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[H.A.S.C. No. 108–2]



FOR FISCAL YEAR 2004—H.R. 1588






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MAY 1, 2003



One Hundred Eighth Congress

DUNCAN HUNTER, California, Chairman
CURT WELDON, Pennsylvania
JIM SAXTON, New Jersey
JOHN M. McHUGH, New York
HOWARD P. ''BUCK'' McKEON, California
WALTER B. JONES, North Carolina
JIM RYUN, Kansas
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ROBIN HAYES, North Carolina
KEN CALVERT, California
ROB SIMMONS, Connecticut
JO ANN DAVIS, Virginia
ED SCHROCK, Virginia
W. TODD AKIN, Missouri
JOE WILSON, South Carolina
TOM COLE, Oklahoma
JEB BRADLEY, New Hampshire
JOHN KLINE, Minnesota

JOHN SPRATT, South Carolina
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LANE EVANS, Illinois
GENE TAYLOR, Mississippi
MARTY MEEHAN, Massachusetts
VIC SNYDER, Arkansas
ADAM SMITH, Washington
MIKE McINTYRE, North Carolina
ROBERT A. BRADY, Pennsylvania
BARON P. HILL, Indiana
JOHN B. LARSON, Connecticut
SUSAN A. DAVIS, California
RICK LARSEN, Washington
JIM COOPER, Tennessee
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Robert S. Rangel, Staff Director
James M. Lariviere, Professional Staff Member
Justin Bernier, Research Assistant




    Thursday, March 1, 2003, Fiscal Year 2004 National Defense Authorization Act—The Defense Transformation for the 21st Century Act


    Thursday, March 1, 2003



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    Hunter, Hon. Duncan, a Representative from California, Chairman, Committee on Armed Services

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


    Aldridge, Hon. E.C. ''Pete'', Under Secretary of Defense for Acquisition, Technology and Logistics

    Chu, Hon. David S.C., Under Secretary of Defense (Personnel and Readiness

    Harnage, Bobby L., Sr., National President, American Federation of Government Employees, AFL-CIO

    Myers, Gen. Richard, USAF, Chairman, Joint Chiefs of Staff

    Walker, Hon. David M., Comptroller General, United States General Accounting Office

    Wolfowitz, Hon. Paul D., Deputy Secretary of Defense

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

Chu, Hon. David S.C.

Cooper, Hon. Jim

Harnage, Bobby L., Sr.

Hunter, Hon. Duncan

Skelton, Hon. Ike

Walker, Hon. David M.

[The Documents submitted can be viewed in the hard copy.]
DOD's Proposed Acquisition and Reporting Reforms presented by GAO

DOD's Proposed Civilian Personnel Reforms presented by GAO

Testimony of G. Jerry Shaw, General Counsel, Senior Executives Association on The Proposed Defense Transformation for the 21st Century Act of 2003

Federal Register, Wednesday, April 2, 2003, Part II
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[The Questions and Answers can be viewed in the hard copy.]

Mr. Abercrombie
Mr. Cooper
Mr. Reyes
Mr. Skelton
Mr. Snyder
Mr. Spratt
Mrs. Tauscher


House of Representatives,
Committee on Armed Services,
Washington, DC, Thursday, March 1, 2003.

    The committee met, pursuant to call, at 9:09 a.m., in room 2118, Rayburn House Office Building, Hon. Duncan Hunter (chairman of the committee) presiding.

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    The CHAIRMAN. Good morning.

    The committee will come to order.

    Today the committee begins a two-day review of the Defense Transformation for the 21st Century Act. This package of reforms is being presented by the Administration as necessary to fundamentally change how the Department of Defense adapts to new security challenges and fulfills its critical missions.

    It is my intention to consider as much of this important package as possible for incorporation in the fiscal year 2004 defense authorization act, which we will begin to mark up next week.

    This proposal involves significant changes to military personnel, civilian personnel, training and acquisition policies. And this morning we will focus on the civilian personnel and acquisition policy provisions, and tomorrow we will cover the military personnel reforms.

    The environmental reform provisions of the proposal have already been the subject of hearings and previous scrutiny. The Department has made what I believe is a compelling case that the current inflexible framework for compliance with federal environmental laws results in an increasingly adverse impact on military readiness. The Readiness Subcommittee held an extensive hearing in March, during which these issues were highlighted, so we will not examine that portion of the transformation proposal today.
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    We are going to hear from several panels this morning. The first is comprised of two senior Department of Defense (DOD) officials: the Honorable David S.C. Chu, Under Secretary of Defense for Personnel and Readiness; and the Honorable E.C. ''Pete'' Aldridge, Under Secretary of Defense for Acquisition, Technology and Logistics.

    The second panel consists of the Honorable David M. Walker, Comptroller General of the United States; and Mr. Bobby L. Harnage, National President, American Federation of Government Employees (AFGE), American Federation of Labor-Congress of Industrial (AFL–CIO).

    With us this morning, because this is an important issue and they have taken from their valuable time to be with us for the first 30 minutes, are Deputy Secretary of Defense Paul Wolfowitz and Chairman of the Joint Chiefs General Richard Myers. And they will be with us for about 30 minutes or so, and because this is a far-reaching proposal, it is absolutely appropriate that we have them participate in this initial hearing.

    One of the most important and possibly controversial elements of this package is the creation of a new National Security Personnel System. This proposal is being advanced in order to allow the Department to develop a mission-based, total force system of management for defense civilians that will support national security, while retaining civil service values and protections related to federal worker pay, evaluation, retention and grievance procedures.

    This more flexible approach has been endorsed by the National Commission on the Public Service, also known as the Volcker Commission, who concluded that key parts of the government are operating with outmoded rules, pay inequities and poor systems for recruiting top-notch talent.
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    The Department is proposing to use the requested authority to develop new personnel regulations that will allow switching to a pay-banding system, implementing a separate pay structure for managers, modifying job classifications, new hiring authorities, changed pay administration, pay-for-performance evaluation systems and reduction-in-force procedures. Most of these personnel reforms in the proposal mirror those included in the legislation that created the Department of Homeland Security (DHS).

    Also in this proposal are a series of miscellaneous provisions intended to grant the Department more latitude in managing its acquisition system. The Department's stated objectives are to increase flexibility, streamline rules, cut cycle time and adopt commercial practices.

    The committee will carefully evaluate each of these proposals with an eye toward providing the Department with an appropriate measure of necessary flexibility but without also jeopardizing the ability of this committee and Congress to obtain information that will enable us to continue our constitutional oversight role.

    These are all critically important goals that deserve the careful consideration of our members, the committee and Congress. Accordingly, I look forward to today's discussion and in working through these issues so that we can arrive at a balanced package of management tools to help the department better execute its paramount mission: to keep our nation secure in a very uncertain and turbulent world.

    At this time, I would like to recognize my colleague, the ranking member of the committee, the gentleman from Missouri, Mr. Skelton, for any comments he might wish to make.
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    [The prepared statement of Mr. Hunter can be viewed in the hard copy.]


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

    I begin my remarks by using the phrase ''shock and awe'' on the issue that is before us, because it was sent over to us and I spent a fair amount of time during the recess in reviewing not once, but two to two-and-a-half times the white book that I have that was sent over by Mr. William Haynes, the General Counsel for the Department of Defense. And I went from shock and awe to disbelief, and then I would say with sadness today that a good part of what is in front of us is cause for an abrogation of our congressional duty as spelled out in the Constitution. But we will get to that later.

    Well, let me welcome our witnesses. You will have some interesting and searching questions put to you today.

    And I have to mention, to begin with, my serious concern with the situation that has brought us to this hearing today, which was hastily scheduled. But the chairman did schedule it for us and I thank him for that.

    Congress received this 200-page bill two weeks ago, on the day we left town before the recess. There is some 50 provisions included in the bill and its scope is absolutely enormous, from civilian to military personnel management, to the organization of the Department, to mechanisms by which Congress oversees major weapons programs, to extensive waivers from a host of environment laws.
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    It is no understatement to say this bill seeks to make the most sweeping changes to the Department of Defense since the Goldwater-Nichols legislation, which I had a small part to play in. But unlike, Mr. Chairman, the Goldwater-Nichols bill, this committee will not hold a series of hearings over many weeks, many months in bipartisan drafting. The Goldwater-Nichols bill was developed over a period of five legislative years. And this committee will have less than three weeks to consider these sweeping changes.

    None of us wants to see reforms wait years to be adopted like in the Goldwater-Nichols, but neither is three weeks and a few hearings enough time and consideration to make smart decisions about the best course of the Department of Defense and the country.

    The implications of many of these proposals are profound. And I think I speak for everyone on this side of the aisle by saying simply that it cannot be in the national interest to rush to judgment, given the major changes recommended.

    I have serious reservations about the substance of many of the proposals. And I know, Mr. Chairman, some of my Republican colleagues share my substantive concerns.

    I worry about the removal of protections on the hundreds of thousands of civilian employees—670,000, to be exact—who we critically need to protect our national interest.

    Is this a return to the days of yore where politics ruled? I worry about the possible politicization of the senior levels of our military leadership. I worry about the damage done to longstanding environment laws and the Congress' oversight on how our Defense procurement dollars are spent.
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    I worry about the Defense Department's taking over the foreign military assistance function that should be performed by the Department of State.

    Most importantly, I worry about the abrogation of the congressional oversight and the ceding of authority to another coordinate branch of government in a way that diminishes the checks and balances contemplated by the separation of powers provided by the Constitution.

    Remember, what we do here this year will be in the books for succeeding administrations. It will be on the books for succeeding secretaries of defense. Would this committee give these powers to a Bill Clinton Administration or to a Les Aspin as the Secretary of Defense, I ask?

    As you know, I have long been an advocate of our military strength and I am so proud of the men and women that serve in the uniform today. Immensely proud. I have supported many of the Administration's proposals, as the Administration knows, for enhancing our national security. And I have worked side-by-side with my friend and my chairman, Duncan Hunter.

    However, I cannot support this approach that the Department sends over to us so quickly and say, ''Pass'' and rush to judgment.

    As much as I appreciate Mr. Hunter's gesture in permitting this hearing, the committee should have a series of hearings over a period of time. And I am not talking about years, like Goldwater-Nichols, but over a period of time, because after every hearing additional questions come up. I have seen it. Questions that culminate in serious and carefully considered legislation; legislation that this committee can be proud of.
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    And I might say that this committee has a wonderful history and tradition—so much due to our chairman, I might say—of bipartisanship. And as I see the proposal before us, it is an attempt to cause that longstanding bipartisanship tradition to be shunned aside. And that personally concerns me, and I hope we can reclaim it and go down the road of seeking what is best for our young people and those that support them in the civilian sector.

    And I want to reclaim the wonderful tradition of thoughtfulness, consideration that this committee has stood for and does stand for.

    So, Mr. Chairman, I thank you for this opportunity to express my deep concerns.

    Thank you.

    [The prepared statement of Mr. Skelton can be viewed in the hard copy.]

    The CHAIRMAN. I thank my colleague.

    And I would just respond briefly, before recognizing our guests today, and that is that we have just concluded a military operation in what was potentially a very dangerous theater. And in terms of having big things at stake, we had the lives of over 250,000 people at stake. And we charged that responsibility to the Secretary of Defense and to the team that he had accrued. And they carried out that responsibility.

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    We have a responsibility of putting together a $400 billion budget in, really, what is a fairly short period of time each year. Many of these areas that we have relatively brief hearings on could easily justify examination on single issues that would take days and days of hearings.

    But nonetheless, the hearing process is designed to get people information. And I would just say this to my colleague: I believe in getting information. And if other questions arise as a result of this hearing today, I would be happy to do everything I can to get you and any other members, Republican or Democrat, as much information about this proposal as possible so that when members vote on this proposal, just like we vote on lots of major issues both here and on the floor, we make an informed vote.

    And I don't want to see the time when anybody is uncertain or confused about how they should vote. And so I will dedicate myself to making sure everyone has all of the facts that they need so that they make an informed vote when they vote on this package.

    And I would simply remind my colleague that a couple of years ago, you know, with respect to the environmental piece of this package, which I think is one of the most dramatic, we had a subcommittee go to the Marine training base at Camp Pendleton, California, where those wonderful Marines practice what essentially is Iwo Jima; that is, assaulting a beachhead and taking it with combined arms to preserve American freedom.

    And because of the encroachment of environmental regulations, when the Marines get to the beach, they have to stop and they have to walk around the beach and get on a bus and traverse the beach by bus. And then they go to a place where foxholes are designated by pieces of tape, not by tactical experts, but by the environmental community. And where a piece of tape resides, there you can put a foxhole. Not because you have a field of fire, but because the field of bureaucracy has designated that for you.
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    And I would just say to my colleague, that was a couple of years ago. That situation exists today.

    So with respect to the idea that we are moving too quickly on these measures, I would say that some of these measures are going to meet strong opposition whether we vote for them this year or vote for them in five years. And I don't think the opposition or support of these measures is going to be a function of time. It is going to be, to some degree, a function of political position.

    And last, I would just say this: The civil service system is based on what I would call the Theodore Roosevelt principles of merit and hard work. And they should be. And my estimate of this Secretary of Defense is that he holds those principles very dearly in putting together this package, which will be a sweeping reform. But I think we all acknowledge that reforms are needed.

    So in this business, often we give the ball to leaders in the Administration and we let them run with that ball and we hold them accountable for what they produce, whether it is a military operation or the reform of a system. And we will have a chance to revisit the product of this administration.

    And in looking at many of the factors and many of the proposals here, many of them mirror what we have done with homeland security, where we found a problem that was so pressing and so important to the American people that we needed to move quickly.

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    I think we have a similar problem with respect to the need for reform in the area we are going to address today.

    So, acknowledging my good friend's concerns, and I think concerns that we all have that we retain our constitutional right and power to oversight in this area, nonetheless I think it is important that we have these proposals laid on the table and have a chance to give this Secretary an opportunity to advance the ball and to work reforms and to be held accountable subsequently.

    And so having said that, Secretary Wolfowitz, I know you can be with us for about 30 minutes or so. I think it is important that you are here with us today. You have three minutes left. [Laughter.]

    General Myers, thank you for being with us.

    And, gentlemen, go right ahead.


    Secretary WOLFOWITZ. Chairman Hunter, thank you for calling this critical hearing on the Defense Transformation Act.

    I would like to thank you and Congressman Skelton for your remarkable support over many years for our men and women in uniform. They have no greater friends than the two of you. And this committee has been magnificent in its support for our magnificent military.
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    The bill you are considering today is the product of many months, in fact years, of work inside and outside the Department of Defense. Much of the content of the civilian personnel package is the result of pilot projects that Congress authorized the Department to undertake decades ago.

    More than 30,000 DOD employees have participated in the pilot projects that this committee helped to pioneer. Without the Congress' leadership, and this committee's leadership, this bill would not be something we could be considering today.

    Over the past year, this bill has gone through an extensive interagency process and comes to you with the full support of the Administration. And the Congress has played a vital role in the development of this initiative.

    Although, as has been pointed out, in its final form, the bill did not reach the Congress until April 10th. In the months leading up to its formal delivery, we had over 100 meetings—that is 100 meetings with members and staff—on the various provisions. That helped to shape, in substantial measure, those things that we thought should be presented to the Congress and those things that should not be. The input that we have received from the Congress has been invaluable in the development of the bill that is before you.

    Mr. Chairman and members of the committee, the Department of Defense must transform for the 21st century, not just the way we deter and defend, but also the way we conduct our daily business. And we need to get this done right now.

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    The world changed drastically on September 11th, 2001, but the laws and regulations governing the Department of Defense have not kept pace. The American people need a transformed department, poised and prepared to defend our national security in a new era, possibly the most dangerous era this country has ever confronted. A critical part of that solution is the Defense Transformation Act for the 21st Century.

    Secretary Rumsfeld is exactly right when he states that DOD is not yet organized to deal successfully with the new security environment. We remain organized to fight big armies, big navies and big air forces, not shadowy terrorists and their networks. The armed forces need freedom to move resources, shift people and acquire new weapons more rapidly.

    In an age where terrorists move information at the speed of an e-mail and money at the speed of a wire transfer and people with the speed of a commercial jet liner, the Defense Department is still bogged down, to a great extent, in the micro-management and bureaucratic processes of an earlier era. We have a management structure designed to meet the demands of the industrial age, when the world has surged ahead into the information age.

    Today, we have some 320,000 uniformed personnel doing essentially non-military jobs and yet we are calling up Reserves to help deal with the Global War On Terror. Despite 128 acquisition reform studies, we have a system in the Defense Department that, since 1975, has doubled the time it takes to produce a new weapons system in an era when technologies in the private sector are arriving in years and months, not in decades.

    Accordingly, we have proposed for your consideration a National Security Personnel System that would give us greater flexibility in how to handle and manage civilian personnel so that we can attract, retain and improve the performance of our outstanding civilian work force—700,000 of them—a work force that is critical to the success of our remarkable armed forces.
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    We have proposed a process for moving a number of non-military functions that have been pressed on DOD over the years to other, more appropriate, departments.

    We have proposed more flexible rules for the flow of money through the Department to give us the ability to respond to urgent needs as they emerge.

    We have proposed elimination of onerous regulations that make it difficult or virtually impossible for many small businesses to do business with the Department of Defense.

    We have proposed expanded authority for competitive outsourcing so that we can get military personnel out of non-military tasks and back into the field.

    And we have proposed measures that would protect our military training ranges so that our men and women will be able to continue to train as they fight while honoring our steadfast commitment to protecting the environment.

    Of course, Mr. Chairman, there will always be resistance to change. That is not surprising; change is not easy. But it is important to keep in mind what the sum total of all these industrial-age bureaucratic processes does to our ability to develop an information-age military.

    The cumulative effect of the old processes that we are seeking to change impacts on our ability to defend our nation and to provide the brave men and women that perform that task with the absolutely best support that they deserve.
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    First, the inability to put civilians in those several hundred thousand jobs that do not need to be performed by men and women in uniform puts an unnecessary strain on our most precious resource: our uniformed personnel.

    Second, the overall inefficiency of our management system means that the taxpayers are not getting the value that they could from their defense dollars. And perhaps more important, the men and women whose lives depend on the support that those dollars deliver are also being shortchanged.

    Third, the encroachment on our ability to train adequately, in an era when training increasingly represents the most important qualitative edge that our military enjoys, threatens a collision that could endanger the lives of our service men and women. Fortunately, that collision has not yet happened, but it behooves us to take appropriate measures now to ensure that it does not.

    Fourth, our limited flexibility to manage our civilian work force will make it increasingly difficult to compete with the private sector for the kinds of specialized skills that an information-age military needs for its support, but that will be in increasingly high demand throughout our economy.

    And finally, and perhaps most important, our slowness in moving new ideas through that cumbersome process to the battlefield means that the equipment and processes that our remarkable men and women are making use of are still a generation or two behind where they ought to be. As we have seen in both Afghanistan and Iraq, we need every bit of qualitative superiority that we can achieve in order to save lives and to more rapidly and precisely defeat the people who threaten the security of the United States.
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    Our objective is not merely to achieve victories, but to have the kind of decisive superiority that can help us to prevent wars in the first place or, if they must be fought, that can able us to win as quickly as possible with as little loss of life as possible.

    Mr. Chairman, the Department is already engaged in substantial transformation. We have reduced management and headquarters staffs by 11 percent. We have streamlined the acquisition process by eliminating hundreds of pages of unnecessary rules and self-imposed red tape. And we have implemented a new financial management structure.

    But these internal changes are not enough. DOD needs legislative relief to achieve authentic transformation. And we need the Congress' help to transform how we manage people, how we buy weapons and how we manage our training range. We need Congress to enact the Defense Transformation Bill.

    Thank you, Mr. Chairman.

    The CHAIRMAN. Thank you, Mr. Secretary.



    General MYERS. Chairman Hunter, Congressman Skelton and other distinguished members of the committee, I would just like to add my voice to that of Secretary Wolfowitz in asking for your support of the Defense Transformation Act of the 21st Century.
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    Over the last several months, the Joint Staff and the services have worked together with the Office of the Secretary to put together a comprehensive package of legislative initiatives that are really needed to improve the way the entire Department does business. The transformation of our civilian personnel system, the way we acquire weapons systems, how our military personnel and installations are managed are all very critical to the future of joint warfighting and, of course, to our national security.

    The service chiefs and I have met on these issues many times. And we strongly recommend that this committee incorporate the proposed legislation into the 2004 defense authorization bill.

    Let me also thank the committee for all the support that we have had over the past years. That support manifested itself, of course, in what we just saw in Iraq and what we saw previously in Afghanistan. And we appreciate it very much; particularly the men and women who are out there on the pointy end dodging bullets and doing such a magnificent job. They know they have your support and they appreciate it. And we thank you for that.

    And we stand ready for your questions.

    The CHAIRMAN. Gentlemen, thank you.

    And Secretary Aldridge and Mr. Chu, would you like to make statements at this time? Or would you like to have a couple of questions first for the Secretary before he goes?

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    Always more questions for the Secretary, right?

    Secretary WOLFOWITZ. I think they should make some statements. [Laughter.]

    The CHAIRMAN. We will have a couple of questions of the Secretary and General Myers before they take off here.

    Incidentally, I was told you have to leave about 30 after. Have you got a couple minutes?

    Secretary WOLFOWITZ. We will stretch it to a quarter of if you can, General.

    The CHAIRMAN. Okay. Why don't we just take a couple questions?

    One of the major goals here is to discharge red tape. And it has been raised. And I think one thing that always causes us some unrest is the unknown. And there is a good deal of license and authority that is being given to the Secretary and to his team with this legislation.

    And people are concerned, of course, with a civil service system whose foundation is integrity, merit, hard work. The question has been raised, in divesting ourselves or jettisoning a lot of red tape, does that mean that we are jettisoning part of the integrity of the system and this wonderful ethic of merit that is the American way, that has grown to be the foundation of our society?
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    And so I think that is a legitimate question for you folks to answer. Will we maintain the integrity of the system with all of the safeguards that will protect people, give them their due process, especially when we look at the grievance procedure, and also reward hard work where it merits reward?

    How will the new system stack up in those areas in comparison to the old system?

    Secretary WOLFOWITZ. I think we have some of the answers to that, Mr. Chairman, in the experiments that have already been conducted, thanks to the discretion the Congress has given us in the past. And I think that record shows that at key installations like China Lake, where we have, perhaps, one of the best civilian work forces any country could ever have, private sector or government. It has produced some of the most remarkable technological breakthroughs. I think that flexibility in management has improved the capability of that civilian work force; has allowed us to keep the very best people around.

    And I would underscore that the purpose of giving us more flexibility to manage is to actually expand the size of that civilian work force to do more through people who are regular government employees under those civil service protections and to try to reduce the amount to which we either have uniformed people doing things they shouldn't be doing or do workarounds with contractors and other much less satisfactory solutions.

    We are looking for a little bit of flexibility and we are looking for the kinds of ability to reward performance that, in my experience, the civil service craves; that the best people in the civil service would like to see all of them performing at the highest standard. And when you can't have that kind of flexibility and rewards, I think it affects the morale of everybody.
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    Mr. SKELTON. Mr. Chairman, thank you very much.

    And Mr. Secretary, General, we appreciate your being here. And we understand you do have to leave shortly, but we do have a few questions.

    The scope of these proposals, I think, requires sober and considered deliberation. You testified a few moments ago that within your building these issues, in particular the civilian work force section, have been under discussion and consideration for a long time.

    So my question is, why can't we, in our legislative capacity, take our time and go through this? What is the rush to judgment? Did the civilian work force in the United States of America cause the young men and young women to do poorly on the battlefield? Of course not. So what is the rush to judgment? Why now? Why can't we really do this, not as long as Goldwater-Nichols, but at least over a period of time when we can ask probing questions of all the issues?

    Mr. Secretary.

    Secretary WOLFOWITZ. I would simply point out that I think this is not a rush to judgment. We have spent a lot of time also with the Congress. A lot of what is in this proposal has been shaped by extensive discussions, as I said, with congressional staff and Members of Congress.

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    And I think the whole world has noticed the stunning performance of our military. Nobody is saying that they don't perform well. What we are saying is they could have even better support than we have been able to give them and that they may have even more formidable enemies in the future than the ones we have faced in the last couple of years.

    And we see throughout where efficiencies could be achieved that would improve the performance of both our civilian and military personnel. The fact that they have been studied for so long, in our view, is a reason to get on with it, not to continue studying longer.

    Mr. SKELTON. I appreciate your answer, but that doesn't give us the time to consider. You know, I am from Missouri, Mr. Secretary; you have to show me. [Laughter.]

    And I don't have an awful lot of time to be shown between now and the time we mark up, though you have taken a great deal of time within your building.

    Briefings are good. And I am sure some folks here did receive briefings. But I am reminded of what my old law school professor would say, as loudly as he could: ''What does it say? What does it read?'' And briefings are not reading the words, which I have done. And the policy discussions and briefings are fine, but what does it say?

    And that is my question, because what we do, the words we pass, long after everyone in this room passes from the scene, those words we write become law of the United States of America. And those that follow us, in your positions and all the positions, will be living by those words. And it is a permanent monument, you might say.
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    So I have one question for the General.

    General, are you familiar with the general flag officer proposals?

    General MYERS. Yes, sir. Yes, sir.

    Mr. SKELTON. Do you subscribe to them?

    General MYERS. Yes, sir.

    Mr. SKELTON. Have you read them?

    General MYERS. Yes, sir.

    Mr. SKELTON. Is there a good reason that there are different qualifications for the Commandant of the Marine Corps, the Chief of Naval Operations (CNO) of the Navy and the Chiefs of Staff of the Army and the Air Force?

    To be a commandant of the Marine Corps, one must merely be a colonel. To be a chief of naval operations, one must have sea service and be a two-star admiral. To be a chief of staff of the Army or the Air Force, one merely has to be a brigadier general. Do you subscribe to that, General? Or did you know that?

    General MYERS. Yes, I knew that. And I think the whole idea is to put as much flexibility into the system as we can. And that was the thought behind it.
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    Anybody nominated for those positions, obviously, has to be confirmed in front of the Senate.

    Mr. SKELTON. You are narrowing the field for the CNO and you are widening the field for the commandant of the Marine Corps.

    Well, they speak for themselves.

    Thank you, General.

    The CHAIRMAN. I thank the gentleman.

    And gentlemen, you have stayed 15 minutes past your allotted time here. Appreciate your indulgence.

    Mr. REYES. Mr. Chairman? Mr. Chairman, there are some of us that have questions for General Myers and for the Secretary. Can we submit them for the record?

    The CHAIRMAN. Absolutely.

    Secretary WOLFOWITZ. Absolutely.

    Mr. ABERCROMBIE. Mr. Chairman?

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    The CHAIRMAN. Yes.

    Mr. ABERCROMBIE. Mr. Chairman?

    The CHAIRMAN. Yes, Mr. Abercrombie?

    Mr. REYES. Can we get an answer timely? Because it has taken quite a time to get——

    The CHAIRMAN. Well, sure.

    And gentlemen, your statements will be taken into the record, too, without objection.

    Mr. ABERCROMBIE. Mr. Chairman.

    The CHAIRMAN. Mr. Abercrombie?

    Mr. ABERCROMBIE. Mr. Chairman, this points up we have to have hearings on this. I am disinterested in how much time Mr. Wolfowitz has spent on something internally and then gets up and makes a statement, as he just did, that we could perform even better, which presumes that we performed under what he expects or under what the Pentagon expects, and then say that their time is up and that we are going to mark things up.

    We have to have hearings on this. We have to consider what is in front of us.
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    The CHAIRMAN. Well, Mr. Abercrombie, let me just assure you that we are going to have a long hearing on this today. And I am going to hold a hearing tomorrow. And we weren't initially going to schedule Secretary Wolfowitz or General Myers today, but they wanted to come. They had limited time and they asked if it was okay if they came even having limited time, because sometimes that is a problem because everybody likes to ask a question.

    And I wanted to have them here at least for their statement and at least for a couple of questions.

    Secretary WOLFOWITZ. Mr. Chairman, I will be happy at another occasion to make more time.

    The CHAIRMAN. So I will try to make sure that you have an opportunity to engage Mr. Wolfowitz at a later time. But we initially did not schedule them.

    Mr. ABERCROMBIE. Mr. Chairman, that is not my point. My point is that, whether it is Mr. Wolfowitz or not, I am not interested in a tete-a-tete with him so much as I am interested in this committee engaging in the kind of hearings in depth that are required when we make policy decisions. Because it may not be noticeable to everybody else in some quarters of government, but the Constitution says that we make the policy decisions. We are the ones that are elected.

    The CHAIRMAN. Mr. Abercrombie, let me assure you, as my good colleague, that you and I will have a conversation after this hearing is finished and after the next hearing is finished. And if you think there are deficiencies in the amount of information that has been made available or extracted, I will be happy to do everything I can to make sure that you have enough info to make an informed vote on this.
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    I think it is an issue that requires a very thorough discussion.

    Nonetheless, I think there is a value in having the Secretary and General Myers make their appearance and put their position in the record on this important issue.

    So, gentlemen, thank you for being with us.

    Mr. SPRATT. Mr. Chairman——

    Secretary WOLFOWITZ. Thank you, Mr. Chairman.

    The CHAIRMAN. The gentleman from South Carolina has a question.

    Mr. SPRATT. I am grateful to both of you for coming.

    I know the enormous amount of work you have put into this. And for the same reason, you should understand why we want to have an equal opportunity to go through it.

    Goldwater-Nichols came out of the Congress. I was here when it happened; so was the chairman of this committee. We put a lot of effort into it and I think you saw the fruits of it in this last war: the first time we have really had an integrated force. Goldwater-Nichols is coming to maturity.

    I think that proves the interactive relationship between the Pentagon and this committee and the Congress, as a whole, can be fruitful. And that is what we want. We simply do not have enough time to begin to digest the enormity of what you have laid before us between now and next week when we propose to mark up this bill; simply cannot be done in a responsible way without abdicating the responsibility the Constitution gives us, which we have proudly upheld as a committee and discharged in the past in notable pieces of legislation like Goldwater-Nichols.
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    And I want to say, Mr. Chairman, this is much, much too fast of a railroad that is going through here. We need to sit down. You can bring this bill to the floor any time you want to. You control the Rules Committee. You control the amendments that can be made to it. It doesn't have to be crammed down into the defense authorization bill with so little oversight and input from us.

