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[H.A.S.C. No. 107–3]



FOR FISCAL YEAR 2002—H.R. 2586







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JULY 12, 2001




FLOYD D. SPENCE, South Carolina, Chairman
HOWARD P. ''BUCK'' McKEON, California
J.C. WATTS, Jr., Oklahoma
LINDSEY GRAHAM, South Carolina
JIM RYUN, Kansas
ROB SIMMONS, Connecticut
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JO ANN DAVIS, Virginia

GENE TAYLOR, Mississippi
JOHN SPRATT, South Carolina
LANE EVANS, Illinois
ADAM SMITH, Washington
JAMES H. MALONEY, Connecticut
MIKE McINTYRE, North Carolina
ROBERT A. BRADY, Pennsylvania

Steve Thompson, Professional Staff Member
Jesse Tolleson, Staff Assistant


DUNCAN HUNTER, California, Chairman
W. TODD AKIN, Missouri
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CURT WELDON, Pennsylvania
JIM SAXTON, New Jersey
WALTER B. JONES, North Carolina
BOB RILEY, Alabama
ROBIN HAYES, North Carolina
KEN CALVERT, California

MARTY MEEHAN, Massachusetts
JOHN SPRATT, South Carolina
ADAM SMITH, Washington
JOHN B. LARSON, Connecticut
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Robert Lautrup, Professional Staff Member
Katherine Gordon, Staff Assistant



    Thursday, July 12, 2001, Fiscal Year 2002 National Defense Authorization Act—Department of Defense Fiscal Year 2002 Procurement and Research and Development Budget Requests

    Thursday, July 12, 2001



    Hunter, Hon. Duncan, a Representative from California, Chairman, Military Research and Development Subcommittee
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    Aldridge, Hon. E.C. ''Pete'', Undersecretary of Defense for Acquisition, Technology and Logistics, Department of Defense


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

Aldridge, Hon. E.C. ''Pete''
Spence, Hon. Floyd D., a Representative from South Carolina, Chairman, Military Procurement Subcommittee

[There were no Documents submitted for the Record.]

[The Questions and Answers are pending.]


House of Representatives, Committee on Armed Services, Military Procurement Subcommittee, Meeting Jointly with Military Research and Development Subcommittee, Washington, DC, Thursday, July 12, 2001.
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    The subcommittees met, pursuant to call, at 2:00 p.m., in room 2118, Rayburn House Office Building, Hon. Duncan Hunter (chairman of the Subcommittee on Military Research and Development) presiding.


    Mr. HUNTER. The hearing will come to order. Today the Military Procurement and the Military Research and Development Subcommittees will hear testimony on the Department of Defense fiscal year 2002 budget request for modernization. On June 27th, the Department of the Defense, (DOD) presents the long-awaited amendment to the Department of Defense budget blueprint to the Congress. Building up to this event, DOD representatives had been presenting a series of briefings and overview documents that have provided only top line dollar figures with none of the programmatic details needed to conduct Congressional oversight. Some of the first details began to arrive just yesterday. It is my hope that our witnesses today can fill in many of the details that members of this committee need to know.

    We are aware that during the long delay prior to the submission of the budget amendment, Secretary Rumsfeld initiated numerous review panels to examine the question of military strategies and the acquisition programs currently underway. We also understand that the recommendations of these 20 or more separate panels are still being studied and are expected to be addressed in the upcoming QD process. Recently, we were informed that although the Administration has spoken often for the need of—to transform the military, you have encountered far more potholes in the condition and readiness of our military forces than anticipated, and your fiscal year 2002 budget request includes less real transformation than planned, and more what we could call pothole repair.
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    Upon first examination, we note that your procurement request of 66 billion appears to be modest and only slightly above the level described by the service chiefs as essential. I am pleased, however, that your research and development requests of 47.4 billion reflects its first significant increase in Research and Development (R&D) funding in over seven years. And while we may not yet know the exact path of transformation of our military, we can be certain that we must modernize our forces with new technologies and advanced capabilities to fight and win future wars and conflict. I believe that modernization will depend largely on your steady commitment to adequate research and development investments, as well as the often-stated prodocument goals.

    With us this afternoon to discuss details of department's budget request for procurement and research and development is the honorable E.C. ''Pete'' Aldridge, Under Secretary for Acquisition, Technology and Logistics. Pete is no stranger to this committee, having previously served as both Under Secretary and Secretary of the Air Force in the Reagan administration, and Mr. Secretary, we welcome you back to the committee. We look forward to your testimony.

    I would note for the record that the acquisition executives for the three services have yet to be confirmed by the Senate, so Secretary Aldridge, the Defense Administration executive is the administration's representative for the military departments, as well as for the Department of Defense.

    He is accompanied by one of his principal civilian deputies, flag and general officers from each of the services. And gentlemen, we appreciate you being with us today also, and the deputy director of the Ballistic Missile Defense Organization, most, if not all of whom have previously appeared before the committee.
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    Before we begin, let me first recognize some of the other loading members of our two subcommittees. I am informed that my colleague and the ranking member of the R&D search, Mr. Meehan, is unavoidably detained today, as is our chairman of the procurement subcommittee, Floyd Spence. But I know that on the minority side, Mr. Meehan is—as Mr. Spratt, standing in, and I also noted that Mr. Taylor, who is the ranking member of the military procurement subcommittee, is with us.

    So at this point, let me recognize first Mr. Taylor, and then Mr. Spratt for any remarks that they might like to make.

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

    Mr. HUNTER. Gene, you are recognized.

    Mr. TAYLOR. Thank you, Mr. Chairman. I want to thank all of you gentlemen for appearing today. I am going to sound like a broken record on this subject till it is fixed. Mr. Secretary, it has come to my attention that in the past six years, the U.S. Navy fleet has shrunk by 15 ships a year for each of the last six years. We have gone from 200 and—I am sorry. 392 ships to six years ago in January to 213 right now, and the Secretary's request for this year is only five ships.

    Knowing that it takes three years to build a ship, if we were to ask for 21 ships this year and continued that for each of the next three years, then and only then does the freefall in the Navy fleet stop, and it stops at 268 ships.
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    I can't tolerate that. The United States of America can't tolerate it. Certainly, the United States Navy can't tolerate that. I do welcome the additional funds to the Department of Defense, and they are doing a lot of good things with those funds, but as far as shipbuilding, it is absolutely insane that this Nation is neither taking the steps to complete the DDG–21 or to buy an adequate number of surface ships and submarines to protect our Nation, and I would hope you would address this, because when I asked the same question and posed the same numbers to the Secretary of Defense just a couple of weeks ago, his answer really was the Washington equivalent of the dog ate my homework. His answer was that the shipbuilders can't build them.

    I have since been contacted by the shipbuilding counsel and by the president of Engel Shipbuilding, both of whom refute that, both of whom say we need to be building at least 12 ships a year to maintain our Nation's industrial base. The industrial base, incidentally, are in places like Mississippi and California, so I would like that my Chairman is going to feel very strongly along the same line, and I would hope you would address that answer.

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

    Mr. SKELTON. Would the gentleman yield at this point?

    Mr. TAYLOR. Yes, sir.

    Mr. SKELTON. I think you had just left the previous hearing, but when the Secretary of the Navy was here, he made reference to the Vincent-Trimble Act of 1934, which authorized an additional 92 ships for the United States, and in essence, made us a two-ocean Navy, which at that time no one anticipated, nor can we anticipate today problems or challenges or conflicts we may have. However, we do know the importance of engagement. We do know the importance of presence, much less the importance of ships. And I told the Secretary of the Navy that I felt it was his duty in the near future to recommend to Congress the number of ships we really need at the end of the day to fulfill the mission of the United States of America. And I personally think we—to do everything we need to do, we need 400 ships, and that is going to take a long, hard struggle to get there. But I think you will find an open area here in the Congress for them. I urge your attention to and participation in that challenge that I have given. Thank you, Mr. Chairman.
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    [The information referred to can be found in the Appendix on page ?]

    Mr. TAYLOR. Mr. Chairman, reclaiming my time very briefly. Mr. Secretary, I hope you or Admiral—Vice Admiral, again, at some point would tell this committee, which is giving the constitutional duty of providing for an Army or a Navy, what size the fleet should be, because when the Secretary of the Navy was asked that just a couple of weeks ago, he did not give us an answer, and it is hard for this Congress to provide the adequate funds to get to a goal if we don't know what it is. Thank you, Mr. Chairman.

    Mr. HUNTER. I certainly thank the gentlemen for his remarks, as well as the distinguished ranking member of the full committee. And now, Mr. Spratt, please make any remarks you would like to make, and then we will let our panel—

    Mr. SPRATT. Thank you, Mr. Chairman. I am sitting in for Marty Meehan, who is on the House floor with Shays-Meehan, the campaign finance bill, and that is the reason he couldn't be here himself. I would like to submit for the record, Mr. Meehan—not the testimony, his opening statement, and note that in his statement, he expresses some concern that such a large amount of the increase in R&D is going to ballistic missile defense, more than half, and he also expresses concern over the fact that though this budget is posed to be the first phase of transformation, the account where you would look for the C coin, that plants the whole transformation budget—science and tech is actually cut from about 9 billion to 8.8 billion. He outlines that further in his testimony.

    I will submit it for the record, but for your information, I wanted to highlight his concerns. Let me express to you my concerns wearing two hats. I am also the ranking Democrat on the Budget Committee.
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    We have a request before us for $18.4 billion. That is a pretty substantial increase and a budget that is already increased $14 billion of the current fiscal year. That is a $32 billion increase, seven percent real, 11 percent nominal. But by all indications, at least from the Department of Defense, this is well below what you had in mind, what you ultimately compromised for at Office of Management and Budget (OMB). My reading of the situation and talking with Mr. Wolfowitz and Mr. Rumsfeld was that you were probably looking somewhere closer to 40 rather than something close to 20, and my suspicion is that you hope to get that additional $20 billion in next year's budget, the 2003 budget.

    One of the problems that we have is we do not have a Future Years Defense Plan (FYDP). We have got your first year number, $18.4 billion on top of $14 billion, a $328.9 billion defense budget, but we don't know what the corresponding out years are, given that beginning change. And when I asked for that yesterday, I was told it wouldn't be ready until the 2003 budget.

    Well, let me tell you why that concerns us. It concerns you in particular, I think. The $18.4 billion happens to be a very tight fit. When we opened our hearing yesterday with Mr. Wolfowitz before the Budget Committee, the Republican chairman of the committee undertook to make it emphatically clear his position with respect to the medical surplus, and he said in no uncertain terms, we will not spend a dime of the Medicare surplus or the Social Security surplus. I joined him and told him, we will make this a bipartisan commitment. We have maintained the same for a long time, and if that is your position, it is our position, too. And if that is the firm irreparable position of the Congress, the $18.4 billion is going to be a tight fit in 2002. It may work. Let us hope the top line doesn't deteriorate due to a major revenue shortfall, along the lines that Mr. Lindsey has already indicated could happen to us in the year 2002. It is a very tight fit.
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    In the outyears, I have shown everybody who has come before here and cared to try to read this chart right here—and I will be glad to leave you with one—what happens in the outyears to our budget if the top line that we have got actually obtains. In 2003, once you deduct Social Security, once you deduct Medicare, once you deduct the tax cut and other things that are already implied by the budget resolution, there is a negative contingency reserve of $5 billion, a minus $4 billion of 2004, 1 billion in 2005, 11 billion in 2006, and 20 billion in 2007, and none of those years is there enough money after you adjust for natural emergencies, which are not included in the regular budget, to sustain this year's request, much less next year's request.

    Now, what concerns me is that I think meat and potatoes come ahead of cream brulet. I would like to see us do transformation, the right kind of transformation, but I, by golly, want to see that we maintain our superiority, maintain the 313-ship Navy, and do the basics and do them well, and then we can talk about transforming the force for the future, and I don't want to see us cheating the base force, the legacy force, in order to fund transformation halfheartedly, and I think sooner or later we may run into that, probably sooner than you thought, we may run into that hard decision, and one of the decisions you have got to ask yourselves, and we have got to ask ourselves is, if we start up things this year that we can't sustain in the future, are we making a mistake? Will we be better off to allocate some of this money that we are plussing up now but can't sustain in the future if we don't get the additional $20 billion that I think you expect? Would we be better off just to put that money in the Navy and build a few more destroyers, a few more surface ships to meet our goals? Or would we be better off to try to fund some transformation this year only to pull it back next year? I think that is a management decision we have all got to make.
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    Looking at the budget, the interesting thing is—now, you get a $14 billion increase, and then an $18 billion increase, and you put a lot of money into personnel, which I support, and into operation and management (O&M), which I think is critically needed. The interesting thing about the O&M numbers, is they don't look that much better when you look at the traditional criteria. The only service that really gets a plus up in the O&M, the traditional criteria you look at for operations tempo (OPS TEMPO) is the Navy, Tactical Air (TACAIR) and the Navy. Everybody else is about the same or a little bit less. This shows you how much you can soak up just for the meat and potatoes for services.

    And in light of that and in light of the things like the science and techs account, not being fully funded at the level you would expect in a truly transformational budget, I find it a little hard to believe that we are putting $3 billion into the ballistic missile defense account. I am a supporter of ballistic missile defense.

    I have been, with respect particularly to the ground-based system but everything has to be done in proportion and moderation, and if you had a budget that was fully funded in every account we were recapitalizing the Navy, Department of Energy (DOE) has got major problems over there, all of these accounts were adequately funded, and you had three billion left over, I would understand it. But I question that, in the sense that I would like to have an answer to it, not just by itself, but in proportion to the other needs.

    In addition to that, we are told that we are going to have some significant changes switching the program, some from the services into BMDO and others from Ballistic Missile Defense Organization (BMDO) back into the services, and then you are going to change the accounting for all of these programs by making the accounts generic as opposed to program-specific. There will be a ground-based interceptor account and a space-based interceptor account and that sort of thing. We don't have any of the backup data for this.
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    Here we are on the eve of a markup for the biggest increase in defense in ten years. We have no justification data. We have no backup or explanation for things like this that have enormous consequences for us. And I really think we are pushing the envelope if we are going to do this right, and I think you are too if you are betting on the outcome. If you are expecting that budget somehow will redeem itself, will be saved again as we have been in past years by some revenues that come out of nowhere, manna from heaven, that will allow us to fund the next increment of $20 billion, they think you need to get on the kind of track that you really want to get on.

