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[H.A.S.C. No. 107–2]



FOR FISCAL YEAR 2002—H.R. 2586






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JULY 12, 2001


For sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov  Phone: (202) 512-1800  Fax: (202) 512-2250
Mail: Stop SSOP, Washington, DC 20402-0001


One Hundred Seventh Congress

BOB STUMP, Arizona, Chairman

FLOYD D. SPENCE, South Carolina
CURT WELDON, Pennsylvania
JIM SAXTON, New Jersey
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JOHN M. McHUGH, New York
HOWARD P. ''BUCK'' McKEON, California
J.C. WATTS, Jr., Oklahoma
WALTER B. JONES, North Carolina
LINDSEY GRAHAM, South Carolina
JIM RYUN, Kansas
BOB RILEY, Alabama
ROBIN HAYES, North Carolina
DON SHERWOOD, Pennsylvania
KEN CALVERT, California
ROB SIMMONS, Connecticut
JO ANN DAVIS, Virginia
ED SCHROCK, Virginia
W. TODD AKIN, Missouri
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JOHN SPRATT, South Carolina
LANE EVANS, Illinois
GENE TAYLOR, Mississippi
MARTY MEEHAN, Massachusetts
VIC SNYDER, Arkansas
ADAM SMITH, Washington
JAMES H. MALONEY, Connecticut
MIKE McINTYRE, North Carolina
ROBERT A. BRADY, Pennsylvania
BARON P. HILL, Indiana
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JOHN B. LARSON, Connecticut
SUSAN A. DAVIS, California

Robert S. Rangel, Staff Director
David Trachtenberg, Professional Staff Member
Jarrod Tisdell, Research Assistant



    Thursday, July 12, 2001, Fiscal Year 2002, National Defense Authorization Act—Secretary of the Navy; Chief of Naval Operations; Commandant of the Marine Corps


    Thursday, July 12, 2001


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

    Stump, Hon. Bob, a Representative from Arizona, Chairman, Committee on Armed Services


    Clark, Adm. Vernon E., Chief of Naval Operations, Department of the Navy

    England, Gordon R., Secretary of the Navy

    Jones, Gen. James L., Commandant, Headquarters, U.S. Marine Corps


Clark, Adm. Vernon E.

England, Gordon R.

Forbes, Hon. J. Randy

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Jones, Gen. James L.

Skelton, Hon. Ike

Stump, Hon. Bob

[The Documents submitted are pending.]

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

Mr. Bartlett
Mr. Chambliss
Mr. Hayes
Mr. Hostettler
Mr. Larson
Mr. Maloney
Mr. Underwood


House of Representatives,
Committee on Armed Services,
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Washington, DC, Thursday, July 12, 2001.

    The committee met, pursuant to call, at 9:38 a.m., in room 2118, Rayburn House Office Building, Hon. Bob Stump (chairman of the committee) presiding.


    The CHAIRMAN. The meeting will please come to order.

    Today the committee meets to review the Department of Navy's budget request for fiscal year 2002. The proposed Navy and Marine Corps budget represents an increase of $6 billion to cover mostly a pay raise, enhanced housing opportunities for most families and an increase in the Navy's operations and maintenance (O&M) accounts.

    I commend the Navy and Marine Corps' leadership for recognizing the need for additional resources. Unfortunately, even with these increases, serious problems will persist.

    For example, the Navy's budget request provides for the construction of only six ships. However, the Navy must build eight to 10 a year in order to recapitalize the current fleet of approximately 316 ships. The proposed budget also requests only 88 aircraft, although 180 to 210 per year are needed to maintain current levels.

    Although the Marine Corps has consistently stated a minimum need of $1.2 billion annually in ground equipment procurement, this year's budget request is only $982 million.
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    I understand Secretary Rumsfeld's desire not to prejudge the pending Quadrennial Defense Review by making significant changes to the modernization program in the year 2002. Even so, a single year's budget will not solve all of the Navy's readiness, modernization and quality-of-life shortfalls.

    Although additional funding is required, the Navy and Marine Corps to get whole, this year the budget request is a positive strong step in the right direction.

    To help us to understand this proposed budget today, we have with us the honorable Gordon R. England, the Secretary of the Navy, Admiral Vernon Clark, the Chief of Naval Operations (CNO), and General James L. Jones, Commandant of the Marine Corps.

    Gentlemen, welcome. Before we begin, I would like to turn to Mr. Skelton, the ranking member, for any remarks he may want to wish to make.

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


    Mr. SKELTON. Mr. Chairman, thanks so much. And I join you in welcoming the Secretary, Admiral Clark, Admiral Jones.

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    And we look forward to your testimony. Thanks for being with us.

    The Navy and Marine Corps have proud histories, and they have paralleled the development and growth of our great nation. And as Secretary Rumsfeld has undertaken his strategic review and begun the department's work on the Quadrennial Defense Review, I also Mr. Chairman, have begun to think about American military forces and ensuring the 21st century national security.

    Now in considering national military strategy, a couple of themes ring true. The first is, being a global power means being engaged around the world. The forward presence of American military forces puts our friends at ease, sends a powerful warning to those who would consider aggression.

    Second, our global interests in this century will increase the importance of the Asia Pacific theater without decreasing our commitments to Europe.

    Third, regardless of what else American forces may do, they must—and I will underline that again—must have the capability to decisively fight and win any conflict that presents itself.

    Naval and Marine forces excel in all three of these areas, conveying U.S. power through their presence, covering large distances to reach the Southwest and East Asian regions and maintaining a potent war-fighting capability. And yet, America will not be able to use these forces to maximum benefit in the future if it does not invest in its forces today.

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    Let me mention about this. The proposed budget does many positive things. It also illustrates a disturbing conclusion. We are in a deepening shipbuilding crisis. The current force of 313 ships is wholly inadequate to the range of naval missions.

    I well remember not all that long ago, Mr. Secretary, your predecessor I guess twice-removed, pushing hard, almost succeeding in his goal of a 600-ship Navy. In my opinion, we must make a 400-ship Navy a top priority. Although the vast majority of this force would be capital ships, we also need a limited number of smaller, faster, more agile ships as defined by Admiral Cebrowski of the Navy War College.

    Current plans would require building nine new ships a year just to maintain the current size at 313, but the proposed fiscal year 2002 provides only six ships. If we continue to ignore the dire implications of this shortfall, we do so at our peril.

    So, Mr. Secretary, Admiral Clark, General Jones, I applaud your efforts, and we are very proud of each one of you and your efforts for our country and the forces, but I am sure you, too, recognize the seriousness of the challenges that we face. We look forward to your testimony.

    Mr. Chairman, I thank you.

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

    The CHAIRMAN. Thank you, Ike.

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    Gentlemen, your statements will be printed in the record in their entirety. If you would care to summarize, we would appreciate it.

    Mr. Secretary, the floor is yours.


    Secretary ENGLAND. Good. Thank you, Chairman Stump and Congressman Skelton, particularly for the nice words, the nice introduction. I very much appreciate it.

    I am delighted to be here with Admiral Clark and General Jones. This is the leadership team of our naval services, and we are proud to be here to represent over half a million of our nation's finest men and women. So it is our pleasure to be here with you today. And again, I thank you and this committee for all that you have done for our naval services. And I do have a written statement, but I will like to summarize that for you.

    Our naval services are indeed vital to our nation, as Mr. Skelton commented. They are vital to our nation and also to the world. Along with the rest of our military, they train for, deter and, when necessary, fight the nation's wars. In addition, being rotational, our naval forces are constantly on station and on call around the world, supporting ongoing joint operations and theater engagement efforts. We do that 24 hours a day, 365 days a year.

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    Typically, five aircraft carrier battle groups and five Marine expeditionary units will be deployed in any 12-month period, manned by more than 55,000 sailors and marines. Another 30,000 marines will be deployed or based forward during that same period. The submarine forces also deploy continuously around the world, conducting strategic deterrence patrols as well as intelligence, surveillance and reconnaissance mission in support of national requirements.

    Our forward-deployed naval forces provide for a stable global environment. Over 99 percent of the world's trade by volume travels over the ocean, fueling the growing world economy. This trade is the foundation of our economic prosperity, and it thrives because our naval services command the seas.

    These same naval services provide timely response to critical events that affect America's interest. They are immediately available for combat with self-contained initial logistics support. Naval forces are there when and where needed, providing options and flexibility for our political leadership.

    This capability to respond also provides the power to shape regions of U.S. interest during peacetime. Combat credible naval forces deployed overseas demonstrate U.S. commitment and promote regional stability to help prevent crisis and conflict, deterring potential adversaries, while reassuring allies.

    With the 2001 supplemental, the naval services will be able to continue this mission and meet our immediate commitments, but with deferred maintenance and other unfilled needs.
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    Now, the 2002 budget does represent a significantly better situation for our naval services. Based on the last Administration's baseline, the 2002 budget amendment for the naval services has increased by $7.9 billion.

    Now, half of that increase is to improve our operations and maintenance, such as fully funding the flying hour program. Twenty-five percent is to fund research and development, which is vital as we look to enhance our combat capabilities. Most of the remaining increase will be used to improve our personnel accounts, such as the targeted pay raise.

    What this increase does not do, however, is adequately address our infrastructure and procurement shortfalls. Hopefully, we will be able to address these areas in the 2003 budget with a combination of additional resources and improvements in specific business practices within the Department of the Navy.

    As an example of our recapitalization needs, the average age of our ships and aircraft continues to climb as the replacement rate has failed to keep pace. While the future force structure has yet to be sized by the Quadrennial Defense Review, I believe it is indeed safe to say that the downward trend of ship and aircraft procurement needs to be reversed.

    Along with increased procurement, technology infusion will be required to transform the naval services of today into those needed tomorrow. As previously stated, such needs will require additional resources. I want you to know, however, that the CNO, the commandant and I are committed to generate funds through better business practices to help offset the added costs.

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    I do look forward to working with each of you to meet the challenges ahead. Thank you again for your continued and dedicated support of our naval services. I look forward to your questions, sir.

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

    The CHAIRMAN. Thank you, Mr. Secretary.

    Admiral Clark.


    Admiral CLARK. Thank you. Chairman Stump, Mr. Skelton, distinguished members of this committee, I appreciate the opportunity to appear before you this morning and talk about our Navy. And I am certainly grateful for the consistent support that this committee has provided to our Navy and to the sailors in our Navy.

    This morning, as we speak, Mr. Chairman, there are 96 ships—not underway, but there are many more than that underway—but there are 96 ships forward deployed to the far corners of the Earth in support of this nation. Almost 50,000 sailors are of that group.

    The Constellation battle group is in the Arabian Gulf, and the Marines are over there with her, the Boxer amphibious-ready group. The Enterprise and the Kearsage are in the Mediterranean, and this cycle, as you well know, continues. The Theodore Roosevelt, they are in their preparations for their final exam and getting ready to deploy as is the Carl Vinson on the West Coast.
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    The cycle of an expeditionary Navy just continues every day, every year. And one of the reasons it has continued and doesn't stop is because of the support of this committee and this committee's belief that that capability is important to our nation.

    I want to report to you, Mr. Chairman, this morning that the young men and women who volunteer to serve in our Navy are making it happen, and they are doing a fantastic job. And we all have, and you all have, much to be proud of in their service.

    I also want to say that I think it is important to point out that we do this as part of the Navy-Marine Corps team, operating anywhere, anytime. As Secretary England said, ''Part of a joint force, projecting America's sovereignty on and from the sea, close to home and around the world, supporting the nation's interests and commanding the seas with sustainable combat credible power deployed forward.'' That is what we are all about.

    We are doing this with a relatively small force. It is much smaller than we were a decade ago. If we go back in time, we find it is actually smaller than at any time back in our history, back to year 1933 before Pearl Harbor. Today, we have now this morning 317 ships, as the numbers go up and down with decommissionings and commissionings, but that is 41 percent fewer than we had just 10 years ago. In my view, and you can understand that I have a biased view, but I believe that this is a capability very important to our nation.

    I also want to say that this is a Navy in transition. We are transforming ourselves to meet the threats of the new century, acquiring exciting new capabilities; inserting technologies into our force; conducting joint experimentation; and streamlining our organization to increase our war-fighting agility and effectiveness.
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    This combination of operational demand and small size and transformation means that while our Navy is not yet under breaking stress, its operational elasticity has been seriously diminished.

    For too long, we have deferred modernization and recapitalization of our force and paid for mission accomplishment by postponing maintenance and the repair of our infrastructure. That trend now poses, in my view, in my opinion, a serious risk to our Navy's future.

    We are not just requesting more money, though, from the taxpayer. We have reduced spending to stay within the imposed limits that we have in fiscal year 2001. We are searching for operational efficiencies, organizational efficiencies also. And we are improving our analytical underpinning, and that is to make sure that we have a better statement of what our requirements are all about. And I trust that we will be able to address that, and also, to improve our readiness and to maximize the effectiveness of the investments that this nation and the taxpayers make in our Navy.

    The major focus for us in the future follows Secretary England's emphasis on better business practices. He is on target, and I share his enthusiasm for this very important cause. And I want to report that we are committed to reforming—and I use ''reform'' word intentionally—reforming the way we do business in the department.

    Now regarding current readiness, I am very encouraged by the fiscal year 2002 amended defense budget, because it makes substantial investments that move readiness accounts toward the required levels. I believe this is the best readiness budget that we have seen in at least a decade.
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    A word about people, Mr. Chairman. The magnificent young people that I am given the privilege to lead are the key to our mission accomplishment. Recruiting is on track for fiscal year 2001.

    This is real good news. But more exciting is the annual improvement that we are making in retention. Improvements in compensation that you have supported, in fact, brought about—bonuses, pay table adjustments, retirement reforms, housing improvements—these things, they are having the desired impact. And I believe that the targeted pay raise and other initiatives in this amended budget, the 2002 amended budget, will reinforce these positive trends. We are winning the war for people.

