Segment 2 Of 3     Previous Hearing Segment(1)   Next Hearing Segment(3)

SPEAKERS       CONTENTS       INSERTS    Tables

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DEPARTMENT OF DEFENSE MODERNIZATION PROGRAMS FOR FISCAL YEAR 1999

House of Representatives, Committee on National Security, Military Procurement Subcommittee, Meeting Jointly With Military Research and Development Subcommittee, Washington, DC, Thursday, February 26, 1998.

    The subcommittee met, pursuant to notice, at 2:12 p.m., in room 2118, Rayburn House Office Building, Hon. Curt Weldon (chairman of the Subcommittee on Military Research and Development) and Duncan Hunter (chairman of the Subcommittee on Military Procurement) presiding.

OPENING STATEMENT OF HON. CURT WELDON, A REPRESENTATIVE FROM PENNSYLVANIA, CHAIRMAN, MILITARY RESEARCH AND DEVELOPMENT SUBCOMMITTEE

    Mr. WELDON [presiding]. The subcommittees will come to order. Let me start by offering my apologies for the delay. There was a personnel subcommittee hearing that went over, and the staff has been trying to, as quickly as possible, change the room over. I think we are about ready to proceed now, but I apologize for the delay.

    This afternoon we will hold a joint hearing of the Research and Development and Procurement Subcommittees to examine Department of Defense modernization plans in the fiscal year 1999 Defense budget request.

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    As we did last year, my good friend Duncan Hunter and I plan to share the chair while holding a series of joint hearings of these two subcommittees during the coming weeks. My ranking member and good friend Owen Pickett and I look forward to working with the chairman of the Procurement Subcommittee and his ranking member and good friend, Norm Sisisky, and the rest of our colleagues on the Procurement Subcommittee.

    The purpose of today's hearing will be to examine a broad range of modernization programs and initiatives which fall under the direct responsibility of Office of the Security of Defense leadership.

    Last year these two subcommittees held a number of hearings covering a wide variety of important topics and worked during the conference with the Senate to establish with legislation and fund adjustments to address many of the issues we identified. Because of limitations imposed by this year's markup schedule and busy calendar of committee activities, we will not have the opportunity to hold a number of single-topic hearings.

    We will move very quickly during the next 6 weeks; however, in the rest of the year we will hold an aggressive series of hearings on specific issue areas and single-topic programs, some of which will be addressed today and in future hearings with the individual services.

    Today appearing before our two subcommittees, we are pleased to have Dr. Jasques Gansler, Under Secretary of Defense for Acquisition and Technology. He is accompanied by Lieutenant General Campbell from the office of the Chairman, Joint Chiefs of Staff, and Admiral West, Deputy Director of the Ballistic Missile Defense Organization.
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    While this committee addressed a number of major issues in the Defense budget request last year, we note the fiscal year 1999 budget is Secretary of Defense Bill Cohen's first budget and that it contains a number of important changes such as Quadrennial Defense Review adjustments and increases to modernization shortfall areas such as ballistic missile defense programs and ending the procurement holiday.

    While the fiscal year 1999 budget request shows signs of finally increasing an emphasis on correcting the disturbing 13-year decline in defense modernization, we still note that defense research and development is projected to decline by 14 percent over the next 5 years, a fact that I personally find extremely troubling.

    I want to point to all the members here today that today's hearing will be followed by at least three more joint sessions which will focus on each of the three service modernization programs and that we should take advantage of Dr. Gansler's presence today to address those programs and issues that OSD is directly responsible for. So, we are talking about the bigger picture across the service issues that we can hopefully focus on today.

    Dr. Gansler, again, we welcome and thank you, General Campbell and Admiral West for joining us. Before I turn the floor over to you, I would like to call upon Duncan Hunter, chairman of the Procurement Subcommittee for any opening remarks you may have. Mr. Hunter.

    [The prepared statement of Mr. Weldon can be found in the appendix on page 57.]

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OPENING STATEMENT OF HON. DUNCAN HUNTER, A REPRESENTATIVE FROM CALIFORNIA, CHAIRMAN, MILITARY PROCUREMENT SUBCOMMITTEE

    Mr. HUNTER. Thank you, my colleague, Curt, you've been a great partner in these joint hearings, and I think that we gain something by having research and development and procurement work together in this fashion.

    Dr. Gansler and General Campbell, thank you for being with us today. Dr. Gansler, after having declined 70 percent in real terms over the last 13 years, the Department's fiscal year 1999 procurement budget does grow a little bit in real terms compared to the amount enacted by Congress in 1998. However the growth in procurement is still not as substantial as you predicted last year, and it's actually about $12 billion under the President's own blueprint for this year, that he put together some 5 years ago.

    Beyond that, the forecast for fiscal year 2000 is an additional $9 billion below last year, and that's at an accumulative total of almost $5 billion that, according to your statement, has been shifted to the operating accounts to, and I quote, ''reduce the potential for resources migrating in the future and retaining much more sizeable or much more stable modernization funding profile in the years to come,'' unquote.

    I must profess that the logic of this action appears to counter the Quadrennial Defense Review's assertion that, and I quote them, ''the dividend from procurement reductions has been spent and modernization needs to rebound,'' unquote; but perhaps you can explain that, the difference in perspectives, today.
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    So, although the procurement accounts are expected to increase 29 percent by fiscal year 2003, this migration of funds which continues a pattern that has occurred year after year in this decade leads me to be very skeptical of such growth.

    Moreover, this predicted growth is based on assumed savings resulting from two additional base realignment and closure rounds as well as implementation of numerous acquisition reform initiatives, a plan which the National Defense Panel has referred to as ''risky.''

    I think if you try to get a take on the political attitude toward the future rounds of base closures in light of the last round, which I think most people feel was to some degree poisoned by politics, I think you've got to be very skeptical of future rounds being authorized by Congress.

    With that as a background, Dr. Gansler, I would like to both exhort and commend you as you settle into what has got to be one of the most, if not the most, difficult jobs in the Federal Government.

    First, your statement speaks eloquently to the fact that our future adversaries are more likely to use asymmetrical strategies against us than to try and to match us aircraft for aircraft, missile for missile, ship for ship, or tank for tank. As you note, they will likely be weapons of mass destruction, information warfare, and cruise and ballistic missiles.

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    You further point out that a recent Defense Science Board study warned that even a small adversary can present a nontraditional, military force as deadly and destructive as large conventional forces. And I think in that statement you are really preaching to the choir, with respect to members of this committee. I think we agree totally.

    So, why are you telling us who are aware of these possibilities instead of the American people? One criticism that I would have about the administration is that a lot of folks—in fact, I think the majority of the people in this country—don't realize we've had massive reductions in force structure since the first Desert Storm, and this administration has not sought, I think, to enlighten them, and many of us happen to believe there is not enough money in the Defense budget, and the continued migration of procurement funds to pay operating bills in recent months I think has further made this case.

    I do want to commend you for establishing the acquisition goals outlined in your statement, and while I'll not take the time to enumerate them because I am sure you will do so in your remarks, I want to applaud you for setting priorities up front and discussing them with us from the outset of your tenure.

    With these comments, let me welcome you back to the committee, and although we would have liked to have you appear before each subcommittee individually, I think this partnership of the Procurement and the Research & Development Subcommittee is very good and I think we'll be very productive.

    Before we begin I'd like to publicly welcome Norm Sisisky, our new ranking Democrat on the subcommittee, and Norm, I know we have a lot of common interests when it comes to the defense of the country, and I want you to know I look forward to your advice and counsel.
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    Mr. Chairman, with your leave, if Norm has a statement I'd love to give him an opportunity to make a statement.

    [The prepared statement of Mr. Hunter can be found in the appendix on page 59.]

    Mr. WELDON. I thank my good friend, Mr. Hunter, and I would like to, at this point in time, allow both Mr. Pickett, the distinguished ranking member of the Research & Development Subcommittee, and Mr. Sisisky, the distinguished ranking member of the Procurement Subcommittee, to make whatever comments that they would like.

STATEMENT OF HON. OWEN PICKETT, A REPRESENTATIVE FROM VIRGINIA, RANKING MEMBER, MILITARY RESEARCH AND DEVELOPMENT SUBCOMMITTEE

    Mr. PICKETT. Thank you, Mr. Chairman. My comments will be very brief. I want to welcome our witnesses here today, and we all know the challenge we have in getting our procurement account up to where it should be. It is going to take a while to get there, but I applaud our witnesses for the proposals they have for moving in that direction.

    At the same time, and I know Dr. Gansler and General Campbell understand this, we cannot ignore the absolute necessity of having a research and development program second to none that keeps Air Force technologically ahead of all other forces in the world.

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    So, I hope you will keep your eye on both of those balls as we go through the process. Thank you very much and welcome.

    Mr. WELDON. Thank you. Mr. Sisisky.

STATEMENT OF HON. NORMAN SISISKY, A REPRESENTATIVE FROM VIRGINIA, RANKING MEMBER, MILITARY PROCUREMENT SUBCOMMITTEE

    Mr. SISISKY. Thank you, Mr. Chairman, I want to join in welcoming Dr. Gansler for his first appearance before these two hardware committees and as well as you, General Campbell. I also want to thank my colleague from California for his kind remarks and assure him that I am looking forward to continuing our excellent relationship in my new capacity.

    Dr. Gansler, I want to preface my remarks by saying that I recognize that you have a big job and at times a thankless job, and because you are new to the job it would be unreasonable for us to expect you to have all the answers to the questions we might ask with respect to programs and activities you've inherited.

    Nevertheless, we begin today to establish our working relationship for the months ahead, and toward that end I would ask that you try to understand our concerns on the issues and that you act on these concerns in good faith before presenting us with the fait accompli. For my part I am prepared to offer you the same courtesy. Please know that we value our prerogatives in the process as much as you and your superiors value yours.

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    That said, I'd like to make just one observation about one part of the budget, and that's about naval shipbuilding. Since the departure of Secretary John Lehman, the Secretary of Navy, there's been a disconnect between the number of Navy combatant ships called for in the strategy and testimony, and the number that the accompanying budget would actually yield.

    I can only conclude that in any given year the Department works the budget as a priority and allows a number of combatant ships that would result float, usually downward. At the same time Department witnesses testified to a strategy that called for significantly more ships than the budget would yield.

    And when challenged on that point, DOD officials state that the shipbuilding budget will provide the necessary ramp-up beginning next year. The problem is we've had that for about 5 or 6 next years now, and the ramp-up is still next year or beyond.

    As a consequence we are actually budgeting—actually budgeting—for a 200-ship navy to carry out what is probably a 350- to 400-ship strategy, a fact which we seem to be in denial. I don't think it will work, and I would call your attention to this and welcome you here again. Thank you.

    Mr. WELDON. We thank our distinguished colleague for those enlightening comments and welcome him to this joint committee as one our key leaders, and it's always a pleasure to welcome someone else who is with us today in a new capacity, and that is our distinguished ranking member of the full committee who has been with us in the past as a ranking subcommittee member.

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    While all of us miss the departure of Ron Dellums, we all welcome the ascendancy of the distinguished gentlemen, Mr. Skelton, to his new role as ranking member of the full committee, and I could not allow this moment to pass without offering for him to make any comments that he would like to make.

    Mr. SKELTON. No comments, Mr. Chairman.

    Mr. WELDON. That's great, Ike. I don't know. Is that a lesson that you learned Ranking Member Ike, you don't want to make any comments?

    Mr. HUNTER. Let me join in thanking Ike for everything he has contributed to our committee and all the things he's going to contribute. Thank you.

    Mr. WELDON. And I am sure Mr. Spence will be here at some point in time. He said he was coming, but with that we'll move along. I just want to remind all the members that we're hosting an exhibit of Defense MANTECH programs in the Rayburn Foyer right down the hallway throughout the day today.

    The purpose of the exhibit is to inform members about Pentagon investments and manufacturing technology and to give staff and members an opportunity to see first-hand some of the successful applications of manufacturing technologies resulting from the MANTECH Program. I'd encourage all of you and our staffers to stop by at your leisure before the end of the day, and there will be a reception this evening from 5:30 to 8:00 in the Rayburn Foyer.

    With that, Dr. Gansler, we'll accept your written statement without objection and insert it in the record. We welcome you to the committee and the floor is yours for such time as you may consume. I will have to leave briefly during your testimony. Please, I will be right back. It's a meeting with Chairman Solomon and the Ambassador from Israel, but I will return promptly. It's all yours. Not Russia. That was last week. Dr. Gansler.
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STATEMENT OF JACQUES S. GANSLER, UNDER SECRETARY FOR ACQUISITION AND TECHNOLOGY, DEPARTMENT OF DEFENSE

    Dr. GANSLER. Thank you, Mr. Chairman. In fact Chairman Weldon and Chairman Hunter, members of the Subcommittee on Procurement and Military Research and Development and your staffs. I really appreciate this opportunity to appear before you this afternoon, to report on obviously a very wide range of acquisition and technology issues.

    As you know, I have been in the job for a little more than 3 months now. So this is my first appearance before these subcommittees, and I am very honored to be here. I am also pleased to have with me here Lieutenant General Campbell. He is, as you know, the Director of the Joint Staff for Force Structure, Resources, and Assessment.

    We'll be happy to answer any questions that you have after we go through what it is a brief overview, and, of course, you do have this full report that I submitted, and for that, by the way, I want to apologize for being late. I have learned that the Government takes a little longer to review things than I had thought they do.

    I had it prepared in some time, but it took a little while to get through the process and we'll try to do better on that in the future. I apologize for that.

    Now before taking your questions, I do want to spend a few minutes giving you my perspective on our current acquisition posture in terms of where we are, what we're providing for the troops today, where we want to be in the near future and within the next say 10 years or so.
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    Then I want to talk about my priorities on how I think we can get there, why in order to accomplish what we need to do, we have to undertake a very radical transformation of the way that the Department of Defense goes about doing its business.

    Now if I can project my voice from over there, I'll try the charts. If not, I'll come back here.

    Mr. WELDON. Perhaps you can grab one of the mikes off the front row. Do we have a mike here for that usage? That won't work, but we can hear you. Speak loudly.

    Dr. GANSLER. This one has got a longer cord.

    Mr. WELDON. OK. Alright. Great. That's great.

    [The chart referred to can be found in the appendix beginning on page 107.]

    Dr. GANSLER. OK. The first chart, as you see, and I don't think that's a particularly controversial point, is the major changes that we see coming up in the future. By the way you have copies of these if you can't see them. I thought it would be a little easier for me to point out a few things by standing next to them.

    The first and the direction of all of the acquisition research and development and procurement ought to be geared toward what are the threats that we're trying to counter; and, as was noted very properly, I think, in Chairman Weldon's comments, I think we both believe that there's a very significant change in the types of threats we are going to be seeing in the future and for which we have to prepare.
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    And based on that, I am going to go through some of the things that I think we ought to be doing in addition to the traditional types of weapon systems that we've been funding in the past.

    In addition—by the way, this leads you to the conclusion, as was noted by Chairman Weldon that we can—actually I guess, Chairman Hunter, you mentioned it—that we can actually expect to see very significant threats for very small resource expenditures from some of the smaller nations in the future.

    The second point here is the changing nature of warfare, the shift toward the emphasis on ''information superiority'' as a basic strategy and the importance of the overall links between say sensor to shooter, the importance of intelligence information—not just going to Langley and the Pentagon but to going to someone in a tanker or a ship or a plane—and then being able to know what's on the other side of the hill in real time in all weather conditions.

    The rapidly changing nature of technology, I think, will change dramatically the way we do our acquisition process. I mean, if typical electronics information system cycle time is 18 months, many defense systems today are 18 years. They are really incompatible cycle times, and we have to dramatically accelerate the cycle time on our weapons development and deployment system.

    The next one is the fact that over the last 10 years we have basically put off modernization, the 70-percent reduction that we have seen over the past 10 years, and so, it is not absolutely time for us to begin the modernization cycle.
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    Lastly, the fact that at best perhaps we can expect a slight increase or flat budgets in the defense arena, so we have to figure out a way to be able to address the needs for future systems, the needs for update of current systems and to do this in the presence of a relatively flat budget. Next slide.

    Now, in terms of the acquisition challenge that we're facing, it's not a single problem of simply modernizing our current systems or developing new systems against these new threats and taking advantage of the new technology, but there's a very huge opportunity here to pay for some of this modernization through a restructuring of our infrastructure and our support.

    We now spend about 65 percent of our dollars and a large share of our personnel, maybe 60 percent of our personnel, on infrastructure and support. And this is an area where we can shift resources in order to be able to pay for these new systems and for the modernization that we require.

    Lastly, and I think very important, is our responsiveness in terms of the support to the forces, be able to do this in hours and days rather than with either huge inventories or with large numbers of people in the system, and so trying to literally transform what amounts to a 1950's type logistics into a modern logistics system that operates such as world class companies do today and as world class companies take advantage of modern information technology and rapid transportation. Next slide.

    I view the job that I have been given, Under Secretary for Acquisition and Technology, as twofold. It's first deciding what it is that we really want to buy for the 21st century, and then second how to be able to afford to buy that equipment.
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    So, these are both significant changes, changes for the new threat and new technologies in terms of what we buy and changes in the procurement process, acquisition reform, and so forth, and I'll talk about in terms of how we go about buying them. Next slide.

    I wanted to start off by just hitting the two main areas that I think cause the largest share of our resources in terms of expenditures and are really followons in the more traditional areas of our investments. First in terms of tactical aircraft and then second in terms of the ships that you were talking about, Congressman Sisisky.

    These are the thrusts of our modernization program in the air. It's the F–18, the F–22, and the joint strike fighter. Most of you are probably in the F–18 that we have doing a great deal of flight testing on what's gotten enormous publicity in terms of the wing problem, the roll—induced roll—that comes from that.

    We're basically 98 percent, I would guess, the way towards the solution to that being demonstrated. We have a perforated wing that we can describe in more detail if you want during the question and answer period. We've gone through the demonstration of it. We believe it will not affect the performance, and it will solve the problem that we've talked about.

    The important point here is that we are going to be doing operator tests and demonstration of this. We've been doing test demonstrations of it. Now we'll have operational tests of it, beginning next week if the weather holds up.

    That is, of course, to replace the F–14 and the older F–18's. The F–22, as you know, is replacing the F–15, and the joint strike fighter coming along behind then replacing the F–16's and some of the other planes that are aging in the fleet. By, I guess, the year 2000 we are going to have a very significant aging, about 50 percent of the aircraft in the fleet beyond ages that we would like to have them.
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    So, one of the things you see from this is the ability, in the out years at least, to begin to compete some of these three systems as to which ones we will buy as we move into the out years. Next slide.

    OK, the obvious question that's come up frequently in terms of the TACAIR is the ability to afford these planes. The numbers shown here are basically the full sort of buyout if you will unto the year 2015 of these three systems. Looked against the overall resources that these two subcommittees address, which is the research and development and procurement, or essentially our total investment kinds of package, and you see we're in the range here of the $5 to $10 billion, a very significant share of the total dollars, but if you look at it from the viewpoint of affordability, these three are affordable. The challenge to us is very clearly to be able to keep the costs down.

    The joint strike fighter, as you know, is critically tied to what it's going to cost, and that's a major consideration in terms of its design. That's the first one, I think, in terms of these major systems where the focus is on cost as well as on performance. Next slide.

    Mr. WELDON. You want the chart explained in more detail?

    Dr. GANSLER. This is the——

    Mr. WELDON. We are not used to pink in this committee, Dr. Gansler. [Laughter.] Red and blue——
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    Dr. GANSLER. It gets your attention anyhow. What I was trying to show here is sort of the share of the total investment that we're making at an annualized basis. The total investment being research and development plus procurement for the Department of Defense and what share of that is going to TACAIR.

    And it's a trivial portion of it very clearly, but if you put it into perspective it's, you know, affordable as long as these numbers stay the same, and, as was pointed out in the introductory comments, as long as we can afford to maintain this top line in terms of not eating it up with operations and maintenance and infrastructure and other things.

    This top line does make the assumption that in the out years we get base closures and that we are able to shift resources from infrastructure into acquisition, things of that sort. This is the assumption for the out years which are dependent on such things as base closures in the out years.

    The other major investment category is on the shipbuilding——

    Mr. SKELTON. Mr. Chairman.

    Mr. WELDON. Distinguished gentleman.

    Mr. SKELTON. Could you go back to that last chart?

    Dr. GANSLER. Sure.
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    Mr. SKELTON. The numbers on the left. What in the world does that mean?

    Dr. GANSLER. These are billions dollars in constant years. In other words, it's only taken out the effects of inflation. It's constant dollars. So rather than projecting what the out year inflation would be. In the venue of dollars this curve will go up by inflation.

    Mr. SKELTON. Thank you.

    Dr. GANSLER. This is the same chart for the major shipbuilding programs, the modernization essentially of the ships and the replacements that are planned to come in, including the CV(X) in the out years. The DD–22, of course, we're right now just putting out a draft request for proposal on that and trying to structure that program to create competition on the program. Next slide.

    We can come back to any of these if you want. I wanted to present sort an overview of where we are today and then of where we ought to go.

    This is the same chart as the pink chart if you will in terms of constant year dollars. Of the total investment—this is the same top line that I showed before—and this is the share of it going to the shipbuilding, and you can see it's around in the same range as that of the TACAIR modernization program in the $5 to $10 billion with some significant peaks in the shipbuilding case because of the full funding whenever a new ship comes in. Next slide.
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    Now what I wanted to lead into with that, those are the more traditional areas of our investment. What we need to do now is to start addressing the question of the nontraditional or the new threats, if you will, and areas that we really need to make significant investments. And I want to cover a few of those.

    Clearly, one area that is going to be the backbone of the revolution in military affairs is the communications, command and control, the intelligence, surveillance, reconnaissance. Now that has to be in an integrated fashion; in other words, multiservice capability. It has to be essentially intelligent because we are going to have much more data than we can use, and we have to be able to analyze what's useful in all of that data, and it has to be secure.

    And that brings up this immediate question that I am going to go back to about information security, and I have a separate chart in that area.

    The second thing that goes along with the information that you have is the ability to strike from that information. When Bill Perry used to give talks about it in the Revolution of Military Affairs, he referred to it in terms of ''the reconnaissance in strike portion.''

    This is the strike portion for which we need low cost, long range, brilliant weapons that can, in fact, track moving targets and be targeted in flight from this communication information, and this is an area that we need to really focus on for all weather, long range strike capability to complement the aircraft and missiles, the ballistic missiles.
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    The third category is that of deterrence against the asymmetric threats. Here I am thinking of things such as large numbers of ballistic missiles and cruise missiles that we'll be seeing in the future; as well as biological, chemical, nuclear weapons; as well as information warfare.

    The next bullet is the ability to rapidly project our forces to achieve global reach, the transportation systems and things of that sort that we have to continue to pursue as we move our troops back to the United States.

    And lastly, the emphasis here on jointness, and that's one of the roles that I believe OSD can play a major contribution in as well as the need for interoperability with our allies since coalition warfare is critical, we have to be able to interoperate with them in order to take advantage say of an air defense system sitting next to each other, they have to work together. Next slide.

    And this is a hard one to read, but I don't want to spend a lot of time on it. If we want to, we can come back in the question period, but I did want to emphasize the importance of the overall ballistic missile defense arena, whether it be in terms of the national missile defense systems, which as you know we've been talking about sort of a 3-plus-3 so that's why there's a range of deployment times shown there.

    The PAC–3 which could have an early capability, shown here, at maybe the end of 1999, for initial-fielded units. The Navy area capability, which could even have an earlier one if you want user operational units to make early deployment but then going into full first-unit deployment out here in 2002.
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    And the medium extended air defense system, which has been funded just for 2 years in terms of the research and development, and we're having now a sort of a broad study looking at this overall area that we'll complete in the spring, to try to talk about the generation of funds for MEAD. Follow-on activities but it's funded in 1998 and 1999.

    The Theater High Altitude Area Defense Program, which a decision was made—certainly before I was involved in it—to stress the THAAD as the earlier version, and then the Navy Theater Wide as the later version. The THAAD has the major development work in terms of the radar and the interceptor. One could do the same thing with an early deployment perhaps in 2001. Right now there's a considerable debate about when the Navy Theater Wide, depending on the resources expended, could have early deployed perhaps out in the 2003–04 time period. Next slide.

    In terms of resources devoted to the ballistic missile defense program in our budgets, this was the 1998 and 1999 numbers. The 1999 is about $100 million higher than the 1998 in total. The numbers are pretty clear here. They are in the $3 billion range each, and then the amount in the 5-year plan, shown over on the right.

    You can see a very significant investment across the board. I personally have been looking at the Navy Theater Wide system to see whether that can be accelerated some, and that's one of the issues that I'll be looking at in terms of there's some areas to minimize the risk on that, that we might be able to do, to accelerate it some.

    The THAAD is going into transition this year, in the 1999 time period, in terms of full-scale engineering development as well as increased flight testing, and that's the increase in that program. Next slide.
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    I mentioned earlier information assurance, and I think this is an area that ought to be of great concern to all of us. As Secretary Hamre mentioned in his press conference yesterday, we've been increasingly getting hits in this area, and our systems, as we become increasingly dependent on information, both in terms of electronic commerce as well as military operations, are going to require us to pay much, much more attention to this.

    Joint Vision 2010 is predicated on information security and so clearly we have to focus on information protection. Part of this is training, just getting people aware of the importance of it and the way in which they approach it. Part of it however is significant investments, and we are going to be spreading about $3.6 billion in this area over the next 5 years for information assurance. Next slide.

    The science and technology, that was discussed in the introductory remarks, is a critical one. I think one of the things we have to maintain as a nation is the long-term science and technology investments, and so, I've selected a chart on that. Particularly interesting here is the importance of maintaining stability in this long-term science and technology level, support for universities and long-term research.

    A lot of this should be focused and is being focused on the military unique area. We want to capitalize on the commercial capability that the DOD can draw on in areas such as information technology, new materials, software; but there are many military unique areas that are high risk and take a long-term development investment.

    As you can see, we are maintaining essentially the same level. A slight increase here is about $100 million as well.
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    Now, this is the point that was made earlier in terms of how much we are spending on research and development and how much we are spending on procurement. I put it in the historic perspective because there is a concern on my part as well as yours, and it was raised in the introductory comments as well, if you take the research and development curve, this sort of bright green one down here at the bottom, what you can see is that the historic level has been around here, and we've been quite a bit above that. And we're sort of slowly going down over here, but we're maintaining the research and development over the 5-year time period.

    If you look at the procurement, that's where you see the huge cycles that we've faced in various periods, and we have had that 70-percent decline that you're all well aware of. And now we have sort of leveled off in the procurement account, and what we really want to focus on is the increase shown here to get us back up to the $60 billion number that General Shalikashvili talked about as well, and that's what we are showing at the end of the 5-year period.

    I have also projected on here the ratio of research and development to procurement. We are trying to get that back in the range of 2-to-1. Even that, if you think about most industries, is phenomenal to have that large a research and development share of the totals. Next slide.

    Now the last part of this introductory talk is the question of how are we going to pay for this. If you have a total top line that stays approximately level, you have to figure out some ways to generate the resources to raise that procurement account and maintain the research and development, while simultaneously maintaining readiness and forestructure. And that's the real challenge to us, I think, over the next 5 years.
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    I've listed five areas that I think make a lot of sense in terms of priorities for attack at the cost area: Continuation of the acquisition reform efforts that we have going now for the last 2 or 3 years, much more integration of civilian and military industrial capability to take advantage of America's industrial capability.

    To give you an example of what I mean here, TRW has been building F–22 cards and Comanche cards. These are defense unique cards, on the same production line as the TRW automotive line. In that case the costs of the large overhead is being absorbed by the high volume of the commercial systems. And we get about a 50-percent saving in the defense unique items.

    That's the sort of integration that we are talking about or trying to encourage through acquisition reform the forms to put their military and civilian work back together. In some cases, such as Boeing, who split in Wichita the civil and military transports. They should be able to be built together if we can change the way we do business to encourage them to do so.

    The third bullet here is this shifting of resources from the infrastructure and support into war fighting and combat. The point that I made earlier in my comments.

    The fourth one is the point I made about refocusing our logistics on the user, the customer—in a sense getting equipment to him when he needs it and not having to have the huge inventories and the huge infrastructure for logistic support. This is just modernizing our logistic systems to keep up with world class logistics systems. It sounds easy to say; extremely difficult to do because of the huge infrastructure involved with that within the Department of Defense, and we still do have to worry about surge capability.
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    And then lastly, and I don't want to underplay this at all, by far one of the most critical things to implementing either the changes in weapons or the changes in the way we do business is to address the acquisition work force, to train and educate that work force so that somebody, who, for example, learned about acquisition 5 years ago and had totally missed the acquisition reform, is kept up to date on that with continuing education and other forms of using modern technology, again to greatly enhance this workforce while it's shrinking. Next slide.

    This is, in fact, the one definition of the acquisition work force, a definition that includes basically all the people who are at acquisition facilities. This is one that the Congress had been using, and so, I used that as my example. This one defines the overall work force reduction that we've gone through at about 43 percent reduction that we've gone through since the end of the cold war essentially, over the last decade in other words.

    We've had a very significant downsizing, and it's our intention to continue to do this. The other thing, which we have done and just recently submitted a report to you on, is to try to define the acquisition work force better than this definition does.

    This definition includes everyone at a particular acquisition facility, so that someone who cuts the grass or is a guard at the facility isn't counted as part of the acquisition work force, as contrasted to those people who have jobs that, in fact, are acquisition jobs.

    When you do it in terms of the jobs and their location, you come out with a number that's more like a 170 thousand than the 300,000 that's shown here, but I still would argue that, and we are now in the process of looking at significant further reductions in the acquisition work force. Next slide.
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    Now, on my first day at work, Secretary Cohen announced the Defense Reform Initiative. It's a nice way to start your job. You get told to have a 30-percent reduction in your work force. It builds up the morale very rapidly.

    What we have in this Defense Reform Initiative are things that I think are really critical to our improving efficiency in the future: A basic restructuring of the Department in terms of what Secretary Cohen has termed, ''the revolution in business affairs.''

    Having the Office of the Secretary of Defense focus on policy and oversight, not program management, and having the implementation being done either by the services or the Defense agencies. We have a 33-percent reduction in the staff of the Office of the Secretary of Defense over an 18-month period, and we have a 21-percent in the Defense agencies which amounts to 27 thousand people approximately. We are going to do that over a 5-year period because that takes a lot longer with that size a reduction.

    But we're trying to sort of set the principle that if you start at the top with demonstration of reductions and then we can take further reductions throughout the system. The idea again is to take people who are in the support and infrastructure area and move them into the combatant and war fighting capability as well as to be able to generate dollars for modernization.

    Some of the key elements of the Defense Reform Initiative—I won't go into it in detail, but if you want to, I'd be happy to during the question and answer period—we've restructured the Office of the what used to be the C-cubed-I Assistant Secretary so that, in fact, it has greater emphasis on things such as the Chief Information Officer, information security, links between the C-cubed-I System and the weapon system. In fact, the Assistant Secretary for C-cubed-I will have a joint reporting relationship. He will report to me for all acquisition issues and to the Secretary for intelligence and the Chief Information Office functions.
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    We have increased our emphasis by creating basically a new agency out of four other functions. In the nuclear, biological, and chemical area; we feel this is critical in terms of the new types of threats, and we needed a set of new initiatives in that area and increased focus on that one.

    And then last, the role of the Defense Research and Engineering Director, which by legislation has a very significant position higher than an assistant secretary, had been somewhat downgraded in the past, down to just almost research and science and technology, is now going to be integrating all of the weapon system activities. And I'll be submitting a nomination to the Senate shortly for a name for that position.

    The last item I wanted to mention was the Defense industrial base. This is an area I think of considerable concern to you and to us in terms of the consolidations that have been taking place and where is it going to go in the future. I think one can look back at the initiatives that were taken over the last administration and say it was an extremely successful consolidation. In other words we did it without any bankruptcies, we did it without any bailouts, and there was a significant reduction in the total support infrastructure if you will, overhead, however you want to measure it, within the Defense industry.

    We are now getting concerned about whether or not we have sufficient competition in the future to achieve innovation and to achieve the cost reductions that come from competition.

    So, the things we want to continue to focus on, which are the positions that we've taken all along, are to be concerned about maintaining competition horizontally and vertically. As you get down to two or three or five really large firms, you worry about the vertical integration as well as the horizontal integration.
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    So, we are addressing that very carefully with say the Federal Trade Commission, with the FTC and so forth, but much more importantly I think in terms of our own individual programs. On each program now we have to assure ourselves that we have adequate competition for those in order to keep innovation going in cost reduction.