    I express all of these things as a caveat. You know I am a constructive critic and a supporter, but these are deep concerns of mine as we go into this process. Thank you very much.

    Mr. HUNTER. I thank the gentleman. And Secretary Aldridge, again, thanks for being with us. We have got a lot of ground to cover. The floor is yours.

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    Mr. ALDRIDGE. All right, sir. Chairman Hunter and Congressman Taylor and Congressman Spratt and members of the committees, it is an honor to appear before you to discuss the President's amended fiscal year 2002 budget for the Department of Defense. I have invited the military departments and the ballistic missile defense organizations representatives to sit with me at the table: Lieutenant General Paul Kern; the Military Deputy to the Assistant Secretary of the Army, Acquisition, Logistics, and Technology; Vice Admiral Dennis McGinn, Deputy Chief of Naval Operations for Warfare Requirements and Programs–N7; Lieutenant General Stephen Plummer, principal deputy assistant, Secretary of the Air Force for Acquisition. Lieutenant General William Nyland, Deputy Commandant for Programs and Resources, U.S. Marine Corps. And because General Kadish is now testifying in another hearing, we have invited Major General Pete Franklin, the deputy director for BMDO, to be with us.

    Mr. Chairman, these are the experts and they can respond to specific questions in their areas of expertise. I have prepared a formal statement for the record, and will briefly summarize the statement this afternoon, along with some personal comments.

    Fiscal year 2002 budget request begins the Administration's transformation of the Department. Transformation is crucial to the security of the United States and our ability to deter, and should deterrence fail, to fight and win wars quickly and decisively. This budget request includes a total procurement funding of $61.6 billion, about the same level as last year.

    The major differences includes a decrease resulting from aircraft carrier production, an increase in naval aircraft procurement, an additional DDG–51 destroyer, Air Force aircraft procurement, training munition and space and information systems.
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    The research and development request is $47.4 billion to support DOD's modernization and transformation initiatives and to lay the foundation for the future. The R&D increase over fiscal year 2001 is 6.4 billion. The increase is primarily in the area of ballistic missile defense, as has been pointed out, and science and technology. There are also increases in the priority for robotic systems, joint experimentation activities, space precision munitions, naval technology and other transformation technologies.

    Overall this budget funds the modernization programs critical to our ability to retain our status as the preeminent military force for the 21st century. This is a beginning, but it does not complete our work. The continuation of modernization and transformation will be seen in the fiscal year 2003 budget to be delivered to Congress earlier next year.

    The management of the procurement and R&D accounts and the programs they produce is very important to the Department. I have developed five goals to help me and the office of which I am responsible with that management. The first goal is to achieve correct and effectiveness in the acquisition and logistics support process. Our acquisition and logistics support cycles are too long and our cost overruns are too often. We need to build confidence in our ability to deliver quality high performance systems at reasonable costs to our military forces.

    We have several initiatives underway to accomplish this goal. As an example, I have restructured the Defense Acquisition Board, the DAB, to include the service secretaries, and I have decreased the overall membership in order to streamline the Department's internal decision-making process. We have also mandated an evolutionary or spiral development for future weapons systems. This reduces the time to deployment and reduces risk and removes older equipment sooner.
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    In the fiscal year 2002 budget, we have been able to support another aspect of this first goal, which is to properly price programs. The President's fiscal 2002 budget has allowed us to fully fund major acquisition programs. This will enhance stability, a crucial aspect of all of our programs, and avoid costly delays experienced when underpriced programs realize their state.

    To achieve the correct and effectiveness in these processes, I have established a second goal to revitalize the quality and morale of the acquisition, technology and logistics workforce. Quality people, both military and civilian, are essential if the Department is to continue to develop, procure and deliver quality products to the military.

    DOD faces complex issues in managing and modernizing its acquisition workforce. We have an aging workforce that is over 49 percent smaller than in 1992. This is a morale message not lost on the remaining workforce. DOD faces a crisis with half of the current workforce eligible to retire about 2005. Low hiring levels and long hiring delays add to this dilemma. People remain our most valuable resource. The department initiated an acquisition personnel demonstration project and the results have been positive. I am considering expanding that program beyond today's 5,000 participants within the current law.

    We also need to be more aggressive educating of our people. The Defense Acquisition University is capitalizing on a Web-based learning techniques for the workforce. My third goal is to improve the health of the defense industrial base. The Department needs to be vigilant regarding the health of our valued defense industry partners. Their financial health is key to the Department's ability to continue to provide innovative technology, technological excellent systems and equipment and favorable and competitive prices.
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    A healthy industry attracts investment, is more competitive and can recruit and retain the necessary talent to deliver quality products.

    To contribute to this goal, contractors must be able to earn a reasonable return on defense contracts in exchange for good performance. Further, contractors should not be expected to invest in defense research and development contracts to recover shortfalls in government funding. My written statement provides more deals regarding a new policy I put in place to address this issue.

    Goal four is to rationalize the weapons systems and infrastructure within the new defense strategy. Certainly, the most important aspect of this goal will be the results of the Quadrennial Defense Review, the QDR, which will shape our national defense, force structure, modernization, transportation and infrastructure, as well as the related strategy review. When we complete this strategy review and our QDR, we will be working on rationalizing the weapons system and infrastructure to support the strategy.

    As part of this process, we are also looking at ways to decrease the overhead costs of the Department and allow those savings to be reallocated to higher priority people programs, readiness accounts and modernization.

    The newly-formed Business Initiatives Council will work to improve DOD's business practices, search for inefficiencies and reduce unnecessary spending. This Council membership includes the service secretaries, the vice chairman of the Joint Chiefs of Staff, and myself.
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    To support the President's national security goals, it is critical to leverage science and technology and transition it to weapons systems as soon as possible. Therefore, my fifth goal is to initiate those high leverage technologies to create war-fighting capabilities, weapons systems and strategies of the future.

    The mission of our science and technology program is to ensure that war fighters today and tomorrow have superior technology to support their missions and provide revolutionary war-winning capabilities.

    Basic research is an investment that emphasizes opportunities from a future military application. And the Department must invest in many defense relevant scientific fields, since it is not possible to predict where the next breakthrough will occur.

    Rapidly transitioning technology from Science and Technology (S&T) to operational capability is critical. We have several mechanisms to facilitate this process, one of which is the Advanced Concept Technology Demonstrations, ACTDs. This program has proved successful at taking mature technology into the field and prototype systems.

    The amended fiscal year 2002 President's budget request provides a $1 billion increase to the Department's S&T budget over the legacy budget. This request of $8.8 billion puts us on a path to achieve an S&T budget that is three percent of the Department's top line.

    In conclusion, I look forward to the support of both committees as we embark upon the R&D and procurement activities that will set the military capabilities for the future, and before I turn it over for questions, I would like to address an issue Mr. Taylor raised about the shipbuilding. I certainly support the comments on shipbuilding. As a matter of fact, when I first arrived in the Department, I asked the Secretary of Defense to assign neither responsibility of undertaking a major shipbuilding study for the Department, to look at what we want our Navy to do and how it should be sized and what force structure, and that study is currently underway.
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    I look forward to having it determine for us the size and shape of the Navy and that we can then come back and lay out a shipbuilding program that will achieve what we want the Navy to achieve. And I am quite actively involved in that. In fact, we will have some progress reports over the next week or so. We hope that that will be done within the next few months.

    Thank you, Mr. Chairman, for this opportunity, and I and any member of our group here are delighted that—I am surrounded and flanked by high quality military personnel. We will be delighted to answer any questions you may have.

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

    Mr. HUNTER. Well, thank you, Mr. Secretary, and since you ended up talking about shipbuilding—and I have noticed our folks on the bottom row here, our new folks who have waited patiently through the last series of our R&D and procurement hearings to get a question in. And since I know—I just listened to Mrs. Davis in the last hearing with some very good questions on shipbuilding. Let me yield my time to Mrs. Davis and let me follow up on that subject, and I will come in attend of the questioning here.

    Mrs. JO ANN DAVIS OF VIRGINIA. Thank you, Mr. Chairman. That is very generous of you and thank you, Mr. Under Secretary, and the other witnesses who have come here today to testify to us. And I do appreciate the comment that you just made, Mr. Under Secretary, and I would like to first say thank you so much for agreeing to have someone in your office brief me and other members of the committee next week on my questions on the CVNX, and I really appreciate that.
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    You stated that you wanted to answer the question—or address the statement that Mr. Taylor had made, and you have stated that your third goal in your testimony was to improve the health of our industrial base. Well, I guess my question, then, is, you know, Mr. Taylor has talked to his shipbuilders and entered into the record that his shipbuilders so that they could easily handle an increase, and I am sure if I went to my shipbuilders in my area, they would say the same thing.

    And so I would like to ask you what you think the solution is to the completion of our shipbuilding industrial base, and by that I mean because of our procurement trends, the shipbuilding yards are often forced to lay off experienced help, and that is talent that we will lose, and I hear that from my shipyard in Newport News, and I would just like to ask you what can we do to correct this?

    Mr. ALDRIDGE. I am glad you asked the question. When we first arrived in the Department, one of the issues I looked at was the Navy shipbuilding program, and that probably falls in the end of the acquisition area. It so happened in 1976 with the first former Secretary of Defense Rumsfeld, I was director of the Program Analyst of Evaluation Office and ran a shipbuilding study for Secretary Rumsfeld at that time, which resulted in the 600-ship Navy being designed.

    When I first came in and looked at where the Navy was with roughly 315, 314 ships and with the shipbuilding rate that was 5 or 6 ships per year, it was clear we were going downhill, and I couldn't answer the question whether that was bad, because we didn't have—had laid out for ourselves what was the future role of the Navy in this new world that we are locking at in the new strategy.
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    And so part of the motivation for doing this study is what do we want our Navy to do in the future, and how should it be sized and structured to carry out its mission? And that is what the study is trying to do. We are working very closely with the joint staff and, of course, naturally with the Navy to work out what do we want our Navy to do, and then we can lay out a shipbuilding plan that achieves our objectives. And I don't know whether that goal is a 400-ship Navy or a 500-ship Navy. We used to have about a 600-ship Navy or whether it should be a 250-ship Navy.

    We have to first answer the question is what do we want our Navy to do and that is part of the study, and I am hoping that over the next month or so, we will get ourselves—get our hands around that issue so we can come and rationalize what we need in the Navy to do in the future and what this rate should be. And we will go fund it, because that is what we need to do.

    Mrs. JO ANN DAVIS OF VIRGINIA. I appreciate that, Mr. Under Secretary. Unfortunately, we may have to vote on an authorization markup before your study is completed, and that is, I guess, where my biggest concern is.

    The other thing is that the unfunded requirement list that was sent to Congressman Skelton, in it it says that we are short funding the CVN–69 refueling by 87 million dollars. If we do this, we will be delivering a nonmission-ready ship. My concern is if we continue to proceed along these lines of short funding, our carrier refueling, it is only a matter of time before this affects our real world missions. Do we have to wait till the shipbuilding study is done on that before we understand how we should fund the refueling?
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    Mr. ALDRIDGE. I think that is probably an issue I would like Admiral McGinn to answer that. But I—the shipbuilding study is more of a strategic-like study. It doesn't get down to the specifics that you have talked about. It does—it will tell us what type of ships we will need, how many we need to carry out the job, but the efficiency of how we are running the Navy and its operational TEMPO is probably—is not going to be addressed in that study in any specific detail.

    Admiral MCGINN. Ma'am, specifically, on CVN–69 refueling, we are underfunded in that particular program for this year. I have received briefings from the program management team and the shipbuilder on this. They have the ability to work the package through this year. As you know, it is a 3-year process to do a complete refueling and complex overhaul (RCOH). And we are working ways to make sure we use the money that is appropriated and authorized by the Congress for fiscal year 2002 and get the maximum capability out of that total 3-year work package for the RCOH. But we will, at some future point, have to pay that bill and make sure that we have sufficient resources in CVN–69 complex refueling overhaul to deliver a ship to the fleet that is ready to go and not one that you have to take to another shipyard to finish the work.

    Mrs. JO ANN DAVIS OF VIRGINIA. I guess what would concern me in that response is if we do end up not being able to even do the $18 billion increase this year and then next year, we can't do that as well as an increase, it looks to me like we are going down a road of trouble. But I thank you, Mr. Chairman, for yielding your time to me. Thank you, sir.

    Mr. HUNTER. Mr. Taylor.
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    Mr. TAYLOR. Thank you, Mr. Chairman. Mr. Chairman, and I guess like a lot of other people, after watching the decline of the Department of Defense over the past decade, like a lot of other people, I was encouraged to hear the then-candidate Bush talk about help being on the way. So I for one have got to admit, I am totally underwhelmed by his shipbuilding request of five ships, which is not even as many ships as his predecessor Bill Clinton asked for.

    The second thing that I am particularly distressed about—and this does tie in with the national industrial base—is in 1993, my colleague, Mr. Hunter, and several of the members who were here worked together with me and others to pass the national shipbuilding initiative. We revitalize and old program called the Title XI program, but for the first time, used Department of Defense monies as a loan guarantee to help our shipbuilders stay in business.

    Now, back then we were building 10 ships a year, and we did this in order to maintain our defense industrial base, and for about 50 million a year in loan guarantee money set aside, we created a billion dollars a year of shipbuilding. To date, we have had $6 billion worth of ships built in America with that money for the private sector. We kept the employees going. We kept the industrial base hot. We did not lose those employees to other fields of work. We kept our big shipyards going.

    I am distressed that the same guy who 18 months ago was running for President saying help is on the way now wants to cancel that program as well. In his budget, he calls for zero funding for the Title XI program, and I would like to hear your thoughts, since you are a little bit closer to the subject than most, as to whether or not this committee should revert to the practice of putting some money aside from the Department of Defense budget for that loan guarantee program. We were able to shift it to someone else's pile of money in the past couple of years, but apparently the President is not in favor of doing so.
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    Mr. ALDRIDGE. Mr. Taylor, I have been on this job for two months. I am not familiar with the Title XI. I would—I would offer that—I would go back and take a look at the—what value that has and get back to you with a response, either personally or for the record.

    Mr. TAYLOR. Mr. Secretary, if I may, we have got maybe as few as two weeks before we do the defense authorization bill.

    Mr. ALDRIDGE. This will be a matter of days.

    Mr. TAYLOR. Okay.