    We are enjoying some victories, but the war certainly is not over and there are areas of continuing concern. Officer retention remains below our objectives.

    Improvements in career sea pay remain unfunded. It is my belief that going to sea is the kind of behavior that we need to incentivize and reward. And the individual tempo legislation contained in the fiscal year 2002, 2001 National Defense Authorization Act (NDAAs) has significantly unfunded associated costs.

    We have made substantial gains in the quality-of-life programs, and that is, of course, with the support of Congress. Navy quality of work, which I have spoken to you before about the difference between quality of life and quality of work.

    Quality-of-work programs require further improvements. Specifically, the Navy shore infrastructure is in poor conditions. Our recapitalization cycle exceeds 160 years. The critical backlog of maintenance is over $2.75 billion. Our real property maintenance funding is significantly below private industry norms.
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    I speak to this issue on every trip that I make to the Hill, and I continue to seek your support to help us change the way we think about this vital area.

    The challenge of sustaining our current readiness while investing in key future capabilities remains a very difficult balancing act. And, Mr. Chairman, as you have indicated, this is an area where we do not meet the goals and the targets that we need in this budget.

    Due to the underinvestment in procurement during the 1990s, we do, in fact, face a significant bow wave for ships and aircraft. And as has been said, we need at least nine ships a year, 180 to 210 airplanes, to meet the Quadrennial Defense Review (QDR) force of 1997. And that is where our target is until we have a new strategy and a new force structure to target. We are procuring significantly less than that, and in my view we cannot sustain this Navy, the Navy that we have today, with these practices.

    I believe that the track we are on today takes us to a Navy with 230 ships in it. To address this shortfall, I am very interested in innovative solutions to accelerating ship and aircraft procurement rates. Specifically, I believe that we must find ways to more effectively partner with industry and level fund our annual investments in ship construction.

    Numbers count. To be sure, our much smaller Navy is an incredibly capable Navy, but its size is a tightening constraint on the number of places that it can be at one time. The demand placed upon this force and our people is an issue of serious concern.

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    So in summary, Mr. Chairman, we are a maritime Nation, but I believe we must never take for granted the maritime superiority that has brought about the benefits to this Nation that Secretary England spoke to.

    The future of land bases overseas has been a major issue in the studies and the analyses that are ongoing today in the defense panels and the QDR. This concern over the availability of overseas bases is correct.

    We are a Navy transforming our equipment, our capability, our organization and our doctrine to successfully deal with and counter the threats that we will face in the future. And we are dedicated to providing the Nation with a very healthy Navy and a Marine Corps team representing our Nation with combat capable forces that will enhance our security and create stability around the globe.

    So these challenges that we are facing are significant, but with your help, they can be overcome. And again, I thank this committee for your continued support of our Navy and our sailors and their families. And I look forward to our discussion in responding to your questions today.

    [The prepared statement of Admiral Clark can be found in the Appendix.]

    The CHAIRMAN. Thank you, Admiral.

    General Jones.

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    General JONES. Thank you, Mr. Chairman and members of the committee. I am honored to be here. And like my colleagues, thank you for your support to your marines and their families during this past year.

    I would like to start out by underscoring my personal enthusiasm for our new Secretary of the Navy, and his lifetime experience in business and his leadership will help us develop these better business practices and guide us through what I think are urgently needed acquisition reforms within the Department of the Navy and within the Department of Defense as well. And his key leadership will be instrumental, and so it is an exciting time to be a part of this team.

    The fiscal year 2002 amended request before you does, as the CNO pointed out, go a long way towards helping correct some of our long-term problems, specifically in the areas of near-term readiness, health care, pay and entitlements, military construction and quality of life.

    We will still, however, not be able to modernize or make critical repairs to our aging infrastructure. As a matter of fact, in procurement for the Marine Corps, it goes down, our procurement accounts go down by $200 million. But the budget at least halts the decline in some very, very important and key areas.

    Your Marine Corps today is stable in its culture, in its clear purpose, in its vision and its direction for the future. We like to say that we are an expeditionary force by culture and we are a transformational force by design. And in this context, I think words are very important and I would like to discuss two sets of words with you.
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    The first one is the word ''expeditionary'' versus the word ''deployable.'' In the expeditionary content, speed is important. It is also expensive, but so is the ability to float follow-on forces. Forces which only need to be deployable have a different metric. We don't always need everyone to be expeditionary. The defining characteristics of an expeditionary force is one that can get there quickly but also one that can sustain itself and make a difference once on location.

    The nation cannot afford to lift all of its forces simultaneously nor is there a requirement for it to do so. So the question for expeditionary forces across the board of all services is one of sufficiency.

    The second set of words that I think are important to understand is the word ''transformation'' versus ''modernization.'' The nation will need both but not in the same amount. In transformation, true transformation—the ability to bring something on-line that you either didn't have before or something that it is exponentially better than you already have—is something that can't always be programmed and is dependent on things like science and technology. If it doesn't arrive, then the best you can do is modernize.

    I use the 1973 oil crisis as an example. Reacting to the oil shortage, we set upon a goal of transformation for our automobile industry. We were going to become less dependent on fossil fuels and go to solar-powered cars and maybe electric cars and so on and so forth. That was 28 years ago. What we really did do was modernize. We never really have achieved true transformation, and we still worry about the flow of oil from the Gulf.

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    We achieved better mileage for our cars. We achieved better fuel efficiency. We achieved better design techniques, aerodynamics and the like, better, lighter cars, therefore using less energy. But we really wound up modernizing as opposed to transforming. So transformation is an easy word and it is a very popular word but it is also one that should not be confused with modernization.

    Services, and the Marine Corps is one of them, are doing both in a measured and hopefully affordable way. And this effort gets us to our 21st century requirement for the modern battlefield, and that is that the forces of the 21st century will not be dependent on mass but will dependent on speed and stealth and lethality. And also very critically, and I think probably the most important characteristic, is going to be the ability to sustain them in a modern way. And so our logistical footprint will have to be transformed and modernized as well.

    As an example of some transformational programs that are ongoing in the Marine Corps today, I would cite the tilt-rotor technology, the Joint Strike Fighter, integrated logistics concepts, which is the pioneering reforms of our logistics, things like information operations, naval precision fires and fast sea lift experimentation. Those capabilities have the potential of achieving true transformational characteristics.

    And modernization no less important, the acquisition of Lightweight 155, service life extension programs of the landing craft air cushion, the High Mobility Artillery Rocket System (HIMARS), the 120 millimeter mortars, the M–4 rifle, the joint tactical radio, the KC–130J and our amphibious ship modernization programs are very important.

    And the Marine Corps budget request was designed with both in mind and with the balance to expeditionary requirements and deployability in mind.
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    Our path is one of convergence, Mr. Chairman, and that convergence can be reached with the ongoing programs in 2008, and it can be achieved with a modest sustained annual increase to our budget of between $1.8 billion and $2 billion. If we follow that path the captains of tomorrow, of 2008, will be leading the most modern, capable Marine Corps that has ever existed.

    We can accelerate our goals, and this total is inclusive of recapitalization of our infrastructure. In this context, I recommend that we continue to apply the lessons of the past and remember that we are, first and foremost, a maritime nation with global leadership responsibilities to fight and win when necessary, but to lead and influence always on the world stage and to lead in ways that allow our economy and our political and diplomatic influence in our expanding culture and our technological leadership to flourish, anchored around the bulwark of the capability of the forward presence of our armed forces.

    I believe that our maritime dominance is slipping, and the CNO has spoken eloquently on this subject. At a time when the availability of fixed land bases are likely to decrease in the years ahead and those that we will have will be increasingly subjected to host nation vetoes, I believe that maritime forces and maritime basing affords the nation an opportunity that we simply cannot underfund or not recognize.

    The Marine expeditionary piece of this is things like the Blount Island purchase by 2004, which I strongly recommend. That is essentially the launching platform for our maritime pre-positioned forces. I believe we should engage on a strategy to finally achieve 3.0 Marine expeditionary brigade lift versus the 2.5 lift that we currently have, that we should focus with some enthusiasm on maritime prepositioned forces of the future when our current leases run out at the end of the decade. And we should pursue transformational technologies such as faster sea lift, as is currently ongoing within the Third Marine Expeditionary Force on Okinawa.
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    This is all to support the Marine Air Ground Task Force, the centerpiece of which is the Marine Expeditionary Brigade, which I submit is the only rapidly deployable, truly expeditionary force of its size and capability in existence today. It has forceable entry capabilities. It is scalable. It is affordable. It is forward deployed as we speak. it is sustainable. It is joint and inner-operable, and it has a capability of combined arms mastery unequalled anywhere.

    This is a great time to be a United States Marine. Our six-year recruiting and retention success prove it. We look forward to our future while we learn from our past. And I look forward to answering your questions.

    [The prepared statement of General Jones can be found in the Appendix.]

    The CHAIRMAN. Thank you, General.

    And I recognize the gentleman from Missouri, Mr. Skelton.

    Mr. SKELTON. Mr. Chairman, I will reserve my questions for a moment later. Thank you.

    The CHAIRMAN. The gentleman from Colorado, Mr. Hefley.

    Mr. HEFLEY. Thank you, Mr. Chairman. I will try to be brief.

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    Mr. Secretary, you mention that you are going to have to put off some of the infrastructure repairs and upgrading that we need, but we will get to them in the next budget or two.

    And I have to tell you, Mr. Secretary, it is not your fault cause you weren't in that seat, but we have heard that from every predecessor I have known since I have been here. It is always the infrastructure that is going to be put off. ''But, by gosh, we are going to get to it. We are going to get to it down the line sometime.'' And we just don't seem to get there.

    Now we are doing some improvement on housing. But I have to tell you, when I go and visit with young sailors, they don't want to stay in. And one of the reasons they don't want to stay in is because they are tired of living in crummy conditions and they are tired of working in crummy conditions.

    At what point do you think you are going to have to say, we are not going to put it off anymore, that this is a high priority and we are going to do it?

    Secretary ENGLAND. Mr. Hefley, when I first came on board, one of the first things brought to my attention was the situation regarding particularly housing for both our married and single personnel. A plan was shown to me with a 10-year time horizon: fix all the major problems in 10 years. My answer was, ''I won't be here for 10 years, so therefore I would like to see the problem fixed during my tenure.''

    So I have asked people to come back to me with a four-year program, and I haven't seen what that is going to cost us yet. But I would like to fix that problem. It is important to our retention. It is important to our recruiting. I mean, it is fundamental to everything we do, so we do have to fix that problem. I definitely share your concern, and we are working it.
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    We will have innovative programs in terms of public-private financing to do everything we can do to speed up that process, and that is part of our initiatives is to look at that specific problem. So I definitely share your concern. We will get back with you as soon as we can get a handle on this whole situation, understand what that cost implication is.

    We do have additional funds, though, in 2002 that do help us in that regard. So while I mentioned infrastructure, this budget does help us. I mean, it helps to get us on the path to fix the problems. It is just that we have such a large backlog, it is going to take some time to work that backlog off.

    Mr. HEFLEY. Well, it is indeed. And I know that on the Infrastructure Committee over the last few years, you know, we tried to help every way we could including initiating the public-private partnership things that you are talking about. I am glad this is a priority, and I would be tickled pink if four years was some kind of a goal out there.

    Let me ask real quickly, General Jones and maybe Admiral Clark too, how bad do we need Okinawa?

    General JONES. Sir, we need it urgently. It is a strategic location to influence the peace and stability in the Pacific Rim. It is a very important forward base location for us.

    I think that the Okinawa situation is one that needs to be understood a little bit more fully. For example, of the 70 Pacific Rim exercises that we have in the region, only seven are conducted in the vicinity of Okinawa, and four of those are conducted with computer exercises, so really only three.
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    Over the years, we have done everything we can to ease the strain of our training on Okinawa. We don't shoot artillery on Okinawa. We don't use the roads for foot marches anymore. We deploy from Okinawa. If we didn't have Okinawa, we would need another place like it, but right now it is the best thing we have.

    And I would like to underscore the fact that, reports in the press notwithstanding, this is finest base from the standpoint of infrastructure and from the standpoint of morale of the people there. The relationships between the people of Okinawa and marines on Okinawa is superb. And we are also very proud of the record of behavior of our marines. For a similar-size community, there is no other military community in the world that operates under a microscope and of the scrutiny where every single traffic ticket and speeding ticket is publicized by a vocal minority in a hostile press.

    But I have just returned from Okinawa. I met with the governor and leadership of the prefecture on the island. We have excellent relationships.

    I am pleased to announce that we are assisting with a young Okinawan, 16-year-old young man who needs a heart transplant has been flying back to University of California at Los Angeles (UCLA) Medical Center to receive some assistance there. I am very proud of our location on Okinawa. It is just very important to the country to have that base.

    Mr. HEFLEY. Thank you very much.

    The CHAIRMAN. The gentleman from Texas, Mr. Ortiz.
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    Mr. ORTIZ. Thank you, Mr. Chairman.

    And I would like to thank the witnesses for being with us this morning.

    As I look at a letter that Admiral Clark sent here about the areas that were not selected for funding, you know, because I guess there is not enough money. And as I look at some of the needs, and needs being parochial in some way, since I have the USS Inchon in my district, I was just wondering, what are the Navy's plan in regards to the replacement of the USS Inchon and the Navy's one-of-a-kind mine warfare command and support vessel that we have there? Do you have any plans for that?

    Admiral CLARK. Congressman, as you may or may not be familiar with the time line on the ship, but it is scheduled to be decommissioned in later in this future years defense plan (FYDP) in the 2005 timeframe. This is a ship that has taken a great deal of money to maintain.

    We need modern capability in this kind of area. This will be a major issue that we look at as we are building Program Objective Memorandum (POM) 2003. And I don't like to punt questions like this, but you know that this is the first budget that I am going to be building as we are putting it together from the bottom up.