    The CHAIRMAN. Having heard the gentleman's statements, we will now proceed with the hearing so we get as much of this information out as we can in an uncrammed style.

    So, gentlemen, thank you.

    Secretary WOLFOWITZ. And we leave behind two extraordinary public servants with Under Secretary Aldridge and Under Secretary Chu. In fact, with all due modesty, I think you may learn more from them than you would from me.

    And I appreciate your indulgence. I am the Acting Secretary today because the Secretary is traveling. And, as you pointed out, Mr. Chairman, we asked to come at the beginning and I appreciate your willingness to hear General Myers and me on the importance of this.

    But you will be able to ask these two gentlemen all the questions you want. And we will work with you to answer any questions that we can possibly answer. I appreciate the time and attention that you are giving to this very important issue.
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    The CHAIRMAN. Okay. Thank you, Mr. Secretary.

    And, Mr. Secretary, to accommodate some of our members, we may have folks that want to have some in-depth discussions over the next several days.

    Secretary WOLFOWITZ. This is important.

    The CHAIRMAN. And we will try to relay that to your office and make that happen.

    General, do you have any final things you would like to say?

    General MYERS. No, Mr. Chairman. Thank you very much for the opportunity.

    The CHAIRMAN. Thank you for being here.

    Thank you, gentlemen.

    And now, Mr. Secretary Aldridge, or Mr. Chu, you gentlemen have the opportunity to take as much time as you want and let us discuss this very important initiative.

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    Secretary ALDRIDGE. Thank you, Mr. Chairman and Congressman Skelton and members of the committee.

    I really thank you for giving me this opportunity to come before your committee to discuss the role of my office in our efforts to transform our nation's defenses.

    I do have a very short verbal statement. And I would be delighted to respond to questions afterwards.

    As you know, this topic of acquisition is broad and multifaceted. President Bush and Secretary Rumsfeld seek to transform not just our uniformed military, their weapons and doctrine, but also the ways and standards by which the Department is managed and administered.

    Since my confirmation into this position almost two years ago, I have made acquisition excellence my objective. It should surprise no one to learn that absent certain substantive changes and remedies, one can make only so much progress along those lines.

    Consequently, as I mentioned in my testimony to this committee on April 1st, my Office of Acquisition, Technology and Logistics is proposing a series of changes to the acquisition statutes, some bolder than others. That is what I want to talk about with you today.

    These proposals address several kinds of problems to include burdensome requirements. In fact, there are some 16 proposals in all.
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    An example would be the relief from current requirement for extensive reporting and contracting of support services for security in firefighting beyond that allowed in prior years.

    We are also proposing several flexibility changes.

    For example, we seek management relief to allow us to move funds within a program to provide management margin where it is needed.

    We recognize the significance of some of the changes we are requesting and have worked to fashion language that would help transform the Department: how we move money, how we manage people, how we buy weapons.

    The primary objectives of the acquisition initiatives are to increase the program manager's flexibility, to streamline the rules and cut cycle time, make the way we do acquisition more businesslike and adopt commercial practices and, of course, to provide excellence in our acquisition process.

    For over four decades, I have observed, working within and from outside, led and been led in and through many dimensions of our national security apparatus. Based on that experience, I am absolutely convinced that these proposed changes are both modest and necessary.

    And after David Chu, I would be delighted to answer any questions.

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    The CHAIRMAN. Thank you, Mr. Secretary.

    Dr. Chu


    Dr. CHU. Thank you, Mr. Chairman.

    I do have a short written statement, which, if you will permit, I would like to submit for the record.

    The CHAIRMAN. Without objection, both of your statements will be taken into the record.

    Dr. CHU. Thank you, sir.

    It is my great privilege to appear before the full committee this morning and have the opportunity in detail to review the concepts that we are advancing in the proposed legislation we have forwarded to the Congress.

    I did testify on these before your committee's Total Force Subcommittee on March 13th. I had the privilege of testifying before the Senate Armed Services Subcommittee on Military Personnel on the same issues at about the same time. They have, as Dr. Wolfowitz indicated, been the subject of many meetings with members and staff. Some of those meetings go back to the fall of last year on the civil service front, specifically on our proposal to adopt the so-called best practices standards for the Department as a whole.
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    It has been my privilege, also, to participate in various conferences and other meetings, including one organized by the Congressional Research Service about one month ago on, again, these same topics.

    We are very grateful, as Dr. Wolfowitz and General Myers indicated, for the support this committee has given the Department, both in statute and in terms of the resource provided over the years that, in our judgment at least, propelled the results just demonstrated in Iraq. Those results underscore the value of speed: speed of action in the modern world. They underscore the value of agility: agility in exploiting opportunities, agility in learning quickly from the actual experience in front of us.

    And we recognize that it is quality people, properly trained, who produce those results.

    Our concern, on the civil work force specifically, is that the current rules, under Title 5, create the opposite set of incentives. They are a set of incentives that slow the process down. They are a set of incentives that make it difficult to change someone's job responsibilities. It takes us, typically, in the Department of Defense, three months to hire somebody.

    That is why at Fort Riley recently it took from January to August to replace the civilian radiologist, during which time the old radiologist left and we had to start sending the mammography materials downtown to be read at greater cost to the taxpayer.

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    It takes two to three months under the current rules, again, to change someone's job description. It has taken us more than two years to get agreement under local bargaining with our unions to garner someone's wages if he or she should abuse the travel card. And we are still not finished with that process.

    Thanks to the powers that you have given us for demonstration projects for more than 20 years, we have seen an alternative future, a future that mirrors these principles of speed and agility. It is that future we have reviewed in the last year. And looking at the lessons learned from those demonstration projects; demonstration projects, currently nine in number, that cover 30,000 employees in the Department of Defense, including, as Dr. Wolfowitz cited, China Lake, the oldest and most well-known of the set.

    Those best practices emphasize an alternative way to hire people, an alternative way to pay people; pay-banding, as you referred to, Mr. Chairman, in your opening remarks. And we sent forward and published on the 2nd of April in the Federal Register the first of our efforts to exploit fully the authority you have already given us to extend these best practices to the laboratory and acquisition work forces of the Department. It is a review that Mr. Aldridge and I participated in personally, starting in March of 2002.

    With your permission, Mr. Chairman, I would very much like to submit our April 2nd Federal Register notice, which provides additional detail of the kind that I think Members here properly would like to see, for the record for this hearing.

    These results, I think, have been validated in their impact on our work force by studies by the Office of Personnel Management that include extensive surveys of our personnel. They have also been validated in practice, in terms of how our individual employees have reacted to them in terms of their decision to renew these demonstration projects as they expire.
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    Last summer, for example, at the Army's Research Drilling Engineering Center (RDEC) at Redstone Arsenal, the civilian personnel management demonstration project begun in 1997 came up for its five-year renewal. The president of the American Federation of Government Employees (AFGE) local said, ''By far, the majority of the employees have indicated to me, both privately and in called meetings at RDEC that they wanted it renewed.'' I am talking about 98 percent of them did.

    This is the record on which we build, Mr. Chairman. It is not a new record. It is a record that is much studied. We are ready to act.

    The legislation we have proposed would allow us to extend this sort of personnel innovation through the entire Department of Defense. It would add lessons learned from those best practices the current statutes do not allow us to take advantage of, including most importantly the right to national bargaining with our unions.

    Members of this committee and members elsewhere in the Congress have properly asked, ''Why do this now?'' There are a variety of reasons. Dr. Wolfowitz already touched on some of them. But let me add another to that list and that is what is going to happen to the American military post-Iraq. We are going to bring this force home; 250,000 personnel in the Gulf now. We have already begun discussions about the alternative stationing of U.S. troops around the world. You have seen in media reports already the fruits of those changes in Saudi Arabia, in Korea and elsewhere. You have heard General Jones in Europe talk about alternative stationing policies in Europe.

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    This is potentially the largest reconfiguration of the stationing of the United States military since the Berlin Airlift triggered the Cold War almost 50 years ago.

    In my judgment, we need to be ready, not five or ten years from now, but within a short period of time, to accept this restationing, which will have significant implications for the shape now, and in the future, of our civil work force. We need these kinds of powers to be sure we have the right civil servants at the right places in the United States to which these troops may be coming.

    We need to be ready for the war in the future, not just the war we have conducted. We must not rest on our laurels.

    We look forward to working with you and the Members of this committee in shaping that future to the continued success of the American military.

    Thank you, Mr. Chairman.

    [The prepared statement of Dr. Chu can be viewed in the hard copy.]

    The CHAIRMAN. Thank you, Dr. Chu.

    Let me start out with one idea that was brought forth in listening to and reviewing this proposal and in listening to conversation about the proposal from the Administration and from folks who are concerned about it, and that is that we have the tension, obviously, between our civil servants and so-called contracting-out contractors. Mr. Wolfowitz talked about the workaround where, in some cases, it is difficult to work through the bureaucracy to use our own work force. And in some cases, the easy out there is the workaround, that is the contracting out.
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    I have seen some argument to the effect that the reform will make it easier for us to use our own federal work force, instead of having to go to contracting out. And that, to that extent, that is going to accrue to the benefit, not the detriment, of government employees.

    Now, do you think that is the case? And, if so, expand on that.

    Dr. CHU. Absolutely, Mr. Chairman.

    The CHAIRMAN. And Mr. Spratt says I am leading the witness. [Laughter.]

    But that is the way I operate. [Laughter.]

    Dr. CHU. Absolutely, Mr. Chairman. The Deputy Secretary has spoken to the review we are beginning of the 320,000 positions now in uniform force that we believe could be possibly equally well-performed by civilians. In many cases, it would clearly be preferable to have these positions in the civil service.

    I don't think we are going to get to that position under the current rules of the game. And that would be a great loss, in my judgment, for the country.

    I think we saw this in the most recent operations in Iraq. In the theater, we had 9,000 civilian personnel supporting our forces. Only 1,500 were civil service: all the rest contractors.
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    The CHAIRMAN. I am just trying to understand this, and I want to hear from the other side, too, on this. So what you are saying is the idea that if you need a position and you find out that your bureaucracy—you have mentioned these three-month delays in being able to hire a person. If you need a position filled, you need to do something quickly. And instead of being able to have a civil servant do it and wait that three months, it is easier simply to order a sergeant to do it because he is under the direct chain of command in the military. And he marches out smartly and gets it done. But the preferable thing to do is to keep the sergeant in his military billet and use a civil servant, if possible, if you could qualify him quickly.

    Dr. CHU. Yes, sir.

    The CHAIRMAN. Now, is that realistic? Or is that just advertising and something that won't come about? You truly believe we will have more opportunities if we have some red tape out of the way?

    Dr. CHU. Absolutely, sir.

    The CHAIRMAN. Okay.

    Secretary ALDRIDGE. Mr. Chairman, just a comment about the acquisition work force in that regard: We are having to compete with highly talented people within industry to get people to come into the government. We need the government to be a smart buyer for the weapons systems we have. We need very highly qualified people. And it is very difficult to hire these people and keep them under the civil service-type of rules. Where there is pay-for-performance, we can actually reward good performance of people and be more attractive for them to come to government and to stay with government and to give us the quality we need.
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    The CHAIRMAN. Okay.

    And, gentlemen, there are dozens and dozens of aspects of this proposal. And, you know, the Members of Congress, both parties here, hold our civil servants to be extremely important to us. And you have a ton of proposals, sub-proposals and pieces to this very comprehensive reform. There are going to be pieces that we don't agree with you on; some that we will agree with you on.

    And one aspect, to me, is this tension that we have always had—and maybe it is an appropriate tension—between the public and private sector, because we want to maintain that mobilization core that can move out; that consists of federal employees that is always there, always ready to show up and perform reliably those what I would consider to be core military functions and military support functions. You might speak to that.

    Will this ability of the U.S. to maintain a core of federal workers in critical skills remain intact?

    Dr. CHU. Absolutely. Absolutely, sir. Indeed, I believe these provisions, if the Congress were to adopt them, would strengthen our ability to build that core for the future.

    Secretary ALDRIDGE. Mr. Chairman, just another comment: We have been under an acquisition demonstration, as you know, for the acquisition work force, which has proven that these attributes that are being claimed for the National Security Personnel Act, which have adopted many of the things we have learned over the many years of the acquisition demonstration, this system works. People like it. People who perform love it because they get pay for performance.
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    You probably will get some criticism of it, but it is mostly from those people who are not performing. They don't like it because they are not given the automatic pay raises every year.

    This system pays for performance, not for attendance. And I think this is an attribute of this particular proposal that is extremely important, and it shows that it is working.

    The CHAIRMAN. Thank you.

    Mr. Skelton.

    Mr. SKELTON. I will not pursue questions now. I am still waiting to hear someone tell us, Mr. Chairman, why the Marine colonel is qualified to be a commandant and it takes a two-star admiral to be the CNO, which drives me to the conclusion this hasn't been written very well or been screened very well by the screeners. And yet, you send it over and want us to pass it. I have to tell you that worries me.

    I have nothing else.

    The CHAIRMAN. You know, Mr. Skelton, I think you are going to get some letters from some Marine colonels on it. [Laughter.]

    Mr. Hefley.
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    Mr. HEFLEY. Thank you, Mr. Chairman.

    You know, I think you make an excellent case in briefings we have had. And you have talked to us, David, for some time; you have been talking to us about this in bits and pieces. And I think you make a good case for the need for some changes in the system, to get rid of some of the bureaucracy and to modernize the way we manage personnel.

    But I guess I, too, like my friend from Missouri, am concerned about the timing of this thing. It is a little like it was with the environmental package last year. We talked about pieces of it, but the actual package got to us just before markup. And we didn't have time to take it through the process that needed to be taken through to get something done up here.

    Big changes don't occur easily up here, as many of you know. And my first reaction is, I wonder if there is no one at the Pentagon that understands how the process up here works and how you have to work through that. Because we are your partners in the defense of this country. I mean, Democrats and Republicans, we are your partners on this thing. I don't think you have a better friend or a more bipartisan friend on the Hill than this committee. But we do need time to work through major changes.

    A76, for example, came into being in 1955; relatively minor compared to what you are suggesting here. And yet, we are still struggling with that, as a broken system that we can't figure out how to make it work.

    And so it seems to me that we are going to need a little more time. We did a few of your environmental things last year. We are going to be able, hopefully, to do more of them this year. But it takes a process and a timing to work through these kind of changes.
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    I worked, at one time in my past, in industrial relations for, at that time, the leading innovator in industrial relations, which included personnel; I guess you call that human resources today. And yet, even with the greatest innovator in industry at that time, these kinds of major changes would have taken a lot of time to work through the process and to get this done.

    One of the things you had to do was to work through with the affected groups to make sure they had some level of comfort with what you were trying to do. So it didn't look like this came out of the blue and all of the sudden, ''Boy, and I am really threatened by what is going on.''

    And I guess my question to you would be: How much of that have you done?

    We are one of the affected groups in Congress, and you are trying to work through that, although, I think, in kind of a compressed time frame. But how much have you worked through with the affected employee groups and so forth to get a level of comfort with them?

    Now, I know not everybody is going to agree because change comes very, very difficult. But how much have you worked through with those groups?

    Dr. CHU. We have tried to pay a great deal of attention to what our people think about changes like this. We have based these changes, as I indicated, on an extensive review of the individual demonstration projects the Department has carried out on the authority you gave us over several years, though each of those projects involves the detailed interaction with the employees who are affected.
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    In addition, we have benefited from the wide-scale surveys, which is another way that our employees can talk to us, that the Office of Personnel Management has done, both of the demonstration project personnel—there is a lengthy report that I commend everyone's attention, called Substantive Evaluation 2002, which is on the order of several hundred pages long that contains these results.

    In addition, we have benefited from The Office of Personnel Management's (OPM) most recent survey of the entire federal work force, where one of the most significant complaints is exactly what Mr. Aldridge touched on. The employees themselves criticize this system for the fact it doesn't reward performance. This really gripes people. And it gripes young people.

    I have had the privilege, in the kind of interaction you are describing, sir, talking with our employees at a major naval base. The installation commander came up to me afterwards and said, ''Sir, we need these kinds of authorities. The good young people of my state will not take my jobs because they do not see us as a cutting-edge organization''.

    And we have begun our dialogue with the unions on an informal basis back in February; Mr. Harnage, for example. We have had several meetings with him. My principal deputy addressed a special congregation of his defense local leaders approximately a month ago, that he was kind enough to organize in St. Louis.

    So we have only begun the extensive process of dialogue with our employees to be sure people understand the purpose. We find, just as Mr. Aldridge has found in his own office, where he has adopted the pay-banding approach we are recommending here, that after a transition period in which you do, as you suggest, sir, need to be sure they understand what we are doing, be sure that they are our partners in doing this, that they know what their rights and responsibilities are. We find, as people understand what this can do for them, that they are enthusiastic about the new approach we are recommending here.
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    Secretary ALDRIDGE. It may be interesting, since I personally participated in scoring people's performance in my office, to explain what we do.

    At the beginning of the year, each individual has to write down a set of goals they want to accomplish for that year that meet the mission of the office. Then at the end of the year, they are rated as how well they performed to those goals. And they are given a score. And in the pay-banding, they have a process by which they check the score against what the pay ought to be. And if their performance is high, they will get a substantial pay raise. If their performance is low, they could get zero. It is not an automatic step increase anymore.

    And so, they can actually put their own goals, they are scored against those goals. And the people who are performing love it because they can see what happens when they do perform. And there is great incentive for other people to perform, as well. And there is, of course, great disincentive not to perform.

    It works well. The people who are the high performers, who are the ones you really want to keep, love it. And some of the lower performers do not. And that is okay, because that is the way the business is run these days.

    And this system is what we are trying to get involved here in this new personnel system; that pay-for-performance is very important and you can reward people for what they do.

    Mr. SKELTON. Will the gentleman yield?
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    Mr. HEFLEY. There is a good case for the problem and I think you have some good suggestions here. And I think you have many suggestions here that will eventually be implemented. But don't be surprised if it takes longer than you would like it to.

    Secretary ALDRIDGE. I understand that, sir.

    And, of course, that is the value of these pilots. You allow this to go out and demonstrate that this thing works or doesn't. And so happens it does work and we have years of experience behind us now. It is not something that is thrown on the table. You gave us the ability to do this and I believe it is working.

    Mr. MCHUGH. Would the gentlemen yield, because Secretary Chu made an important point that causes some question in my mind?

    Mr. Secretary, after you appeared before Mrs. Davis' Subcommittee on Government Reform the other day, there was an extensive article in The Washington Post, where it reported that General Accounting Office (GAO) Comptroller David Walker criticized the process for not consulting with unions. And, in fact, according to the news report, he said very specifically it should have consulted the unions from the start. And also in that article, Mr. Harnage, President of AFGE, was quoted directly saying that they were shut out.

    And I thought I heard you say that you did consult with them on the development of this bill, so I am just curious who is right.

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    Dr. CHU. I think what I was asked earlier was is there a dialogue established? The answer is yes. We have been dialoging with our people over this; not just the union leadership, I should emphasize.

    In the sense the question was originally asked, the issue was were the unions part of the design team? No, they were not.

    I should emphasize that the demonstration projects that are the basis of our conclusions here, in eight of the nine demonstrations currently in force, they include unionized employees. And so in that demonstration process, you do have consultation with unions.

    The distinction between who was on the design team and what kind of dialogue have we begun, we began a dialogue, as I have indicated, with some of our union leadership before even we had specific language to table. But we discussed the concepts with them. I don't want to pretend they agreed with all of those concepts.

    Mr. SKELTON. Would you contend they agreed with any?

    Dr. CHU. I think I would let them speak to that rather than have you take my word for it.

    Mr. SKELTON. Thank you. It is an important point and I just wanted to make sure we had a clear understanding of your view versus the newspaper. Thank you.

    The CHAIRMAN. Okay.
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    Mr. Spratt.

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

    I was just reading through this as you testified, so you will excuse me for not hearing everything you just said. But I keep coming across this phrase in the draft ''at the Secretary's sole, exclusive and unreviewable discretion.'' That puts him outside the Administrative Procedure Act, where the standard of review is very high. It has to be capricious and non-substantive, but here the Secretary is isolated and insulated from any kind of challenge: ''sole, exclusive and unreviewable discretion.'' Those are strange words for the government of the United States of America.

    And it goes on to say, with respect to one particular aspect, which is an enormous aspect of your function, which is the acquisition corps, ''The Secretary, at his sole, exclusive and reviewable discretion, may establish an acquisition corps and to establish criteria for selection of military personnel and civilian employees for that corps.''

    ''Sole, unreviewable, absolute discretion'': Does that mean he can hire anybody of any educational qualification, he can engage in nepotism, he can decide that certain people in this country are not fit to serve in the acquisition corps because of their national origin, their creed or their political exposure? ''Sole, exclusive and unreviewable discretion.''

    What if he makes a decision like that? What is the remedy in case the Secretary abuses that enormous authority?
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    Dr. CHU. Sir, I am not a lawyer, so I defer to my legal colleagues on this point.

    Mr. SPRATT. I am. And I am telling you this is a hell of a grant of authority.

    The CHAIRMAN. I think you just had a legal opinion there, Mr. Chu. [Laughter.]

    Dr. CHU. The question is, is it done yet?

    I believe the section which you are reading speaks to administrative procedures, as you suggested, sir, and that is intended to align them with how regulations inside the Department are currently handled.

    Let me, if I may, in terms of the issues that you raised—because I know this is an issue everyone wants to pay careful attention to, and properly solve—take you to what is page five in the original transmission, which is Proposed Section 9902, Subsection B, System Requirements.

    ''Any system established under Subsection A shall—'' and then it lists several things. And most important in terms of the issues you are raising is number three: ''Not—'' let me underscore ''—not waive, modify or otherwise affect, A, the public employment principles of merit and fitness set forth in Section 2301 of the Civil Service Title 5, including the principles of hiring based on merit, fair treatment without regard to political affiliation or other non-merit considerations, equal pay for equal work, and protection of employees against reprisal for whistle-blowing; B, any provision of Section 2302 relating to prohibited personnel practices.'' And it goes on from there.
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    So, I think there are excellent safeguards.

    Mr. SPRATT. Let me just stop you there, because that is fine; it is in there. But you are saying if the Secretary exceeds the authority, the limits that are laid down in this 9902 AB, then it is not reviewable; his discretion is sole and exclusive. Why not say that these things do, indeed, affect the flexibility of the Secretary?

    Dr. CHU. Sir, as not a lawyer, I merely must refer your question to the general counsel's view. There is, I believe, a similar language in the homeland security statute.

    Mr. SPRATT. Mr. Chairman, this is why we need to have lots more time to review this matter. I mean, you know, I have enormous respect for Dr. Chu. I don't know of anybody in the Defense Department that has made a greater contribution in his career than Dr. Chu has, but he can't give me an answer to this.

    When do we get the answers? And how do we act upon them in the markup that is coming upon us? We need to be very careful about what we are doing right here.

    The CHAIRMAN. Well, to Dr. Chu and to Mr. Spratt, I think Mr. Spratt has posited a good legal question here and that is as to whether or not the provision with respect to unreviewable authority by the Secretary is subject to the requirements of merit-based selection, which you cited. And if it is subject to those requirements, how are those requirements manifested if there is a departure from a merit-based selection?
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    So, I would simply ask Dr. Chu to have your counsel respond to the committee on that. I think it is a fair question by Mr. Spratt.

    Dr. CHU. I would be delighted to.

    The CHAIRMAN. So, if you have anything else on that issue though, I think you are going to have to ask your lawyers to respond to it. I think it is a very fair question.

    Dr. CHU. I would just say similar language appears, I believe, in parts of the homeland security statute. But let me get the lawyers to answer your question, sir.

    The CHAIRMAN. Okay, because, if it is the same language in homeland security, we are interested in the answer on that one, too. And that one is already in place.

    Mr. SPRATT. Could I ask one question?

    The CHAIRMAN. Go right ahead, Mr. Spratt.

    Mr. SPRATT. I haven't gotten to this part in leafing through the material here in front of me, but I understand that your acquisition request, among other things, calls for the repeal of the SAR, the Selected Acquisition Report.
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    Secretary ALDRIDGE. Yes, sir. What we are proposing to do is that there is a whole series of very onerous reporting requirements that take an enormous amount of time to prepare. And it is not an attempt to try to deny the Congress information, but we would like to work out a better approach to reporting than what we have in the current SARs and unit reporting system. It just takes an enormous amount of time and people to prepare those things, and there has to be a better way to meet both your needs and can be done more efficiently within the Department.

    Mr. SPRATT. But you leave a vacuum; nothing is proposed as an alternative to it. Why don't we keep the SAR until we come up with a better alternative? I am game. I have been trying to get the SAR revised and improved for the 20 years I have been in Congress, but we have never been able to get any significant changes.

    Secretary ALDRIDGE. Well, we are delighted to work with the Congress to figure out what an alternative would be.

    Mr. SPRATT. Let me tell you, that was a product of the Laird-Packard administration. And it was a product, in particular, for a Republican member by the name of Richard Schweiker who accosted Mr. Laird one day when he was testifying before the Senate Armed Services Committee and asked him how he could preside over a system where there was so little accountability. And in particular, we were having enormous over-runs then, in the late 1960s, early 1970s, due to the Vietnam War, particularly with our weapons systems.

    And out of that grew the SAR. It came from a Republican administration. David Packard felt that he had to have some kind of variance report system. And initially it was used internally, and now I understand you have a better system internally, but you still send that to the SAR.
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    But all it says is, you know, ''This is what we think we can build it for.'' You represent to us that before we pledge billions of bucks that this is the likely program unit cost of the system; will perform in these manners. It is simply establishing three different baselines and then determining whether or not the performance is tracking those baselines. It is the very essence of accountability.

    With the expenditure of $125 billion to $130 billion a year, don't you think we need some kind of system like that, that systematically and methodically tracks cost, performance and schedule?

    Secretary ALDRIDGE. Yes, sir. We had one of those inside that works very well. It is a reporting system. And maybe what we could do is share that with you rather than having to put a different set of reports——

    Mr. SPRATT. Well, see, if we are going to do that we could write that into the legislation, but we don't have time in three days to make that swap-off.

    Secretary ALDRIDGE. Well, that is why we need to work with you to figure out what it is that you need to do your job, as well as for us to do it more efficiently. And we are prepared to work with you to come up with that answer. But the SARs are not it.

    The CHAIRMAN. Maybe so, Mr. Aldridge, if you could externalize what you are using internally right now and utilize that as a reporting mechanism without reinventing the wheel, that would seem to be something that could be done conveniently, painlessly and yet give us the picture before we act.
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    Secretary ALDRIDGE. Yes, sir. We will go back and look at that.

    The CHAIRMAN. Okay.

    Mr. Saxton.

    Mr. SAXTON. Thank you, Mr. Chairman.

    Mr. Chairman, I would just like to make two points. The first: In the overview that I believe was prepared by our staff, it talks about the remaining five provisions which are related to the way we handle environmental issues and training and so on. And it has to do with the Marine Mammal Protection Act. It has to do with the other environmental issues that we have to face from time to time.

    And in talking with you both before this session, this is probably an issue that we need to raise with perhaps Secretary DuBois or in some other forum. And so, we will look forward to doing that.

    And like you, Mr. Chairman, I want to make sure that our process and policies provide opportunities for meaningful training, and the example that you pointed out on the West Coast Marine base is certainly something that we have to be aware of and deal with. And I look forward to working through these issues with Secretary DuBois and you, Mr. Chairman.

    Let me raise one other point. It is, kind of, a follow-up to a Mr. Spratt's point, I think, on Section 201 of the proposal that you sent over, Title 2, Section 201, is entitled ''Repeal Requirements for Major Defense Acquisition Programs.'' And as I read through that, of course, it is hard to understand exactly what that means, because basically we strike and insert words and we don't have the context from which they are being stricken or inserted. But it causes me some heartburn to think about repealing requirements for major acquisition programs, having lived through the process of watching the development of the interim fighting vehicle known as the Stryker and the Stryker family of vehicles.
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    Secretary Aldridge, we were informed some time ago that the House position in conference was a bad position and that we should recede to the Senate position and fund this program because we had learned a lesson from the war in 1990 and 1991, when Saddam came down and positioned himself along the Kuwaiti border, that we couldn't get there in time to stop him. And so we needed a lighter, more mobile system so that we could airlift it into the theater and with C–130s carry the necessary systems and equipment into the theater and be there in 96 hours.

    Now, we receded to the Senate's position on that representation by the Secretary of the Army.

    More recently, we have discovered that, as a matter of fact, as the Stryker system has evolved, it can't do that. A Stryker vehicle, ready to fight, a troop carrier—this is not the mobile gun system I speak of now, this is the troop carrier—weighs very close to 40,000 pounds. The maximum payload a C–130 can carry is 40,000 pounds. The problem is, in order to carry 40,000 pounds, it has to offload gas from its tanks in its wings, which gives it very short legs.

    As a matter of fact, one pilot who was flying a C–130 with a Stryker onboard told me, just before they were ready to take off—I asked him how far he could fly. He said, ''On any given day, if we can take off with this load, we may be able to fly to a destination 60 or 100 miles away.'' I said, ''You have to be kidding me.'' He said, ''No, sir.''

    So, these kinds of issues are really quite important to us.

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    The chairman and I have spent some time studying this issue and we came across a report on the comparison between an M–113 and the Stryker in performance. Now, if you took the word Stryker and M–113, if we took the two titles out and called it ''System A'' and ''System B,'' and you read though it and said, ''Which is the new system?'' a reasonable person could conclude that the M–113 was the new system.

    And then, as we looked further, we came across some information just this week produced by the United States Army Safety Commission on the safety features involving the Stryker. And let me just point out three things.

    And this slide talks about blast overpressure from the Stryker. It says, ''Halo effect created by perforated muzzle brake designed to lessen recoil burn overpressure hazards to adjacent personnel and crew members when the hatch is open.'' That wouldn't seem to me to be a really great engineering design.

    It says, ''Vehicle weight exceeds the wheel design for the mobile gun system. Wheel design inadequate. Provides insufficient tolerances for current vehicle weights with four axles. Wheel design grossly inadequate for two-axle operation, considering only two axles are equipped with one flat inner cores.''

    There is a third issue here, which has to do with danger to the crew when the gun is fired because of the muzzle velocity and the recoil and the relatively light weight of the vehicle for purposes of handling the recoil from the gun.