    General Plummer—I am sorry. General Nyland, I have got to tell you my continuing concerns that I do not see within the United States Marine Corps a plan B should the V–22 not work out, and I have been one of the ones who voted to save that program, unlike a lot of other people on Capitol Hill, I have got to express my growing frustration with the program and the horror at the loss of life that has occurred and the money that has been spent, and interestingly enough I looked up a copy of Roll Call Magazine from the week I got sworn in almost 13 years ago, and there is an ad for the V–22 saying it is going to be online any day now.

    That was 13 years ago, sir. So I would like to hear what plan B is or when you plan to have an operable program so we can get the kids out of those 30-year-old Hueys.

    General NYLAND. Yes, sir. We also share your concern over the loss of life, but I think that that said, the studies as just recently completed by the blue ribbon panel have clearly indicated that the technology is sound and mature for the future. We do have some issues with reliability and maintainability which are being addressed. We have a 90-day program that is underway right now that will be reporting to Secretary Aldridge in the middle of August for the way ahead that will address those issues. And it is our hope that that will prove out that the blue ribbon panel was correct in all their assertions, and we will have a way ahead for the MV–22, and we will start replacing the CH–46 at an economical rate.
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    Mr. TAYLOR. Thank you, Mr. Chairman.

    Admiral MCGINN. Mr. Taylor, if I could add to General Nyland's response. Secretary Aldridge appointed an executive committee cochaired by two service acquisition executives to review the report of the blue ribbon panel on the V–22, to review all of the discrepancies that have been noted throughout the developmental testing and operational testing, as well as the reports of the mishap boards for both mishaps that occurred last year. I attended the second executive committee meeting down at Patuxent River two days ago, and I want to report significant progress. And the program management team and the executive committee and very systematically working through every issue that has been highlighted, particularly the ones related to safety as documented in the aircraft mishap board reports, and the safety-related issues regarding the blue ribbon panel recommendations.

    I am confident that with the help of literally a national level of a first class quality team of aerodynamicists, systems engineers and power plants folks, that the program team will be—government and industry will be able to work through the issues that have been highlighted and deliver an aircraft that the Marine Corps so urgently needs.

    Further, we are doing this in an event-driven way. We are not tied to a sense of urgency, other than we want to do it as quickly as feasibly can be done so that we can in fact get the marines out of the 30 plus year CH–46s and Hueys and deliver the V–22 capability to not only the Marine Corps, but to the personal forces and the Air Forces in the form of the CV–22.

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    Mr. TAYLOR. Mr. Chairman, if I may. Admiral, I have got to tell you, having watched and listened to the testimony on the C–17 and having heard five years of testimony where they had turned the corner, they had a new production team, everything was going to be wonderful, I noticed a strange coincidence—and that was when then-Secretary Deutsch came down here and said, we are going to another program; you have got so much time to fix it. Hell of a coincidence, they finally got those suckers flying.

    The problem with your strategy right now is you have no alternative. There is no sense of urgency for the contractor, and I sure as heck hope 13 years from now I am still not looking at ads in Roll Call saying we are going to do it any day now, and I think we would be well served if you had an alternative. I think the Nation would be well served and the certainly the Marines who hope to fly in some sort of a future platform.

    Mr. ALDRIDGE. Mr. Taylor, let me just comment first. When we had the review of the blue ribbon panel, it was very clear that this program needed another relook. I elevated the distribution authority to acquisition category 1 D, which means that I was responsible for deciding whether the airplane proceeds or not, and I instituted a series of—as has been pointed out, another series of experts who would give us another set of eyes to look at the program to make sure that if we did proceed an this plan, we were doing it with our eyes wide open as to the capabilities and the risks and so forth. I should receive that input toward the middle part of August, middle of the third week in August, and we will proceed on the program accordingly.

    There are some alternatives that can be considered and we have them in the back of our mind. We just haven't gotten serious about it yet, until we see where we stand with regard to can we bring the V–22 on board reliably, safely and with its performance that we predict. So there are ideas in the back of our mind. We are just not there yet, and we probably won't get serious about them unless we find some major problems during this second series of reviews.
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    Mr. TAYLOR. Thank you, Mr. Chairman.

    Mr. HUNTER. Okay. I thank the gentleman. Just one point, Mr. Secretary. On Title XI, which is loan guarantee that is multiplied many times over in terms of the work that we do in our domestic shipyards, the one good aspect of the program, I suspect that the Bush Administration wanted a zero ab initio, because it looks on the face like a subsidy, but in fact, to apply for Title XI loan guarantees, you have got to pay a fee, and if you look at the amount of fees that have been paid by our shipyards, balanced against the losses that they had to make good, only one or two loans have gone bad, and we—and the U.S. Treasury has actually made a profit on Title XI loan guarantees.

    So it is a—it is a painless way to maintain a good part of our industrial base, so I would recommend that you might—you might want to take a look at it and maybe make an editorial with the Administration with this thing. Typically whether it is Republican or Democrat Administration, the first tendency is to eliminate Title XI, because they don't know exactly what it is.

    Mr. ALDRIDGE. Right. I understand.

    Mr. HUNTER. But it does—

    Mr. ALDRIDGE. I was aware it was an entitlement. I just don't have enough details and information. There is one other aspect I know Mr. Taylor is interested in, and that is advance procurement, so that we could actually buy more ships per dollar over the next few years, we can actually get our shipbuilding—and we are very interested in looking at that particular aspect.
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    Mr. HUNTER. Excellent.

    Mr. Everett.

    Mr. EVERETT. Thank you, Mr. Chairman, and I thank the gentlemen, one and all, especially those of you who have an L.A., lower-Alabama connection. Good to see you all here.

    Lieutenant General Nyland, let me start with you. I am concerned about the status of the Marine Corps' predator program. This system, as you know, is developed to provide our war fighters the very best short range antitank reps system, unlike anything else in the world today. Fiscal year 2001 funds were appropriated to begin a limited rate production, and yet I understand that the production has been delayed. Can you explain why the Marine Corps has not moved out quickly to get this capability to the field?

    General NYLAND. Yes, sir. The predator, in its initial operational testing, had a threshold level or reliability of 85 percent. Regrettably it did not retain that level. It retained only 72 percent. So rather than rushing to an ill-rift decision, we set aside eight missiles, which we are in the process of shooting now to see if we can achieve that threshold level of reliability.

    It has, to date, shot forth those eight missiles. We expect to shoot the remaining four between September and October, and then following those results, we will then make a decision for the way ahead. I am happy to report that the four that have been shot have met all expectations.
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    Mr. EVERETT. Well, great. I also understand that the predator is selected—if the predator is selected as a winner of the competitive UK program that will result in significant cost reductions to the Marines, what are you doing to try to make sure that the predator does come out on top in that competition?

    General NYLAND. Sir, that I would like to take for the record. I would tell you that we certainly hope it does well over there, because as you have stated, it will certainly lower the cost per round as to our exact involvement in that, I would like to take that for the record, if I might.

    Mr. EVERETT. If you would, I appreciate it.

    General NYLAND. Yes, sir.

    Mr. EVERETT. Let me get back to the V–22 just a moment, because I have to tell you this is one member that is not convinced that this aircraft should continue to go forward in production. I am very much concerned about it. You may or may not know that the pilot of that first aircraft was from my district, and he was, at the time, the number one pilot in the Marine Corps in handling the V–22, so I have great concerns about it.

    And as far as not having an alternative, I am not convinced that the Blackhawk couldn't be an alternative for one thing. I understand the speed and what it carries, the weight load and that sort of stuff, but also I understand that the GAO report has pointed out a number of problems with the V–22 rotor wash bin just one, heat, low capacity, a number of things. So one thing I would like to ask you, I had heard somewhere that someone was looking at a four rotor-type aircraft. Is that true?
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    Mr. ALDRIDGE. There was some work done, I believe then by Defense Advanced Research Projects Agency (DARPA), on a quad rotor configuration. Does anybody have any further details about that? I am not sure where it stands at this point, but I don't think it is active at this point in time.

    Mr. EVERETT. It is nothing that we have—that the—that we have invested money in, is it, a quad rotor?

    Mr. ALDRIDGE. There were some R&D money invested in it but I think it is now inactive, but I will check and make sure of it.

    Mr. EVERETT. Given the track record over the last 18 years of the V–22, I am not sure we should be looking at a four rotor aircraft at this point. That just doubles a lot of the problems that the General Accounting Office (GAO) report pointed out in. And I am—you know, I am very much open to meeting and talking about this issue, but I have serious concerns about the continued production of the V–22. We are talking about, what, $44 billion?

    Mr. ALDRIDGE. For the total program? That is about right. It is about $80 million per aircraft, and I think there is—

    General NYLAND. 458 total for the Department.

    Mr. ALDRIDGE. Yeah.
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    Mr. EVERETT. Well, thank you very much. Thank you, Mr. Chairman.

    Mr. HUNTER. I thank the gentleman.

    Mr. Spratt.

    Mr. SPRATT. Thank you, Mr. Chairman. Mr. Aldridge, I didn't say it to start with, but it is good to see you back to the saddle.

    Mr. ALDRIDGE. Thank you, sir.

    Mr. SPRATT. Glad to have your expertise at DOD. Sometime ago, a couple years ago, Congressional Budget Office (CBO) tried to project what we would need to recapitalize the force, and they admitted at the outset that some of their assumptions were simplifying, because obviously you never recapitalize the same force. You buy a new and different force that has different elements, but basically doing an extrapolation from the force levels we had, they came up with the need for about $19 billion in a procurement account in fiscal year 2000 money.

    It would be a little bit more than fiscal year 2000 money now. You have got $61.6 billion in your procurement account, and that is $500 million for 2002 less than 2001. Surely, that is not something that can sustain itself. You are going to have to get substantially more than that, are you not, particularly in light of the fact that you are plussing up substantially the R&D accounts. Your R&D account goes up by about $6 billion. But sooner or later, if that is meaningful productive expenditure, it has to be taken out in the form of production and procurement dollars.
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    And so that ramp-up in R&D, along with lots of other things like three tactical aircraft, all being squeezed down the same pipeline, mean you have got to have a big plus-up in procurement, does it not?

    Mr. ALDRIDGE. Yes, sir. The assumption that the GAO had of course of the force structure stayed the same, and that we were trying to modernize that same size force structure. Right now I can't tell you whether that is a good assumption or not. We are going through this QDR process, which one of the issues of the QDR is what is the size and shape of the military forces that we need for the future. And certainly if the force structure is the same as it is now, then the procurement account to sustain and modernize that with—without aging the equipment far beyond its average life, that is another factor, you can just let it age and not replace it, and that is kind of what has been happening. The TACAIR levels are too old. The ships are too old. Much of the Army equipment is too old.

    Mr. SPRATT. Then you pay in O&M what you are—

    Mr. ALDRIDGE. Then you pay in O&M. So we have to look at what the force structure is that we want to modernize and then modernize it at a rate that keeps the average age at a level like its half life or something like that.

    There is another piece of it, though, is that we also have to—have to worry about what are the other monies—where are the other monies going to sustain the force structure, and we have got too much infrastructure. And it may be some way to offset the increase needs that we have in modernization, is we have to decrease the amount we have in infrastructure. And—
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    Mr. SPRATT. We have found that those games are often elusive, terribly hard to measure. We have also found that environmental cleanup costs are enormous, that usually you want to help a community where you close down something as big as a depot so you virtually give them the real estate and the cash flow, if you are lucky, opportunities positive in about the 6th year after a BRAC, and you have got five more years to go before you can put the savings in your pocket. So how do you get from here to the—I am talking about the FYDP, which I haven't seen yet.

    Mr. ALDRIDGE. Yes, sir, and the reason you haven't seen one is we don't have one.

    Mr. SPRATT. Does it—

    Mr. ALDRIDGE. Yes, sir it does, but we don't know where we are going until we get this QDR and this strategy review done, and when we get that done, then we can lay out a future. We don't have one of those today, and I know you are frustrated that you can't see a FYDP. I can't see a FYDP, because we don't have one of those. The first time we will actually get one is when we finish the strategy and get the fiscal year 2003 budget completed and then we will have an out-year projection on what that looks like.

    Mr. SPRATT. But my concern is that if we start up, speed up some things this year with the $18 billion that is likely to be provided, but we can't appreciably increase that next year because of the budget squeeze, what happens then?

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    Mr. ALDRIDGE. Yes, sir, it does. But we don't know where we are going until we get that QDR and this strategy review done. When we get that done, then we can lay out a future. We don't have one of those today, and I know you are frustrated that you can't see a FYDP, I can't see a FYDP because we don't have one of those. The first time you actually get one is when we finish the strategy and get the fiscal year 2003 budget completed. Then we will have an outer projection of what that looks like.

    Mr. SPRATT. But my concern is that if we start up, speed up some things this year, with the $18 billion that is likely to be provided, but we can't appreciably increase that next year because of the budget squeeze, what happens then? If we anticipate that another 18 to 20 billion is not coming on top of this increment next year in 2003, doesn't that have some implications for what we spend in 2002?

    Mr. ALDRIDGE. Absolutely. You have to have a future plan laid out of what can you and cannot afford. Another piece of that is that in your fiscal year 2002 budget we put a substantial amount of money in to fully fund the programs that we had ongoing. We found that there were shortfalls in funding for many of our programs. And we put—I say several hundred million dollars, I don't remember exactly the number, to make those programs funded, knowing we were buying fewer programs. But that is the right answer. Because if you get out in the future and you find out that you are now underfunded then you have to go steal money from somewhere and it causes a lot of programs to get disrupted. It is better for us to buy fewer programs and fully fund them, which is less disruptive and costs us less over the long term. Every time we slip a program a year and save a dollar we pay three dollars later, which is going to affect programs out in the future.

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    Mr. SPRATT. To sustain your forestructure, including your acquisitions, your research and development, that year's level, the level you estimate you will be supporting, what do you need next year and in the outyears? Can you give me a back-of-the-envelope indication?

    Mr. ALDRIDCH. Well, I think Congressman Skelton had asked the Service Chiefs for what they view as their shortfalls. I believe those letters have now been provided to the Congress. And they are substantial increases in what they need.

    Mr. SPRATT. Do you know what the summation of them is?

    Mr. ALDRIDCH. I just remember, the Navy asked for 12 billion, 12.5 billion. Of course in 2002, I don't remember exactly, but the numbers were for all of the Services, were in that range.

    Mr. SPRATT. So the Navy would want 12.5 billion over the 99 billion?