    I would tell you that we are in a circumstance with Inchon that she is an old ship. Last year we spent over $100 million in operational needs statement (ONS) costs on her, and it takes a lot to keep—she is a large ship—her going. It is like trying to modernize your 1950 Chevy. And so this will be a major issue that we are looking at.
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    We are committed to continuing our development in mine warfare, because it is a core mission for us and for creating as much organic capability as we can. But the current plan calls for her being decommissioned mid-FYDP.

    Mr. ORTIZ. See, I don't know, I haven't had a chance to go through all the budget. We have the T45s that do a lot of training in the Kingsville area. That is another issue.

    And then, as I looked at the Department's promised legislation that would permit the Navy to settle or compromise and pay any and all claims arising from the tragic collision between the USS Greenville and the Japanese training and fishing vessels in any amount provided that such payments should be made from funds available to the Department of the Navy for operation and maintenance.

    Now, how does the Navy plan to pay for that? We have no idea how much that is going to cost before we can settle that incident. Do you have any idea, Mr. Secretary or Admiral Clark?

    Secretary ENGLAND. Mr. Ortiz, I am afraid I don't know the answer to that, so I will have to get back with you, sir. I don't know the particulars of that, sir.

    Admiral CLARK. I would just follow that those kinds will be subject to negotiations, and there is no way to project what that number will be, sir.
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    Mr. ORTIZ. But we will know that we just don't have the money.

    Admiral CLARK. It is not in the budget.

    Mr. ORTIZ. It is not in the budget.

    Admiral CLARK. Right.

    Mr. ORTIZ. Thank you so much.

    Thanks, Mr. Chairman.

    Secretary ENGLAND. Thank you, sir.

    The CHAIRMAN. The gentleman from New Jersey, Mr. Saxton.

    Mr. SAXTON. Thank you, Mr. Chairman.

    I have two questions. The first is for Admiral Clark.

    Admiral, guided missile destroyers (DDGs) have obviously served us and continue to serve us very well. And we have developed great technologies that have obviously given us superiority on the seas, and that is great. At some point we are going to transition into a new service combatant, DD–21 or whatever.
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    And I know it would be easy for you to say, ''Well, you will have to wait for the QDR to get the answer to this question.'' But I would like to know where we are in the process of transitioning. Are we going to continue with DDGs for a while? Are we ready to go?

    We looked at the arsenal ship that didn't work out, or we decided to cancel it. And now it is a mystery to us on the committee as to what our plans ought to be and where we ought to be placing our emphasis. And so, if you can give us some insight into where we are in that transitional process, we would appreciate it very much.

    Admiral CLARK. It is a three-part answer. Number one, yes, we are going to continue with DDGs because they are very valuable platforms, and we have DDGs in this budget. And I am very pleased that in the amendment we were able to add another DDG. And it was the option ship off of the multi-year that has concluded, and it is a bargain to the taxpayer.

    Number two, on DD–21, I have testified before and I feel with every conviction that I know how to transmit to you, Mr. Saxton, that we need the technology and the transforming capability that is in that ship. Now, the acquisition executive makes those decisions, and that is a matter of law that was passed by the Congress; I do not make those acquisition decisions. The acquisition executive does.

    But my recommendation will be that we should pursue those technologies. We need all electric. We need the reach for war-fighting capability that comes with the advanced gun system. We need the other enhanced capabilities that are going to be present in that ship. And more than anything else, we need the ability to reduce the operations and support (O&S) costs that are associated with the research and development that is going into that platform.
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    Part three to your question has to do with the science and technology (S&T) line. And we have committed resources to the S&T line, and this also goes back to what Mr. Skelton said with regard to new concepts that are being looked at at the War College and our Navy warfare development command. Looking at potential new hull forms, how to put the greatest lethality in the smallest kind of packages. We have money set aside to pursue that and intend to commit more resources to that in the future.

    That is the way I see the overlay of it, sir.

    Mr. SAXTON. Well, thank you very much.

    I have a second question. Admiral Clark and General Jones, you both talked about quality of life, and Mr. Hefley, who was my predecessor as chairman of the Military Construction (MILCON) subcommittee, worked really hard for six years.

    Something happened recently which raised a question in my mind. I was with a servicemember earlier this week, and somehow the subject of commissaries came up. And he said, ''You know, commissaries are great. Everybody knows the economic benefits and the privileges that servicemembers have with commissaries.''

    But he said, ''They are important for another reason, too.'' And I said, ''What is that?'' And he said, ''Well, they give families a place to meet.'' And I thought, ''Well, that's good. Glad it gives them a place to meet, but why do they have to meet at the commissary?''
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    Do we have facilities, do we have community centers, do we have places where families can get to know each other? And I had never given it a thought before. I mean, they have gyms and we fund them, physical fitness centers. Well, for the most part, servicemembers meet servicemembers at physical fitness centers. It is not necessarily a place for families to meet.

    Of course we have churches as part of the community, but as we begin to bring on new housing through the privatization program and MILCON program and we begin to build communities, have we planned sufficiently for places for families to get to know each other and interact? Is that an issue? Should we be concerned about it?

    General JONES. Absolutely. And I hadn't thought of commissaries as a necessary meeting place, but I guess some of the checkout lines—

    Mr. SAXTON. I only mention that, General, because I thought it was great that people can meet there.

    General JONES. We both understand. And you raise a good point.

    I would like to just tell you that I think, to sustain the all volunteer force in the 21st century, it is going to be important that our bases and stations are good and safe places for families on which to live.

    I consider that we pay a lot of attention to what I call the intangible benefits of service life. And those intangible benefits are, in fact, quality bases and stations, decent housing, good schools, good hospitals, good commissaries, a viable club system that we do have. We have youth activities on our bases. We have athletic programs. We do have a lot of great places to meet.
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    The statistic for the Marine Corps is that we strive to have about 25 percent housing for our force. About 25 percent of all marines can live on a base if they want to.

    I think preserving that community identity, the meeting place identity, is very important for the future. And to the extent that we can make those bases, where expeditionary forces are launching and recovery pads, if you will, for our marines. And to the extent that as they go out, they feel comfortable with the fact that these are not only meeting places, but these are places where their families are cared for when they are overseas for the many operations they go on, we will be able to retain the force.

    So all of those things—the commissaries, the exchanges, the clubs, the youth centers and just the recreational facilities—are places where social values and the service cultures are developed. And those are, in many cases, intangible benefits. I mean, it takes money to develop them, but they also have to be of sufficient quality for people to use them.

    And so we are trying to make sure that our bases in fact are places where people want to stay, and we are really reengineering how we approach the quality of life on our bases and our enlisted quarters and in our officers quarters as well.

    Admiral CLARK. If I might respond, and I would like to align myself with General Jones' comments, and say to you, Mr. Saxton, that when I was a lieutenant, I was assigned overseas. And I remember how much Connie and I enjoyed going to the post office—we had to pick up our mail—because we got to see people there.
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    I think your point is absolutely on the mark. And there are a large number of areas where the morale, welfare and recreation (MWR) whole program is being expanded to look at—by the way, the shape of these and the things that we provide are different than they were when I was a lieutenant, because young people go at it in a different way than they did then.

    This ties to Mr. Hefley's comment, too. It is the pressure on funding in this area is an issue. Quality of service is my number-four priority, and we have been banging on this. And I am happy to report to you that this budget has $500 million more in it in our budget than the budget that came forward here in 2001 in this broad area of quality of service.

    But we have to be looking for every application that can better support our people, aligning with General Jones' comments.

    The CHAIRMAN. Mr. Allen, you are next, if you are ready, or I will pass you and come back to you.

    Mr. ALLEN. Thank you, Mr. Chairman. I didn't expect my timing to be quite that good, although I may have missed some things that I would like to know.

    But I thank all of you for being here today. I very much appreciate your coming by. I have a couple of questions: one or two for Secretary England and one for Admiral Clark.

    Mr. Secretary, before this committee on June 28, Secretary Rumsfeld testified that the Navy needed an additional $3 billion a year to maintain a 310-ship Navy. And that makes sense to me: If you have to move from six ships to nine ships, this is at least a rough equivalence there.
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    Coincidentally perhaps, but not in my opinion, the ballistic missile defense budget got a $3 billion increase in this budget; the largest add-on for any weapons system. And my concern is, I guess, one of my questions is, if this committee can provide you that $3 billion for shipbuilding taken from another source in the Pentagon that is getting more than necessary, would that help solve your problem?

    Also at the June 28 hearing, Secretary Rumsfeld and Comptroller Dov Zakheim testified they were ready to allocate a higher amount for shipbuilding but they didn't because the shipyards couldn't handle the money due to design and contractual problems with funding more than six ships.

    I understand that is not the Navy's position, it is not the industry's position. And I would appreciate your comments. I assume that referred only to the LPD–17 and not to the need to maintain a higher level of shipbuilding.

    And finally, Admiral Clark, I am glad to see your testimony indicating that the DD–21 is central to our transformational effort. You noted in your testimony the new technologies in the ship's power system, in its gun system, the radar and reduced manning concepts. And I hope that you will be able to say a few additional words about the DD–21's transformational aspects.

    So, Secretary England.

    The CHAIRMAN. Mr. Secretary, before you start, let me interrupt just a moment. There is a vote on the journal. After the answers to Mr. Allen's questions, we will recess for about 15 minutes and resume as quickly as possible.
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    Secretary ENGLAND. All right, sir. Thank you.

    Mr. Allen, your first question dealt with the $3 billion. Certainly, we would like to have $3 billion to increase our procurement accounts. Obviously the tradeoff is the total security to the country. We are concerned with one part in our naval services, but there is this broader issue of a balanced force against all threats, and obviously that is a threat in terms of missile defense.

    And, you know, I certainly I would support that position to have that type of defense because that is a significant threat to the nation. But if there is another $3 billion, we would certainly like to entertain that also, sir.

    Regarding the shipbuilding, we did manage, as the admiral pointed out, Admiral Clark mentioned, to put in another DDG–51. We could not increase the LPD–17 just because of the delays in the program, specifically problems the contractor was having in terms of going to automated designed systems. I do believe they are getting out of that situation, so we will be able to increase that, I hope, as we go forward.

    The TAK (cargo ship) supply ships, we already have two of them in the queue. We do have one in this year, but another one just couldn't be exercised. I mean, it was not possible to do this year, so we did add the DDG–51. Now, to go beyond that would have required a lot more money, for example, for another submarine or something.

    So within all the funds, we did maximize everything we could do in the shipbuilding account. If we were in the position, for example, though, to do another TAK, we likely would have done that rather than increase our aviation account in the F–18s.
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    So, certainly we want to increase. This year, I believe we did everything we could do as a combination of what was available in terms of resources and the opportunities to invest it in the specific shipbuilding accounts. I think we made the best tradeoff we could at that point.

    And I would ask Admiral Clark if you wanted to expand on that.

    Admiral CLARK. That is well stated, Mr. Secretary.

    I would say this with regard to the $3 billion more a year. My personal position—and this is my position, not a department position. But I know that the Secretary agrees with me, but we haven't formally pushed this position forward. I said in my statement, we have to level fund our investments.

    I am convinced that if we talk about truly partnering, how do you partner without industry knowing where you are going to be. And if you look at the system development notification (SDN) account, it is the best illustrator that there is. How can the industry figure out how to deal with $6 billion one year, last year a carrier was in it in 2001 $12 billion, and this year back again at around $9 billion. And that is counting the money that is in there for overhaul of carriers.

    We need to level fund our investment in new construction in the $12 billion area. We just need to do that. Now, we have to discipline ourselves to do that also.

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    With regard to DD–21, the statement as written really does talk about the way I feel about it. I have commented on it earlier here today. I believe we need the technology that comes to us.

    As I share time with you, I will try to streamline my philosophy about the bow wave that has been created and the high ONS costs and what I face in trying to make recommendations to the Secretary. That we have to rid ourselves of that element of the old force where the costs are spiraling. And when we come back, maybe we can talk about that in some detail.

    It is especially so in aviation, where costs are just climbing, climbing dramatically. We need the ONS advantages that come from the kind of transformational ideas and research and development that is in DD–21 along with all the combat systems.

    Mr. ALLEN. Thank you, both.

    The CHAIRMAN. The meeting is now in recess at the sound of the gavel, hopefully no longer than 15 minutes, gentlemen.

    Secretary ENGLAND. Thank you, sir.


    The CHAIRMAN. The committee will please come to order.

    The gentleman from Maryland, Mr. Bartlett?
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    Mr. BARTLETT. Thank you very much.

    Gentlemen, welcome. Pleased to have you here.

    Two of you are quite new. General Jones has been here a little longer, so he may have had some impact on this budget, but I know the other two of you have had essentially no impact on this budget. So my question is a relevant one for you, I think.

    A congressional request to the services to indicate to us the unfunded requirements elicited a response that totaled $32.4 billion of unfunded requirements. The Administration's proposal is to add $18.4 billion to the budget. Now, this is $14 billion short of the $32.4 billion that the services indicated represented the unfunded requirements.

    Do you know what part of that $14 billion shortfall is represented by the Navy and Marine Corps? This is the first part of the question. And the second part is, if you don't get that shortfall, what is this going to do to readiness?

    Admiral CLARK. Mr. Bartlett, let me take that. I have here in my notes the letter that I sent in, and it included a total of $12.447 billion unfunded.

    Mr. BARTLETT. And how much of that are you getting out of the $18.4 billion?

    Admiral CLARK. No, this is $12.447 billion that we did not get in the—maybe make sure we are not talking past each other.
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    Mr. BARTLETT. Okay. So most of this $14 billion shortfall is Navy, then.

    Admiral CLARK. No.

    Mr. BARTLETT. Because it was only $14 billion.

    Admiral CLARK. You talked about $54 billion, and then you talked about $18 billion.

    Mr. BARTLETT. No, I talked about $32.4 billion and then $18.4 billion. $32.4 billion was what the articles are saying was the sum of the unfunded requirements from the military services. The Administration is proposing adding $18.4 billion.