    We are also encouraging the industry, as I said earlier, toward more civil military integration at the factory level as well as at the product level. And then we're trying to encourage more global links to try to draw on the technology from around the world.

    And so, in summary, in order to pay for, and we have to have the revolution in military affairs, we must reequip the systems that we have in the field with say the digital battlefield, with intelligence right to the war fighter. To pay for that we have to have the revolution in business affairs, and these two go together.

    We are paying for the revolution in military affairs with the revolution in business affairs, and that will be the focus of my activity.

    Let me then conclude, Chairman Hunter, Chairman Weldon. I want to thank the subcommittee and you yourself personally for this opportunity to give you this overview of our Defense acquisition and technology posture. No question in my mind that the United States is clearly the superior military power in the world. Today Congress and the Department of Defense have worked closely together to maintain this position. I believe these are the two critical subcommittees that I'll have to work with in order to get the funding and support, both in terms of the necessary modernization of our equipment and also in terms of the transformation of the way we do business.
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    So I thank you very much for your time, and General Campbell and I will be pleased to answer any questions that you might have.

    [The prepared statement of Dr. Gansler can be found in the appendix on page 61.]

    Mr. WELDON. Thank you, Dr. Gansler, and before we begin the questioning I'd like to call upon our distinguished chairman, who I mentioned earlier would be here with us today, and he did show up as he always does, for any comments he'd like to make. Mr. Spence.

    Mr. SPENCE. No; I just apologize for being late. Welcome to the committee and thank you very much.

    Dr. GANSLER. Thank you.

    Mr. WELDON. Dr. Gansler, thank you for your testimony, and let me start off by saying I think we have an enormous problem that I don't think the administration is directing in an up-front way. Let me explain it and the reason why I come to this conclusion.

    First of all, as you mentioned, we've had a—or as I mentioned—we've had a 13-year decline in modernization. We're projecting a 14-percent decrease in the research and development accounts. In anyone's estimation we have cut the Defense budget dramatically. In fact, it's the only real area of the Federal budget that's been cut, and it's been cut significantly.
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    At the same time we've cut the Defense budget dramatically, deployments have been up dramatically. In fact, in the last 6 years you've had 25 deployments.

    If we compare that to the previous 40 years, we had 10 deployments, and the problem is that none of those 25 deployments was budgeted for or planned for. All the costs of those deployments have come out of the hide of the readiness accounts, the research and development accounts, and the acquisition accounts.

    Bosnia cost an estimated $8 billion. Secretary Hamre said today in a news conference that he thinks we've already spent $800 million in dealing with Iraq. None of that's been budgeted for. We've had to eat all of that.

    Unlike Desert Storm where we actually were reimbursed $54 billion for a $52 billion investment, in most of these deployments not only have we paid our own costs, we've had to pay the cost of other troops. In the case of Haiti, my understanding is we paid the salary and the housing cost for the Bangladesh troops to go into Haiti. Additional costs coming out of our DOD budget.

    During that same period of time environmental costs have become the largest increase area of Defense spending, now $12 billion when you take both the nuclear area and the nonnuclear area.

    Now in spite of these problems, the administration has continued to push out the modernization even though we were told by Secretary Perry and General Shalikashvili that we would see the modernization counts go to $60 billion in this fiscal year. We're now seeing that that's not going to occur until the next administration comes on board, therefore driving up the per-copy costs of all the programs that are currently in the funding cycle.
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    We are being told by the administration that procurement reform can save us the money that we need to adjust, and I agree that there are dollars to be saved in procurement reform and the fact that Procurement Subcommittee has taken the lead in that area.

    I would agree with my colleague, Mr. Hunter, there is no chance for a base-closing round to take place with this administration—zero, zilch, nada. It's not going to happen. Now I know they're projecting it for the next administration, and that's all well and good, but the Congress has been soured, and it's going to be a very difficult process to convince us that it's going to be fair in the future.

    So therefore I think we have a major problem. You put up a TACAIR chart there which I have trouble with. The hearing that we held last year, when General Accounting Office and Congressional Budget Office came in—now I know there's been some reforms following the QDR, but they estimated that we'd have to be spending $14 to $16 billion a year by the 10th year of the procurement of these three new tactical aviation programs.

    If that were to be the case, we'd have to go from what we are spending this year on Tactical Aircraft, which is about $3 billion, to a jump of $11 to $13 billion of increased funding, just to pay for TACAIR alone.

    Now if we look at missile defense—in fact the dollars are there for the short-term, but if we look at the out years Ballistic Missile Defense Organization is currently expressing concern that the scaled back budget may not support currently planned programs. In fact it's projected to go down by over a billion dollars between now and fiscal year 2003.
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    It doesn't support unbudgeted programs such as Medium Extended Air Defense System or the Navy upper tier and Navy lower tier upgrades that we planned to accelerate. It doesn't even mention smaller programs like the Tactical High Energy Laser which there's no budget request for.

    The point is: I don't see how we get from here to there, and I don't think we're being realistic. I think that the Pentagon would do more service to us if they would simply say, ''We've got to bite the bullet and cut some programs.'' You can't expect the Congress to do that because it's not going to happen.

    We tried to in with the F–18C/D versus E/F last year. My distinguished chairman bit the bullet, tried to take the issue to the Congress, and what did we get?—so lobbied so heavily by the Navy that in effect the Congress relented and supported the E/F buy.

    And I can tell that we have—I have—major personal problems about the wing dip problem. I am not convinced that we've solved it, and to the extent I am offended that we didn't hear about that until the press reported it in January in the national media this year.

    So therefore what I am saying is, ''I don't see the rosy scenario coming together.'' I don't see the ability for us to buy the systems that are currently being planned by the administration because I think the assumptions are unrealistic in terms of base closings and savings.
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    And I don't see any effort on the part of the administration to give us reforms legislatively to reduce environmental costs and any effort by the administration to reduce deployment levels or have our allies pick up more this year of the cost of deployments.

    And if those things don't happen or if we don't get a better top line number, which Members on both sides of the aisle in this body support, then I think we're facing a train wreck. And I just think we're being unrealistic in not facing that up now and biting the bullet and making some tough decisions.

    Now perhaps the administration would say Congress should cut some programs. I don't think it's Congress' function to say we should cut this or that program. I think that should be done by an administration.

    I made a tough decision over the past 3 years in opposing the B–2 program and offending most of colleagues on this side of the aisle and many on this side of the aisle, but I just felt we couldn't afford it. The administration also said they opposed the B–2 program until President Clinton wanted the bill, one more, in the election year to keep the production line open in California.

    I say it's time to make some tough decisions, to be realistic. This committee will continue to fund aggressively. Information warfare, it's one of our top priorities. Asymmetric, dealing with asymmetric threats. We plussed up in this committee additional funding over the President's request in dealing with the chemical/biological threat in the past 3 years and dealing with information warfare over the past 3 years.
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    Missile defense we plussed up by a billion dollars each year and continued to support that, but the problem is: With this budget environment, given the scenarios I've laid out to you, I don't see how we can get to where I understand you want to be and where the administration wants to be in terms of modernizing, keeping the research and development accounts fairly stable and still being able to meet the deployment schedule established by this President.

    Now I know that's not really a question, but if you want to respond to that, I'd be happy to have your side of the view.

    Dr. GANSLER. Let me comment on a couple of points that you raised. You raised very clearly a critical issue for us in the very near future, which is that of paying for Bosnia and Iraq. If we don't get the supplemental that we're submitting we're going to obviously have to eat a lot of money, and that's going to just destroy the whole program that we're both trying to achieve.

    So support for the supplemental is an essential first step in order to achieve any of the things that I discussed. Second, we did try, in putting together the 1999 budget, to address some of the issues of realism that you brought up, Mr. Chairman.

    One of the things which we did was to increase the operating and maintenance funding which has been one of the drains on the procurement account. As you know each year we end up sort of funding O&M at 80 or 90 percent and then having to put in the rest later on, and that not only comes out of procurement, but it even messes up the procurement because it stretches out the programs even more. So we tried to fully fund it.
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    We also had a readiness issue where we needed to fund spare parts. We increased that by a billion dollars. We tried to address realism in this plan, and of course it affects whether you are going to have enough this year in the procurement areas and the research & development areas.

    Now the really tough issue—we think the programs that are in there now are affordable if the costs don't rise, and if we don't have other costs that cause us to drain those programs—in other words, in terms of O&M costs or operating costs or non-supplemental costs and so forth. And at that point, unless we get more money, we are going to have to start cutting programs.

    I have spent 42 years in this business, and half of that is analyzing programs that got stretched out and how much it costs to raise them. To stretch them out, it just continues to drive them just over, over, over in terms of their costs, and so we have to start being very tough on these decisions. I am going to try to do that. I'll need the support of Congress to do it obviously.

    Mr. WELDON. Well, I think you'll have the support of the Congress. I think it requires leadership, and I think you're going to be an outstanding leader in the position you're in. It requires leadership I think even above your pay grade to give us a direction that we need to go in to make some very difficult decisions. And that's got to come from the White House, and it's got to come from the Secretary's office, and I think you'll find us willing to engage and have an honest debate over these priorities in the short-term and the long-term.
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    One other question I want to ask before I pass the questioning along so everyone can get their chance is in regard to missile defense. It's probably—it's not probably—it's been the single biggest area of disagreement between I think the Congress and the White House over the past several years.

    We plussed up the missile defense accounts by a billion dollars over the President's request in each fiscal year, slightly less last year. We've tried to speed up the deployment of theater missile defense systems, national missile defense, cruise missiles and external queuing and sensing.

    There's a sense of real frustration in the Congress that 7 years after Desert Storm we're not much better prepared to deal with Scud missiles from Iraq than we were 7 years ago. Now there have been some enhancements. We have the PAC–2 instead of the Patriot. We don't have PAC–3 yet.

    We are trying to give some additional enhancements with legislation that we introduced in a bipartisan way that the administration now supports, that hopefully will be moved to the first quarter of this year, dealing with the Iranian missile threat that emerged over the summer, but we still—I mean if we look at where we were 7 years ago when the Congress passed legislation saying, ''Protect our troops. Give us the capability in the short-term to take out these low quality Scud missiles.''

    We're not much better off today, and even though we've made some improvements during that same period of time, Saddam has acquired guidance systems from Russia on at least three occasions that we know of. He's probably acquired a ton of other technical information. So he's probably improved his capabilities.
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    The frustration on my part, and I think I can sense a lot of my colleagues, and the same feeling is that we've just not seen the high level commitment to make missile defense a top priority. I can tell you, and this is above your pay grade, but I was extremely disappointed with the State of the Union speech.

    I sat there for the entire—I think it was 75 minutes—and I think there were two sentences that dealt with national security and how great our troops are. I think we need to have a commitment that we're going to follow through with both the personal commitment and the guidance from the highest level of the White House and the Pentagon, as well as the patting on the back of our troops when they do a good job.

    A specific question about the National Missile Defense Plan, the 3-plus-3 plan: I understand we've increased funding about—and we've given you about a half billion dollars over what you originally for this fiscal year. Many have said, including a report that I just read, that there's an extreme high amount of risk with this plan, under its current format.

    We probably will not be able to achieve the 3-plus-3 scenario even if it is desired that in the third year we'll go ahead with the deployment decision. We're not making the request for long lead money that we should be making now, to be able to make that decision to deploy.

    So I guess my question is: Is 3-plus-3 really in your mind real or is it just to get us through the rest of this administration and to buy time? And really there is no commitment on the part of this administration to proceed with a national missile defense capability.
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    Dr. GANSLER. Let me comment on both parts of your discussion, first in terms of the importance of missile defense in general and then in terms of the National Missile Defense specifically.

    I am probably a dangerous person to have selected for this job because I have some background in this area, and that makes me probably, you know, a little knowledgable. My first job in getting out of college in the midfifties was actually designing the Hawk missile guidance and control system, as I mentioned to you.

    And in 1960 I modified the guidance and control system to shoot down the ballistic missile. The first intercept of a ballistic missile was the Honest John. I shot it down at White Sands, and so it's an area I've been involved with now for 40 years I guess.

    And I think today when we look out at the threats that we're going to be seeing, that the cruise missiles and ballistic missiles are really a key part of the threat that we will be seeing in the near term; initially, as you suggest, in relatively crude form but as they evolve, in much more sophisticated form.

    And all of the analysis in the last couple of years have said that this is a critical threat that we have to address, the combination of these cruise and ballistic missiles, along with the traditional threats, especially when those are armed with nontraditional warheads, biological chemical type warheads.

    So we have to develop the capability against those systems, and that's why I plan on spending a considerable part of my time addressing that question and looking at each of the options that we had on that chart in terms of the various types of systems that we can use to address that threat, in some cases faster, in some cases making sure that we have a system that works.
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    One of the concerns that I have is that a recent task force has looked at this question about the acceleration of these programs with a bunch of experts that we called in from the outside, and just reported in January—said that we may have actually hurt some of these programs by forcing them to accelerate so much that in fact they didn't address quality, they didn't address the vision testing, and they ended up in some problems.

    So we have to do it with care but with concern, and acceleration is certainly one of the things that we want to look at. It costs money, but I think it's worth doing.

    To go to the 3-plus-3 I think the administration is committed, and I think I know I am personally in terms of there will be a system deployed. In my opinion there's absolutely no question that the Nation will have to have ballistic missile defense in the future. I mean people will have ballistic missiles that are capable of reaching this country in the future. The question is when.

    And the impression that we have is that today or for the next year or two that that isn't an area that we anticipate direct threats on the Nation. We do expect direct threats on the Nation from terrorists and from transnational actors and so forth, but in terms of intercontinental ballistic missile attacks at the United States, that's probably a low probability from what the intelligence estimates tell us.

    And therefore, given the difficulty of this mission, shooting a bullet with a bullet, we have to carefully develop the capability to do it. Now we want to maintain the option of deciding there is a threat and we want to deploy quickly, and that's what the second of the three is, and therefore what we are trying to do is to spend a sufficient amount of money to keep that option open.
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    We have to spend some money for example on site surveys and things like that so that if we decided to deploy, we would. But we would rather put off that decision if we can because the systems are being developed, and we would like to build and spend money on the systems that will work rather than where we happen to be today at any point.

    Now if we know there's a threat, we'll deploy. We'll deploy where we are at that point, and that the concept, the 3-plus-3, gives us that option. But there's no question in my mind that in time we will deploy a system, and I think the administration is committed to doing that to defend the Nation.

    Mr. WELDON. Well I am glad to hear your comments, and I hope the administration feels as strong about it as you, but I have my doubts, but I appreciate your candor and certainly your answers.

    Mr. Pickett.

    Mr. PICKETT. Thank you, Mr. Chairman. Secretary, one of my concerns that I'd mentioned to you previously was the Navy Upper Tier Program which you've already spoken about today and questioned about whether it's resource-constrained or technology-constrained.

    I would just ask you to take a good look at that, not a quick one but a good look—take a look quickly but make an indepth look—because my information is that it is resource-constrained. I think there's some potential there that our Nation needs to realize on.
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    Back in 1987 I went down into one of the control modules for the missiles in the United States and looked around, and then a couple of years later, in 1989, I had a chance to go to the Soviet Union, the then Soviet Union, and go down into one of their missile control units.

    And somehow they seemed to be identically the same—the size, the shape, the location of the equipment and all was. It couldn't have been accidentally designed that close without there being some interchange of information, which brings me to my point. Yesterday we had information from the intelligence community about leaks in our program, in our defense program in our sensitive information.

    And how are we going to stay ahead of the competition if every time we develop something new and innovative if immediately it's going to find its way into the hands of our opponents or potential opponents. What are you doing about that and what can you tell us about measures that are being taken to ensure that that doesn't happen?

    Dr. GANSLER. Let me comment on what I think are really three points in your discussion. First, in terms of theater missile defense, I can personally assure you that I will look at it carefully and quickly.

    I have actually had three reviews already of it, and I am raising the same kind of questions. I could easily do it as an outsider coming in and saying, ''Why isn't it faster?'' or ''Is it resource- or technology-limited?,'' and I am looking carefully at that question.
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    Second in terms of the Russian ballistic missiles, when you go down into their silos and you see the same thing that we have. What I hope we see is the same kind of controls, that still exist over the ballistic missile controls so that they don't launch them, that same kind of things that we're trying to do. And there's where I think that additional arms control techniques can be very stabilizing if we want to push for that, and I would encourage that even along with ballistic missile defense.

    Lastly, in terms of the maintenance of our leadership position, clearly with cycle times of technology of 18 months and with weapons systems that are now being sold on the open market—I mean the examples that I gave earlier where a third world country can get capability say of cruise missiles—just got out and buy them out of the catalog.

    I mean you don't have to worry about whether they steal your secrets. They don't have to develop them anymore. They actually just buy them, and if you wanted to develop your own say biological or chemical weapon, you just go onto the Internet and you get the data.

    So there's a certain amount of that now that is much more open than it used to be. On the other hand, we have to worry about two things.

    One is staying ahead. So we have to have much shorter cycle times, and that's why I think we have to maintain our research and development and continue that long-term research and development along with the short-term to cut our cycles from, as I said earlier, 18 years to 18 months. I mean we won't get there, but in new weapons systems we are going to be constantly updating them, compatible with information technology cycles.
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    And then we have to worry about the information security, the aspect that I think is directly addressing what you're talking about. We are, as I said, in my presentation planning on spending about $3.6 billion over the next 5 years on information security.

    We have a very significant vulnerability of many of our systems. Many of our systems are dependent on commercial systems, you know switching systems and things of that sort. So we need to really look, and the studies recently have shown this, very carefully at our whole infrastructure and our information systems.

    We probably are going to have to go to multilevel security systems. It is expensive, but it's worth it. And that's our plan to do that now. What we have done is really greatly intensified our investigations in this area. Art Money, who is going to become the Assistant Secretary for C-cubed-I, has a big task force looking at this now.

    We have to also in this area, by the way, work closely with Justice because a lot of this is domestic, and you can't tell initially whether it's a crime or a national security issue. So we have to develop much stronger links with the Justice Department. We are doing that now actively.

    Mr. PICKETT. Turning your attention to the tactical air program, I understand that there are quite a few systems in the F–22 that are expected to be made proven technology and incorporated into the Joint Strike Fighter. There appears to be an increasing amount of concurrency between the F–22 and the Joint Strike Fighter. Do you see a problem there?
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    Mr. GANSLER. No, in fact what I worry about is how long the F–22 is taking to get there. We actually have in the F–22 some obsolete parts. I mean electronic cycles are so short now that we have to keep our system development cycles much shorter. I am concerned, you know, that we keep up that cycle time.

    Now in terms of concurrency I don't see that as a major problem on either the F–22 or the Joint Strike Fighter. What I do see is in the out years some overlap in those two programs, as well as the F–18E/F, and I think that's good because what we will be able to do at that point is choose between them in terms of capability and cost. And we'll get the mix that we want out in that time period.

    We have a near term need for the F–18E/F in the Navy. We have a relatively mid term need in the Air Force for the F–22, and we have a long term need in both the Navy and the Air Force and the Marines for the Joint Strike Fighter, and so we're phasing those programs, but in the out years we'll be able to have the choice among them in terms of cost and performance to select for TACAIR modernization.

    Mr. PICKETT. OK, thank you. Thank you, Mr. Chairman.

    Mr. WELDON. Thank you, Mr. Pickett. Mr Hunter.

    Mr. HUNTER. Thank you, Mr. Chairman. Thanks again for being here, Dr. Gansler and General Campbell. First we are talking about—you mentioned a number of times—''tooth to tail ratio'' and getting the money where it's needed and all the right things that have been said I might say by many folks
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that have sat in that chair ahead of you.

    And I think the greatest contribution you could make to your tenure here and to the country is to do things, just do things, and we've got a situation in front of you in which we have set the stage for you to do something that will save a lot of money and provide a lot of modernization and research and development dollars.

    I have the letter from the Congressional Budget Office to the effect that if we would cut down what I call the shoppers, the procurement work force, and that's not metal benders. It's not people at depots, but the 300,000 or so people that you mentioned. If you cut that down to the size of the U.S. Marine Corps so you don't have more shoppers than marines, you will save in the next 5 years over $15 billion.

    Now all you have to do the first year is simply not exercise the waiver that we reserve to the President in the conference agreement. We cut about 125,000 shoppers out of the budget. We did the same thing that your predecessors did in cutting the Defense budget in the last 5 years.

    They simply cut instrength. That's how we went from 18 Army divisions to 10. We just cut instrength, multiplied how many riflemen you got to cut to get a billion bucks, and we did that. And nobody cared, incidentally, and nobody came over here and protested from the Pentagon. We cut from 24 to 13 fighter air wings using the same analysis.

    If you folks will not exercise the waiver—there's a 25,000 acquisition workforce instrength cut this year—with a 15,000 Presidential waiver. If you simply will do nothing in that case, not exercise that waiver, you're going to save in the near-term, over the next 4 or 5 years, several billions of dollars.
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    And if you partner up with us on this idea of if we are going to have to cut, let's cut some of the tail rather than some of the tooth—you can save $15 billion over the next 5 years or so.
    And I would offer to you the real lesson we got out of base closing is you don't necessarily save money by giving away real estate, and especially if you give away real estate to your nephew and you don't get a dime for it from it, and he demands that you do a $10 million Environmental Impact Statement before you give it to him, it actually costs you money to give away real estate.

    The real savings is in the personnel instrengths, and these 300,000 professional shoppers that we're carrying represent and manifest that cost. When I had the services in here, Ike Skelton and I had them come in and tell us about their acquisition workforce at the end of last year. And incidentally I've got the letter to Chairman Spence here. We'll make that available to you.

    As I recall in calculating the Army for example, the Army I think spent in research and development and procurement I believe $8.6 billion last year. They spent—I calculated—$6.8 billion for their shoppers. That means they bought a $10 million helicopter, they paid almost $10 million to their personnel for the service of buying it in payroll costs.

    So there's something you can do right now, and don't let somebody go back and talk you out of this one. Go back and grab the bull by the tail, and let's get this one done and march on and try to do other things.

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    You mentioned going back to Tactical Ballistic Missile Defense, which my colleagues brought up, and I think it's so important. I think it is kind of important that your first three questions go to TMD. It's been what?—15 years—since President Reagan talked about missile defense. You operated a successful missile defense shop you say in 1960. You hit a bullet with a bullet.

    Do you realize today the same dollar will pay 5 million times as much computing power as the computers that you used in 1960? Now, let me just offer—we all have opinions on this—why we're failing, but we are failing. For us to have taken basically the extent of three World War II's over 12 years to have just a marginal improvement on the Patriot missile system that we started in 1962, is remarkable.

    I think our problem may be this—when we had the Manhattan Project we didn't focus on building a product. We focused on completing a technology. That was a technology for a nuclear weapon.

    Perhaps we need to regroup and bring in the national laboratory expertise and bring in all of the contractors on this thing and look at it not as a product but as a technology, and work day and night, and instead of having a testing schedule in which each test is a political event where you have to succeed so you put it off as long as possible, have a lot of shots, and go ahead with the idea that we must not—that we have to succeed ultimately, and we are going to take as many test shots as it takes to make this thing go.

    I think if we focus on this as developing a technology, forget the brands, forget the products, and get the darned thing out there, we're going to do better. You know, I am reminded, Israel probably has an acquisition workforce of three people. They are, from what I've seen on their successful shots, they're ahead of us. We have all the king's horses and all the king's men working this problem, and we can't outdo Israel. Quite remarkable.
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    Last thing, you mentioned that one of your big challenges is figuring out what to buy and how to buy it. I would submit to you there's a third element, how fast you can buy it, because the threat that's coming at us is coming very quickly. We had a good threat definition, an array of threats that have been developed that were displayed for us yesterday, and you've got to field technology quickly.

    I don't think our system allows us to field technology quickly. And it may, you know, we've meet the enemy and they are us to some degree. We got a lot of regulations. A lot of time has to pass before we can buy anything. We need to have a system where you and the Secretary of Defense can say, ''This system is so important that doggone it, we need it right now.''

    And we need to have a system where we can waive all regulations with respect to acquisition and just do it, just develop stuff and buy it quickly, and we're going to have to do that I think in a number of areas where we are going to be technologically surprised by both the development and the proliferation of what you've described as these asymmetric threats.

    So we've got a lot of things we've got to work on here, but I look forward to working with you in partnership, and please as your first step, don't exercise that Presidential waiver. Recommend against the exercise of that waiver, and I hope you'll agree with me on that one.

    Dr. GANSLER. Let me comment on a number of points that you raised. I do think, as you properly point out, we have trying to say some of these same things for many years. I think things are different now in the sense that people recognize the need for the change.
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    Mr. HUNTER. You've got to remember I've heard that for a lot of years too.

    Dr. GANSLER. Well I understand that.

    Mr. HUNTER. It's always different.

    Dr. GANSLER. All I can say is that I will try, but I genuinely believe that one of the barriers we've had in the past has been the fact that civilians such as myself get up here and tell you that things have to change.

    And I think what you're starting to see now is four-star and three-star generals getting up and saying that these changes are required in order to be able to afford modernization and forestructure size we have to reduce the infrastructure. We have to do things in a more streamlined fashion.

    What I plan on trying to do to change things, if you will, is to try to use metrics much more in terms of what we have achieved than rather output metrics, if you will, rather than input metrics. Reorganizing doesn't achieve anything, but measuring whether the cycle time, which I think is the most important measure and the one that you stressed as well, in terms of how fast we develop systems, how fast we can support those systems.

    Those are metrics you can measure. They take a few years in some cases to be able to do it, but you can have intermediate metrics that you can measure, and that's the focus of our acquisition reform activity. We've made actually commitments to the Vice President and to the Secretary of Defense in terms of cycle time changes that we are going to try to make.
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    You did make an observation that I would like to at least call your attention to. You said that people in factories and depots and so forth who were wrench turners are not the ones you want to address. I would argue that if you look in the typical factory or depot, what you find is two people who aren't turning wrenches and who are in the overhead function for each one that are turning the wrenches.

    You find this in the public and private sector side. I think we can address that overhead function, if you will, more explicitly through competition, and so I want to encourage competition—public-private, private-private competitions—to really force down——

    Mr. HUNTER. But let me make a point here. I think when you've got 300,000 folks buying 48 billion dollars' worth of procurement—that's probably less than Walmart's annual budget—I think you've got too many folks. And if you take those folks and take public uniforms off of them and put contractor uniforms on them, that doesn't solve the problem.

    Dr. GANSLER. No, that's my point. In other words, we need the total to be less, not just to whether they're wrench turners. We need to address the total work force.

    And that raises really an interesting point. I did a study when I was vice chairman of the Defense Science Board about a year and a half ago, looking at the total population, the military and civilian, you know the 2 1/2 million people that we have out there, and what it turns out is that the vast majority of those are not in combat positions, including those wearing uniforms. I mean they're writing checks, they're in personnel and so forth.
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    And so instrength as a measure itself, it seems to me, isn't the critical measure. It's how many of those people are in fact in combat positions or in positions where they can influence the outcome of the war. In fact what we found was by official definition about 17 percent of the 2 1/2 million civilian and active duty military were in officially defined combat positions.

    So I think what we need to do is to take a lot of those people, including those in uniform, and put them into combat positions and then reduce the ones who are in the support role, including those in the acquisition work force. As to that I would comment that we will have a report coming to the Hill on April 1, looking at the overall acquisition work force.

    And what I am trying to do there is to define a vision for where we want to be say in 5 years with the acquisition work force and to try to not address it from the viewpoint of exactly how many people this year, although we will do that of course because you had suggested it, but we also want to know where we're trying to get.

    Mr. HUNTER. I've found that this year is always the toughest. No matter what you're in, this year is the toughest.

    Dr. GANSLER. But the role of the acquisition force, what are they doing? I mean the Government role has changed dramatically in the last few years from that of the doer to that of the manager, and we have different kinds of people that we need besides the numbers of people. We need different kinds of people, and that's what I meant.

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    The last point I just want to briefly touch on what you're testing, where you talked about one test. That's a terrible measure of success or failure, and we need to sort of review what tests and evaluation is for. Test and evaluation traditionally was always to try to make systems better. Now test and evaluation is a final exam.

    And that's not what it should be. And that's been driven by a combination of the Congress and the DOD tending to move more and more toward viewing it as a final exam instead of a part of the development process. We need more flights to learn. Failures you learn much more from than successes.

    Mr. HUNTER. I agree with that. I think you've got to give these guys a lot of shot at the trap and skeet range. You're not going to have success until you give them a lot of shots and a lot of testing, but that's going to take some tough people just saying we're going to do it. And if you look at the Theater High Altitude Area Defense [THAAD] and these other schedules, they have been basically limited, and they are political events, for practical purposes, but you can change that.

    Dr. GANSLER. I'll try.

    Mr. WELDON. Thank you, Mr. Hunter. I didn't get the final—are you going to support the waiver or Mr. Hunter's original request?

    Dr. GANSLER. We have it under consideration. [Laughter.]
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    Mr. WELDON. Thank you, Dr. Gansler. Mr. Sisisky.

    Mr. SISISKY. Dr. Gansler, you kind of scared me a little bit when you start talking about only 17 percent of the Federal employees and the military are fighting. You are not going to privatize the Army or the Navy, are you?

    Dr. GANSLER. No sir. Just the opposite. That's an essential government function.

    Mr. SISISKY. I want to associate my remarks with the chairman here about the amount of money, and I do that—I was very critical of the National Defense Panel. I think they missed a golden opportunity. I was critical of the quadrennial review mainly because they said we have to get certain things, but we're going to get it by the following three things: Forced reduction, which I don't think is going to happen.

    Probably the only service, if they can develop ships that won't take as many people, would be the Navy that maybe—maybe—and I don't believe that that will happen—that you can reduce—the Air Force, unless you get the greatest planes in the world, and you don't need mechanics on them. I don't think you can reduce that unless you reduce the wings even more, and we've done too much of that. The Marine Corps can't be reduced, and I guarantee you the Army. If anybody thinks they can reduce the Army, which has to hold a piece of land—you know, it still takes a human body—I think they're very much mistaken.

    So I don't believe that the savings are going to be in force reduction. I don't believe they're going to be in infrastructure reduction. I may be wrong. I think we probably need to have another Base Realignment and Closure. It's not going to happen right now. I believe that, but even if we do, we're not sure we save money yet. There's been a lot of money poured from other things.
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    God only knows. I had to put an amendment to try to kill Defense Business Operating Fund because I think they were funding part of the BRAC out of DEBOF, and I tried to uncover that, but I never did. And certainly the outsourcing savings I do not believe that the savings are going to be there through outsourcing. Certainly there's some that we can do, but the real problem is that the more outsourcing you do and kill our own depots or other things, the more you reduce competition, which leads me to another thing.

    I remember that we had the merger and acquisitions funds. Do you remember the money that we helped corporations merge?

    Dr. GANSLER. Yes.

    Mr. SISISKY. And basically I was in favor of it. I wrote the section 8–18 that put the controls on it that the Pentagon hated, but I thought it was the right thing to do, but I thought the Pentagon was right because it isn't like a regular business that you merge. It's the overhead that you save.

    Now I am wondering, do you know of anything that we're buying cheaper now than we did before we put this huge amount of money in? Let's just say F–16's. Well we are not buying F–16's I don't think, but, you know, if you can show where we've really saved the money.

    I got into an interesting debate last week with the Europeans who are facing the same thing that we faced, there's not enough business for the amount of defense contractors. So they're faced with the—thinking of merges in acquisitions, and they asked me about it, and I told them—I said, ''I really believe the jury is out on it,'' because I don't know.
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    I mean I think we still pay the same amount or more for aircraft, and, you know, you can talk about inflation all you want. We haven't had an inflation. You know we really haven't. Certainly the work force, you know, gets increases but the downsizing takes place or should take place in these companies.

    So I just worry that we can't fulfill our obligations. And what I said about the Navy, I just picked that one. I could do the same thing with the Air Force. I just happened to pick that out because I am a little familiar with the Navy that I really worry that we're going to fall into a trap that I don't know we are going to get out of it.

    Now that's not your job. You've got to do what the administration wants, but somewhere along the line and that's why I was critical of the National Defense Panel, they had a unique opportunity. If we say we need more money, those guys don't know what they heck they're talking about. If the Pentagon says we need more money, well they just want to waste more money; but an outside group, because there is a fourth way to get money, and that's through the appropriation process. And I think we missed a golden opportunity there, and I think that we're going to live to regret it. I hope I am wrong.