    Mr. ALDRIDGE. They are on the record to Congressman Skelton that that is what they need.

    Mr. SPRATT. It is my understanding that BMDO is going to set up six funds as opposed to the programmatic funding that we have been providing for as long as I have followed this budget. And as opposed to having specific programs, you are going to have generic funding.
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    That makes it awfully hard for us to follow where the money is going, what it is being spent on, what the priorities are. And it would seem to me it would create problems for you with the DAB. If you remove milestones, as I understand they are talking about doing, what—

    Mr. ALDRIDGE. I am going to ask General Franklin to answer some of these. But let me just put—one of the reasons you commented in the earlier discussion about the fact you don't have the backups. The reason you don't have a backup is we just completed an approval of the program. So it is just—we are this week—and in fact General Kadish is testifying today on what the program is. So we are a little late in getting you backup because we couldn't give you backup for something we didn't know. So that is coming and we are trying to get that information over to you as quickly as possible.

    And, General Franklin, why don't you comment on the structure?

    General FRANKLIN. Well, the structure is, originally in the original program we had some 20 program elements. We now will go to nine program elements. You mentioned six. There are six key program elements, and then there are three others that are of different importance.

    I would say that when we were asked to develop the program we looked at different capabilities in different areas. We looked at boost phase, mid-rise and we looked at terminal capability. We looked at different basing options. We looked at sea-based, we looked at ground-based, we looked at air-based and we looked at space-based. We looked at a broad range of different activities that had different levels of maturity. Our experience tells us that we are still developing those technologies, and some will succeed, some will fail and some will slow down.
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    But because we haven't had a set architecture at this point in time, we wanted flexibility to be able to look within these frames in the boost phase, in the terminal phase and in the mid-rise phase and in our sensors phase to provide us the flexibility to accelerate or slow down certain activity as they go through.

    If you look at each of those phases you will see that there are three or four different concepts.

    Mr. SPRATT. Are you mixing Theater Missile Defense (TMD) and National Missile Defense (NMD)?

    Mr. ALDRIDCH. Under the new structure the requirement for us is to handle both long-range and short-range missiles. One of the things we faced when we went through this assessment and our recommendations was the difference between long-range and short-range missiles starts to blur.

    One person's long-range threat, he might also be threatened by a short-range threat. And so those situations have blurred. But the requirement is still to protect our friends, to protect the U.S., the forces, to look at—

    Mr. SPRATT. True. But in looking at it from our standpoint there are Members of this Congress who would freely support TMD programs, but might not support NMD programs in the same category, boost phase, mid-rise, whatever it might be.

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    Or we might support the Theater High-Altitude Area Defense (THAAD) but not support Navy areawide, not nearly as much. We might want to put more into THAAD. This would take that discretion away from us, wouldn't it, and give you not completely a blank check but almost a rubber check.

    General FRANKLIN. I can't speak for the Secretary, but I would say that there will be sufficient oversight over the program, both at his level but also at your level when we submit the R–2 forms and the rest of the budget documents as to exactly what we want this money for.

    Mr. SPRATT. Okay. How do we control reprogramming, things like that? You can freely sort of slosh the money around, can't you? As long as it is not—if it is midcourse intercept, or boost phase intercept, it might be space-based, it might be ground-based, you can go either way and use the money?

    General FRANKLIN. We have set up a process, and again I don't want to speak for the Secretary on this, to review the program at his level and above. And we will not be moving money around very rapidly without certainly consulting at that level and certainly talking to Congress about that.

    Mr. ALDRIDGE. Mr. Spratt, I think you will have all of the visibility into what the programs are going to be proposed for the missile defense program, the shorter range, the midcourse and the boost phase. You will see all of that clearly, in high visibility.

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    One of the things we are looking at in this program is trying to put together a management approach that will allow us, if we see something failing we can terminate it and get on to things that are being successful.

    I don't think that we would have any desire to offset or to try to go around the Congress' intent, and we certainly will follow any kind of rules that you want to place on the budget.

    But, we are trying to give the Ballistic Missile Defense Office here the maximum capability to pull off a successful program.

    Mr. SPRATT. I don't want to take up the rest of the committee's time on that. We will get together with General Franklin and General Kadish and go into it in more detail.

    Mr. ALDRIDGE. The Secretary of Defense has created a senior executive committee that consists of the three Service Secretaries, myself, the Deputy Secretary himself. And one of the steering committees that will look at when we make these various forks in the road for missile defense, whether one idea is good and one is bad, is the Ballistic Missile Defense Officer will report to the Senior Executive Counsel, which is the Secretary of Defense, Deputy, three Service Secretaries and myself. So we will provide the Board of Directors for tracking the program.

    Mr. SPRATT. Okay.

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    Mr. HUNTER. We thank the gentleman for his question. Incidentally, General Franklin, let me throw in my two cents. I like the idea that you are not artificially separating NMD and TMD because you are basically talking about slow, medium-fast and fast missiles. And it is a little bit analogous to having two separate defense systems, one that defends against slow aircraft and one that defends against fast aircraft. And systems like the TD–2 that North Korea is building appear to now to be taking on the appearance at least of a missile that can reach the United States. And there is certainly no law that restricts an aggressor nation from shooting our troops in theatre with a fast missile.

    So the idea that you got to be able to handle these by function rather than by name I think that is a practical application and a practical analysis. So I think a number of Members support that.

    And so we will appeal to Mr. Spratt's practical instincts and try to get him on board with that. Let me say—Mr. Gibbons.

    Mr. GIBBONS. Thank you very much, Mr. Chairman. Gentlemen, welcome before the panel. We are glad to have you. It is a real honor and privilege to have your dedicated service to this Nation. We are thankful for that.

    I grew up in a small town in rural Nevada. I knew right away when I went to college that I did not want to graduate with a green eye shade and sit in a smoke-filled room looking over a book full of numbers.

    When I look at the budget requests here, the forecasts for 2001 and the requests for 2002, I have some questions and perhaps they will be simple questions that you can address and answer very quickly.
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    But, my first understanding is that, and maybe for Admiral McGinn, the T–45, that is a simple training aircraft; is it not?

    Admiral MCGINN. Yes, sir.

    Mr. GIBBONS. Turbopropped aircraft?

    Admiral MCGINN. No, sir. The T–45 is jet engine powered.

    Mr. GIBBONS. It is jet engine powered?

    Admiral MCGINN. Yes, sir.

    Mr. GIBBONS. Its cost is nearly $30 million per copy. Can you explain why it is so expensive; knowing that the F–18 is about 60 million a copy, why we are paying 30 million a copy for a T–45.

    Admiral MCGINN. I am sure that it has a lot to do, sir, with the low quantity of production.

    Mr. GIBBONS. Let me ask, because you only acquire four in 2001, you are looking at six in 2002, is there a budget prediction procurement plan for beyond 2002?

    Admiral MCGINN. If I can just start with the general response, sir, about the overall aircraft procurement Navy account. As was noted earlier about the procurement account in shipbuilding, it applies in aircraft procurement as well. We have taken a lot of money to fix the fleet that we own and operate today in the form of operations and support (O&S) cost increases, personnel costs, so that we can make sure that the levels of readiness and the capabilities that are required are there.
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    This is required that we have taken money from the only place that we could go to, which was in the procurement accounts.

    That is the reason. If you track back over the past six years or so, you will see diminished quantities of buy for the most part in virtually every procurement program that we have, ships and aircraft and weapons.

    This has caused us to get in a situation where we are buying in many cases at uneconomic order quantities. Mr. Aldridge mentioned before that in the attempt to try to pay for bills that are compelling right now, like readiness, and paying for them by taking it out of procurement, you end up paying more down the road. And I think that the T–45, as you point out, is a good example of exactly what has happened.

    Mr. GIBBONS. Well, answer the question then. Is there a production plan after the 2002 time frame for the T–45?

    Admiral MCGINN. Yes, sir, there is.

    Mr. GIBBONS. All right. Now, with looking at that same philosophy that you have got, I look at your Joint Standoff Weapon Procurement, the (JSOW). You are buying 762 of them in 2001 for about $200 million, which comes down to about $265 thousand, but you have purchased zero in the 2002 timeframe. That is your projection.

    Perhaps that could be answered, along with General Plummer, why the Air Force production of JSOW is running, instead of $265 thousand per copy, it is running at about $475 thousand per copy in your budget.
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    General PLUMMER. We are buying two different types of JSOW. We are buying the combined effects munitions, the A, and we are also buying the centrifuge weapon, the B. It is part—

    Mr. GIBBONS. Both of those are warhead capabilities?

    General PLUMMER. Those are the internal mechanisms of the missile.

    Mr. GIBBONS. Right.

    General PLUMMER. We, in 2002, have elected to not buy JSOW due to the fact that the weapons system is showing some significant problems, problems that have caused us to have to decertify the use of the weapon on the F–16. So the Air Force has elected to tell the contractor that we would not buy the weapon until they can get those problems fixed.

    Mr. GIBBONS. So your budget requests show—

    General PLUMMER. This is very recent. This is a very recent change that we have made in regard to problems that have cropped up just within the last month or so.

    Mr. GIBBONS. But your purchase per individual JSOW is literally twice as much as that of the Navy. I know you said you had two different variants, but I cannot imagine simply the internal mechanism of the warhead costing twice as much as the average production, and maybe General McGinn can talk to us about what type of JSOW he is buying at his price.
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    General PLUMMER. And before—I will go back and get the exact cost, because I am not familiar with what the Navy is paying for their JSOW.

    Mr. GIBBONS. I am just looking at the budget here. And simple mathematics has 762, a little over $200 million, comes out to about $264 thousand per copy. Your 2001 request at 164 was 77.8 million. That comes out at $475 thousand per copy. If you look at the projection for the 104 that was requested in 2002 at 54.6 million, that is right at $525 thousand per copy.

    Admiral, what is the type JSOW weaponry that you are buying?

    Admiral MCGINN. We are buying the first version, the cluster munitions warhead, Mr. Gibbons.

    I wanted to also mention on top of the comment that General Plummer made on the technical issue in testing with the JSOW/F–16 interface we found in the trans-sonic region there was a problem with the weapon carriage and separation. As a result, we had to go back and do more R&D to find and fix that problem. That is ongoing right now. And as a result, that problem was fixed. We lowered the production quantity to minimum sustains so as to not break the production work force and split those weapons dollars deliveries between the Air Force and the Navy. I believe it is 208 to be split evenly between the two services. And that is why we zeroed out the procurement for the 2002 budget.

    We expect and we have heard of progress that has been made to fix that problem, and we expect to come back in 2003 with a ramp-up to economic order quantities and production rates.
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    Mr. GIBBONS. Do you anticipate the cost for the joint produced JSOW weaponry to be closer to the $400 thousand bracket or the $265 thousand bracket that the Navy has acquired today?

    Admiral MCGINN. I expect it to come closer to the lower figure.

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

    Mr. HUNTER. I thank you, Mr. Gibbons. If you could do me a favor. The quorum call I think is being used to round up folks to hear the closing speeches on campaign finance reform. I am going to forego those speeches so I can hear these wonderful speeches by these uniformed folks. These hearings are kind of precious to us. We are frittering away a lot of time going back and forth, so I am going to stick around.

    Jim, if you could—they will have the vote on the rule right after the speeches. And if you could come back and chair the operation right after the speeches, then I will take off and vote; and I will vote and be back for the rule.

    Thanks, my friend.

    Gentlemen, as long as we have got an opportunity here, let's talk about a lot of these systems that we are working on here. I think General Kern where—we are talking a little bit about your artillery systems. I thought it might be good to talk a little bit about Crusader, where it is going. You got a big ticket right now in terms of the R&D, a little under half a billion bucks. Obviously as we go through Army programs, not a lot of headroom in some of the other programs. Tell us a little bit about Crusader.
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    General KERN. Thank you, Mr. Chairman. Crusader is clearly one of the Army's top priority programs today. It has been in development and was restructured at a request of Office of the Secretary of Defense (OSD) and the Army to meet our transformation strategy last year. We took it from 60 tons down to 40 tons in that process. We have the prototype vehicle now at A.M.A. Proving Grounds. It has fired over 1,900 rounds in many different conditions with very successful results.

    Mr. HUNTER. I have seen at least the film of some of those operations. But I guess that leads me to the question. You got platforms there that looked like they are working fairly effectively. Why do you need half a billion more this year in R&D? What is not working?

    General KERN. They are working very effectively. The program is in its next phase. That has just completed its milestone and moving into engineering, manufacturing, development. The prototype which you see firing and has been very successful is the 60-ton variant. So we have to build the 40-ton variant. That has been done through a great deal of very good simulation work which leads to production, the Pro-E type, the same that built the 777.

    Mr. HUNTER. My question is, you have—but for the reduction requirement, going from 60 to 40 tons, you wouldn't need that big half a billion dollar chunk of money each year, fairly expensive piece of change for weight reduction?

    General KERN. It is far more than weight reduction. It is also a significant reduction in the structure of the vehicle which has to be built.
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    Mr. HUNTER. I understand. But, my point is to make this transformational, so to speak, you are eliminating the opportunity for lots of other transformational systems and the main elements of the system, that is, a rapidvue capability, the autoloading capability, et cetera, we have already paid for in R&D, and we could harvest some of those things.

    But we have got this—you might tell us a little bit about what this is going to enable us to do, the 60 to 40-ton reduction.

    General KERN. It enables us to put two of those vehicles, or the vehicle with its ammunition reload capability, either a wheel or track variant on our aircraft to fly it into theater. We could take the comparison to our current Paladin, and do it with one-third the number of people, two-thirds the number of people, one-third reduction—

    Mr. HUNTER. When you had the 60-ton, what was—because obviously we had airplanes when we designed the 60-ton. People were smart. What was the thinking behind the 60-ton in terms of air transport?

    General KERN. It was not—the vehicle was designed originally to support our heavy forces, and it was designed originally—and I hate to say this—with a requirement that was closer to the 40-ton, and it grew over time. So a great deal of that reduction was bringing it back to the original requirement. There are two aspects at least—

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    Mr. HUNTER. But what are the air transportable capabilities of the 60-ton? I guess that is what I am asking.

    General KERN. With the 60-ton vehicle you could put one. It is in the same category—

    Mr. SPRATT. One on what, a C–5?

    General KERN. C–5 or C–17.

    Mr. HUNTER. This thing, you are going to be able to put two?

    General KERN. Two, that is correct.