    Mr. SKELTON. Would the gentleman yield to that?

    Mr. BARTLETT. Yes, sir.

    Mr. SKELTON. What the Admiral is referring to is in response to a letter I sent him. They actually waited until the budget was sent over. His response is, none of the figures that were included in the budget that was sent over include the unfunded requirement list. In other words, none of the $12 billion was included in that $18 billion.

    Admiral CLARK. Then it is a correct statement that the $18 billion amended budget was sent over. I can't give you the exact number, about $7 billion or $8 billion I guess, $6 billion or $7 billion that we got in the Navy Department. And then I submitted a list of $12.44 billion that is unfunded above the amended budget. And if you multiply that by three, you get in the neighborhood of your $35 billion to $36 billion for all three services.
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    Mr. BARTLETT. Okay. So this $18.4 billion has been misrepresented. This is the unfunded requirements beyond the $18.4 billion.

    Admiral CLARK. That is the letter that I sent to Mr. Skelton.

    Mr. BARTLETT. Okay. So it is about $50 billion total, and the Administration is proposing providing about $18.4 billion.

    My question, if you could provide for the record, is you don't get this $12.447 billion, what is that going to do to readiness? If you could just provide that for the record. We need to know how much you are going to be crippled if we aren't able to find dollars for these unfunded requirements.

    My second question has to do with a relatively small issue, and I have no provincial interest in this. If I did, as a matter of fact, I shouldn't be raising the issue because, if anything, constituents in my district could be hurt by a possible decision.

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

    David Taylor Model Basin, part of Carderock, is a major test facility for the Navy. They test boats there. They have both a tow tank where they drag models through it, and they also have a circulated water channel. And about 45 years ago I was there using the circulating water channel, testing underwater swimmers when I worked at the National Institutes of Health.
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    We also have a tow tank at Langley. Now, Langley is an Air Force facility. And the Navy tow tank at Langley is kind of strangely out of place there. There is now a move to destroy the tow tank at Langley. If that were destroyed, that means that all of the work would be done at Carderock, and I have some constituents who commute to Carderock.

    But I want to make sure the right thing is done. The one at Langley can be filled with sea water; the one at Carderock cannot be filled with sea water. I think a major reason for getting rid of it is, it is a Navy facility on an Air Force base. It needs paint.

    The fees that have been charged for its use have covered its expenses. My understanding is, it would cost more money to tear it down than it would to maintain it for a number of years.

    I just want to make sure that the right decision is made. I hate waste, and if there are not good reasons for tearing this down, I don't want to see it torn down. If you all could check into this and let me know whether tearing it down is the right thing to do.

    By the way, if you have to test at sea in salt water, it costs many times as much as testing in the tow tank at Langley. Could you please get back to me and let us know whether or not tearing this down is the right thing to do for our country?

    Secretary ENGLAND. Yes, sir, we definitely will. We will get back with you, sir.

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

    Mr. BARTLETT. Thank you very much.

    General JONES. Mr. Bartlett, could I respond to your question with regard to the unfunded portion for the Marine Corps?

    Mr. BARTLETT. Yes, sir.

    General JONES. My original fiscal year 2002 unfunded list totaled $1.8 billion. The Administration additions to the budget have reduced that amount by approximately $400 million. So the letter that I sent over for unfunded requirements totals approximately $1.4 billion for the Marine Corps.

    Mr. BARTLETT. Thank you very much.

    Thank you .

    The CHAIRMAN. The gentlelady from California, Ms. Tauscher.

    Mrs. TAUSCHER. Thank you, Mr. Chairman.

    Gentlemen, how are you?

    Secretary ENGLAND. Good morning.
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    Mrs. TAUSCHER. This has been very helpful.

    Secretary ENGLAND. Thank you.

    Mrs. TAUSCHER. General Jones, how are you?

    General JONES. Fine, thank you, ma'am.

    Mrs. TAUSCHER. In your statement you mentioned that the V–22 Osprey remains the Marine Corps' main near-term aviation priority. I know that there has been a lot of work done on it, and you have been very much involved in that.

    Can you kind of briefly tell me what steps are being taken to ensure that the V–22 Osprey is reliable and operationally suitable?

    General JONES. Thank you very much. Tilt-rotor technology I think is transformational. I think it is not only important for the Marine Corps but I think ultimately you will reach over into commercial aviation as well. So I think this is an industrial base issue.

    I am pleased that, as I said in previous testimony, that the independent panel referred to tilt-rotor technology as being a national asset. We have taken the panel's recommendations quite seriously and have already corrected 80 of the 120 deficiencies that they listed. We are tackling the main issues, which is fixing the software anomaly and the re-engineering of the hydraulic lines in the nacelles. The partnership with industry and the support of our secretary and the acquisition community is going along at pace, and I am very encouraged at the prospects.
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    Our recovery from this serious setback will be event-driven not timeline-driven. And I don't have a forecast for how long that is going to take, but I am encouraged at the progress we have made thus far.

    Mrs. TAUSCHER. When do you think a forecast and a re-baseline timeline would be available?

    General JONES. Well, I think the optimist would say a year; the pessimist would say two years. But that is about as far as I would go. I think it really is important. Having done 80 of the changes already, that gives me great hope that we can get there sooner rather than later.

    Mrs. TAUSCHER. All right.

    Thank you, Mr. Chairman.

    The CHAIRMAN. The gentlelady from Virginia, Ms. Davis.

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

    And thank you, Mr. Secretary, General Jones and Admiral Clark, for coming and testifying today.

    Mr. Secretary, I would like to just tell you that I appreciate all the challenges that you faced with the force modernization and procurement. And I am just sort of curious with regard to General McCarthy's study on the transformation panel. And I was wondering if you could speak as to why they did not find CVNX and the Nimitz force transformational.
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    Secretary ENGLAND. I really can't speak for them, so I don't know what the basis was. My understanding is, they did clarify those remarks later in terms of transformational. But I can't reconstruct their thinking in that regard, so I am sorry. Perhaps Admiral Clark has a comment here. I am sorry I just can't help you in that regard.


    Admiral CLARK. Well, you know, the definition of transformation is sometimes in the eye of the beholder. And I think in some regards that may have affected what they said.

    But I believe that if you look at this capability—and I alluded to it in my testimony, in my opening statement. If you believe that you live in a world where there is going to be more and more pressure on the ability to insert yourself in land sites where there will be political questions about your ability to go there—General Jones alluded to it in his testimony.

    A number of the documents that were developed in the Rumsfeld panels pressed the point hard that capitalizing on our ability to operate from space and from the maritime areas was of vital importance to our nation, and I certainly believe that.

    And I believe that what makes our Navy dramatically different from everybody else's is that we have the ability to project air power and that, without the carrier, we lose a lot.
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    That said, I think the transformational aspects of carriers in the future has to do with the systems that will continue to be introduced into the carriers, and all of our force structure, that will allow us to take a fight to the enemy. When I see the future, whether it is 20 years out there somewhere, I see unmanned air aviation operating from our carriers.

    Mrs. JO ANN DAVIS OF VIRGINIA. A large deck, right?

    Admiral CLARK. What will transform is what we put into these platforms, because the investment that the nation makes buys them for a long time.

    Mrs. JO ANN DAVIS OF VIRGINIA. And I think I asked you before: You prefer the large-deck carriers as opposed to the small deck, right?

    Admiral CLARK. The large-deck carrier, there has been all kinds of analysis done through the years that shows that if you are interested in winning, if you want to be engaged in a fight and come out victorious, you need big-deck carriers.

    Mrs. JO ANN DAVIS OF VIRGINIA. General Jones, did you have a comment?

    General JONES. I would just like to underscore the CNO's comments, because I really believe, getting back to the point I tried to make in my introductory remarks, that being a maritime nation requires a maritime investment. And it is going to be particularly important in the 21st century. I don't know anyone that could look at us and say, well, we are going to have more land bases around the world in the 21st century. I believe that we will not.
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    And I believe that the ones we have will be subjected to great restrictions on how we use them, and I think the nation needs some flexibility. And that flexibility, to me, is with the seas. We have, for 60 years or more, had a mastery and dominance of the seas. And I think from the standpoint of from big-deck carriers to the amphibious platforms that we have, which will launch Stovall aircraft, and if we get into tilt rotors, we will really transform—and I use that word very carefully, as you know—transform the way we do sea-based logistics, for example.

    But this gives the nation great flexibility to be able to move these mobile platforms and bases around so you can influence the regions that you want to influence. And I am very excited about what we could do in the 21st century in the aggregate sense.

    Mrs. JO ANN DAVIS OF VIRGINIA. Thank you.

    If I could ask one quick question, Mr. Secretary, would you or one of your assistant secretaries be willing to update myself and possibly other members as regards the CVNX transformation capabilities before we have our authorization markup?

    Secretary ENGLAND. Certainly, we will do that at your convenience, Congresswoman, absolutely.

    Mrs. JO ANN DAVIS OF VIRGINIA. Thank you.

    Thank you, Mr. Chairman.
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    The CHAIRMAN. Mrs. Davis of California is recognized.

    Mrs. DAVIS OF CALIFORNIA. Thank you, Mr. Chairman and Secretary England, Admiral Clark and General Jones. Thank you again for being here. I know that everyone has expressed that to you.

    I missed a few of your comments, Secretary England, earlier, I think, about the 2002 budget and building the 2003 budget and how you have an opportunity to look at that in a different light.

    Could you share with us then, what are you learning from that? What is different about that process? And you obviously have a lot more flexibility with it. But is there something that we can learn from the gaps or perhaps the lack of, I don't know, forward thinking how we really integrate it with QDR?

    Secretary ENGLAND. We are, the three leaders of the naval services, Admiral Clark, General Jones and myself, have been discussing how to approach the 2003 budget to focus on core, essential capabilities for the Navy, to be sure that we fund those essential capabilities first; that is, set aside certain amounts of money to make sure that we deal with primary issues that affect the Navy.

    So we have had these discussions. We are still trying to decide exactly what that approach will be. Obviously, time is getting short. But rather than build up the budget, we guess, in whatever that fashion has been in the past, to do this with more top-down direction in terms of making sure we address the central core capabilities for our sailors and our marines and make sure we fund those capabilities in the 2003 budget.
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    I don't know what the outcome of that will be yet. I can tell you there is an intent on this leadership team to take a different approach because it has been evident to us that the prior approaches have not worked. At the end of the day we end up sacrificing our ships and our airplane procurements and other things that we feel are essential. So we are going to try to approach this from a different direction, and hopefully we will have a more positive outcome.

    Mrs. DAVIS OF CALIFORNIA. And where does personnel fit in that, as you look at the basic four?

    Secretary ENGLAND. Well, of course, personnel is at the very top of this list. I have made the comment a number of times—and, again, I know the admiral and the general totally support this—whatever equipment we build, the day it gets launched or sits on the runway or whatever, it has no asset value to the Nation until we put people on board.

    So at the end of the day, it is the people that make our assets valuable to the Nation. And without those people, they are not valuable to the Nation. So people are indeed our number one priority. And we must take care of our people.

    And this is a volunteer force, but it is also a recruited force. I mean, we actually go out and recruit these people to join our team. And it is important with the kind of weapons systems and the complexity and the technology we have that we find the very best people that the Nation can produce to join our team. And we are committed to do that.

    And part of this is to make sure that we have the right quality of service, the quality of life, the quality of work, the right leadership in place, the right equipment that they can feel proud and know that they are going to succeed in their mission.
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    So again, this leadership team of people, very important, and that is number one. And then number two, are the core equipments that we need then for those people to man, outfit and maintain for us .

    Mrs. DAVIS OF CALIFORNIA. Thank you. Are you comfortable that the emphasis, then, on retaining individuals who have the technology background is moving forward, that we are going to be able to provide them the salaries that can compete in the private sector?

    Secretary ENGLAND. Well, this is an issue both for our military people and for our civilian workforce. So this is both a civilian-workforce issue and a military-personnel issue. We are committed to do what we need to do to retain the right quality people with the right backgrounds in the naval services.

    So you will see, as we work together on this issue, I believe you will see some innovative recommendations we will make to this committee as to how we will go forward in the future.

    Mrs. DAVIS OF CALIFORNIA. Okay, thank you.

    Mr. Chairman, if I may ask one more question of General Jones, which—

    The CHAIRMAN. The gentlelady may proceed.

    Mrs. DAVIS OF CALIFORNIA [continuing]. Is more on a personal level for San Diego.
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    I had the opportunity to tour Camp Pendleton recently, and I know you are very aware of the dynamics in San Diego and the concern that we have both Camp Pendleton and Marine Corps Recruit Depo (MCRD). Could you please just let me know how important MCRD is to the training of marines in the area and why they couldn't train at Camp Pendleton?

    General JONES. Thank you. Yes, MCRD is extraordinarily important. As you know, it handles all recruits west of the Mississippi who come into the Marine Corps.

    The reason that MCRD needs to stay where it is has to do with the fact that Camp Pendleton, even though it is a large base, can also get very crowded. We have constraints on environmental issues. We have encroachment issues that we are battling. Camp Pendleton is an operational base. We have regiments and battalions that need to train there.

    And the recruit training and the operational training are two different things. And so we value and treasure the location of MCRD and the missions that it currently has.

    Mrs. DAVIS OF CALIFORNIA. Thank you.

    Thank you, Mr. Chairman.

    The CHAIRMAN. The gentleman from Mississippi, Mr. Taylor, is recognized.

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    Mr. TAYLOR. Thank you, Mr. Chairman.

    Thank you, gentlemen, for being here today.

    Gentlemen, it came to my attention yesterday that the negotiations between the Health Care Financing Administration (HCFA) and the Department of Defense for the reimbursement of the base hospitals for Medicare-eligible retirees have broken off. As you know, that was supposed to go into effect on October 1 to fulfill the promise of lifetime health care for our military retirees. This cannot happen.