    But if you could find me what we're buying cheaper now, by the way, that's my question. I didn't think you've have it.

    Dr. GANSLER. No, I actually do. Let me comment though on your other points because I think one of the most exciting programs going on right now is the smart ship program in the Navy, where technology is being used to significantly reduce the number of people on a ship and the number of sailors on the ship, and we should be able to get 20 to 30 percent reduction.
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    Because of the shore rotation you get a 2-to-1 multiplier from that, and that's a very significant difference because as was pointed earlier, this is a labor-intensive business. If we can in fact get the same effectiveness from that ship as we got, you know, with 30 percent more people, well that's a huge payoff. We can buy more ships.

    I mean that's the whole trade here that we are exactly trying to get to, and it goes throughout the system. It is not just for ships. I think you can get the combat readiness. If you have more reliable equipment, you need less maintenance people, you know, and you need less people in the logistics chain, and you don't even happen to as frequently maintain the equipment so you can cut back on civilian and military personnel in the maintenance area.

    You can go through a long list of things that should allow you to reduce the number of people without in fact impacting the combat capability, and actually I'd like to see it increase. I'd like to see more people carrying guns and having more ships and more planes and more tanks and in fact some of the advanced information systems.

    So I think we can do that. I think your point about BRAC—I think there is data, and we are actually putting together a report to show you the savings that have been realized as a result of BRAC.

    There is a cost up front, as you point out and is properly the case, but there is a significant savings, and I think we do want to commit to the long-term future of the defense establishment. We just can't maintain all these facilities, and that's what we are asking you for in the BRAC area.
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    Outsourcing is a different issue. There I think we make a mistake in talking about outsourcing instead of talking about competition. The savings from competition are very real. I mean there is a huge amount of empirical data that says you get better performance at lower cost.

    When we have public-private competitions we make significant savings in the both the public and the private. In fact, on average, when we competed about 2,000 cases, we've gotten about a 20-percent saving in the public sector, 40 percent in the private.

    I don't see that as an outsourcing choice. I see it as competition versus sole source.

    Mr. SISISKY. Excuse me. I didn't idly make this statement about outsourcing without bringing in mergers and acquisitions. We have two manufacturers of airplanes now.

    Dr. GANSLER. Right.

    Mr. SISISKY. What I am saying. If you kill the public sector, there is no competition. That's what I submit to you. That's why I said we have to be very careful——

    Dr. GANSLER. And that's why I want to keep that competition. No, I'd want to keep some form of competition in the public-private, private-private, either way.
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    The last point in terms of actual realized savings from consolidation. I actually just recently had one program review where they said, ''These were the savings on this missile program as a result of two firms being merged,'' and that they made—got that commitment from them that that would be part of—would be a real reduction of the missile cost, the unit missile cost as a result of the merger, putting them together in the same factory. So we are starting to see some of that payoff.

    Mr. SISISKY. Thank you.

    Mr. WELDON. Thank you, Mr. Sisisky. Mr. Spence, our Chairman.

    Mr. SPENCE. Thank you, Mr. Chairman, and welcome, Dr. Gansler, and thank you for coming by to see me the other day. We talked about a few of these things. What I didn't relate to you back then was that I am pleased to have you in this position.

    I think with your expertise and background in missiles, as you've indicated, you can help a whole lot to dispel some of the notions in this country people don't have and are beginning to have now about the seriousness of the threat from weapons of mass destruction and delivery systems to deliver those weapons of mass destruction.

    As a consequence, people I think in this country have been lulled into a false sense of security. Defense is not in the top 10 of the priorities that people have in this country today I think because they have not been lead to believe that the threat is serious and that our ability to defend against these threats is not what it should be.
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    And so in that particular area you mentioned that in this day and time what you can buy: Cruise missiles and short-range ballistic missiles across borders. But one thing I think people haven't been able to see, that the range of these cruise missiles and short-range ballistic missiles, especially cruise missiles, can be extended by the launch platforms of various kinds: Ships, airplanes, submarines, tugboats or what have you.

    And really it brings everybody under the gun of mass destruction warfare. We aren't talking about intercontinental ballistic missile, and I am concerned about that too. And also our troops deployed throughout the world and our allies throughout the world are in immediate range of these short-range ballistic missiles and cruise missiles.

    So that's the fear I have. That threat is right here today, and as you indicated, the deployment of defenses against these threats are years away. The threat is right here today, this hour, this moment, and we can't defend against it; and the people don't understand that.

    With all this thing with Iraq now people are starting to understand a little bit better, I think, about it, but they still don't get the word on it; and people like you are in the best position to be able to tell them. And so, I haven't got a question. I just wanted to urge you to do your part to tell people in this country what it's really like. Thank you.

    Dr. GANSLER. I certainly intend to try to do that.

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    Mr. WELDON. I thank the distinguished Chairman. The gentleman from Arkansas, Mr. Snyder.

    Mr. SNYDER. Thank you, Mr. Chairman. I really agree with Mr. Spence's comments there. I don't think enough of us—I mean we have a shared responsibility I think to go back home and talk about the Defense needs and the world out there.

    Dr. Gansler, you and I are in a similar situation that we're both relatively new to this. This is the beginning of my second year in the middle of my first term, which I think is true of a substantial number of members of this committee, and you begin your comments by talking about the need for some radical transformation of how we do things, and I guess I want to react a little bit to some of the things that have been said here today and in previous times.

    And in some ways I think that we in Congress need to go through a little radical transformation. The gravy train is over. You know the old days of I think that you, Mr. Chairman Duncan, talked about as a freshman, and the ability to do add-ons and such great amounts of money.

    Those days aren't with us, and yet you know tomorrow evening I will probably be at my favorite microbrewery in Little Rock, AR. Somebody will offer to buy me a beer, and I will turn them down because we have ethics rules committees rules here that say, ''You know, you're not really my friend or my brother-in-law. I am going to pay for my own beer. Thanks a lot.''

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    And yet back when we were discussing this B–2 bomber, you know, I got a letter advising of how much contract work for the B–2 project had been in Arkansas, in my congressional district. In some of the districts it must have been incredible amounts of money.

    It would seem like our culture in these days of shortages of dollars that we need to radically transform how we evaluate projects here if a project like that is—at least some of the weight behind it is based on how many millions or billions of dollars are done in the district.

    Since a few months ago, I am proud to serve in this Congress on this committee but to pick up the Sunday funny papers and see jokes in there about a weapons system that was a congressional add-on that you all didn't want and aren't prepared to deal with, I think when you start ending up—when the work of this committee starts ending up in the funny papers, we may need to transform what we do.

    This issue of BRAC has come up. I have an air base in my district. I am not very excited about the prospects of it closing, as any member would be, but I think that at some point we've got to declare the 1996 election over. I mean that election is over, and I think you all have come up with a proposal which is this thing won't even kick in until the year 2001.

    We don't even know which party is going to control the Presidency, let alone who it's going to be. As a way I think of trying to sidestep this issue is continuing the fight of the 1996 elections. The comment was made that the BRAC proposal has been poisoned by politics, and yet it looks to me like Mr. Cohen's proposal is to totally sidestep that, and I don't understand it.
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    For me, I am not sure if I will support a BRAC or not. I think Mr. Cohen obviously feels very strongly about it. It's got to rest to me on the analysis of does it save money or not. I think there's some legitimate questions about how much money is being saved, how much does it cost.

    It sure seems to me like if you close a bunch of bases at some point you've got to save some money, I would think. It would seem to me, given all the things that you have presented and we've heard here today, if it turns out that we can indeed save $3 billion a year that could go to your program, then I think it's probably our patriotic duty to get on board then, but I'll need to see the numbers.

    The issue of deployments comes up, and, again, it seems like a transformation of thinking what we as a country are going to have to go through. I think one of the advantages of having a world organized along cold war lines is they tended to suppress those hot spots. Now the tradeoff was we have had in the last 40 years two major—the Korean war and the Vietnam war—two major blowups in which thousands of Americans died.

    We are now I would think in this period that we are occasionally going to have, more often than we have in the last 50 years, to commit troops overseas, and I would think from your perspective that it's not going to be helpful if we appear to panic every time about where that money's going to come from. I mean I think you are going to need to be able to do your procurement without worrying about, ''Gee I hope something doesn't flare up in Sierra Leone. They're going to cost $500 million. It's going to come out of the sangars,'' or whatever it is, but I think we are going to have to transform how we do things so that you can reliably have some what you called earlier stability in your planning.
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    So you are new to the job. I hope that as a new member and I suspect I speak for most of the new members, at least on this side, we would welcome any suggestions you have on how we might do the business of the people that are—I am predicting Tom Allen is going to survive here long enough to be chairman, even when he's an old, old man.

    I wanted to ask one specific question. In the Defense panels report they talk about the willingness in their view to take some short-term risk as part of this transfer. I don't know if they use the words ''radical transformation'' but they meant about the same thing. As they look ahead and to preparing for the military in the year 2010, 2020, what's your reaction to this view of taking some short-term risk and how do you see that issue? That's my only question.

    Dr. GANSLER. Well first of all let me thank you for your support relative to the BRAC and the supplementals. I mean those are two critical issues as far as we are concerned, going back to Chairman Weldon's point in the beginning about a tough decision.

    I think Secretary Cohen faces a tough decision in coming up on the Hill and advocating the BRAC, knowing the political environment, and I think the fact that it's projected for 2001, what we need to do is get started on it. It won't happen until that point.

    The supplementals are clear. If we don't get supplementals then our programs are really going to be terribly messed up.
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    You asked for a suggestion on an area where the Congress can help. I think one of the things that in the past few years has hurt us a great deal on efficiency and effectiveness in our acquisition programs are the undistributed cuts, whether Congress has given us a cut across the board, said ''Take x percent off all programs rather than cut the ABC program.''

    It's tough, and I understand the Congress' reluctance to do that, and we should do that ourselves, by the way, but I think if you point out a specific problem these undistributed cuts just mess every program up universally, and that's not an efficient way to run a business.

    As far as the short-term versus the long-term, in a certain sense the Nation made that choice over the last 10 years. We stopped modernizing. I mean that curve that I showed you on procurement plummeting 70 percent. We had the advanced systems.

    We were ahead of the rest of the world, and we took a pause for 10 years and stopped buying new systems, and I think we are at the point where we need to start modernizing those systems. The planes are getting old, and the equipment's really getting old in some of the Army equipment. And so I think we need to at very best begin to modernize these systems or they're not going to be able to take advantage of modern digital technology, for example.

    Even if it's a tank that you could add in the digitization to it so that it enormously improves its effectiveness because it now has the access to the intelligence about who's coming at them and so forth. The same thing in planes and ships.
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    So I think personally that we've got a balance in the present program that we presented that does try to address that tradeoff between short-term and long-term. The trade was made in the last 10 years, and it was frankly to focus on readiness, maintain readiness, and we put off procurement.

    Mr. WELDON. Thank the gentleman. Mr. Bartlett.

    Mr. BARTLETT. Thank you very much. You mentioned the increasing environmental costs. A meaningful part of those costs are cleaning up military bases that we give away. Our military personnel have served there. If that environment was good enough for them, in my view it's good enough to give away.

    Our military people are not second-class citizens. I don't want to spend one dime cleaning up a military base to give it away when it was good enough for our military people to use.

    If the private sector doesn't want it, we'll plant trees. We'll close the gate, and we'll come back in 50 years and harvest the trees.

    Will you use your influence to stop insulting our military personnel by this practice and to stop this insanity?

    A second question, you mentioned modernization and the challenge of modernization. I want to mention just two examples of concerns that I have as we look down the road. One is that the Russians will be fielding a new tank by 2005, which will have more firepower and it will be less vulnerable than anything that we now have. We don't plan to field our next generation of tank until 2020. That's 15 years of disparity.
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    Also our missile subs are aging. I have heard no plan to replace them. Presumably they will be taken out of service when they have aged. Do we really envision a world in which we will not need this capability and this deterrence?

    I appreciate your reference in your second chart, the realities of asymmetric threats in the 21st century, and then I make reference to your 9th chart which talked about credible deterrence against asymmetric threats. I would like to mention one asymmetric threat and then ask you, ''Do we now have adequate deterrence against this threat?''

    This to me is the ultimate terrorist weapon, a single nuclear weapon, detonated at about 300 miles over Nebraska will produce an electromagnetic pulse laydown that at the margins of our country, south Florida and northwest Washington, the State of Washington, will produce 10 to 20 kilovolts per meter, enough I understand to fry all microelectronics, which means that in our national infrastructure there will be no power grid.

    There will be no communications grid, and we will not be able to restart those because I am told that even spare parts on the warehouse shelf will be zapped. It's like a simultaneous lightning strike where the rise time is in nanoseconds, and none of our surge protectors will be effective.

    You don't even limit this to an intercontinental ballistic missile and a bomb detonated, and by the way it hurts not one person nor damages one building, but it produces this effect.

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    A Scud missile now onboard a tramp steamer off of our coast with an 180-mile apogee—two of them on the east coast, two of them on the west coast—will shut down the east coast and the west coast and probably the fallback will shut down our whole country.

    They can then kick the launcher overboard, and we wouldn't even know to whom to retaliate. What plans do we have for coping with this very real asymmetric threat which I think comprises the ultimate terrorist weapon?

    Dr. GANSLER. Let me comment on both the environment and the nuclear threat. As far as the environment goes, I chaired a Defense Science Board task force on the environment about 3 years ago now, and what I concluded was somewhat similar I think to what you are suggesting, namely that in response to legislation and regulation, both from the legislative side and from the administrative side; I have the feeling that we haven't really been balancing the risk against the investment in many of our locations, including the former military sites.

    What we probably need to do in the future is set some threshold, maybe it's $5 or $6 billion a year and within that really manage the risk associated with it. The $12 billion of course it would include the DOE taking the same approach as the DOD in looking at the former nuclear sites or current nuclear sites.

    And a risk management approach to that would require that many of the stakeholders, both legislative and administration as well as local stakeholders, have to agree that this is the approach we are going to take—you know that we don't necessarily get down to drinking water in an area where you're not going to have drinking water.
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    And so that requires a great deal of working with all of the stakeholders, and that's the approach that we're trying to take I think in the environmental area. Now we are trying to shift from trying to religiously follow every single requirement instantly to saying eventually we want to get there but we ought to first get rid of the things that cause cancer before we worry about whether we are going to have drinking water on a reservation that we are not using.

    As far as the vulnerability to nuclear threats, as I mentioned in my briefing, the vulnerability domestically to a nuclear, biological and chemical threats is basically the number one thing that Secretary Cohen and the administration are concerned with.

    As you know, Secretary Cohen's been walking around with his 5-pound bag of sugar and his little tube of anthrax, but he's also been simultaneously addressing the nuclear concerns at the same time. And this new agency that we are creating to address the nuclear, biological and the chemical and trying to take initiatives of the sort of threat that you are talking about, and that I think is increasingly credible, is one that we're very concerned with and really do want to address.

    Mr. BARTLETT. I am particularly concerned, sir, about the electromagnetic pulse effects. The blast effects we're very familiar with, but when you with one weapon can shut down the whole country from EMP effects, where with two weapons on the east coast and the west coast would shut down all that part of our country, and a single weapon over a battle zone.

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    And I am not sure how much of our military functions, after an aggressive EMP laydown, because it is my understanding that we have been waiving both EMP hardening and chemical hardening on new procurements because it costs 5 to 10 percent to harden. You get 5 to 10 percent more systems if you don't hard. We need an assessment, sir, of how much of our military will survive after an EMP laydown.

    One other vulnerability, a high level blast, like 300 miles up, we will lose $50 billion worth of satellites. Two satellites will remain operable, the two Milstar satellites. The Van Allen belts are pumped up. It won't do you any good to launch another satellite. They will also very rapidly decay. We are exceedingly vulnerable to this EMP affect, and I think that it's been inadequately addressed.

    Dr. GANSLER. In fact just recently I was talking to people about setting up a task force to look at—the particular issue we were talking about was the space EMP effects, but obviously there's also a ground-based one, but the issue we were talking about was the blinding of our satellites from EMP affects, that someone could set off over their own country. They don't have to do it over our country.

    Mr. BARTLETT. Oh, that's right, you know just a little third world nation that has a missile that nowhere near intercontinental is sending the bomb straight up and setting it off, and we'll lose $50 billion worth of satellites.

    Dr. GANSLER. Right.

    Mr. BARTLETT. Thank you.
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    Mr. WELDON. I thank the gentleman from Maryland, and Dr. Gansler, we did raise this issue repeatedly last year and we had I think it was General Marsh from the President's Critical Infrastructure Task Force. Unfortunately his response was that the costs are just too great, so we appreciate you working with us to look into that issue because it is of great concern to members on both sides of the aisle.

    Dr. GANSLER. I think it's a selective question. You know, can't you do it universally in many systems? You simply can't afford it, but I think selectively you do need to address it.

    Mr. WELDON. The gentleman from Mississippi, Mr. Taylor.

    Mr. TAYLOR. Thank you, Mr. Chairman. No. 1, I am not a member of your subcommittee, and I appreciate you recognizing me. I am interested in where we stand—I happened to have been here when Secretary Cheney canceled the A–12. I read with great interest where the court has ruled in favor of the contractor. Can you tell me where we stand with that and what does that do to this year's procurement budget?

    Dr. GANSLER. You probably also read that the administration basically said that the decision made by the court was wrong. I mean that's the position that the administration has taken, and they feel very strongly about the fact that they have a very good case to go back and appeal it and therefore are doing that.

    And as far as the budget goes, the way that works is that until a final judgement is made, in other words on the appeal, that we don't have to budget for it within the Department of Defense, but at some point if in the eventuality in the long-term that we end up having to pay for it then we will have to budget for it, and probably in this case it would come out of the Navy budget.
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    And so we feel obviously if we didn't have a good case, you wouldn't go back and appeal it because there's interest accumulating all the time.

    Mr. TAYLOR. Any chances of finding a judge who is also one of President Bush's appointees?

    [No response.]

    Mr. TAYLOR. Thank you, Mr. Chairman. The other thing I would like to mention as far as procurement, several members of General Clark's staff have told me that he has recommended for their reading a book called ''The Cobra Event,'' which deals with a biological terrorist attack on New York City. And I realize it's a novel, but it is so within the grasp of reality that it is certainly frightening.

    I am also a believer in asymmetrical responses. I don't think Hussein would be stupid enough to stand toe-to-toe with us again. I do fear that he does have biological weapons, and I do fear that he has chemical weapons that are much worse than anthrax or any of the other reported weapons of mass destruction.

    What is being proposed to deal with this threat? I am told that the Guard and Reserve will pick up the mission for responding to it, but I really have not seen a great deal of specifics along those lines.

    Earlier today, before the Military Personnel Committee, I was informed by a number of the people responsible for providing military health care that FEMA and the states have been given the responsibility for dealing with the aftermath.
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    Since most of us were State legislators I think it's safe to say that the States certainly have not budgeted for this. The States certainly are not planning for this and quite honestly I think that is something that only the Federal Government is capable of responding to, and I was wondering in your procurement plans for this year and for the near future, what are we doing to respond to this, much like Mr. Bartlett's first case scenario, another very threat that I think exists as we speak.

    Dr. GANSLER. In last summer's Defense Science Board summer study we looked at that particular threat, you know, the biochemical attack on the United States; and what we did—we actually brought in policemen, firemen, first responders to it, and as you point out, in most cases they are not prepared adequately for this. And so we felt it was an appropriate for the National Guard to pick up that interface between the local first responders and to try to provide training and in some cases even some equipment for it.

    And so we have been stepping up that activity and that's what the primary direction for the support. Clearly there is this question of the role of FEMA and other agencies. It's not a Defense unique role. We are talking about a domestic activity. There is this continuing question about the interface between a criminal action and a national security threat.

    Increasingly they're getting very vague in terms of many of these will be national security threats and what we anticipate in fact in the future it's very likely that if you get into a regional conflict you'll also have domestic actions taking place against you that would appear even to be terrorist type actions.
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    And so we're trying to recognize the fact that biological, chemical, information warfare actions here domestically could well be linked into national security threats outside the United States. General Campbell, you may want to comment on the National Guard role. Did you?

    General CAMPBELL. In the 1999 Budget they're reporting over here—there are funding for establishment of 10 44-man teams, that will be the initial 10, and hopefully our end goal will be to put one in every State; and we do have that funding included.

    Mr. HUNTER. Would the gentleman yield on that question? I thank my friend from Mississippi. You know one thing that this committee put in the National Guard Budget, that is the array of systems that we recommended be purchased last year were these x-ray machines, portable x-ray machines that you can check the semis with as they come across the international border.

    In my town of San Diego we have 2,400 semis a day coming north from Mexico, and General McCaffrey said they desperately needed these things for drug detection, but also they're very important. I think it's important to have these mobile x-ray systems so you could take them to troop concentrations. You could go to Bosnia with them.

    The administration cut them out, and we talked to the--because the Guard didn't make a strong enough case for them, but I think that's a place where you folks weighing in could be important.

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    I thank my friend for yielding.

    Mr. TAYLOR. Mr. Chairman, my only request would be and I know you aren't going to know this off the top of your head but if you could get back with me to what you have budgeted as far as procurement along these lines and what you see as a realistic amount of money to budget in the next 5 years towards this threat.

    Thank you sir.

    Mr. WELDON. Will the gentlemen also yield for this time? Just one word of caution, I support the effort to give the Guard an enhanced role, but the first responder in this country to a domestic disaster is not the military. And there is a very real concern across this country among 1.2 million men and women; 32,000 organized departments that I work with in every State and in every one of your districts who feel very threatened that the military and the Justice Department may be attempting to come in and take over what is a domestic, local responsibility.

    The fire chief from Las Vegas called me over the weekend. They sat there for an hour and a half in Las Vegas because there was no one that could go in, yet there were teams around there that were not called upon, and we are going to do a hearing on this within the next couple of weeks. So there's a role for the Guard, but they are not the first responder.

    You could have all the teams you want in every State. They're not going at an incident in the first 10 minutes, and we can't lose sight of that. And I can tell you if we don't keep this in the back of our mind as members you're going to have big problems in your districts.
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    I can tell you that right now because I am already hearing this from across the country, and General, you know what I am talking about, these emergency responders, largely who are volunteers, 85 percent of them know what they are doing. They are well-trained, and we should be there to support them and provide additional capability beyond what they have.

    Mr. HUNTER. But they are first responders at the border, at the international border, because that's all we have to.

    Mr. WELDON. Mr. Bateman.

    Mr. BATEMAN. Thank you, Mr. Chairman, and welcome Dr. Gansler and General Campbell. I am certainly glad that you've got your job instead of me because we've certainly given you a plateful to try and dispose of today. I've listened to a number of comments and some lecturing from members of the committee, and I've enjoyed them, and I think they've been constructive, and I hope that you are receiving most of it well.

    I am not going to lecture at any great length, but a note of caution. We have for too many years proceeded on a defense plan that assumes that we are going to pay for modernization and other things which everyone agrees are needed by savings. Now it's wonderful to have savings. We ought to do things as efficiently and as cost-effectively as possible, but you can't spend assumed savings.

    Now looking at BRAC, it is probably necessary that we undergo that painful process further, but the one that doesn't really make a lot of sense is to do it in a context that we will pay for modernization of our equipment by BRAC savings because the time frame that you show us on your charts and that we read about as to when modernization needs to occur and when programs come online, are within any reasonable time frame by which you will actually generate the savings from BRAC before everyone concedes apparently that initially it will cost you more to close bases than you'll save for a period of time.
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    The time frame doesn't match. So we ought to stop this phoniness about paying for modernization by a round of BRAC closings or assuming savings until we have achieved the savings. In the meantime the President's got to bite the bullet and ask the Congress to adequately fund national defense.

    We can't do it above what he requests. There's just no political reality to that, but if we asks us I think we would provide, and I am very concerned that he has asked us for very, very meager means to accomplish things which are incredibly important.

    Let me turn to the area of real question that I wanted to raise, and I'd just assume you do this for the record as to do it spontaneously or off the top of your head but however you are comfortable with it. We've talked about the chemical-nuclear-biological threat and defenses to it. And our congressional defense reorganization or reform effort deals with how we manage the nuclear-biological threat and a desire to have that activity programmed and coordinated within the Office of the Secretary of Defense for all military departments.

    Tell us where you are headed on that and what we can expect and the degree to which it's consistent with the expressed view of the Congress or if we think we are wrong, tell us where we're wrong.

    Dr. GANSLER. Let me comment on both points. Relative to base closures, you are correct that obviously up front there's an investment cost, and the report which we'll be sending up relative to what the actual empirical data show on the base closures to date, it's 3 to 5 years out in the time periods that in order to realize the benefits; but if you take a base closure that begins in 2001 you're going to start to see savings and significant savings in the 2004, 2005, 2006 time periods and continuing on out with those savings, since you have eliminated those facilities and the labor associated with them.
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    And if you look at the curves that I had up there in terms of the modernization, you're correct in that we've reached the $60 billion number for investments in the short-term and therefore you won't impact the base closures at all.

    If we are going to continue the modernization program as shown on those charts with the joint strike fighter, the new ships, the new planes, the equipment that the Army needs and so forth, the ballistic missile particularly as we start to go into production that, those are going to be out in that time period, 2004 and beyond; and that's where we really need to generate those dollars from the base closures, and that's why we are pushing now for the base closures to have the impact in the out years.

    We've budgeted for the costs of the investment. We've also taken the benefit of the savings, and we have to get it in order to realize those savings.

    Now in terms of the nuclear-biological-chemical activity within the Office of the Secretary of Defense, our plan within this reorganization that we're going through now is to address, as we said in the Defense Reform Initiative of Secretary Cohen, to have the Office of the Secretary of Defense not be in the programmatic side of it but in the policy and oversight.

    We will have a smaller group within the Office of the Secretary of Defense, actually within my organization, that will doing the oversight on the nuclear-biological-chemical area, and then we'll have this large organization that will be doing the implementation activities in that area. So it is consistent with what you said in terms of the OSD having that oversight and responsibility and then the implementation portion of it in terms of the arms control agreements, during the counter-proliferation, in terms of onsite inspection agency.
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    That sort of onsite inspection is clearly an implementation. It is not something that the Secretary's office should be doing, but seeing oversight of those dollars and of those programs and of those policies clearly remains in the Office of the Secretary of Defense.

    The policy aspect of it would remain in the Under Secretary for Policy and the acquisition aspect of it would remain in my responsibility.

    Mr. WELDON. I thank the distinguished gentleman from Virginia. Mr. Thornberry.

    Mr. THORNBERRY. Thank you, Mr. Chairman. I want to echo some of the comments by Mr. Hunter and Mr. Snyder. I think there are few things either for the Department or the Congress that are more important than trying to transform the military to meet the threats that we face today and into the future.

    And throughout history nations that have failed to make that transformation have often paid catastrophic price for that failure, and I don't want to see that happen to us, and I worry about the obstacles to that transformation here and in your place, and they are considerable, as you know.

    Let me start out by asking this: If you were king and could write any law or regulation you could imagine, what change in law or regulation do you think would make the most difference in the acquisition process in reducing the time that it takes to get things from conception to deployment, in making sure that things are not obsolete by the time they are deployed and being more efficient, you know, through that whole process. What is the thing that would make the most difference?
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    Dr. GANSLER. That's really a very good and a very difficult question because as you've pointed out in your introduction to the question the primary barriers today to new ideas, new systems, new ways of doing business are cultural, not technical or legal.

    The resistance of the institutions within the Department of Defense—the military, the civilians, the defense industry, the Congress—are all based upon doing things in the traditional fashion, and changing that in terms of accelerating it, but more importantly even in terms of buying different systems and buying them differently is I think much more of a cultural barrier than it is either regulatory or legislative.

    Mr. THORNBERRY. That makes it a more difficult problem to solve.

    Dr. GANSLER. Well that's right, but the good news is that the transformation that the commercial industry in America has gone through in the last decade gives me some hope. Otherwise I would not have any.

    What they found is they first had to recognize they had a problem, and that was pointed out I think Mr. Chairman by you that we have to first recognize we have a problem. Second, you have to have a vision of where you want to get to, and that was what I was trying to do in the charts that I went through, to say, you know, what kind of new systems we need and should we change the way we are going about doing it.

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    Then it requires leadership and sustained effort and by all of the leadership and this would apply both to the Congress and the administration towards making these changes. And I think in the case of the DOD, as I said earlier, I think that there's a growing recognition of the senior military leadership for the need for these changes now, which I honestly believe wasn't as much recognized 5 years ago.

    And that's my hope that we will be able to collectively between the Congress, the administration, the military and even in some cases the defense industry, be able to make this transformation.

    There will obviously be some areas where we'll come to you and ask you for legislative change, and there will be many areas where we will have to change our own procedures and practices, but I think the main thing is to sort of have an idea where we want to go and provide leadership for getting there.

    Mr. THORNBERRY. Well I hope you're right. I know that you're right, that increasingly the need is being recognized because I've talked with a number of those folks too, but everybody also is somewhat skeptical that that can be made. And frankly I'm kind of interested in Mr. Hunter's suggestion that maybe we need to figure out some priorities where the Secretary can say, ''This is so important we are going to throw all the rules and regulations out the window. Just go do it.''

    Maybe we ought to try that a time or two. Let me ask you about a couple of specific things. I am not on the R&D subcommittee, but I'm a little concerned that R&D is going to go down at a time when change is happening this fast. That does not seem to me to be something that makes sense, and I'd look at what your proposal is for this year for the different services.
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    I noticed that the Army, which has the most people, has a very low R&D budget, and out of there, there is some environmental R&D. I understand the second largest R&D proposal in the Army is $300 million for base operations. It's not exactly, you know, the army of the next century.

    How are we ever going to get there if we don't put our priorities in a little better order than that?

    Dr. GANSLER. If you look at the actual R&D, as submitted as I indicated in my charts, we are slightly increasing but certainly keeping level the long-term basic research and applied research because that's critical. That's the seed corn for our future. We have to do that I believe.

    The place where you see the drop in the R&D, as I indicated on the charts though not even back to the historic levels but nonetheless a drop, is because about 7 of the 10 major R&D programs are phasing into the production phase. And so what we are doing is shifting those major investments from the R&D into the procurement account.

    If you think of modernization as the sum of R&D and procurement, that's what we are actually going to be addressing for modernization; nonetheless I really recognize the importance of the long-term R&D being maintained, and that's something that I want to continue to stress.

    One of the areas that in fact was mentioned is the display outside on MANTECH. That's an area we actually increased for this year because a key element of our R&D investment is reducing the costs of new systems, not just making them better, but the individual costs of our weapons is prohibitive today, and they take too long. They cost too much. And we've got to do something about reducing their cost and their cycle time.
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    So that's an area for research. Now you pointed out even an Army R&D related to support costs or base costs reductions. I am pretty excited, as I said earlier to Congressman Sisisky, about the smart chip program. That's and R&D program. We're using R&D to replace labor.

    You can do that same thing on—there's a so-called ''smart base'' program that the Navy also has, where we're trying to use basically the information technology to reduce the costs of operating bases.

    I think that will have a big payoff in the long run because it will shift support dollars to become available now for modernization for R&D and production. So I don't really want to stop the R&D related to cost reduction activities. I think that's really important, but we still need to continue the next generation weapon systems.

    Mr. THORNBERRY. Mr. Chairman, if I may ask just one other area. A number of people have indicated that we need more joint development and testing of weapons systems. It was one of the recommendations of the National Defense Panel. Do you have comments about that and maybe changes organizationally in the Department of Defense that can help encourage further jointness earlier in the process?

    Dr. GANSLER. Yes, you will recall it was over 10 years ago when Goldwater-Nichols was passed and when we really moved towards the direction of recognizing that we are going to end up in almost every conceivable scenario having jointness involved and that the big payoff for us in the future will sensors from one service working with missiles from another service or airplanes from another service and so forth.
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    The ability to operate in a joint environment is again a counter-cultural one in terms of historic behavior. We've historically said, ''Sea power is Navy. Air power is Air Force, and ground power is Army and the Marines.''

    And so now we've got to recognize that we need this joint exercises, joint activities, interoperability, all of the things that go with that. And we are making major steps in that direction and maybe in fact, General, maybe you want to comment on that one because that's right down your line since he is in the Joint Office.

    Mr. CAMPBELL. Sir, we are making major attempts to structure ourselves institutionally to speak for the Commanders-in-Chief of the future. Historically we have spoken for the commanders-in-chief of the future by single services which have yielded single service solutions, and we've recognized as we've gotten more mature, after Goldwater-Nichols, that we need to provide a venue that has the charge to come up with joint solutions to problems in the 21st century.