    Mr. HUNTER. With a reload wagon.

    General KERN You can either put two Howitzers or a Howitzer and a reload vehicle. We have also designed it with a wheeled reload to give us considerable other mobility and reduced weight capability, exactly the same package that is on the tracked vehicle.

    Mr. HUNTER. Let me ask you a fast question here. We are real short on money. You are taking a big chunk of money to give it two-per-plane capacity instead of one-per-plane capacity and arguably some maneuverability on the battlefield, the ability to get over maybe some of those bridges in places like Bosnia.

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    Could we cut that R&D figure substantially if we hung with the 60-ton?

    General KERN. No, sir, we could not. I would—

    Mr. HUNTER. You are saying you still need lots of money?

    General KERN. Sir, we need to get this vehicle in production. We have a requirement today. We are about fourth or fifth in terms of artillery capability.

    Mr. HUNTER. I understand.

    General KERN. We are underrange, we have no mobility to keep up with our current fleet of vehicles.

    Mr. HUNTER. Here is my point, General. We want to get them in production quickly, too. But if you hadn't made this decision to go transformational and not—first, we started with the 40-ton, we paid money to build it, it wound up to 60. Now we are paying money to bring it back to 40 where we started. If you could live with a 60-ton, understanding you got—it is going to take you slower to airlift it, less time to, or more time to airlift it, you are still going to have all of the aspects of rapidvue and autoloading and all of those things which are beneficial.

    The 60-ton is a good system, at least the one I have seen, I have seen the demonstrations on, looks like a worldbeater. So the question: If we can buy the 60-ton today without paying for the downsizing R&D and save some bucks, would it still be worthwhile?
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    General KERN. No, sir. You already paid for the downsizing. You did that last year and the development project is underway. It would only make sense today to go forward with our reduced size Howitzer.

    Mr. HUNTER. I thought you said the R&D money is for downsizing.

    General KERN. It is for building, engineering, manufacturing prototypes of that vehicle. The one that is firing today, and the firing mechanism, the fire control, the processor the armament, the autoreload capability are identical. So what you are paying for is the engineering-manufacturing to get it into production of the 40-ton variant of the vehicle and the wheeled vehicle plus the tracked vehicle reload capability.

    It would be going backwards and cost us additional money to go back to where we were, and it would not meet the requirements of the United States Army. Clearly we have to have a strategically deployable and flexible force that has the range, capability, the lethality as well as the accuracy to deliver those precision fires. That is what the Crusader brings to the United States Army.

    Mr. HUNTER. I like the Crusader. I think most members of the committee do. So you don't have to sell the Crusader. In terms of the rapidfire automation, et cetera. The only thing I was getting at is you have a very large of chunk of money, half a billion bucks here. I asked you what it is for. You said it was for getting down from a 60-ton variant to the 40-ton model.

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    And my question was, if you could live with a 60-ton, would you save money and still retain all of those aspects of rapidvue and autoloading, obviously that the Crusader has, but be able to eliminate some of the cost?

    I take it your answer is that you got almost half a billion dollars in R&D you got to do now no matter what you do. Is that—

    General KERN. That is correct, sir.

    Mr. HUNTER. Okay. I appreciate that.

    General Franklin, do you have anything to say about this last test we just did on PAC–3. I read some of the reports on PAC–3. You had one hit, one miss. You missed the missile, you got—I think you got the cruise missile or the air-breathing target; is that right? It was a double shot. Tell us what happened.

    General FRANKLIN. I will talk a little bit and then General Kern may add something to it. The last Patriot flight test had several objectives. It was a very sophisticated test in that we were actually using a jammer in this capability to see if the jamming would affect the Patriot or the radar that is associated with it.

    The objective was to have one PAC–3 fire at an R–4 target that was a considerable-distance-away aircraft. The other one was to fire at a Harrow target. The first missile against the aircraft hit the aircraft and did exactly what it was supposed to do. The second missile that was flown against the Harrow target missed and there was a software glitch within the missile and, I would point out, is one that we haven't faced before in simulations, but one that we think we know how to correct pretty rapidly.
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    I would also point out that, you know, this is an engineering-manufacturing-development program with a considerable amount of testing in it.

    And, in fact, Patriot has been very successful. This is the first time Patriot has ever missed in any of its tests, whether it was against a cruise missile or a ballistic missile and the tests have been getting increasingly harder. That one was—

    Mr. HUNTER. I think it is good to make them harder. I think we want you to test until you miss. In fact, robust testing I think is going to be your direction from this committee. But so in general, do you think the test was valuable in terms of information gained?

    General FRANKLIN. Sir, we learn something from every test. In this particular test we were really wanting to see how well it worked in a jamming environment. I would say that part of it was completely successful. The issue of whether we had a glitch in the software we still will learn from that. That is why we do testing, to learn from that.

    General KERN. Could I add one other comment to that, sir?

    Mr. HUNTER. We can count on our colleagues on the floor to talk for at least another 20 minutes. This is great news. I tell you what, Mr. Roscoe Bartlett and Mr. Gibbons are back. I want to defer to them and let them ask a question or two.

    Mr. BARTLETT. Thank you very much. I am glad we are in disarray on the floor. It means that we have more time here. I have two questions I want to ask. The first one has to do with a relatively small subject. It is really—if it was a district issue, I wouldn't be asking this question, because one of the solutions could not benefit my district, but I am going to ask it anyhow, because I want the right thing to happen.
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    At David Taylor Model Basin, which is part of Carderock, they have a tow tank there and some other test facilities which I used about 45 years ago in working for National Institute of Health (NIH) doing work on physiological studies on UDT, SEALS now I guess, Underwater Demolition Teams then.

    There is also a tow tank at Langley, so I am talking to the Navy and the Air Force. The tow tank at Langley has not been as much used, but has been used. And my understanding is that the fees they get for using it have more than paid for its maintenance, for its upkeep.

    It is on an Air Force facility. The Air Force thinks it is ugly, it has no business being on an Air Force facility. They would like to destroy it. My concern is that it is the only tow tank we have that can be flooded with saltwater, and there are some tests that have to be done with saltwater. If we are not using that tow tank, we have to do them at sea, which costs a great deal more money to do the tests at sea. I just want to make sure that the right thing is done.

    And I am not sure that destroying this tow tank—by the way, the cost of tearing it down would maintain it for a number of years, and I just want to make sure that we are doing the right thing. I know the Air Force likes pretty bases, and I know that the tow tank is not a pretty sight. It is a very long building there and it needs some paint. But I suspect that we might find some money for paint, which may be a better solution than tearing it down.

    By the way, if that is torn down, then the only show in town is Carderock, and I have a number of constituents who work there. So from a district perspective I would be better off with my people if they destroyed the tow tank at Langley. I am not sure this is the right thing to do. I am not comfortable, because I know—I am not comfortable letting it be destroyed without raising the issue.
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    So I would appreciate very much if you could check on it and make real sure that this is the right thing to do.

    Mr. ALDRIDGE. Mr. Bartlett, I was just handed a note from my staff, a very attentive staff, that I have an office—or director of test evaluation is reviewing that requirement, and they plan to come and brief you in about two weeks.

    Mr. BARTLETT. I want to make sure that the right thing is done. If it is the only way that we can do saltwater testing and it has been paying its way with users, I want to make sure. I hate waste, and I don't want to see us do something that we will later regret doing.

    The other thing I wanted to ask a question about was the Administration has requested $50 million for hardening of military satellites. Now, two comments on this one. I am very pleased in that—this is the Electronic Pulse (EMP) hardening of satellites. I am very pleased that they recognize that there is a need to do EMP hardening. But, my question has to do with the—if we need $50 million to harden satellites, is that enough? If we are going to harden satellites, why would we want to do that when almost nothing else we are buying is hardened? If we are going to spend $50 million hardening satellites, why aren't we concerned about hardening other things?

    See, I don't see what good a hardened command and control is if you have got nothing to command and control. And we are not now doing EMP hardening on the things we are procuring. My question is, is $50 million enough to harden the satellites? There was nothing there last year. If we are going to harden satellites, why aren't we going to harden other things that presumably would be needed in the event that—by the way, if there is an EMP laydown, it is going to damage a whole lot of other things.
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    Mr. ALDRIDGE. Mr. Bartlett, let me try to clarify. That $50 million is to procure radiation-hardened parts that go into satellites—

    Mr. BARTLETT. I understand.

    Mr. ALDRIDGE.—and, unfortunately, the radiation is already in space, irrespective of electronic magnetic pulse. So the radiation hardening is also to improve the lifetime and reliability of the satellites that we have in orbit.

    Basically, the $50 million is to keep two production lines going for competition. But they are only for the parts that will actually be procured to be placed in the satellites for that purpose as well as other uses as well.

    But it is not only just a nuclear radiation, it is also the natural radiation that happens in space. GPS is in one of the worst places that you can get for radiation hardening.

    Mr. BARTLETT. Our satellites are very soft. There is nothing to protect them from the radiation. My question is, if we need to harden these satellites, why don't we need to harden other things?

    Mr. ALDRIDGE. Well, I think in space you have a natural radiation you don't get on the ground.

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    Mr. BARTLETT. That is true. A lot of it is filtered out. And the satellites, because it costs so much to put the weight up there—

    Mr. ALDRIDGE. Cost to launch a satellite. You want to keep the satellite not only longer time, but you also find that the computational capability degrades over time, and radiation-hardened parts keep your computational rates higher.

    Mr. BARTLETT. They mostly go through the Van-Allen Belts, the radiation.

    Mr. ALDRIDGE. And you have solar flares that create temporary radiation problems in space. The money is there for protection of that, which also has commercial application, because they do sell the parts to commercial companies as well.

    Mr. BARTLETT. Thank you very much.

    Mr. HUNTER. Thank you, Mr. Bartlett. Thanks for your expertise on this issue and your hard work on it.

    Another one of our experts and a guy I look to for a lot of advice is Mr. Gibbons.

    Mr. GIBBONS. Thank you, Mr. Chairman, for recognizing me for a second round.

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    While I was gone, I don't know if you had a chance to talk about the Tomahawk missiles; and, if not, I wanted to bring to the attention of the panel our concern about Tomahawks which we have had in this committee for a number of years. We noticed in the production for the planned quantity is 34 for 2002, which is down from the 45 that was projected in 2001; and I was wondering whether or not this program, like the JSOW, might be experiencing some sort of technical problem that this committee needs to know about. Could you address the issue of why you have reduced your planned buy-in, and are you going to be able to execute the 34 in production program by what you have got on your request?

    Admiral MCGINN. Yes, sir. The program has experienced a couple of technical issues that have since been resolved through engineering analysis. The result was a slide in the production schedule of about nine months, about three quarters, and we have confidence that the 34 buy for fiscal year 2002 will hold.

    Of course, as you well know, there are unknowns out there. But I am assured by the technical team that they have good solutions for the engineering problems that they encountered which were related to airframe integrity and that they will be able to hold the schedule.

    Mr. GIBBONS. Has the Department of Defense considered continuing the conversion program from the tactical antiship missile and the Block 2 into Block 3 Tomahawks?

    General MCGINN. I will have to take that question for the record, sir. We will get right back to you.
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    [The information referred to can be found in the Appendix on page ?]

    Mr. GIBBONS. Thank you, Mr. Chairman.

    Mr. HUNTER. I thank the gentleman.

    This Tactical Tomahawk (TacTom)—this is the new TacTom, the new Tomahawk?

    General MCGINN. Yes, sir.

    Mr. HUNTER. It is panning out to be everything you folks wanted it to be?

    Admiral MCGINN. Yes, sir. As you know, and various versus predecessors have testified before this committee, it has attractiveness of increased war-fighting flexibility, decreased time to plan and launch and lower costs.

    We have had, as you well know—

    Mr. HUNTER. It was supposed to come in about $600,000 a bird as opposed to a million two. Is that working out?

    Admiral MCGINN. Yes, sir, based on the last update that I have gotten.
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    The downside of sticking with the Tactical Tomahawk program, as you well know, is that we have assumed risk in overall inventory. But we feel and we are constantly scrutinizing this, that the best way ahead continues to be with the Tactical Tomahawk and that we will work through the production issues and start delivering on that 9-month delayed schedule.

    Mr. HUNTER. Okay, Mr. Gibbons. Go right ahead. We have got lots of time here.

    Mr. GIBBONS. If the Chair would yield, I would add one final request. If they are going to get back to the committee for the record on that conversion process, would you also include in that any primary showstoppers, any technical problems that you are coming up to with regard to that conversion as why or why not the conversion is going forward?

    Admiral MCGINN. Yes, sir.

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

    Mr. GIBBONS. That is all I wanted to add to that.

    Mr. BARTLETT. I would, if I could come back for a moment to our discussion of the rad-hardened parts for satellites.

    There is a statement here, while radiation-hardened manufacturing was once a thriving market due to the Cold War race to get survivable satellites in orbit, only two major vendors manufacture radiation-hardened satellite parts in the United States today, according to Major General Brian Arnold, former director for the Air Force's Acquisition Office for Space and Nuclear Deterrence Programs, that is BAE and Honeywell.
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    My observation is that there are two references here that would indicate that one of the considerations for developing these rad-hardened parts is a nuclear EMP. Because it says due to the Cold War race to get survivable satellites in orbit and the Observation Office for Space and Nuclear Deterrence.

    So again, my question. If we are providing radiation hardened—I understand that space is a very vulnerable place for radiation because lots of cosmic radiation is filtered out by our environment, and it is—by the atmosphere—it is not filtered out for these satellites. But if we are hardening these satellites for space at least partly because of concern for a nuclear EMP, which this quote would indicate, my question again is, why are we not hardening other parts of our military? Because what good will command and control be if we have got nothing to command and control?

    Mr. ALDRIDGE. I didn't mean to mislead you. The nuclear hardening is part of it, but there is also natural radiation is part of it.

    Mr. BARTLETT. I understand that.

    Mr. ALDRIDGE. The concern with the two production lines, we are worried that maybe one or both of them will go down, because there is no market for these kinds of things; and so we are having to pay to keep the market there so we can go get the parts. It would get to the point, since there is no other market or no incentive for these companies to stay in business, they would go away, and we would have to provide the incentive.

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    I believe that we should have hardening for other components of our command and control system. It is much more difficult in space because of the nature of a nuclear explosion in space. They have a term, they call it pumps, the Van Allen Belts. It creates even more of a lingering long-term effect that results in that.