    I don't think it is the Department of Defense's (DOD) fault. I personally think HCFA is dragging their feet in order to try to save some money, and that is absolutely the wrong place for the United States of America to try to save some money, with our military retirees.

    So I would ask you in your positions to, in working through the Secretary of Defense to get in touch with the Commander in Chief, to see to it that his folks are taken care of. This cannot happen. And if we have to pass some language on the appropriations bills cutting back funds to Medicare administration to get their attention, I am certainly willing to take a run at it. But I just wanted to pass that on to you. We have less than two months to make sure that this program is in place.

    Secretary ENGLAND. Can I respond just a minute because yesterday afternoon I was in a meeting with Dr. Chu? This subject came up. Dr. Roche, Secretary of the Air Force, was at that meeting. He brought this up specifically to Dr. Chu and asked Dr. Chu to speak personally to you on this subject. So you will be getting a direct conversation from Dr. Chu, who is familiar with the details of this issue.
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    Mr. TAYLOR. Thank you, sir.

    Second issue, Mr. Secretary, you touched on the subject, but the truth of the matter is, if we started this year building 21 ships a year, since it takes about three years for a ship to go into the fleet, that the fleet will continue to shrink and will bottom out at 268 ships. That is if we started building 21 ships a year this year, because we have been having a net loss of 15 ships a year for the past six years. Three destroyers just doesn't cut it, sir.

    I posed this question to the Secretary of Defense. He came back with what was truly the Washington equivalent to the ''dog ate my homework'' answer, when he said the shipbuilders did not have the capacity to build those ships.

    I have letters I would like to submit for the record from the National Shipbuilding Council, a second letter from the president of Ingalls Shipbuilding saying that answer is totally off base, that the capacity is there. And as a matter of fact, they need to build 12 ships a year just to maintain their industrial base. So I would again welcome your remarks on that.

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

    Third thing is Vieques. And I am very grateful and honored that you took the time to visit with me on the subject yesterday. Thank you for your research that pointed out that the language that passed last year would transfer that property to the Interior Department if the referendum fails. I think that is horrible public policy. I think the true believers on national defense have asked to serve on this committee, and I want this committee to continue to have jurisdiction over that property.
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    So, Mr. Secretary, I am going to ask you to consider asking this committee to change the law so that that property, regardless of the outcome of this referendum, stays in the possession of the Department of Defense. I have a heck of a lot more faith in this committee doing the right thing with that property in the future than seeing to it that it does not fall into the hands of the developers and fulfill what they are trying to do by stirring up all this trouble. Because I remain convinced that this is really being driven by the developers trying to get their hands on 18 miles of beachfront property, and they are willing to risk national defense to do so.

    Along those lines, Admiral Clark, I want to thank you for your update on what you are doing at Vieques. And like any American, I have to tell you, I am distressed that the mayor of an American city—and the mayor of Vieques is the mayor of an American city—would turn down help to the local clinic that the Navy is offering to provide.

    My suggestion to you is, having been to Vieques, is that the gate of the range is not that far from the city even though the gate is still eight miles from the bombing range, and I want the American public to be aware of that. It is eight miles from the nearest house to that bombing range.

    If the mayor doesn't want the help in the clinic, then may I suggest that you have a mobilization exercise just inside the gate to provide medical services for the people of Vieques and show the mayor that you are sincere even if he is not. And we are going to help those folks, and we are going to be better neighbors, and we are going to stay. I would strongly recommend that, and I would like to hear your thoughts on that.
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    Admiral CLARK. Well, I think that is a very innovative idea, and I will certainly take that aboard and see what we can do about that.

    I was pleased when I spoke before the committee last time. I did not have the extensive details that I sent to you in the letter that showed all of the activity that is going on. I am very proud of what the people are trying to do down there, and I want to thank you for the comments you made when we appeared here before and your comments about the way we seek to be good neighbors. And you have an excellent suggestion, and I thank you for it.

    Mr. TAYLOR. Thank you, sir.

    Mr. Secretary.

    Secretary ENGLAND. Mr. Taylor, I have a meeting this afternoon on this subject. The meeting is broad in terms of, how will the funding be spent on Vieques, the $40 million. We have people working in terms of each classification on what we will be doing on Vieques, what the time line will be. And so we will indeed discuss this suggestion you made today, and so this is very timely. We will include that in this afternoon's discussion.

    Regarding the land, as you noted it does go to the Department of Interior. And depending on which piece of land, it is either a wilderness or a protected area of some sort. I understand your concern about, is that an adequate safeguard for the land, so I will go work that, I will follow-up on that suggestion.

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    It wouldn't require a change in the law because that is currently the law that is on the books today in terms of how the land reverts. So I will go work that, and I will get back with you on that and with this committee, sir.

    The CHAIRMAN. Mr. Taylor, your communication will be made part of the record.

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

    The gentleman from Florida, Mr. Crenshaw.

    Mr. CRENSHAW. Thank you, Mr. Chairman.

    And thank you all for being here today. I am very encouraged to hear what is going on, and I appreciate that.

    I have one question that maybe I would direct to General Jones. When you talk about the expeditionary aspect of the forces, and you mentioned Blount Island as an acquisition as part of that where they are pre-positioning ships are. And I wondered if you would just elaborate a little bit about how that all works together and fits in, in terms of our strategic mission of being ready all throughout the world.

    General JONES. Sir, I would be glad to. Blount Island is part of the strategic enabler entitled Strategic Mobility, and it is really the launching platform for that flexibility. It is critical to the worldwide application of our military power and our strategy. And it is contained under that strategic concepts allowed in the national military strategy, the forward presence and crisis response.
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    The reason that it is such a special facility is because of the fact that this is where our maritime pre-positioned go for replenishment and refurbishment. And I want to underscore a unique capability of those particular ships and because they enable our joint commanders around the world to really influence and demonstrate the power that can come from the sea if necessary. They are for conflict resolution but also for things like humanitarian assistance and the like.

    Last year in Greece we had an exercise. We off-loaded, partially off-loaded the maritime pre-positioned ships in support of 4,000 marines ashore in a joint exercise. People who watched that exercise were in awe because those ships are loaded in such a way that you can roll off specific items that you want.

    If you want light-armored vehicles, you can roll them off without off-loading the entire ship. And that is a unique capability within the maritime prepositioned shipping of the United States.

    It is important to not put all of our eggs in one basket and one location. This location gives us a unique capability. We have been leasing the location. The leases expire in 2004.

    And I think it is, not only for the Marine Corps and the Department of the Navy but for the Department of Defense I think, I consider Blount Island to be a national asset.

    Mr. CRENSHAW. Thank you.
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    Thank you, Mr. Chairman.

    The CHAIRMAN. The gentleman from Arkansas, Dr. Snyder, is recognized.

    Dr. SNYDER. Thank you, Mr. Chairman.

    Gentlemen, I am sorry I had to leave. Mr. Crenshaw had a subcommittee meeting of the Veterans Committee, was doing a markup there.

    General Jones, I wanted to ask you, in the 2001 bill we changed the way we pay people who are deployed for longer than 400 days. You make a comment about this in your written statement, to make a reference to the fact that the larger services—referring to the other three branches—it may have a different impact on them than the Marine Corps.

    Do you want to comment on that, amplify that? Do you have any suggestions about what we might need to do?

    General JONES. Thank you. The issue here is that, first of all, sometimes one size doesn't fit all. And this is maybe a case for us, and I will defer to the CNO for his particular answer to that question.

    But when you have an organization like the Marine Corps, that is 68 percent 24-years and under, unit cohesion is very, very important in how we train our people. And we train them up to deploy. We have an expeditionary culture. Much of our recruiting success is attributed to the fact that we lay it out exactly, the challenge of serving in the Marine Corps. We guarantee that they are going to be deployed and they are going to do exciting things in long distances, and we meet those expectations.
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    And so, we don't see deployments as a penalty. We see them as part of the pride in service, and marines look forward to being able to do that in partnership with our Navy, our counterparts.

    I believe the legislation was imposed as a management tool too, at a time when we have serious first tempo, operations tempo (OPTEMPO) problems in the armed forces in general. I worry about the fact that now, by having to pay $100 a day for marines who are deployed over 400 days in a two-year period, first of all that the funding has not been provided as part of the budget.

    And that applies beyond just the operation. It applies to people who could be at Marine Corps headquarters and spend the night away from home. It applies to people who are living on a base and go train in the field over night.

    And so when you total up those days, the 400 days using that metric, can come very, very quickly. And the bill that will have to be paid ultimately can be quite large. We will have an estimate by July as to what that bill is going to be for us, because it is a tough one to get our hands around.

    But I bring it to your attention, Congressman, because I think that it is important to make a statement that marines are proud of what they do. We know that to be an expeditionary and being deployed was part of our culture and we accept that, and that is part of our marketing and recruiting attraction for our young people who come and join us.

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    Dr. SNYDER. Thank you for your comment.

    Mr. Secretary, I was trying to think of, you know, who might have sat in that seat 18 years ago and what they said. And I couldn't think of who it was, so that is a way of saying whatever you say here today, a few years from now no one is going to remember, you know. They won't remember what we say.

    The humbling experience is, try to remember the greatest speech you ever made on the floor of the U.S. House, you know. Baron Hill had one last week, but other than that, most of us can't think. You know, the world will little no longer remember what we say here.

    But I am concerned that what we do and what your administration does and what this committee does over the next several years is going to have tremendous impact on national security issues, and we all hope, for the good.

    But as I look at the budget numbers, it seems to me that we have ourselves in a hole already. You know, I have heard reports that the White House did not want the defense budget to come up here before the tax cut passed.

    We already see problems. You know, you talk about the backup in infrastructure needs. You have a reputation for being kind of a wizard with numbers and cutting expenses and doing things more efficiently. But you are going to have to be a remarkable wizard, I think, as we look ahead to see when this tax cut thing fully kicks in. It is called $1.35 trillion. I think a lot of experts think it is probably already $2.2 trillion, $2.3 trillion over 10 years, and we are going to do other things.
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    I mean, do you have an uneasiness in your gut that, as you look ahead and you see what the needs are, as outlined by General Jones and Admiral Clark, that the money may not be there in the budget the way you want to do it?

    Secretary ENGLAND. Let me comment. I guess I feel like I am very fortunate because I came in at a time when the budget went up by $18 billion, that none of my predecessors have been in that position for a long, long time to be able to say that. So probably for the first time, I am part of the start-to-get-well team in terms of having some money available for things like readiness that was going down every year. And this year it is improving. For the first time we have our flying hour program.

    So going into 2002, if you look at every single vector within the Department of Navy, they are all improving somewhat. So at least we have started the turn, and it certainly wasn't my expectation we would do all this in one year, but we have started in the right trend line.

    I commented, hopefully next year we will have more resources available. And, again, I think I need to comment here, because Admiral Clark and General Jones have been very forthright and, I would say, enthusiastic about trying to find ways that we can more efficiently run the Department of the Navy. Put the right systems in place, put the right measures in metrics. So they have enthusiastically embraced this.

    And I am hopeful that, between some improved resources and better efficiencies within the department, better ways of doing business, better ways of doing our operations, that we will be able to continue to move forward. So I am pleased to be part of this turn in the road toward better improvement for our naval services. So I am enthused about it. Rather than being dejected, I am very positive, sir.
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    Dr. SNYDER. Well, as time goes by, I hope we will all, with great candor, look at these budget numbers as they come out and look at things like Medicare trust fund and where these dollars are going to come from, because it is a total package that this Congress is responsible for. Thank you.

    Secretary ENGLAND. Thank you, sir.

    The CHAIRMAN. The gentleman from Virginia, Mr. Schrock.

    Mr. SCHROCK. Thank you, Mr. Chairman.

    Mr. Secretary, General, Admiral, thanks for being here.

    I have heard a lot of things this morning, and I think one thing that bothers me that I knew was the force is smaller than before 1933, and that is very bothersome to me. I was told that by the former chairman of the Senate Armed Services Committee about a year and a half ago, and I hadn't forgotten it. And the thought that we could get down to 230 ships is frightening to me. I think it is frightening where we are right now, and to go any further I think makes absolutely no sense at all.

    And Admiral Clark mentioned the level fund investments. That is a mighty fine idea, and it is too bad we can't get that into place and keep it there. But it is going to take resolve on the part of this committee and the Congress as a whole to make sure that we are going to authorize to fund these ships of the future so we don't have to go through this every year.
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    The admiral said elasticity has been diminished. Well, that is an understatement. Maintenance is just an absolute mess. Everybody I talked to in the district I represent—and I would probably say I represent more military than anybody else in this room—that is one thing they complain about. And I can assure you, we better keep our ships and every other asset the whole force services use up to speed, because if the red flag goes up, we got to make sure they are ready and we need to make sure that the folks we are putting them in are trained as well as possible, or we are going to be in big, big trouble.

    Yes, we are doing a pretty good job with people in compensation. I appreciate that, but we need to do more. Retention is not as good as it should be. I say it over and over and over again and everybody gets sick of hearing me say it, but if mom and the kids aren't happy, dad's not going to hang around. We need to make sure that we have adequate housing. We are doing a great job of that in Hampton Roads with the Navy. We need to do better with the Army and some others, and we are working on that as well.

    I heard Mr. Hefley talk about the infrastructure. I visited a lot of buildings that sit on bases in the district I represent, and there are some pretty grim facilities out there. But how do you expect to spend to money on the infrastructure when, in the last eight years, we have had our forces spread in more areas of the world than ever before? I mean, more areas of the world than all—the last president—what I am trying to say is, the last president had us spread in areas around the world more than any other president since Franklin Delano Roosevelt. And when you have that—and that is with unfunded money—something has to give. And it is coming out of infrastructure. We have to put a stop to that, frankly.