    We expect this year the chairman resident will probably address that in some of the unified command plan changes, and we are working right now in areas like combat identification which certainly demand a joint solution to try to use that as a model perhaps to how we will develop these in the future.

    And I think that the joint implementation master plan that we're putting together to institutionalize and operationalize Joint Vision 2010, which is our attempt to break free of these cultural bounds that Dr. Gansler just talked about, will also be a way to speak for the CINCs of the future or joint ways to do business in the future. It's not easy. We don't have the nut cracked yet, but we're certainly make a good attempt at it I think.
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    Mr. WELDON. I thank the gentleman. The gentleman, Mr. Allen.

    Mr. ALLEN. Thank you, Mr. Chairman. Dr. Gansler, thank you for being here. I have two questions, one related to the DD–21 program and then to national missile defense. Just in reaction to some of the recent comments, asking where we are going to save money, my understanding, my memory is that the DD–21 is about $200 million more than the Aegis destroyers that we're currently building, and that that's only a fraction of the life cycle savings that, as you say, you have when you get to a new platform, a new system that takes many fewer people to staff over its life.

    But I did want to ask you where the formation of the BIW Engels-Lockheed Martin teaming arrangement, with the respect to the DD–21 programs, poses any problems for the Department?

    Dr. GANSLER. Well let me first comment on the fact that we are counting on the competition that's going to take place on the DD–21 to introduce very significant innovative concepts, and that's where the cost savings from a system and life cycle cost perspective will come.

    We must design lower cost ships and have fewer people on them in order to be able to afford them in the future, and that is the principal focus of the DD–21 is to take advantage of advanced technology of a variety, not just shipbuilding but information systems and integration systems associated with it.

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    Now in order to do that we want to encourage competition as much as we can on the DD–21. The draft which was just released, a revised draft on the structures of the industry—it's up to the industry of course to decide how they are going to structure—but we in our revised draft tried to encourage competition as much as we could from a variety of perspectives in terms of systems integrators and in terms of shipbuilders.

    Mr. ALLEN. But the teaming arrangement isn't necessarily at odds with that particular goal, is that correct?

    Dr. GANSLER. Well in the draft request for proposal that we have for the DD–21 we actually suggest—well in fact we specify—nonexclusive arrangements for teaming.

    Mr. ALLEN. I understand. Let me turn for a moment to the national missile defense. When our chairman began, he rightfully I think emphasized the three areas where this committee has taken some initiative in pushing the Department of Defense—one on information warfare, two on asymmetric threats, and third on missile defense.

    And I am in complete accord on the first two, but I have some concerns that some of which have been reflected in what's been said so far about the national missile defense agenda that we have, and I am coming at it a little bit differently.

    One thing that seems to be reflected in Chairman Hunter's comments and in Chairman Weldon's and others is that the technology does not necessarily accommodate itself to the time within which we'd like these programs to be set up, and I am concerned that we are going to rush through a national missile defense program, first, before we can do it well and second, before it is out there to meet a realistic threat.
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    We talk a lot about threats here, and as we should. That's our responsibility, but I sometimes think that we have to put individual threat's, individual weapon systems in a broader context and remember that our first line of defense, it seems to me, is still deterrence. And although that may have been a theory of defense that worked much more easily when you just had a bipolar world, and it doesn't take account of how Saddam Hussein and North Korean leaders may act, it 's still our number one line of defense.

    With that in mind, I wish—I wonder—if you could comment on how that 3-plus-3 system can be operated and moved forward in a way that ensures that when there is a credible external risk out there that we really have to deal with, that we will have a technology that is developed late enough to be an effective deterrent.

    That's my concern. Not that we do this too fast. My concern is more that we do it too fast than we do it too late.

    Dr. GANSLER. We certainly agree with you that our first line of defense is the deterrence one. Second, that the current 3-plus-3 program has as its focus evolutionary development. In other words the first 3 in the 3-plus-3 is geared towards an evolutionary development concept; in other words, we will develop, test—develop, test—and continue that evolution process along with the option at any point such that the threat shows we need to deploy, to deploy whatever it is at that time, rather than what might be a more traditional approach of say we'll develop something and then we'll deploy it.

    We think that, given the state of the technology today in this area and the difficulty of the challenge of national missile defense and the evolution of the threat to become increasingly sophisticated when it is realized, we need to have an evolutionary development program.
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    And that's exactly what we are doing, so that we're trying to keep the development going along, not develop a system but have an evolutionary development program, and that is the thrust of the current program.

    Mr. ALLEN. Thank you, Dr. Gansler, and thank you, Mr. Chairman.

    Mr. WELDON. I thank the gentleman. Mr. Abercrombie.

    Mr. ABERCROMBIE. Thank you, Mr. Chairman. Mr. Chairman, I've unavoidably, due to commitments having to do with my State, have been unable to attend some of the hearing. Today if I lurch into ground that you've covered, just say so, and I'll move to something else immediately.

    Thank you very much for being here. I am not sure I have some questions. I have some observations, and if you could give me your perspective I'd be very grateful.

    Let me preface it by saying, so that it doesn't sound like I am trying to trick you or draw you into something, you may be familiar with, as certainly Chairman Hunter and Weldon are and some other members, that I am very interested in moving the concept of capital budgeting into perhaps a bill form or a legislative form that might be useful, particularly where procurement and the DOD is concerned.

    Without going into the whole question or intellectual abstraction of capital budgeting and operating budgets, I want to ask you particularly about the F–18 E/F, the F–22, and the Joint Strike Fighter and the outlines here that you kindly gave us, the charts.
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    Showing on page 6 your TACAIR long-term investment in constant 1998 year dollars the F–18/E&F, F–22 and Joint Strike Fighter in relation to other investment. Are you familiar with what I am speaking about?

    Dr. GANSLER. Yes.

    Mr. ABERCROMBIE. If you look at that, and if I read on page 8 of your testimony, investment budget overview, where you say, ''over the period from between fiscal year 1999 through fiscal year 2003 a program the total of $288 billion for procurement,'' and if you go over—you don't have this in front of you necessarily, but the committee in the past, the committee staff and as a result of hearings I might say, Mr. Chairman, parenthetically the very thorough hearings that have been held here—the estimate just on the F–22 has gone as high as $350 billion.

    Now I realize that there have been cutbacks and changes, but I am trying to reconcile this very—what was meant to be an encouraging chart I expect, as far as this committee is concerned—your number of $288 billion total procurement and estimates as recently as our hearings last year that just the F–22 could reach considerably higher than that.

    How do you reconcile these various numbers in terms of a realistic assessment and projection for our joint committees here to undertake, vis-a-vis this year's budget?

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    Dr. GANSLER. If you look at first at the chart, that chart shows the full expansion of each of those programs over the period from 1998 to 2015, and the page 8 numbers that you referred to, the $288 billion, that is——

    Mr. ABERCROMBIE. That's the F–22, right? Oh no, excuse me, $288 is the total procurement budget if I understood your——

    Dr. GANSLER. Right, but that is only for the period from 1999 through 2003.

    Mr. ABERCROMBIE. I see. OK. Alright. So it would be considerably more than that out to 2014?

    Dr. GANSLER. Oh sure. I mean it would be the integration on curve 8 of all of that black area for the three programs.

    Mr. ABERCROMBIE. OK. In relation to the estimate of the committee that projections as late as last year as to costs would be as high as $350 I think for all three. ''The total acquisition of these programs could be $350 billion.'' Has your figure come down or up or in between?

    Dr. GANSLER. Well, I think the principal difference between the set of numbers you would have looked at last year and the set of numbers that we are talking about here now is the result of the Quadrennial Defense Review where we reduced the quantities of the systems in that time period.
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    I think that's the dominant difference between the two. The costs of the individual weapon systems has not significantly changed.

    Mr. ABERCROMBIE. I am trying to remember now. I may not have it right in front of me. I am trying to remember, was it the Joint Strike Fighter you hoped to bring in eventually at $70 million a copy? Does that sound right? I am trying to remember my numbers.

    Let's see. Here I've got it. If you'll give me just a minute. ''The 1997 Defense Acquisition Executive Summary estimates the average unit per human cost for a thousand aircraft be $73.9 million.'' Does that sound like a familiar figure?

    Dr. GANSLER. Yes. That's the F–18.

    Mr. ABERCROMBIE. Right. OK. Does that still sound as if—this is for a thousand aircraft?

    Dr. GANSLER. Yes, both of us say that's the right ballpark.

    Mr. ABERCROMBIE. OK. How many aircraft are you projecting for the F–22 at this stage?

    Dr. GANSLER. Three hundred and eighty. Go ahead. You can do it.
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    Mr. CAMPBELL. It's approximately 380, sir, down from over 400.

    Mr. ABERCROMBIE. And do I remember correctly that's thought to be at $30 million?

    Dr. GANSLER. No sir, the flyaway of the F–22 will be greater than $70 million a copy.

    Mr. ABERCROMBIE. Be greater than $70 million?

    Dr. GANSLER. It's the Joint Strike Fighter that's $30.

    Mr. ABERCROMBIE. OK, the Joint Fight Striker.

    Dr. GANSLER. Except there will be three variations of the Joint Strike Fighter, but they're in the $30 million range.

    Mr. ABERCROMBIE. Wait, what's the projection at $30 million for the Joint Strike Fighter, the projection of numbers?

    Dr. GANSLER. You mean how many aircraft?

    Mr. ABERCROMBIE. Yes.

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    Dr. GANSLER. It's over 2,500 aircraft.

    Mr. ABERCROMBIE. OK. Have you considered at all, because one of the points you then make as you move on in your summary is, ''Five key ways to paying for modernization,'' at the top of your list, this is on page 15, the top of your list is acquisition reform.

    Have you contemplated at all the idea of moving to a capital budget and an operating budget, particularly where acquisition and procurement is concerned, in the Department of Defense, given the extraordinarily high numbers that we project out into the distant future that we're likely to incur in the light of and in the context of our concern for readiness, our concern for quality of life issues, our concern for being able to operate the armed services which will surround these incredibly complicated and technologically sophisticated systems?

    Dr. GANSLER. I am going to have to take that one for the record because that's one that the Comptroller would tend to be dealing with, rather than myself. At least I have not yet addressed that question of the difference between the two.

    [The information referred to can be found in the appendix beginning on page 129.]

    Mr. ABERCROMBIE. Mr. Chairman, my point is that I posit that you are a serious-minded person, as is Chairman Hunter and certainly every member is, and I am putting this forward not as some kind of an academic exercise but a recognition, particularly if we're to retain people in the armed services they're going to have to high quality, highly motivated people, that are going to have to have a support system under them, including housing and other what I call quality of life elements, that have to be paid for.
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    And in order to do that I think we may very soon have to move towards genuine consideration of a capital budget process and an operating budget process.

    If you'd indulge me just one more minute, Mr. Chairman. I know this is an area of concern to both you and Mr. Hunter. On page 12—it's really hell when people actually read all this stuff you put in front of them, right?—of the summary, you've got the Joint Vision 2010 predicted on information superiority, and the first thing you have listed under there is protection required. I don't know if you've had occasion to listen to some of our hearings, but some of us are very, very concerned about technology transfer and information projection, including the information warfare encryption protection.

    I presume that those things may be incorporated in this very, very general summation here, but could you be a little more specific as to how committed you folks are to this. It's a little disconcerting to see Dr. Hamre on CNN trying to explain how hackers attacking the Pentagon is not just a movie of the week but is actually taking place.

    And if that's happening, I hate to think what the situation is if we're actually transferring technology to someplaces around the globe which may be great for building sneakers and selling them back to us, but may have other things in mind for us.

    Mr. WELDON. Will the gentleman yield on that?

    Mr. ABERCROMBIE. Certainly.

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    Mr. WELDON. I was going to ask you a question, but since he's already asked it, if I could expand on that, when answering Mr. Abercrombie's question, give us an update on the report that Dr. Hamre gave yesterday that we have just had recently one of the largest I guess hits if you will on our nonclassified systems that we've seen and what steps we are taking to deal with that.

    We did hold a very significant, lengthy hearing last year on information warfare. We did plus up additional money there. It was based on the Defense Science Board report that said we need $4 billion more in that area, and the specific concern we have is that we can't pass this off as trivial hacking because all it takes is one person say to take an order of missiles say going to Dover Air Force Base and instead change that order to be boxes of grenades. We all know what impact that would have in a nonclassified, and that's the kind of information we are talking about.

    So if you could expand upon Mr. Abercrombie's question, it would also answer the one I was going to ask.

    Dr. GANSLER. Yes, very clearly what Secretary Hamre was doing was trying to alert people—I mean we've had a lot of discussions internally about the degree to which you keep quiet about the vulnerability of your systems.

    As you know, many in the commercial world have been under significant attack, banks and so forth, and they are not proud of that, and they don't talk about it, and so it doesn't get the visibility, and as people start to hack into our unclassified systems, there is this debate about do we go public with that and let people know it's happening.
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    And Secretary Hamre reached the conclusion that it is something we really ought to let the public know about and let our own industry know about so they're sensitive to it because of the technology leakage and so forth. So we first actually called in a bunch of the senior people from the defense industry.

    We gave them a classified briefing in fact on the vulnerability, and now as a result of the activities over the last few weeks where there appears to be a significant increase in what we believe to be hacker, as he indicated, activity; but it's almost like the analogy that he's drawn is to what happened in Japan with the subway attack, you know from the biological agents, and you need to get something to wake you up to this very serious threat that you have.

    And so we've now sort of tried to expose the vulnerability and at the same time tried to take corrective actions. And that's the critical part of it—in other words, what are we going to do about it?

    Mr. ABERCROMBIE. Well Mr. Secretary, may I just interrupt for a moment to say that I'm pleased to find out that an anonymous hacker can get the attention of the Department of Defense on this issue as opposed to the combined weight of two subcommittees of the National Security Committee by raising exactly the same issue last year.

    Maybe we should have tried to hack in out of the National Security offices over here, and maybe we'd had had more attention; but regardless of how it came about, I hope now the message has been delivered because I think if you'll check your budget you'll see that Mr. Weldon and Mr. Hunter, along with some of the rest of us on a strictly nonpartisan basis here, have been pushing to have this become a priority.
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    Dr. GANSLER. As I indicated in another one of the charts that's in there, we have committed $3.6 billion over the next 5 years to this issue, and we've also really focused our attention organizationally.

    We've gotten the services—we've had a number of meetings with them, in fact some of them even on Saturdays to try to make sure they understood we were serious—and we're also working closely with the Justice Department, which I had mentioned before you came in, that this is a problem that transcends just the defense arena, and it's one that we're going to work on an interagency basis because you never know whether this is a national security or a crime issue and when first addressed, it's addressed as a crime.

    And so we need to collaborate much more closely, and we need to be much more responsive because in one case someone's interested in catching a criminal, and another case we're interested in preventing leakages. The prevent leakage you have to do instantly. To catch a criminal you want to accumulate data on. So there's a conflict in a sense in the time response.

    And so we're trying to work out those issues with our other agencies.

    Mr. ABERCROMBIE. Well, last point, you may want to answer Mr. Weldon's question a little further, and I appreciate your indulging me with this time, Mr. Chairman. You did not address my other point, which has to do with technology transfer.

    Obviously, I cannot ask you to give to me a definitive response in this particular context with respect to that, but I would like to respectfully put you on notice that I do believe the Secretary of Defense has to be prepared before this session is over to come before—I am certainly not speaking for the Chairs—but has to come before the committee as a whole and certainly these subcommittees, with a definitive policy statement with respect to technology transfer, which I hope will be a tough-minded, hard-nosed national security first approach, which I believe will receive the support of the overwhelming majority of members of this committee and hopefully of Members of Congress.
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    And if that does not sit well with other elements of our society, that's something that I think we'll take up politically and see where it comes out, but absent the strong and firm support of the Secretary of Defense and the Defense establishment, if you will, in this regard, it's going to be very difficult for some of us who want to see lives saved and the interests of this country protected to carry out that mission if commercial interests, self-serving interests, short-term profit interests are put ahead of the national interests of the Nation.

    Thank you very much.

    Mr. WELDON. Thank you, Mr. Abercrombie.

    Dr. Gansler, FA–18 E/F, how many aircraft do we have flying right now? How many FA–18 E/Fs?

    Dr. GANSLER. I am sorry. I have to take that for the record.

    Mr. WELDON. Is it one?

    Dr. GANSLER. No, it's a few, but I don't know the precise number. I am sorry.

    Mr. WELDON. In my early years, coming to Congress, we used to have a policy of fly-before-you-buy. The reason I ask this question is in fiscal year 1997 we authorized and appropriated money for 12 FA–18 E/Fs. The Secretary has now put a hold on 20, fiscal year 1998. We have a wing dip problem, and you're requesting 30 in fiscal year 1999.
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    It seems to me as though maybe without solving the problems to request that kind of buy, it may be something that we ought to look at, given especially the current financial problems that we have and the ability to fund all the priorities again coming before us.

    And I would just say that as we get through the hearing process, and we're going to be asking this question in considerably more detail, I would just be asking you to look at that and be prepared to answer us. I am sure that question will be asked as well of the Navy because it's the kind of concern that I think we have to address. My understanding is you had one or two flying, but what this would now mean is that we would have 30, 62 aircraft on order—I am sorry. OK, seven flight test aircraft right now.

    And this is a—and I am not against the FA–18 E/F program. I just think we have too many big systems coming down that we are not dealing with aggressively, and to leave those decisions—we are going to be here, you know. Maybe the Secretary of Defense won't be here, the Secretary of the Navy will change, you will change, a lot of us will be here, and we don't want to have to keep coming back with new faces, realizing we asked these same questions 5 years ago or 6 years ago with a different person in the position.

    And so you are going to see the Congress continue to ask these tough questions because I think most of us expect to be here during the time we're going to have to solve these problems of not having enough money to buy the programs and the priorities that are outlined for us in the year 2000 and beyond.

    Let me also ask you a question that the rumor mill in the Pentagon which comes up to the Hill frequently sometimes becomes—I asked you this question in private, but I want to put it on the record—are you aware of any internal planning in the Pentagon right now that is basing a conclusion, assuming there is an unsuccessful THAAD test in June which is now the schedule for that next THAAD test, that would reallocate all the THAAD money and in effect end the program?
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    Dr. GANSLER. No, I am not.

    Mr. WELDON. Would you be in opposition to any such planning, if that in fact were the case?

    Dr. GANSLER. I will be responsible for the review of the program and the decisions to go ahead or not go ahead on that program. I am the acquisition executive on that program and all programs.

    Mr. WELDON. Is your opinion that the THAAD program is dependent on one test or is the measure of the program at this point in time based on a number of milestones besides the actual intercept?

    Dr. GANSLER. I frankly wouldn't want to count any program to be dependent on one test, either plus or minus by the way. I wouldn't count on—if it's a success, saying, ''Wow, we've finished now. We're done with testing.'' As I said earlier I think we learn more from failures than from successes, and so I definitely would not feel that any program would be—should be—dependent upon a single test.

    Mr. WELDON. Isn't it not correct that the THAAD program has met all but one of its milestones, which is basically the intercept?

    Dr. GANSLER. I can't answer that question. I believe it's met most of its milestones. I don't know about that.
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    Mr. WELDON. Can I ask Admiral West in the back to respond for that?

    Dr. GANSLER. The one final demonstration is. I don't know about some of the engineering tests, but in essence that's correct.

    Mr. WELDON. I thank you. Let me ask you, in my final summary here, besides one request I have, and that is, if you could answer the questions for us in a written form and ask your staff to do it as expeditiously as possible, hopefully within 2 weeks. We're going to a very quick markup process, and your answers can help us and our staff shape some of the funding levels that we'll provide for the various programs. If you could assist us in that regard, it'd be deeply appreciated.

    [The information referred to can be found in the appendix beginning on page 129.]

    My final request of you, Dr. Gansler, is I think at the heart of where we are going. I'd ask you to do two things. First of all, I'd ask you to help to think about how we working with you can put together a process to maybe rethink the way that we approach at least the R&D relative to the military.

    I am not satisfied that we've stepped back and taken a broad look at how we can restructure or reorganize the way we approach research for the military. Perhaps working together we can come up with some solutions that may be difficult for some of us to swallow, maybe because of our parochial concerns for the services or our parochial concerns with our districts.
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    But I think we owe it to ourselves and the Pentagon at this point in time to take that step where we step back and say, ''Now wait a minute. Maybe it's time to rethink the way we organize our labs, the way we organize Defense Advanced Research Projects Agency, the way we organize our whole research and development process. In this day and age, given the budgetary limitations, maybe we ought to rethink and relook this.''

    I'd be willing to work with you on that, and I think our entire subcommittee would, and I would ask you to consider that.

    [The information referred to can be found in the appendix beginning on page 129.]

    The second thing I ask you to do is to help us sell research to the members of Congress. Now, the reason why I say that is we sit up here on the Hill and most of our colleagues don't understand the long-term implications of where we are trying to go.

    We have to try to deal with that. I took a trip in January out to the West Coast, and the idea was to visit some of our labs and to see some of the ideas that we're trying to promote. And one of the visits was to Space and Naval Warfare Systems Command [SPAWARS] in San Diego, as well as visiting the headquarters of the Third Fleet and the new command ship of the future that's being retrofitted there, the Coronado.

    But while I was at SPAWARS they took me into a classified room known as the command center of the future, and when I was in that command center they gave me a brief, and they showed me a video presentation that was done by one of the Disney Hollywood types that's very interactive and basically shows the way this country would respond to a multifunctional, multidisciplinary response to a situation in some other part of the world
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    It was probably the most visual representation I've ever seen of why we need all this investment for R&D, why information management is so important, why the weapons systems must be interconnected, why we must have all the technologies that you ask us to fund each year.

    Well we've got to make that real for the Members, and we can't do it with words. I ask to have the SPAWARS presentation brought to Washington for a classified presentation to Members. The same thing could be done, and the Army has attempted to do this with their 21st century warrior system that they're building.

    Please assist us this year, if nothing else, in helping us to sell R&D by making these kinds of end results available for members to see, touch and feel, not just on the committee but here on the Hill so that it's easier for us to fight for the dollars and to keep the appropriators who in the end were the ones who taxed all of our programs and cut the R&D accounts by a billion dollars from doing that again this year.

    That would be extremely helpful, and I would appreciate it if you could see your way clear to help us accomplish that.

    Dr. GANSLER. That's an excellent idea. I will try to take that.

    Mr. WELDON. I am sure you have other examples of where——
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    Dr. GANSLER. No, if we do, you know, it's—the most desirable is to have as many from the Congress go to see the demonstrations that you saw, and they are around the country——

    Mr. WELDON. It's tough to do that.

    Dr. GANSLER [continuing]. And each of the services have them. We'll try and bring more of them here.

    Mr. WELDON. Thank you. Mr. Hunter.

    Mr. HUNTER. Thank you, Mr. Chairman. We have a couple of questions for the record too we'd like to give to you, lots of them.

    [The information referred to can be found in the appendix beginning on page 129.]

    Let me go over something that is fairly simple that I think is doable, that you would be a great partner on, and that is the way that we repair aircraft and ships and systems around the country and the attempt to move from paper to computers, that is document conversion.

    Today if you go in, as I did recently, and change the water pump on your car I was amazed, as a guy who used to own a gas station, and I went into the service station in Alpine, CA, and wanted to change the pump out and the gentleman said, ''Wait one second. I'll show you what it's going to cost you and what we are going to need.''
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    And he walked in, turned his computer on, touched it, and it laid out the display of the water pump, touched a couple of other things. It showed all the components and ultimately the price, and the guy never looked in a book.

    We are trying to do the same thing at places like Warner-Robbins and other repair depots around the country and obviate the need to have literally millions of drawings and a system which is somewhat tedious. I think we can do this. I have talked to some of the folks in the industry who feel that we can automate and make it go.

    And if we could do that, if you could be a champion of moving that forward, my sense has been over the last couple of years that there's been a cultural resistance to that. There's a lot of folks that by golly don't want to go to electric typewriters because the old manual ones feel good, and they've used them for a long time, and we need to be able to do that, to move into that area.

    Last, I brought up the fast field, the idea that if you need to move a technology quickly from concept to field we're going to have a system or a provision that bypasses the standard procurement process, and I would hope that we could work to do that.

    Last, one of your—and I had a sense I heard B–2 mentioned a couple of time—I had to go to your projection of worldwide, the ability to move globally, and I presume that means to project power globally. In an era, and I looked at the TACAIR price tag for the next 15 or so years—it's $350 billion—you don't have a dime for bombers.

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    And when we move from an era in which in 1962 for example we had 81 overseas, major overseas airfields, and today we have 14, the idea that you spend all of your money on the short-range aircraft and also at a time when we are looking at the real prospect of having a laydown, a continuous laydown, of gas—of poison gas on airfields for examples in the Korean theater for scuds and artillery—the idea that you don't maintain a long-range bomber force is one that is troubling.

    And so I am a strong advocate of B–2. We've got enough money—we could save enough money with the shoppers to run this B–2 program, and Norm Dixon and I and several other people and Ike Skelton got a chance to talk to the commission this morning and gave them our unbiased viewpoint in that area.

    But the one thing that troubled me was there was a statement to the effect, that was alluded to in the Washington Post, to the effect that the administration did not want to deploy B–2 in a, for example in a strike on Iraq, because there was a real fear that it would perform superbly and there would then be a drumbeat for its continued production.

    Could you comment on that?

    Dr. GANSLER. Let me comment on——

    Mr. HUNTER. In fact comment on all of those things, if you can.

    Dr. GANSLER. I was going to, yes, actually. The first one was the electronic commerce and the use of digital systems instead of paper, essentially the paperless system. This is a very high priority of Secretary Hamre and of myself and Art Money and others in the building. We've committed actually to go to paperless systems in our commerce in the next couple of years.
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    A key element of this, however, is not simply automating the current systems but to reengineer the systems so that you don't in fact just automate this system and that system and then have to have sneakers between the two but in fact that we integrate those systems so that we have electronic commerce from end to end, and in doing that we are going to have to reengineer a large share of our systems and eliminate a lot of the people that are in the middle of those systems.

    A key piece of that is the procurement process and trying to have rapid procurements, speedy procurement, automated procurement, is one of the directions that we're clearly going now.

    Actually Secretary Hamre has been holding monthly meetings and review—we had one last night in fact—to review the status of this electronic commerce activity and so we're going it I mean not because the Secretary's going to make a difference but because we really want to show leadership that this matters.

    And so we're getting all of the senior people in the services and within the Office of the Secretary of Defense to come to these meetings to really highlight the importance of the electronic commerce thrust that we have.

    As for the B–2, as you know, and you've said you saw them this morning, there is a study group, the independent study group that is now underway, and General Welch that he will have a report by the end of March. We need that in order to not hold up funding on the B–2 because otherwise if it goes beyond April we're going to be in funding problems so we have to address that question in the near term, and we'll be doing so.
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    General, if you want to comment on the use and the last question in terms of the use in the war.

    General CAMPBELL. Sir, Dr. Hamre had an excellent piece in the paper I think today that captures it, that the Block 30 B–2 which is our instate bomber is still embryonic. There's only just a few of them at Whiteman right now. That's our real combat-capable bomber.

    I will quote him—paraphrase his quote this morning—because I believe he captured it best. He said we didn't need to use the bomber in a plan right now. If we did need it, we could use it. We obviously have Block 20 B–2s that are sitting there with a weapon that we qualified. I have flown that aircraft twice, and I really think it's a marvelous aircraft, but we haven't gotten our instate combat capability ready yet in the aircraft.

    It isn't that we're afraid to use it at all.

    Mr. WELDON. I thank my colleague, and I thank—Gene, any other questions? Dr. Gansler and General Campbell and Admiral West, you've been very forthcoming, and it's been a pleasure to have you at the hearing. I think we're going to have a great working relationship.

    Your answers were thoughtful, candid and obviously I think you tried to provide as much honesty on your part as you could in terms of where we are going and what you intend to do in your new position. We wish you well, and we look forward to working with you.
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    The hearing stands adjourned.

    [Whereupon, at 5:04 p.m., the committee adjourned subject to the call of the Chair.]

    The official Committee record contains additional material here.

QUESTIONS SUBMITTED BY MR. WELDON

RESTRUCTURING OF DOD RDT&E INFRASTRUCTURE

    Mr. WELDON. Maybe it's time to rethink the way we organize our labs, the way we organize Defense Advanced Research Projects Agency, organize our whole research and development process.

    Dr. GANSLER. I would certainly welcome such cooperation with you and with the Subcommittee. I share your point of view that we must take a new and different look at how we organize our military RDT&E activities. I am now in the process of preparing a Defense Reform Initiative Directive which will set in motion a fundamental review of our RDT&E infrastructure with a goal of making it as efficient as possible within our current authority. However, in order to achieve optimum savings, the Department would need BRAC-like authority.

REQUEST FOR BRIEFING/PRESENTATION

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    Mr. WELDON. I ask to have the SPNUAR presentation brought to Washington for a classified presentation to Members.

    Dr. GANSLER. The Public Affairs Officer at the Space and Naval Warfare Systems Center San Diego (SSC San Diego) advises that the requested briefing to the Committee was conducted on March 11, 1998.

    The briefer was Mr. Jeff Grossman, head of SSC San Diego's Simulation and Human Systems Technology Division. Mr. Grossman showed the requested video, provided additional information on the vision of C4ISR for the future, and addressed a wall chart ''road map'' demonstrating how to get to the future capabilities demonstrated in the video.

    We understand that not only the Congressman's subcommittee members, but the full committee attended this briefing.

F/A–18E/F

    Mr. WELDON. The committee understands that the contract award for the FY98 block of 20 F/A–18E/F aircraft was moved from November 1997 to March 1998 because of the wing drop and engine problems. The committee also understands that the Navy has increased the number of the two-seat F-models in the total buy and that the Marine Corps has decided not to procure the F/A–18E/F, choosing instead to modify its existing aircraft until the JSF is produced.

    If the contract award decision should be delayed further, what is the impact on the Department's $2.9 billion request for 30 aircraft in FY99?
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    Dr. GANSLER. The production decision for Low-Rate Initial Production Lot #2 (LRIP 2) was originally scheduled for March 1998 and was accelerated to November 1997 in order to better align production decisions with the fiscal year. The production decision was then moved back to the original March 1998 timeframe while resolving the wing drop issue. Delaying the production decision into April 1998 will not impact releasing funds already appropriated for full funding of LRIP 2, and advanced funding for LRIP 3 (30 aircraft), nor will it impact the aircraft delivery schedule of the LRIP aircraft. The Department still requires the $2.9 billion requested for LRIP 3 in FY99.

    Mr. WELDON. When will a decision be made on the ''fix'' to the wing drop problem?

    Dr. GANSLER. The Navy has identified solutions that correct wing drop. The optimum solution appears to be replacing the original wing-fold fairing with a porous fairing, which will solve the problem with minimal impact on production costs and performance.

    Mr. WELDON. How much has the decision to increase the number of two-seat F-models added to the total cost of the program?

    Dr. GANSLER. An F/A–18F costs approximately $1.8 million per aircraft (unit procurement cost in then year dollars) more than an F/A–18E. As reflected in the FY99 President's Budget, 234 F/A–18Fs (42%) will be procured, compared to the March 1997 procurement objective of 392 (about 39%). The increase in percentage will result in an increased program cost of about $36 million or 0.09% of the total program.
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    Mr. WELDON. Why do the Marine Corps not want to procure the F/A–18E/F?

    Dr. GANSLER. Original (1992) program plans called for both the Navy and Marine Corps to operate the F/A–18E/F. The Marine Corps decided prior to the Defense Acquisition Board review in early 1997 not to acquire the F/A–18E/F. The Marine Corps determined that it could not afford F/A–18E/F, V–22, and Joint Strike Fighter together. Accordingly, the Marine Corps selected the V–22 and JSF, with the reduction to two aircraft types for much of their aviation fleet permitting significant projected logistics and support effciencies. The Marine Corps will sustain their force of F/A–18C/D and remanufactured AV–8B aircraft until the JSF enters service in about FY 2010.

    Mr. WELDON. The April 1997 Defense Acquisition Executive Summary Report estimates the average unit procurement cost for 1000 aircraft to be $73.9 million. What is the estimated unit procurement unit cost for the QDR-recommended total of 548 aircraft?

    Dr. GANSLER. The estimated Average Production Unit Cost for 548 aircraft is $73.8 million (in then-year dollars) based on the President's Budget for FY99. These figures take into account multi-year procurement savings and adjustments for inflation.