    On the ground you don't have that same phenomena occurring which is not as persistent. You do need to harden against electromagnetic pulse. I believe many of our nuclear command and control centers are hardened for that purpose.

    Mr. BARTLETT. But again my question, sir. If all we have hardened is command and control, if after a vigorous EMP laydown there is nothing functioning to command and control. If my brain and spinal cord works but if my arms and legs won't move, then I am not sure what good I am.

    Mr. ALDRIDGE. I think the case is that those events are isolated on the ground, they are not isolated in space, and that we can afford to not harden everything that we have on the ground, especially those that are going to fight a conventional war against nuclear attacks.

    I don't know if I am answering the question.

    Mr. BARTLETT. It is my understanding that a single weapon detonated 300 miles high above Nebraska would, in fact, blanket the whole United States. As a matter of fact, a SCUD launcher can launch a missile, they have a 180-mile apogee, that is quite high enough to fully blanket a full fourth of our country.
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    So this is a threat from Third World countries that certainly would not be stupid enough to lunch a missile, even if they had one, that would reach us from their soil, because we would certainly determine that with our satellites. So if they are going to launch a missile, it is going to be from the sea.

    And this is not isolated. You know, a single weapon can cover the whole United States. And I am just concerned about what percentage of our warfighting capability would remain after an EMP laydown.

    Since we are no longer radiation hardening, or chemical hardening for that matter, almost any of our new weapons systems procurement—it costs five to ten percent more to do that. We have made the judgment that it is not worth that. The Chairman of the President's Commission on Critical Infrastructure testified before us at a full hearing on EMP. We asked him if he looked at it? Yes. And? Well, there wasn't a high probability it would happen, so they didn't look any further.

    My observation was, gee, if you haven't already, when you go home tonight you are going to cancel the fire insurance on your home, because there is not a high probability that is going to happen.

    This is why you have insurance, when there is a low-probability, high-impact event, which is exactly what an EMP laydown would be. It is not an improbable thing. As a matter of fact, if you are talking about asymmetric weapons, there is no way that an enemy could hurt us so much with a single booster and a single nuclear weapon as to create an EMP laydown. My question is, are we prepared for that, sir? I think we are not.
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    Mr. ALDRIDGE. I would agree with you. We are not.

    Mr. BARTLETT. Well, don't you think that we ought to be? Because the only reason we need this sophisticated weaponry is against a sophisticated enemy. The first thing, sir, that a sophisticated enemy will do is an EMP laydown and deny us the use of all of our weapons systems that are not EMP hardened. We don't need those to defeat Saddam Hussein. World War II technology will do that. Not as quickly or as decisively, but it will do it.

    But, you know, any sophisticated enemy that has nuclear weapons, the first thing that he is going to do is an EMP laydown to deny us the use of all of our weapons systems that are not EMP hardened. That today is almost all of them.

    Mr. ALDRIDGE. All of the ones that are non-strategic, that is right.

    Mr. BARTLETT. Well, the only thing left is to incinerate his grandmothers and his babies, is what you are telling me?

    Mr. ALDRIDGE. I hope I am not telling you that.

    Mr. BARTLETT. Well, that is the conclusion.

    Mr. ALDRIDGE. But I don't know the answer of how—

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    Mr. HUNTER. The record will reflect that the Secretary did not recommend that course of action.

     Mr. ALDRIDGE. I am trying to get into the scenario and what type of yield at what altitude at what location and how vulnerable the weapons systems that are non-strategic.

    Now, in the strategic weapons, we do nuclear harden those now. They are not hardened against every possible scenario, but they are hardened.

    Now what happens to the conventional weapons, I just don't know how vulnerable they would be. I know our civil communications systems would go down in an instant.

    Mr. BARTLETT. And so would the power grid.

    Mr. ALDRIDGE. Possibly again depending on the scenario in certain locations. But you are trying to get me to assess how vulnerable the non-strategic weapons are, and I just don't have an answer to that.

    Mr. BARTLETT. See, if all the enemy does is to deny us the use of our computers or our microelectronics, that is the ultimate in cyberwarfare. Not if all that survives that is our strategic deterrence, then I am not sure that we are justified in incinerating their grandmothers and their babies because they denied us the use of our computers, which is in effect all that an EMP laydown does.

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    There are enormous consequences to denying us the use of our computers—like your car won't run, there is no like electricity, there is no telephone or radio or television. The only person you can talk to is the person next to you, unless there is a ham operator who happens to still have vacuum tube equipment which is a million times more susceptible. It is a potentially and enormous problem and, you know, I understand that it is tough to deal with.

    Let me close with this. A CIA fellow once told me that he briefed a recent Joint Chief in the Army on this; and after that briefing the Joint Chief kind of cussed him out and said, why did you do that? Why did you have to ruin my day? You know there is nothing that I can do about that. Why do you want to make me feel bad?

    That is not an adequate response, sir.

    Mr. ALDRIDGE. I understand.

    Mr. BARTLETT. It might be a truthful response, but it is not an adequate one.

    Mr. Chairman, thank you very much.

    Mr. HUNTER. I thank you, Mr. Bartlett.

    And, Mr. Secretary, we hope that you will take a look at this because it is of serious import.
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    I have got to add I was going to ask a few questions about the F–22, but I thought that I would refer to our TACAIR expert, Mr. Gibbons, to walk through that program. Then we will go to Mr. Taylor.

    Mr. GIBBONS. Mr. Chairman, I appreciate your reference, but I have to admit that it would be trailing-edge TACAIR expertise, not leading-edge TACAIR expertise if you are talking about me. But I do want to talk about the F–22 because I think it is an important part of our future. It is an important part of the defense of this nation.

    When I look at the budget, I see the budget request for 2002 showing 13 aircraft at a cost of about $2.6 billion. Then last Tuesday Kathleen or Darlene Druniun, if I pronounced her name right, testified before the Senate that the Air Force now believes that the engineering and manufacturing development costs cap should be eliminated for that program. She testified that both the Secretary's office and the Air Force estimates that the 339 aircraft F–22 cap exceeds the existing production cost cap.

    My question is, because of that, do you share the view that the F–22 engineering, and manufacturing development costs cap should be eliminated? And, if you do, why?

    Mr. ALDRIDGE. Yes, sir. I will let General Plummer also respond.

    We have gone back and looked at the program again and looked at the test program, and we found that we need to put more testing in the airplane to ensure that we are going to be delivered an airplane that performs as we expect. That is going to raise the cap for the engineering, manufacturing development, and it is a fact.
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    We should not undercut our test program for this aircraft. Putting a cap on it would unnecessarily restrict the testing, and we should not do that. That would be a terrible mistake.

    The other piece of the program is the production. There are estimates of the production from two sources, one from the Air Force and the one from the Cost Analysis Improvement Group, which is an independent group within the Office of the Secretary of Defense who have looked at the production costs and have both concluded that the production cost will increase over that which is currently in the production cap.

    The numbers will vary according to those estimates, one being $2 billion over and another being $7 billion over.

    We are in the process now of looking at that program. There is a Defense Acquisition Board which I will chair coming up in August that is going to have to resolve what those production costs are going to be.

    Mr. GIBBONS. Well, Mr. Secretary, it yields to the premise that there is an understanding or a willingness to undertake a consideration that the production cap should also be either amended or eliminated; is that what you are saying?

    Mr. ALDRIDGE. Yes, sir. It is no longer truthful that we can bring that program with those numbers in at those costs, and we need to go and make a review of that, come up with a conclusion, that is what we think the airplane is really going to cost, and the program, and present that program to the Congress.
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    Mr. GIBBONS. And when do you expect the low rate production schedule to begin?

    Mr. ALDRIDGE. It will begin shortly after the Defense Acquisition Board (DAB), which I believe is scheduled now in the first week or so in August.

    Mr. GIBBONS. Okay. Looking at the—

    Mr. ALDRIDGE. That is under the assumption that we can come to close on all of those issues that we have.

    Mr. GIBBONS. Looking at the Aerospace Expeditionary Force structure that is going on and the replacement that the F–22 is supposed to occur for the F–15 and 16—or F–15 anyway, what is the total number? I mean, the 339 is sort of a short-range goal. What is the total number of F–22s and the total buyout range that you expect us to fund?

    Mr. ALDRIDGE. Well, we have in the program now I believe it is 339. But part of the QDR review is the forestructure analysis that has to be done relative to where we want our forces to go in the future. That has not been completed. That is ongoing now. There is a requirement for the QDR to be completed and submitted to Congress by the 30th of September,and at that time we hope to have an assessment of what is the total buy that we really want, whether 339 is a correct number or not. We will be ready to discuss that with Congress at that point.
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    Now, that is an issue that is really a longer range issue. The budget that is before the Congress really is not affected by that longer range number other than what the total cost would be a basic—for the program depending on the number that we buy.

    Mr. GIBBONS. My expectations are that that number would go up dramatically. Because when you start looking at the replacement squadrons, replacement units for that, I think that you are looking at somewhere close to 750 of them instead of 339. And I think that is realistic.

    Mr. ALDRIDGE. I have heard those numbers being used, but I can't tell you if that is the right number or not.

    Mr. GIBBONS. Somewhat—

    Mr. ALDRIDGE. General Plummer, do you want to make any comments?

    General PLUMMER. If I may.

    With regard to the EMD cap, the Air Force fully concurs with the statement that the cap has served a useful purpose. But we are 95 percent complete now with the engineering and manufacturing development phase. We need to fully test this aircraft before we enter it into the DIOT&E phase which will be coming up in 2004.

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    In order to do that and provide the fullup aircraft to the testers and the warfighter, we need to extend the EMD phase a short while longer, which would in fact require additional funding beyond the cap. We fully support that.

    With regard to the production cost cap, as Mr. Aldridch has said, we are different in the Air Force cost position and the OSD cost position. We hope to be able to bring that one to a resolution in time to be able to get the aircraft into LRIP. And the reason that I say that is because we have been trying to get into low rate production since 1999.

    One of the problems we have got with cost increase and production is a lack of confidence or a loss of confidence in the vendor base, which comprises 60 percent of the cost of this aircraft. The vendors are unwilling to upfront commit themselves to the kinds of cost-saving investment that is necessary to build out 339 of these aircraft over the life of the program without some assurance that there is going to be a 339-aircraft program.

    We have seen cost escalation, and they are part of the program as a result of that. So it is imperative that we get this aircraft into production.

    Mr. GIBBONS. Well, let me ask the question. How much is included in the 2002 request for production cost reduction plans?

    General PLUMMER. We had $65 million already in there. We are asking for another $85 million. In fact, as you noticed on the P–DOX that we submitted, we asked for 13 as opposed to 16 aircraft. Of that reduction in cost or in money, $85 million would be added to the production cost reduction problem.
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    Mr. GIBBONS. Is this a one-time down payment?

    General PLUMMER. No, sir. We intend to fund those at a rate which they can be accepted and fed into the production line. Obviously, the earlier we get them in the better, because then we can benefit on the savings throughout more aircraft. So we want to get as many in upfront as we can. But we anticipate this war on costs, if you will, to go on throughout the life of the program.

     Mr. ALDRIDGE. Mr. Gibbons, just one comment. I did have a chance to visit the production at Robins Air Force Base or Dobbins Air Force base just a couple of weeks ago. The airplane is performing magnificently. There are no issues that we can find regarding the performance of the aircraft in terms of its observability or super cruise. In fact it is doing very well.

    So the issues are not around performance, it is making sure we have sufficient testing of that performance and we have the proper costing of the program. Those are the two issues.

    Mr. GIBBONS. It seems to me in the past the big issue was the canopy structure, the strength of the canopy to withstand super cruise. Have they solved that problem with the canopy?

    General PLUMMER. Yes, they have. We have worked very closely with the manufacturer. We have resolved the issues with the canopy. It was not necessarily the—the concern was the super cruise, as it was with the drilling of the bolt holes and being able to ensure that the canopy had the structural margin required for a bird strike at high speed and those type of things.
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    We had some initial problems, as you are aware. Those have been fixed. We don't have a problem with canopies today.

    Mr. GIBBONS. There is discussion about downgrading the radar. I would imagine—is that still on the boards today?

    General PLUMMER. There is no program that I am aware of about downgrading the radar.

    Mr. GIBBONS. Okay. I think I read that somewhere. I may be wrong, but there was some talk about downgrading the radar.

    General PLUMMER. I will go back and research that. If there is I will get back to you. But the radar is performing flawlessly. It is doing very, very well, and we have no intention to downgrade the radar.

    Mr. GIBBONS. Thank you, Mr. Chairman.

    Mr. HUNTER. Okay. I thank the gentleman. Mr. Taylor.

    Mr. TAYLOR. Thank you, Mr. Secretary.

    I have a question regarding the Army's Shadow Unmanned Aerial Vehicle. You want to respond to that, tell me where that stands?
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    General KERN. Yes, sir. The Shadow is a—the TUAV, Tactical Unmanned Aerial Vehicle, which we are doing initial testing on today. We had started some operational testing and found some issues and have returned to development test back at Fort Wachuka. It has been back and flying, and we have got about 18 more hours on the aircraft right now. We expect to bring it back to operational test at Fort Hood this fall and move on into procurement as our budget request asked for it.

    This is a critical piece of the transformed Army, to get unmanned aerial systems into our capability. It is an area which we are behind in terms of capabilities around the world today and one which we are flying only the Hunter, which is over in Macedonia today and has been performing reconnaissance duty with the Predator for the last few years.

    Mr. HUNTER. A very fine system, I might add.

    General KERN. Yes, sir. I won't go back into that one.

    The TUAV becomes a part of our brigade reconnaissance capability and will be fielded with both our current force and the interim forces which we are working on to undertest right now up at Fort Lewis Washington. So it is one which we have requests for initial procurement, low rate production, in which we are proceeding ahead full speed.

    Mr. TAYLOR. Just for my information, the Shadow is—how large is it, say, compared to a Predator?

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    General KERN. It is about a third of size of the Predator. It is made for brigade. It is to move with the ground brigades and our current operations and be deployed from unprepared airfields. It has an autolaunch and an autorecovery capability. It is flown mostly in a reconnaissance but can also be used in a targeting mode and has both a day and night capability, a much shorter range capability than the Predator out to about 200 kilometers and four hours of duration.