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    The overseas land bases, I am very bothered by the possibility that we might leave Vieques. If readiness is as important as we say it is, and it is—because if these folks aren't ready, we are putting them into harm's way in ways we should not be doing. And I see Okinawa is hitting the radar screen now, and where does this stop? We get out of Vieques. We get out of Okinawa. You know, the people in the district I represent, Naval Air Station Oceana, they want the planes to go away. Well, it is not going to happen.

    And we have to make sure that we don't get out of those places and regret it afterwards. Yes, people are our friends, but our friends like the peace and safety that they enjoy because of our military. And they have to understand, with that, comes the ability to help train our folks. And Vieques is important, Okinawa is important, all these other places are too.

    Let me make two more comments real quick, then I have a question.

    The Osprey: This is one member who is a huge fan of the Osprey. I was privileged to go to the hearings they had in Philadelphia, and I heard the people who know the Osprey talk about it, and I am convinced it is good. I saw a picture of the commandant with his wife in the thing. Now, unless he doesn't love his wife, I can't imagine why he would put her in there if he didn't think the thing was safe.

    Yes, there are going to be problems with systems. Every single system we have ever developed has had problems. But you develop those and keep getting rid of the problems until the system works well. And I am convinced the Osprey is the future, and we better focus on that and we better do it real quick.

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    I can't remember which member asked about families meeting in the commissary. Hey, I go to the commissary. I think it is great. I meet people there. But what military families do better than anybody else is assimilate themselves into the community.

    The house my wife and I built several years ago in Virginia Beach, we were the first military family to move into that neighborhood, and everybody went, ''Oh my God, what has happened to the neighborhood?'' But after we were there a few years, everybody said, ''Hey, this guy is all right. So is his family.'' So, yes, we have to have facilities on bases, and we do. We have swimming pools and sports facilities.

    But to assimilate ourselves in the communities so they understand what we are all about so any community will be willing to support us when we have hearings like this, say, ''Hey, yes, spend the money on the military,'' is real important. So I love living in the civilian community. Always did as a military guy, and I think most military families do.

    Now that I can get off my soapbox, I appreciate what Mr. Snyder asked about the deployment days, and I appreciate what the general said. Admiral, do you feel the same way, that it causes economic hardship if we start doing this?

    Admiral CLARK. There is no question about it, Congressman Schrock, that this particular piece of legislation was put in to target an objective to deal with first tempo. The Navy was the first service to ever develop the first tempo, OPTEMPO standards, and we have had them for now a number a years. And we have made great progress. And this is a management issue, not a leadership issue. This is a hardcore management. You have to manage your way through this problem.
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    And frankly, we have turn-around ratios where we guarantee a sailor that when their unit deploys, that they are going to—a CNO—the standard is, never before two-to-one turn-around will you deploy again. The optimum, ideal period is somewhere in the three to three-and-a-half range, so that you have—because if we deploy them too often, they are going to vote with their feet.

    And so, I think we are doing this well, and I think this is punitive legislation. And I would like to see this made positive. Let's incentivize going to sea. And frankly, our re-enlistments are higher on our deploying units than anybody else. They understand purpose, and they are committed and dedicated.

    Mr. SCHROCK. Great. Thanks.

    Mr. Chairman, could I ask one more question?

    The CHAIRMAN. Very briefly, please.

    Mr. SCHROCK. Okay. General, on page four of your written testimony, you mentioned that the Marines are utilizing numerous best-business practices, what the secretary mentioned earlier in his opening comments, in order to make operations both efficient and effective. In other words, internal management, efficiencies, outsourcing, privatization, of course returning marines to the operating forces.

    Now, these activity-based cost-management programs you are using—and I understand they are the best in DOD—are, in fact, saving the Marine Corps large amounts of capital. Could you just briefly comment on that, because that is fascinating to me.
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    General JONES. Sir, I would be glad to.

    This is used to improve the visibility of all the resources consumed by the work being done on base and the length of work to services provided to supported units. And basically it is a practice of developing better efficiencies.

    And the results to date have been encouraging, streamlining check-in and-out procedures on base housing. For example, Hawaii saved $100,000 annually. That the regionalization of our Marine Corps communities support systems at Marine Corps Air Station in Beaufort and MCRD Parris Island have saved in 2000, $63,000; in 2001, $197,000; and it gets up to a quarter of million dollars by 2004.

    And if you keep on going like that around the Marine Corps and you get more efficient in how you do your business practices, you know, in consolidate and regionalize, you wind up saving a lot of money. And sooner or later, it adds up.

    The other thing that it does is that it returns marines who are filling these billets to the operating forces. When you can save and consolidate, and you not only save money, you save people. And the people in uniform go back to the operating forces, which is where they belong.

    Mr. SCHROCK. Everett Dirksen said, ''A million here, a million there, pretty soon you are talking about real dollars,'' and that is what this is all about. Thank you.
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    Thank you, Mr. Chairman.

    The CHAIRMAN. Gentleman from Virginia, Mr. Forbes, is recognized.

    Mr. FORBES. Mr. Chairman, in the interest of time, I will just have a brief statement I will leave for the committee and reserve questions at this time.

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

    The CHAIRMAN. Thank you.

    Mr. Hunter from California.

    Mr. HUNTER. Well, thank you, Mr. Chairman.

    If you have anybody else that wants to go, that is fine with me. I will save questions in the end if we make it. If not, I can give him written questions.

    The CHAIRMAN. Unfortunately, we have another vote.

    Mr. Abercrombie, you want to try to get your questions in before we leave?

    Mr. ABERCROMBIE. Yes, thank you.
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    The CHAIRMAN. If the rest of you want to leave, we will return then with Mr. Hayes, Mr. Akin, Mr. Larson and possibly Mr. Hunter and Mr. Skelton.

    Mr. ABERCROMBIE. General Jones, you mentioned Okinawa. Isn't it a fact that the Japanese government refuses to consider whether or not there might be a dispersement of the numbers there? Isn't that what the key question here is, the concentration of numbers in Okinawa? And doesn't that get brought up all of the time? And are we not in a situation where the training, even by your own discussion in the remarks you were making, is more and more limited and that much of the training now is taking place in Guam?

    It is not that I want to get into a long discussion about what the strategic necessities might be with stationing people in Japan. But the question becomes about the concentration of the numbers in Okinawa, and maybe you could comment on them.

    General JONES. Yes, sir. What has happened on Okinawa over the years is that the island has developed, and the concentration of population is in roughly one half of the island: southern half; northern half is largely underpopulated. Unfortunately, that is where the bases are, that is where the air stations are, that is where Kadena Air Force Base is. And so, you have a very, very crowded half of the island, and the other half is not crowded.

    And the basis of the Status of Forces Agreement (SOFA) agreements was to relieve that pressure on the southern part of the island, with the agreement being that we would voluntarily move whenever the Japanese government wants us to, to the northern part. We would return Kadena Air Force Base, and in return we would build another air facility in the northern part of the island, taking with us all the infrastructure and the population that exerts pressure on the southern half.
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    We are committed officially by policy of our government to support the SOFA agreements, and we do so.

    With regard to training, as I mentioned in my opening remarks, out of the 70 exercises that we do in the Pacific Rim, only seven are done on island, and only three or four are even visible to the population. So we are really using Okinawa as a staging base to forward project and execute our national policies and our military-to-military relations with our allies.

    I just came back from a conference with Pacific Rim commandants of the Marine Corps from Thailand, Korea, Philippines, Indonesia. We invited Vietnam, but they did not come. This is how we get our access to other countries for expeditionary operations.

    We are looking at Guam, as you know, sir. We don't do most of our training there, but we certainly do some of our training there, and we are excited at some of the possibilities that exist there. But that is essentially the scenario on island in Okinawa right now.

    Mr. ABERCROMBIE. I understand, but you are saying yourself, this is essentially is staging. All I am saying at this state is, if we persist in the policy that we followed for the last dozen years, at least since I got to Congress, there is only one thing worse in politics than being wrong, and that is being right. People forgive you for being wrong. There very seldom forgive you for being right.

    And all I am saying is that I have been warning for a long time that if the United States persists in taking a passive role in understanding what is coming in Okinawa, then we are going to keep paying a price. And eventually, this is not going to be able to be sustained.
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    And this is not necessarily your problem, but it is maybe the Administration, in terms of the policies that are being put forward, has to start dealing with the Japanese government in a serious way about dispersement and utilizing other bases. And we have to think about the future, where we are on United States soil for staging purposes, and relieve the pressure that is constantly, I think, on you and the marines that are out there.

    Just one last thing, Mr. Secretary.

    Thank you, General.

    Mr. Secretary, yesterday's hearings and the press conferences from the budget director, Mr. Daniels, I am sure you are aware that the budget surplus now is cut almost in half from what was estimated previously. There is talk now about going into the Medicare payroll taxes. There was testimony that savings are supposedly taking place from the base closures and that those savings are more accurately portrayed as costs that might otherwise have been expended, monies that might otherwise have been expended that aren't being expended, so there is not real savings there.

    And I would like you to be able to make a statement, if you can. When we use the word savings, in regard to the bases, those are not real savings that can be tapped toward accommodating the $18 billion or any part thereof, is that right?

    Secretary ENGLAND. Senator Abercrombie, that is not how I understand it. I mean, when we close excess infrastructure, we do have a cost savings because we don't have the carrying costs of that infrastructure. So when we close it, there is an initial cost to close it, but then every year thereafter you accrue the savings that otherwise you would be spending on that building. So you do avoid that cost in future years, and those monies are therefore available for whatever purpose—
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    Mr. ABERCROMBIE. Are you, then, able to tap those funds? Because, as it stands right now, we are talking about adding additional billions into the budget, but I don't know where that money is going to come from. And if the budget surplus has been cut in half, where are we?

    The CHAIRMAN. Mr. Secretary, that has got to be a yes or no. We have less than four minutes to go vote. The second bell has already passed. We will have to stand in recess right after your question. Very briefly, please.

    Secretary ENGLAND. Okay. I believe that is probably a different issue you are addressing than the savings per se. I believe, in the past, the savings have accrued and they have been applied, sir. And in the future, hopefully if there are savings, we will also apply those to other military needs.

    Mr. ABERCROMBIE. Okay, thank you.

    The CHAIRMAN. The committee stands in recess at the sound of the gavel.


    The CHAIRMAN. The committee will please come to order.

    The gentleman from North Carolina, Mr. Hayes, is recognized.
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    Mr. HAYES. Thank you, Mr. Chairman.

    And thank you, gentlemen, for being with us today.

    My friend and colleague, Mr. Snyder, towed a target in front of us and we got a shot that we have to take here. The previous Administration: biggest tax increase in history, and the military budget got decimated. Now we have a different point of view, and national security seems to be a higher priority. It also occurs to me that the men and women in uniform will have their withholding reduced by 1 percent and will receive a check for $300 or $600 sometime in the next six weeks, just to set the record straight on where that needs to go.

    Mr. Secretary, you were here and took a lot of shots last week. We appreciate your patience on Vieques. But ironically, just to bring you up to date on that, that same day my daughter got a letter from an international hotel chain that said the new hotel they wanted to visit on Vieques was temporarily postponed, that opening. So I thought that was interesting, backing up what Mr. Taylor said.

    And I got another letter from my Coast Guard person in Puerto Rico. He said, ''The climate down here is nothing like what the press would have you believe. Fourth of July, there were hundreds of American flags, tremendous patriotism.'' So we would probably win that election down there, particularly after this debate today.

    But anyway, you have mentioned in your testimony that you are going to find some savings with process changes. Could you briefly comment on that? That sounds good to me.
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    Secretary ENGLAND. Well, what we want to do is, instead of being, Mr. Hayes, just a product-oriented team. That is, most of the time, the management team concentrates on products, something we are building or a specific output or a specific service. What we want to do is have a process-oriented team throughout the Department of the Navy that would look at the processes: how we do things. Because as we improve how we do things, then we improve all of our products, rather than just a specific product we may be working on.

    General Jones mentioned, for example, a management system which they have used quite a bit in the United States Marine Corps. We want to make that universal throughout the Department of the Navy and also throughout, frankly, the whole DOD. So that is one of the initiatives we will have as part of Secretary Rumsfeld's management team.

    So that will give us a way to know exactly what the cost of our various activities are within the departments that we can manage effectively. And until you have that sort of visibly, it is hard to make those kind of choices.

    Admiral Clark has pointed out that while that is important, it is also important to make sure that we not only can measure the money, but to make absolutely sure that we are spending it on essential things to the Department of Navy.

    That is why I mentioned this management team is going to take a different approach to 2003 to make sure that we absolutely fund the essential items. And that means that will be some things at the end of the day that probably will not get funded. But if we do this in the right manner, we will make sure that the things that are really important to the Department of Navy and to the Nation will indeed get funded.
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    So that is our general approach, sir.

    Mr. HAYES. Thank you, sir.

    General Jones, we have a lot of legacy systems that we are in the process of replacing. I have been told, I don't remember what the source was, that we never want to lose the life of any of our men and women in uniform, and certainly that is true at Camp Lejeune. You were there the other night. So I don't want to down play that.

    But is it true that the F–15 had a more difficult research and development history up to this point, much more so than the Osprey? Is that a correct statement?

    General JONES. The F–15? The Air Force F–15?

    Mr. HAYES. I think that is it, yes.

    General JONES. I would have to get back on that, sir. I am not—

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

    Mr. HAYES. That is part of the problem. But anyway, my point is, I think, again, we don't want to lose any of our soldiers. However, the Osprey is a very necessary and very vital part of our upgrade program. I think that—
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    General JONES. I could say that back in, I think it was 1954, the Department of Defense lost over 700 airplanes in one year. In 1990, it was, you know, fewer than 20. The Osprey program itself, when compared to all other programs, statistically has been safer in terms of cost of life in developing it than other programs. It is not out of the norm, let's put it that way. We expect that the modern way of doing things will continue to reduce that, and zero is the goal, but it is still risky business.

    Mr. HAYES. In your testimony you spoke about the Class A flight mishap rate, the lowest ever. Does that include the Osprey?