    So, when we read here that you would like us to repeal requirements for major defense acquisition programs, I am not sure whether we want to repeal them or whether we want to refashion them in some way so that we can get a clearer picture of what the progress on major acquisition programs are.
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    And if you would like to respond I would——

    Secretary ALDRIDGE. Delighted. There is no attempt by that Section 201 to deny the Congress information on acquisition programs. It was just to see if we could find a better way to respond to your needs with information on the unit cost and the SAR reporting that take an enormous amount of time in the Department, which we believe is wasted time to report on outdated reports. There has to be a better way for us to give you the information that is more efficient for us and satisfies your needs. And that is what we were trying to do.

    Mr. SAXTON. I agree, there needs to be a better way, because issues have been represented to us on this system that I am just talking about here now.

    Secretary ALDRIDGE. I have not seen that report. I am going to find it, however.

    I know that several of the configurations of the Stryker have been cleared for C–130. And I knew the mobile gun system had a weight problem and needs to go on a diet. And I know the Army was working on it; has not solved it yet. But the other configurations have been cleared for C–130 flight, although they are equally capable of flying on C–17s, which is probably the way they would actually fly under those conditions of high-hot temperatures.

    Mr. SAXTON. Well, that is fine. All the Army had to do was say that to begin with. We would have evaluated it in terms of that capability and in terms of that method of deployment. That is fine. We will buy more C–17s; Boeing will be real happy. [Laughter.]
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    Secretary ALDRIDGE. I wasn't here in the year 2000, sir. I will tell you, I wouldn't have told you that now. [Laughter.]

    Mr. SAXTON. And we understand that.

    But to come and hand us a document in a way that this one was given to us, which says that, ''We are going to repeal requirements for major acquisition systems,'' is just not fair. It is not fair to us and it is not fair to the process.

    Secretary ALDRIDGE. That was not the intent; that was certainly the case.

    The CHAIRMAN. I thank the gentleman.

    The gentleman from South Texas, who, in a few hours, is going to be honored by 35 different organizations for his heroic service to South Texas, Mr. Ortiz.

    Mr. ORTIZ. You are very kind, Mr. Chairman.

    Mr. Chairman, as we listen to the discussion this morning about the sweeping changes, there is no question that we might need more time to really digest and dissect the items that were given to us this morning.

    But let me yield to my good friend who sits on the Government Reform Subcommittee on Civil Service. I think that they received a little information before we did and maybe can enlighten us little bit.
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    To my good friend, Mr. Cooper, from Tennessee.

    Mr. COOPER. I thank my good friend from Texas for his yielding.

    These are extremely important questions and I am, along with the gentlelady from Virginia, I think, about the only members of this committee who are also able to attend the Civil Service Subcommittee hearing. So we do have a little bit of advance knowledge.

    The most important point to make is—and I would like to stress this with all my colleagues—regarding civilian personnel at the Pentagon, we are not being asked to approve a new system of civilian personnel. What we are being asked to do is to allow the Secretary of Defense to think up a new system so that when we are asked by the 600,000 or 700,000 civilian employees in the Defense Department what new system we approved in this legislation, we will not be able to answer that question.

    If you read page four of the legislation, it is as broad a grant of authority to the Secretary as I think any of us have ever seen or could imagine.

    I don't know exactly what the total payroll is for civilian personnel, but it has got to be over $100 billion. And this is tantamount to a $100 billion-plus blank check to the Secretary of Defense so he can think up a new system.

    And I think many of us trust this Secretary of Defense; we are glad to give him broad authority. But think of future secretaries of defense, because this could as easily apply to a future Les Aspin as to a future Donald Rumsfeld.
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    So we are being asked to do an extraordinary thing here. There have been lots of misleading comments so far. We are not being asked to approve China Lake reforms; that is not in this legislation. We are not even being asked to approve pay-for-performance. The intention is there, but the specifics are not there. We are not even being asked to approve the personnel reforms that were included in the homeland security bill; this legislation goes way beyond that.

    So, it is about a $100 billion-plus blank check and guess what? As my colleague from South Carolina pointed out, it is written in invisible ink. Because there is so much sole, exclusive and unreviewable discretion here I worry that we are abrogating our constitutional responsibilities. And I know the Secretary swore, as we swore, to uphold the Constitution and the laws of the land.

    Another side-note is these personnel regulations are to be internal regulations in DOD, which also exempts them from a large section of the Administrative Procedures Act.

    So we are not being asked here to approve a new personnel plan. We are being asked to allow the Secretary to think up a new plan.

    This leads to a fundamental question. I feel we need more time. But guess what? If we are only given this, sort of, black box to talk about, I am not sure more time will help us. Unless the Pentagon comes forward with details, how are we ever going to be able to judge the quality or the lack thereof of a personnel plan? I think the Pentagon needs to be more forthcoming.
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    Dr. Chu didn't even submit written testimony until after the hearing began today. So members of this committee have not had a chance to even see his written words.

    I would like to ask specifically of Dr. Chu if he is demanding that this committee include these personnel provisions in our overall markup from this committee, even though we are not the committee of primary jurisdiction. And it is my understanding that on the Senate side the Senate Armed Services Committee is not going to include the civilian personnel measures in their mark.

    Are you insisting that we include these provisions in the Armed Services Committee mark?

    Dr. CHU. I think what is in your mark, sir, if I may, with due respect is up to you gentlemen and ladies.

    Could I come back to your underlying concern, which is what are the details? I think it is a very fair question.

    As I indicated, we published the Federal Register on April 2nd; 22 pages, which I hope, Mr. Chairman, you will accept for the record as part of this hearing, on how we might proceed. This is the first of the best practices implementation actions taken for the work force as whole for which we have authority.

    To the structural language in the proposed legislation, this does pattern itself after the homeland security bill, which says that the Secretary of Homeland Security shall devise a personnel system, et cetera. It does not, in the statute, lock in that system. It does outline the broad parameters much as this one does.
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    I might say this is also an approach that Congress has adopted in other areas. In fact, at least as I understand it, the grant of authority to the Transportation Security Agency is actually broader than what we are seeking here.

    It is very consistent with the pattern of recent congressional decisions. I think the big change here, quite candidly, sir, is we have with our April 2nd Federal Register notice, to which I commend everyone's attention, laid out in considerable detail how would we plan to proceed, down to how would the rating system work? How would the pay-bands be structured? What would be the salary ranges in these pay-bands? What are the career fields involved? What are the procedures for assigning employees to pay-banding, et cetera, et cetera?

    So, we have tried very hard to provide in considerable detail how this system would work. We are not proposing to put every detail in the statute; that is a different statement. And I think the wisdom of this committee over the years has not been to legislate each detail in the statute.

    Mr. COOPER. So you are not insisting that we include this in the Armed Services mark. You did provide some idea of your thoughts in the Federal Register announcements, which I have had the privilege of reading, and that is just a sample. You are nowhere in the statutory language that we are being asked to pass required to follow this. This is just an example; it is discussion material.

    So I would respectfully say we do not want every detail spelled out in that statute, but we do deserve some details; more than a one-sentence grant of authority to the Secretary of Defense to do whatever he wants. That is an amazingly broad grant, especially since this is a committee that usually fights over the details of every single weapon system. We go at it in a bipartisan, patriotic fashion. But this is a $150 billion blank check in invisible ink regarding our civilian personnel, and we are given almost no information and expected to pass it in a matter of days. That is extraordinary.
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    Dr. CHU. I would say, sir, respectfully, that I do believe that the Federal Register notice provides the kind of detail you are looking for. That is the blueprint we intend to use. We have testified to that.

    As you point out, we would probably not want to put every——

    The CHAIRMAN. Dr. Chu, where did you say the specifications that you are referring to are manifested?

    Dr. CHU. They are in the notice we published in the Federal Register April 2nd, 2003, pages 16–120 through pages 16–142, which I would submit if I might, Mr. Chairman, for the record for this hearing.

    The CHAIRMAN. Without objection, those will be taken into the record. But those were published when?

    Dr. CHU. April 2nd.

    The CHAIRMAN. Okay.

    Go ahead, Mr. Cooper.

    Mr. COOPER. There is no statutory language that requires you to follow these recommendations that were published in the Federal Register.
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    You are asking us to buy your good intentions, which many of us believe wholeheartedly, and you are asking us to buy your values, but there are no specifics here. We are asked to turn over broad authority—far broader than this committee has ever turned over before—to make personnel changes unthought of in the last 50 years. And so much of it is sole, exclusive and unreviewable by your own language.

    And this might be fine for this Secretary, but think of future secretaries. You would not have endorsed legislation like this from some of this Secretary's predecessors. But, this is permanent, statutory law, and so much of it is unreviewable, I am not sure this committee will ever know what future secretaries are doing.

    And you mentioned in the earlier hearing you intend to implement a good bit of this, if you can, this fall. I would respectfully suggest that you have more information than you are disclosing to this committee today.

    And lest anyone think this is all just my opinion, our colleague from New York, Mr. McHugh, quoted the GAO. Look at some other GAO testimony this week. And they say that, ''The DOD plan does not provide an adequate justification for the significance of the proposed changes.''

    The GAO goes on to say that, ''Moving too quickly or prematurely at DOD can significantly raise the risk of doing it wrong.''

    The GAO also says that, as far as they know, ''A document containing a fully-developed justification for the proposed changes is not available, at least to outside scrutiny.''
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    So these are deeply troublesome concerns that I think everyone on this committee has, especially since we don't even have primary jurisdiction. And we are being asked to include it in our mark.

    This is not a fair way to change the work rules for 700,000 Americans, especially those who have performed so brilliantly in the Iraq war and in the Afghan war and in supporting all the Pentagon activities.

    I am sure there are problems. And we are all for pay-for-performance. But let's see a pay-for-performance plan; one that you are obligated to follow. This just gives the Secretary discretion to do whatever he wants, including, by the way, repealing the nepotism prohibition. My colleague from South Carolina mentioned that.

    If you look at Sections 31 and Sections 33, you will find some shocking things that the Secretary has complete discretion to get rid of. That is not a new personnel plan, that is a disaster waiting to happen, either in this Administration or in a future administration.

    And when so much of it is unreviewable, we may never be able to reclaim jurisdiction again over these vitally important policies for hundreds of thousands of key defense personnel.

    So I would urge you and your lawyers to be more cautious in your approach, to be more forthcoming and to give this committee and the Civil Service Committee, which my colleague from Virginia chairs, a fair chance to deal with these vitally important issues. Because unless several of us, including our ranking member, Mr. Skelton, had insisted, we wouldn't even have been having this hearing today. We would have been asked to pass this sight unseen, no hearing, no testimony, no witnesses. And that is not fair.
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    So I would urge you, as I urged you in the Civil Service Committee, to take a new and fresher and more open approach to this so we have a chance to know what we are voting on. Because we will be asked by probably each one of those 700,000 people, ''What did you pass?'' And we will point to 9902A and we will say, ''We asked Secretary Rumsfeld to do it for us.'' And we may never know what happened.

    That is not a responsible answer. That is not a constitutional answer.

    So these are troubling questions and there are many other sections of the bill. This is just civilian personnel, but this is in the first title of your bill. So please help us do a better job, help us do our constitutional responsibilities.

    Dr. CHU. We will provide all the help we can, sir.

    I would like to point out this is exactly the structure Congress approved in terms of how to proceed, how to design a modern personnel system in the homeland security bill.

    Mr. COOPER. Will you be willing to settle for the homeland security language? Can we agree on that today?

    The CHAIRMAN. At this point that may be a tempting offer here. [Laughter.]

    Dr. CHU. And I am eager to see if you would be willing to deliver it, sir. [Laughter.]
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    My point is that there are some changes, particularly, and most importantly, to seek recognition; we want national bargaining with our unions. There are some changes relative to the homeland security statute, but the basic construct, including this approach designing the personnel system, is exactly what you have in the homeland security statute.

    Let me, if I may, respond to a specific point you made and then the general question you are raising. You asked whether nepotism is feasible. No, it is a prohibited personnel practice. As I indicated, the starting material of the proposed legislation says you can't violate primitive personnel practice limitations in anything you might do, whatever grant of authority might otherwise be given.

    To the larger question you are raising, I think we will differ as to what the best way is to improve the United States federal civil service. But I think what a wide range of opinions, whether that is Paul Volcker's most recent commission, whether it is the studies by the Brookings Institution, whether it is material that the Congress itself has assembled via this hearing, agrees we do need to modernize the federal personnel system.

    We are not going to succeed if we send our representatives, as I do, to college job fairs and we tell young men and young women, ''I will let you know in three months whether you have a job.'' The next table, where General Electric (GE) sits, where Microsoft sits, they are telling young men, the quality college graduate, ''You have a job. I will check your references. As long as those pan out, it's yours.'' We are not going to succeed if it takes three months to change someone's job qualification. It is not going to succeed if we can't deploy the helicopter repair team from Corpus Christi to the Gulf because we can't get anyone to agree, under present rules, that it is a good idea to go.
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    Mr. COOPER. Dr. Chu, you are not offering us a pay-for-performance plan. You are offering us the opportunity to give Secretary Rumsfeld complete discretion to think up one, which may or may not resemble China Lake, which may or may not resemble the federal regulations you have submitted.

    We should be voting on a specific measure. And let's get a real pay-for-performance measure and I bet you would see broad acceptance of that. But you are not asking us to vote on that today.

    Dr. CHU. I would beg to differ, sir. If I could, again, draw your attention to the April 2nd Federal Register notice, we have set out in that notice both what the pay-bands would look like and what the performance evaluation system would be. So we have tried to put our cards on the table, to be clear about what the implementation of such legislation might look like for our people.

    Mr. COOPER. The Secretary is not in any way bound by your April 2nd submission. He has complete authority to do whatever he wants to under what you are asking us to pass.

    So if you would like to limit his authority to April 2nd, let's talk about that. Or if you want to limit him to homeland security measures, which were thoroughly debated in the previous Congress, let's talk about that.

    But what you are asking us to do is to allow him to do whatever he wants. And that is a $150 billion blank check written in invisible ink. And that is not fair to this committee. That is not fair to this nation. And it is not fair to these employees.
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    Dr. CHU. It is very similar, sir, to the demonstration project authority you have already given us. We are patterned after the past act of Congress. If the Congress prefers a different formulation, then that is, obviously, a subject for discussion. But we are patterning ourselves on what you enacted in homeland security, what you have enacted in the demonstration projects, very similar grants of authority.

    Mr. COOPER. Well, why do you then go way beyond homeland security? If homeland security is sufficient, which we may agree on, why not limit there?

    A demonstration program is quite different than having something that, according to the first sentence of your statute is applicable possibly to every civilian employee of DOD. This is not a demonstration program, this is sweeping reform unlike this committee has seen in a half a century. And you are asking us to accept essentially a pig in a poke, to accept this blind on a few days' notice. And we will not be able to answer the simplest questions about what we approved or disapproved because no one here knows.

    The CHAIRMAN. Dr. Chu, why don't you respond to that last statement, if you want to? And then we will move on to Ms. Davis for her question.

    Dr. CHU. Sure.

    The CHAIRMAN. And I know Mr. Cooper has taken some time, but I think he has asked some appropriate questions here. It is clear in this language that this is a grant of discretion and authority, albeit at this point to a guy who just took 250,000 Americans and their lives and handled his authority very effectively.
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    But the point that is made by Mr. Cooper is that this is an enduring grant of authority that will allow secretaries in the future to continue to shape and change the civil service program where they think it is appropriate. And that, of course, is subject to our ability to come back, which we are going to be doing, assuming that we pass a good part of this package. We will be putting another bill together in nine months. And we will be back to change and review and mandate where we think it is appropriate.

    But you might comment on this point that Mr. Cooper has made, which is that this is a delegation of authority to the Secretary to shape this program, understanding that Congress, where it wants to, could involve itself down to very minute detail where we think it is appropriate.

    What is your response to the general truth that this is a fairly broad grant of authority to shape this program in an enduring way which will pass to succeeding administrations and succeeding secretaries of defense? Why do you think that is necessary?

    Dr. CHU. It is, indeed, a broad granting of authority, sir. We think it is appropriate given the enormity of the challenges in front of us. It is, as you suggest, subject, at all times, to the review of the Congress. The Congress has the right to revoke that authority, to reshape that authority, to give us guidance, as you do in each year's authorization reports, which we read with considerable care as to how you intended that authority to be used. And it is for exactly that reason that we wanted to put the details of the Federal Register on the table to demonstrate our intent in this regard.

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    What we see ahead of us is a fast-changing world with many threats to the United States and security of its citizens. We want to be sure that the Department of Defense, with its total force, active, reserve component, civilians, is ready and able to respond to those threats. And that is the purpose of the granting of authority. So the Department is ready and can, indeed, provide defenses that you probably expect.

    The CHAIRMAN. Ms. Davis.

    Mrs. DAVIS OF VIRGINIA. Thank you, Mr. Chairman.

    As my colleague, Mr. Cooper said, we had a rather lengthy hearing on Tuesday on this issue, and during that hearing you iterated several times—and you have today, as well—you discussed the demonstration projects and talked about how we had given you authority in the past, over, I think you said, 20 years, for about 30,000 employees, civil servants.

    But if I am correct on it, you don't have this broad authority that you have asked for in this legislation. You have some of it, but not as broad of an authority.

    The second thing that you said several times, we have 9,000 folks over helping the troops in Iraq. Only 1,500 were civil servants; the other 7,500 you had to contract out. After the hearing on Tuesday, I asked the question. I still don't have an answer back yet as to why those other 7,500 people could not have been civil servants. And in some of the questions, what I finally asked was, were those civil servants even asked if they wanted to go? And basically, the answer was no, so I am still waiting on an answer of that. Why did you have to contract out 7,500 if the 7,500 were not asked if they wanted to go?
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    The other thing, in the hearing on Tuesday, and it goes back to what Mr. Spratt said and Mr. Cooper said, you said you were not trying to waive nepotism and the other aspects of the law, but your intent was to enable you to create a pay-for-performance system. And as you have testified Tuesday and as we have heard today, the flexibilities you are seeking in this what you are asking us to pass are beyond those granted to DHS. And I can see how you think you might need more flexibilities and pay statutes, but I don't see how these additional flexibilities that you are asking for are essential to creating a pay-for-performance system.

    My question is, if DHS has the ability under its authority to create a pay-for-performance system, do you think they do? And if they do, why do you need more additional flexibilities to create such a system? And what specific additional flexibilities do you really need to create the system? And if you need them and DHS doesn't have them, then does DHS need to have them? That is a lot to ask you, but I can't see you and it is hard with the microphone.

    Dr. CHU. I will try to sit up straighter. I apologize. Let me try to answer several questions you posed.

    First, on the question of why not more civil servants, as a practical matter we did contemplate sending more. The problem we encountered is that under the current rules, if not all members of a team, let's say a repair team, would be willing to volunteer to go, we have no way to send the team as a whole. We can't send part of the team.

    Mrs. DAVIS OF VIRGINIA. Were they asked? Any of them?

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    Dr. CHU. I will need to check to be sure that I am accurate in responding to your statement, but that is my understanding of the source, the difficulty that you can't send the whole team, which you can with a contractor. The whole team goes. In our case, each person could decide whether he or she wanted to opt in or opt out. And, of course, you can't have someone who only fixed part of the helicopter. You have to fix the whole helicopter. That is a practical matter.

    To this question of differences with Homeland Security, we have learned some lessons as Homeland Security moves forward to try to implement its statute. And it is my understanding of the case they can have a pay-banding system if that is their choice. They do have some constraints on it because the way the staffing flexibilities provision of the law were written, and it is that kind of technical change that we would like to make here.

    The big, substantive changes in this bill relative to homeland security really fall into three pots.

    First of all, we would like to have recognized in the statute that we want national bargaining with our units.

    Second, we have a series of provisions which we discussed with you in your hearing on the employment of older Americans which are not present in the homeland security bill. That is an important flexibility, I believe. As the current generation of the so-called baby-boom employees retires, we would like to bring back some to serve as mentors and guides and sources of knowledge as that transition moves forward.

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    And third, we would like some ability to get the best graduates of America's universities into this Department through on-the-spot hiring practices. Our proposal would be, let us have such on-the-spot authority with the top ten percent, those with grade averages above a certain level and so on and so forth. That is not, as I understand it, feasible on the homeland security itself.

    These are designed to take us to the next level, so to speak, as the business community would like to say.

    Mrs. DAVIS OF VIRGINIA. Mr. Chairman, if I could go a little further, I think it is the middle one that you talked about, being bringing the annuitants back and also the older folks back. There are two different sections, as I read it, in what you have.

    The one concern I have in bringing annuitants back, yet I see the need for it because we need the expertise. But the concern is there is no limit. As I understand it, you can have the person retire today at 5 p.m., close up desk, leave everything they have, retire at their full whatever, their full retirement, come back tomorrow at from 50 to 80 percent of their salary while they are still collecting their annuity.

    Now I think I voiced this to you, several concerns. One, I don't know what the cost would end up being to the federal government for doing that. Two, the competition that it could lead to from bringing those folks out of other agencies within the government would be an unfair advantage. And I am sure we will have other agencies lining up the day after we pass this, if we pass it, wanting to do the same thing.

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    But the one that concerns me a great deal is bringing the older folks back in and it not affecting their Social Security. We already have a problem with Social Security. We are looking at bankrupting Social Security down the road anyways. And what will this do to us? We don't have any limits, we are not setting anything in this bill, you know. What is going to be the cost of this bill? And I don't think you can tell me.

    So I guess my question to you is, is there some way that we can tighten it up and just give you a certain number that we would allow or either make you go back to OPM and say OPM has to let you know within ten days? Because your concern is OPM takes so long, right? So if they would have to give you an answer within a certain number of days—and I know it is restraining you a little bit, but if we don't have some restraints, I mean, I am afraid we are going to bust the budget here. And we already have a problem with the budget.

    But those are all concerns of mine and I would really like to sit down with whomever. And I have heard that you have been talking to all of us about these reforms. Well, I think I have been in on at least one where I heard concepts. Well, I always worry that the devil is in the detail, and these details are worrying me to death.

    We want to help you. We want to give you flexibilities. And I think most of the folks on this committee would like to give you flexibilities. And I know the people in Government Reform would like to give you flexibilities, but we are very concerned about the details. We don't want to hamstring you, but we also want to make sure that we are responsible to the taxpayers because that is who we are elected to represent.

    And Mr. Chairman, I would certainly like to work with you and the full Chairman of Government Reform, Mr. Davis, and with Dr. Chu and with whomever else, that would be Department of Defense, so we can work out a solution. My concern is the same as I had with my colleagues on the other side of the aisle, is that maybe it shouldn't be pushed so quickly in our authorization bill, because I don't want to do anything to harm our military because you know I support them completely. And I don't really want to rush into this, but I do want to try and fix the problem.
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    Thank you, Mr. Chairman.

    The CHAIRMAN. I thank the gentlelady and I know she did pose a question that I think is a meaningful question to all of us, and that is this license to rehire a retired worker. Tell us a little bit about that, Dr. Chu, and why is that important, and what flexibility do you need there?

    Dr. CHU. Yes, sir. Thank you for the opportunity.

    First of all, let me speak to Ms. Davis' concern about limits. If it were a Social Security annuitant, it would be a limit of two years, renewable so-called critical skill for two more years. But that is it. So it is a limit in terms of time.

    As a practical matter on the Social Security annuity front, the problem, I think, the country faces is that there is a severe discouragement to these people to working. And in fact, my forecast would be you would actually see additional tax revenues because they would be generating more income subject to taxation.

    To the broader question you raised, Mr. Chairman, in response to Ms. Davis' point, certainly we would be delighted to work with you on details; certainly happy to discuss limits.

    First, I should observe, this committee was the one that did change that underlying principle on receipt of annuity of also a government employee for military personnel about three years ago. And we are merely seeking to put the civilian personnel in the Department of Defense in the same position as you have already put the military personnel in this Department.
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    To the need, though, which is really the issue here, we face a situation, as you know well and you being among the leaders emphasizing this subject, ma'am, we face the need to replace half our work force over the next 10 to 15 years. In five years, half that work force will be eligible to retire. Not everybody is going to retire the first day, but over a 10-to 15-year period they are all going to leave.

    The CHAIRMAN. What portion is that, again?

    Dr. CHU. Half our work force is eligible to retire in five years. Not everyone is going to be able to retire on that day for a variety of reasons. But half are eligible.

    What that really means is in 10 to 15 years half is gone. And unfortunately, because of the hiring restrictions of the last decade, the Department did not hire the replacement generation. So now you are going to have a work force largely composed of junior personnel who do not have the experience, the depth of knowledge that these senior members do.

    What we want, and that is the reason for this particular solicitation of a grant of authority, is the ability to hire some of these people back after they have retired as mentors, perhaps part-time. Most importantly these people have in their heads the knowledge of what it really takes to carry out the kind of operation we have just conducted. And we need that knowledge transferred to the next generation.

    And without some ability to get these people back, who are otherwise going to go out and work for a private firm, so it is not as if they are, indeed, going to collect both their federal annuity and some other salary. The issue here is can we hire them.
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    Otherwise, what happens, to be quite candid about this, the contractor hires them. Which is back to your question, Mr. Chairman, why so many contractors? This is part of the reason. You can legally hire them as a contractor; quite ironic: We cannot legally hire them as an employee of the U.S. Government.

    The CHAIRMAN. Dr. Chu, on that point, because I think that is a really important point, at least talking with my federal workers over the many years, over the last 20 years or so, I would think that a lot of the senior guys—because nobody has got a better spirit for helping this country than our DOD federal workers—a lot of them, I think, would relish the mentor role, to come back and teach the new folks on the block a lot of these insights and in many cases, a lot of the stuff that they do is really an art.

    Dr. CHU. Absolutely.

    The CHAIRMAN. It is something that is developed by a combination of technology and expertise that is acquired over time. And the idea of being able to bring that guide, that steady hand, a man or woman, back to show the new folks how to get the job done, I would think would appeal to a lot of these folks.

    Is that something you have reviewed with federal workers and talked to them about? I don't think there would be opposition on that point.

    Dr. CHU. No, sir. In fact I think they would welcome it. I have had retirees expressing quite bitterly their resentment that they cannot come back and help when they have important technical knowledge. They would rather do it directly for us. They really don't want to do it through some third party. We drive them to the third party as the only employer in these situations.
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    Mrs. DAVIS OF VIRGINIA. Mr. Chairman, I think you might want to talk to the Senior Executives Association (SEA). I am not sure that they are as thrilled with it as you think.

    But my point I wanted to make was that when Dr. Chu said there was not the intent, it also goes to the same thing as the nepotism laws and the so forth. A lot of the bill is not the intent. And I think the words you used to me was this bill was going to require a lot of trust. And I think that is the part that made all of us uncomfortable. And it is not that we don't trust you or Secretary Rumsfeld. It is like my colleague from Tennessee said, it is this is enduring forever and ever, and you know, sometimes once you let this train leave the station it is not as easy to pull it back. And that is where our concern is.

    Thank you, Dr. Chu.

    Thank you, Mr. Chairman.

    The CHAIRMAN. Mr. Skelton and I have to leave in just a couple minutes. We are going to be back and Mr. Hefley will take over. And I think Mr. Taylor is next on this.

    Let me just say, Dr. Chu, this thing about it being unclear whether anything other than merit, you have the statements of merit-driven system and Mr. Spratt asked how that is translated into a constraining mechanism with respect to hiring. I am sure you folks wouldn't be adverse to this committee taking away any ambiguity.
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    So if you have exactly the same restrictions on nepotism and other practices that we have always maintained, you would have no quarrel with that, would you?

    Dr. CHU. No, sir. And we believe that the draft we sent to you, in fact, maintained exactly those principles.

    The CHAIRMAN. Well, rest assured that one thing we will do is ensure that any product leaving this committee will have it iron clad that that issue is done with. So I don't think we have to worry about that anymore.

    Dr. CHU. Thank you, sir.

    Mr. TAYLOR. Thank you, Mr. Chairman.

    If I may first take this opportunity to go on record to request of the chairman that this item, because of its significance and because of its flaws that have already been pointed out, be voted on as a separate measure from the defense authorization bill.

    Mr. Aldridge and Mr. Chu, thank you for being here. My colleagues have mentioned problems they have seen in personnel. I would like to point out and ask you some questions about acquisitions. Because I, quite frankly, as someone who represents shipbuilding country, am appalled by the waivers you seek from the Made in America provisions.

    I would like to point specifically to section 204 of your bill: ''The Secretary of Defense may waive the application of any domestic requirement or domestic content requirement with the exception of Small Business Act and articles listed below if he determines the security interest is served by a waiver of such requirement.''
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    And for you, from shipbuilding country in Virginia, I sure hope you pay attention. And for folks who represent aircraft manufacturers or parachute manufacturers, chem-bio suit manufacturers, I sure hope you are listening.

    ''The waiver authority includes, but is not limited to, circumstances in which it is necessary to promote standardization, interoperability of conventional defense equipment with allied and friendly governments.''

    So therefore if M–16s are made in your district, the Secretary can decide we need to get AK–47s made in Romania, because they are indeed friends.

    If by chance the Joint Strike Fighter was to have been made in your district, I would point out that the Eurofighter Typhoon is made by friends.

    ''It is necessary to encourage competition in the Department of Defense procurements.'' Well, I am sure the Chinese make a fine chem-bio suit. It wouldn't have been great to have been counting on the Chinese in this latest effort to send those chem-bio suits in a timely manner since they weren't exactly very helpful in the war in Iraq.

    ''Significant cost savings for purchases of DOD supplies can be achieved.'' Again, we know we need to buy some tankers. The Chinese make the cheapest tankers on Earth. Wouldn't it be swell if the next generation of Navy tankers was constructed in China?

    But, you know, it gets even better, and I am really looking forward to your comments on this, because—and for those of you weren't around—and I really greatly respect General Shinseki, let me go on record as this—and I don't mean a swipe at him—but some of you may remember one of the first things General Shinseki did, and I think, in retrospect, rightly so, was changing over to the beret to create more esprit de corps within the Army, and I think it has worked.
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    Unfortunately, that first batch of berets came from communist China, which gave a number of members of this body and of this committee a lot of heartburn. I think it was the threat of legislation from this committee for domestic source that got the general and others to turn around and buy them in America.

    Well, under this law change we couldn't do that, because if you look at section D—and I would hope the attorneys in this room would pay particular attention: ''Construction with respect to later enacted laws,'' now this is verbatim, ''this section may not be construed as being inapplicable to a domestic source requirement or domestic content requirement contained in a law enacted after the enacted of this section solely on the basis of the later enactment.''