    Mr. TAYLOR. Mr. Secretary, last question. I know you want to leave. The Mississippi State Health Department, the doctor in charge of it, who is also a member I believe of the either Army Reserve or National Guard, recently wrote me with his concerns; in particular of our Nation's vulnerability to biological attack, and in particular with smallpox, with your and my generation being some of the last Americans who were vaccinated as children against smallpox, and the fear that the Soviet Union had an active program and that that program might somehow resurface in the wrong hands. So I am going to lay down a scenario, and you tell me if we are prepared to respond.

    One of our carrier groups has been in the Mediterranean or possibly in the Persian Gulf, a successful strike against a terrorist organization. As a big welcome home ceremony at Norfolk, two or three ships tied up, sailors out on the deck, families out on the pier, and as often happens when a crowd is gathered, a crop duster towing a ''welcome home'' sign or ''eat at Joe's'' sign circling the crowd, and I guess the upwind side of the crowd, the people noticed that something has come out of the crop duster, not quite so sure what it is.

    A, do we have the capabilities on the scene at places like Norfolk where there is a large crowd to test what has just come out of that vehicle? And, B, do you feel like our bases are adequately equipped with chem-bio suits for some sort of a ration force to get there and at least try to stabilize the situation, maybe isolate the people who were exposed to this, before they return to their respective homes and possibly spread some type of a plague?
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    Mr. ALDRIDGE. The answer is we are not prepared to respond to that. We have various programs underway. In fact, it is a broader issue of being able to respond to weapons of mass destruction of any type, chemical, biological or nuclear. We don't have a good detection capability to detect what is the problem. We don't have a good capability to assess whether such a thing is starting to occur across the country. All we have is somebody gets sick in one hospital, and if somebody gets sick in another hospital, they have the same symptoms. It is something going on that is indicating a trend that something has been done, some chemical, biological weapon has been introduced.

    We don't have that. We have programs that we are recommending in the budget to begin that process. And it is not necessarily just a Department of Defense problem. The Federal Air Emergency Management Agency, the Center for Disease Control, the Department of Justice, the FBI, the CIA, we are just in the process of beginning to work the interagency problems. We know that the Department of Defense is going to be a major player in that. And as a matter of fact, I talked to Secretary Rumsfeld and he was talking to the President about this kind of a problem. And Secretary Rumsfeld said, Mr. President, when something like that happens, you are going to get the first phone call and I am going to get the second; and we need to get ourselves in planning to be able to, one, detect, to assess, to respond. And then they have a problem called consequence management: How do you manage this process, how do you keep crowd control, how do you avoid everybody running to the hospital to try to get vaccinations and things of that nature?

    So it is a major problem, and I think we have to address it, but it is not just the Department of Defense. It is a national problem we have to address.
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    Mr. TAYLOR. With all due respect, Mr. Secretary, I don't see anyone out there with the capability other than the Department of Defense. I served State government. It is my understanding that probably 35 out of the 50 States are experiencing a shortfall in their revenues this year, so I certainly can't see any of them jumping in to assume this responsibility.

    Even if the State of Virginia which gets, last time I checked, $60-plus billion worth of Federal spending, I doubt that they have the capability of responding for something like this, even though the military is as important to them as it is to us in Mississippi. And I would certainly encourage you, as I hopefully have done so on shipbuilding, to address what I fear is an even more likely threat to the Nation than the very strong threat outlined by my good friend from the State of Maryland with Theater Missile Defense (TMD).

    Mr. ALDRIDGE. I will just say we do have some limited capabilities, but it is not an integrated response as we would all like to have. Maybe you ought to ask some of the members—I know the Army is involved very heavily in this and the Marine Corps is involved with it. Maybe they can make a few comments.

    General KERN. Mr. Taylor, I think you know we have developed some joint bio-chem detection devices which we do work, which we deploy. I think your question is, should we take that same type of capability and deploy them inside the Continental United States and be prepared here as well? And I think that is a question which deserves further analysis by all of us, because those funds, as pointed out by Mr. Aldridge, are in the Defense Department right now and not focused on the facilities, as you have noted. And so that is an area which jointly we work with FEMA.
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    We have had discussions with the National Security Council, and we have had discussions with our Army National Guard, and we jointly share the response capability with the Marine Corps within the United States. And we have practiced those efforts, and, as noted, shown some real shortcomings around the country. We have continued to work them, with the first responders inside our boundaries, particularly through our National Guard efforts, and in each of those areas, while we have the capability, we do not have that equipment distributed around the country.

    Mr. TAYLOR. Mr. Secretary, just one last thought. A hurricane is a natural disaster. A flood, an earthquake, those are natural disasters. Someone spraying anthrax, smallpox, on a crowd of Americans is an attack on the people of the United States. That is the Department of Defense's function and I can't see how anyone could come to any other conclusion.

    Mr. ALDRIDGE. That is true, but it is not—the Department of Defense cannot do police-type functions that would be required for some of the responses.

    Mr. TAYLOR. I am talking about very simple things. A, a master at arms unit that is sent out to try to control the crowd; do we have suits to ensure that they are at least safe? Or are they, too, in effect sent on a suicide mission, they are going to pick up the same plague as everyone else? I think that is just common sense.

    Mr. ALDRIDGE. Well, the first—

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    Mr. TAYLOR. B, is there a plan in place to quarantine that crowd until we find out whether or not they have actually been subject to a prank or is someone trying to spread a plague around the United States of America? Do we even have the laws in place that would allow that base commander, based upon what he deems is a threat, to detain that crowd until someone makes a determination?

    And, C, someone out there, I have got to believe, has the equipment that can identify what was sprayed and we find out whether it was kerosene or Roundup or smallpox. And I think for the immediate future, that is the most likely threat that this Nation faces. I am not talking 5, 10 years from now. I am talking in the next 18 months. I think that is the—we saw how much damage one Timothy McVeigh could do. What if Timothy McVeigh had smallpox? What if he had anthrax?

    Mr. ALDRIDGE. We have, as you know, a program underway of anthrax vaccinations, which receives a lot of controversy.

    Mr. TAYLOR. I have taken the shots.

    Mr. ALDRIDGE. Have you?

    Mr. TAYLOR. And so I do believe, for the same reason, I think the Navy ought to take the base commander from Roosevelt Roads down to Vieques. It is one thing to say it is safe. It is another thing to do it.And I have found the parents in my district don't ask twice if I think it is safe when I tell them I have taken the shots.

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    So I do think it is a threat, and I would really hope that—I hope to see you again next spring, as we have another round of these hearings, and I do hope you will have a stronger response on this subject next spring. I know you are new to the job.

    Mr. ALDRIDGE. I know the Marine Corps has a response team.

    General NYLAND. Sir, if I might add. Absolutely, we have the Chemical Biological Response Incident force, our CBRI team, which we recently moved up here to Indian Head. They do have an initial capability in many of those areas in which you spoke. They come with their own security. They have a detection capability. They have a reach-back capability to the top scientists and doctors in the Nation. They have been deployed, high visibility events here at Capitol Hill, at the Big Eight summit and other places. So it is limited, but it is a start and it is an initial capability that is available today to be used either in Continental United States (CONUS) or outside CONUS.

    Mr. HUNTER. I thank the gentleman. Let me make just one fast follow-up, and that is—ask you this question. Obviously part of Gene's question, which was kind of intriguing—I was following him as he was talking about the nice plane that was going to be pulling the banners saying ''Thank you, Joe,'' and then it disperses some type of a toxin which could make a lot of people sick.

    The same—we have had a couple of hearings with the Terrorism Panel, chaired by Mr. Saxton, where the same scenario for Washington, D.C. Had been laid out, where a boat goes down the Potomac River, does kind of the same thing. Detection obviously is very, very important—detection capability. This might be an area where we want to spend a little added focus.
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    And so my first question, General Nyland, would be: Do we have a system with all this apparatus that the Marines have, do we have a system that gives us a quick detection of a wide variety of toxins or chemicals?

    General NYLAND. Sir, we have some detection capability. But I would like to take that for the record so I can give you something that is accurate and exactly what they can provide.

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

    Mr. HUNTER. Okay. Anybody else want to comment?

    Mr. ALDRIDGE. Also, Mr. Chairman, there are some programs, if you go into DARPA, looking at advanced detection systems, as well as looking also at advanced vaccines that could be able to be used against this kind of stuff.

    Mr. HUNTER. We have talked to them to some degree on this issue, and right now there is—my recollection of our discussions is that there is not a lot that is immediate, which is a little disturbing. So that may be an area where we want to put quite a bit of focus.

    Mr. ALDRIDGE. In fact, we did this year double the amount of money that went into vaccine research, into DARPA.

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    Mr. HUNTER. Oh, is that right?

    Mr. ALDRIDGE. Yes, sir. Still not a lot, but doubling is still—it is in the $10 million per year range rather than in the $4 million dollar per year range.

    Mr. HUNTER. That is very important. And so let us really work on that this year together. And I know Mr. Taylor wants to work that issue, too, so let us do that.

    We were talking about making the production of F–22s a little more efficient, and the efficiency expenditures that are being made. And I would just—thought about applying the same problem—or the same focus on the missile defense program. We have looked at some of the components of our testing program in a given test, and you kind of add up the elements of the costs that some of our very able staff have done—and looking at Mr. Carlin sitting in the back, looking around saying, at wasn't me that did that—but we added these elements of cost, and the total price tag seems to be higher than the sum of the parts.

    And one thing that struck us is testing is expensive, and I think to some degree, that is unavoidable. To some degree, it may be somewhat avoidable in that we may be able to render these tests more efficient. The tests themselves are now a big cost driver in the missile defense program.

    So, a question for Secretary Aldridge and General Franklin. Do we have a panel, a tiger team, a leadership element that is trying to drive down—that is really scrubbing these test costs and trying to drive down the costs of testing?
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    Mr. ALDRIDGE. I will answer it in a way that says that we try to do that. But unfortunately, in many cases because of the interest of the test community, they try to drive us to more and more sophisticated tests, which causes more costs.

    I think you were focused on the missile defense side, and I will just ask General Franklin to address that part of it.

    General FRANKLIN. Well, we certainly take into account the cost of these tests because they are indeed very expensive, but we do need to do those tests because we need to expand the envelope and see what these systems can do.

    Mr. HUNTER. See, I agree with that and I agree with more testing and robust testing, but I don't think we should take that as an answer from the testing industry that by God, because we are necessary, we are going to give you a lot of gold watches. If there are ways to make them cheaper, we can make more of them.

    General FRANKLIN. Sir, if I could add, the flight test itself is a combination of other tests that have happened before that.

    Mr. HUNTER. Certainly.

    General FRANKLIN. And certainly the way you can take costs out of these tests is to do a lot of ground simulation, a lot of hardware simulation. As an example, Patriot PAC–3, the final tests are very successful, and so there is a lot that goes into the bid-up of these tests but these are absolutely necessary.
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    Mr. HUNTER. I understand. But my question is, all that being said, do we have a leadership element that is looking over, that is scrubbing these tests and saying, maybe either the range leasing or the infrastructure or the—you know, one question that was asked is you have got this little standing army that does these tests at the test sites, right? So that is a fixed overhead that we are paying. Can we better utilize that standing army? Can we reduce it? Can we make more of a seasonal situation out of this, where we are really—we utilize it very intensely for a period of time during the year and then maybe send a lot of the folks home?

    Is there a way to make these tests cheaper? Has anybody looked at this, because this is just as important as making F–22s a little cheaper so that—we are all afraid of giving folks sticker shock with the F–22. We may have the same problem with TNB testing.

    Mr. ALDRIDGE. Mr. Chairman, we can always do better in this. But I would say that—and modeling and simulation, I believe, is one of the solutions to getting these costs down. Now, of course you have to validate that the models and simulations actually represent the real world. That is one thing.

    But I think there is a natural tension that exists within the program manager and the testing community. The program manager has a certain amount of money that he or she has to make a program—bring a program on board as quickly as possible, with as much confidence; but his tendency is if I don't need to do this test, I will not do it. Or, I can do this test cheaper, I will do it that way.The testing community, of course, has the other view, and so this tension between the program manager and the testing is there.
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    So I think we come eventually to the right answer. The testing community is satisfied that the test is being done in a thorough way. The program manager is compromised and says, okay, well, I am going to come up to the test program that the testing community wants me to perform. So I think we end up at the right place, because of the natural tension that exists between the community.

    Mr. HUNTER. Okay. That being the case, notwithstanding that fact, I would still like to see us—for example, on simulation, our national laboratories have a lot of simulation capability. I wonder if they are being fully utilized. And they are paid for by the taxpayer, and they may be able to—I am talking about our national labs, Livermore, Los Alamos, Sandia. Heretofore, we haven't used them much in the missile defense program, and we may be able to accomplish some efficiencies by utilizing them to some degree. I don't even know if we have had some real good discussions with them, and I would hope maybe you could work with Mr. Carlin who is sitting in the back of the room here on our staff, and let us see if there are any prospects for making these tests any more efficient.

    So if we just scrubbed them, if cost was a driver here, understanding you still want them to be rigorous—incidentally, the Republican Conference is meeting—if you still want these things to be rigorous but you want them to be as inexpensive as possible, with substance, so you can have more of them, I think we ought to have some way of scrubbing those to see if there is a way to get more bang for the buck.

    General FRANKLIN. Yes, sir.

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    Mr. HUNTER. If there is a way to go on that.

    Mr. BARTLETT. Mr. Chairman.

    Mr. HUNTER. Yes. Mr. Bartlett.

    Mr. BARTLETT. I would just like to note, they concur with my colleague from Mississippi that chem-biotech is far more probable than a nuclear EMP laydown, but by definition, it is going to be regional, it is not going to incapacitate us as a country.

    And I would just like to close with what I think is some appropriate scripture: This also you should have done and not to have left the other undone.

    Mr. HUNTER. Mr. Bartlett, if you would—do you have any more questions you would like to ask?

    Mr. BARTLETT. That is it. Thank you, sir.

    Mr. HUNTER. Let me ask you a couple of questions about B–1 deactivation. And, General Plummer, maybe you can address this. But we understand their capability rate has fallen fairly dramatically, mission-capable rates down, cannibalization is up, and we understand the answer to that is deactivating about a third of the fleet to be able to get the rest of it up. It is kind of like a farmer that has got six combines and he is going to use two of them for parts so he can get the others in the field.

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    Tell us a little bit about the thinking behind this thing, this deactivation program.