    General JONES. Yes, sir. That includes the Osprey. It includes the accident last night. This is the safest recorded year of Marine Corps aviation, and we are very proud of that.

    Mr. HAYES. Keep up the good work.

    One more question, Mr. Chairman?

    The CHAIRMAN. Go ahead, sir.

    Mr. HAYES. The warrior culture. Recent trip to Parris Island, you are into a martial arts program for our marines down there, most impressive. How has the reaction from the force, particularly trainees, been to that? Seems like it is, ''We want warriors, we don't want fighters. There is a time to know when to fight and when to stand.''
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    General JONES. It is an exciting program. It is having a dramatic effect on our people who are interested in joining the Marine Corps. And it is having a very big effect inside the Marine Corps, where we are actually teaching a core competency, a skill that you can use in a complex battlefield. It is another non-lethal weapon, if you will.

    But it teaches, in addition to a skill, it teaches disciplines. We like to celebrate the warrior culture, but we want it to be a disciplined and intelligent warrior. Because, I think, on the complex playing field in the far-flung places that we send marines in the future, sergeants and corporals and young lieutenants are going to be making very critical decisions.

    And we want them to have the discipline and the judgment that goes with that. So, teaching the skill is one thing, and that is exciting and they are reacting to that. But teaching the discipline that goes with it and making sure that we don't compromise the standards so that we don't create a Marine Corps full of ninjas that are undisciplined, but that actually are disciplined and can go forth and do the things that we want them to do in a very intelligent and confident way.

    Mr. HAYES. I was most impressed with the instructor. It would be redundant to give him a weapon. [Laughter.]

    The CHAIRMAN. The gentleman from Connecticut, Mr. Simmons?

    Mr. SIMMONS. Thank you, Mr. Chairman.
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    And thank you to the panel. It has been very interesting and informative.

    I had two questions basically that I would like to address to the Secretary and to the Admiral.

    I notice in the testimony that we will be funding two Trident conversions, and I notice also from the package that there is a shortfall from converting four from fleet ballistic missile submarine (SSBN) status to nuclear-powered cruise missile attack submarine (SSGN) status. I mean, this is a very dynamic transformation, in my opinion, not a modernization, to use General Jones' terminology, but a transformation of taking some very capable platforms that have helped us win the Cold War and converting them, transforming them to the strategic challenges of the future. And if you can believe some of the local Centers for Strategic and Budgetary Assessments, we can do it for $500 million for both, which is really an awesome bargain in my opinion.

    But there has been a rumor circulating that not only will only two be funded for conversion, the other two will be decommissioned, thus losing them forever to the inventory and to this very cost-effective transformation. I wonder if the Secretary or the Admiral could comment on that rumor and reassure me that it is not true?

    Admiral CLARK. Well, one of the options that was considered was four boats, and frankly this is a resource issue. I would sure like to have all four of them. We can get all four if we have more resources, and we can keep the option open on all four of them, and I am saying the planning and the design work and the early work that has to be done on them, for another $163 million. The additional tail goes with that, and the tail is not in the out-year budget, I would tell you.
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    Having said that, I believe this is, Congressman Simmons, this is a capability that we would very much like to have. And one of my responsibilities is to put forth the recommendations for a balanced and a totally capable Navy that has capability across all fronts. So, you know, I need more money for F–18s and I need them for other platforms. This is something we want to do. If we only get two of them, we will decommission the other two boats.

    We also have in this budget recoring of one of the 688s. That was on the table. I want every one of those if I can get them. I don't want to see those pass by.

    So it is not rumor, it is fact that if we do not have enough resources to put these through conversion, well, then two of them will be decommissioned.

    Mr. SIMMONS. And if I could have a brief follow-up on that issue, what would be the time line for this?

    Admiral CLARK. Well, I believe that there are options open to us, and we are still examining the way we can get to this. And frankly, there are several options the way you could get at each of these.

    As we put together the 2003 budget, and it has been said a couple of times around here, General Jones has been here a while—the Secretary and I—this is my first visit to you this time of year. And I am building the first budget to pass and make recommendations to Secretary England. While we are doing this, we are going to be able to continue to analyze this, but I can tell you the number to keep the option open on all four is another $163 million.
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    Mr. SIMMONS. Thank you very much, Admiral. You made the comment that General Jones has been around here for a while. Believe it or not, I knew General Jones as a major here on Capitol Hill. So—

    Admiral CLARK. You have both been around for a while. [Laughter.]

    Mr. SIMMONS. Well, I took a leave of absence for a while.

    Thank you, Mr. Chairman.

    And I will simply conclude by saying that, from my perspective, and it is not simply because of my district in eastern Connecticut, but the Trident conversion is truly a transformation program which takes an extraordinary platform which has done extraordinary things in the past and re-adapts it for the future in a very cost-effective way. And I think it goes more than to just the strategic system itself. This can be an earmark of this Administration and of this Navy now and into the future of really extending the taxpayers dollars in a very focused and very effective way.

    Thank you.

    The CHAIRMAN. Gentleman from Illinois, Mr. Kirk, is recognized.

    Mr. KIRK. Thank you, Mr. Chairman.
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    Gentlemen, I left the fleet in December and, before that, participated in Northern Watch last year. We flew it in April and May. And before that, Allied Force. Especially from Allied Force, there was a lesson learned that electronic warfare (EW) works; stealth doesn't work so well. I don't know if that got all the way up to the chain of command, the problems we had in the stealth program in Allied Force, but EW was the key.

    As we go into the Early Operational Assessment (EOA) on follow-on platform for the Prowler, I hope we keep that Navy confidence to keep EW in the mix and not go the Air Force way and have a follow-on for the 34-year-old Prowler platform. If you could give me your comments.

    Admiral CLARK. You know, sometimes I think it is important to put the bumper sticker out: What does it take to win? And this is a capability the Nation has to have, and I don't care what branch you are in. This is where the advances in warfare—the potential enemies developed capabilities. And the Prowler capability, we have to have that to win.

    We have work going on with some modernization that is in this. One of the areas we are reaching for is the update to this. And this is a practical reality of life, we must continue to upgrade this and bring about this kind of capability because the enemy keeps improving. You can't fix it once and then go, well, we took care of that. It doesn't work that way.

    I am convinced, and I said earlier, Congressman, that over time we pick up a kind of an approach to this, how we get ourselves out of this bow wave that we are in and this lack of what has happened because we haven't been able to make the investments in the past. We must have a methodology to get out of the platforms that are extraordinarily high cost and where the costs are spiraling. And they are spiraling in aviation where we have the oldest air force in the history of the United States Navy that we have ever had.
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    So we need that update, and we need to figure out with research and development how to turn that into, I believe, two-seat capability. And the proposals will be analyzed, the analysis will have to be done on what is the best platform to put that into. And the suggestion of a Prowler is one potential solution that makes a lot of sense. That is the way I see it going. The key is to get this upgrade capability into an airplane with fewer seats and the research and developments required, and we are investing in it.

    Secretary ENGLAND. I agree with you, Congressman, that it should be in naval aviation.

    Mr. KIRK. Thank you.

    I want to compliment the team here on the new leadership that you have to take a leading role in combining Navy/Veterans Administration (VA) medical resources. We have a leading partnership between the Air Force and the VA at Nellis Air Force Base, the Army and the VA have that. And I really want to thank you for the kind words you have had on what we can do at Great Lakes with the VA infrastructure there and the new naval hospital.

    I think that is, from what we have seen, a 25 percent reduction in costs to the taxpayer with improving medical care by doing VA/active-duty combinations.

    My key question, though, is on realistic training. The high point of boot camp, something that the Marine Corps has pioneered with the Crucible. In the Navy, we have that as well, but it has been cobbled together. Admiral, you are going to come to Great Lakes soon, and I encourage you to see Battle Stations.
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    Admiral CLARK. I will.

    Mr. KIRK. But Battle Stations is cobbled together, and it wasn't ever designed for that. And I hope that in your upcoming planning, we would go to a much more realistic, rigorous facility, because—and General Jones, if you could comment—it appears that that is one of the highest ways to build teamwork and morale, and putting naval recruits through a real Crucible seems to be a goal that we achieve.

    But, Mr. Secretary, any comments you have would be good.

    Secretary ENGLAND. Thank you for your mention of the Crucible. It is, in fact, a very important event in the lives of our recruits. It is an emotional experience when they complete it.

    We are constantly changing it. There are certain events in the Crucible now that have martial arts stations to test what they are learning, basically under conditions of very high physical stress and sleep deprivation tests. They are resolved to want to earn that eagle, globe and anchor. And when they do earn it, it is an emotional experience and we are very proud of it.

    Mr. KIRK. I want to make sure that naval personnel have the highest quality opportunity, too. I was struck by how our new seamen, men and women, are crying when they finally switch their hats. But we are still not at the level of the Crucible yet, and I think we could get a real bump in morale and esprit d'corps if we got there.
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    Admiral CLARK. I am going to be there next Friday, Congressman, and witness the conclusion of that event. And I believe that what you are saying is absolutely true, and it reinforces what I was saying about the Prowler. You don't fix this capability once and then walk away from it. You must continue to improve. We made this the introduction of battle stations here some time back. And then we must always be analyzing it and seeing how we can do it better, and we will continue to do that.

    Mr. KIRK. Thank you.

    Mr. Secretary, thank you for coming.

    Secretary ENGLAND. Thank you, sir.

    The CHAIRMAN. The gentleman from Missouri, Mr. Akin, is recognized.

    Mr. AKIN. Thank you, Mr. Chairman.

    A couple of, I think, fairly quick questions.

    Admiral, would you share your thoughts please on the F–18 multi-year procurement? Specifically, where would you like to go in terms of the E/F production in future years? And also, given the competing interests that you are having to balance within the Navy budget in the fiscal year 2002, are you comfortable with this year's request for 48 aircraft?
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    Admiral CLARK. Well, thank you for that question. I really appreciate it because, to me, one of the real high points of this budget is where we got to in FNA–18 procurement.

    Now obviously, the multi-year was a great deal for the taxpayer and wonderful for the Navy. I guess you could take the position, well, Admiral, how could you be satisfied with 48? Well, when I had 41, well, then I love 48.

    And Secretary England and I sat down in the late moments of putting the amendment together and making the recommendation to the Secretary of Defense, and said, we believe we should get seven more Hornets out of what we have available and what is potentially possible.

    I believe this is extraordinarily important. And I don't want to keep repeating myself, but let me just say this about where we are in aircraft.

    When I came to the Hill the first time and appeared before this committee, and it was last September, and the discussion was on readiness, and I was here with all the chiefs, I talked about the fact that current readiness was my number-two priority and that I was going to work on bringing the right requirement to this committee.

    And if you look at the identification of the requirement this year, you see something different. And what is different is that the flying hour program is up dramatically, and the Secretary made the point it is funded at 100 percent. But when the 2001 budget came up here, it was targeted at 100 percent, too. When I came here in September, I knew that we had a several-hundred-million-dollar shortfall. And this year's budget is literally $700 million more than last year's was, and it is $1 billion more than the projection was for 2002.
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    That is happening because the cost of operating Naval Air, because it is so old, is spiraling out of control. And there is no magic way out of this except buy new airplanes. And, you know, I am a destroyer man. My proposal was, buy more airplanes. I believe it is vital to our future.

    And so the multi-year is very important, but what we need to do is that we need to replace the old fighter and attack aircraft as fast as possible because the analysis since I was here last September shows that the demand on these older aircraft for spare parts is going up 9 percent a year.

    I don't mean the cost of them, I mean the demand for parts themselves. And because it is more and more difficult to get spares for those airplanes, the cost of operating that older force is going up 13 to 15 percent a year. And what I am happy to report to you here is that this budget reflects the requirement the best way we know how to define it.

    Mr. AKIN. Thank you very much for the answer to that.

    Maybe a follow-on, and this was piggybacking on a previous question, and that is, one of the things that is possible for a very small amount of money, I think about $10 billion or so, we could get a jump start on replacing some of those Prowlers with an F–18 alternative for your electronic warfare. But by putting that $10 billion in, we could basically shorten the procurement time as much as close to two years. Just wondered if you think that is a good idea, or is that putting the cart before the horse, or what is your thought on that?

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    Admiral CLARK. Well, since we don't have a formal program on that, I think I should just maybe give my personal opinion, and that would be a good way to do that. In my personal opinion, I reinforce the belief that we have to eliminate the old airplanes that the cost is spiraling and we need to have new platforms, and I think that is the best deal for the taxpayer.

    Mr. AKIN. Thank you very much.

    The CHAIRMAN. Gentleman from Connecticut, Mr. Larson?

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

    I want to thank you for your perseverance and patience. Just a couple of questions. I want to thank the committee in advance for submitting in writing some questions and concerns I have.

    And first, with regard to Vieques, Mr. Secretary, you seemed very optimistic about the prospect of locating another facility the last time you were here, another island where training could take place. Are you still that optimistic that that is do-able as we move forward?

    Secretary ENGLAND. I am not optimistic we are going to find a one-for-one replacement, but I am optimistic that by May of 2003 we will have an adequate approach to train our sailors and our marines. But our focus is not to find a one-for-one replacement, but rather to adequately train our force. A little different shift there, sir.
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    Mr. LARSON. Yes, I understand.

    I had this question asked of me, and I thought it rather curious because I was unable to answer it. But I understand the unique aspects that Vieques supplies, in as much as from a battle group position and being able to have the combined amphibious landing and offshore support from the fleet, et cetera, because Vieques is unique. And the person said to me, ''If that is the case, in order to do a coordinated effort, how do we know that we are going to face in a coordinated effort the same situation that we have in Vieques?'' And the notion here was, ''So why wouldn't you train in different situations where you would know that you would come across different types of topography that you have to deal with?'' And I said, ''That is a good point.'' I at least thought it was a good question.