    Which means, Ms. Davis and Captain Schrock, if they decide to build an aircraft carrier in communist China and this committee sees fit the next year to say, ''No, you can't do that,'' they have already said ahead of time, ''You can't do that.'' And, of course, you could spend a year or two trying to get that measure before the Supreme Court, in which time they have now progressed about halfway constructing that aircraft carrier.

    Guys, I got to give it to you. Boss Hogg couldn't have come up with this one. [Laughter.]

    This is so swell. Six years in the Mississippi legislature and I saw all kinds of schemes. This is the best ever.

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    Now I want to hear your comments. [Laughter.]

    Secretary ALDRIDGE. I am not sure how to comment to that.

    The intent is to maintain a healthy industrial base for this country. As I have testified before this committee many times, that has been one of my top five goals is a healthy industrial base. And everything we do is to try to make that industrial base in this country as strong as possible through a wide variety of techniques, including buying the products.

    When we go through the process of deciding on a weapons system it is clearly buy American. Domestic content is always at the top of our list.

    However, there are some rare occasions, as we have provided in the Buy America Act, that the Secretary, for public interest reasons, has the authority to do a waiver when it is in the best interests of the country to do so.

    It so happened in this one he does not. And so we thought it was appropriate that on those rare occasions when it is appropriate for us to buy something from one of our allies that may not have domestic content in it for interoperability reasons, the Secretary ought to have a little bit of authority.

    You trust him, you trust the Secretary of Defense to make certain decisions that affect the lives and the health of many of our troops. You have to give the Secretary of Defense some degree of flexibility when it is in the interest of the country to waive some of those restrictions, but only when it is——
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    Mr. TAYLOR. Mr. Aldridge, with all due respect, you are not asking for some degree, you are asking for a total waiver. And it is not just this Secretary of Defense.

    Secretary ALDRIDGE. He can waive for national security purposes. It is not the intent of the Department of Defense to circumvent the law. The law clearly says there has to be domestic content, that we will follow the law. There are those exceptions, and all we are asking for is a waiver for national security purposes when it is in the interest of the government to do so. It is not waiving the law, it is just giving the Secretary of Defense authority——

    Mr. TAYLOR. Mr. Aldridge, have you read this?

    Secretary ALDRIDGE. I have read it several times. I am not a lawyer, as Dr. Chu is.

    Mr. TAYLOR. Would you like me to read it to you again, sir? Would you like me to go down the list of all the exemptions? Because after reading all of these exemptions there is no reason why you have to buy anything in America. To promote standardization? Well, I guess the Chinese make green shirts just like the Army wears.

    Secretary ALDRIDGE. Mr. Taylor, you know that is not the intent of that language. It is not the intent.

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    Mr. TAYLOR. I don't know that is the intent, sir. And I don't want some Supreme Court justice deciding whether or not this committee intended what we intended to say. I think this committee ought to say what we intend to say.

    And by the way, since you have the language in here that says we can't even question your actions after we find a mistake, I find that particularly appalling.

    I have read the Constitution, sir, and it does not call on me to give to the Secretary of Defense my constitutionally mandated duties. And I deeply resent that you are trying to bury this somewhere in a 300-page bill and then give me one week to vote on it.

    I will remind you, sir, that this committee, which normally gets the defense authorization request from the Secretary in February, waited until July the 10th to receive the first one from Secretary Rumsfeld. I didn't hear anyone in this committee make a whole lot of stink of, ''Well, he is new, let us give him some time, let us give him some time to do it right.'' For that same Secretary to turn around and say, in a period of ten days he wants us to pass this verbatim without ever reading it, I find appalling given the slack that we cut him in his first year.

    This is significant change. It in effect takes this Congress from a performance-based Congress to a Congress where we get paid to attend. There is absolutely no reason for the committee to meet if this bill passes.

    And, again, Mr. Chairman, I am not in a position to demand, but I would respectfully request, given the gravity of this bill, the significance of this bill, that this committee be given the opportunity to vote on it as a stand-alone measure and let it pass or fail on its own merits.
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    Mr. HEFLEY [presiding]. Mr. Taylor, we will pass that on to the chairman.

    Mr. Chu, on your whip list, put Mr. Taylor down as undecided, please. [Laughter.]

    Dr. CHU. I will do that, sir.

    Mr. HEFLEY. Mr. Schrock.

    Mr. SCHROCK. Thank you, Mr. Chairman.

    Thank you, Dr. Aldridge, Dr. Chu, for being here.

    This has been a fascinating debate, and I knew it would be this way. Change is hard. Change is hard for anybody. I am probably as guilty as anybody else. But I, for one, hate red tape like everybody else, and there is a lot of red tape in the Pentagon. When I worked in the Pentagon, I was a lieutenant in the Navy; I could do nothing about it, but I hated it, and I realized something had to be done.

    Everybody needs to understand, this crew you are seeing here, the people who occupy the Pentagon, are just trying to address some of the problems and they knew they were going to take some hits when they did it. But they are legitimate issues, and there have been some wonderful questions asked, some wonderful responses given, and I am sure they appreciate that.
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    Acquisition bothers me. For instance, the F-22 the Air Force desperately needs went on the drawing boards in 1983. Here it is 2003. They wonder why the thing is going to cost $200 million a copy. Well, technology has changed 100 times since then. We have to tighten that stuff up, and I think some of the bureaucracy that created that is what you are trying to get at to make that go away.

    And I certainly agree with my good friend from Mississippi about aircraft carriers. Nobody builds them better than Northrop Grumman Newport News Shipbuilding and Drydock Company in Newport News, Virginia, and we will never want that to change. We have to keep that as strong as we can. And the thought of the Chinese or the Japanese or anybody else building them is absolutely appalling to me, so we have to make sure that never happens. And I don't think that is your intent.

    And I am concerned, too, about the possibility of overseas repairs for ships. I have some wonderful shipyards in the district I am privileged to represent with some wonderful workers who do it better than anybody else in the world. I want that to stay in Virginia. I know Californians won't like that too well, but I want it to stay in Virginia. And I know you are working on that and trying to make sure that isn't abused.

    But that being said, I have the utmost respect for Secretary Rumsfeld and the magnificent men and women that we have in uniform in our military. And this team has just demonstrated to us and the world that they are the very best and can accomplish what they are given through terrible adversity. And today I think our national security is a lot better because of what we have just gone through. And as members of this committee, I think our job is to ensure that our security is assured for the future, as well.
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    Now, I understand the necessity for the Secretary of Defense to have the authority and the tools to preserve that national security, but clearly the mission of DOD is significantly different from that of other Cabinet departments, and as such the Secretary of Defense (SECDEF), subject to the guidance from our president, needs the ability to waive some of the bureaucratic requirements that we might find to be reasonable for other federal agencies.

    We have heard some of it talked about here, some of the endangered species things. This situation at Camp Pendleton is absolutely ludicrous. How do we expect some of these young kids that went to Iraq who were building foxholes for the first time—not that it takes a rocket scientist to build a foxhole, but it would be nice if they had had that training. But regulations prevent that, and we could be putting our kids in harm's way if we don't ease up on some of that. And I think that is what some of this regulation does.

    I am sure you will agree with that, Dr. Chu.

    Dr. CHU. Yes, sir.

    Mr. SCHROCK. And isn't that what the Administration had in mind when it proposed the waiver authority in the National Security Personnel Act?

    Dr. CHU. Yes, sir, that is indeed right.

    Mr. SCHROCK. And I think that is important.

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    I have so many questions, I don't know where to start, and I know my time is going to run out. Let me run down to one.

    We are going to hear from Mr. Harnage in a few minutes, and I look forward to hearing what he has to say. I would like for you to help me understand what you mean when you say you want to bargain at the national level. Would every issue be adjudicated at the national level? And if not, could you give us some examples of issues that might be bargained at the national and the local level?

    And I guess I am wondering, too, if these are federal employees, why are they negotiating with local unions? Shouldn't they be doing it with the national unions? And if they have to do it at the local unions, I have to believe there are hundreds and hundreds and hundreds of them; you would have to have a bureaucracy in place that would cost billions of dollars to make that happen, and I just don't understand that. Help me understand that.

    Dr. CHU. Yes, sir, I will do my best.

    We have 1,366 locals, I believe, in the Department of Defense. Examples of issues to be bargained at the local level relate to such things as parking, for example, which is a very localized kind of situation.

    An example of an issue to be bargained national level would be personnel rules that apply to the whole work force. An example, as I offered earlier, would be what do we do if you fail to pay your travel card bill; can we recover that from your salary? That is the kind of issue one can apply to everybody; it is not specific to a local situation, it is a nationwide consideration. That is the kind of thing we would like—explicit authority to bargain at the national level.
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    Mr. SCHROCK. If a uniformed person would do that, they would garnish their wages, no questions asked.

    Dr. CHU. Yes, sir, that is correct.

    Mr. SCHROCK. I know.

    Dr. CHU. But the intent here is to produce faster results, better results, in the end, I think, for our workforce itself. To get these issues settled we would like to work with the national unions on those issues when they are going to apply to the entire work force. When it is a local question, like where the parking space is located or how you are going to come into work or something like that, that should be left to a local union.

    Mr. SCHROCK. When I was a Navy captain I parked in the far, far, far end of the north parking lot at the Pentagon. Took me a half-hour to get to work; it didn't seem to bother me.

    Dr. CHU. We will try to do better by you, sir.

    Mr. SCHROCK. If I could address just one more question, Mr. Chairman, my colleagues and I on this committee understand the important role that DOD has and how that role differs from the role of homeland security that has been talked about here today. What may be helpful to us is if you could give us some examples of why those different roles require different management authorities and why does DOD need flexibilities beyond those that we have already authorized to the Department of Homeland Security.
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    Dr. CHU. Yes, sir. I think the entire Department and our responsibilities illustrate the difference. It is, after all, homeland. It is at home. One of the key things about this force is it has to deploy, as we have just done in Iraq. We sent 250,000 military personnel, 9,000, 10,000 civilians to the Gulf region on short notice, quickly, often having to improvise the arrangements under which they are going to labor.

    So this is a force that needs the ability to reconfigure itself promptly. We are about to do the reverse, actually, as I suggested in my earlier testimony. We are going to bring these people home, but not everyone is going to go home to the same place they started from. That is the challenge in front of us. We are going to have to reconfigure how those posts, camps and stations are organized. We are going to have to restaff them. We will need to do that quickly. We would like to do many of those with civil servants. We prefer that alternative. We need the flexibilities that we are proposing here in order to get to that result.

    Mr. SCHROCK. If the chairman doesn't cut me off, I would like just one more quick question. I haven't read the whole 200 pages. I am going on a five-day trip in about five hours; I promise you I will read the whole thing.

    But I know this is one part of it you are seeking a number of authorities that will affect how DOD manages flag and general officers. And I know some of that was discussed. Could you explain the management concepts that could drive the changes that you requested? I think I understand that, but I want everybody else to understand that.

    Dr. CHU. Yes, I would be delighted to.
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    The intent is to allow the Secretary of Defense to be purposive in the tenure a flag officer has in his or her post. Present practice, unfortunately, is everybody, sort of, turns over every two years; not a good paradigm. If you are going to remake organization, I think we all agree you often need to be there three, four, five, six years in some cases.

    Moreover, we all believe, I think, that we ought to get more time out of our most senior offices, especially those in the grades of O–9 and O–10. So you might have more than one multi-year assignment, just as General Jones was confirmed by the Congress to be our commander in Europe, having been Commandant of the United States Marine Corps. And as General Rogers in an earlier era also served as Supreme Allied Commander Europe (SACEUR), having been Chief of Staff, United States Army.

    Under the present rules, it can be tough to do that. The age limit is 62. If we went to the kind of world I have just described, the most senior officers would probably serve 40 years. The power that this committee gave us several years ago-that means, if you start commissioned, age 22, serve 40 years; if there is any break in service—and some of those most senior officers have breaks in service——

    Mr. SCHROCK. As the current Chief of Naval Operations does.

    Dr. CHU. Yes, sir, that is correct. You are not going to make it. You are going to run out of time.

    And so, the purpose of the general flag officer provisions is to give us the latitude to keep some of those senior people a bit longer to allow them to be in their posts a bit longer. That means you are got to manage the rest of the force in a little bit different way. In particular, you need to be able to invite those who are leaving at a more junior flag grade to retire promptly, and hence the provision on retirement at grade of the services, honorable service and satisfactory without regard to tenure in that grade.
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    But it is a package. It is intended to get the result I have attempted to describe, which is to get more out of our finest officers, to have them in place for a longer period time to make the initiative more effective.

    Mr. SCHROCK. See, I look at people, at Admiral Clark, for instance. His best years are ahead of him. And that is the point when he has to leave, and I think the country suffers from that.

    Dr. CHU. Yes, sir.

    Mr. SCHROCK. Thank you for your indulgence, Mr. Chairman.

    Mr. HEFLEY. Mr. Reyes.

    Mr. REYES. Thank you, Mr. Chairman.

    And thank you, Mr. Secretary and Dr. Chu, for being here.

    Mr. Chairman, before I make some comments and ask some questions, I would like to endorse Mr. Taylor's request that we do handle this separately from the regular defense authorization in whatever manner the chair deems necessary. But I think that there has been sufficient questions raised, where it would be a disservice not to do it that way. So I will make that request.

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    My first question, Dr. Chu, is you have cited China Lake in some of the examples of a demonstration project that has been used as a model for this. Is that correct?

    Dr. CHU. Yes, sir.

    Mr. REYES. Do you know what the composition of that work force in China Lake is in terms of the number of minorities employed there?

    Dr. CHU. Not off the top of my head; no, sir.

    Mr. REYES. Let me tell you what it is. There are a total number of 3,090 civilian employees, of which 391 are minorities. There are 120 Hispanics, 75 blacks, 157 Asian-Pacific and 39 Native Americans, which is about 10 percent of the work force.

    The point I want to make is that if that is a model that you are using on the basis of patterning all this discretionary authority for the Secretary, it is a great concern to me personally.

    And it is a great concern to me personally from two different perspectives. The first one is, as a member of the Intelligence Committee, let me first tell you that in the intelligence arena, minorities are greatly unrepresented in the work force, even though we have shown, as a result of 9/11, that had we had more diversity in the capabilities of this country to deal with diversity and understand different cultures, understand different language capabilities, we might have had more success in preventing the attack of 9/11.

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    So that is a very real concern to me as a member of the intelligence community. They have been left largely to their own priorities, to their own system, to their own flexibility to do the hiring. And the results are very dismal representation of minorities in the intelligence community.

    The second concern to me, personally, is that I think, Mr. Chairman, I am the only member of this committee that has spent 26 and a half years as a civil servant before coming to Congress, including at every level, because I worked my way up through the Border Patrol from an agent to a chief. So I have been at every single level, including a first-line supervisor, and have seen the civil service at work.

    I understand and know the workings of a performance work plan. I understand the goals. I understand when there is a performance-based ability by management to be able to recognize that.

    And I can tell you the civil service system is a hell of a lot better system than what is presented here in this package from a minority perspective.

    The chairman is back, and I want to thank him for always introducing me as the greatest Border Patrol chief that he has ever met. Well, let me tell you and tell the chairman that if it hadn't of been for the civil service protections, that career would have never materialized, because in 1969, after serving my country in Vietnam, I applied for the Border Patrol, passed all the tests, was accepted, and was one of a couple of Hispanics in that class. And I will tell you, in 1969 in Del Rio, Texas, trying to survive in a redneck environment in the United States Border Patrol is something that I will tell you I will never forget.
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    But if it had not been for civil service protections, I can assure I would have never made it through probation; I would have never had the ability to prove myself, work myself through the agency to become a chief, where I administered two very large sectors. When I retired, I had authority over 1,000 civil service employees.

    And yes, I will tell you there are times when you get a bad employee, but you deal with them. I would rather deal with one or a dozen bad employees than have the possibility that my granddaughter or the chairman's grandchildren would suffer at the hands of somebody that arbitrarily and capriciously can say, ''Well, you know what, you are not just not a clear thinker in my opinion. You are not of a clear mind.''

    And I reference the many documents here where we are trying to promote an environment where everybody thinks alike. Well, not everybody thinks alike. I think diversity is the strength of this country. And we shouldn't be promoting a work environment or a work force that all thinks alike, looks alike and acts alike. We are better than that, and I am very much concerned about the proposal that we have here that would severely restrict and, I think, hurt even more than China Lake represents minority participation in the work force and in the ability of this country to function.

    And in closing, what you said on Tuesday, Dr. Chu, that what is wrong with our civilian employees is that they have been laboring under a system of management that stunts opportunity, that minimizes rewards, and provides little incentive for risk-taking. Dr. Chu, as a chief, I took it upon myself to run the risk of changing the way we conduct operations on the southern border. It was tremendously successful. You can ask the chairman right here, who often cites that.
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    But I will tell you, without the protections of civil service, I would have been fired by the commissioner. In fact, I would have been fired by the commissioner for supporting the chairman in his effort to put up a system of fences in Southern California.

    So this is one member that is from Texas and understands that old phrase that this dog doesn't hunt. And it doesn't hunt for me, and it doesn't hunt for minorities that are already severely under-represented and will continue to suffer those under-representations, I would submit, under the system that allows one person to hire everybody that is of the same thinking.

    So with that, Mr. Chairman, I yield back my time. I don't have any questions.

    The CHAIRMAN [presiding]. And let me just say, Mr. Chu, before you respond there, that you have just heard from arguably the greatest Border Patrol chief in history. [Laughter.]

    And, in my mind, he is, because he is a guy who, on his own initiative, took the Border Patrol to, of all places, the border in El Paso, and then placed his people and told them to stop illegal immigration. And he had enormous pushback from the community. And the bureaucrats in Washington wanted to fire him. And overnight, in fact, the merchants in El Paso were angry at him until overnight the auto theft rate went down 50 percent. And before the bureaucracy could fire him, they wanted—he is like the sergeant that took the hill without orders. They wanted to court-martial him, and then they noticed everybody applauding. They decided to give him a Bronze Star instead.
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    And he is a guy with great courage, great initiative. And for that I am going to buy him a Coca-Cola at the bar here when I see him afterwards.

    But he has made a good point, and I think it is a point that needs to be addressed. And that is that, once again, this is a system which is based on the American ideal of fairness. And we want to make in merit and hard work and reward for those aspects of the American character. And we want to make sure that what emerges remains embedded in that bedrock. And it is going to be important to have that, and that goes back to Mr. Spratt's statement that he couldn't see a linkage between the stated requirements of meritorious advancement and the discretion that is given to the Secretary. We want to make sure that the product that we produce manifests those characteristics of this system.

    And so I think of all the issues that you have to address, and I think you have addressed a number of them today, that I think is the most important. So, please strap that one on, because certainly the committee is going to strap that on.

    Dr. CHU. Absolutely, sir, and we agree with you. I can see why Congressman Reyes was such an outstanding chief. It is exactly that spirit of innovation we want to reward.

    The CHAIRMAN. Actually, he was a better helicopter crew chief than he was a Border Patrol chief. He was a great, great helicopter crew chief, also.

    Dr. CHU. Let me, if I may, Mr. Reyes, come back to your underlying concern, and that is what is the prospect for minorities.
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    We are committed in this Department to improving the prospects of minorities. I think the low percentages you see of minorities in laboratories generally—it is not by any means exclusive to China Lake, but it reflects the fraction of minorities who succeed in getting a college degree. That is really where those percentages derive from.

    We are dedicated in this Department to seeing more people get those degrees. That is why we have the kind of continuing education programs we have for our uniformed force, as you know.

    It is one of the things you want to do in this statute. Present law, present law precludes us from taking someone who is in one job and saying, ''
''You are a promising individual; I would like to get you trained for an ever better job.''

    We can train someone who is in the better job, ironically, to do that job. We can't take someone else who is in a different job and pay the cost of sending him or her to school to get that better job. And that is one of the things we would like to do.

    I would stake, as an earnest of our good faith on the minority issue specifically, the record of this Department over the last 30 years in the treatment and advancement of minorities in the uniformed forces of the United States. As evidence of that, given the leeway to proceed, we do know how to make opportunities for minorities happen.

    I think we are a model for the nation, we still have things we would like further to improve, and we are dedicated to those improvements.
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    Mr. REYES. Mr. Chairman, if I can respond, if that is the case for the last 30 years, then why do you want to change it? Question number one.

    Number two, the Department of Defense figures, and I can tell you, as the former chair of the Congressional Hispanic Caucus, are as dismal as any other in federal service. Those are concerns to us, and concerns to other minorities who I hear from.

    And let me also—while I am remembering—when you talked about discontent among the work force, that people were complaining that there wasn't monetary recognition for the work, I know, I have heard some of those complaints. But, ironically enough, Mr. Chairman, the complaints were after the announcement of the political bonuses that were given by the Administration at the end of the last budget cycle.

    Those are the only complaints that I heard from the federal work force in context to the monetary rewards for their work.

    Dr. CHU. First, Mr. Reyes, we don't give bonuses to political appointees in the Department of Defense. That is not done in this Department. It is prohibited by our Deputy Secretary of Defense.

    Second, the record I am reciting to you is our record on military personnel, where we do have the kind of latitude that we are seeking for our civil personnel. I think if you give us that latitude, you are going to see a better record for minorities in this Department.
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    Mr. ABERCROMBIE. Would the gentleman yield?

    The CHAIRMAN. Dr. Chu, could you elaborate? Because I think there is some difference of opinion on who you give bonuses to, who are eligible for bonuses right now and who are not.

    Dr. CHU. In the Department of Defense, by direction of the Deputy Secretary, political appointees cannot get a bonus. It is only the career civil service.

    The CHAIRMAN. And they have received no bonuses pursuant to that?

    Secretary ALDRIDGE. If they did, I would be disappointed. I didn't get mine, either.

    Mr. REYES. Well, that wasn't the point. The point was that I wanted to address the fact that civil servants were complaining about political bonuses and not about their own system. Because, believe me, as a former civil servant, we understand our ability to be able to survive from one administration to another and be able to prevail under, often times, a work environment that otherwise would be very—not just unfriendly, but would be brutal in terms of termination.

    Mr. ABERCROMBIE. Would the gentlemen yield?

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    Mr. REYES. Yes, I will yield.

    Mr. ABERCROMBIE. Maybe there is some confusion here. This bill allows you to give bonuses to so-called experts, attracting highly qualified experts.

    In fact, maybe you can tell us, you can not only give bonuses you can then go into additional payments. And the total amount of the additional payments to the employee under this section, Section 9904, for any 12-month period may not exceed the payments in the following amounts.

    And maybe you can tell me what it would be this year. Supposing you had one of these experts at a $100,000, ''$50,000 in fiscal year 2004, which may be adjusted annually thereafter by the Secretary with a percentage increase equal to 0.5 percent point less than the percentage by which the Employment Cost Index, published quarterly by the Bureau of Labor Statistics, with a base quarter of the year before the preceding calendar year exceeds the Employment Cost Index for the base quarter year of the second year before the preceding calendar year.''

    Could you tell me what that would be this year?

    The CHAIRMAN. Mr. Abercrombie——

    Mr. ABERCROMBIE. No, this is——

    The CHAIRMAN. Well, that is fine, Mr. Abercrombie. Let me just state that, I want to clear up a confusion here.
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    Mr. Reyes made a statement about having a complaint from workers about what he called a political bonus. Mr. Chu thought he was referring to bonuses for political appointees, and pointed out that the present practice is no political appointees have received bonuses, so therefore there couldn't have been complaints about appointments about bonuses to political appointees.

    Now, I think that is unchallenged. Now, having said that, Mr. Abercrombie has this new line of questioning, and feel free to respond to that.

    But I think it is clear—and if somebody has additional information I would like to know it—but political appointees do not at this point have the right to receive bonuses under the law. Now, is that absolutely the case?

    Mr. ABERCROMBIE. It is the reason I asked the question, Mr. Chairman.

    The CHAIRMAN. Well, I understand. You are talking about the proposal.

    Mr. ABERCROMBIE. The document proposes to change that to allow you to give not only to get these political appointees, which will not be subject to any kind of scrutiny by this committee, but you propose to be able to pay them, to pay them bonuses and to make additional payments to them under this, which again will not be under scrutiny. Isn't that correct?
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    Dr. CHU. No, sir.

    This bill is not about political appointees. As I testified, political appointees cannot now and have not in the past, to my knowledge at least, certainly under this administration, been paid bonuses in the Department of Defense.

    The language you cite is part of an effort in this statute to clear up the question of how we treat experts who are hired from the civil sector; for example, a forensic pathologist to testify on trial. Something like that.

    We would like to discriminate between those who are federal employees, government employees whom we are calling in this bill highly qualified experts, and those who are merely being hired essentially on a one-time, rifle-shot basis for a specific task, who we call expert consultants. They would not be considered full employees. They would be subject to the ethics act, they would be subject to the Conflict of Interests Act.

    Mr. ABERCROMBIE. And they would be subject to political appointments.

    Dr. CHU. No, sir, that is not what this is about.

    Mr. ABERCROMBIE. You know, I understand what you are trying to do, and I am trying to be respectful and I want to be respectful for the work done in this. And I am going to say in advance, Mr. Chairman, that I will take that the intentions here are honorable.
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    But, precisely because of the way this is worded this is all political. I don't use political in the bad sense of the term. Listen, Mr. Rumsfeld's going to have Mr. Perle there, he is not going to have somebody he doesn't want to have there. It is political.

    That is okay if you want to do it, but say what you are going to do. You want to be able to pay these folks, you want to be able to give them bonuses, and you want to be able to give them additional payments. As of right now, you can't do that. Is that or is that not the case with this bill, that you will now be able to do that?

    I am not going to argue with you about whether I like who you appoint or don't appoint. But don't tell me it is not political; everything is political.

    Dr. CHU. Sir, I would beg to point out that the language in question is language similar, if not identical, to that language this committee has already given to the Defense Advanced Research Projects Agency. It is so we can hire the nation's scientists to ensure that the departments of the future have the performance the country needs. It is not about political appointees.

    Mr. ABERCROMBIE. Dr. Chu, I am not arguing whether this is a good idea. So you are saying that this, in fact, allows you to do what you are able to do in a specific instance elsewhere, you will now be able to do in general.

    Is that the reason? That is a good reason. Is it the reason?

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    Dr. CHU. That is exactly what——

    Mr. ABERCROMBIE. See, that is all you had to say. But the point is.

    Dr. CHU. It has nothing to do with political appointees, sir.

    Mr. ABERCROMBIE. I beg your pardon?

    The CHAIRMAN. I think there is, now, Mr. Abercrombie, an honest confusion here, and I want to clear it up.

    There is a class of employees who are known as political appointees that each administration brings aboard when they put their team together when they come into office.

    Secretary Aldridge, you are considered to be in that class, is that not true?

    Secretary ALDRIDGE. That is correct.

    The CHAIRMAN. Okay, you cannot under the law right now receive a bonus, is that right?

    Dr. CHU. If I may, sir, he cannot under directive of the Department of Defense. The law actually is more generous than that.
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    Secretary ALDRIDGE. Right, in the Department of Defense we are denied bonuses.

    The CHAIRMAN. Okay, will you be able to receive one, or would your successor be able to receive one under the new proposal?

    Secretary ALDRIDGE. No, sir.

    The CHAIRMAN. Okay, so there is a distinction between describing bonuses as being given politically, which is the question that has come up, is that do you want everything that we want to have accomplished here based on a system of merit, as opposed to the question of whether or not a distinct class of employees that is known as political appointees can receive bonuses.

    And I just want to make this clear: it is the understanding of the committee that political appointees, that is people in Mr. Aldridge's position, for example, cannot now under DOD directive receive bonuses, and they will not be able to receive bonuses under the new proposal?

    Dr. CHU. That is correct, sir.

    Mr. ABERCROMBIE. Mr. Chairman——

    The CHAIRMAN. Okay, go ahead.
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    Mr. ABERCROMBIE [continuing]. I realize you have to move on here, but then somebody is going to have to tell me the difference then between an appointee such as you describe and a highly qualified expert in needed occupations as determined by the Secretary.

    There is nothing political in finding a highly qualified expert in a needed occupation as determined by the Secretary.

    Dr. CHU. We hope not.

    Mr. ABERCROMBIE. Oh, okay.

    The CHAIRMAN. Well, why don't you give an example, Mr. Chu?

    Mr. ABERCROMBIE. No, that is fine. I have been a legislator now, next year, for 30 years, and I know the difference between legislation that hopes and legislation that does.

    The CHAIRMAN. Mr. Reyes was asking the last question, and then yielded to Mr. Abercrombie.

    Mr. Reyes, any follow-ups for the greatest Border Patrol chief in history?

    Mr. REYES. No, Chairman. Thank you for your indulgence, Mr. Chairman.
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    The CHAIRMAN. Okay. I thank the gentlemen.

    The ranking member has some follow-up here.

    Mr. SKELTON. I have just one question, Dr. Chu. Would you be kind enough to point out the section in the proposed legislation that does protect minority rights?

    Dr. CHU. Yes, sir. If I may, if you go to the very front of the legislation, you can find a general list, as I indicated earlier in response to Mr. Spratt's question, of things that the Secretary or the system cannot waive, modify or otherwise affect.

    And among those are—go down to Subsection (c), Subsection small numeral 2—''Any provision of law implementing any individual referred to in the section cited by providing for equal employment opportunity through affirmative action,'' and so on.

    Mr. SKELTON. Thank you very much.

    The CHAIRMAN. Okay, the gentleman from South Carolina, Mr. Wilson.

    Mr. WILSON OF SOUTH CAROLINA. Thank you very much, Mr. Chairman.

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    And thank you both for being here today. It has been very helpful to me. And I, in particular, appreciate, after Secretary Wolfowitz and General Myers departed, that you have been very clear, both of you, in regard to providing responses to members of the committee.

    And, in particular, Secretary Aldridge, I am interested in Sections 204 and 205 in regard to the Buy American Act, potential waivers and exceptions and clarifications to the Berry Amendment. And, of course, a concern that I have, coming from South Carolina, is the textile implications of this.

    And I know there are references to textiles, but frequently what is stated in terms of protecting the remnants of the textile industry that we have actually has a double meaning that doesn't have the practical effect.

    And so what I would like to know is what would be the practical effect on the acquisition process to the textile industry in the United States?

    Secretary ALDRIDGE. Well, I think there are some positive aspects of this that, as you know, this Buy America, the Berry Amendment, is detrimental to small businesses.