    General PLUMMER. Well, as we have looked with the Department toward what kinds of things we can do to begin the process of transformation, if you will, to provide more capability to the warfighter, it became obvious to us in the very beginning that the B–1 was one area in which we had an opportunity to perhaps make some ground. We have got 93 B–1s. We have got over a $2 billion backlog in the types of things we need to do as we complete the conversion from the nuclear to the conventional B–1 in terms of conventional munitions upgrade, defensive suppression upgrade, and those types of things to the B–1. Over $2 billion—that is in the FYDP that is unfunded that we need to do.

    So what we have got is 93 B–1s that have some marginal capability, if you will. If we look back at the history of usage of the B–1 in combat, we used the B–1 for the very first time in Operation Desert Fox in December of 1998. We used four of them. We employed only five of them in Kosovo, so we have actually put nine of them into combat over the entire life of the weapons system. And to be truthful with you, we couldn't put the aircraft as much in harm's way as we did the B–52, quite frankly. We are able to fly the B–52 over Kosovo deeper into the area than we were the B–1.

    So with the marginal capability there—and without the money to make it capable—it was our reasoning that we would take 33 of those aircraft and take them out of service, use that money that we would save to help buy down that big deficit that we have in making the fleet more capable, so in the end game, we would have more capability for the warfighter than we have in 93 airplanes. That, in fact, was the rationale.
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    Mr. HUNTER. Okay. Admiral, the TAC–E. You folks planned to procure initially three of them in the 2002 budget. You have come down to one. Could you tell us a little bit about why you deleted the two ships, if you have any revised procurement schedule, and did you ever consider the option of going with two?

    Admiral MCGINN. Yes, sir. We came down principally because of affordability reasons. It is symptomatic of the problem you spoke of earlier in terms of our overall shipbuilding account, and we felt that the more compelling needs were in the ships that were left in the shipbuilding account, Mr. Hunter, and that is why we came down from three to one.

    We do have an existing need, a future need to get back up on TAC–E production, and it is our intention to carefully review that and come up with a plan for our program review in 2003. And that is reflective of not only that existing need that we have, but also with the results of the ongoing shipbuilding study that Secretary Aldridge referred to before.

    Mr. HUNTER. Okay. Why don't you tell us a little bit about the LPD–17 program?

    Admiral MCGINN. The LPD–17 program has slipped, in aggregate, two years. This is principally because of problems with the digital design process, the production process for the lead ship of the class. We have an existing need and a compelling need to recapitalize our LPD–4 class of ships to the level of 12 total LPD–17s, and it is our intention to carry that plan out.
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    There has been progress in addressing the design and production issues in the LPD–17. There has been a lot of work done by the shipbuilder and by the government to resolve those, and we anticipate coming in in future budgets with requests that will get us back up on production to carry out through the life of the program to that total buy of 12 ships.

    Mr. HUNTER. Let me ask you about something else. It is Navy-related, with all of the discussion about Vieques that has come up, but it goes to some thoughts on efficiencies. We still do live-fire testing. Obviously that has been well illustrated in the Vieques description. What do those rounds cost?

    Admiral MCGINN. It depends on the type of round. For example, we use the standard gravity-fall type of bomb, Mark 80 series, 500-pound 82s, or 1,000-pound 83s, and those cost about anywhere from 1,000 to $1,500 a round.

    Mr. HUNTER. Okay. Now, that is for—you say that is for bombs or for artillery?

    Admiral MCGINN. Those are for the aircraft drop bombs.

    Mr. HUNTER. Okay. Artillery, what are we looking at?

    Admiral MCGINN. I will have to get back to you. Perhaps General Nyland could—

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    Mr. HUNTER. Any general ranges, General?

    General NYLAND. Sir, rather than give you a number off the top of my head, I would rather be accurate on that, because it varies, and I would like to take that for the record.

    Mr. HUNTER. Okay. My question is this, that I would like you to consider maybe getting back with us. Simply one thing that occurs to you when you are going through the Vieques thing is, whereas you do need to have the live-fire component, you have got your combined arms moving in for realism, you don't necessarily have to have a round that goes off and makes a big crater in the same sense that we use when we are doing—firing maneuvers in training, in lots of cases we use blank rounds. They still have the sound, but they don't necessarily have the impact.

    I guess my question is, is there a cheaper alternative to a full-up live crater-blowing round, both in artillery and bombs for training that would save us some money? Vieques notwithstanding.

    General NYLAND. In fact, we do drop—in the bombs I am familiar with, many of what we drop are either sand filled or concrete filled, no explosives. I cannot tell you—

    Mr. HUNTER. Are those the $1,000 rounds or the $1,500 rounds?

    General NYLAND. I hope they are the $500 dollar rounds, sir, but I would have to research that. But we do in fact use an awful lot of what we refer to as inert ordnance.
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    Mr. HUNTER. I understand. But my question is, if you go to live rounds where you feel it is important to have so-called live rounds, could you have a lighter live round? That is, one that may go pop, throw a little smoke up, whatever, and still give the sensation to the combined arms team that you are working under a live-fire condition but be a lot cheaper? That is what I—I presume it costs a lot of money to make these full-up crater blowers?

    Admiral MCGINN. Yes, sir, and we use them sparingly. In fact in assessing our readiness—I will speak to principally the aviation part of it—the requirement to actually drop live ordnance is higher than our ability to afford that level. The compelling need for live fire is, of course, to be able to demonstrate end to end; right from the magazine to blowing up and making that crater or hitting that target. And you have to do a certain amount of that.

    But there is a lot of the training that gets done, in terms of artillery from ships and from land artillery as well as from air-dropped ordnance, that is done with inert rounds that General Nyland referred to. In the case of laser-guided bombs, instead of putting the very expensive laser-guided bomb kits and dropping a bunch of those, we have a much less expensive laser-guided training round. We use the practice bombs, for example, with free fall, called Mark 76, with small smoke-filled spotting charges in them and a flare at night. So there is a whole array of training that gets done with much less expensive training rounds.

    Mr. HUNTER. Okay, I understand that. But what I am saying is I understand there is a certain amount of training that is done with full-up live rounds.
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    Admiral MCGINN. Yes, sir.

    Mr. HUNTER. The question is, for those shots where you are using the big crater blowers, could you come down with something less expensive, save some money? You know, you might want to do a little R&D project, come up with something that costs maybe 20 or 30 percent as much, and utilize them. Not just for the cost, but you also—you know, from what I have seen, we are 50 percent short of precision munitions almost across the board. So anyplace where you can keep from having a live round being utilized would probably be beneficial.

    Mr. MCGINN. Yes, sir.

    Mr. HUNTER. Okay. If we could just get a quick report back on this, that would be great.

    Admiral MCGINN. Yes, sir.

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

    Mr. HUNTER. And while we are at it, Admiral McGinn, you get the easy ones here, can you talk on—we have got this pending merger of—or acquisition by General Dynamics (GD) of Newport News and the melding of the submarine production base that is a function of that. What do you think? Are we going to be—

    Mr. ALDRIDGE. Let me take that off the Navy's back.
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    Mr. HUNTER. Admiral McGinn is going to buy you a cold one, believe me.

    Mr. ALDRIDGE. I am going to put it on the tab, too. Now, that responsibility for doing that assessment lies in my office. It is done in a very thorough, complete manner. We are not only looking at the GD in Newport News, we are also looking at the Northrop Grumman, and there is a very methodical, comprehensive process that goes on, a complete objectivity. That process is currently underway. The timing is not necessarily completely in the control of the government, because the contractors actually decide when they have provided sufficient information for the government to make a decision. And when that date is established, then there is a 10-day running clock that has to be done inside. That point hasn't started yet, but we are looking toward having a conclusion about that merger sometime toward the end of August.

    Mr. HUNTER. Listen, when you have—when Admiral McGinn buys you that cold beer, you can say, hey, that is okay; I didn't tell him a damn thing anyway in my answer. That was one of the great stall jobs of all time.

    Mr. ALDRIDGE. He still owes me one. But—and I can't—I can't tell you, because I honestly—that analysis is ongoing, and I have—it is.

    Mr. HUNTER. Sure. I understand. But here is a question I got for you. It is on the substance. We want to make sure that we insert new technology into the subs, and at one point a couple years ago, we were going to do competitive prototyping; while we had this breathing space, we were going to try to have both your yards do that. That got reduced down to the teaming arrangement, and now we are going to have this melding of the yards.
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    I just want to ask—maybe ask you for your personal opinion and, Admiral McGinn, for your personal opinion. Financial facts aside, do you think that you can have the warfighting capability, that is, the insertion, the R&D insertion of technology that is going to be necessary to evolve these boats into the best they can possibly be with one owner? That is my question. That is a substantive warfighter's question.

    Mr. ALDRIDGE. Yes, sir, I think we can. We are basically doing that with the carrier now. We have got one—one contractor. The contractor—

    Mr. HUNTER. You are requesting for some carrier overrun money, too, in this budget, aren't you?

    Mr. ALDRIDGE. I hope not—that it will be that much. But we are looking at a new carrier concept—

    Mr. HUNTER. I understand.

    Mr. ALDRIDGE.—and that is being done within the single contractor. The contractor has all the incentive in the world to produce new ideas that can be reintroduced in the submarine, and I think certainly the Navy is going to be watching it to make sure that that new technology and new warfighting capabilities are going to be achieved.

    Mr. HUNTER. Has the chance of having maybe some external teams, technology insertion teams that work—whereas you have got maybe a single builder, you might have some of the good innovators in the country in certain aspects?
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    Admiral MCGINN. Yes, sir. In fact, we do that. We do it for all classes of ships, including submarines. The technology, advanced technology base, as well as the industrial base that goes into the construction of the submarine is, as you know, fairly broad. So my personal opinion is that the potential cost savings may be the driving factor, more so in making the decision—more so than concerns about the ability to put the best warfighting technology into the boats that are produced.

    Mr. ALDRIDGE. And there is electronics, obviously, that get modernized in the boat, and then the weapons systems that go on them are of course very important as well.

    Mr. HUNTER. Thank you for that question. As we walk that one down the line, let us see what we can do. The C–17, we have got about 15. We had 15 last year. The mobility study concluded that the current air fleet is inadequate. We have had that—basically that position for several years. The chairman of the Joint Chiefs, the service chiefs, theater commanders, all support about 54–1/2 million ton miles per day as a minimum moderate risk lift capability. But our completes right now—in plan fleets only support about 48.3.

    As a result—I guess these questions are good questions here. Does the Department plan to buy more C–17s beyond the 134 you now plan? We have been informed by the Air Force there are only 12 aircraft in the 2003 budget, and is the 228 million sufficient to provide long lead components for these aircraft? And to save unit costs and meet mobility requirements, is a 15-aircraft procurement under consideration for 2003? And if that is the case, what is the advance procurement increase that is necessary if you did move from a 13 2003 buy to a 15 2003 buy?
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    Mr. ALDRIDGE. Let me start off just in a general sense and then I will turn it over to General Plummer to be specific. We need more airlift, there is no doubt. There are several ways to get it, improving the C–5 and buying more C–17s. I can't tell you what the right answer is yet. That is under review. It is certainly premature at this point to say what is in the fiscal year 2003 budget, because none of us know. We are going through that process as part of the QDR. The results of the QDR will then be fed into the budget process that will go on through this winter and be delivered to Congress early next year.

    Every study we have ever done has said more airlifts are needed and we have got to figure out how to solve the problem. And with that, I will turn it over to General Plummer to see if he can be specific.

    General PLUMMER. With regard to the numbers that you mentioned, the 12 aircraft that we are currently proposing to buy in 2003, the 228 million that you referenced is sufficient money for the long lead for those aircraft. However, if we were to plus that up to five aircraft, it is not sufficient. It would require another $182 million in long lead to make the 15 aircraft buy for 2003.

    Mr. HUNTER. This is one final question for Mr. Thompson. I hope you are happy. Does the budget request support a follow-on multiyear procurement contract, and if not, as Mr. Thompson says, why?

    Mr. ALDRIDGE. I don't believe it does, but I will let General Plummer be specific.
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    General PLUMMER. It does not, but specifically—

    Mr. HUNTER. Why? Was that good, Steve? Okay.

    General PLUMMER. And ''why'' is the hard part of the answer here. It all comes down to a question of the amount of money that is in the budget and the priorities that the Department has assigned to that money. As you know, we have the multiyear procurement for 80 aircraft which expires, actually runs out. We will purchase 137 total aircraft. That is the total buy. We have three additional added VOSDs, PBD last year. So it brought the total up to 137 as opposed to 134. We will buy the last one of those in 2005, and as you have pointed out, not an economic; buy a quantity.

    As we get to the bottom of the study that Mr. Aldridge mentioned with regard to MRS–05 and the outsized and oversized analysis of alternative, when the QDR report is out, we will have the answer at that point as to what mix and match of additional C–17s vice modernization of other platforms that are necessary to meet the 54.5 million ton mile per day requirement.

    Mr. HUNTER. Okay. Joint strike fighter, we are ready to go into EMD. Is that right?

    Mr. ALDRIDGE. The selection of the competition will occur in October, with EMD starting very soon thereafter, yes.

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    Mr. HUNTER. Okay. Well, Mr. Secretary and gentlemen, thanks to all of you. Let me ask your staff folks here if they have got any other questions that they would like to ask here. You okay? Okay. Mr. Thompson is happy with that.

    Mr. ALDRIDGE. He wouldn't dare ask me a question.

    Mr. HUNTER. He is totally happy. Thank you for being with us for a long period of time. Sorry for the interruptions we did have, and is there anything else we would like to—and we may submit a few more questions for the record if we could.

    And, General Franklin, one thing we do need to know, and I know Steve is working on this, is to get a real good scrub on a little information on the tests, the NMD tests that are going to take place on Saturday. We would like to get as much as you have got on that.

    General FRANKLIN. Yes, sir. We will provide that.

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

    Mr. HUNTER. Thank you. And General Kern, thank you for carrying the American flag here strongly, and I will report to them that you gave up on Crusader. Anything to help the Navy with their funding problem. And, General Nyland, thank you—

    General KERN. Do you want to have Private Kern report to you later?

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    Mr. HUNTER. Yes.

    General Plummer, thank you very much. And Admiral McGinn, appreciate you. And Mr. Secretary, you have got a great team. We are going to have to do more with less, but that is our job.

    Mr. ALDRIDGE. Thank you, sir.

    Mr. HUNTER. Thank you.

    [Whereupon, at 4:35 p.m., the subcommittee was adjourned.]


July 12, 2001

[The Appendix is pending.]