PRECISION GUIDED MUNITIONS

    Mr. WELDON. The use of precision weapons was hailed as one of the key reasons for the success of Operation Desert Storm. Since that time, the DOD has made a number of investments to improve its precision/deep attack weapons capabilities. Precision guided munitions are identified as one of the key elements in bringing about the Revolution in Military Affairs. The recently completed Deep Attack Weapons Mix Study (DAWMS) makes a number of recommendations regarding the services' PGM programs. In FY99, DOD plans to continue and/or expand procurement of the Wind Corrected Munitions Dispenser, the Joint Direct Attack Munition, the Standoff Land Attack Missile-Expanded Response (SLAM–ER), the Tomahawk cruise missile, the Brilliant Anti-armor submunition, and the Joint Standoff Weapons (both Baseline and BLU–l 08 variants). Procurement of the Joint Standoff Weapons Unitary variant and the Joint Air to Surface Standoff Missile (JASSM) is scheduled for FY00. Planned acquisition of these weapons represents a significant increase over the investment in precision munitions during the past few years.
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    Are the DAWMS recommendations with regard to the future level of spending for precision guided munitions reflected in the FY99 and Future Years Defense Program?

    Dr. GANSLER. The Deep Attack Weapons Mix Study Part 1 concluded that: DOD's planned investment budget is sufficient to provide the next-generation munitions required to maintain our qualitative advantage over potential aggressors. Modest adjustments to the planned mix and quantity of weapons will ensure forces retain their superior engagement capability.

    The Study's recommendations, for the most part, were not directive in nature, consistent with the DAWMS objective to provide insight, not point solutions. The recommendations that were incorporated in the FY99 Defense Planning Guidance, on balance, tasked the Services to review requirements and acquisition objectives, and to maintain current procurement/development efforts. The Services are complying with that guidance.

    Mr. WELDON. What level of funding do these programs represent in aggregate and is this level deemed affordable?

    Dr. GANSLER. These programs, which the Department views as affordable, represent on the order of $10.5B (FY 1996$) from 1997–2006 the budget used in the Deep Attack Weapons Mix Study (DAWMS) Part 1.

    Mr. WELDON. What is the Department's position regarding whether the Navy's SLAM–ER development program competes with development of the Joint Air to Surface Standoff Missile (JASSM)? Should there be a single joint program or not?
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    Dr. GANSLER. The Standoff Land Attack Missile (SLAM) has served us well in trouble spots around the globe and is being replaced by SLAM–ER, a longer-range variant. However, the ''off-the-shelf'' SLAM–ER system would require additional development to meet the requirements and threat projected for JASSM. The JASSM Analysis of Alternatives (AoA) reviewed the SLAM–ER program along with the JASSM candidates against the JASSM requirements to determine the most cost-effective means (best value) to defeat a representative list of time-critical, heavily defended targets. This spring, the Department reported the results of the analysis and the plan to acquire a capability against these targets.

    The Analysis of Alternatives (AoA) demonstrated that the JASSM requirement is valid and that the capability it will provide has great value. In particular, of the alternatives considered, the JASSM candidates are more survivable, lethal, and cost-effective than modification to the Navy's SLAM–ER in destroying high-priority, highly-defended targets during the early phases of a war. Therefore, the Department elected to proceed with the JASSM program using the finds from the JSLAM program element. The SLAM–ER missile is proven and also has demonstrated performance against many of the JASSM targets. In the near term, the Navy will continue to acquire and use SLAM–ER and its variants because: JASSM is not available yet: an F/A–18 C/D carrying a JASSM missile may not, under all operational conditions, be able to land safely on a carrier due to the weight of a JASSM; and SLAM–ER has a man-on-the loop capability whereas JASSM does not. The Navy remains an active member of the JASSM team and preserves the option to integrate JASSM on Navy aircraft. The Department will also review its planned buys of both JASSM and SLAM–ER as more information becomes available regarding the ability of JASSM to achieve its currently projected cost and performance. This acquisition strategy allows us to maintain competition between the JASSM and SLAM–ER programs.
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DEFENSE INFORMATION SECURITY

    Mr. WELDON. To its credit, the Department has recently organized the Defense Information Assurance Program (DIAP) in order to position itself to effectively defend against a wide variety of attacks on its information systems, networks, and supporting infrastructure. According to information sent to Congress by the Secretary of Defense in his November 1997 ''Report on the Information Security Activities of the Department of Defense,'' over $3.6 billion was identified as resources for the DIAP between Fiscal Years 1999 and 2002 (in constant 1998 dollars). However the FY1999 budget request identifies only $2.8 billion (in current dollars) between Fiscal Years 1999 and 2003—less funding across more years.

    Given the Department's information vulnerabilities exposed by the recent Eligible Receiver 97 exercise, what is the reasoning behind the reduced funding?

    When questioning the difference in the above numbers, the committee was told that no one could recall how the $2.8 billion figure was derived. Why is this so?

    Dr. GANSLER. The Information System Security Program (ISSP) for the Department reflects $4.9 billion over the FYDP. This includes $160 million added to the ISSP as over guidance resulting from Department-wide reviews. The ISSP includes all expenditures for Information Security (INFOSEC) including voice, data, keying material production and distribution.

    During the recent Quadrennial Defense Review and subsequent Service and Agency program reviews an attempt was made to identify all Network-related Information Assurance (IA) expenditures in the Department. Due to inconsistent definitions and lack of precise budget information (All IA-specific information has not routinely been collected) an approximation was made reflecting Department expenditures against three operational capabilities (Protect, Detect, React) and two functional areas (Assessments and Training). This approximation was based on the most complete information available from the Services and Defense Agencies.
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    The information collected reflects a total of $3.6B over the FYDP.

    Currently, a Department-wide team is developing the DIAP Implementation Plan. This plan will address those processes, procedures, and resources necessary to achieve an Initial Operating Capability (IOC) of May 1, 1998, and a Final Operating Capability (FOC) of August 3, 1998. The DIAP Staff will continue to refine these numbers through FOC, and will be able to provide a complete answer in the September time frame.

    We have not been able to determine the origin or basis of the $2.8 billion quoted in the question.

MULTIYEAR PROCUREMENTS

    Mr. WELDON. What criteria does the Department apply to approval of a multiyear procurement request by a component?

    Dr. GANSLER. The DOD Budget Manual lists the criteria used to screen multiyear procurement requests. That criteria includes: present value analysis, benefit to the government (e.g., savings and cost avoidance), impact on industrial base, stability of funding, configuration stability, degree of cost confidence, degree of confidence in contractor, and risk factors.

    Mr. WELDON. What is or will be your policy regarding approval of multiyear procurements?
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    Dr. GANSLER. My policy is to ensure compliance with the published criteria in assessing the propriety of individual multiyear procurements prior to requesting Congressional approval.

ACQUISITION STABILITY RESERVE FUND

    Mr. WELDON. As a fix to the continued migration of procurement funds to the operations accounts, the Quadrennial Defense Review (QDR) proposes to create an ''Acquisition Stability Reserve'' of $6–7 billion per year beginning in FY 2000 to hedge against future program disruptions. However, it appears that the research and development and procurement accounts have been ''taxed'' to establish the fund.

    Why have the modernization accounts been ''taxed'' to pay for a fund that, ironically enough, is intended to protect them?

    Dr. GANSLER. The QDR directed establishing an Acquisition Program Stability Reserve of $1 billion annually. Initially, this reserve will start at $250 million in FY 2000 and ramp up to the full $1 billion in FY 2003. No reserve is in the FY 99 budget request. The purpose of the out-year reserve is to offset the increased costs associated with technical risks in acquisition programs. By using a reserve to address these increased costs when they materialize, we can avoid costly and destabilizing decrements to otherwise ''healthy'' programs. The reserve is specifically limited to offsetting costs associated with technical risk. It is not intended to address the migration of resources to the operating accounts. The QDR and subsequent guidance to the Services have directed more realistic planning and programming for the operating accounts. By doing so, we will greatly reduce the potential for future migration of resources.
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    Modernization programs have not been ''taxed'' to pay for the fund. The reserve fund was initially capitalized by a 50% contribution from existing modernization reserves held by the Office of the Secretary of Defense (OSD). The Services sourced the remainder through savings from QDR-directed force structure reductions, program terminations, and reduced program content.

    The individual Services hold and manage the reserve with my oversight. We will maintain this reserve only in the out-years of the FYDP. It will be liquidated prior to submission of the budget for any given year.

    Mr. WELDON. As a fix to the continued migration of procurement funds to the operations accounts, the Quadrennial Defense Review (QDR) proposes to create an ''Acquisition Stability Reserve'' of $6–7 billion per year beginning in FY 2000 to hedge against future program disruptions. However, it appears that the research and development and procurement accounts have been ''taxed'' to establish the fund.

    How can the Department complain about undistributed reductions ''levied'' by the Congress when it is doing the same thing?

    Dr. GANSLER. These two actions are not the same thing. The acquisition stability reserve was created through a one time action made possible by QDR-directed force structure reductions, application of existing reserves held at the OSD level, and elimination of programs for which the requirement was no longer valid. In the future, the reserve will be part of our normal long range planning and will not involve ''taxes'' of any kind. This contrasts to the annual problem of mandatory undistributed Congressional reductions that require indiscriminate reductions across the board without regard to requirements or practicality.
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''YEAR 2000'' SOFTWARE PROBLEM

    Mr. WELDON. Computer software that performs thousands of essential functions throughout the Federal government may require modification to correctly recognize January 1, 2000, as a valid date. This change could be critical to weapon systems, Command, Control, Communications, and Intelligence systems and other information systems that must continue to operate through the millennium change. Consequently, the Office of Management and Budget has accelerated the government-wide completion date for modifying all software from December to September 1998 and requires that user acceptance of the modifications advance from November to March of 1999.

    Is there adequate funding in the budget request to meet these accelerated schedules? If not, why not?

    Dr. GANSLER. The Department of Defense will continue to resource Year 2000 compliance efforts within existing program budget lines. Fixing the Year 2000 problem is the Department's top information technology priority but diverting funding to remedy Year 2000 problems may cause delays in non-essential software sustainment requirements, change requests, product improvements and enhancements.

    Mr. WELDON. The Defense Department RDT&E request is down slightly from the FY 1998 appropriation, and is projected to decrease by 14% over the FYDP. The budget request shows $13.6 billion for the Air Force, $8.1 billion for the Navy, $9.3 billion for Defense-wide and the Army, our largest service, with only $4.7 billion (13%) down slightly from last year.
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    We note that the Army's request is only as high as it is because of transfers of defense-wide programs such as $54.4 million for the Strategic Environmental Research and Development Program to its R&D accounts. It is also very disturbing to find that the Army's second largest R&D expenditure is to support $300 million of Base Operations, not exactly a leap ahead technology. Exacerbating this problem is the fact that as of this morning, OSD still had approximately $350 million of FY98 Army R&D funding withheld. These withholds, halfway through the fiscal year, create execution problems, and if not released, a huge deficit to be overcome in FY99.

    How can the Army develop lead ahead systems and digitize the force under such severe fiscal constraints?

    Dr. GANSLER. The appearance of a decline in Army RDT&E, when comparing FY98 to FY99 column of the FY99 President's Budget, is a result of FY98 appropriated special interest programs. Most of these programs are environmental and health issues not submitted as part of the Army's annual RDT&E budget submission. The Army cannot (within its declining top line) afford to continue these special interest programs in subsequent budget requests. Therefore, a more valid comparison is comparison of one year's budget request with the previous year's request.

    When evaluating the comparison of budget requests, the FY99 Army RDT&E request grew +6% over the FY98 request. This rise in FY99 is due primarily to the devolvement or transfer of approximately $95M of OSD programs to the Army. Without this transfer, the increase would have been +4%.
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    Some of the Army's leap ahead systems and technologies can be developed by focusing efforts toward minor modifications rather than a full RDT&E effort. As an example, information security tools for the digitized force are being developed using government and commercial off-the-shelf and nondevelopmental item technologies. While this effort requires reduced funding, future increases to the Army's RDT&E funding may be necessary to fully implement tools into the digitized force.

    Mr. WELDON. Doesn't R&D require reliable and increasing funding now to support development of advanced systems to be procured in the future for the Army After Next?

    Dr. GANSLER. Yes, R&D requires reliable funding. In the aggregate, however, whether R&D requires increasing funding depends on the mix of programs currently in R&D. As programs ebb and flow, the aggregate funding levels may move up and down. As mentioned above, once you remove programs for which we do not budget from the baseline, the Army has slight growth. The appropriate level of funding for the Army's RDT&E is determined in light of the Army's total modernization strategy. This process dictates investments in other portions of Army top line, as well as other DOD Services'/Agencies' investments and industry/academic areas of emphasis. As an example, the Army conducts yearly reviews with the Army's Combat Developer, the Training and Doctrine Command, to ensure that our RDT&E programs are supporting the warfighters' needs.

    Since the advent of S&T Reliance among the Services in 1991, the Army has been able to focus on technology areas where Army has unique expertise and needs and depends on others in DOD and industry to meet its technology needs in their areas of expertise. This reliance strategy combined with elimination of substantial RDT&E infrastructure has freed funding for specific initiatives, such as capabilities required to enable Army Vision 2010, Full Spectrum Dominance, and Army After Next (AAN).
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    We must fund the most important RDT&E efforts given the Army's revised modernization strategy. The Army is relying on its RDT&E to enable mid- and long-term key technologies, such as full spectrum active protection and cognitive engineering to reduce information overload and to seize the initiative on leap-ahead technologies expected to revolutionize ground warfare in the 21st Century. The Army's RDT&E programs are generally appropriately sized to enable the Army to meet it future technology needs. Its underlying funding strategies will assure timely technology products responsive to user requirements. As experiment of new technologies continue, the results will dictate changes in future budgets. RDT&E efforts are the minimum necessary to span the gap between today's forces/capabilities and what is envisioned in AAN.

     

QUESTIONS SUBMITTED BY MR. HUNTER

SURFACE SHIP TORPEDO DEFENSE

    Mr. HUNTER. The Committee believes that large-deck ships, such as carriers and amphibious ships, which are most vulnerable to torpedo attack, have the most urgent need for an effective torpedo defense capability. What is the OSD position regarding the continuation of a ship torpedo defense program for these ships in particular and all ships in general?

    Dr. GANSLER. Torpedo defense for surface ships remains critically important. Employment of the current system level architecture has the potential to be effective as a layered defense for ASW capable cruisers and destroyers. However, additional system improvement and testing are needed to demonstrate an integrated torpedo defense capability before full fleet introduction. This same architecture does not appear to be suitable for non-ASW ships, such as carriers and amphibious ships. Further examination of battle group ASW concepts of operation and new technologies will help us determine the most cost-effective approach for achieving the required protection from torpedo attack for non-ASW ships.
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SURFACE SHIP TORPEDO DEFENSE

    Mr. HUNTER. It is our understanding that the OSD-chartered independent assessment report by the Institute for Defense Analyses (IDA) that I requested is complete. When will you furnish the Committee with this report?

    Dr. GANSLER. I recently completed my review of the report and signed a transmittal letter, forwarding it to you with my endorsement on February 25, 1998.

QUESTIONS SUBMITTED BY MR. ABERCROMBIE

CAPITAL AND OPERATING BUDGETS

    Mr. ABERCROMBIE. Have you contemplated at all the idea of moving to a capital budget and an operating budget, particularly where acquisition and procurement is concerned, in the Department of Defense, given the extraordinary high numbers that we project out into the distant future that we're likely to incur in the light of and in the context of our concern for readiness, our concern for quality of life issues, our concern for being able to operate the armed services which will surround these incredibly complicated and technologically sophisticated systems?

    Dr. GANSLER. The Office of Management and Budget is responsible for setting the budget policy for all Federal agencies. In reality, the Department of Defense budget breaks out along the lines of capital and operating budgets where the Procurement; Research, Development, Test, and Evaluation; and Military Construction appropriations represent a capital-like budget and the Operations and Maintenance; Military Personnel; and Working Capital Funds appropriation represent an operations-like budget. No mechanism currently exists for financing these budgets differently. Both types of budgets require appropriations.
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    Private companies deal with capital and operating costs differently because they normally finance them differently, using more long term financing tools to pay for capital expenditures, but using current receipts to pay for day-to-day operating costs. Significant tax implication differences exist (e.g., depreciation) between corporate capital and operating expenditures which can greatly impact corporate bottom lines. Similarly, state and local governments have different financing mechanisms available to them to fund capital expenditures; i.e., frequently using bond authority to finance road and construction projects, while using general tax revenues to fund operating costs. DOD does not have these options. Investment decisions for weapon systems are threat-based, not based on managerial assessments that strive to increase the Department's net worth or decisions to invest an improved production capability in order to increase market share. The nature of DOD investment decisions concerning weapon systems has no analogy in the commercial world.

    In summary, the DOD budget provides a delineation between capital and operating costs in the way our appropriations are structured. Beyond that, given that the source of all our budget authority is the annual appropriations process, there does not seem to be a financial advantage to preparing a separate capital budget. The only alternative to that would be some kind of DOD-specific bond or commercial-like financing authority.

   

QUESTIONS SUBMITTED BY MR. SPRATT

NAVY THEATER WIDE (NTW) OPERATIONAL REQUIREMENTS DOCUMENT (ORD)
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    Mr. SPRATT. Does the Navy have an approved ORD for the NTW program? What is the status of the NTW ORD and when is it expected to be approved by the Joint Requirements Oversight Council (JROC)?

    Dr. GANSLER. The Navy has developed evolutionary operational requirements for the NTW Theater Ballistic Missile Defense system. These requirements are currently in the review and approval process. Key Performance Parameters were validated at a JROC meeting on April 6, 1998.

    Mr. SPRATT. The Navy's POM includes funding for a Block I capability NTW system, but anticipates making a Block II upgrade in the out-years which is characterized as a ''major upgrade.'' Will Block I Upper-Tier meet the operational requirements of the ORD? Is it unusual to plan a block upgrade in a program which hasn't had an approved ORD yet?

    Dr. GANSLER. The Navy's POM identifies funding, through their cruiser conversion program, to provide a combat system baseline that could support Navy Theater Wide Block I and Block II capabilities. The NTW ORD has both Block I and Block II requirements. The Block I system will meet the Block I operational requirements in the ORD. At the time planning began in earnest to establish a NTW Acquisition Program Baseline, it was slightly unusual to plan a block upgrade without an approved ORD, but approval was expected in the future, and the JROC approved the Block I ORD requirements on April 6, 1998. The block upgrade acquisition strategy is in response to the recognized urgency to field a system which meets the near-term threat quickly, while still being able to respond to meet the longer-range, more challenging threat in the future.

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NAVY THEATER WIDE (NTW) COST

    Mr. SPRATT. What will it cost to upgrade to Block II, are there funds programmed for Block II in the POM, and what will be the increase in capability? Will Block II meet the operational requirements in the Operational Requirements Document (ORD)?

    Dr. GANSLER. The current Future Years Defense Plan (FYDP) does not contain any NTW Block II funding because Block II development is expected to start after the FYDP. The Department is currently developing its cost estimate for the initial Block I system. Until this estimate is completed for the initial Block I system, along with additional refinement of the actual Block II system, it is premature to speculate on the costs associated with a Block II upgrade.

    The Block II system will be developed to perform in accordance with the requirements specified in the ORD. The increased capabilities of the Block II system required in the ORD include a greater theater missile defense coverage of more-advanced and longer-range theater ballistic missile threats, greater downrange and crossrange reach, more robust interoperability, and a greater probability of kill.

QUESTIONS SUBMITTED BY MR. GIBBONS

NATIONAL GUARD AND RESERVE EQUIPMENT

    Mr. GIBBONS. In the past, the Military Departments have not adequately included Guard and Reserve equipment in their budget requests, expecting the Congress to provide for them with Congressional adds. How have these requirements been incorporated in the budget request this year? How successful have you been at reducing the shortages of key equipment across the Reserve components? How have you ensured that early deploying Reserve component units are fielded new equipment prior to later deploying active units?
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    Dr. GANSLER. Last September, Secretary Cohen urged leaders and commanders Department-wide to take ownership of his goal to seamlessly integrate the Reserve components into the Total Force. Since then, several groundbreaking initiatives have helped further Active and Reserve component (RC) integration. The most notable initiative was with the Reserve components' participation in DOD's budgeting processes. The development of the FY 1999 budget marked unprecedented RC involvement in the Department's budget development processes. For the first time, each Reserve component Chief was invited to participate with senior DOD leaders, including Secretary Cohen and Deputy Secretary Hamre, in deliberations of the Program Review Group and the Defense Resources Board. This involvement increased awareness and understanding about National Guard and Reserve funding requirements and budget priorities at the highest levels of the Department, and resulted in adjustments in Service budgets to increase readiness funding for the Reserve components.

    Despite reductions in DOD funding levels, overall readiness funding for the Reserve components has remained a top priority for the Department. The FY 1999 budget reflects an increased ratio of ''Operations & Maintenance'' (O&M) dollars spent per member, increased funding for equipment for the RC, and increased participation of the Reserve components in the day-to-day operations of the Total Force. Consistent with the Department's priority to modernize its weapons systems, the proposed FY 1999 budget includes about $1.5 billion in procurement funding for RC equipment. In addition, the Services have projected they will redistribute used equipment valued at $600 million to their Reserve components in FY 1999. Redistribution of equipment from the Active component historically has been the primary source of RC equipment. Deliveries of key equipment anticipated for the Reserve components during FY 1999 include:

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    The Army National Guard anticipated delivery of UH–60 Black Hawk helicopters, in addition to M109A6 Paladin and towed howitzers, plus heavy trucks.

    The Army Reserve anticipates receipt of medium and heavy trucks, radios, night vision devices and material handling equipment.

    The Air National Guard is projected to receive night vision devices, ground support and base support equipment.

    The Air Force Reserve is expected to receive WC–130J aircraft and ground support equipment.

    The Naval Reserve anticipates receipt of F/A–18A aircraft, a MHC Coastal Mine Hunter ship, light inshore boats and surveillance equipment.

    The Marine Corps is planning to receive CH–53E helicopters, ambulances and generators.

    The Department's Reserve component funding included in the FY 1999 budget specifically supported readiness funding based on a ''first-to-fight'' policy. This policy ensures that funding priorities are given to units scheduled to deploy first to ensure that they are ready when needed. While this approach enables higher readiness levels for ''first-to-fight'' units, an overall lower readiness status often results for later deploying units. This readiness funding approach assumes that there will be sufficient time for an incremental readiness build-up before later deploying units are needed. As resource decline and operational support requirements increase, the Reserve components continue to adapt and apply innovative methods to improve readiness and support the National Defense Strategy.
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CHEMICAL/BIOLOGICAL DEFENSE

    Mr. GIBBONS. The Nevada Test Site is developing a world class training site for realistic WMD (Weapons of Mass Destruction) training, test, and evaluation for emergency response personnel (''First Responders''). How is the Department integrating that facility into its WMD strategy?

    Dr. GANSLER. DOD is working closely with the National Domestic Preparedness Consortium, of which the Nevada Test Site is part, to ensure that training to mitigate the effects of WMD terrorist activities will augment, not supplant, the training missions of DOD, the FBI and FEMA. FEMA is the federal lead agency for consequence management. DOD is optimistic about the Consortium for a number of reasons, including the Consortium's capability to provide deployable certified trainers worldwide.

TITANIUM STOCKS

    Mr. GIBBONS. Mr. Secretary, I would appreciate your looking into an issue that is of great concern to me.

    It has come to my attention that the Administration is reviewing petitions from the Russian Federation and the Russian titanium producer to extend or reinstate duty-free treatment on imports from Russia of titanium products. I am convinced that a unilateral trade benefit of this magnitude would be harmful to the United States in light of the domestic titanium industry's vulnerability to the volatile and cyclical nature of the international aerospace market.
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    More important than just the economic aspect of this issue, the Administration must consider the grave consequences this could hold for U.S. national defense. The domestic titanium industry is one of the most critical and strategic material sectors of our economy and I think it would be terribly unwise—even dangerous—to place our domestic industry in jeopardy and risk making the U.S. military dependent on a foreign supplier.

    Dr. GANSLER. The Department of Defense is working with the United States Trade Representative and other agencies of the Federal government to weigh the national security and economic considerations associated with this issue, and make the appropriate recommendations concerning the 1997 Generalized System of Preferences Product Review to the President for his determination. When that determination is made, we will undertake to ensure those results are passed on to you.   

QUESTIONS SUBMITTED BY MR. SANCHEZ

INDUSTRIAL COMPETITION

    Ms. SANCHEZ. The proposed merger of Lockheed Martin and Northrop Grumman is scheduled to be approved later this month. Can you comment on the impact that these sort of defense mergers (large-scale) will have on the middle-sized defense companies? How can we protect these small innovative, technology, technology-driven companies that are struggling to compete in today's environment?

    Dr. GANSLER. The Department carefully reviews proposed mergers and acquisitions in the defense industry. We examine each and every program for which the companies are competing or may compete in the future. In addition to analyzing the horizontal implications of the combination, the Department also examines the future effects on the vertical supply of critical subsystems and components. Through this analysis we can ascertain the impact of a particular transaction on smaller supplier firms. The Department of Defense will continue to review transactions on a case by case basis, and in coordination with the Department of Justice or the Federal Trade Commission to ensure adequate competition at all levels.
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F–22

    Ms. SANCHEZ. I have been informed of new manufacturing problems that could delay six of the engineering development F–22 models by up to five months. The problems are centered around production of large, single-piece titanium castings that attach the wing to the fuselage, and welded titanium assemblies—known as booms—that carry tail and wing loads in the rear fuselage section of the aircraft.

    What is the status of the ''fixes'' to these problems? How will cost and schedule be affected by the current delays?

    Dr. GANSLER. You are correct that there have been problems with the manufacturing processes for the wing side-of-body castings and the welded aft boom assemblies. Both of these are very complex state-of-the-art processes that require very tight tolerances and careful attention to process control. Both of these fabrication processes were pursued in order to achieve savings in cost and/or weight on the F–22 aircraft. A thorough audit of the processes has been conducted at both vendors, and changes have been identified to improve the process control, and achieve acceptable production yields. The modified processes are currently being used to produce the next set of wing side-of-body castings, and welded aft boom assemblies. We will know soon whether the changes have been successful. If we continue to experience problems with either of these processes, the alternative is to pursue other manufacturing processes that could increase aircraft weight or cost, or attempt to qualify other vendors. An independent team of government/industry experts was convened to conduct another audit of these manufacturing processes, and the proposed solutions. The preliminary findings of this independent team were that the work-arounds proposed by the vendors were reasonable, and should produce acceptable parts.
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    The Air Force has expressed confidence that pursuit of these work-arounds will mitigate the impact of the late deliveries of flight test aircraft. The test Integrated Product Team is continuing its work to minimize delays in the overall test program through reallocation of test assets, and a restructuring of the test matrix. The Air Force believes that this restructure of the test program can be accomplished within the current cost cap on the development program.

MODERNIZATION FOR THE MILITARY DEPARTMENTS FOR FISCAL YEAR 1999 House of Representatives, Committee on National Security, Military Procurement Subcommittee, Meeting Jointly With Military Research and Development Subcommittee, Washington, DC, Wednesday, March 4, 1998.

    The subcommittees met, pursuant to notice, at 1:30 p.m., in room 2118, Rayburn House Office Building, Hon. Duncan Hunter (chairman of the Subcommittee on Military Procurement) and Honorable Curt Weldon (chairman of the Subcommittee on Military Research and Development) presiding.

OPENING STATEMENT OF HON. DUNCAN HUNTER, A REPRESENTATIVE FROM CALIFORNIA, CHAIRMAN, MILITARY PROCUREMENT SUBCOMMITTEE

    Mr. HUNTER [presiding]. The subcommittees will come to order.

    This morning we welcome witnesses from the Navy and Marine Corps as we continue our series of hearings on modernization for the military departments for fiscal year 1999.
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    After years of substantive decline in real terms, we finally see that the administration has submitted a Navy and Marine Corps procurement budget with modest gross compared to the amount enacted by Congress in fiscal year 1998. Last year we were told that the Navy and Marine Corps Procurement Budget for fiscal year 1999 would come in at $20.4 billion, and we see that the request stands today at about $20.2 billion. However, last year we were also told that the fiscal year 2000 budget would be $23.4 billion. This year, we see that next year's plan calls for a 7-percent reduction in that amount.

    Overall, the fiscal year 1999 to fiscal year 2003 Navy and Marine Corps Procurement Budget shows a 2-percent drop from the funding plan envisioned only a year ago. And, of course, if you look at the President's 5-year plan in 1995, he had projected, overall, for procurement for DOD a $60 billion level, and of course, we're at $48 billion. When we get to the year in which the rubber meets the road, and you folks of the $12 billion that was cut out of the President's own plan, you folks took a corresponding hit.

    As most of you know, I've been consistently critical of the inadequate levels of procurement funding provided to this Congress by the administration. And, of course, we're familiar with the former chairman of the Joint Chiefs of Staff, General Shalikashvili and his statement that procurement funding should have been at $60 billion by fiscal year 1998.

    The fiscal year 1999 Navy and Marine Corps Procurement Budget is about 41 percent of the DOD procurement total. If the $60 billion objective could have been reached this year, we would be deliberating the budget in this hearing of about $24.8 billion, 22 percent above where we are now.
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    Last year, General Krulak, Commandant of the Marine Corps, told the members of the House Appropriations National Security Subcommittee that the Corps had a ''procurement shortfall'' of $.5 billion. Also, last week at a hearing in the other body, a Navy captain, Thomas Kilcline, commander of the carrier air wing on the U.S.S. Abraham Lincoln said that his 72 warplanes received one-third fewer training bombs and bullets since training for its last deployment overseas 18 months ago, and that readiness of this combat forces has fallen from 80 to 60 percent.

    Just yesterday, again at a hearing in the other body, Adm. Donald Pilling, the Vice Chief of Naval Operations, said that the ''Navy must buy two more ships per year to maintain a 300-ship Navy pass 2003.''

    Recently, I visited some active duty and reserve combat units and personnel have shared with me similar stories of underfunded procurement and falling readiness. If we had a $60-billion DOD procurement budget with the Navy/Marine Corps share at about $24.8 billion, this would amount to about $4.5 billion more than the budget we have before us today. At this level, we could fund General Krulak's requirement for an additional $.5 billion in procurement. We could also provide many more training munitions and spare parts for Captain Kilcline's air wing to stop its declining readiness.

    Additionally, we could increase the ship construction budget to address Admiral Pilling's concerns to abate the serious decrease in Navy warships from 333 this year to, the currently projected number of, 306 in fiscal year 2003.

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    We need to do all this and more in procurement to provide for tomorrow's readiness, and we are grateful that the Commandant of the Marine Corps, Vice Chief of Naval Operations, and others are beginning to speak out to let the people of this country know what the real story is.

    Our witnesses today for what I hope will be a candid session of the Navy and Marine Corps fiscal year 1999 procurement budget request are the Hon. John Douglass, Assistant Secretary of the Navy for Research, Development and Acquisition. Welcome back, John. It's been good working with you. And, we also have Vice Adm. Conrad C. Lautenbacher, Deputy Chief of Naval Operations for Resources, War Requirements and Assessments. We thank you for being here, Admiral. And, Admiral Lautenbacher is making his first appearance as the Navy's new N–8. So, congratulations.

    Admiral LAUTENBACHER. Thank you.

    Mr. HUNTER. You can tell us at the end of the hearing whether you're enjoying it or not. [Laughter.]

    And, finally, Lieutenant Jeffrey—Gen. Jeffrey W. Oster, Deputy Chief of Staff, Marine Corps Programs and Resources. And, welcome back to you, general. Thank you for your service.

    We thank you all for being here and, Mr. Secretary, before I turn the floor over to you, I would first want to call upon Curt Weldon, and this is another one of our joint hearings in which research and development, and procurement take testimony jointly. I think it's been a very rewarding modus operandi for the National Security Committee. And, Curt, thank you for all the great cooperation that you've displayed in the last several years working these very difficult issues. I think it's appropriate that we work R&D and procurement issues together, because they are meshed.
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    So, first, I'd like to ask Curt to make some statements and that followed by Norman Sisisky and Owen Pickett, the ranking Democrats on the Procurement and R&D Subcommittees, respectively.

    [The prepared statement of Mr. Hunter can be found in the appendix on page 195.]

    So, Curt, do you have any statements you'd like to make at this time.