    We had one situation where a small business itself identified a problem with goat hair in one of the uniform jackets, and turned themselves in, but they could not validate that this goat hair was all domestic.

    The result of that particular process was that we stopped payments to the small business, waiting until we got a clarification whether or not we could expect to give them the particular contract, and they almost went bankrupt.
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    And what we are trying to do here is to get some kind of a de minimis relief of the Berry Amendment that says in some cases we don't know if there is some small degree of foreign content in some particular area, textiles being a good example of it, food being another one, medical bandages being another. And we think that this is trying to be too restrictive to the point where if by enforcing Berry we have to turn to areas, in fact it makes it easier to buy non-U.S. products in some cases because of this particular limitation.

    So give us a little more flexibility is what we are asking for in the Berry Amendment to permit us to essentially be able to take better use of commercial activity; like, for example, the Department of Defense cannot use bandages and medical supplies available in the commercial sector for the Department of Defense because we are not sure about the content of certain of the materials.

    For example, we cannot buy out-of-season fruits and vegetables for our troops because out of season, we have to buy them offshore and we cannot do that.

    So there are some reasonable things we ought to be able to do here, still protecting the directive and the intention of the Berry Amendment, but give the Department a little more flexibility that, in fact, helps our small business rather than harm them.

    And that is basically what we are trying to do here.

    Mr. WILSON OF SOUTH CAROLINA. This has special meaning to me, because this past weekend I had the opportunity to go to the SEAMS conference at Myrtle Beach, which was of small businesses and also representatives of large textile manufacturing companies. And this is what they were concerned about. And so I am going to be relaying this to them.
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    But I have a real appreciation, more than ever now, that we need to have a domestic textile industry, because allies that we thought were reliable seem to be not so reliable.

    I know that something that really impressed me through the meetings that we have had here is to see the upgrade in regard to the lightweight chemical and biological protective equipment, the mission-oriented protective posture (MOPP) gear has just been terrific. The changes have been made. And ironically, I met the manufacturer from Tennessee who was providing this. And so it is just so crucial. And I appreciate you all, truly, following through on this.

    Mr. TAYLOR. Would the gentleman yield?


    Mr. TAYLOR. I would encourage my colleague from South Carolina to take a look at page 71. And amongst the blanket waivers that are granted to the Secretary, if you look down about line 12, one of the blanket waivers the Secretary can have is ''significant cost savings for purchases of the Department of Defense supplies can be achieved.''

    Now, if you have walked into a Wal-Mart, you have noticed that most of the garments there aren't made in South Carolina. They are made in China because there are significant cost savings. If a future Secretary of Defense or this Secretary of Defense decided that he wanted to do that, your South Carolina equipment manufacturers are out of luck.
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    I would also remind you, again, if you will turn to the following page, that even if you came back the following session under this bill and tried to address that, you can't because under D on line four, construction with respect to later enacted laws, ''this section may not be construed as being inapplicable to a domestic source requirement or a domestic content requirement contained in a law enacted after the enactment of this section solely on the basis of the later enactment.''

    I would hope you would also pass that on to your garment manufacturers because I am sure that will give them a great deal of confidence that at no time in the future would a future Secretary or this Secretary send that product offshore. It ought to give you great heartburn that if he does, there is absolutely nothing that you, as an elected Member of Congress can do about it.

    The CHAIRMAN. Let the chair just tell both gentlemen and the witnesses that one initiative that we are undertaking in the bill this year is it reflects the fact that at last glance the average American worker, including our military folks, pays about $1,000 a year our of their paycheck in taxes for the defense function of government, and that that means the defense function of the free world, as we have seen in this recent operation.

    And I think there is an equity that arises from that fact that, while Americans pay for the defense of the free world, they should be able to build it. And that is the basic philosophy manifest in the Berry Amendment.

    And just let you know that we are strengthening that rule in a number of areas, both in the specific and in the general in this bill. And that when we finish working our will with this bill that you will probably have, although the Secretary has pointed out some exceptions in some places where, in theory, the Berry Amendment has actually hurt onshore producers in a few very limited, very unique situations, there are other situations where clearly large amounts of business would have gone offshore if the Berry Amendment hadn't been in place.
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    And at least my feeling is that and my position is that this bill should reflect strengthened Buy American provisions, rather than provisions that have been weakened or watered down in any way.

    So I am just giving you a little forewarning that when this bill emerges, it will probably have some very strong Buy American provisions in the general and in the specific.

    And so I wanted to let my friend from Mississippi know that, and my friend from South Carolina.

    Mr. TAYLOR. Mr. Chairman, I neglected to thank the gentleman from South Carolina for yielding, and I do so now.

    The CHAIRMAN. And go on ahead, you still have the floor.

    Mr. WILSON OF SOUTH CAROLINA. And, Mr. Chairman, one final question: I was quite familiar with the controversy that the congressman from Mississippi identified about the berets. How would the change in the law being proposed have affected how that controversy was ultimately resolved, which was buy American?

    Secretary ALDRIDGE. I don't think it would have changed at all because what we are talking about, in that particular instance was a unique requirement established by the Army to have berets delivered at a specific rate, at a specific time. The Defense Logistics Agency, which had the responsibility for acquiring those for the Army, went back to the Army and said, ''I don't think we can have a domestic supplier meet your requirement.'' And the Army refused to back off from the requirement.
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    And unfortunately, that was a mistake at the time. They should have looked for some domestic.

    But because they demanded the berets to be delivered at that rate, they had to go offshore, because there was no way to do it. And now we know that was a terrible mistake. We shouldn't have done it that way.

    But in this particular case, where domestic people are now providing berets, if a small business doesn't have the technical depth or the accounting standards to know that there is some small foreign content in a leather strap in the beret, we can't buy from them either. And it is impossible for us to try to force these smaller companies. For a de minimis effect on some small degree of foreign contact, we should not be penalizing him for that purpose. And that is what we are trying to get relief.

    And, Mr. Chairman, there are a lot of misunderstandings about the language in the Berry Amendment that need to be clarified. And we will certainly work with you to understand those and ensure we are providing consistent application. Because of those misunderstandings, there could be different levels of interpretation. And we need to make sure that happens.

    Certainly, the intent is to build and maintain a very strong industrial base in this country.

    The CHAIRMAN. Yes. And you know, you mentioned one thing and that is the inability of some businesses now in some sectors to provide sometimes a critical component in the defense sector. And it is the intent of the committee to provide some funds which can be used, so that when the answer comes back, ''It is not executable in the U.S.,'' the response can be, ''We are going to make it executable in the U.S. and we are going to tool somebody up to be able to do it.'' And I think that will eliminate some of the problems that we have.
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    And, of course, we have this tracing problem across the board. We have the same thing with titanium right now in the proposed tanker lease deal. But we can't have the answer to that problem being a diminishing American content in those systems.

    I know you will work with us on that.

    Secretary ALDRIDGE. Yes, sir.

    The CHAIRMAN. So we will be paying a lot of attention to that, I can assure the gentleman.

    Mr. WILSON OF SOUTH CAROLINA. And thank you very.

    And, again, thank you, Mr. Chairman, for your personal interest in this, too. Thank you.

    The CHAIRMAN. I thank the gentleman.

    And Dr. Snyder.

    Dr. SNYDER. Thank you, Mr. Chairman.

    First, Mr. Chairman, if I might, being from Arkansas, I need to correct my good friend from Texas when he talked about, referring to the bill, that ''This dog doesn't hunt.'' That is grammatically incorrect. It is, ''This dog don't hunt.'' [Laughter.]
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    Also, Mr. Chairman, I thank you for holding this hearing today. I think the discussion has been a good one, but I am one of those that this was a last-minute thing. I have a previously scheduled important meeting to meet at noon. I mean, our subcommittee chairs, who are very diligent folks have, obviously, had conflicts.

    We just can't do the kind of hearing process we want to do and somehow cram it all in into a Thursday and a Friday and say, ''We have had a fair hearing.''

    I do appreciate you having this one and I appreciate the men being here today.

    Also, Mr. Chairman, in response to Congresswoman Davis a while ago, you pointed out that the discretion that we are giving is being given to the man that held 250,000 troops in his hand and won the war in Iraq. I am going to resist the temptation to point out that this discretion is not being given to General Franks, but is being given to the Secretary of Defense. But, in fact, it is all secretary of defenses, not just the current one. And that is one of the concerns. This is a statutory change that, once it is given, is very difficult to give away.

    Also, Dr. Chu, my good friend Mr. Reyes, here talked about civil service policies as relate to minorities. I know it is a big concern to you, and the military has always been a door-opener, as has civil service.

    But I mean, in this committee, we have our work to do. We have 37 what we call professional staff for the Armed Services Committee dealing with the military of the United States. How many Hispanics? Zero. How many African-Americans? Two. We have one Hawaiian and, I believe, one Asian-American. Not a great record for the people's house in dealing with the military.
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    So this is a concern that all of us have to have. And, you know, obviously, we are a political body and people serve at a pleasure. They are not a civil service, but that is an issue.

    Chairman Hunter began this hearing by talking about fundamental change. And I agree with that. I think your proposal is a fundamental change and we have had that discussion before. And you pointed out that you are not a lawyer, Dr. Chu, which a lot of people think to your benefit. [Laughter.]

    But these are fundamental statutory changes. And what Mr. Skelton pointed out from law school, this is about drafting words and words have meaning and they can either help you or kill you down the line.

    And that is why it is so, I guess, aggravating or disappointing to a lot of members that somehow this has come on so fast that we can read the words, but that is not the same as these words being out there floated amongst the public, press writing about it, bringing in retirees, bringing in people from across the country. We just are not having the kind of discussions that we need.

    I know you have had an entertaining week, Dr. Chu. But there are three ways, you know, I am disappointed. I am disappointed that what this committee is doing in terms of, at least at this point, making the decision to push ahead with this in the defense bill. But also, you had sent, some time ago a letter dated April 10th that I received April 18th. I knew I was in trouble because it says, ''The Summative Evaluation 2002,'' and I never had seen the word ''summative'' before. [Laughter.]
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    So it was downhill after that because this was for this report.

    But you talk about, ''These recommendations build on two decades of defense experience using the authorities Congress granted for a portion of our work force.'' And then you talk about, ''Over the last year, we have worked to distill the best practices of that experience.''

    I think it was both Mr. Skelton and Mr. Spratt pointed out, you know, you are talking about putting together a proposal that you drew on the experiences over two decades over the past year and yet, we got it, I think, the day before we left here, that Friday and a Saturday. I heard about it the first of the week.

    I mean, you took decades and a year; the people's house has to have some kind of more deliberative process. And I find that disappointing.

    And it is also hard for me to believe that, given what has been going on in the last six or eight months, that our high-ranking military officers and non-commissioned officers have had the time to really digest this. They have been preparing for or been in war. And I just don't think that they have had time, for example, to review in any meaningful manner the general officer provisions that we are going to talk about tomorrow.

    And then my third disappointment, Dr. Chu, is we had a private meeting a group—it was the Democrats—you were going around and meeting—Mr. Spratt was there and some others; Mr. Geren was there. And as Congresswoman Davis pointed out, we were talking about concepts. There was no paper given to us, no proposal. But I left that meeting, I thought, with assurances that this was going to be a deliberative and thoughtful process; that, in fact, I brought up the point, you know, well, there are two ways of doing things here. We can do things and get a, you know, 220 to 215 vote. Or we can do things in which we reach consensus and work through problems and dealing with the national defense of the country, as best we can, we come out with overwhelming majorities.
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    And you or Mr. Geren pointed out that was your goal.

    Well, then we turn around and this thing just comes crashing down the day before we are gone for two weeks. And that is very disappointing.

    I understand you have made some comments that Mr. Rumsfeld is an impatient man, and he wanted to move ahead with this. But I would hope that you would point out to Secretary Rumsfeld that I think some assurances were given that this was, indeed, going to be a deliberative process. And if you had put us on notice, ''By the way, this thing is going to greased and slid and put in the railroad and you had better be ready by markup,'' I think our attitude would have different in terms of evaluating this.

    With regard to the GAO, you know, I guess we are going to have a second panel later on with the GAO, which is unfortunate because I think the concerns are legitimate. But it is just a reminder that it is not just members of this committee that have concerns.

    I have tried to look through this report last night. And frankly, I don't envy you your work because it sometimes gobbley-gooks me to death. But I could read through that that there were great concerns with the rapidity with which this is going.

    The last thing I would say is this: This may well be carried along in the defense bill, but my guess is that there will be some attempts at amendments and we will have some piecemeal effort to try, in a short time, to clean it up.

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    But what we will do is—if the bulk of this proposal is included in the defense bill, we will do what we often do: We will depend on the Senate, on Senator Warner and Senator Levin, to try to sort through this. And I think that is an unfortunate thing for the people's body to do and for this committee to do.

    So I don't really have any questions, but we get our five minutes and those are my concerns.

    And I appreciate your service, but I am disappointed in how this has gone and disappointed in the assurances that I thought we had that this was going to be a thoughtful and deliberative process.

    Thank you, Mr. Chairman.

    The CHAIRMAN. I thank the gentleman.

    And I would just remind the gentleman that the fact that we ask questions as to what the legal construct of provisions in this bill is; the fact that we have questions or we are not sure, in Mr. Spratt's instance, of whether the Secretary's permissions are legally constrained by the statements of merit requirements in other parts of the bill; the fact that members of the committee have questions on that doesn't mean that there is an absence of legal opinion on that and that the bill was not drafted by counsel.

    So let's give a fair shot to counsel to give us the legal connection, at least in that instance and any other instance that is brought up by any member of the committee who has a question and says, ''I don't know if provision A is related to provision C.'' And I don't know if, in this case, if, for example, nepotism is prohibited under this proposal as it has been in the past in civil service.
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    Let's give the Administration a chance to come back and answer that before we conclude that our interpretation is the same as counsel's interpretation.

    And so, I appreciate the gentleman's concerns, but I think we should spend more time actually going over the substantive issues in this proposal, rather than bemoaning the fact that we don't have a lot of time to go over substantive issues, because, again, we put together a $400 billion bill each year in what really is a relatively short period of time.

    And so we are going to give as much attention to this, in that we are going to answer every single legal question that a member has about this provision so that every vote on this is done by someone who feels they are adequately informed. And we are going to make sure that that occurs.

    Dr. SNYDER. Mr. Chairman, may I respond?

    The CHAIRMAN. Certainly.

    Dr. SNYDER. Well, with all due respect, Mr. Chairman, that dog don't hunt, in my opinion, because it is not just about a member having a private briefing about legal language, it is having a process over several months or even several year's time where, in your words, fundamental changes have an opportunity to be discussed, not just with Members of Congress, but with the American people, with reporters, with people back home, with retiree groups, with civil service folks from around the country.

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    The good ideas in this country don't just come from the lawyers of the Pentagon and members of the House and Senate. They come from all over the country.

    But the rapidity with which this is being done is going to lead to problems down the line when we don't have the opportunity to fully get this reviewed.

    But I appreciate your holding this hearing today and I look forward to the one tomorrow. And I will be here tomorrow.

    The CHAIRMAN. Okay. And I would just remind my friend, also, that we shouldn't belittle the nine pilot projects that have been undertaken over a fairly extensive period of time.

    And last, I would tell my friend I was reminded by the staff director that he is Hispanic, and that he is, indeed, the staff director, the last time he checked.

    And so, Mr. Kline.

    Mr. KLINE. Thank you, Mr. Chairman.

    And thank you, Mr. Aldridge and Dr. Chu, for being here.

    I am like all my colleagues who have so many questions. This is, indeed, a pretty sweeping bill. I am excited about the prospect of doing something that will allow our troops to train without undue restraints imposed by various environmental restrictions. I am looking forward to working on that.
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    I have always been excited about the prospect of speeding up, streamlining the acquisition process. And I hope we are going to be able to do that.

    I share the concerns expressed by my colleagues from Mississippi and South Carolina and the chairman about buying American. We make some very fine boots in a place called Red Wing, Minnesota. And they are built with leather that is, in fact, tanned and produced there, and I would like to make sure that we are paying attention to that aspect of the acquisition process.

    We have talked a great deal about civilian personnel. I wonder if we could just take a minute to talk about uniformed personnel for a minute. The distinguished minority leader raised a question. I didn't really understand the question because he was asking fundamentally why a Marine colonel couldn't do everything that general officers and flag officers in the other services could do. And that is apparent to me why a Marine colonel could do that.

    But I wonder if you would address seriously his question for a minute. You have made a distinction in the services as to who could be the service chief. What was the rationale for that?

    Dr. CHU. I think what you are seeing are really historic parameters being reiterated. The modern practice has been that the chief of each service is a four-star officer. In that capacity, as law requires, each such nominee must come before the United States Senate for its advice and consent to the president's nomination.

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    With due respect to the Marine Corps, I don't want to hold up too much hope here for the Marine Corps 0-6 group, but there is really no intent to change that practice.

    Mr. KLINE. It just seems to me strange that if you are rewriting the language, that you would put that in there. I have great confidence in Marine colonels, as I am sure you would imagine, but it does seem strange that that language is in there.

    On perhaps a more troubling note to me is you have language in here—oh, it goes back to it looks like around page 63 or so—and I am not interested exactly in the specifics, but in the notion that you have with the continuum of service that it appears to me that the intent is to move uniformed personnel from the Reserves to active duty and back again. And I understand that that might provide some flexibility.

    I am concerned that you may be circumventing what ought to be another look at what the active force structure is. If there is a concern that we don't have the forces necessary in the active forces, those who have chosen to make a profession and to stay on active duty for 20 years or more, that we may need to look at what that structure is in active forces and not rely on going to the Reserves, on a voluntary basis or not, to pull them onto active duty to meet a shortcoming there.

    Because in the end, certainly, Reserves have other jobs in most respects. And those other jobs may be a police officer or a fire officer or a business owner or a farmer or whatever. And I am worried about the impact of turning too often to the Reserves to meet what might be a force structure or end strength or average strength in your new language issue.

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    Can you talk about that for a minute?

    Dr. CHU. Yes, sir. We want to be very careful about the same phenomenon you have identified: You don't want to go to the Reserves too frequently; you don't want to go to the Reserves improperly.

    What we would like to do is to be sure that when it is appropriate to reserve forces, you can really shape their employment to the task at hand. So, let me give an example, if I may.

    One of the provisions would reconstruct the current practice that we expect 38 days of service a year out of our Reserve personnel in terms of peacetime training. In the law, that is now 14 days annual training, one weekend a month. We would like some more flexibility.

    Some of our adjutants general have told me they would much rather have a little longer summer training period, as people call it, at the expense, perhaps, of some of the weekend drills.

    And so, we would like the restriction in the statute be 38 days; let us use the 38 days in a fashion that better prepares the reservists for whatever eventual duty the country is going to——

    Mr. KLINE. Excuse me. May I interrupt for just a minute? My concern there would be that the adjutant general might prefer that, but the employer may not prefer that. And the system as it exists now, with the exception of a national emergency where we consciously call up Reserves, there is a work pattern that can be counted on. And by giving the Secretary and the Department this flexibility, you may be having an adverse impact on the rest of the economy, the civilian work force side of this, the uniformed soldier when they are not wearing their uniform.
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    So, I am concerned about that and I am looking at it and I don't expect you to answer that now, but it is of some concern to me. And I am going to be looking pretty closely at that language.

    And in the interest of my continuing efforts to set the example for my colleagues, I yield back.

    The CHAIRMAN. Well, I noticed that your ears perked up when they talked about the colonel in the Marines being eligible to be Chairman of the Joint Chiefs.

    Mr. KLINE. It did.

    The CHAIRMAN. Mr. Meek.

    Mr. MEEK. Thank you, Mr. Chairman.

    I was looking forward to today's testimony. And hearing and having read the comments and reading parts of the bill and I am going to go over far beyond one may say neophyte or elementary comments of the fact that all I have been hearing is the mean, agile, most equipped, most qualified military in the world.

    During our last activities, need it be Afghanistan or Iraq, there was no mention on any of the cable shows or any of the comments that I have heard come out of the DOD, any of the briefings as it relates to we would better if we could do this civil service reform.
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    I can also say that I want to raise my objections to putting this in the defense authorization bill and I am going to tell you the reason why. Not that I have been in the Congress more than four months, but I would say being in the state legislature, usually when I hear from a Secretary of a department or what have you on new piece of information or a legislation that has just been brought to the attention of the state legislature—I would add to Congress this time—when they want to put it into an overall bill, nine times out of ten they know that the legislation or the action could not stand by itself.

    That brings about the question, ''Are we doing the right thing about having this in the authorization bill?''

    Let me just advance just a couple of weeks down the road. I had staff take a look at what we are talking about here. We are not talking about the Pentagon down the street, we are talking about a nation of workers—just under 700,000. So give or take, what have you—that are in every district, including mine, including the chairman's district, including many of the members on this committee.

    And I am not prepared to go back to Florida with 15 military bases, outstanding individuals, the President is flying around, giving this speech everywhere there is a tank or an airplane on this land. We commend the Department, we commend every man and woman that has been involved in this process because, because of you, because of you.

    Well, we are not sending the right message here. Basically, we are saying that we have a military overall, and not just picking a branch or what have you, that is the most outstanding military in the world.
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    I feel the individuals that we have in the military now—need it be sworn, unsworn or what have you, out of uniform—are good people.

    But these are my concerns: One, we should not roll this in the authorization bill. You are going to have members on the floor saying, ''I feel very uncomfortable about the civil service reform, but I can't vote against the authorization bill. What would they say back home, military preparedness, homeland security?''

    I heard Secretary General Myers talk about the importance of facing the new challenges. Who wants to be on the other side of that argument if this civil service reform is so great?

    The second thing I am concerned about, need it be Democrat or Republican, I am not ready to make the Department of Defense the good job grounds for this country. And I mean by that, Secretary of Defense is not elected; he is appointed by the President of the United States. How does the president get elected? Well, obviously, votes. What is going to happen to military bases when we change parties and we change presidents? There is a great job over at the base I wanted; the Secretary is not going to sign off on every job.

    We are depending on people to carry out good will and you are telling us to trust you here. You are speaking on behalf of the Department. It is nothing personal against you two gentlemen, but I would say that that brings about great concern, because in our military and our national defense, now international defense as it relates to our friends and allies overseas, I am not ready to politicize the Department of Defense. I am also not ready for the Secretary, any Secretary, to fly around the world shaking hands with people and giving away American jobs on behalf of national defense.
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    Now, I am glad to hear the chairman speak of buy American, but I think it is very important that we start thinking about these individuals that are stretched across the country. And I must say, the men and women that did go into the theater, they have a spouse that may work in one of these jobs.

    So, I would say that this is quite interesting and I can say that this almost builds a formula of a military over an elected government. Now, I am not trying to scare anyone in this room, but I am just talking about the realities of this bill.

    And I think that we need to give great thought, not only in-depth educational hearings, but to put this into the Department of Defense authorization bill automatically, on the surface, gives us prima facie evidence that this legislation cannot stand by itself. We have to couple it with other priorities of Members of the Congress.

    Mr. Chairman, I really don't feel at this particular time—and I am glad that we are having a hearing this afternoon and tomorrow, which I will stay for. And if we had a hearing on Saturday, I would be here; Sunday after church, I would be here. But I would tell you that if we feel that we need to do this right here, right now in the Department of Defense authorization bill, I think we should have a discussion.

    Some of the points in this bill are outstanding. On the floor I voted for commending the troops and their families. There was language in that resolution that I disagree with. I have been voting on bills of language that I disagree with, but the underlying concept of the bill, I agreed with. And this is going to put Members in the same predicament and situation.
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    So, I think if we can have a stand-alone bill, I think that would be helpful for good deliberations. We will also have members voting when they are giving this blanket authorization—more than homeland security, I must add—a good opportunity to make a good decision.

    So, I commend the work that both of you have done and the Department has done in looking into this issue over a period of years. Unfortunately the Congress hasn't had the same privilege. You are asking us to do this in a matter of days and hours.

    Mr. Chairman, thank you so very much.

    The CHAIRMAN. I thank the gentlemen.

    Ms. Bordallo.

    Ms. BORDALLO. Thank you very much, Mr. Chairman.

    And first, before I begin, I am going to discuss something a little more on the buy America side. But I, too, want to join my colleagues in saying that I think that the proposals for the civilian and uniform work force should really be discussed separately and should be a stand-alone bill. Whatever we decide here is going to have far-reaching effects and I think we are all very aware of that, so I do support my colleagues in that.

    I want to thank you, Secretary Aldridge and Dr. Chu, for appearing before our committee today and for the long hours you have been here.
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    I have a brief statement to make and then a question of Under Secretary Aldridge.

    First let me say that I represent minorities, almost entirely. I represent the people of Guam. And the military has no greater friend than the people of Guam. They are proud Americans; proud of the job that our fighting men and women have done in Iraq.

    And given that spirit of friendship, I was very surprised to see that your proposal before us today allows, in Section 432, for the repair of American ships in foreign ports on extended deployments. Your new proposal would mean that ships deployed in Asia would steam right past Guam—and Guam has a major ship repair facility—on their way to being serviced in Singapore or Korea or wherever they are going.

    I hope that our chairman—and by what I hear today, he certainly is in support of Buy America—will act to ensure that Section 432 is not included in the fiscal year 2004 defense authorization bill.

    And I want to thank the chairman for his interest in this and thank him for his leadership on this particular issue.

    The CHAIRMAN. Ms. Bordallo, on that point, let me respond to you.

    I have been an advocate for buying American and repairing American for a long time; for about 20 years. And it is always a conflict between the operational commanders who may need a quick repair and also may think they are getting a much lower price as a result of lower wage rates in other countries, and repairing in your district or in San Diego or Washington State or other places.
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    And I have come down on the side of keeping this very fragile part of our industrial base intact; that is, repairing America. And that is one of the provisions that I think the committee will be addressing here, when we mark this legislation up.

    Ms. BORDALLO. Thank you very, very much, Mr. Chairman. I truly appreciate that, and I know the people of Guam will, as well.

    I also felt the need to examine your proposal very thoroughly and have come up with a question regarding one other proposal, and that has to do with the Marine Mammal Protection Act.

    What I would like your clarification on is, why you chose five years as the time-span to examine whether the Navy's activities would have a negligible impact on marine mammals. Would it not be better to reduce this to an annual process? This would better reflect the annual breeding habits of marine mammals rather than an arbitrary five-year process.

    You may say in response that an annual determination might be too burdensome, but given that you have just exempted the Department of Defense out of numerous reports to Congress, I think there is room enough for an annual requirement.

    And furthermore, your statement in support of these changes said that the term ''small numbers'' is impossible to quantify. How would you quantify a negligible impact? Can you give the committee a numerical example of what is a negligible impact over a five-year period? And what would that be?
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    Secretary ALDRIDGE. Ms. Bordallo, let me respond to that with an answer. For the record, I am not the expert on the various environmental impacts. I think there is going to be a hearing tomorrow on this topic, and I just can't address that. But we will get you an answer for the record if you don't mind.

    Ms. BORDALLO. Thank you. Thank you very much, Mr. Secretary, and thank you, Mr. Chairman.

    The CHAIRMAN. Actually, Mr. Secretary, we are talking about military personnel tomorrow. We did have a visit by the naval leadership that is involved with the marine-mammal issue and the problem that we have with our submarine training and detection as a result of that.

    And I can make sure that they engage with you, Ms. Bordallo.

    Ms. BORDALLO. Thank you.

    The CHAIRMAN. They have been over one time on the Hill to talk about that.

    Secretary ALDRIDGE. Mr. Chairman, can I also respond on the issue of the ship overhaul? I know this is of high interest.

    The purpose of that is that when we have these ships which are now being deployed overseas for 12 to 18 months and they go through a repair cycle. It is ridiculous for us to ship them all the way back home for the time it takes to get back and then turn around and put them back out to sea.
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    So what we are asking for here is a permission to do the routine maintenance of these ships in foreign ports and certainly Guam could be one of those. It is not just—it could be anywhere that is reasonable, rather than bringing them all the way back.

    Now, there is some language in here; I would say it has people a little bit confused. We said something about routine repair and overhaul. We are prepared to drop that term ''overhaul,'' because that was not what the intent was. It was really just the things that we need to do.

    For example, we had a ship in Freemantle, Australia. We had to ship the ship repair crew all the way to Australia for them to repair the ship. That doesn't seem like a very good use of taxpayers' resources when certainly a friend of Australia like they are—good ally—could do that.

    Ms. BORDALLO. Mr. Secretary, Guam is very close to Australia.

    Secretary ALDRIDGE. And in that particular case, we probably should have taken it to Guam.

    Ms. BORDALLO. I realize taking them 6,000 miles away to San Diego doesn't make a lot of sense, but Guam——

    Secretary ALDRIDGE. I think the chairman——

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    Ms. BORDALLO [continuing]. We are out there.

    Secretary ALDRIDGE [continuing]. Argue with that.

    The CHAIRMAN. I think we need to amend this bill very strongly, at this point. [Laughter.]

    Secretary ALDRIDGE. But that was the intent, is to give us permission to do so when it makes sense to do so. And that is what the argument and obviously the discussion will be about.

    The CHAIRMAN. I thank the gentlelady.

    And we will now ask my colleague from San Diego to offer the rebuttal.

    Ms. Davis.


    Ms. DAVIS OF CALIFORNIA. Thank you, Mr. Chairman.

    And thank you to both of you for being here and hanging out with us for the morning. I appreciate that.

    I also wanted to state, as my colleagues have done, and actually I have really thoroughly enjoyed the questions that have come forward.
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    We are all, you know, trying to get up to speed quickly on this. And I appreciate the fact that you have been working with it over a period of time, but we haven't, as many people have stated. And I always believe in working with the communities that there is great benefit in bringing people along, and that is something that we are actually asking you to do with us, as well here today.

    I see a lot of great things in what you are talking about. One of the issues that I have often asked our flag officers in San Diego, ''Why didn't you stay longer?''

    It seemed to me that there was kind of method to the madness, to move people along before they could make any changes. So I think there is a lot to commend here. But at the same time, I have a number of issues and maybe it is questioning some of the basic assumptions.

    I know a number of my colleagues continue to bring up environmental issues, and this is one that we have had a number of hearings on. But one of the hearings that we had suggested as—every time I have asked the question—that the Navy has really never been denied when we talk about readiness issues and environmental issues; that they have never been denied a permit by the National Marine Fisheries.