    Secretary ENGLAND. You know, the best of all worlds is obviously we stay on Vieques, but unfortunately a lot of events have transpired before this and the outcome, the potential outcome, if there is an election in November, is we have to leave in May of 2003. So, you know, there is at least a 50–50 proposition here that we would definitely have to leave, and I think much higher than that because it will be very, very hard to win that election, frankly. But it is not like we just have that option.

    Again, the option I was trying to preserve and still feel is important is to be there until at least 2003 so we have a way to develop an alternative. My concern, as you know, was events would transpire in such a way that we wouldn't be able to stay there that long.

    So, you know, my view again, buy time, but in the best of all worlds we wouldn't have the situation that was handed to me a couple months ago that has been going on for now 50 years, literally. But that is not the situation, so we are trying to deal with the situation that exists today, sir.
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    Mr. LARSON. Well, I guess the person who was asking me the question says, ''If you had to have a combined frontal assault and you weren't presented with the same topography as Vieques, how would that help in the training when you look to train in different venues and locations in topography?''

    Secretary ENGLAND. Okay. I will make one comment and then I will turn it over to CNO. Obviously, the general is much more qualified, I am sure, to answer that in detail.

    But I would say Vieques is, what I have always called the scrimmage, so it is putting all the pieces together, which is integrated command and control. I am not sure the topography is as important as the integrating command and control training that takes place. So I would differentiate the topography from that aspect of the training, which is the integrated exercise.

    Mr. LARSON. Well, let me shift gears then and go to a follow-up question that Mr. Skelton asked some time ago. And I notice that at the end of the statement we talk about all of this testimony is contingent upon results of Secretary Rumsfeld's strategic review. But with regard to that strategic review, and inasmuch as you would like to see the budgets that we developed based on strategic input, Mr. Skelton asked the question some time ago about whether or not the war colleges are involved in putting together the strategic plan for the Nation and whether or not that is incorporated into the Rumsfeld strategic plan or thinking. Is that—

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    Secretary ENGLAND. Sir, I do not believe the war colleges are directly involved in this process, perhaps indirectly. But they certainly don't have a direct role in the panels. The output of those of the war colleges, obviously, our people graduate from those and they are instructors, and so there is a fountain of knowledge which is available to the people who participate in these studies and analysis and it gets incorporated in that way. Same with the Commander in Chief (CINCs) get involved directly and also through their representatives. So I would have to say that their representation is through people, not directly to war college people themselves.

    Mr. LARSON. Well, is the strategic plan that is being developed more budgetary and economic than it is military strategy?

    Secretary ENGLAND. No, sir. Having sat in a lot of those meetings and, again, the CNO and the commandant can comment on this. But the meetings I have been in, which is on a very regular basis, is to look at the specific framework that we would operate in the future and what sort of military capability will we need to operate in that environment, sir.

    Mr. LARSON. Admiral.

    Admiral CLARK. The real key is answering the question, what does the Nation want its military to be able to do? And so, these discussions are about what kind of world do we live in and, therefore, what kind of activity do we believe is going to be required, the current strategy, two major theater war (MTW), Secretary Rumsfeld has addressed it.

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    But the mismatch has occurred because the current strategy was a two MTW capability. It was an engagement strategy. But out of the two MTW capability, you had included the capability that could go apply itself in smaller-scale contingencies.

    The world we are living in the decade of the 1990s and the early part of the 21st century has been a world where those small-scale contingencies are dominating, not the two MTWs. And we have not had the right alignment of force structure to deal with all of these. And so, we have some significant shortfalls in pockets of our force structure.

    So what this is about is coming to grips with the kind of response and the response to what kind of scenarios is going to be expected of the military.

    General Jones may want to add to that.

    General JONES. Prior to the Secretary taking office, during most of last year, the National Defense University was involved in, under the leadership of Ms. Michelle Flournoy, in some preparatory work for the Quadrennial Defense Review. That work was largely completed before the Administration took over. So there was some involvement there. And I thought they did some excellent, excellent work.

    Mr. LARSON. Well, I agree with what the admiral was saying before that I think the Nation needs a healthy dose of, ''What will it take for us to win?'' And my concern, as a member of the committee at least—and I commend our leadership here, especially Mr. Hunter, who has held several subcommittee hearings—that to a greater or lesser extent it doesn't seem, at least to this date, and maybe there is a lot of valid reasons for it, but it just doesn't seem that the strategy overall as it is being shaped, it seems like it is top-down rather than coming from the bottom up and from the troops themselves from the various armed services.
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    Secretary ENGLAND. Mr. Larson, again, my experience is that these meetings, in meeting, discussion, includes the chiefs of all the military services and/or the vice chief, along with the Joint Chiefs. And as part of the various integrated product teams that are working this, there is also representatives from all the CINCs. So I really believe this is a broad-based effort, and I think the Secretary is searching for that input from all these very experienced and capable people.

    So I don't believe it is top-down, sir. I believe it is searching for the very best input we can from the most experienced people we have.

    Mr. LARSON. Thank you very much.

    The CHAIRMAN. Gentleman from California, Mr. Hunter?

    Mr. HUNTER. Thank you, Mr. Chairman.

    And thanks to our guests for this long stint of testimony here, and broken up by votes every 20, 30 minutes or so. At least that gave you a little break as you went through this thing.

    But I think today at least I define this era as one that is kind of a tragic era, because it is one in which this Nation is relatively prosperous, and yet to have all of you and all the requirements laid out and to find that we still have major shortfalls.

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    And it is very easy to do the analysis, simply replacing old platforms, and finding that we are about $30 billion short per year on procurement of platforms, whether it is ships, planes, tanks, trucks, then moving to the munitions area, and concluding the testimony that we have had over the last several years we are about 50 percent short on precision munitions. The Army is $3 billion short, Marines $200 million short on basic ammo. Moving to the training area, General Accounting Office (GAO) says we have been spending $5 billion too little each year, resulting in those inadequate flying hours that you spoke of in the previous several years.

    You add all those things up, add a couple billion bucks for missile defense, and you easily find a justification for a $50 billion increase in this defense budget. And appreciating the fact that we are going to do an $18 billion increase, that is going to basically, according to Secretary Rumsfeld, keep our head barely above water in a number of areas and keep us inadequately funded in other areas.

    So I think it is a tragedy that we are in this situation where we are not spending what we have to spend to get this reduced force up to speed. And this force is a small force. This is, in many areas, half the force we had in the early 1990s. And yet it is the half a force—the 18 Army divisions to 10, the 546 Navy ships to 316 and dropping, the 24 fighter air wings to 13 air wings—the half a force we have left is not as ready, according to our own analyses and statistics, as the big force of the early 1990s. But I think that battle is largely over for this year. And I applaud all of you for doing the best you can to wade through it.

    I think the one thing we are going to have to concentrate now on is innovations and ways to do more with less. So, Mr. Secretary, in order not to be totally negative in this hearing, I think you have a big challenge ahead of you, and General Jones, Admiral Clark.
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    Let me just offer a couple of things. One thing we discovered in the early 1990s was that we had what I call a shopping force or the acquisition force. Not metal-benders, not technicians, not engineers, but simply the people that do the paperwork to buy our goods, to procure the $45 to $50 billion we procured in the 1990s. We had 300,000 professional shoppers in DOD. The Navy had a good piece of those, Marine Corps had a good piece. The Army had the biggest piece in ratio to the amount of systems it procured. But we had 300,000 shoppers, and the payroll for those shoppers was $15 billion.

    Now, this committee put in mandated reductions over the last six years. The Senate always fought us, and the Clinton Administration would come in usually with two big concerns in the world: One was that the North Koreans would get nukes, and the other big concern was that one of their shoppers might be cut.

    But I would recommend that you make another scrub on those shoppers. I have been told a number of them have been replaced with consultants. But if you just go to the Army, since they are the absent service here today, and look at their numbers, the year that I had them in before the Procurement Subcommittee, I think their procurement budget was $8.7 billion, and in payroll, they were paying the people that bought the $8.7 billion about $2.7 billion. That meant for every $10 million helicopter they purchased, they paid the guy that went down and bought it $3 million for the service of buying it. I would strongly recommend that you folks make a real scrub on the acquisition force.

    Second, you still have some land left over from Base Realignment and Closure (BRAC). I checked the other day, and you have in some cases fairly large amounts of property that hasn't been disposed of.
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    Secretary England, you were a superb businessman and are a superb businessman. If you were a company and you were asked to build 200 or 300 units of Navy housing in areas that your company had moved to, and you knew you still had large property holdings in other areas, and one of your officers came to you and told you that you needed to come up with a lot of cash to build the new housing, the first thing you would want to say is, wait a minute, why don't we flip the property we have in the area we are leaving and trade it for constructed property at our designated new locations?

    We put a provision that allowed you to do that in the MILCON bill some years ago. Now, it was watered down considerably. But my recommendation is, you still have several billions of dollars worth of real property where you haven't handed the pink slip over yet. My recommendation is you pursue vigorously the option of trading that property for value, and do a request for proposal (RFP). Get some big financial institutions involved, where in return for property at closing bases, you get—and for example, I think Tustin is a good example—you get new construction with no money exchanging hands at designated locations. If we did that throughout the services, we could save some bucks.

    The other thing, obviously land is a big driver in terms of military housing, military construction. If you can make a deal where you have out of our housing allowances you can start to buy housing like we do in the private sector: Nobody comes up with 200 grand in cash for a house. If you could do that, you pencil out that you could make a deal with a financial institution to build housing across the board in return for a guarantee that you get payment as money comes in through housing allowance payments, we could concurrently build our housing shortfalls in lots of areas and save some money.
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    So I would recommend that your pursue vigorously some of those ideas and other ideas to save some bucks.

    And last, in the war-fighting area, you need to have a littoral strategy, which you are developing. The Navy is developing small craft for littoral fighting with a small missile now—600-mile missile—that is roughly 1/100th the cost of a Tomahawk. And it looks like it is successful so far in its tests. So it is a good chance it will be killed soon.

    I would pursue vigorously and protect vigorously those initiatives. The Office of Naval Research (ONR) is working those systems right now that appear to have important applications and appear to have a promise to save a lot of money for the procurement and research and development (R&D) budgets.

    So thanks for your endurance. Thanks for taking on this challenge, and we will work hard with you.

    Secretary ENGLAND. Good. And thanks for your input. I appreciate it, sir. We will definitely follow up on that. It is good input. Thank you, sir.

    The CHAIRMAN. The chair recognizes the ranking member, Mr. Skelton.

    Mr. SKELTON. First, a caution for Admiral Clark and then a history lesson.
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    Admiral, can you speak to the increased funds that are put toward readiness here this year, and what are these additional funds allowing you to do? And what do you not have resources to do regarding readiness?

    Admiral CLARK. Yes, Congressman Skelton, I mentioned earlier on the aircraft issue, we have added $1 billion to the flying hour account. This is an important number, but the more important piece of it is the fact that I believe we are doing a better job of identifying the requirement. In my opening statement, I talked about continuing to improve our analytical underpinning.

    Let me just talk about ships. In ships, we are not at the 100 percent level. What you will see if you look at ships, when we sent the budget up last year, the projection for this year was that we would spend $2.1 billion on ship maintenance this year.

    It was projected to be 85 percent of the requirement. This year this amended budget talks about $2.9 billion; we have added $800 million, and we are at the 90 percent level.

    What you can see if you analyze this is the base has changed dramatically. And that is because, when I came here in September I said, ''I am going to give you all of the requirement.'' We may not fund it all, but at least we are going to know what duck we are shooting at.

    And in my letter I submitted to you, I showed you the number that I was seeking to get to was to the 95 percent level, because, frankly, some of the generation of this requirement needs additional refinement. So the principle shortfall, the largest shortfall still to get to the target that I had was in ship depot maintenance, and that is approximately $200 million.
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    Mr. SKELTON. Thank you.

    Secretary Rumsfeld testified before us a number of days ago, Mr. Secretary, speaking about the uncertainty of conflicts: what was not anticipated and what was not expected. Of course, that is the world in which we live.

    Admiral Clark, a few moments ago, asked the question, what does it take to win? And that question, of course, is usually asked at the time a conflict begins. But I refer to 1934 when this Congress passed the Vincent Trammel Act that authorized eventual construction of 92 war ships, which was the birth of the two-ocean Navy.

    Those members of the Congress asked themselves the question, what does it take to win? And they had no idea of the threat that was hanging over us from the empire of Japan. But thanks to that, the ships were built. None of the ships, and I would point out that won the battle of Midway were built after the war started. They were built as a result of what the Congress did in anticipating worse-case scenario, what does it take to win?

    The point of this, Mr. Secretary, is I think it is your duty to ask yourself that question and make recommendations to this Congress as to the worst-possible scenario, what does it take to win? Number of ships, size of the Navy, expenditures down the stream? Very difficult for you to do.

    But I think you should have a goal, whether it is a 400-ship Navy, a 399-ship Navy, a 450-ship Navy, whatever the case may be. I think that should be your goal to make that recommendation. I know you can't do it today. You haven't been on the job that long. But I think sooner or later you will have the capability with the wonderful help that you have from these two gentlemen and their outstanding staffs to make that recommendation to us. Not within budgetary constraints, but to make that recommendation to us as you see the very, very uncertain future and the challenges that we might well have as a nation.
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    So with that reference to history, I thank you for taking on the job that you have. It is a major challenge, but you have truly outstanding Americans to help you.

    So, Mr. Chairman, I thank you.

    The CHAIRMAN. Gentlemen, any closing remarks from any of you.

    Secretary ENGLAND. No, sir. Thank you for the opportunity to be here, sir.

    The CHAIRMAN. Well, we thank you for your patience and apologize for the interruptions of the vote. That can't be helped sometimes. But thanks for the patience.

    Secretary ENGLAND. Thank you for the opportunity to allow us to tell our story, sir. It is very important. Thank you.

    The CHAIRMAN. I look forward to working with you in the future.

    This meeting is adjourned.

    [Whereupon, at 12:00 p.m., the committee was adjourned.]