STATEMENT OF HON. CURT WELDON, A REPRESENTATIVE FROM PENNSYLVANIA, CHAIRMAN, MILITARY RESEARCH AND DEVELOPMENT SUBCOMMITTEE

    Mr. WELDON. Thank you, Mr. Chairman, and I join with my good friend and colleague, Duncan Hunter, in sharing the Chair of today's hearing and continuing this relationship between our two subcommittees where we allow all of the members of our two subcommittees to be involved in all of the issues that affect our subcommittees, individually, and it works extremely well. It has in the past 3 years, and we're continuing that process this year.

    Welcome, Mr. Secretary, and Admiral Lautenbacher, and General Oster. It's a pleasure to have you all here and we look forward to working with you. And, also, to work with our distinguished colleagues, Owen Pickett and Norm Sisisky, two of the finest members in support of defense in national security in this Congress, and two good friends.

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    All of us share a common concern over the decline in defense spending during the last several years. Despite a slight increase in funding requested for procurement in research and development funding, the Department of Defense declines, again, this year and it is projected to decrease by an additional 14 percent over the future year defense program.

    Overall, in relative terms, the Navy's in a better position than the Army or Air Force. Both have experienced declines in their research & development budget requests. The Navy's request increases to $8.1 billion, an increase of 2.9 percent from fiscal year 1998. However, the Navy's Science and Technology account is essentially flat, within an approximately 7-percent increase in basic research and exploratory development being more than offset by an almost 10-percent reduction in advanced development.

    The reduction in Navy advanced development parallels the same trend as advanced development programs in the other military departments and the DOD, as a whole. It raises some concern relative to our ability to fill advanced technology systems that would overmatch those of a future peer competitor, which intelligence sources predict could emerge 10 to 15 years from now.

    These concerns are compounded when we recognize that the research and development accounts, and the science and technology accounts, in particular, were the target of significant reductions in the fiscal year 1998 budget process.

    We look forward to exploring these concerns and the impact of these budget trends in our future military forces. In fact, in our hearing last week, I raised the potential of putting a new focus on the need for members to better understand the importance of the R&D accounts. And, to that end, we're hoping to bring the command center of the future from SPAYWAR, out in San Diego, into the city, as I discussed with you, Mr. Secretary, to show members where we're trying to get in terms of these technology advances, and to make R&D more real for the members, not just of this committee, but of the entire House.
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    While the Navy budget requests for fiscal year 1999 shows an increase and looks fairly robust, particularly when compared to other services, undisturbed by the long trends that I see. The administration's budget submission to Congress continues to delay funding for modernization until after the turn of the century.

    This, really, is causing us, I think, to face a major train wreck after the turn of the century. The budget is driven, and justifiably so, for the need to maintain the quality of life for our service men and women. It's driven by increased operational tempo created by the deployment of our forces throughout the world in response to regional crisis and to operations other than war.

    Again, I want to repeat the fact. In the last 6 years, we've had 25 major deployments around the world. Compare that to the previous 40 years where we had 10 such deployments. None of those 25 deployments in the last 6 years were budgeted for. So, all of the costs associated with those deployments, including $8 billion for Bosnia, and whatever Iraq is going to cost us, is being paid for out of programs that should have been modernized over the past 3, 4, or 5 years. And, it's now beginning to catch up with us. It's based on a series, of what I believe, are unwarranted assumptions regarding savings that will be made from decreases in the infrastructure, within DOD, and savings from acquisition reform. It includes a bow waive of force modernizations and other initiatives that, quite frankly, I don't believe can be realized unless the budget's top line is increased, or we make serious changes to the way we fund environmental mitigation of the DOD budget, which is now $12 billion. And, again, quite frankly, I don't believe either of these things are going to happen.

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    The Navy's budget request reflects an emphasis on the acquisition of new platforms and capabilities, surface ships, carriers, submarines, airplanes, advanced munitions and missile systems, and advanced communications and intelligence systems. Some tough decisions are going to have to be made relative to these programs because, taken together, with the modernization programs of the other services, they are, simply, unaffordable unless some fundamental changes are made.

    Let's take the Tactical Aviation Program for the Air Force and the Navy, as an example. The projection for annual procurement costs of the F–22 Advanced Tactical fighter for the Air Force, the FA–18 E/F for the Navy, and the Joint Strike Fighter for the Navy, the Air Force, and the Marines grows from a current level of $2.7 to over $14 billion in the outyears. This is according to both CBO and GAO.

    Now, I know the Pentagon disagrees with those numbers, but I haven't been convinced that they have the factual backup data to, in fact, support their conclusions. I don't see where that, sort of, an increase in funding for TAC AIR alone is going to come from, and that's just one small part of our defense needs in the next 10 to 15 years. Given the bow waive that exists for procurement of other weapon systems, including missile defense, among others, not to mention the need to maintain the strong research and development program required for future systems. Something has to give. Some tough decisions have to be made.

    Advanced technology will be needed to improve operational capabilities and reduce manufacturing costs, and the costs of sustaining systems once they are fielded. We will need to maintain competition in order to ensure the best products from our research and development establishment and the most economical and cost-effective systems in production. And in regard to this last comment, Secretary Douglass, as an example of these needs, I want to thank you, personally, for your commitment in ensuring the establishment and support of the program for an alternative engine for the Joint Strike Fighter. I believe this program will be essential to the future affordability and, indeed, to the performance of this aircraft. Likewise, I want to thank you for your leadership and, what is I think, an impossible situation where we are asking you to do many, many more things than what you have the resources to accomplish those challenges.
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    Gentlemen, there are a number of specific issues with regards to the concerns I've outlined today that I hope will be addressed in your testimony, and our questions that will follow. Again, I welcome you and look forward to hearing from you. And, I thank you, Mr. Hunter.

    [The prepared statement of Mr. Weldon can be found in the appendix on page 199.]

    Mr. HUNTER. Thank you, Curt and, you know, on this committee, we're probably the most bipartisan committee, I think, in Congress. And, one thing is very gratifying when you come into a hearing like this, is to have a—know that you got a partner working side by side with you. He's been out working hard to analyze the defense needs of the country. Nobody works harder than Norm Sisisky, and nobody's got a sharper mind for business. And, in many cases, he tries to apply that business acumen to the way we should be doing business in the National Security Committee and to the way the services should be doing business in acquiring the items that are on their procurement agenda.

    So, Norm, thanks for everything that you do, and welcome as the ranking member of the Procurement Subcommittee. And, what do you have to say?

STATEMENT OF HON. NORMAN SISISKY, A REPRESENTATIVE FROM VIRGINIA, RANKING MEMBER, MILITARY PROCUREMENT SUBCOMMITTEE

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    Mr. SISISKY. I don't know if you want hear it all, but I thank you for that very kind compliment, and I welcome you, gentlemen, here. [Laughter.]

    You know, I have a very elementary thing. It's basic like you. It's stretching the Navy too thin, I think, to sustain global presence. We do not have the ability to pay as much attention to events around the world on a day-to-day basis. And, I think, the perfect example—I was in Japan in November, and we were getting ready to say goodbye to the Independence. It was heading back to the United States to be cut up as scrap. And, now, it's in the Persian Gulf flying aircraft off of it with some very enlightening young Americans, and leaving, as General Tilelle said today, the Western Pacific very bare.

    The Navy has shrunk, but I don't believe the seas have shrunk anywhere. And, that's, that said, I'd like to make an observation about Naval shipbuilding. Since the departure of John Lamon, and I was here when he was here, and Secretary of the Navy, there has been a disconnect between the number of Navy combat ships called for in the strategy, and of course, testimony, and the number that the accompanying budget would actually yield. I can only conclude that in any given year, the department works the budget as a priority and allows the number of combat ships that would result float, usually downward. At the same time, department witnesses testify to a strategy that calls for significantly more ships than the budget would yield. When challenged on that point, DOD officials state that the shipbuilding budget will provide for the necessary ramp-up beginning next year.

    The problem is that we've had about 5 or 6 ''next years'' now, and the ramp-up is still 1 year or beyond. A question was asked to a commander-in-chief this morning, ''would you like to bet on base closures, force reduction, and outsourcing to pay the bill next year or the year after?'' I don't think so. As a consequence, we're actually, and I'm going to be very conservative now, we're actually budgeting for a 200-ship navy. If you take 5 ships a year in 30 years, that's 150 ships. I'm being generous and I going to say 200 ships, to carry out, what is probably, a 400-ship strategy. A fact about which we seem to be in denial. I don't think it's going to work. This is not your gentleman's responsibility, but somewhere along the line, we're going to wake up and all of a sudden we're going to have to say we're going to have to build 15 ships a year in order to catch up. And, then what the price will be to find the help to do it.
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    Thank you very much, Mr. Chairman.

    Mr. HUNTER. Thank you, Norman, and we have another gentleman from Virginia who has great expertise in maritime issues and marine issues. And, likewise, spends a lot of time doing his homework.

    The gentleman, Mr. Pickett, is recognized.

STATEMENT OF HON. OWEN PICKETT, A REPRESENTATIVE FROM VIRGINIA, RANKING MEMBER, MILITARY RESEARCH AND DEVELOPMENT SUBCOMMITTEE

    Mr. PICKETT. Thank you, Mr. Chairman.

    I know that there are folks at the table here today, and not the ones that decide how much money they get to spend, because if they were making that decision, they'd probably put a whole lot more in the pot. So, we can't really fault them. We have to sympathize with them for having to do all they are called upon to do with the funds that they get.

    We did hear from Admiral Gehman, the U.S. Atlantic Command Commander-in-Chief and Admiral Pruehr, Commander-in-Chief Pacific this morning. And, I'm alarmed at what they had to say about the readiness posture of their Nation, and about how thin our surge capability is.

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    I think it's time for all of us to look seriously at the top line that we're allocating for our military and do what's necessary to ensure that we have the capability that's required to meet the commitments that we've undertaken. Otherwise, we're going to reach that point that we have in the past, where we simply are a paper kind of a force and not the kind of force that we—our Nation can depend upon to carry out all of its responsibilities.

    The comments about the parts, supplies, and about what's happening in depot maintenance raise a lot of concerns about the future readiness of our forces and I hope this is something that our witnesses can tell us a little more about today.

    Another issue that, I for one, don't see as a huge problem because we conduct tests and evaluation studies on aircraft over a long period of time. And, we actually build aircraft strictly for this purpose to determine what needs to be done, to get them to the point that we can manufacture them with confidence and put them in the force with a clear comfort that they will perform as they're supposed to. The fact that there was a huge issue made of a, what's referred to as a Wing Drop on the F/A–18 E/F, I don't find all that alarming. The comforting thing is it was found at this stage in the process, and it can be fixed. And, I know that the Navy has gone a long way toward getting this fixed, and I hope you'll be able to tell us, today, about what's taken place in that regard, as well as, apparently that some minor matter that evolved with the V–22 program. Not a huge matter, but, again, something that we conduct the test and evaluation studies to detect and make sure that we correct them before we get into production and before these planes are turned over to the fleet. The DD 21 program, Mr. Secretary, I know is one that is very close to your heart, and I hope that you can move it ahead with the speed and efficiency that you've started out with. It's a whole new concept. I wish you a lot of success on that, because it's going to mean a lot to us in the future. And, it's going to be a very capable ship, if it can be developed along the lines that have been outlined.
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    And, of course the CVX is something that we're depending on very much and we want to make sure that this stays on course. And, I hope you have something to tell us about that today.

    But, there's no substitute for money when you've got to buy things and get things done. And, we understand that and we hope that we can agree on the priorities that are the right ones for our Nation to move us ahead to a more secure environment for our Nation and better military.

    Thank you. Thank you, Mr. Chairman.

    Mr. HUNTER. Thank you, Mr. Pickett.

    Mr. Secretary, the floor is yours, and, I think, you've had the stage fairly well set by my colleagues.

STATEMENT OF JOHN W. DOUGLASS, ASSISTANT SECRETARY OF THE NAVY, RESEARCH, DEVELOPMENT AND ACQUISITION; ACCOMPANIED BY VICE ADM. CONRAD C. LAUTENBACHER, DEPUTY CHIEF OF NAVAL OPERATIONS, U.S. NAVY, RESOURCES, WARFARE REQUIREMENTS AND ASSESSMENTS, AND LT. GEN. JEFFREY W. OSTER, DEP. CHIEF OF STAFF, U.S. MARINE CORPS, PROGRAMS AND RESOURCES

    Mr. DOUGLASS. Thank you, Mr. Chairman.

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    I want to begin by thanking all of the members of the committee. As I sit here today before the committee and I look at that beautiful new portrait of Mr. Dellums up there, I have to think back that it's been almost 30 years since I first came into this room as a young officer sitting in the back handing out the papers. And, you know, sir, the Office of Management and Budget, or somebody, did a study of the length of time that an assistant secretary holds his job, and as I understand it across the government over the years, the average half-life of assistant secretaries' term is 18 months. So—and we don't get to run for reelection. Generally, we come in, serve one tour, and we're out. And so, I am very mindful that the long-term corporate memory and the long-term view of national security largely rests with those men and women that serve on committees like your committee, in the House and the Senate. So, the words that you have said today, we listen to, sir. We do the best we can to work within the constraints that we have, but I want all the Members of this Committee to know how much we, in the Navy, appreciate the many things that have been done over the years to keep our Navy the finest and best Navy in the world. We're all dedicated to that purpose. And, what I will try to do today, sir, is to explain this year's program fairly quickly. I'll touch on some of the issues that have been brought up in the opening statements of the members, but I'll not go into a lot of detail on those in my opening statement and then allow that to come out during the questions.

    And, if I might, Mr. Chairman, I would like to ask your permission to present the combined testimony of my myself, General Oster and Admiral Lautenbacher into the record.

    Mr. HUNTER. Without objection, it will be accepted.

    Mr. DOUGLASS. May I have the next chart, please?
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    [The information referred to can be found in the appendix beginning on page 231.]

    This is just the brief overview of what's in our budget today. Hopefully, they've handed out paper copies of this to you all. As was noted by the various members, it's a $20 billion plus procurement budget; $8 billion plus RDT&E budget, and what you don't see on that chart is that I spend between $15 billion and $17 billion of O&M money on things like ship repair. I know this is a big issue in your district, Congressman Hunter, as it is among some of the other members. So, under my jurisdiction, on an annual basis, we spend about $45 billion of the taxpayers' money, a very large and diversified program. The most diversified in the Department of Defense because the Department of the Navy procures everything from surface ships, submarines, airplanes, missile defense system, all the equipment for the Marine Corps, and as you know, a variety of airplanes. So, whatever it is the Department of Defense buys, we tend to buy it in somewhat lesser quantities.

    Our focus has been on acquisition reform these last 3 years presented with the dilemmas that you and Chairman Weldon and others have so eloquently pointed out. We've had to become more efficient and we have saved lots of money. Our primary focus today is reducing the lifecycle costs of these systems, so that we can reduce operation and maintenance costs in the future and recapitalize our Navy.

    Some of the major changes that you'll see in our presentation this year are that we've moved up our carrier by a year. I'll get into that in some detail. We have a series of multi-year procurement proposals on our smaller aircraft programs. These are programs that, I hope, will be well received by the committee. And, as you can see from that last bullet, our highest priorities this year are to get on with the production of our F/A–18 E/NF and to get our two carrier programs, CVN 77 and CVX, launched properly.
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    Next chart, please.

    [The information referred to can be found in the appendix beginning on page 231.]

    This is the long-term trends that all of you were talking about in your opening statement. What you see there, sir, is kind of a graphical representation of what Mr. Weldon, and others, were talking about. The procurement accounts are increasing over the years, but one has to be mindful, as one of you pointed out, that if you were to go to the left a little bit, those procurement numbers would be about 70 percent higher than what you see on the beginning. So, we are moving in the right direction, but at a fairly modest pace. And, you can see, also, Mr. Weldon's concerns there in that somewhat stable, but slightly dipping line, of RDT&E dollars over the years. And, I think the questions that have been raised by the Committee this morning are good ones. I struggle with these constantly. I worry that we do not have enough Research Development Test and Evaluation dollars, especially for the kind of modernizations that we need in our surface ship accounts.

    One thing I would mention when you look at that chart is an issue that has been developing in recent years. Not as a result of actions taken on this Committee, but actions taken in other committees, and that is of the procurement dollars you see, I don't receive about 2.5 percent of those dollars. They go away and inform of various taxes and levies, and so on. So, that whatever that line is, you can just take 2.5 percent right off the top. I never see it. It goes to other things. And, even worse aggravating the problem, Congressman Weldon pointed out, it's 5 percent of those RDT&E dollars go away. So, you might think you're authorizing $100 million on a program, by the time it gets to me it's down to $95 million. And this causes me a lot of problems, and I'll elaborate on that in the question and answer series.
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    Next chart, please.

    [The information referred to can be found in the appendix beginning on page 231.]

    This is our Aviation Program and, Congressman Weldon, I hope you don't mind if I keep referencing you, but your opening statement kind of hits some of my high points here. That's the slope you mentioned in your opening statement. We have been down in the valley. We're trying to come up.

    I think what is most important for you gentlemen, ladies and gentlemen, to be aware of, is the numbers on that chart are within one or 2 airplanes the same numbers that I presented to you for the last two years. We have stabilized our program. And, so, Mr. Sisisky, speaking to your comments that, you know, modernization always seems to be slipping to the right, we have been managing to hold the line in our aircraft programs and in keeping them stable over the last couple of years. And, we're proud of that.

    Next chart, please.

    [The information referred to can be found in the appendix beginning on page 231.]

    And I'll show you the same kind of a chart on ships, in just a minute.

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    Our F/A–18 E/NF is, of course, our No. 1 aviation priority. I have model here today. I have some things I could show you about the Wing Drop issue. I'm happy to report to you, Mr. Chairman, that we know how to solve this problem, and I'll be glad to, in the question-and-answer series, to go into more detail. In essence, we're going to put on the wing, here at wingfold, a perforated piece of metal about like this, that allows for some aerodynamic flow through the wing which alters the way the shock waves move up and down the wing. It solves the problem. Has very little effect on the other attributes of the airplane. And, I have a full-size wingfold here that I can show you when we get into the Q&A session.

    The MV–22 is doing very well, as Mr. Pickett pointed out. We do have some problems with that airplane. All complex, modern airplanes have problems in their test programs. People who try to tell anybody, whether it's the Congress or the public, or whatever, that we take these pieces of equipment down to the test ranges and we don't find any problems with them, just aren't telling the truth. They are very, very complex systems, and we don't know everything we need to know about how modern airplanes fly. There are some areas where we have modeling and some places our modeling isn't too good, so when we get out there and we start flying, we do find surprises, but we fix them. And, the key thing is are we managing that process properly. And, I'm very pleased to tell you that on the MV–22 program, it's a little behind schedule and we've had some problems with it, but we're managing them, and we're not asking for any additional funding over what's in the President's budget.

    Joint Strike Fighter, as you all know, is in it's, really, in it's early stages. It's in its pre-Engineering and Manufacturing Development phase. We have two contractors. They're doing reasonably well. Both Engineering and Manufacturing Development of them have problems. I can't go into a lot of detail on what those problems are, because of the competitive nature of the thing. We have funded the Alternate Engine Program, as requested by the Congress last year. Frankly, this was a battle within the building because of the shortage of funds, but the Alternate Engine Program addresses the single, biggest risk issue on the Joint Strike Fighter, and that is ''can you take a single engine and achieve the thrust levels required for those three variants.'' And, I've been down to Florida. I was just down there a couple of weeks ago. I saw the Pratt Whitney engine that goes in the F–22 and the Joint Strike Fighter engine is 40 percent bigger and more thrust than the F–22 engine. I saw the basic core running. So, it's up and running. It's doing well, but I would not recommend that we go forward without an alternate engine at this stage. And, it's my understanding that that certification is here now with the Committee, so, hopefully, we have put that issue behind us. And, I want to state again, unequivocally, my support for the Alternate Engine Program, sir.
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    Next chart, please.

    [The information referred to can be found in the appendix beginning of page 231.]

    This is the Ship Program that Mr. Sisisky was talking about. We've come down off the mountain there, and as you can see, it's flat. And, Mr. Sisisky, we aren't promising to go back up the mountain next year. The promise is that it's off the chart, out there to the right. And, in some ways, I know that's more troubling to you than if we could show you that next year we were going back up that mountain.

    The thing that's important about this, again, is what I showed you on the airplane chart. These numbers have stabilized. As all of the Members of this Committee know, we've had our debates about when to fund the carrier. We've had our debates about the submarines. We've had issues on the LPD–17, but these programs are stable. If you look at those numbers on the DDG's, 3 years; 2 yeara on the LPD–17's moving up our carrier. This represents stability and stability allows me to negotiate contracts that are good deals for the taxpayers.

    Hopefully, if we get some papers signed up and sent to our office today, I'll be able to sign the contract, the multi-year contract on the DDG–51. Right there, with the stroke of the pen, we're saving the American taxpayers $1.5 billion. Those dollars will be funneled back into Department of Defense programs to do the things we need to do for our sailors and our Marines around the world. We are very proud of that.

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    Next chart, please.

    [The information referred to can be found in the appendix beginning of page 231.]

    As I mentioned, we're moving up CVN–77 by a year. This allows us to reap some substantial savings and I'll be glad to answer any questions on that. The DD–21 have gone through its defense acquisition board review, and it's cleared for first acquisition in 2004.

    The one comment that I would make to the Members of the Committee is that we must have competition on this program. I have recently completely revised the request for proposals to, hopefully, stimulate more competition. I've talked to all the shipbuilders. I've talked to a number of the systems' integration houses. I think this new RFP is being well received, but I'll be glad to answer any questions the committee may have on that.

    As I mentioned on the DD–51, we're hoping to sign a contract today. I'm sure it will be signed, if not today, then in the next couple of days. And that $1.4 million is in the bank. We have already reinvested that in Navy programs. This year, we're asking for the second of our LPD–17 class, the LPD–18, and that's a good news story as well.

    Next chart, please.

    [The information referred to can be found in the appendix beginning on page 231.]
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    Seawolf is doing well. SSN–21 has gone to sea—been commissioned and gone to sea since our last hearing. She's doing very well. We put her through her initial acoustic trials. The figures look good. There is a classified briefing available to any Members of the Committee that would like on the results of those acoustic trials. I will tell you that we do not have the outer acoustic tiles on her yet. So, what we know her stealth is, roughly, what you might know about, I mean, the B–2, for example. She didn't have her radar absorption material on her. But, we can, more or less, extrapolate and clearly, I'm able to report to the Committee, that this will be the quietest submarine that exists on this planet. And, as many of you know, she's broken speed records and she has many other attributes that are doing well. I've been to sea on her, and she's a marvelous ship. The second one we'll commission this summer. And, the third out toward the end of this century. And we're under the cost cap.

    And, some of you may recall that there was legislation last year that asked the inspector general to come in and took a look at the cost cap. I can't remember whether that came out of this committee or over in the Senate. We have had the IGN and I've seen their report. It is in essence it says, yes we are still under the cap, and I'm proud of that.

    New Attack Submarine doing very well. We start our second ship this year. We'll have the contract for the first four ships awarded this June or July, and the cooperation between the two shipyards is progressing very well. That is also a good news story, and I think we're going to be able to fully take advantage of the lessons we've learn on the Seawolf Program. And, thanks to you, Mr. Chairman, and the technology money you've helped us sponsor, that submarine is just going to get better and better as the years go by. You know that we have a chart over there in the Pentagon we call the Duncan Hunter Memorial Submarine Improvement Chart. And, some future Assistant Secretary will probably——
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    Mr. HUNTER. How many darts are in that chart? [Laughter.]

    Mr. DOUGLASS [continuing]. Will probably hate me for committing me to do all those improvements, but you know I believe in it and I fight hard for those dollars and we are on track, sir, with that.

    Next chart, please.

    [The information referred to can be found in the appendix beginning on page 231.]

    This is our summary chart on the Marine Corps programs, the AAAV. I thought we had a model of it here today, but I don't see it here. It's doing very well. I'm really proud of the fact that the Marines have made the program manager on that program a brigadier general. And, they are, at last, growing young officers to be senior acquisition officials. We've got a terrific program manager. He has his contractor team and his government team co-located down there in Manassas. That's going to be a terrific new armored vehicle for our Corps. It's going to be able to get them off of our amphibious ships while they're still out over the horizon in a shore very quickly. As you know, the thing goes very fast. The exact speed is probably classified, so I shouldn't say it here, but it's suffice to say, you can waterski behind it.

    Lightweight 155 Howitzer, this is a program we're developing jointly with the Army. It's a British design. It's doing very well.
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    Our truck overhaul programs are doing well. I've been up to Aberdeen and drove. We have a competition going on. I've driven both variance. They're both terrific and trucks may sound a little mundane, but if any of you've tried to drive up a 45 degree slope in the mud with 2 tons behind you, it's scarier than you think. But, they're marvelous vehicles, and that's on track.

    And, of course, the Marine Corps warfighting laboratory, which is really a manifestation of the wonderful leadership provided by Gen. Chuck Krulak, the Commandant of the Marine Corps, is doing well. We have about $24 million invested in that this year. And, General Krulak and his marines are doing amazing things. We're developing systems on a shoestring, and little Remotely Piloted Vehicles, and other things that will help our marines and urban warfare. And, that program is absolutely on track.

    Next chart, please.

    [The information referred to can be found in the appendix beginning on page 231.]

    Coming quickly to the end, sir, here, and we'll—we only have about two or three more charts.

    This is command control communications, computers and intelligence. I think the two things that I would like to leave you with here is the Cooperative Engagement Program, which is the foundation for a lot of the work we're doing in ballistic missile defense. It's progressing satisfactorily. I've had some problems with it this year that I'm working out. Not totally satisfied with it, but, in general, it's doing well. We're gradually getting it to sea on more and more ships, and keeping a close eye on it.
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    The Y2K, that, of course, is problem of getting all our computers upgraded so they won't dump when the year 2000 rolls around. The Navy is taken this very seriously. And, I might add, sir, that the Deputy Secretary of Defense, Dr. Hamre, has taken a personal interest in this, and I meet with him on a monthly basis to explain to him the progress that the Navy is making. What makes its hard for the Navy, gentlemen and ladies, is that we have to bring—not only do we have to update all of our computers, but some of our computers are at sea. And, so, we have to bring the ships home or else we have to send technicians out there to change the computers. And, so there's a lot of movement that has to go on here to get all these ships upgraded before the administration's test at the end of this year. They want to have a test at the beginning of 1999 to make sure everything is OK. And getting all our ships done by that time is a very serious challenge.

    Next chart, please.

    [The information referred to can be found in the appendix beginning on page 231.]

    This is an issue that has been mentioned in some of the opening statements, Theater Ballistic Missile Defense. I'm changing my management structure. We'll have a press release out on this in a couple of days.
I'm essentially strengthening this program with some additional management. We're doing very well on Area Wide. I think it's important for this committee to know that next year we will have ships at sea with this capability deployed on them, next year. You often hear a lot of frustration on the Hill that we aren't making enough progress in Theater Ballistic Missile Defense. I think the fact that we're deploying ships with missiles on them, next year, is a sign of the Navy's commitment to these programs.
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    Theater-wide, of course, we're looking at a deployment sometime in the early years in the next century. The money for this program is controlled by the Ballistic Missile Defense Organization. There is an ongoing debate in the building and on the Hill about how fast could you go given the money we have in the plan right now. We plan to deploy this at sea in 2006. We, in the Navy, believe that we could do it sooner, and I'll be glad to answer any questions on that.

    Next chart, please.

    [The information referred to can be found in the appendix beginning on page 231.]

    Science and Technology, Mr. Weldon mentioned this. The Navy's program is about a $1.3 billion a year program. I have fought very hard to keep this stable. I'm not particularly thrilled about the level of 6.1. Secretary Dalton and I have publicly said we'd like to get it up to about $400 million and we're at the $362 million level now, but overall, we've kept this program reasonably stable over the years.

    We have a number of good Advanced Concept Tachi Demonstration which are in progress now, which have been approved by the Congress. Probably, the most interesting one is the Joint Mine Countermeasures Program in which we bring together lots of different programs from different parts of the fleet to demonstrate how we're going to be able to deal with mines in the future.

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    We funded the Manufacturing Technology Program. This has been a contentious issue. It's been zeroed a couple of times, but that is stable funded out through the FYDP now. And, I know of great interest to you, Congressman Hunter, and other Members of the Committee, is the Maritech Program. There is money in the DARPA budget again this year. That program had been planned to end last year. A number of us made appeals within the administration to keep it alive. There is money in the budget. I'd be glad to discuss that, sir, if they're any questions on that.

    I believe that that is vital, and you and I have discussed this, on a number of occasions, to keeping our maritime industrial base viable. And, we need to do even more than Maritech, and I'd be pleased to work with you, sir, in any initiatives. As a matter of fact, Congressman Weldon and I were talking last night about some innovative uses of the Defense Features Program that he's interested in, and I fully support those issues that we were talking about.

    That's my opening statement, sir. Our team is ready to answer any questions that you have.

    [The prepared statement of Mr. Douglass, Mr. Lautenbacher, Mr. Oster, can be found in the appendix on page 202.]

    Mr. HUNTER. Mr. Secretary, thank you, and I think you've covered a fairly broad waterfront there. Let me lead off with a couple of questions and go, quickly, to other members.

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    The new technology insertions in the New Attack submarine, could you expand about where we are right now with that, and, you know, the list that we developed throughout the submarine discussion, and the interchange that we had over a period of about a year and a half on that?

    Is that a robust list and are you moving forward? And, I have the letter from the Secretary of the Navy that he sent the committee certifying that he forwarded to the Secretary of Defense a budget request that met the funding levels of the House provision——

    Mr. DOUGLASS. Yes, sir.

    Mr. HUNTER. Does the fiscal year 1999 Navy budget reflect the same commitment?

    Mr. DOUGLASS. Yes, sir, it does. And, we've tried hard to keep that program robustly funded. As my memory is that the R&D program is $60 million–$70 million a year. There has been an issue, Mr. Chairman, about how much money DARPA is investing in this and I would like to see them invest more because, I think, if the both, the Navy and Defense Advanced Research Projects Agency, work collectively together we can do some better things for the submarine force. I keep my eye on that. As you know, there is a thing called the Submarine Technology Counsel which Dr. Caminski established a couple of years ago. I'm hopefully that Dr. Gansler will keep that in effect. And, we can continue to oversee the administration of those dollars. There are some outyear issues which we've discussed with you to make sure that we not only pay the research and development bill, but we have the money to actually put those changes on the submarines in the years ahead. That's what your certification involve, and we have met the certification, and we are hopeful that we can do even more.
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    I'm encouraged with the quality of where we heading on New Attack Submarine. I'm encouraged by what I see on the Seawolf submarine. At some point, Mr. Chairman, I think it would be worth your while to get that classified briefing on where we're going acoustically, because I think you'll see some interesting things. I think you'll also see some interesting things and where we're headed in combat systems. And, finally, thanks largely due to your efforts and others in the Congress, as you know, we have the large scale vehicle under construction which will be going out to Lake Pend O'Reil. It's going to be a——

    Mr. HUNTER. Yes, tell us about that a little bit.

    Mr. DOUGLASS. It's going to be a modular system which will allow us to try these new technologies on subscale vehicles to see how they work. We're, of course, looking at a broad range of issues from hydrodynamic shapes to new kinds of conning towers, new propulser designs, you know, for more and better acoustics, quietness devices for towing our new lightweight rays. We have a number of things that we hope to be able to demonstrate with those new vehicles. And, that program is on track, sir.

    Mr. HUNTER. OK, the third large scale vehicle is moving along?

    Mr. DOUGLASS. Frankly, I'm not exactly sure where we are on the third vehicle. The second one is definitely moving along, but I'd have to take that for the record.

    Mr. HUNTER. OK.
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    Mr. DOUGLASS. I can get that from records. I think what you asked us, as I recall on that one—you know, just allow me a little license here.

    Mr. HUNTER. Sure.

    Mr. DOUGLASS. I think you asked us to go back and look at the need for a third one and, I think, those studies are underway, but I wouldn't want to mislead you, sir, and say there's money in the budget for the third one yet.

    Mr. HUNTER. OK. Let's go to F/A–18 E/F and the Wing Drop.

    Mr. DOUGLASS. Yes, sir.

    Mr. HUNTER. You stated you think you're well on your way to handling that problem and we've had discussions before the hearing, too.

    Mr. DOUGLASS. Yes, sir.