    And we also learned that the Secretary of the Interior has existing authority to waive portions of the Endangered Species Act (ESA) for national security reasons. We know that those laws are in place and yet we are seeking to change the law, rather than living within the existing provisions.
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    And part of my question about what we're doing today, as well, and what we are going to be grappling with over the next number of weeks, I hope, is whether we have existing laws and whether the reason for not dealing with them is because it is inconvenient. It takes some people time to do that. And I think we need to be critical about the way we look at that.

    You suggested that there are some areas, however, where you really don't have authority. One issue has been brought up about hiring people after they have retired. I know that as a school-board member, bringing back principals that have left the district is of great benefit to a school district. And, there are ways of doing that. Perhaps within the law, there are no ways of doing that.

    But you have also mentioned best practices. You have also mentioned the fact that we have a number of demonstration projects. Have you been able to do that within demonstration projects? Have you been able to bring in people? And if so, then, in fact, do we need to change it? And, you know, what happened as a result of that?

    I think one of the things that I am struggling with—and I understand a RAND report that was made, you know, explains some of these demonstration projects and the result of them; I would like to see that. That would be helpful. Perhaps that would be helpful to some of our colleagues.

    And having a nexus between what was brought together in this project and how people responded within it.

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    The CHAIRMAN. Yes.

    Mr. Chu, do we——

    Ms. DAVIS OF CALIFORNIA. One of the things that——

    The CHAIRMAN. If the gentlelady wants to spend—I think that is a great question.

    Do you have a summary of the demonstration projects that we could produce for all the members that is not so voluminous that it is tough to get through, but at least goes over the cogent points and lessons learned?

    Dr. CHU. Yes, sir. We have some materials and we are delighted to share them.

    Ms. DAVIS OF CALIFORNIA. That would be helpful.

    The CHAIRMAN. Okay. Could you make sure that the gentlelady gets it, and that all members receive them?

    Ms. DAVIS OF CALIFORNIA. Thank you.

    And, Mr. Chairman, I appreciate that.

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    You know, if it is voluminous, it is going to be difficult. What we need to know is, you know, what were the ideas, but I have looked at that. I mean that is a whole bunch of charts and stuff and I think it is helpful for us to know, you know, what did we want to fix?

    What did we develop in the demonstration project to do that? And what were the results and how do you bring that to scale? I mean, we are not just talking about a small, you know, pilot program here that we are going to take city-wide.

    I mean, you know, this is taking something nationally. And that is a whole different thing. And when we talk about transformation, I mean, the basic thing that I always know is that we are talking about relationships and how people interact differently in this situation. And I think that we need to know that.

    One of the other things you have brought up, and in fact, if you might just engage with me in a line of questioning here for a second. You know, we want to mirror this or develop this based on homeland security. How long has that been in place?

    Dr. CHU. The Homeland Security Bill was passed last year.

    Ms. DAVIS OF CALIFORNIA. And how long have we been operating in that situation?

    Dr. CHU. The Department just stood up a couple of months ago.

    Ms. DAVIS OF CALIFORNIA. A short time; what have we learned from that?
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    Dr. CHU. I think we have been in conversation with our colleagues in the Homeland Security. My sense is that they are very interested actually in our demonstration-project experience because that does, as you have pointed out, extend back over two decades; preclude China Lake in the data set. And we have had a sufficient variation of those demonstrations trying out a variety of ideas.

    We are very pleased that after a transition period—and transition is always a little bumpy, although it has never been disastrous—that the employees typically are happier, sometimes substantially happier, than they were before.

    And so I think we have the kind of longitudinal evidence that you are looking for that these ideas work. We have tried to distill over the last year or so—Mr. Aldridge and I are working together—what the best ideas are, which is hence the name best practices.

    Ms. DAVIS OF CALIFORNIA. Thank you, Dr. Chu. What I would suggest is that we don't have some of that information.

    Dr. CHU. We would be glad to show it to you.

    Ms. DAVIS OF CALIFORNIA. And the reality is that the Department of Homeland Security has not been up and running for very long. And it hasn't interfaced with our local communities, and that is what is important. Because we are talking about people, we are talking about a whole different culture change. And we know that take times.
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    I am not opposed to changing the status quo, believe me, but I think that we need to understand how those changes affect the way people do their jobs. And we may not have some of that experience, some of it we may have. And that is great. I would like to see that; that would be very helpful to see.

    I think the other quick question is, is it my understanding that in the homeland security bill, there is a five-year sunset?

    Dr. CHU. Yes, I believe that is correct.

    Ms. DAVIS OF CALIFORNIA. Can you tell me why, if I am correct, that we don't have a sunset in this bill on this proposal, and if not, why not?

    Dr. CHU. Yes, ma'am. Delighted to.

    First of all, the permanent change. One of the difficulties we found, and this is one of the lessons learned from demonstration projects is with the sunset provisions, you basically create a very short-term orientational part of the work force because one of the things they have to worry about is what are they going to go back to if you, indeed, allow the sun to set.

    And that is, I think, destructive to some of the very kinds of innovations that are being talked about here.

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    You want people to be able to count on it for the long-term. This is what life is going to be like for some time to come.

    If you have to transition back, you have to get started, as a matter of personal practice, on the transition back a year or two before the period ends. So, the problem with five years is you start the thing, it takes you a year or two to get it in place—it is a practical matter—and then, at year three, you have to begin the transition back to the old system. You really don't give it a fair test with a five-year in our judgment.

    Ms. DAVIS OF CALIFORNIA. Why? Why do you think we have that in homeland security?

    Dr. CHU. I don't know the answer to that question, ma'am.

    Ms. DAVIS OF CALIFORNIA. Okay. Perhaps the Congress, its wisdom, was a little anxious about it; something that they didn't have a sense of.

    I don't know, Mr. Chairman, I really don't recall that specifically.

    But I thank you for your time. I think I would be, you know, very happy to speak to someone about what we learned from some of the key demonstration projects that we have. And more than that, if we can have some reflection on how it actually changed peoples' culture within their working environment.

    Thank you.
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    Dr. CHU. We would be glad to provide that.

    The CHAIRMAN. I think——

    Ms. DAVIS OF CALIFORNIA. If I may, Mr. Chairman——

    The CHAIRMAN [continuing]. Oh, go ahead.

    Ms. DAVIS OF CALIFORNIA [continuing]. Very, very quickly, I just wanted to also applaud my colleagues who spoke about buying American. Obviously, and with my calling in the chairman from San Diego, we are very concerned about that issue, very concerned about ship repair and how we look to our local entities for doing the outstanding work that they have been doing over the years. I don't think we want to send the wrong message to them.

    Thank you, Mr. Chairman.

    The CHAIRMAN. And I would say to my friend, on that point it is attractive to do work offshore not simply because of convenience, but because of cost. When you are looking at the amount of money you have in your budget and you can get ships repaired by folks making a buck a day, it saves money.

    But there are things that we have found we could do over the years, for example, if a ship needs to be repaired, these availabilities come up on a monthly basis or a biannual basis. And if ship A is moving out from the United States to deployment, and it is due to be repaired in 45 days or 30 days, you move the availability ahead and you repair it while it is here.
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    And similarly if the availability or the schedule says that it should be repaired 30 days before you come back, you put that off and you repair it in the United States when you get there.

    And so there are adjustments that we can make that I think accommodate the repair American, buy American, build American——

    Secretary ALDRIDGE. It is just when the—

    The CHAIRMAN [continuing]. buying requirements.

    And sometimes in the past those requirements have been gamed, to some degree, by folks who understandably wanted to save money because they didn't have a lot of money and it was a lot cheaper to repair stuff in Singapore and other places.

    Secretary ALDRIDGE. Well, I think we are going to this ship-swap concept of not having to have these ships out just six months and bring them home. They are out for a long period of time. And what we are looking at is what is the right way to do the routine repairs on these ships when they are gone for 12 to 18 months. And we rotate the crews to them; don't bring them all the way back.

    And Australia is kind of a good example because it is such a long way away, but I think we can find a way to make this work without affecting the industrial base of this country in terms of the overhaul and major repairs.
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    The CHAIRMAN. And, Dr. Chu, on that point that Ms. Davis made, if you could, take, let's say, the seven or eight most important points of the package and then do a brief description or executive summary with respect to the pilot projects where they are relevant to those points.

    So, for example, one area that you have talked about with respect to being able to quickly qualify federal workers for a position so you don't have to appoint a sergeant in the Army to that position because you can't move quickly with the federal worker, point out the pilot program where that was undertaken and the results of that.

    And so we have a lessons-learned brief, if you will, with respect to those pilot programs. I think that would be helpful for Ms. Davis and for all of us.

    Dr. CHU. We would be delighted to do that, sir. Thank you.

    The CHAIRMAN. Okay.

    Mr. MEEK. Mr. Chairman.

    The CHAIRMAN. Yes.

    Mr. Meek had a follow up.

    Go ahead, sir.
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    Mr. MEEK. To the point—not to the Buy American—I appreciate the dialogue on that. Mr. Chairman, I must say that I forgot to share: Yesterday's Congressional Black Caucus, in our meeting, we spent 30 minutes on this topic with the civil service reform within DOD.

    And as we started looking at the demonstration projects of lessons learned, if we could address the issue of the minority-employment issue, did it decrease in the demonstration projects? Did it increase in the demonstration projects?

    I think that will help as we start moving the legislation towards the floor so that members feel comfortable about having good information on this.

    And I would appreciate, Mr. Chairman, if you would have them add such information in the information they are going to provide as it relates to the demonstration projects.

    The CHAIRMAN. Absolutely.

    Dr. Chu, if we could strap that one on?

    Dr. CHU. We would be delighted to, sir.

    The CHAIRMAN. Mr. Ryan.

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    Mr. RYAN. Thank you, Mr. Chairman. And thank you for the lengthy stay here in the committee.

    I have a couple things. I want first to associate myself with the comments of Mr. Taylor regarding the Buy American and the industrial base. And I remember the last time that you were here, Mr. Secretary, I told you about a waiver that was granted. I believe it was to Pratt-Whitney. The waiver was filed on December 17. The waiver was granted on December 20. And not only granted in just three days, but it was granted retroactively back until 1995 of 1996.

    The CHAIRMAN. You are talking about the titanium waivers?

    Mr. RYAN. Yes, I am.

    The CHAIRMAN. Okay.

    Mr. RYAN. Yes.

    And so when I look at the proposal and several of them that Mr. Taylor touched upon—one on page 71—it states that the waiver authority includes, but is not limited to, circumstances which—and then they list the following: One is, ''it is necessary to promote standardization and interoperability of conventional defense equipment with allied and friendly governments.''

    I think the concern for those of us there, aside from all of the Berry stuff and the Buy American stuff, is that friendly governments a few months ago would have been France and Germany and maybe even Russia. And now we are in the situation where we may actually provide waivers to establish relationships and for standardization in these other countries.
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    If you could maybe just—that were allies just a few months ago and no longer are, and are not supporting some military operation that is a priority for this government.

    Secretary ALDRIDGE. Yes. As a matter of fact, I got very intimately involved with a case where we had one country which is a very strong ally of ours, a neutral country, but provides certain parts for the Joint Direct Attack Munition (JDAM) tail kits. And because of the Iraqi situation, their political side of their government decided they were not going to ship parts to countries that were in Iraq.

    And therefore, they stopped shipping a piece of the JDAM bomb kit, which was a very critical component of ours. And the process of getting there was that we thought it would be something that would be acceptable to us. So happened it was not, so we second-sourced it in the United States, and fortunately we could do that job.

    I think these things come up all the time. We want to be a good steward of the taxpayers' dollar. I certainly want to protect the industrial base of this country; that is my job.

    But there are certain times that the decisions need to be made that would provide the Secretary of Defense with authority to do something that was invested through the country, but would provide for the best capability at the minimum cost and the best schedule. We have to make those decisions. It is never a black-and-white case.

    Mr. RYAN. And I think this——
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    Secretary ALDRIDGE. And so that is all we are asking, for some authority to give the Secretary of Defense the authority to make a waiver when it is in the national security interest, just like we have in the Berry Amendment for public interest.

    Mr. RYAN. And I understand that.

    Secretary ALDRIDGE. Now, the list may be too long, but I think we could work with you and understand what those waiver conditions ought to be. But it is certainly my intent that, as I have said over and over again, not to go offshore for things that we don't have to.

    Mr. RYAN. Mr. Secretary, you know, with all due respect, I think we are doing that. I think we are doing that with titanium. And I have a titanium company in my district that is going to close down and 1,000 people are going to be laid off because Boeing is getting their titanium from Russia. And in many instances these countries are subsidizing their corporations or their companies.

    And not only are we going to lose 1,000 jobs; the school district that the company is in now has to put a levy on because they don't have the tax revenue to fund their schools. And this is something that goes right through the economy.

    And this particular company has to pay a 15 percent tariff on the sponge that they import. So Russia's price is 15 percent better because of that.

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    And number four is that significant cost savings. And when it is that broad and that open to interpretation and the United States companies are facing significant challenges, they can't compete.

    The CHAIRMAN. Mr. Secretary, you mentioned the JDAM example. You said there was a company that stopped sending us components?

    Secretary ALDRIDGE. Yes.

    The CHAIRMAN. What country was that?

    Secretary ALDRIDGE. I would rather not say, sir, if you don't mind. That has stopped. It got corrected. But I would just rather not talk about it, if you don't mind.

    The CHAIRMAN. Well, will you tell us in classified session?

    Secretary ALDRIDGE. Yes.

    The CHAIRMAN. If we beat you with a stick? [Laughter.]

    Secretary ALDRIDGE. Well, you won't have to beat me. [Laughter.]

    The CHAIRMAN. Okay. We will take that.
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    I think, Mr. Secretary, that in making that point, you justified the need for more flexibility to go to another country, presumably.

    But I think that in making that point, you have fairly effectively illustrated our concern, which is that we have gone offshore for lots of stuff, and there is not a—what I would call a—rigorous scrutiny of the critical-components requirements that we have in weapons systems with respect to reliability of producers.

    In this bill, we are going to put in a requirement that the primes give us, if you will, the family tree; that is, where their components come from and whether or not those components are considered to be critical.

    At that point, we can identify as to whether or not there are violations of Buy American Act in that family tree. But we can also, I think, put off problems like the one you have just described with JDAM; that is, we can go and we qualify—at some point, probably, there was a decision that there wasn't an American manufacturer of a particular component.

    Secretary ALDRIDGE. That is correct.

    The CHAIRMAN. And instead of tooling up a manufacturer and creating one, which we probably could have done with some effort, it was more convenient to go to a foreign supplier. And we probably had their lobbyists working the Hill vigorously or working the Pentagon vigorously to show their new and shiny wares.

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    Secretary ALDRIDGE. Mr. Chairman, this will fit in directly. I have initiated a foreign-parts dependency study within Acquisition, Technology & Logistics (AT&L) to go look at this particular topic to see where we are to make sure conscious and deliberate and correct decisions have been made across the board.

    And in this particular event, you have stimulated that study.

    The CHAIRMAN. Okay. Good. And we will try to ascertain the identity of that country and——

    Secretary ALDRIDGE. I would be delighted to talk to you off-line, sir.

    The CHAIRMAN [continuing]. In the least, deliver them a strong letter.

    Secretary ALDRIDGE. It has. [Laughter.]

    The CHAIRMAN. And I thank Mr. Ryan.

    Mr. Ryan, are you finished? Do you have anything else?

    Mr. RYAN. I have a couple more things, Mr. Chairman.

    The CHAIRMAN. Go right ahead.
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    Mr. RYAN. Thank you.

    And I think, exactly right, that that is the example. With the titanium, there are four major producers in the world: three are American, one is Russian. And the Americans are about ready to go in the tank. And if we run into that same situation, I think we have a real problem.

    One question I do have: There was a section in here, as well, and I don't have it identified here regarding the commercial uses and how the Buy American requirements and the Berry requirements are not needed for commercial planes.

    And so I guess the question is if DOD or the Air Force would want to purchase, say, a Boeing 767, that there is no requirement in this instance for titanium, American titanium to be included. And it just seems to me that that is a major loophole where there could be a process of just purchasing commercial airlines to somehow not have to comply with the Berry Amendment.

    Secretary ALDRIDGE. That is certainly the case as it stands right now. I know we are looking at that, but you know, we don't control commercial companies and how they do business that are providing a commercial product.

    But I think you have identified a question when we are trying to do more commercial procurement. And certainly this lease of Boeing 767 tankers, if that process goes through, will—they are providing a product to the Department of Defense. And whether or not the Berry Amendment applies there, I think there is still some uncertainty and some question.
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    The CHAIRMAN. Well, let me just say, Mr. Secretary, once again, there is a strong equity that doesn't exist anywhere else that arises from the fact that the American workers paid for the security of the free world out of their pockets. And they, therefore, should be able to build that security apparatus. I think that is a valid proposition that we should implement wherever possible.

    And so, Mr. Ryan and Mr. Manzullo and Mr. Hayes and others are working right now to see that if that Berry Amendment is not, somehow, finessed and that there has been a waiver already in one of the appropriations bills with respect to that tanker rent or lease; that the substance of the Berry Amendment is carried out.

    And there may be other ways to do that. The roadblock that has been thrown up is that it is impossible to trace all of these parts that are coming from other suppliers into this basically commercial line that at this point will be tapped to provide leased tankers.

    I think there are some ways to work around that, that is, to make sure that, in substance, America's titanium producers sell as much titanium into that program in terms of value as they would have if every single part was followed down and traced to the most basic form.

    I want to make sure that happens. And I hope you will go back and renew your direction to these people.

    The other thing I have heard is that, from the suppliers, like Pratt & Whitney, is that the traceability isn't all that difficult, but that it may be tough to re-establish or to redo the vendor lines because you have this mixed vendor base, if you will, some foreign, some domestic.
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    But we should be creative enough to be able to work that. And I also don't want to work it in such a way that we establish a precedent that allows the Berry Amendment to become less important than it has been previously.

    So let's renew our dedication on that one, sir.

    Secretary ALDRIDGE. Okay.

    Mr. RYAN. Mr. Chairman, I would also like to thank you for your leadership on that—also with Chairman Manzullo—and just make a quick plug for our Defense Industrial Based Caucus that we have started, of which Chairman Manzullo is a member. And I think it just illustrates the concern around the country for this.

    And one final piece that I would like to add is that one problem that American companies have—and I think there is no procedure for this—is being provided with some notice.

    You know, Boeing was going off and saying, ''Well, the American companies can't provide the titanium'' when, in fact, that wasn't the case. There were qualified companies. And our American companies were never put on notice that Boeing was saying that they couldn't supply the product.

    And so, I think, Mr. Chairman, we need to also include in this procedure that the American companies that are being ignored or not being used are at least put on notice so they can provide their side of the story that they are qualified and they can provide the product.
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    But, again, thank you for your leadership, and Mr. Taylor and Mr. Abercrombie and some others on this committee share this same concern.

    Thank you very much.

    The CHAIRMAN. And we will continue to work this.

    I thank the gentleman.

    Mr. Cole.

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

    First, let me thank you for a wonderful hearing; giving us this much time and being this indulgent on something that is a very important topic.

    And gentlemen, it would always be remiss for me not to begin by thanking you for your service to your country and, frankly, congratulating you on your extraordinary success not only in Iraq, but, frankly, what has been done in DOD across the board. I appreciate it. I know every member of the committee does.

    I would also ask—and I know you would do this out of course, but I think it is an important point to make—that you recognize that some of the folks that have a different opinion with a number of your proposals have an equally long history of service to their country and the Department of Defense and, frankly, are equally responsible for the success that we have enjoyed in recent months and recent years.
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    There was a comment made earlier, and I am sure it was inadvertent, that particularly on some of the personnel issues, pay-for-performance, that the good performers all like it and the ones that are poor performers don't.

    I would suggest that is probably not the case. There are a lot of good performers I know in my district that have come and expressed concerns to me. And they have a long history of performing very well. They just simply disagree with you.

    And, you know, I have been in politics long enough to know if you can define your opponent, you can discredit their argument before you ever evaluate it. That is a mistake. You know, the folks on the other side of these debates, I can assure you, and I know you know this, sir, are equally committed to the defense of the country.

    I will tell you there is a lot of things in this bill I love. I mean, the environmental stuff, I think you guys are right on. Most of the military personnel stuff I could agree with; certainly most of the acquisition reforms. So it is an excellent piece of work or it has many excellent components in it.

    I do have a problem, like many of my colleagues, with the civil service provisions, in particular. And I have to tell you, I have a problem with the process at which some of these decisions were arrived at. I don't think it has been transparent. I don't think it has been particularly collaborative or consultative. And I think that is why you are running into some of the opposition that you are seeing today or some of the skepticism.

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    And not to open an old wound, but to use it to make a point, let me just go back to Crusader a year ago. I mean, you know, I was not in Congress at that time. I would have disagreed very strongly, as my predecessor did, with that decision. But I accept it, you know, the decision is arrived at, it is made, you move on.

    What I would never accept is the same process we went through in Crusader because I will tell you, I think it was a debacle for the Department of Defense. I think you strained your relationships with a lot of your natural friends in Congress. I think you alienated a lot of your natural constituencies.

    And I would suggest on this civil-service situation, you are headed down the same road if you are not extraordinarily careful. And I would associate myself very closely with the concerns expressed by Mr. Cooper and Mr. Meeks.

    You know, I think this is a breath-taking grant of authority in the civilian personnel area to the Secretary of Defense. And I have a lot of confidence in this Secretary of Defense. But I don't know who his successors are going to be and I don't have confidence in people I don't know.

    I also, frankly, think there is a lot of merit to having these things in a stand-alone provision. I have Mr. Meek's same skepticism when I see something wrapped up in things that I can be very supportive of. I mean, you know, sometimes you sneak through a weak link or a weak target that way by surrounding it with a lot of other more attractive items. And so, I have some concerns there.

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    Let me tell you why, if I may, or ask a couple of questions, having expressed those concerns. Let's take the depot work force. Tinker Air Force Base; I have a great interest in that, obviously. Where have they fallen short? You know, where is the quality. Has the quality been short? Has the productivity not been there? Have they not been cooperative, not been responsive when they were asked to go the extra mile?

    I mean, certainly when I talk to the uniformed military personnel that are responsible for supervising, they think it is a great facility. They think it has a great work force; think they do a good job. And, you know, it concerns me that I know we will have, later, testimony, you know, from that sector, if you will, that will be at odds with you on every single point.

    And they are people that, again, like you, many of them former uniformed military personnel, go on, serve their country in a civilian capacity. So their, you know, their credibility is exceptionally high. Their dedication is exceptionally great. They have performed extremely well.

    And as I read through some of the testimony that we will hear in person later today, I think a good point was made with, ''Hey, haven't we done a pretty good job over the last decade? Haven't we cooperated in down-sizing? Haven't we been productive? Haven't we tried to work with you?'' And I think those are legitimate points, and yet I, you know, what I see is a lot of opposition.

    So I would like you to, one, tell me where they are falling short and, two, go through for me, again, your efforts at collaboration and outreach, because I guarantee you they are not your wards, they are your partners. And they want to be your partners.
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    They look at the universe the same way you do, through very patriotic lenses, and they want the United States of America to be extraordinarily successful in every way. And yet, you know, I don't find that they feel as if they have been included in the process or consulted in a serious way.

    Secretary ALDRIDGE. First of all, there is no intent to go away from the 50–50 rule of the depots. That was considered at one time during this process, but we said that was not the thing we want to do. We believe that we have a process in place that is approved by the Congress, and we are going to proceed.

    There was a need to do some clarification to what you mean by the 50–50 rule. And that is what this is trying to do: Some clarification. For example, we found that what really works well is when there is a partnership between industry and the depot and the private and public sector.

    That works extremely well and we want to encourage more of that because we have seen, and I think every depot manager has seen, the value of partnership; not giving it all to the private sector. And, certainly, we need a core capability existing in the depot.

    But what we have tried to do with this legislation is to say, ''Well, there is one part of it: Some very special access parts should be excluded from the 50–50 because it is normally dealt with very highly talented people within the contract.'' It is a very small percentage. But that was a clarification.

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    The other one is that when the work is done in the depot, even when it is in a partnership, then that ought to count toward the 50–50 calculation as work done in the depot. And, basically, that is what this provision is all about.

    The capabilities of the depot are outstanding. We do see that when it is competed, things improve on both sides of the equation, even when the government wins the competition, costs are saved the efficiency goes up. And they win those competitions about 60 percent of the time. But independent of who wins, costs go down by 25 to 30 percent.

    So competition works, both for the government as well as inside in the government.

    So, I think what we are trying to do here is really to focus, again, on partnerships and making sure we have the right provision in place to make that partnership work better; that is what we are trying to do.

    Mr. COLE. Yes. If I may respond quickly—and I appreciate your points—yes, I don't see any hesitancy about competition in the people that I deal with. Quite frankly, they are like most Americans, they like to compete and they think they are better than anybody at what they do and they think they can beat anybody at what they do.

    Secretary ALDRIDGE. And they do 60 percent of the time. [Laughter.]

    Mr. COLE. Yes. And they will tell you if you would have invested as much in them in terms of infrastructure and technology over the last few years, they would win a lot more than 60 percent because they are working with some pretty old stuff.
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    But, again, I would just tell you, because I don't want to want to surprise anybody down the road, I have real serious, real serious concerns. I think they were raised again about the grant of authority to the Secretary, how broad, how extensive, how complete that is.

    And while I want competition and I believe very strongly in public-private partnerships, I think you are right. I mean, we want more of them. I can promise you, I don't intend to trade, in my area, what I know works well and has worked very well for the promise that somehow competitive things will generate a better product. I mean, I am not prepared to run that gamble.

    And I don't just mean that I hope in a simple parochial sense. I mean, I would expect anybody on this committee to try and do their best to look after the districts they are from, but I want to go beyond. I mean, not just this base, but frankly these workers in these depots around the country have performed extraordinarily well. And my dad worked in one for 20 years, my brother for 10. I would match them against anybody.

    And so, making them better is one thing, but running the risk of losing them, you know, I think is quite another because they have proven their value.

    And then the other thing, again, I would just urge you, as you work through this process, you know, if you win, but you win at the cost of losing the confidence of your own employees and their legitimate representatives through their unions.

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    And again, I think these unions have been amazingly cooperative. You know, if you really look at the last decade and you look at the effort to work with the civilian leadership and the uniformed leadership at DOD to get a better product; to make America a stronger country, you know, they deserve a big role in this process.

    And, again, I don't talk a whole lot with leaders. I talk a whole lot with the guys on the line that used to work where my dad worked.

    They don't feel like they have been part of the process. They don't think they have particularly been included. And, you know, if it is not a collaboration in the end, you know, again, whether you win legislatively or administratively, you won't have the product that you need in the end because you won't have the cooperation of your own workers.

    And we have seen what that means in a lot of corporate context in the private sector in the last several years.

    So, again, I appreciate your service and I don't mean to be unduly harsh. You have been very kind. You guys must have the best bladder capacity on the planet——


    Mr. COLE [continuing]. Because I have gotten out twice on your time here.

    But, again, I appreciate it.
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    Mr. Chairman, thank you very much for your indulgence and letting me go on this long.

    The CHAIRMAN. I want to thank the gentleman. I thank him for his wisdom and his insight. And I have been up with him talking to some of the finest Americans on the face of the Earth, and those are the folks that work in his depot and on his bases.

    And that is what I would ask the gentlemen and other folks here, to look at some of the aspects of this package with respect to what they can do to benefit our federal work force.

    Maybe I am an optimist: I think there is some common ground here. I think, for example, the ability to bring back senior people that have retired as mentors for the new folks who are training up is great.

    I think it would be looked forward to by the new folks who want to know how you solve this particular problem that a guy was able to solve or a gal was able to solve for 20 years because of some insight that they developed. And I think that the senior workers would like the chance to come back in and teach the new guys how you do it.

    So I think there is a value there.

    With respect to this issue that we have brought up with respect to the unions, there is a large number of unions. They have great leadership. They provide a lot; they provide a good dialogue.
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    As I understand, one of the issues is you have, what, 1,300 unions? Is that right?

    Dr. CHU. 1,366 locals. Yes, sir.

    The CHAIRMAN. How much?

    Dr. CHU. 1,366 locals.

    The CHAIRMAN. 1,366. As I understand there are some issues that—kind of like the uniform commercial code, you wish you had kind of a national solution.

    Maybe you pointed out the problem that everybody has to look at is how when somebody gets a judgment against a federal worker how do they garnish it. That is an issue that you try to work through without stripping folks of too much of their pay.

    And maybe there are some issues that lend themselves, like in our government, to a national, if you will, or unified position, where maybe we have a policy that can be adopted across the board. And yet, one size doesn't fit all with respect to a lot of other issues.

    And there are lots of issues that local unions certainly are able to work much more effectively because they know the specific local situation and that maybe a national decision is, number one, very difficult to arrive at because it doesn't fit all of the unions, and, number two, something that does not lend itself to shape at the national level.
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    So my question would be, just kind of thinking out loud, is there a way that we could work a bifurcation of that application where you may have some issues that would be worked where a national standard is required, where the Secretary of Defense could work with the national union leadership and they could put out a national standard?

    And yet that would leave for local unions and local management, on specific problems that lend themselves to specific areas, the ability to work those local problems.

    Now, am I dreaming? Or is there some accommodation that could be made there?

    Dr. CHU. I am sure we could find language that would accomplish that result. Yes, sir.

    The CHAIRMAN. Well, in looking at the array of issues that we handle over the years that are typically taken up, do you see a reasonable split there? Do you think there are a number of issues that need to be decided at the local level, as opposed to the national, and vice versa?

    Dr. CHU. Yes, sir. That is absolutely the case.

    The CHAIRMAN. Okay. Well, why don't we work on that a little bit here in the next several days.
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    Mr. REYES. Mr. Chairman.

    The CHAIRMAN. Yes, Mr. Reyes.

    Mr. REYES. I wanted to speak directly to your comment on bringing back the mentors because I am looking at the schematic here that represents the Office of Reconstruction and Humanitarian Assistance in Iraq after the conflict.

    And in looking at the bios, of course, we have General J.M. Gardner; we have General Ron Adams; we have General Jared L. Bates; General Michael Mobs: lack of minorities here. And not to continue to beat this issue. This is an important issue because two things. Number one, we are not seeing any progress.

    I have asked for the breakdown on the minority employees at the Department of Defense because Dr. Chu mentioned that over the last 30 years they have made great progress.

    If they are anything like the State Department, it is less then 3 percent minorities; not great progress in my mind when we represent Latinos 14 percent, blacks 13 percent of the population.

    The CHAIRMAN. I will bet you a steak dinner they beat the State Department. [Laughter.]

    Mr. REYES. Well, yes, a little, I will say.
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    But my point is, you know, when you have a non-minority pool that you are drawing back in as these ''mentors,'' minorities have nobody to look to as role models. We have to do better and we have to understand where the main obstacles and stumbling blocks are.

    The ranking member asked the question of Dr. Chu, ''Where in here is the section that protects minorities?'' And Dr. Chu cited, ''Well, there will be no discrimination,'' there will be no this, there will be no that. Fine, but where is the part in here that says, ''We are going to go out and make the Department of Defense look like the rest of America''? And where are we going to see the minority representation?

    There is nothing in here except a single person that will decide who goes and who stays. And I will submit to you, Mr. Chairman, that doesn't give me great comfort.

    The CHAIRMAN. Okay. I would say two things to my good friend. First, I think we should let the Department give us what you have asked for, which is a breakdown of the representation of the U.S. work force in DOD. I think it is going to be a pretty good answer, but let's not prejudge it. Let's get that from them.

    And second, let's retrieve from the appropriate statutory or regulatory language the description or the mandate or the charge with respect to minority hiring.

    And so let's see what we have and let's see, second, if that is in any way affected by the proposal before us. Is it, as Mr. Spratt mentioned when he cited the one section that reflected, that hiring will be on a merit basis and then reflected on the provision that gives the Secretary broad discretion and wanted to know what mechanism restrained the Secretary's discretion as a function of directive with respect to meritorious selection.
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    And so that is a question for a lawyer and for counsel. And we are going to get the precise legal determination there, so we make sure we are not missing something.

    So, along the same vein, let's pull the foundation, if you will, for treatment of a minority hiring and see whether or not this proposal in any way diminishes that. But let's let them answer back.

    And incidentally, along that line, we are going to have this next panel come on fairly soon. In fact, we have another briefing on lessons learned in the war from the services. It was set for 2 o'clock. We, obviously, are not going to be able to accomplish that. We may have a vote shortly. So we are going to push that hearing back to 3 o'clock.

    But what I would like to do, Dr. Chu and Secretary Aldridge, when we finish here is let you take a break here. [Laughter.]

    But I would like to have——

    Mr. ABERCROMBIE. Mr. Chairman, are you going to call a break now?

    The CHAIRMAN. No. I think I am going to let Mr. Abercrombie ask a question first.

    Mr. ABERCROMBIE. Oh, good.
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    The CHAIRMAN. But before we do that——

    Mr. ABERCROMBIE. This is the last full measure of kidney devotion going on there.

    The CHAIRMAN. Yes. If you would like to take a break, we will take a break and come back, Neil, if you would like to do that. What do you think?

    Mr. ABERCROMBIE. Am I the last questioner?

    The CHAIRMAN. I think Neil is the last questioner. He has already asked 50 questions pursuant to asking people to yield.

    Mr. ABERCROMBIE. No, no, no, honestly, if I am the last questioner, I would just as soon do it and then these gentlemen can——

    The CHAIRMAN. Okay. We are going to let you do it.

    But what I would like you to do, Secretary Aldridge and Dr. Chu, when we get finished, if one of you could stay we are going to have another panel come up and we still have a number of questions with respect to legal interpretations.

    I would like to make sure that our members who have stayed here until the end have a chance to get the answers to some of those questions.
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    So if you can leave somebody from your staff—counsel, hopefully—who can answer those questions before we leave, so if you have three or four residual questions, we can wrap them up.

    Mr. ABERCROMBIE. I am sure Mr. Geren and Mr. Moore would love to stay. [Laughter.]

    The CHAIRMAN. Is that right? Okay.

    Mr. ABERCROMBIE. I will volunteer them. [Laughter.]

    The CHAIRMAN. I know Mr. Geren and Mr. Moore are true stars on the Hill.

    And, Mr. Abercrombie, you are recognized, sir.

    Mr. ABERCROMBIE. Thank you very much.

    No, I do appreciate the length of time you have been here and I will try not to keep you too much longer.

    But, Mr. Chairman, with respect to the proposition made, I guess most specifically first by Mr. Taylor, I would like to associate myself with having the bill, at least, or having a separate bill, rather, for this purpose.
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    And let me give you an example real quick on this.

    Secretary Aldridge, if you would be so kind as to refer to page 66, Title 2 acquisition transformation. I am going to ask you for your honest observation here.

    And Secretary Chu, if you wanted to chime in, you could.

    Look, subtitle A, Mr. Chairman: ''Transformation of the acquisition process.'' All I am saying here, this is in regard to my point about having this stand as a separate bill and have some deliberation on it.

    Section 201: ''Repeal requirements for major Defense acquisition programs.'' And if you look under the repeals, it refers to Section 2430: 1, 2, 3, 4, 5 and 40 of Title 10 are repealed.

    Now, in all honesty, Mr. Chairman, I doubt whether there are too many people in here can cite what those sections are right now, but we are just repealing them in the Defense Acquisition.

    And the operational manpower requirements—and then it goes on to repeal the applicability of the Klinger-Cohen Act. The Klinger-Cohen Act may be of incredible interest to you and I, Secretary Aldridge.

    It has a little bit of an esoteric quality for a lot of folks with regard to, most particularly, the DOD information technology management.
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    And it repeals, Mr. Chairman, the notification of the Congress. It repeals the notification of the Congress, which is the thing that bothers me the most. The congressional notification reporting requirements of the Section 811 of Public Law 106398, and 351 of 107348, would be repealed for the DOD information-technology systems.

    Now, that may be perfectly reasonable. Maybe this is just some paper burden that doesn't need to be put forth. But you can certainly see, Secretary Aldridge, where a Member of Congress would have a question as to when you are repealing even informing of the Congress that you are going to do it that that would strike a little bit of fear into them that they might be neglecting their own duties.

    Wouldn't you agree that just those points alone require a little bit more than a quick pass over by this committee?

    Secretary ALDRIDGE. Well, I think they need to be explained as to why we are asking a repeal of the activities. We have a process internal of the Department of Defense that we don't report to you on and that is the DOD acquisition system that has a lot of different aspects of it: inoperability, safety, properly pricing things.

    Mr. ABERCROMBIE. Yes, I agree.

    Secretary ALDRIDGE. It so happens that we have now in place a process by which the results and the need for the Klinger-Cohen reporting has already been established in existing processes.
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    Mr. ABERCROMBIE. Excellent. Okay.

    Secretary ALDRIDGE. And so——

    Mr. ABERCROMBIE. Because of the time constraint—I am not interrupting you because I want to stop the flow, but rather, I agree. My point is, and my observation is—and I would just hope you would agree and I hope Secretary Rumsfeld—because obviously you are going to go back and talk to him about what took place today.

    That is the kind of exchange we need to have so that we can achieve a comfort level. And we just simply don't have enough time to do that.

    And all I am asking, Mr. Chairman, and I am asking you, Secretary Aldridge, for whom I have great respect, and I think every member does here—and Secretary Chu, you have already been commented upon today by other members in terms of your service, in terms that I think that everybody would agree with—is that you go back and say to him, ''Look, let's take some time on this. You don't have enemies over here.''

    And if we take some time, maybe we can come up with a package that not only everybody can agree upon, but which we can have a comfort level in terms of our responsibilities here that you could live with and everyone would be a lot happier.

    Secretary ALDRIDGE. Just a comment, briefly, is that we went through internally a tremendous process to get all these issues vetted, and of course had to send it to Congress. We have to start somewhere and that is what we have done.
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    Mr. ABERCROMBIE. Fine.

    Secretary ALDRIDGE. We have sent it and we now start the process.

    Mr. ABERCROMBIE. That is good, because I would reflect to you that we have to go through an internal process, too.

    One other thing then, if I can very quickly, I am going to ask you—I won't go too far with it, but I have information here; I don't have time to go into it all—memos, particularly from former Secretary England and so on, asking people not to cooperate on the Marine Mammal Protection Act and on the Endangered Species Act—cooperate with, like the Fish and Wildlife Service to try to resolve these issues, because the Pentagon wants to make significant changes.

    I have various memos which I think are in contradiction to something even Secretary Wolfowitz said recently in which he stated that there was no significant difficulties in being able to accomplish our training mission.

    But what I want to ask you to do is to be prepared at some point—we can't handle it today, Mr. Chairman—to go over in detail what you want to do exactly with the Marine Mammal Protection Act in terms of the two definitions of harassment and injury and why you think you need to have this exemption and why you think you need to not cooperate with the Fish and Wildlife Service with areas like critical habitat with regard to training exercises and so on.
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    Obviously we can't go into it today. And I am going to pursue that. And the only reason I bring that to your attention now is I am one of the members that sits on the Resources Committee, as well, and I have had particular jurisdictional awareness of these issues before.

    And I honestly do not believe that there is any significant difficulties in arriving at an accommodation between our training requirements for the military and meeting the provisions of either the Endangered Species Act or Marine Mammal Protection Act, let alone Clean Air and some of the other issues. I believe they can be accommodated, I believe they have.

    And I want to finish, Mr. Chairman, by saying that the record of the Department of Defense in meeting environmental standards and requirements is exemplary compared to almost any other area of governmental agency activity, including Interior, Commerce and some of the other agencies.

    And I think if we build upon that record, we could resolve some of the outstanding issues in the exceptional instances in which there may be a difficulty by working together, rather than trying to get wholesale exemptions that we might regret later on.

    Thank you.

    The CHAIRMAN. I thank the gentlemen.

    And, Mr. Secretary, you are going to be leaving this position fairly soon. And you have been an extraordinary public servant. I think you have embodied in your career the idea of duty and service of country that is manifested in the careers of hundreds of thousands of great federal workers.
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    And let me tell you, you have really impressed this committee with your work ethic. I have seen you over at the Pentagon working well into the hours of the night and I am wondering, why is this guy spending all this time working when he could be out maybe having a lot more fun in life? [Laughter.]

    Secretary ALDRIDGE. My wife asked me the same question. [Laughter.]

    The CHAIRMAN. Well, you represent the absolute best in government service. We appreciate you.

    Secretary ALDRIDGE. Thank you, sir.

    The CHAIRMAN. And let's continue to work on this issue before you take off. And thank you for a great career of dedicated public service to our country.

    And, Dr. Chu, thank you for coming over and continuing to work with us.

    Let's keep this going and please leave some talented folks behind to answer the last questions of the day, because we will probably have five or six more legal questions before the hearing is over.

    Dr. CHU. We will leave our drafting team here, sir.

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    The CHAIRMAN. Okay. Thank you very much and we will take a break and we will take the second panel shortly.


    The CHAIRMAN. Ladies and gentlemen, we are going to conclude this hearing after our second panel is up, and then we will move into our lessons-learned classified briefing with our warfighters coming back from Iraq. And then, at approximately 10 p.m. we will take a break to get ready for the next hearing. [Laughter.]

    We have with us the Honorable David M. Walker, Comptroller General, United States General Accounting Office; and Bobbie L. Harnage, Sr., National President, American Federation of Government Employees, AFL–CIO.

    And, gentlemen, thank you for being with us and for enduring here for this very long hearing. We appreciate that. This is obviously an issue of great importance to us and a major issue from your perspective.

    So at this point, I think we will lead with Mr. Walker and then, Mr. Harnage, we will be happy to hear your testimony. And the written testimony of both witnesses, without objection, will be included in the record.

    And having said that, before we fire up, I want to turn to my ranking member, the gentleman from Missouri, Mr. Skelton, for any remarks he wants to make.

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    Mr. SKELTON. I merely want to ask unanimous consent to put in the record the testimony of J. Jerry Shaw, general counsel, Senior Executives Association.

    [The testimony of J. Jerry Shaw can be viewed in the hard copy.]

    The CHAIRMAN. Without objection.

    Mr. Walker, thank you for being with us. The floor is yours, sir.


    Mr. WALKER. Thank you, Mr. Chairman, Ranking Member Skelton, all the members of the committee. I appreciate the opportunity to be with you.

    Thank you for entering my full statement into the record. What I will do now is to summarize the most important comments for your consideration.

    I will focus my remarks on the civilian human-capital reform proposals in the act that I believe have been the area of most interest and concern and discussion and debate today.

    But before I touch on our comments, I think there is a little bit of context that is appropriate.

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    First, DOD is the second-largest civilian employer in the federal government with approximately 700,000 civilian workers.

    Second, the DOD deserves an A on effectiveness. It is number one in the world in fighting and winning armed conflicts as recently evidenced by Iraq; but it is a D on economy, efficiency, transparency and accountability. DOD has nine of 25 high-risk areas on GAO's High Risk List that was published in January of 2003.

    At the same time, current DOD leadership from Secretary Rumsfeld down is committed to transforming the way the department does business. Human-capital strategy is key to any related government-transformation effort, as well as DOD.

    We agreed that the federal government needs to modernize its human-capital policies and practices to conform to the 21st century, to recognize the reality that the work force is very different, the world is very different. At the same time, how you do it, when you do it and on what basis you do it matters.

    DOD's civilian human-capital reform proposals are unprecedented in size, scope and significance. They have significant implications for government-wide human capital policy in general, and OPM in particular.

    As a result, Congress should consider them carefully before acting. DOD is asking for many of the authorities granted to the Department of Homeland Security, but in some cases without the related safeguards. They are also asking for some additional authorities beyond what Congress granted to the Department of Homeland Security within the past year.
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    Many of DOD's specific proposals have strong conceptual merit, including their broad-banding and pay-for-performance proposals. However, we do have serious concerns with regard to several aspects of their proposals, and we have outlined those in the statement, Mr. Chairman, so I won't cover them now.

    We believe that there is no question that DOD needs additional flexibility in certain areas. At the same time they need to be coupled with adequate safeguards to prevent abuse and appropriate transparency mechanisms in order to provide for effective congressional oversight.

    We believe that it would be more prudent and appropriate to take a government wide approach to broad-banding and pay-for-performance. Specifically, the Congress could authorize broad-based authority which could be used by either DOD or any other agency to implement broad-banding and pay-for-performance systems if they demonstrated to the Office of Personnel Management that they have adequate systems and safeguards in place in order to maximize the chance of success and minimize the possibility of abuse.

    These safeguards are outlined in my statement as at least a beginning that Congress could consider for discussion and debate.

    The Congress should also consider establishing a government-wide fund which agencies could access to help implement modern-performance management systems based upon sound business-case proposals. That is also talked about in my statement at more length.

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    This approach would accelerate progress throughout the federal government, not only in DOD, but would avoid further Balkanization of the civil-service system within the executive branch.

    It also would assure that management was provided reasonable flexibility while at the same point in time, adequate safeguards were there to prevent abuse and appropriate transparency and accountability mechanisms were in place for the Congress to discharge its constitutional responsibilities relating to oversight.

    So in summary, Mr. Chairman, we have mixed emotions: Conceptually, strong support for many of the things that are being sought. At the same point in time, concerns that there are not adequate safeguards and that those need to be incorporated and addressed.

    And that, furthermore, given the significance of this, not only the civil service as a whole, but also OPM in particular, that Congress needs to carefully consider it.

    But our view is in some cases, a broader-based approach with adequate safeguards would actually be preferable than having individual departments and agencies continue to come up and say, ''we would like to be carved out, trust us,'' versus provide broader-based authority that would say, ''we are willing to provide DOD and a number of other parties the ability to be carved out provided you can demonstrate that you have the safeguards in place.'' The Missouri principle: Show me. And then it is operationalized.

    Thank you, Mr. Chairman.

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    [The prepared statement of Mr. Walker can be viewed in the hard copy.]

    The CHAIRMAN. Mr. Walker, thank you.

    And Mr. Harnage, thank you, sir, for being here today and spending all the time you have been spending working this very important issue. And the floor is yours.


    Mr. HARNAGE. Thank you, Mr. Chairman and Mr. Skelton and members of the committee. Thank you for the opportunity to testify today on DOD's proposal for total unilateral and unchecked authority to impose an entirely new personnel system upon the Department every time a Defense Secretary decides to do so.

    AFGE represents over 200,000 civilian employees who have worked around the clock preparing the troops, maintaining and repairing and loading their weapons onto tanks, aircrafts and war ships. Their loyalty and patronage cannot be questioned.

    But today we must question just how loyal and dedicated the Department is to them.

    DOD's proposal does not ask the Congress to vote on a new personnel system for the Department or to vote on a new pay system for the Department or to vote on taking away federal employees' rights to due process to appeal decisions they feel have been based on discrimination or political coercion or to vote on whether federal employees should have the right to form labor unions or to vote on the rules that govern reduction in force, rules that today require consideration of both performance and seniority.
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    This bill is asking—no, it is insisting—that you hand your authority on each of these matters to the Department on each successive Secretary of Defense. They will make those decisions, not you.

    You have heard a lot of excuses as to justification for this operation to erode the civil service. The worst has been, the legislation is needed because the current system forces DOD to contract everything that isn't nailed down and prevents high performers from getting their due. Neither of these arguments is true.

    DOD's proposal allows every new Secretary of Defense, without congressional input, to impose a new flavor-of-the-week pay-and-personnel system of its own design. And employees and their representatives will have nothing whatsoever to say about it, and neither will you.

    The not-so-veiled threat that if they don't get the power they demand they will simply privatize everything is an important admission that contracting out has never had anything to do with saving money or improving efficiency.

    And giving each successive Secretary of Defense total unchecked authority to hire and fire whomever he wants, promote and demote whomever he wants, schedule and pay overtime or schedule and fail to pay overtime to whomever he wants, allow collective bargaining or disallow collective bargaining to whomever he wants has little to do with national security.

    It is about unbridled power to move money and jobs to political favorites, cronies, relatives and concubines.
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    We have a tradition in this country. We have a system of checks and balances that holds everyone, even the Secretary of Defense, accountable. No Secretary of Defense should be above the law.

    But DOD's legislative proposal amounts to nothing more than giving the Secretary of Defense the power to decide which laws and regulations he would rather do without. I would urge you in the strongest possible terms to think twice before you vote to hand this power over to each Secretary of Defense.

    Pentagon officials, at their case is a plea for freedom to waiver the laws and regulations that compromise the federal civil service. Our opposition is a plea for freedom as well. We ask that you preserve our freedom from political influence, cronyism and the exercise of unchecked power.

    DOD is not a private corporation. Market pressures do not keep it honest. Congress and collective bargaining and the rules of law do. Government agencies operate under laws and regulations set by Congress specifically to make sure that taxpayers and government employees are guaranteed freedom from coercion and corruption. DOD's proposal takes away that freedom.

    I ask you, what sense do their arguments make when there are at least four times as many contractor employees that work indirectly for the department, many of them in a unionized work force; employees who have the right to have their union represent them, the right to collective bargaining, collective bargain for all the protections and rights that the Department is asking you to take away from the civilian work force you now control.
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    You will have employees working side by side, sometimes doing the same work. One will have all the rights any other citizen of this country has, and the other will have virtually no rights. You will be creating a work environment where unions will be the only protectors of constitutional, civil, and human rights, fair and equitable treatment of one group of workers. And Congress will have taken away those rights from the other groups. Employees Congress has heretofore protected.

    The most absurd comment I have heard concerns pay. Everyone that performs above 51 percent will get pay increases; higher performers, more than the rest. Those not performing at or above 51 percent will get their pay cut. I thought they wanted to get rid of poor performers. Now I find all they want to do is just pay them less.

    Let me sum up with this observation. The comptroller general, Mr. Walker, has laid it out very professionally for you. He recommends that you do not do this at this time this way. DOD is not ready, and neither are you.

    I urge that you take his advice, and as the gentleman from Tennessee said this morning, and it is the same thing really that the comptroller is saying, why would you buy a pig in a poke?

    There is no justification for this rush to pass this legislation. Instruct the Department to work with the employees' representatives and develop a draft of the changes in statute and regulations they need and bring it back to Congress when it is done. This can be a win, win situation.
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    Mr. Chairman, that concludes my statement. And I will be glad to answer any questions you might have.

    [The prepared statement of Mr. Harnage can be viewed in the hard copy.]

    The CHAIRMAN. Okay. Thank you, Mr. Harnage. And Mr. Harnage, let me start by asking you this question since you commended Mr. Walker for his statement. Mr. Walker said there were lots of good initiatives in this package. Do you agree with that?

    Mr. HARNAGE. Well, there can be some, some that——

    The CHAIRMAN. Well, what I am trying to find is because we are looking at all the provisions. If you sat in on the first part of the hearing here with Dr. Chu and Secretary Aldridge, we took up a number of those issues which we disagree with the Department on.

    And so, some we are going to agree with, and some of them we are going to disagree with. And so, what I am trying to do is find some common ground here.

    A couple of things struck me in this last hearing that I thought came to my mind would be things that federal employees would like. And one, let me give you a couple of them. And I would like your comments on them.

    One, they talked about the fact that you have so many guys in uniform doing jobs that federal employees could be doing. But the reason you have a sergeant go do something is because it takes a couple of months to qualify, go through the bureaucracy with respect to qualifying a federal worker for that position.
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    So if that is true—and I have seen some evidence that it is true—it appears the Secretary has over 100,000 people in uniform doing jobs that he would like to move them out of and have those jobs done by federal workers. That would seem to accrue to the benefit of the federal work force if in fact that happens.

    So do you agree with the idea that there is too much bureaucracy in trying to qualify a federal worker for some of these jobs that presently uniformed people are being assigned to do? Would you like to have more of those jobs being done by federal workers? And do you think that is something we should try to accomplish here?

    Mr. HARNAGE. Well, to answer your first question, what is good in the bill. You know, it is very difficult for me to answer that question because this is the second hearing I have been to, and I have heard a different interpretation of what is in the bill.

    We didn't get it as quick as you did, although there was some discussions. All it was was a heads up of what might be coming forth. There was no here-is-the-legislation-we-are-looking-at draft, would you look at it and tell us what your problems are.

    It was a discussion. And when we asked the specific question, ''Is this going to be in the legislation?'' we were told they were not authorized to talk to us about that.

    The CHAIRMAN. Okay.

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    Mr. HARNAGE. So it is hard for me to say with an ever-evolving interpretation of what they intended for me to say anything is good in it. To answer your question, treating 700,000 federal employees wrong does not make it better just by making it 800,000.

    So I question the sincerity of what they said. And let me give you an example. When we were on the commercial-activities panel, and we were talking about bringing work back in house, when we were talking about giving federal employees the opportunity to compete for new work, Pete Aldridge, who sat right here, first asked why in the world would we do that. We said because it would save money.

    And his other comment was, we don't have the capability to do that. We can't hire the employees. But all of a sudden, they can hire, you know, several thousand. I don't believe they fully intend to do that. There is no language in the legislation that says they will do that. It is merely an opportunity to do that.

    The CHAIRMAN. Well, let me ask it a different way, then. Let's assume that you had a different administration, and you had an administration that you felt was in your estimation going to carry out the bill in what you consider to be an appropriate manner. And you have this problem. I am trying to raise the substantive problem. You have 170 some thousand uniformed people, people in the service, doing jobs that presumably could be done by civil servants.

    And the answer that we have received as to why it is difficult to get civil servants in there as opposed to just ordering somebody in the chain of command to go do it is because it takes a lot of time to make that qualification.
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    In terms of the substance, not the personalities, but the substance, would you like to have a system where you can rapidly qualify a civil servant to do a job that is presently being done by uniformed personnel so they could take that job, and the uniformed personnel, that sergeant could go back to training for warfighting?

    Mr. HARNAGE. I have no question with that and don't have a problem with that because over the past 20 years, I have seen DOD move military people into civilian slots and it becomes military slots. Reverse of that shouldn't be a problem. As far as qualifications and the ability to hire people, you know, this is——

    The CHAIRMAN. Well, why don't we work on that problem then?

    Mr. HARNAGE. Give me a chance. If you pass this legislation, I don't have that opportunity.

    The CHAIRMAN. Well, I tell you what, Mr. Harnage. We probably will have spent more hours, believe it or not, in this $400 billion bill—we probably at the end of tomorrow will have spent more hours because we have so many things we have to do. And we are going to follow this up with lessons learned in this war we are fighting or have just concluded.

    We will probably have spent more hours doing this, working this thing. And we are going to spend, let me tell you, a ton of staff hours and member hours trying to shape this bill, rejecting some of the provisions that the Administration has and accepting others.
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    And so, I would like to know in good faith whether you think we can find some common ground in some of these areas where you say, ''Yes, I would like to have a federal employee having a shot at that position instead of having a uniformed guy have it.''

    And according to the testimony we received from the Administration, in some cases what you do instead of going with the federal worker, because it is harder to qualify them, is you work around that by hiring a contractor and contracting out.

    Now if it becomes easier to qualify your own people and your own federal workers to do the job instead of a contractor, I would think that is something that you should embrace and try to work on.

    So, do you have some time to work over the next couple of days with our staff and look at some of these basic, substantive provisions and see if there aren't some things that you can agree with or that you would be willing to work on and change them in such a way that they would help the federal work?

    Mr. HARNAGE. Mr. Chairman, I have never turned down the opportunity to work with somebody to make positive change.

    The CHAIRMAN. Okay.

    Mr. HARNAGE. And I would be glad to work with you on that. I just question the sincerity of what the Department has said. And let me give you one other example. I just came from Kirkland Air Force Base, the laboratories.
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    The CHAIRMAN. Could you pull the mike up, please, close.

    Mr. HARNAGE. I just came from Kirkland Air Force Base which has a lot of laboratories on it. And the doctor there was explaining to me in this laboratory where they were doing some great work, some important work, was saying we are going to build an annex onto this building and increase, double our work force.

    And he said, my problem is I have the money, and I have the land. But I can't get the authorization for the Full-Time Equivalents (FTE). Now if he has a problem with a couple of dozen, hiring a couple of dozen scientists or engineers, where are we going to get the FTEs to hire several thousand ex-military slots to fill if we can't just fill those couple.

    So they have to come clean with you, Mr. Chairman. They are not coming clean with you. They are controlling the slots. The delay in training people, the delay in hiring people is the flexibilities they currently have because everybody from A to Z has got to look at it and approve it instead of giving that manager the authorization to do what he needs to do to fulfill his mission.

    The CHAIRMAN. Mr. Walker, looking at the provisions, the most important, substantive provisions of this proposal—and going first to that qualification provision that I talked to Mr. Harnage about, have you looked at that problem, the problem of qualifying federal workers for jobs?

    Mr. WALKER. We have done some work in that area. And there is no question that there are certain aspects of this bill that have merit from a conceptual standpoint. At the same point in time as I point out in my testimony, I think there need to be some additional safeguards incorporated.
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    The CHAIRMAN. Okay. What safeguards are you thinking about?

    Mr. WALKER. Well, on page five and six of my testimony, I give several examples of things where we believe it would be appropriate to incorporate some additional safeguards.

    One thing I would note, Mr. Chairman, is it is my understanding that it doesn't take legislation if the Department wants to end up converting certain military slots that are currently occupied by military, uniformed personnel into civilian. I don't think it took legislation to do the otherwise. I don't know that it takes legislation to turn it back.

    The CHAIRMAN. No, the Administration said that the problem was it takes a long time and a lot of red tape to get the federal worker there in that position. And so it is a lot easier basically to simply turn to the sergeant and say, ''Go do it.''

    And since he is in the chain of command, and he doesn't have this red tape, you can put him there quickly. Now, that seemed to have some merit. The idea that you want to undo that so that you can move a federal worker into that position, free up the military guy to go do his job, his warfighting job.

    Mr. WALKER. It does have intellectual merit. As you know, there was some reform in the Department of Homeland Security bill that provided government-wide reform in certain areas. Senator Voinovich as well as Congresswoman Davis are considering some additional government-wide reform in this area because DOD is not the only one that has this problem. There are a number of federal civilian agencies that have the same problem.
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    The CHAIRMAN. Okay. But you would recommend doing something about that problem?

    Mr. WALKER. With appropriate safeguards.

    The CHAIRMAN. Okay. And you note some of the safeguards that you would put in legislation, you think need to be placed in legislation in your testimony?

    Mr. WALKER. We do. And I would be more than happy for myself or any of our GAO staff members to be able to converse with you, members or staff to try to address others.

    The CHAIRMAN. Okay. Let me ask you another question for Mr. Harnage and yourself.

    We have talked about the national issues, or having negotiation on a national basis as opposed to on a local basis. And the idea is that there are some 1,300 locals and that that means that if you have an issue which is a common issue or a standard issue; one was this garnishment issue that comes up.

    It may be treated in 1,300 different ways presumably, and yet it is something that would seem to lend itself to a national standard where once you set that standard and that formula that it is something that could be picked up by all the locals right down the line and could be used.
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    The thought occurred to me that in trying to make kind of a compromise on this issue that there is probably a lot of issues that are local in nature where one size doesn't fit all. But there are some things where one size probably would fit all or should be a national standard.

    Does that make any sense, Mr. Harnage, that we might have a formula where there are some issues that are decided nationally so the Secretary of Defense can have a meeting with national union leadership, clear that one off the calendar and then let the locals work on the things that are specifically local in nature? What do you think?

    Mr. HARNAGE. Sure, Mr. Chairman. You are absolutely right. And I can give you plenty of examples where that has already taking place. But the example given on the garnishment of wages, let's clean that up. None of us in this room right now know who the problem was. We are automatically assuming that it was the union.

    The CHAIRMAN. I am not assuming it is the union. I am just offering that as an issue, just as an example. There is no fault being placed here.

    Mr. HARNAGE. Right. Well, no, but I think Dr. Chu tried to imply that we were the problem when in fact, we don't know but what they were the problem. They wouldn't agree with us rather than us not agree with them.

    The CHAIRMAN. Well, listen. I assure you that at least I took no implication that there was any wrong or right.
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    Mr. HARNAGE. But we have about 32, I think it is, of what we call bargaining councils, where we are bargaining at the level you are talking about.

    We right now bargain for the Marine Corps. We have the entire command in the Air Force, the Logistics Command, where we bargain at command level. We do it with the Veterans Administration (VA). We do it with the Social Security Administration. We did it with the Border Patrol and with Immigration and Naturalization Service (INS) before Homeland Security. There are 32 examples of those where we negotiate at the agency level. And they have supplements to deal with the unique situation down at the other level.

    The reason we don't have more than that is the Pentagon has fought us for the last 20 years to raise those recognitions. They wouldn't allow it. And the last couple of years I was able to get them to just quit fighting it and let it happen.