    Mr. HUNTER. And you've gone over that. Do you think the first—do you think the proposed solutions can be implemented without a great deal of additional costs? And, Admiral Lautenbacher, the January 14, 1998 report of the Wing Drop panel stated and I quote, ''although the panel is optimistic that an acceptable combination of fixes can be found, some of the more promising fixes will increase the drag to some extent, may impact the observability characteristics, and may alter the design loads on the wing and flap components.'' So, the question is will the corrections to the wing result in an aircraft that still meets the Navy requirements, and will it meet the range requirements?
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    Admiral LAUTENBACHER. Yes, sir.

    Mr. HUNTER. I know you're nodding, but you're going to have to give us a better, extensive answer. [Laughter.]

    Admiral LAUTENBACHER. I was just wanted to know if my good friend wanted to answer first, sir.

    Mr. DOUGLASS. Go ahead, and I'll fill in.

    Admiral LAUTENBACHER. To date, the testing shows that we're able to continue to meet all of our key performance parameters, and there has been, essentially, no major effects. We're well within the margins on all of our key performance characteristics. We believe this fix is the right one. It corrects the problem and it's within performance specifications. And, we're pleased that this is in the right direction and doing what it needs to do to meet the requirements.

    Mr. HUNTER. OK, are we on the same general subject, Admiral Lautenbacher? We were in Fort Worth, recently, at the Joint Reserve Base, the old Carswell Air Base, and we spoke to some of the members of the Marine Corps Reserve F–18 Squadron, and they told us that their aircraft didn't have the upgrades that would enable them to fire them AM RAM and provide for more current avionics. Does the Navy have long-range plans to keep the F–18 A, B, C, and D fleet current and capable? They were a little concerned about that.

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    Admiral LAUTENBACHER. Yes, sir, we do. We have a long-range plan for all of our configurations, A's, B's, C's, and D's of the F–18s. As you might imagine, there are a long list of modernization items which are important to add to these aircrafts. We have a program to do that, and we are funding it as affordability and limits allow us to do.

    Mr. HUNTER. OK. Secretary Douglass, and I'll cut off here and let the other members have a shot here. But, in May 1997, you and Secretary Kaminski commissioned an industrial-base study of the shipbuilding industry, and last week, Dr. Gansler told us that the report's almost finished. Should be available shortly. What is the objective and when will the results of the study become public? And, what can you tell us today about what you've learned so far, or what the results of the study will be? And, I thought that Norman Sisisky's observations on the fact that we're building to a 200-ship navy, go to the heart of our concern. I mean, we can all count, and we know how much money we're putting in the budget, and it's not enough. And, it doesn't look like there's a reasonable explanation for the level of funding that we have, and a deterioration of the shipbuilding base is an inextricable part of this draw now. So, what are we going to do here?

    Mr. DOUGLASS. Yes, sir, can I comment, very quickly on the study. The study will not be made public, and the reason why the study won't be made public is because it contains a lot of information about proprietary labor rates and negotiated contracts, and things of that nature with the shipyards. Of course, it is available to all Members of Congress, but it's one of those things that you don't just put on the internet, because it would—it's like we don't make the proposals available to the public during a competition because it would give the other guy the competitive edge.
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    As to what the results of the study were, they're not, particularly, surprising. They say that we have more capacity than we have need, right now. That we could build, as I recall, it says, well just, you know, the workforce we have and the facilities we have, probably two or three times as many ships as we're building today. Most of the members who have shipyards in their districts kind of know that's almost intuitive.

    It suggests that a solution over the long run might be to close some of these yards. I'm not sure I agree with that. I would rather see us get work in those yards for our American shipbuilding infrastructure and for our workers. As you and I have discussed, and I think—and I'm encouraged by this. Three years ago, when I began this job, there was no large commercial ships under construction. Today, we have something like 42 under construction. A lot of them being built for the, you know, double hull tanker trade in the United States and abroad.

    The Congress has been responsive to requests that I have made to liberalize certain provisions of the law that deal with shipbuilding. So, I think we're moving in the right direction, but more needs to be done. But, the bottom line of the report is we have a very important industry, industrial base for national security, that's underutilized at this time.

    Mr. HUNTER. OK. And you know, John, we need to work—all of us on this committee, need to work with you to see to it that we come up with some creative ways to——

    Mr. DOUGLASS. Yes, sir.

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    Mr. HUNTER [continuing]. Expand that industrial base. Just one last thing, and I'll turn it over to the Chairman of the R&D Subcommittee. We had our Korean Commander-in-Chief in this morning. He is concerned about Theater Missile Defense, because the North Koreans have missiles that contain gas, that can kill our troops fairly readily, and further can, on a continuing basis, contaminate the air fields. It'll keep TAC AIR out of Korea, out of the peninsula. He wants, and I think this is something that is echoed from the early days of our comments by our Korean commanders, he wants missile defense. He'd like to see navy aperture employed faster than the projected blueprint. You indicated, you think, you can get it a little bit faster than projected.

    Mr. DOUGLASS. Yes, sir.

    Mr. HUNTER. I think that it's critical to get that system out there, and maybe we're doing the wrong thing. Maybe we're focusing on the product instead of focusing on the technology and maybe we can bring more assets to bear on simply developing the technology and perhaps accelerate the program. You feel you can accelerate that program?

    Mr. DOUGLASS. Yes, sir, I could.

    Mr. HUNTER. How fast could you move it?

    Mr. DOUGLASS. Sir, I've seen various plans, some of them that speak to moving it all the way up to 2002. In my opinion, we'd be putting an awful lot of money on the line and in a very, very risky program. I've made some proposals to OSD that are, what we call, a sort of technology-based program which, we think, could bring it up to maybe 2003, 2004, depending on how much money went into the program.
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    But, also, Mr. Chairman, Mr. Weldon and I were talking about this last night, and it's a combination of hard work. It's a combination of investment and their's a certain element of luck to it, as well. You know, things go wrong in test programs. If you have a really lucky run and everything is really going great. You don't have any setbacks. Sometimes you can do it a little sooner. But, sometimes bad things happen, you know. Guys wire things up backwards in the lab or something, and something blows up. Then, it's six month later until you get—so it depends.

    Mr. HUNTER. Let me make a suggestion, John. It might help in that talking with some of our testing folks. You can do a lot of stuff with simulators. And, we've got simulators, in fact, in other areas in the defense apparatus, for example, the National Laboratories, that could be used, I think, to advantage in these areas. I was told, this morning, that all the failures we've had with THAAD could have been taken care of with a lot of simulation work.

    Maybe we need to bring those guys in and work the technology. I think if we get together and, kind of, talk this thing out, maybe adapt a new approach, we can accelerate the program.

    Mr. DOUGLASS. Yes, sir, and I'm pleased to report to you that Dr. Gansler is reviewing this. I think he may have testified before this committee. I know he has spoken to other committees about looking very carefully at this. I know other leaders in the department are—all of their hearts are in the right spot on this, I think. There has been concern, in the past, that the Navy's program was too risky. But, we've made a lot of progress over the last year, and I've been presenting that progress up to chain of command.
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    Mr. HUNTER. You know what I think, John? I think it's too risky not to go as fast as we possibly can, because every moment that we exist with the 30,000-plus troops in Korea who are vulnerable to gas attacks, scuds, that we're risking their lives. So, if it costs a lot of money and we love some money, let's do it. I think we need to accelerate this program. I mean, I think this is one of the keys.

    Mr. DOUGLASS. Sir, before we leave your questions, I had some more comments on Wing Drop, but I'll hold those until the end unless, you know, maybe they'll come out in some other——

    Mr. HUNTER. Go ahead. Why don't you hold on and I'll turn it over to Chairman Weldon. We'll try to run down the line here, and get some questions.

    Mr. WELDON. Thank you, Mr. Chairman, and again, thank you all for being here today.

    Let me just follow up on that and say that—and ask the question, Mr. Secretary, that in your personal and professional opinion, is it more than a dollar problem and a cost problem, as opposed to a technology problem to allow us to speed up Navy Theater Wide?

    Mr. DOUGLASS. Sir, it's a mixture of both. That's what I was trying to explain when Congressman Hunter and I were having our colloquy there. Clearly, to speed it up, you're going to have to invest more dollars. The earlier you speed it, the more the risks goes up. The risk, of course, is associated with the pace of the technology development. So, reasonable people can disagree on this, but I think what is happening, if I might put this in context, is we have just recently gone and, kind of, showed Dr. Gansler where we've been with the money that Congress gave us this year and year before. And, I think, I sensed a little bit more optimism up there in the Ballistic Missile Defense Organization that we can move forward. And, as I mentioned to Congressman Hunter, unilaterally, the Navy is doing a number of things to strengthen this program. We have our Cruiser-MOD Program, which will eventually allow us this to go on many more ships. I have, unilaterally, decided to greatly strengthen my management structure below me to see that this program gets to the fleet. As I mentioned before, lower tier gets deployed next year, and I want to make sure that happens. I'm taking the very smartest person that exists in the U.S. Navy and putting it into this program, a flag officer. It happens to be a woman. And, making some other changes which will be announced in the next couple of days.
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    So, I think it's a combination of all of those things, sir, and we're eager to work with the committee, and work with our bosses in Office of the Secretary of Defense to find the right balance.

    Mr. WELDON. But, the point is, that you said that you do think it's possible to speed up that system?

    Mr. DOUGLASS. Yes, sir. Yes, sir. I do.

    Mr. WELDON. Very well, thank you. Two points I want to congratulate you on. I've been here, now, 12 years. And, my first term in Congress, the USS Stark was attacked. And, then the chairman of the Seapower Committee, Charlie Bennett, held a hearing which I requested of him to look at ship safety and survivability. And, as a result of that hearing, we began some initiatives which I tried to follow through during the 12 years I've been here. One of which, which I think is most important, for the sailor of the ship. It's not the big ticket item that everybody notices, but when you're out there having to face the kinds of situations our sailors face, and you have to respond to a disaster, the kind of response equipment, the turnout gear and the breathing apparatus, is extremely important. And the Navy has now, finally, decided after 12 years to replace all of the old oxygen breathing apparatus——

    Mr. DOUGLASS. Yes, sir.

    Mr. WELDON [continuing]. Which the civilian fire service stop using 20 years ago. And, I know, you're in the process now of replacing—how long do you think it will take for us to replace all those old OBA's with the new self-contained breathing apparatus you're putting into place?
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    Mr. DOUGLASS. Sir, I don't have that on the tip of my tongue, but I'll get that to you for the record.

    Mr. WELDON. Thank you.

    Mr. DOUGLASS. I can tell you that I'm the son of an Aviation Chief Petty Officer. He used to tell me about fires at sea. He fought on our carriers during World War II, and a couple of them were hit by kamikazes, and big fires got started. When I saw what was going on with this effort, I did everything I could to get that program funded.

    I apologize. I don't remember how quick we're going to buy it out, but I will get that for the record.

    [The information referred to can be found in the appendix beginning on page 247.]

    Mr. WELDON. I appreciate that, and I just want to acknowledge that Dick Healing is in the room today. He's the individual working in OSN who is focused on this effort. He gets a very small pinch of money that this committee pluses-up each to allow us to take off-the-shelf technologies to better support our sailors at sea, and our Navy personnel and Marine personnel. And one of the issues we're working right now is the aviation safety systems. And, I just want to say how important, I think, that very small investment is to allow us to get into state-of-the-art technologies that really save lives in the service. I want to get into some issues like the F/A–18 E/F.
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    The funding request for fiscal year 1999 is $357.2 million. That's an increase of $158.5 million greater than the estimate for fiscal year 1999 that was provided in the fiscal year 1998 budget request. Given, and I will accept what you told me last night and today and what I've read, that you have the Wing Drop problem solved. But, why such an increase when we have a backlog of aircraft, right now, that we're attempting to purchase?

    Mr. DOUGLASS. Yes, sir. Probably, we need to get out that backup chart that shows the estimate versus what we're actually funding. See if you all can find that chart. It really breaks down into, kind of, three things, sir. One of them is I—a couple of years ago when we going through the POM exercises—as you know, the Program Objective Memorandum about 18 months ahead of the budget submission, I looked at the fiscal year 1999 amount of money that was in the budget for this program, and I found it unacceptably low. But this was a long time before anybody knew anything about Wing Drop or any of the other issues that are in the flight test program.

    [The information referred to can be found in the appendix beginning on page 247.]

    And, as you can see, one of those colors there shows what they estimated the program's suppose cost us. This is the Research and Development Program for F/A–18 E/F. The other one is what we actually got. And in the early years, we didn't get near the money that the KEG had estimated. And, I looked at the tailoff in other programs. I had them go get the money. Show me how the test program for the F–16 ended, and the F–15, and the F–117. These were all programs that I was involved in when I was an Air Force officer. And, sure enough, we were bringing the F–18 almost down vertical and going out of the R&D business. I thought that was dumb. I got them to add some money, as I recall. Of the $150 million increase that you talked about, was about $80 million or $90 million was added. There was a lot of discussion about ''we're going to lose this money on the Hill, because this is just your estimate, Douglass.'' But, then low and behold, you know, things happen. We began to find out about Wing Drop and we had some other issues, and we had to accelerate our flying program. So, it turns out that it was a very wise thing that we added that money to the budget.
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    The rest of the money, sir, are for new things. They don't have anything to do with test problems or anything like that. One of them is for, as I recall, a new tactical—to begin research and development in a new tactical recognizance system. And, I forgot what the third one was. Any of you guys recall what it was? $27 million of it were for new items on the program. These are not money that's going into the development of the airplane itself, but for ancillary equipment.

    Forty-three million dollars of it was for this new tactical recognizance program and it was $87 million for the basic program itself. This is money that I got put into the POM a couple of years ago because I felt that when we got out to this point, we just didn't have enough money in the program. And, it's turning out, given that we did have Wing Drop and, as you know, we had the—we'd been flying this airplane as much as we possibly could to make sure we had a fix on it. These dollars were a wise request.

    Mr. WELDON. Mr. Secretary, we expect you to answer this question now that it's the subject of a major debate on the Hill, and that is, again, how the pentagon can justify the cost differences between what CBO and GAO say are going to be the required amounts that, not just the Navy, but all the services are going to want to spend on our tactical aviation buy in the outyears?

    Many of those in positions in the military air shift may not be here 5 or 8 years in the same position. Members of Congress and many of the folks in this room will be here 5 to 8 years from now, and many of us feel as though we're, basically, leading ourselves down a path that has no end. That we just can't fund 3,000 or 3,500 aircrafts. So, I think, the key thing that you've got to answer for us, not today but this year, is how are you going to pay as a Navy, as a partner, in these new programs? And, how is DOD, as a whole, going to be able to pay for a buy that's realistic? And, I think we're going to have interchange between the GAO and the Congressional budget office. That's going to be the continuing subject of major discussion between us this year.
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    Mr. DOUGLASS. Yes, sir. Let me, fairly quickly, rough out my part of that issue and give you my perspective on that.

    First, of all I can't comment on the Air Force airplane. I don't know how they're doing. Whether they're over their budgets or what. That's something I just am not informed and it wouldn't be right for me to do that, anyway.

    This airplane is underrunning significantly. Despite the problems that we've had in the test program, which are minor programs, we're $48 million under what everybody estimated. Sir, you've authorized $175 million for that bird that I never saw. It was siphoned off for this little project, and that little project, and somebody over in some other Committee taxed us with an undistributed Reduction. Because they couldn't get the bottom line to balance and so on.

    You add that up over the last 4 or 5 years. It's like being sent to the market to buy a carton of eggs, you know, when you're a kid and along the way you lose some of the money. So, I had to make it up with other things. In reality, if you really want to say apples to apples, and what you asked me to do, I 'm underrunning this program by well over $200 million in development.

    In production, it's even a larger amount. Our numbers have significantly come down. I know that some members have asked me, ''Gee, we were going to buy 1,000 planes, now we are only going to buy 5468. Has the price gone up?'' The answer is ''no, sir.'' The price has not gone up. In fact, it's gone down, because of acquisition reform and other things. So, this airplane, which is going to give 25 percent more combat air patrol coverage for our Sailors; 35 percent increase in fighter escort range; 40 percent or 50 percent increase in interdiction ranges; 52 percent more target coverage and on, and on, and on over the FA–18C&D. This one is on track and is being resolved through two or three different fixes.
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    Now, when you get the joint strike fighter, that's another question. You're absolutely right that the CBO and the cost estimating group in the Pentagon, and others say it going to cost in the neighborhood of 50 percent to 100 percent more than the estimates that I'm working on right now. It is a program that we call Cost as an Independent Variable. Other words, we're going through cost trades every year looking at the estimated costs, and asking ourselves ''What are asking this thing to do.'' Gradually we are trying to bring it into the box.

    I think the biggest unknown that I deal with between this and joint strike fighter is the joint strike fighter costs in the outyears. That's the big unknown. We're doing everything we know how to do. We are using all the tricks and tools we have in our acquisition reform kit to hold down the cost on that one. But, the book is still open there, because it's so far out in the future. This one is a good news story.

    Mr. WELDON. Mr. Secretary, so how do we then deal with the taxes that you're paying on these programs? What's the solution?

    Mr. DOUGLASS. Well, sir——

    Mr. WELDON. We understand the problems it's causing. How do we deal with that? I mean, a lot of its to pay for deployment costs that were never budgeted for.

    Mr. DOUGLASS. Some of it is that. Some of it is due to undistributed reductions which come out of the Appropriation Committees. I don't know if you can talk to your colleagues on those Committees and ask them not to—take those type of reductions.
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    Mr. WELDON. We can talk to them. I don't know whether they'll listen, but we'll talk to them. [Laughter.]

    Mr. DOUGLASS. It's enormously corrosive, sir. When you have a budget and, your usurp milestones, and to just have 5 percent of your R&D money disappear. There are also some other efforts, which we put in place 4 or 5 years ago, that are percentages of our dollars we ought to look at.

    I'm looking at the way I invest the Small Business money to try to funnel it back into our programs as best we can. Let me give you a more thoughtful answer for the record on that, sir.

    [The information referred to can be found in the appendix beginning on page 247.]

    Mr. WELDON. Thank you, Mr. Chairman, and thank you for your hard work in this area.

    Mr. HUNTER. Mr. Sisisky.

    Mr. SISISKY. It's strange with the last comment. And, my first question was going to be explain the taxes, 2 percent of procurement and 5 percent.

    Mr. DOUGLASS. 2 1/2 percent of procurement.
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    Mr. SISISKY. 2 1/2 percent.

    Mr. DOUGLASS. Yes, sir.

    Mr. SISISKY. And, that's what the appropriation is slated for?

    Mr. DOUGLASS. Well, it's not all there. Sometimes they get——

    Mr. SISISKY. It isn't Defense Business Operating Fund, is it?

    Mr. DOUGLASS. No. sir. This one is not DBOF. As you and I know, we've got our bones to pick about DBOF. As a matter of fact, I was talking to Congressman Hunter about some of my irritations, in that respect today. This is just levies that come on the programs to pay for when there is an O&M shortfall and we have to do, you know, reprogramming, or there's an undistributed reduction put on us by the appropriation committees, or whatever. You add them all up and that's an average, Mr. Sisisky. Some years it gets as high as 8 percent or 9 percent, and it really throws us into the ditch when that happens. And, the programs begin to slip.

    Mr. SISISKY. I've got to ask you a question that I don't usually do. Somebody provided me this question. It's somebody that I hear from all the time. And, in fact, it's a lot people I hear from all the time. [Laughter.]

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    I've been bombarded, and I think that the appropriate word, with people who advocate bringing back two Iowa-class battleships. [Laughter.]

    When I point out the expense in dollars in personnel, they counter the naval gunfire support is limited to various missiles, which is not really a substitute, the 5-inch range guide munitions, which may be having development problems, and the 155 millimeter vertical gun for advanced ships, which we won't have for the foreseeable future. Am I missing something here? Do we have a current capability to provide naval gunfire support which meets requirements and are the marines on board? Could you tell us the status of this——

    Mr. DOUGLASS. Yes, sir. Let me try to comment on that. Both my colleagues may also want to comment, especially this good marine, here, to tell you whether the marines are onboard.

    We do not have, right now in the fleet, the required ground attack naval gunnery that would meet the requirements that the Congress levied on us that said you got to keep the battleships on the active roster until you can achieve an equivalent level of fire support ashore.

    But, the extended Range Guided Munition program you mentioned is on track. I get briefed on it quarterly and I have not been briefed recently. Maybe you know something I don't know.

    Mr. SISISKY. No, I don't know.

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    Mr. DOUGLASS. I have not heard of any serious development problems. The Vertical Guns for Advanced Ships is, of course, part of what we hope to get on the DD–21, but we aren't there yet. I think it's going to be 2002, 2003 before we get to that point. Until then, the law requires us to keep, at least, two battleships on the active roster. That's where they are. Some people have recently asked to take those battleships and put them in museums and things, and we politely tell them we can't do that as long as we have this law. But, in regards to whether it's satisfactory or not to the Corps, I think General Oster should comment on that.

    General OSTER. This has been an area of great concern for a considerable period of time. We have worked diligently with our shipmates and under the leadership, of the last about 24 months, of Admiral Murphy. In the N–86 operation, we believe we put together a plan that is going to deliver the capability. But, as Secretary Douglas said, it's not going to deliver it tomorrow. But, it's a coherent plan. We've put a little bit over $1 billion into the FYDP over the last couple of years in order to develop the various phases. It's integrated to be able to provide for the operational maneuver from the sea concepts of the Marine Corps to provide the range and the depth, and so, it is moving along. My great effort, each year, is to make sure that the money stays in there and that we continue making the progress in that regard. But, we're in a better position to talk about the future today than we have been in a longtime.

    Mr. SISISKY. That's good enough for Marines. That's good enough.

    I've got to ask a question. You probably don't know the answer and I should probably ask the Commanding Officer, but I've got to ask the question. I must. Through the series of hearings that we've had, particularly with the National Defense Panel, the Quadrennial Review, obviously the 12-carrier stayed in as a necessary thing. I was reading the other day that the Nimitz is going into the yard for 3 years.
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    Mr. DOUGLASS. Yes, sir.

    Mr. SISISKY. In 3 years, the Enterprise is going into the yard. Now, using a carrier out of the Pacific to go into the Persian Gulf leaving the Mediterranean completely empty. And every time we get out of there, something happens. Is anybody studying whether we may need to have another carrier? I'm not talking about CVX. But, you know, I'm talking from a warfighting thing.

    Mr. DOUGLASS. On the requirements issue, Conrad, you want to——

    Admiral LAUTENBACHER. Our requirements is still for 15 carriers, if you're going to have a reasonable opportunity to cover the areas, the three trouble areas that we have in the world. So, we are allocating shortfalls, basically, with the 12 that we have. And, you know, part of the calculation is that ships will be in overhaul for periods of time, and the nuclear carriers, when they reach their midlife upgrade, is a longer period of time. That's a fact of life that we're living with, and it represents a shortage.

    Mr. DOUGLASS. Mr. Sisisky, I can only tell you this, you know that I am a student of history and I read a lot about it. The last time we had a smaller fleet than what we have right now is before World War I. And, the difference between the fleet we had in World War I and the fleet we have today is naval aviation. It's our carriers and our airplanes that fly off their decks. And you can probably add to that, the Tomahawk cruise missile.

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    That is why I am so adamant, sir. The taxpayers of the United States have paid for that airplane. It's finished its development. I'm not asking for anybody anymore money. We need to get that thing out to the fleet and we need to keep building carriers.

    With the world we live in today in a post-cold war, we're losing basing rights all over the world. All kinds of things are changing. You know, I used to be a, as you know, the No. 2 American flag officer at NATO headquarters in Brussels. If you just looked at the what the world looked like when I was over there in the late 1980's, early 1990's, and look at it today, a lot of things have changed. What has not changed is American aircraft carriers can go anywhere they want to go on the seas of our oceans. That is turning out to be, in the post-cold war era, America's tripline.

    We used to, in the old days, you know, talk about the tripline at the Fois d'Gap; well now, it's those young aviators. And we've got to keep them safe. And, we've got to invest in their future. That's why I'm so, you know, probably, emotional on this issue.

    Mr. SISISKY. Well, I appreciate that. And, to the committee's knowledge, you know, Mr. Douglass says he's an historian. He's also a reenacting. [Laughter.]

    He puts on the war for Southern Independence uniforms every now and then.

    Mr. DOUGLASS. A private, sir, in the 42d Virginia infantry and 28th Massachusetts volunteer infantry——

    Mr. SISISKY. Thank you. [Laughter.]
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    Mr. DOUGLASS [continuing]. For those of you on both sides of the Mason Dixie line. [Laughter.]

    Mr. HUNTER. OK, you can put on your Southern uniform and answer Mr. Pickett's questions. [Laughter.]

    Mr. DOUGLASS. Famous—I've been in Pickett's charge, Mr. Pickett.

    Mr. PICKETT. Hope you were on the right side of that one. [Laughter.]

    Mr. PICKETT. The missile defense, and speaking specifically about the Navy aperture——

    Mr. DOUGLASS. Yes, sir.

    Mr. PICKETT. What would you estimate the procurement costs, the development costs and procurement costs, of each system that used by the Navy in developing the aperture?

    Mr. DOUGLASS. Wow, you mean the whole EGIS system? Oh, sir, I, many billions. I don't have that right at tip of my tongue, but I can tell you if you added up all the costs of all those destroyers and all their radars and the cruisers that we're upgrading, and so on, it'd be a big number. Many, many billions of dollars of infrastructure.
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    Mr. PICKETT. You bring a lot of assets to the table when you talk about what you're able to do in taking a relatively small amount of money when compared to what we've spent on national missile defense and some other programs to try and develop an aperture program. You bring a lot of assets to the table——

    Mr. DOUGLASS. Yes, sir.

    Mr. PICKETT [continuing]. To launch that are already proven in combat. Is that fair——

    Mr. DOUGLASS. Yes, sir. Absolutely. The radars, the launchers, the basic components of the missile themselves are all proven assets. That's what in my mind, Mr. Pickett, lowers the risk significantly compared to what some people think the risks are.

    Mr. PICKETT. OK, that leads into my next questions, the cooperative engagement capability. And, I saw a demonstration of that down at Dandeck some time back. Very impressive. The Marines and the Navy were——

    Mr. DOUGLASS. Yes, sir.

    Mr. PICKETT [continuing]. Conducting exercises that day, but I'm a little bit concerned by what I see on your chart here. You went over it pretty quickly. It says ''operational tests of CEC and ancillary systems have generated concerns.''——
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    Mr. PICKETT. Yes, sir.

    Mr. DOUGLASS [continuing]. And that statement generates a concern for me.

    Yes, sir, let me explain that. The basic CEC system, Mr. Pickett, is working great and we're pressing ahead to get it on as many ships, and, incidentally, on as many airplanes as we can. It'll start into E2C fleet in the near future.

    One of the problems we're finding, though, sir, is that when you—remember now, what you're doing is you're bring in the radar picture from a whole bunch of other ships and airplanes on the each individual ship. And, that information gets shared onto other combat systems on those ships. And, we've had a couple of the other combat systems that haven't done well in Operational Evaluation—not Cooperative Engagement Capability itself, but it's playing with other systems. As a matter of fact, we had flunk OPEVAL recently. This is a major concern to the fleet. It's a major concern to me. I've got a thorough review team out there in the field, right now, that's going to report back to me at the end of the month. A flag officer is looking at this, and I'm making some management changing in the structure of the program. So, that's on that chart, not to get anybody alarmed or anything, but just to make sure everybody knows that this is a tough problem getting it into the fleet and we're working on it. But, CEC, itself, the basic, you know, CEC program is doing well. It's how it mixes in with the combat systems, especially, on the carriers and the big deck amphibs. We've had problems.

    Mr. PICKETT. Thank you.
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    The final one is, I know you came prepared today to talk about the wing problems and I want you to take the opportunity now to show us what you've got, both for the FA–18 ENF issue and the V–22 wing problem. Tell us how that's been solved.

    Mr. DOUGLASS. Yes, sir. Just let me, briefly, explain to the committee, this is a F–18 with all its bombs and rockets, and everything aboard. And what we found, about a year ago, was—remember at that time, we only had one airplane flying, and the pilot would go out and fly at a very high angle of attack, high G-turn. And, once in a while, they'd be out there flying and they'd get a drop this way, and the next time, maybe a couple of flights later, it would drop the other way. When this occurred, we'd send another pilot out to try to fly that profile. And, he'd fly it, and he didn't get the problem.

    So, in the beginning, it was a very illusive, sort of, a ghosty problem. We didn't know we had a problem or not. It began to show up on my management chart, oh, about last spring, about this time 1 year ago. And I watched the problem grow over the summer. And, we thought we could solve it with software. And, as we got closer and closer to last fall, when we had planned to make the production decision on last year's birds, we realized that we're going to have to do something else other than software to solve this problem. And then I was faced with a dilemma. I'm getting ready to turn on a production run of 20 airplanes, and I don't have this thing solved yet. So, I wrote a note to my boss, the Secretary of the Navy. It says I'm concerned about this. And some scalawag over there in the pentagon, took it, and leaked it to the press. [Laughter.]

    And, so, one morning I came to work, and what do you see on the headlines of some ranch sheet around town was ''big problem on F–18,'' blah, blah, blah, blah, blah. Well, this gave me a heck of a problem because I hadn't been able to talk to any of you. I have friends on this committee that I wouldn't deceive. I'd rather be fired than deceive Members of Congress, because I plan to be in this business the rest of my life. And, a man's word is his bond in this town. So, we had to rush over and brief up staff and others, and try to explain what it was. And, then we had to get out and get some flying done to figure out how to solve it.
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    Now, what happened was, we found about three or four ways to solve it. And, I went out, and I realized that in the cynical world we live in, in this town, I could not come before this committee, or any other committee, and say the Navy independently distrust us, Mr. Chairman, or trust us, Congressman, we've got this solved. So, I went and I got the best Air Force aerodynamicist I could find that had nothing to do with this program; the best NASA aerodynamicist I could find that had nothing to do with program—and, incidentally, went to rival contractors and asked them to give me their best aerodynamicist. And, I created a blue ribbon team of people who have, if anything, interests in other airplanes that are competitors to this.

    And, I sent them out to tell me whether or not we've got this problem solved. And, they came back and said ''yes, you do.'' But at that time, we had, like, three or four ways to solve it. And they said, some of these ways could impact range or draggers, radar cross-section, and so on, and we'd like to see you tell us which one you're going to pick before we make our final blessing. And, what turned out was, we picked a thing called the Wing Ferring, porous Wing Ferring. This is a little piece of it.

    So the bottom line is, it kind of popped out because of a leak, before we could get over to the Hill and tell our friends what was going on. We got over here afterward as quickly as we could. We found several solutions. Some of them would have had some minor impacts to various attributes of the airplane, but the one we were able to finally reach has almost no impacts that we can calculate at this time. So, I feel pretty good about it, Mr. Pickett.

    Mr. PICKETT. Do you want to tell us about the V–22, while you're at it?
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    Mr. DOUGLASS. The V–22 is going through its test program right now, and the V–22—as you know this is a completely radically new design. This is the first airplane like this ever built, other than the previous pre-EMD models, and you all know how it works with the tilt rotors and so on.

    These came out of the factory late. They got behind in building them in the factory, so our test program has gotten a little bit behind schedule, and that's cost us some extra money. And as we got out there and we start flying them, we're beginning to find things that we have to fix. We had a bearing up here, where the propeller connects into the hub go bad on us. We have a new bearing on the design; that's going to get fixed. But it's the kind of thing that—we have some backups too. If it starts to go bad, the guys can get back safely.

    There's been some issues about the twistability of the wings under various stresses and strains with these big—remember when you were kid, they used to have—kids today have much more sophisticated toys, but when I was a little boy, the big thing to get a spinning top or a gyro, and you'd try to move that gyro, and you could feel those centrifugal forces. You could imagine the centrifugal forces that are in these two big propellers when they start to go like this; boy, you're really getting some twisting moments there. So there's been some question about how strong is the wing, and does it do this while these things are turning.

    All of things are minor issues, and I'm confident that that's going to be terrific bird for the Marines. The age of the helicopters that it replaces are getting so old, we have got to get this thing out there to the field as quickly as we can. I'm looking at, once we get a few more test hours on it, probably next year coming over with a proposal for a multiyear contract, which would allow us to buy—for the money that we have in the program, buy even more of them sooner.
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    But the bottom line of this is, these kinds of development programs, our system is not used to dealing with them anymore. The last time we put a major airplane through this system was back in the late 1970's, early 1980's. None of the reporters that are out on the beat today—they were all in grade school in those days. A lot of the people in the Pentagon were kids in those days. [Laughter.]