    And within the last year, the commissary agency, the finance agency have all—we have raised the level of recognition up to the agency level because they didn't resist it. But there is a way of doing it. You don't need legislation. What you need is cooperation. And there is a way of doing it so that the employees choose who their representative is rather than the employer. That is the way I prefer it.

    The CHAIRMAN. Okay. Well now we are talking about negotiating at a national level. We are not implying that the Secretary of Defense would chose the national union leaders.

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    Mr. HARNAGE. Well, if he has 1,300, how is he going to deal at the national level with 1,300? He hasn't cured his problem.

    The CHAIRMAN. But you have national leadership that can handle these issues, though, right? For example, you would be in a position to negotiate national issues with the Department of Defense.

    Mr. HARNAGE. That would be true. And we had that. We had that under a defense partnership council, which was immediately done away with when this Administration came in office.

    The CHAIRMAN. Okay. Let me ask Mr. Walker. Do you have any comment on that issue on whether you could have a bifurcation of this thing where you have national issues handled nationally, gotten off the docket, and then local things are retained for the local level?

    Mr. WALKER. I think it clearly makes sense for some issues as a matter of, you know, efficiency and economy to be able to be dealt with at the national level. And other issues, by definition, because of their nature have to be dealt with locally. I think the point is is that whether or not you need legislation to do that.

    Clearly that is something that ought to be done. It is in the interest, I would argue, of both parties to try to make sure that national or cost-cutting issues are dealt with at the highest level possible.

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    The CHAIRMAN. One last thing, and then I will move on. I want to thank my colleagues for letting the chair just pursue this a little bit. But another thing that jumped out at me was you may have seen me take a double take when they said that such a large percentage of our work force is eligible for retirement right now.

    I have gone through a number of depots with great folks working in them, and they are a little bit like the F–16 facility in Dallas, Fort Worth, where I was informed that I think the average age on the line of those grand people building those great planes was like 53 or 54.

    And so, when they talked about that, a couple of things came to me. One was this idea that, where you can hire back a retired federal employee who has that great skill, and he can be a mentor to the new folks coming on. Now it seemed to me like that ought to be something that would appeal to federal workers, both the young guys coming on and the senior folks that have left.

    The other thing that I thought would have appealed to federal workers is the idea that when you have in these great new skills where you have the job fairs, and you have all the companies out there hiring people basically right out of a job fair, that an IBM can come by and pick up somebody who has a tremendous skill of some technology and hire them right there.

    And what we have to say in the federal government is we will get back with you. And after three or four months, you may have a job. And we are going to lose out to that private company. So in those two areas, could you give me your comments? One is having the senior guys come back on board to mentor new people coming in. And the other one, being able to hire people quickly. Doesn't that make sense?
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    Mr. HARNAGE. It makes sense if you have the correct checks and balances there. In the first place, that is probably going to involve very few people that I represent because only the higher grades are going to get that opportunity. You have to make sure that we don't create a position so that I can retire at 50 to 60 percent of my salary. But before I do, I hire myself back as a senior employee. And what I have done is substantially increased my income, but I am doing the same job. That is not in the best interest of the taxpayer.

    The CHAIRMAN. Well, we are not going to let you hire yourself back.

    Mr. HARNAGE. Well, sure. There is nothing in that legislation that prevents that.

    The CHAIRMAN. Let me assure you, when any legislation leaves this committee it is not going to allow either congressmen or federal workers to hire themselves.

    Mr. HARNAGE. Well——

    The CHAIRMAN. Okay. Hefley is out of here now.

    Mr. HARNAGE. Well, you need to make sure those——

    The CHAIRMAN. So with proper safeguards, you think that is not a bad thing?
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    Mr. HARNAGE. Proper safeguards will make sure that it is in the best interest of the mission. Sure, there is not a problem with that.

    But be careful that what we are not talking about with this employer—somebody mentioned this morning about people of the same mind. Make sure that we are not laying the ground work for the military establishment to hire itself back, and everything we have in the Pentagon is of the same mind.

    The CHAIRMAN. Okay. Mr. Walker.

    Mr. WALKER. Two things, Mr. Chairman. Clearly it makes sense to provide some additional flexibility to be able to provide, to hire critical occupations more expeditiously than now.

    Furthermore, clearly it makes some sense to provide some reasonable flexibility to be able to help with succession planning, in some cases to help people to enter into phase retirement rather than just all-or-nothing working.

    I might note that Congress gave us some flexibility in this regard. It gave GAO the flexibility to be able to hire a certain number of personnel for a stated period of time on a non-competitive basis. That concept, I think, not only has potential merit here within DOD, but elsewhere. But you limit it by the percentage of people, the term and critical occupations so you don't undercut the civil service.

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    Second, I would also note that Congress has provided us some flexibility to where we have the ability to have people phase into retirement, where they can work part-time, where they can end up still being employed and get their annuity.

    But we are going to do that in a situation where it is a year-by-year test and where there are going to be limitations on the number of people that can do it. So yes, I think these concepts have merit. And I think with the right kind of safeguards, not only to prevent abuse, but frankly to control costs, because there are costs associated with these provisions, as well.

    The CHAIRMAN. Okay. And Mr. Walker, is it true, because this was offered, kind of, anecdotally that you go to a job fair, and the U.S. Government can't hire you for several months, but the private company hires you on the spot if you have what it takes? Is that the case?

    Mr. WALKER. It can be the case, depending upon what the nature of the position is and whether or not the rules that apply, whether it is rule three, et cetera, et cetera.

    The CHAIRMAN. Okay. Okay. Thank you.

    Mr. REYES. Mr. Chairman.

    The CHAIRMAN. Yes, go ahead. And then I will yield to Mr. Skelton here.
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    Mr. REYES. Only because I want to make a point on your question there. In the past, the OPM has granted authority to agencies that are under stress. And I will use the Border Patrol as an example to do one-stop hiring.

    And what that means is that agency will put together a task force that will go essentially and give the written examination, do the interview, do the medical check and kind of put an employee on a fast track. That normally would take the three to four months, would be greatly reduced. They could actually be in a class within a matter of weeks and on the way to the academy.

    That flexibility has been done in the past, can be done. And I know if it was done for the Department of Justice Border Patrol, it certainly can be done for the Department of Defense.

    So I wanted to make that clear on that because that is something we have done before or in the previous career we have done previously. We hired about 2,200 people that way.

    The CHAIRMAN. Excellent. Excellent.

    Mr. Skelton.

    Mr. SKELTON. I will have some questions later.

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    The CHAIRMAN. Okay.

    Mr. Spratt.

    Mr. SPRATT. Thank you both for your testimony. I wasn't here for all of it, but I have been trying to read it and listen at the same time. And Mr. Harnage, I read a good bit of yours before your testimony.

    Let me ask you, Mr. Walker. You say in your testimony, these authorities give DOD considerable flexibility to obtain and compensate individuals and exempt them from several provisions of current law. You go on to say we strongly endorse providing agencies with additional tools and flexibility.

    But the broad exemption from some existing ethics and personnel authorities without prescribed limits on their use raises some concern. Could you be more explicit? Could you list in particular the ethics and personnel exemptions that you find troubling?

    Mr. WALKER. Well, the personnel exemptions, we give several examples on page five and six where we talk about the fact that in many cases the Department of Defense is asking for similar authorities that the Department of Homeland Security has, but without some of the safeguards with regard to numerical limitations or without regard to the role that OPM might play or, in one case, OMB might play as a check and balance.

    I think one of the issues that we have to keep in mind here is that when you pass legislation, it is for every Secretary of Defense forever.
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    And one of the concerns that I have, sir, is that while there is no question that conceptually a lot of these proposals have merit, the idea of taking the Department of Defense, which is the largest civilian employer behind the postal service, and effectively carving it out and effectively exiting it from much of the major aspects of the civil service, is one that I would have concern about as to the precedent that it would set.

    And I believe that, obviously, some of the things they are asking for on the military side are unique to the Department of Defense. But some of these areas frankly are not just problems for the Department of Defense. They are problems for the whole, you know, civil service.

    And if the Congress could end up recognizing that and trying to work to provide reasonable flexibility to DOD and frankly other agencies, but to incorporate adequate safeguards to prevent abuse, I think you have a win-win situation. You not only help DOD, you help the government as a whole and the taxpayers. But at the same point in time, you protect the rights of employees.

    Mr. SPRATT. Let me ask you on a very different topic, but still part of this whole proposal. DOD proposes to dispense with the SAR, the selected acquisition report. It is my understanding they propose to raise the threshold of the applicability of TINA, the Truth in Negotiation Act, which applies to sole source contractors to $200 million, which precludes an awful lot of sole-source business.

    And there are a number of other management tools that have been built into this system over the years. It used to be the GAO had quite a bit of work to do with the SAR. You would periodically issue a review. I don't think you do that any more. We probably repealed that at some time. But do you think it is wise to repeal the SAR without having something to put in its place?
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    Mr. WALKER. There is no question that there is a need to streamline and simplify certain acquisition aspects. Also, there is no question there is a need to streamline and simplify the reporting proposals.

    However, I would note that if this legislation was enacted as it is proposed, including the SAR, then a number of critical reports that we rely upon in order to do work for the Congress on weapons systems and other major acquisitions would no longer exist and therefore, that that would impede our ability to do our job for the Congress and the country.

    I would also note, as another example, is there is a sunset provision in here to repeal a number of reports after five years. Something like that may have merit. But it should be, in our opinion, prospective. In other words, if you pass a bill, the way that it is written right now, anything that was in existence five years ago or more is gone the next day.

    And so, if Congress wants to do something like that, you may want to make it prospective. So no, not a unilateral exemption of SAR, but a streamlining and simplification.

    Mr. SPRATT. What about the Truth in Negotiations Act? I know that you don't do the follow-up audit work there. I believe the Defense Contract Audit Agency does. But still, it basically says that if we have a sole-source contract, we have a right to go in and look at the cost data and see whether or not we are getting a fair deal.

    Mr. WALKER. I would have to look closer at that. You properly pointed out that we are not the ones that are on the front line of dealing with that. And so therefore, I wouldn't want to comment right now.
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    Mr. SPRATT. How about DCAC, Defense Contract Accounting Centers?

    The CHAIRMAN. Mr. Spratt, could we get an answer on the record for that because I think that is an important——

    Mr. WALKER. I would be happy to provide something for the record, Mr. Chairman, on both questions.

    Mr. SPRATT. Okay.

    Mr. WALKER. Thank you, Mr. Spratt.

    Mr. SPRATT. DCAC, Defense Contract Accounting Centers?

    Mr. WALKER. Well, that is what I said. I will be happy to provide something for the record on that.

    Mr. SPRATT. Okay.

    Mr. WALKER. Thank you.

    Mr. SPRATT. As long as you are doing that, if you could get your staff to look at the other reports that are discontinued by the adoption of this legislation and pick out the ones that really have some significance to you, to your agency, to having data in the public domain that you can use and don't have to go out and get together from scratch in order to keep abreast of defense contract work.
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    And let us know in a letter back to the committee. That would be very useful.

    Mr. WALKER. I anticipated that request. And we are working on it right now, Mr. Spratt. Thank you very much.

    Mr. SPRATT. Thank you very much.

    Mr. Harnage, have you seen before in the language of other agencies anything as exclusive as the language which vests the sole, exclusive and unreviewable authority in the Secretary of Defense to do countless things with personnel in this bill? Are there any other parallels to this that you can think of?

    The CHAIRMAN. Now, did I hear something about leading the witness when I was asking that kind of question?

    Mr. HARNAGE. Well, I have been in this business for 39 years, and I have never seen anything like this.

    Mr. SPRATT. Well, that is your answer. I didn't have to lead him to get that answer. He has been here for 39. He is an expert on the subject.

    I have sponsored before—and I will let others ask a question after this—language on trying to take the China Lake experiment, for instance, with pay banding and performance reviews to offices throughout the Department of Defense and not just to a select entity like China Lake.
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    And I will have to say that in the past when we put it through, I was on this committee and then on the Government Operations Committee. I was in two places where we could move the legislation. We had some negotiations with your folks in order to get the language down to a point where you wouldn't object to it.

    Do you have any problems with the way it is working out to the best of your knowledge right now, the experiments, the expanded experiments with that kind of personnel pay?

    Mr. HARNAGE. I am not convinced that it is any better than the current pay system. You have to remember that China Lake was prior to Flexible Employee Benefits Company (FEBCO), the current pay system.

    Mr. SPRATT. Yes.

    Mr. HARNAGE. And it has been changed several times over the past years and one time after FEBCO was passed. And I think it is because of the current pay system that is making it successful. Without the current pay system, I am not sure it would be as positive as they try to make it out to be.

    Mr. SPRATT. Thank you very much, both of you.

    Mr. HARNAGE. All right.

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    The CHAIRMAN. I thank the gentleman.

    Mr. Hefley.

    Mr. HEFLEY. Thank you very much.

    Mr. Harnage, I thought, and I stated this morning, that the Department makes a pretty good case for some problems, for some need for some streamlining and getting rid of bureaucracy and making things happen more quickly. Do you see a need for some changes? Did they make the case to you?

    Mr. HARNAGE. No. Let me make clear: I consider myself a change agent. I am not for status quo. I said any time I am given the opportunity to make some positive change I will be at the table. I will be glad to work with anybody. I have tried to work with the past administration as well as this one on pay reform.

    Nobody yet has said okay, let's sit down and talk about pay reform. They keep coming up with these schemes, but they never really sit down and talk about it. Yes, there are some needs for changes. There are some needs for modernization. There are some needs for new management techniques. There is some need for changes in the current pay, not major, but some tweaking.

    And I am willing to do that. But you don't have to give somebody unfettered authority in order to accomplish that. Because you have no guarantee that is what you are accomplishing. You are accomplishing change, but not necessarily the positive change.
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    Mr. HEFLEY. But you do see some need for some modernization and change?

    Mr. HARNAGE. Sure. Sure.

    Mr. HEFLEY. Is that correct?

    Mr. HARNAGE. Yes.

    Mr. HEFLEY. Mr. Walker.

    Mr. WALKER. There is absolutely no question that we need to move to a new pay-base system in the federal government. Right now, if you look at the executive branch, approximately 85 percent of all annual increases for individuals who are not promoted is on auto pilot. It is based on the passage of time, the rate of inflation and your geographic location.

    And there is absolutely no question that something has to be done to increase the percentage of pay that is based upon performance. At the same point in time as we point out in our statement, it is critically important to have the modern, effective and credible performance-appraisal systems in place and other safeguards in place to make sure that you can do that in a fair and equitable fashion.

    Unfortunately, they don't exist in a vast majority of the federal government, including at DOD. Now they can exist. But that is why I suggest possibly, you know, employing an alternative approach, which is in my testimony that could be employed, not only by DOD, but other departments and agencies to the extent that they can make the business case.
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    Mr. HEFLEY. Mr. Harnage, do you see a need for pay-for-performance?

    Mr. HARNAGE. I think the current pay system is a pay-for-performance. It is just not utilized the way it was designed to utilize. This automatic pilot that people talk about was not intended to be on automatic pilot.

    Of course, we have to understand that the annual pay increase is not really a pay increase. It is a cost-of-living adjustment so that the people that are working for the federal government don't have less buying power this year than they had last year.

    But for your information, the current federal employees have no more buying power than they had in 1975. Today they have no more buying power than they had in 1975. So this is not on automatic pilot. It is crawling along the way.

    Second, the step increases that people keep referring to are not supposed to be on automatic pilot either. Nobody is saying there is only 10 of them. And it takes 18 years to go all the way through the process. You don't get one every year. The first three you get every year. The next three you get every two years. The next one you get every three years. So it takes 18 years to go through that.

    But every person that gets a step increase, the supervisor certifies that they are of an acceptable level of competence. What is put on auto pilot is the supervisor understands that the employees are 18 percent underpaid already and to deny that step increase is not fair.
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    It may be on automatic pilot, but it is not supposed to be. It is a performance-based increase. If you are of an acceptable level of competence, if you are performing the work, you get the step increase. If you are not, you are supposed to be denied.

    Mr. HEFLEY. Well, what do you do for the guy that is outstanding?

    Mr. HARNAGE. Give him an outstanding.

    Mr. HEFLEY. Not acceptable level of performance, but outstanding performance?

    Mr. HARNAGE. You have three ways of going. One, is you can give him an outstanding performance evaluation, which gives him five years credit if there is a reduction in force. You can give him a bonus. You can give him a quality step increase. In other words, you can jump him a step under the current system. They don't utilize those things now.

    If you look at the study that OPM made, they found that less than one percent of the bonus authority in the federal sector was being utilized.

    So there are means there for giving high performers more money, either through a bonus, either through an evaluation and some recognition, a cash award or through a step increase called a quality step increase.

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    Mr. HEFLEY. Mr. Walker?

    Mr. WALKER. I think it is important to note that there are some, you know, performance-based elements in the current system. There is no question about that.

    Mr. Harnage is right to say there is supposed to be a certification before you end up getting the step increase. You can get a quality step increase, as well. There also is a possibility for spot awards or—it is cash-based compensation, but not increasing your base pay, if you will.

    However, I stand by what I said. Approximately 85 percent of all the pay increases in the executive branch in any given year are across the board.

    And the annual increase is a combination of several things: Number one, inflation adjustment to protect purchasing power; number two, intended amortization of the pay gap between the private sector and the public sector. But even that treats the government as one-size-fits-all as if every position at every level has the same pay gap, which is not the truth. And third, a locality adjustment.

    So about 85 percent—it doesn't make any difference what your performance is. It needs to be lower than that. We need to protect people against the erosion of purchasing power if they are performing at an appropriate level. We need to consider geographics. But we need to have more of a performance basis, more based on skills and knowledge than we have right now.

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    Mr. HEFLEY. Mr. Walker, I have run out of time, I am sure, although I don't see the light, but Mr. Harnage indicated we are giving the Secretary of Defense unprecedented and perhaps dangerous authority if we pass the package as it is now. Do you agree with that, that we are going too far with that authority?

    Mr. WALKER. Number one, I think you would need to incorporate a number of safeguards if you are going to consider this package on its own merits.

    And second, as I stated before, I think with regard to broad-banding and pay-for-performance, it would be more prudent and more appropriate to address that on a broader basis whereby you would authorize DOD and other departments and agencies that they could adopt such approaches if they satisfy certain statutory standards in advance that OPM would certify to within prescribed time frames. That way, you provide reasonable flexibility, you incorporate adequate safeguards and you prevent the further Balkanization of the civil service in the executive branch.

    Mr. HEFLEY. Thank you very much, both of you.

    The CHAIRMAN. Thank you very much.

    Mr. Taylor.

    Mr. TAYLOR. I want to thank both of you gentlemen for being here.

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    Mr. Walker, I am pleased that you did this reviewing of the civilian personnel system. I am curious if the GAO took a similar look at the acquisition reforms that are being proposed.

    Mr. WALKER. We are looking at them now. And as you know, we didn't know about this hearing until yesterday afternoon very late.

    Mr. TAYLOR. Yes. Neither did I, sir. So welcome to the club, sir.

    Mr. WALKER. I am not saying we are alone.

    Mr. TAYLOR. Okay. When do you think you might have that? Because as you know, we are on a very tight schedule here.

    Mr. WALKER. We can have some observations as soon as tomorrow on that and provide them up.

    Mr. TAYLOR. Okay.

    The CHAIRMAN. On that point, Mr. Taylor, were you asking for examples of the safeguards that Mr. Walker referred to?

    Mr. TAYLOR. I didn't. But that would be a smart thing to ask for, Mr. Chairman.
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    The CHAIRMAN. Yes. I would like to have a——

    Mr. WALKER. Be happy to do that, Mr. Chairman. And we will do both. One is the safeguards with regard to the human capital. The other is preliminary observation on the proposed acquisition reforms.

    The CHAIRMAN. Okay.

    Mr. WALKER. And if it is okay, Mr. Chairman, I will include something in there that you mentioned before. And that is examples of reports that we think are critical for us to do our job for the Congress and the country that hopefully Congress would not rescind.

    The CHAIRMAN. Excellent. Go ahead, Mr. Taylor.

    Mr. TAYLOR. Thank you, sir. I really am a bit taken aback at the lack of a public outcry for the removal of the nepotism prohibitions. And although I kind of scanned your highlights, I would welcome your thoughts on that. I don't know of any business that is well-run that allows that.

    I certainly don't know of any city or state government that is well-run that would allow that. And I don't think the Department of Defense with its huge $400 billion budget and quite possibly unrestricted acquisition rules that give the Secretary total discretion in what to buy and where to buy it. I would like to hear your thoughts on the nepotism sections.
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    Mr. WALKER. Well, first, I sat through the first panel. And I think what we have here is a situation where there is a lack of specificity in many regards. There are a lack of adequate safeguards, potentially including in this area. What I heard the former panel say was that they did not intend for certain things to be addressed. And that may be well the case. I mean, I think they are people of integrity.

    On the other hand, I think you need more specificity in a law in order to make sure that since you are passing a statutory change that not only applies to this Secretary, but every Secretary that there is a degree of specificity that hopefully the Congress can get comfortable with no matter who the Secretary is and no matter who the players are that are involved.

    The CHAIRMAN. And maybe you could help us with that, Mr. Walker, in your presentation. I know Mr. Chu said he thought it was covered by the section that he cited. But he said, as a lawyer, he couldn't vouch for it.

    Mr. WALKER. Yes.

    The CHAIRMAN. So let's make sure.

    Mr. WALKER. Yes.

    Mr. TAYLOR. Mr. Walker, I am going to put you on the spot.

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    We had a conversation prior to the beginning of this hearing or the second portion of this hearing where you made some comments based on my comments earlier about the construction with respect to later enacted laws.

    Since you did have the time to sit through that first hearing and apparently took the time to look at that, I would welcome publicly your thoughts on that.

    Mr. WALKER. Well, let me first say that I am not a lawyer. Although I have had reason to have to look at a lot of constitutionality issues recently. And on its face, that would raise serious constitutional issues, I think. The fact that there would be an attempt to say that the Congress couldn't at some point in time in the future change the law dealing with an area that, presumably, under Article I of the Constitution, is within your prerogative.

    Mr. TAYLOR. Based on your experience at the GAO, if that were indeed the case, would the Supreme Court automatically strip this? How would that be removed from the law?

    Because it is my understanding that the only way it could be removed would be for a member with his limited office allowance, having been the victim of this section of the law and trying to change it, would actually have to somehow, within the limited resources of a Member of Congress, raise a constitutional challenge.

    On the other side, you have the Secretary of Defense with a $400 billion budget who is opposing you and who time is on his side since the acquisition that he has made that you think is unconstitutional or that you tried to prevent in the whole time you are trying to get a decision from the Supreme Court it continues to take place.
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    Mr. WALKER. Well, it would take time. It would take a considerable amount of resources.

    And obviously, even if the Supreme Court were to rule that it was unconstitutional, the question is what has happened during that period of time. What type of actions have occurred, some of which, you know, the horse is out of the barn. You can't reverse it. And so, therefore, they would have to, to a certain extent, deal with it on a prospective basis. And you may not be able to remedy what has already occurred.

    Mr. TAYLOR. Okay. If I may, Mr. Walker, while I have you here, I would—and Mr. Harnage, please don't take offense that I am ignoring you; the first portion of this is something of grave interest to me.

    Mr. HARNAGE. I understand.

    Mr. TAYLOR. I would hope that as the folks from GAO look at the acquisition portion of this presentation they would give serious consideration to that section and give us their thoughts in writing on that section.

    Mr. WALKER. Well, I will talk to my general council who, as you know, we do work for the Congress on legal interpretations. I don't know if it is possible to get an opinion on that shortly. But we can at least provide you some feedback on it.

    Mr. TAYLOR. Okay. Thank you very much.
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    Thank you, Mr. Chairman.

    The CHAIRMAN. Okay. I thank the gentleman. I want to inform the committee we have apparently two 15-minute votes coming up. We have our lessons-learned hearing waiting in the ante room.

    I would ask my colleagues if it is possible that we could submit the last questions for the group, because Mr. Walker is going to have to leave momentarily anyway. If we could submit our last questions in writing with the assurance that we would have an answer back, say, by tomorrow for the last members who didn't get a chance to ask a question.

    Mr. ABERCROMBIE. Mr. Chairman.

    Mr. HARNAGE. As long as you don't do what DOD did and give us a little bit of time.

    The CHAIRMAN. Okay.

    Mr. ABERCROMBIE. Mr. Chairman.

    The CHAIRMAN. Yes, Mr. Abercrombie.

    Mr. ABERCROMBIE. In that regard, Mr. Walker, are you prepared to answer at some length or such length as is appropriate questions concerning the Marine Mammal Protection Act and other elements that are in this bill, as well? I know the concentration has been on personnel matters. But the transformation hearing today says that, you know, that you are here in your capacity as comptroller general.
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    Mr. WALKER. Correct.

    Mr. ABERCROMBIE. But there are a lot of questions with regard to the Endangered Species Act and other elements in this document before us which the GAO has commented on in other contexts. And I would be submitting questions along those lines.

    Mr. WALKER. Mr. Abercrombie, we will make best efforts to be responsive to the Congress in all areas within our authority within reasonable time frames. So, yes. I mean, I would have to talk to my people about that anyway.

    Mr. ABERCROMBIE. Okay, good. It doesn't have to be tomorrow. But that is where my questions are going to be. That is appropriate, Mr. Chairman?

    The CHAIRMAN. Sure. Absolutely.

    Mr. ABERCROMBIE. Okay.

    The CHAIRMAN. Absolutely.

    Mr. ABERCROMBIE. Thank you.

    The CHAIRMAN. And Mr. Abercrombie, also I would like to get you married up with up the naval leader, the undersea guy who has been working the marine-mammal issues. I can't remember his name right now. But get that from the staff. He briefed us some time ago. And if you think there is an accommodation that can be made, I would like to see it and see if they would agree on that.
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    So why don't we try to hook you up with him tomorrow?

    Mr. ABERCROMBIE. Sure.

    The CHAIRMAN. Now Mr. Snyder had a question?

    Dr. SNYDER. Just a brief one. Mr. Chairman, I would ask you—I mean statements for the record—and I am going to submit one to General Meyers. But a lot of what we saw here today was an exchange and follow-up questions that take you down—and you were probably the leader of that.

    And I would ask you to consider, depending on where we are at with this process, of bringing these folks back. We had poor attendance today because the thing went late. I think particularly our friend from GAO has stirred things up a lot with his comments.

    And I think there may be other members that would like to participate more in this discussion and ask you to consider bringing him back or bringing both back at a later time prior to markup.

    The CHAIRMAN. Okay. Okay. We have the military-personnel aspect tomorrow. But I would be happy to if Mr. Walker and Mr. Harnage want to come back to make sure we get the last few answers here on our hearing tomorrow. Can you gentlemen be with us tomorrow?

    Dr. SNYDER. Well, Mr. Chairman——
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    The CHAIRMAN. We are here to work that.

    Dr. SNYDER. Mr. Chairman, our last vote is coming up here in about 20 minutes. And so, a whole lot of members, you know, who are heading for the airports. I mean, that is not the kind of robust discussion that, you know, giving people fair notice it is going to be 10 o'clock Wednesday or 2 o'clock Thursday or whenever it is where people can plan schedules.

    You know, I don't know what kind of attendance we are going to have on a Friday morning with no more votes.

    The CHAIRMAN. No, we already have a hearing set for tomorrow, Dr. Snyder. So what I was thinking of doing is, since that is already set, and that has been noticed, is seeing if these witnesses would come back and either precede or succeed the witnesses we have tomorrow.

    Mr. ABERCROMBIE. Mr. Chairman.

    The CHAIRMAN. So gentlemen, can you make it if we needed you back around noon tomorrow?

    Mr. WALKER. I will do what I have to, Mr. Chairman.

    The CHAIRMAN. Mr. Harnage.
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    Mr. HARNAGE. Yes. I told you I was very cooperative.

    The CHAIRMAN. Okay. But in the least, let's make sure we will have written answers to any questions that members still have here.

    Mr. ABERCROMBIE. Mr. Chairman.

    The CHAIRMAN. How are you doing, Mr. Walker? You are looking nervously at your——

    Mr. WALKER. Don't worry, Mr. Chairman. You will know when I am nervous.

    The CHAIRMAN. Okay.

    Mr. Abercrombie, go right ahead.

    Mr. ABERCROMBIE. Mr. Chairman, just in conclusion because we are going to the next hearing. You have heard, I think, not reservations about trying to come to grips with the issues that are involved here, but certainly reservations on a bipartisan basis here today about whether this is appropriate to be incorporated into the authorization bill.

    And my inquiry of you with all respect, both personally and institutionally: Would you be willing to consider perhaps dealing with this issue as a separate issue from the authorization as a result of the hearing today and your contemplation of it, or at least willing to think about it?
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    The CHAIRMAN. Well, Mr. Abercrombie, I have reflected on this issue and on the relationship that the Department of Defense and some of the issues and some of the problems that are acknowledged to exist in this area.

    I think we can do a good job of putting this thing together, finding some common ground, agreeing with good points and disagreeing with points that we don't think are good. And especially if we have more feedback from Mr. Walker on safeguards, I think we can do the job in this round.

    I would just say to my friend, I have been here 22 years. In theory, we should have solved these problems of the difficult time that it takes to qualify federal workers for a job, the difficulty in not being able to hire people quickly when you need people and other difficulties that have been brought out that both sides concur exist.

    So we haven't been able to do it in the past. We have a window to be able to do it now, and I am inclined to move ahead and try to do it.

    Mr. ABERCROMBIE. Okay.

    The CHAIRMAN. And having said that, I would be happy to work with you and get you hooked up with, for example, on the Marine Mammal Act and get it done.

    Mr. ABERCROMBIE. I will tell you what, then. How about I mark up and off all the sections that I think are difficult, and then we will just deal with the others? How is that?
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    The CHAIRMAN. I think that will be a fairly short list that we have left.

    But Mr. Abercrombie, I do want you to hook up with the marine mammal guy, because we had quite an earful from him the other day.

    I think we have about four minutes left.

    Gentlemen, thank you for your contribution to this important debate. Let's keep working this thing. We look forward to your work product here tomorrow. And Mr. Harnage, you have the same invitation Mr. Walker has on safeguards that you would like to see on these provisions, sir.

    Mr. HARNAGE. Okay.

    The CHAIRMAN. So we will be here tomorrow. Same place here.

    [Whereupon, at 3:11 p.m., the committee was adjourned.]