    There's an expectation that you take one of these things down to the test stand, and it's going to be perfect; you just get in it and fly away, and the only reason why we're doing this is because Congress passed a law that says we have to have test programs. That's just not true.

    We get down there and we find all kinds of little things wrong, just like automobile manufacturers do when they put their programs through, truck manufacturers, and so on.

    So the key here is, establishing an open dialog with everybody, so that when problems come up, we can explain them, we can put them in context. If they are serious, we report them to the Congress. And that's what I've tried to establish, Mr. Pickett, as best that I can.

    Mr. SISISKY. Mr. Chairman, would the record show that the reporters laughed when he made the statement——

    Mr. WELDON. The record will show that. It will also show that not all of them were in grade school at the time that he referred to.
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    Mr. DOUGLASS. The reason why I said that, Mr. Sisisky, is one day I had a bunch of them in a room, and we were talking about the problems here, and it was clear to me that they didn't really understand the aerodynamics. I said, ''How many of you were here when we did the F–18A?'', and they all looked at me with kind of a blank stare. And I said, ''That was in 1978.'' No hands went up, and I looked at the oldest one in the room, the one that looked the oldest to me, and he said he was in grade school when that happened. So that's where that comment came from.

    Mr. PICKETT. Thank you very much, I think that clears it up, Secretary.

    Mr. DOUGLASS. Thank you, sir.

    Mr. HUNTER [presiding]. Thank you, Mr. Pickett. I'm reminded that we've got to 4:30 with the room, and so we're going to go to the 5-minute rule, and Roscoe Bartlett.

    Mr. BARTLETT. Thank you very much. I have just three short questions relative to the trident submarines. But before that, I'd just like to note that I personally have not seen in our long-range planning a recognition that our nuclear ballistic missile subs will age, and will need to be retired; and if we do not plan for their replacement, we are apparently anticipating a world in which we will not need this strategic capability or this deterrent. I'm not sure that it's prudent to anticipate a world of that kind, and I am concerned that we are not planning for this future.
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    The fiscal year 1999 budget request has not contained any funding for converting the four oldest trident submarines. If the Start II Strategic Arms Reduction Treaty enters into force, the four oldest tridents will be removed from duty as ballistic missile submarines by January 1, 2003. Since these four boats would be 19 to 22 years old in 2003, they could be operated for an additional 8 to 21 years, depending upon whether the Navy would plan a 30 or 40-year life cycle.

    Since 1994, the Navy has examined various options for modifying the boats and operating them after 2003 as nonstrategic submarines, if indeed we enter into the Start II. These options include reconfiguration of the Terry Tomahawk or Antacums, and special operations forces, using two advanced swimmer delivery systems. Some have considered this proposal to be alternative to the arsenal ship. Cost for redesign would be about $150 million and reconfiguration would be about $2 billion or about $500 million per boat.

    If the Navy were to bring this idea to fruition, design work of funding should be in fiscal year 1999, or at the latest, fiscal year 2000, with advanced procurement in fiscal year 2001 or 2002 in actual modification, and fiscal years 2002 to 2004.

    Admiral Lautenbacher, does the Navy have a requirement to reconfigure the four oldest trident submarines? Does the Navy anticipate funding for this program to begin in fiscal year 2000? And do you consider this proposal to be an alternative to the arsenal ship? And finally, in the absence of the program to reconfigure the four tridents, what are the Navy's plans for these four boats?

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    Admiral LAUTENBACHER. We believe that it's premature at this point to talk about the future uses, when we are still supporting the Start I Treaty. Our programming and our budget are designed to ensure the hedge remains in tact to keep an 18-boat force and to keep the proper number of warheads and missiles on line for Start I. Obviously, if the strategic posture changes, and the world turns around, then these are good ideas which are on the shelf and that we have certainly some interest in.

    Our budget allows I think the proper flexibility, to ensure that all good ideas in the future can be looked at, developed, and put on the table, but right now we're supporting the current strategic policy.

    Mr. BARTLETT. But you have built into your budget the funding that would be require for making sure that these boats could be used in other than a strategic capacity?

    Admiral LAUTENBACHER. We are building in the hedge to keep these boats in service, so by keeping them in service, keeps them available to be used for other—there could be other users, if feasible in the future. So, the hedge is there in a sense that the boats will continue to be funded in our program. At some point that hedge runs out, but for right now, for this year, it is still good.

    Mr. BARTLETT. So those four boats, it's your anticipation, will still be a part of our fleet, whether they are missile-carrying subs or some other use?

    Admiral LAUTENBACHER. Our program allows us that opportunity——
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    Mr. BARTLETT. I thank you very much.

    Admiral LAUTENBACHER [continuing]. To keep them in the program for this year, and we're doing this a year at a time, based on the fact it's an uncertain strategic world in which we live.

    Mr. BARTLETT. Thank you, agreed. And thank you very much. Thank you, Mr. Chairman.

    Mr. HUNTER. Thank you, Mr. Bartlett.

    Mr. Taylor.

    Mr. TAYLOR. Thank you, Mr. Chairman. I'd like to direct my question to General Oster, if you don't mind; it's a two-part question.

    The first is, is there still a firm requirement for 12 amphibious ready groups? Is that part of the Marine Corps' plan for the future?

    General OSTER. Yes, we work very hard to sustain that requirement, in terms of the analysis of the quadrennial defense rearview. That has been sustained. The shipbuilding program of the LPD–17 class moves us forward to the configuration which we're looking for, which will be 12 three-ship amphibious ready group, each with a big deck ship as the centerpiece.
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    Mr. TAYLOR. One of the things that was brought to my attention is that there is a plan I think in the next palm, to take an amphibious assault ship and possibly schlep it. And my question is whether or not the Marine Corps has looked at the alternative, of instead of schlepping a almost 30-year-old ship, what would be the cost comparison to building an 8–LHD?

    General OSTER. We put the money in, Admiral Lautenbacher and I, in the last palm, out in Zero 3, because we really need to get on with what is the best decision with regard to the LHA class. It's notionally in there now for a schlep, but one of the issues that we're spending an awful lot of time on in the development of our next palm, Palm 00, is really what is the future with regard to that. And there are other options than schlepping. Certainly, building a new big deck is an option that we're looking at, but those decisions haven't been made, but will be made within the next year.

    Mr. TAYLOR. My third question would be—although we're certainly pleased to have the work in south Mississippi for the LHD's, I did question why they chose to go with a steam plant at the time when there were fewer and fewer Navy vessels using steam plants, rather than diesels or turbines.

    It's my understanding that the Marines are looking at the possibility of changing LHD–7 over to a turbine to be more compatible with the training for the other vessels in the Navy. Do you know where you stand on that?

    General OSTER. Well, sir, I appreciate the fact that you give the Marines control of this program.
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    Mr. TAYLOR. It's your ship.

    General OSTER. I work very, very closely with my shipmates in the amphibious program.

    The configuration, as you know, the first six ships has been the steam plant. We have looked at some options with regard to gas turbine, and the effect that that has on the design, but to my knowledge that proposal has not been tabled for decision at this time, sir.

    Mr. TAYLOR. Secretary Douglass, do you know where that stands?

    Mr. DOUGLASS. I do not sir, but I will be glad to answer it for the record. As General Oster, I'm aware that there have been some trade studies being done on it. As you know, most of our modern ships are now moving toward gas turbines, and I just don't know the exact status right this moment of where that trade study is, but I'll be glad to get you a quality answer for the record, sir.

    [The information referred to can be found in the appendix beginning on page 247.]

    Mr. TAYLOR. I would appreciate a quality answer, sir.

    I guess my last question to you, Secretary Douglass, is I was really impressed. I had a chance to visit the Cyclone down in Columbia a couple weeks ago. It's one of those 170-foot vessels built in that State immediately to the west of Mississippi, but still a good ship.
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    It's my understanding that the Coast Guard is going to look at one of them. In fact, you're going to lend one to the Coast Guard. When does that program begin and what's the anticipated timeline on that?

    Mr. DOUGLASS. I don't know when that begins? Do you know?

    Admiral LAUTENBACHER. We're making arrangements right now. I think within the next 6 months or so. But we're getting close to doing that. We've had a team together to build a memorandum of understanding of how to do it, and we're in serious discussions right now. It's going to happen.

    Mr. TAYLOR. Could you let me know the details when you find out?

    [The informaton referred to can be found in the appendix beginning on page 247.]

    Admiral LAUTENBACHER. Sure.

    Mr. DOUGLASS. Mr. Taylor, one thing that you reminded me of, sir, if I could take this opportunity to mention to you is—the Coast Guard has a requirement for a new deep water offshore patrol ship, and we've been working very closely with the commandant of the Coast Guard to look at a way that we could configure their design as a modular design, so that they could build the hulls and the combat systems they need for the Coast Guard, but that hull could then also accept Navy combat systems which we could export overseas to NATO countries and other countries that would be interested in acquiring modern U.S. Navy technology and U.S.-built hulls. This is a way for us to stimulate shipbuilding here in the United States, and help us get through this period Mr. Sisisky was talking about when we were building so few ships. I am leaving on Saturday night to go to Norway, to talk to the Norwegians about this kind of an effort. They're in the market for some—glass ships of the future.
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    So, one of the very positive things that has happened is, that the Navy and the Coast Guard are working together to try to combine our forces to help the shipbuilding maritime industrial base, and I'm very hopeful that we yield some fruition for our builders.

    Mr. TAYLOR. Mr. Chairman, just one quick one.

    Mr. Douglass, I appreciate the fact that the Coast Guard 378's and the 250's, they're going to be—vessels, the 210's. Something has to be done.

    Mr. DOUGLASS. Yes, sir.

    Mr. TAYLOR. I am concerned, and I would hope the administration could come out with a positive statement. I would sure hate to see those new ships come out of the DOD budget.

    Mr. DOUGLASS. Yeah, I think we would too. I don't think there's any plan to do that; they haven't hit us up for any money. And they have been very, very cooperative. As you know, we build some of their ships for them. We build their icebreakers for them, and so on, but they pay for them out of their budget.

    Mr. TAYLOR. So it is the plan to fund that out of the Department——

    Mr. DOUGLASS. Yes, sir, that's my understanding——
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    Mr. TAYLOR. Except for their weapon system.

    Mr. DOUGLASS [continuing]. That's the plan. Well, no, they'd fund their weapon systems as well. What I meant to say was though, if you have a modular design that can take, for example, a bigger radar than the Coast Guard might use, or take say the Urgam or vertical launcher, or something like that, it would be nice in the design phase of the program, if whatever shipbuilder gets that contract, could have the flexibility to come up with a design that would meet the Coast Guard needs, but would also be a great export product, with the kind of weapon systems that the Navy has. The Coast Guard is keen on that idea, because the might be interested in a few ships with certain or special attributes. So, it's just a cooperative program between us and the Coast Guard, that I promised the commandant that I would mention to this committee and some of the other committees when this issue came up.

    Mr. TAYLOR. Thank you, Mr. Chairman.

    Mr. HUNTER. Mr. Bateman.

    Mr. BATEMAN. Thank you, Mr. Chairman.

    Last year we made some considerable effort in this committee to get approval of a building charter program. It didn't come to fruition because of opposition in the Senate, and I suspect some opposition from the administration. This year's budget has not building charter provision, and I was wondering if you could tell us why, and if this program does not have the potential for meeting our national defense sealift requirements, and doing it in a way that protects our industrial base, and ultimately obtains the ships, and obtains them quicker and cheaper, and without it having a significant impact upon the Navy's SCN account.
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    Mr. DOUGLASS. Mr. Bateman, you've extolled the virtues of the program, and I would say I agree with your description of what building charter yields.

    Admiral Lautenbacher wasn't here last year, but his predecessor, Admiral Pilling, and I did testify on the record that we were in favor of it. I think Connie will continue that support.

    It has been a controversial program though, sir, within certain parts of the Congress and certain parts of the administration. We don't actually need to begin this program I think until 2003, isn't it Connie? So we have a couple of years to achieve legislative consensus on building charter.

    Chairman Hunter and I were talking about this earlier today. I think we need to have a little more dialog on this between the Navy and the Congress. I would be glad to come over and brief you, sir, or brief other members of the committee on our perspective on building charter. We are also doing that with those in the administration who aren't too thrilled with the idea. It has advantages, but it does also have some disadvantages, and those have to be recognized.

    My own personal opinion is though, sir, that if we keep working at this, I think we will achieve consensus well ahead of 2003, when we have to implement it, but it will take some changes in the law. And fundamentally—I mean, that's where you have to begin between this committee and your counterpart over in the Senate to reach agreement on it, and if there's anything that I can do—and I believe I speak for Admiral Lautenbacher—to illustrate what our plans would be to both committees, we'd certain be willing to do that, sir.
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    Mr. BATEMAN. I think you for it. One of the things that I don't fully understand is your reference to 2003, as the timeframe when such a program would be useful.

    What is the magic of 2003 as opposed to early——

    Mr. DOUGLASS. We have some plans in the Navy—Connie, you want to——

    Admiral LAUTENBACHER. Yes. We have put some money in the SCN account in the year 2002 and 2003 that will allow us to get started on this. The difficulty of the scoring rules on how you have to have the money up from basically to do it, and when you start looking at that, that makes it very hard to do it, to build an economic profile.

    So we put some, what I call seed money, or the beginning end, or the beginning part of this program for auxiliary dry cargo in the program. So there is some money so that we can talk about how to deal with it in the most efficient to build these ships for us. We are absolutely committed to building a balanced Navy, which means that we have to replace our combat logistic forces; it's absolute necessity. So that's our commitment in doing this in the future. It's there on the record.

    Mr. BATEMAN. But the heart of the problem is these counting rules which don't make any sense, but they're there and have to be changed. If we change those rules more quickly, we could get them out doing what needs to be done more quickly, could we not?
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    Admiral LAUTENBACHER. Yes sir, we could. We have both camps within the executive branch, and we still have similar camps in the congressional side too, and we're interested in doing whatever we can to bring that together.

    Mr. BATEMAN. It's the bean counters versus us folks who want to get things done.

    Admiral LAUTENBACHER. Yes, sir.

    Mr. BATEMAN. Another area that's somewhat related. We set up the National Defense Sealift Fund as a separate fund in order to highlight the need for strategic sealift, but my understanding is this year's budget it's no longer an accepted item, but you're including procurement of the LMSR to the Navy's shipbuilding and conversion, Navy procurement account. So what is the rationale for that?

    Mr. DOUGLASS. It's the same as what you just said. There are people over there in the Pentagon that decide what accounts these things go into, and they felt that it was better in the SCN account and in the National Defense Sealift Fund.

    For me, sir, as long as I have the contracts properly structured, and as long as the program is progressing technically, in most cases which account it comes out is kind of transparent to me. So I haven't entered into this debate, and I honestly can't tell you why they shifted the accounts.

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    It causes some irritation, I know, sir, from time to time. In a small way, on other programs, what's R&D, or what's operations and maintenance, which account things are to be funded in. And it goes back to the discussions that occurred earlier by the chairman, about how tight these accounts are. And occasionally somebody would just feel that there's a little more flexibility in one account than the other. And usually these things kind of get made up stream of Connie and I, somewhere in the Department of Defense, or somewhere.

    So I don't think people did this to hurt the program. I would not in any way characterize this as malicious, or a bad thing, or whatever; I just think that when they were racking up the final budget somewhere upstream from us, they decided they had a little more flexibility in the out years in the SCN account, and moved the dollars.

    Mr. BATEMAN. Well, one thing I wanted to make sure of, is that this isn't something that appears to increase an SCN account above what it was, simply because you're now changing the pot of money from which you fund Sealift. If that's the case, it's something more than a matter of irritation; it results in a budgetary shortfall.

    Mr. DOUGLASS. I don't think this results it a budgetary shortfall, sir. I think it could be confusing to some people, because they're used to seeing it in the other account, and now all of sudden it makes it look like that there's more buying power in one account than in another one.

    Mr. BATEMAN. But the only difference here, is money that would have gone into the Sealift account, didn't go there, it was put in the SCN account.

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    Admiral LAUTENBACHER. The intent as I understand it from those above me, was only to highlight the fact that it is a procurement-type item, and didn't want to see it get lost in the big budget picture. I think probably folks we rethink that. That's always done for—as far as I know, there's no prejudice in terms of trying to either take it away from Sealift or add it to SCN; it was done purely as an accounting kind of a thing, so that the procurement account would be highlighted more.

    Mr. BATEMAN. Well, I don't want to beat this dead horse, but I never dreamed that it was anything other than a procurement account—to a special dedicated National Defense Sealift Fund.

    Mr. DOUGLASS. Mr. Bateman, one of the problems that I occasionally run into over there in the building is, because I worked up here on the Hill, although it was in the Senate side, I'm fairly aware of which committees have jurisdiction of which kind of dollars and so on. That's not always that well appreciated by the bureaucrats over there in the Pentagon. So when they move things from one account to another, to them it may seem just, moving a piece of paper or something, but want they don't realize is it could be taking a program away from the jurisdiction of one chairman, and giving it to another one, or taking it off of one subcommittee, and giving it to another one.

    For that reason, and the reasons that I pointed out early on, which is the Navy is very grateful, and needs to express its gratitude to the Members of Congress, especially the ones who've been here for so many years, and served on these committees, and served as America's sort of sanity check over the long haul, while secretaries like me come and go through the revolving door; that we ought not to do these things without giving it some serious thought. But, you know, people don't always listen.
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    Mr. BATEMAN. That's been the story of my life.

    Mr. HUNTER. Mr. McHale.

    Mr. MCHALE. Thank you, Mr. Chairman. Gentlemen, good afternoon.

    Mr. Secretary, the question I'm going to present addresses the fundamental challenge confronting the Navy, and that is, how many ships? Mr. Sisisky touched on that during an earlier round of questioning. What I'd like to do is simply take the point that Norm articulated, and perhaps expand upon it and quantify it to some degree.

    The Bottom Up Review to Sustain a 2MRC Strategy called for 346-ship Navy. I have in front of me the 1994 annual message of the Secretary of Defense to the President and the Congress. If you look at page 27 of that report, just 4 years ago approximately, that chart indicates that by 1999 in conformity with the Bottom Up Review to Sustain a 2MRC Strategy, we were to have 346 ships. In a footnote to that chart, it indicates that in the fiscal year 1995 defense budget and the fiscal year 1995 to 1999 defense program, there was funding anticipated slightly below that for a 331-ship Navy.

    Now flipping ahead if I may, I can't confirm these figures, but I assume for the moment for the sake of analysis that they're accurate. In the February 16 edition of the Navy Times, there's another chart, which depicts the number of ships for 1997, 1998, and 1999. The number in 1997 is 354; the number in 1998 is 333; the number in 1999, the same benchmark that was used in the 1994 report, is 315, a reduction between 1997 and 199 of some 11 percent.
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    Let me assure you, in presenting these issues, which I think raised some very difficult truth, I am an ally, not an antagonist. I am deeply concerned, as Mr. Sisisky was a few minutes ago, that by next year we will be at least 16 ships down, perhaps as many as 31 deficient, depending upon which benchmark you use, and moving in the wrong direction. When I look at the various components of the Navy's budget, when taken as discreet elements, I support the F-18E and F; I support the Joint Strike Fighter. But based on current rates of construction, we appear to be heading into the 21st century, where we will literally have a Navy that is at very nearly half strength in terms of ships.

    Is there a strategic reason? Now, I'm hoping that in answering my question, you'll show me where I'm wrong. I truly would like to be shown that somehow these numbers are inaccurate, that somebody made a mistake, that we're moving in the right direction, and that when compared to what we predicted 4 years ago, that we are where we said we would be by 1999. But assuming that those figures are truthful and I'm assuming that they are accurate, is there any strategic reason that justifies a delay in facing the necessary inevitable costs of additional ship construction?

    Mr. DOUGLASS. Sir, let me first say that I think your figures are generally accurate. We have numbers where the total number of ships are anticipated to do. As you know, I'm the acquisition official in the Navy, and my concern about this is probably at about the macro level like yours. I don't get to say how many ships we're going to have, but am I concerned about; you bet I'm concerned about it.

    My concern stretches into the area that I work, which is, I'm concerned about the maritime industrial base that supports this Navy, and if we let that atrophy to the point where we can't begin to flush out a Navy, without having to go overseas or something like that, I think we've made a grave national security mistake.
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    I've written extensively, and then published—the latest article that I wrote was published I think this month in Proceedings magazine. It's an article called ''Often No Other Option''. It deals along the lines of this subject, so I'm on record with the public of saying, that I'm deeply concerned about the problem.

    My part of it is to hold the cost of these ships down to the rock bottom that I can, and to try to use technology, sir, to make the ownership cost less, and we do have very robust programs to do that. The DD21 is going to have a crew of 90 or less, and it will be about the same size as the DD51, which has a crew around 350.

    Our new carrier—incidentally, this is a model—I meant to show it to the other members—of our new carrier. This thing sometimes looks more like a space ship than an aircraft carrier to me. But this is going to have a crew of probably in the neighborhood of 20 to 40 percent less than the Nimitz class carrier, although it will be about the same size, and it's got actually more deck space, and other attributes. So we're trying very hard to get the life cycle cost down, and plow that money back in to new construction.

    I think over the long term though sir, there is an anxiety that I sense, not only in the Congress, but in the public, and in the industry, and so on, that this upturn in shipbuilding is out there beyond the—beyond the President's program. We are we going to see it.

    Mr. MCHALE. Mr. Secretary, that's precisely my question. And I present that to you as someone who has no doubt that you I think will join with me in seeking to move toward the size of the fleet that we ourselves have define, more expeditiously. And I realize that in a world of finite dollars, tough choices have to be made. Frankly, what concerns me is, I don't see them being made.
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    I see us looking at discreet weapon systems; weapon systems that when taken in the abstract are fully justifiable, but when taken together do not fit together into a financial picture that anyone defines as affordable.

    The hard choices are being avoided, because we look at those choice by independent parts. It's time for somebody to fit those pieces together, because I'm afraid the net result is going to be a fleet of combatant vessels far smaller than we predicted we needed to sustain the Bottom Up Review. And we're no longer dealing about years that are in the distant future. We have the publication still on the shelf. We can go back just 4 years and see that by next year, we promised, we predicted, that we would have a Navy of somewhere between 315 and 331 ships—331 at topside and 346 on the Bottom Up Review, and what we're likely to look at is a fleet of 315.

    That deficiency alarms me. It concerns me because it's not an abstract figure; it's one tied directly to the 2MRC Strategy, the Bottom Up Review, and what we ourselves said we needed just 4 years ago. So I want to echo the remarks of Mr. Sisisky. I don't know what the answer is to this challenge, but clearly there is an unmet challenge.

    Mr. DOUGLASS. Yes, sir.

    Mr. MCHALE. Thank you, Mr. Chairman.

    Mr. HUNTER. Thank you, Mr. McHale, for putting the question so concisely.
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    Mr. Saxton.

    Mr. SAXTON. Thank you, Mr. Chairman.

    Mr. Secretary, I've been in and out of the hearing, as you may have noticed, and I think probably most of the General's questions have been very dealt with, so I won't go over that ground again. But I would like to focus on one specific area, and it has to do with the technology proposed to be used in the LPD Program.

    Mr. DOUGLASS. Yes, sir.

    Mr. SAXTON. It's my understanding, Mr. Secretary—can you hear?

    Mr. DOUGLASS. Yes, sir, I'm trying to focus though, because I know this is going to be a good one here, sir. [Laughter.]

    Mr. SAXTON. Well, if it's too good we can discuss it later.

    Mr. DOUGLASS. Yes, sir.

    Mr. SAXTON. The radar system proposed to be used in the LPD ships are systems which have far less or at least less capability than state-of-the-art phase-a-ray radar systems, like those used on the Aegis class ships. If a phase-a-ray system was engineered specifically for the needs and size of the LPD class, and were made available at the same or less cost than the less capable systems, or what I believe to be less capable systems, would the Navy be interested in the phase-a-ray type radars?
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    Mr. DOUGLASS. Yes, sir. We're interested in phase-a-ray radars across the board. As you know there's a number of advantages in phase-a-ray radars over the old rotating radars, because you can do so many more things with them. We are looking—studying right now ways to bring a new modern radar aboard the LPD–17. I don't have the schedule to do that in my memory. I could get you a better answer for the record. But in general, I would say to you, sir, that we are across the board interested in looking at new phase-a-ray radars, not only for the LPD–17 but for the DD–21, and perhaps to retrofit on other ships, as the case may be, and as the technology evolves.

    Connie, do you want to add to that?

    Admiral LAUTENBACHER. Yes, sir. We are interested in phase-a-ray radar. We have a development program going that will build—hopefully will build the right product for the DD–21 Program. Obviously, if it's there and it meets some requirements for other ships' classes, it certainly would be considered.

    The LPD–17 is set up, however, to operate in a battle group concept, layer defense. We believe we provided it with the right types of antiship defense at this point, considering the tactical concepts under which we're going to operate and employ those ships.

    Mr. SAXTON. Thank you very much. Mr. Chairman, that's the only question I have at this time.

    Mr. HUNTER. Thank you, Mr. Saxton.
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    Mr. Allen.

    Mr. ALLEN. Thank you, Mr. Chairman.

    Mr. Secretary, I'd like to follow up on the questions that Mr. Bartlett was asking you about, with sort of a different perspective.

    I'm interested in the cost of maintaining these 18 Trident SSBNs that we have.

    Last year, the Secretary of Defense and the Chairman of the Joint Chiefs testified, it might make sense to have some flexibility in the required force levels, because in the Defense Authorization Act, passed by Congress last year, there's no capacity for us to reduce the force levels for these Trident subs below the level set by Start I, unless the Russian DUMA proves Start II.

    My question is, there ought to be costs associated with keeping these ships. Given our search for money, which is what we do on this committee, and the emphasis on modernization, I'm wondering what your position is, what the Navy's position is, concerning how we deal with that issue, whether we should have some flexibility in allowing the number of Trident subs to drop, so that we can invest in some other technologies and some other systems.

    Mr. DOUGLASS. First of all, let me say, I'm not as conversant as I used to be. I used to work this issue when I was on the National Security Council staff, but being in the acquisition business, you don't tend to focus on these treaty issues that much.
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    I had in the past not though it was wise to move off of the numbers in the treaties, until you get the new treaty gratified. I think there is an issue here though with, what are we going to do over the long haul with this forest.

    We're looking at several things. One of them is, we have to keep it modern, in the sense that we have to keep looking at ways to reduce the acoustic signatures of the boats, and replace certain things as they wear out, and so on. The other factor is, that we have to have a coherent plan as to what are we going to do with the four boats if they do become redundant to the strategic force?

    But I would prefer, sir, to give you a thoughtful answer for the record on that. It's just not my main area. Although Admiral Lautenbacher may have something to add to that.

    Admiral LAUTENBACHER. Basically, the answer is the same one I gave to Congressman Bartlett, in essence that we are supporting the Start I Treaty. We don't know when Start II will be enacted. We think we have a prudent program, which allows us to maintain for the President the right level of strategic deterrent. We have not thrown money—inordinate money. I mean, if we're going to keep 18 boats forever, it will take more money than we have in our program, there's no question about that. But we are doing it year by year, to try to keep ourselves in the right strategic position.

    Mr. ALLEN. I would really appreciate some clarification of this in writing. My concern is it's been suggested to me that after fiscal year 1999, that cost of keeping our forces at the Start I level is about $1 billion a year. I have no idea whether that number's right. But my question is, given our strong need for modernization, I think this policy probably should be reexamined. I'm not suggesting you save $1 billion a year; I'm just saying that some flexibility in this area might make some sense.
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    Mr. DOUGLASS. You know there are a lot of things you can do, if you want to do them, to bring down the cost. The Russians have done certain things with their strategic force. Let us give you a thoughtful answer on that. Some of them are kind of bordered on tactics and strategies that might be classified. So I have some thoughts on that. I used to be strategic planner at the White House, but I think it would be better for me to give you a quality answer for the record, sir.

    Mr. ALLEN. I appreciate that very much.

    Admiral Lautenbacher.

    General OSTER. Can I just add one thing to it?

    The dollars that are involved in keeping the hedge open are in the tens of millions. I mean it's a relatively small amount, depending on your frame of reference. But the longer we go—delay making a decision, then the price tag goes up. So what you've been hearing when you get to year 2000, 2001, 2002, then you're up into $900 million. That money has not been allocated. I mean, that money is not programmed, so there's no windfall there.

    So the options are either to decommission the boats or to convert them to some other use, as Congressman Bartlett suggested, and those are all ideas that are on the shelf, and we're ready to deal when the time is appropriate.

    Mr. DOUGLASS. Yeah, and there are some intermediate options too that have to do with tactics you could use that would be less expensive than keeping them out on patrol. But we'll answer that one for the record, if we may.
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    Mr. ALLEN. Thank you very much. Thank you, Mr. Chairman.

    Mr. HUNTER. Certainly, Mr. Talent.

    Mr. TALENT. Thank you, Mr. Chairman. I'd like to thank the members of the panel for their really excellent testimony, and covered most of the points that I wanted to make. I just want to make a comment or two in revisiting the Super Hornet Program for a minute. And Mr. Secretary, if you have an additional comment, that would be great.

    I think your written testimony says it all. You say in here, the program's on track within cost below 8, meeting or exceeding key performance criteria, modernizes the Navy's tactical aviation through the affordable and low risk evolution of the C and D.

    I really appreciated the point you made earlier, because I associate myself with Mr. Weldon's remarks about the shortfall in funding for tact air, and the point you made earlier I think, is this program is not part of the problem; it's part of the solution, because we're developing a really high-performance, flexible, tactical aircraft, and saving money in doing it. I thought that was an excellent observation.

    I don't know if you want to elaborate at all.

    Mr. DOUGLASS. Yes, sir, there is another perspective that I would like to add to this, and one thing I thought about after we had talked before.

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    One thing is that, some of the members remember me from when I was a young officer. I used to come over and brief the members on stealth many years ago, and Dr. Kaminski and I used to lurk in the halls of this building, and over in the Senate, trying to convince people that they ought to buy the 117, and the B–2, and so on. And in those days, back there in the late 1970's, early 1980's, we postulated—of course we were in the middle of the cold war at that time, and we kept those stealth airplanes in the deep black, and we thought that once they came out of the black and into the light of the rest of the world, people knew about them, that suddenly everybody would start building stealth airplanes all over the world, and the whole world would change, and blah, blah, blah.

    Well, what's happened, is that technology has spread much, much slower than we thought it would be. The cold war ended, there's been a downturn in the economic affairs, parts of the Third World, and so on. And looking back on history, and if one had to go back say 10 years ago, when the beginning of the E&F Program started, and you had to ask yourself, you really want to make a giant leap forward in fighter bomber technology, or you want to make a more modest leap forward for an affordable price; this is the airplane that history has vindicated, because the threat has gone down, not up. And this is more of a bomber than a fighter.

    What we are producing for naval aviation for the next few years, is a dependable, reasonably low cost, very high performance airplane, that builds on the heritage that's in the fleet today. It's a little more of a bomber, little less of a fighter. People seem to get kind of frizzed out about that. You see these articles in the paper that say, oh, well, you know, if you go back to the other plane under this part of the envelope and at this speed, and if this temperature, the other one could do 1 percent more than this, and that's nonsense. This thing is doing everything we asked it to do.
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    It turns out that the people who envisioned this a long time before I got there probably called the historical trends of the world more correct than anybody else did. And, yes, we have to eventually get onto the next generation, and so on. But this is the airplane for this era, in my opinion, and it's doing great. It's meeting all of its parameters. So I appreciate your support.

    Mr. TALENT. Thank you for that.

    One other brief comment, and then my question. When Admiral McGinn briefed on the wing-drop issue, he said, relatively minor, as you mentioned. But I said, well, are you concerned about it? He said, that's why we have flight testing.

    Mr. DOUGLASS. That's right.

    Mr. TALENT. I mean, that's the point. Again, it's really a sign of help. The problem comes up. I really appreciate the open manner in which the Navy has handled this, and I congratulate you on having solved it.

    My one question really is: Is it feasible—I know you've studied this, and I want to hear your views on it—is it feasible to accelerate, in your judgment, the Navy variant of the joint strike fighter from the current fiscal year 2009 to fiscal year 2005? What's your opinion on that?

    Mr. DOUGLASS. Sir, it might be technically feasible, but I don't think it's advisable to do that. The Air Force and the Marines need their variants, and in some ways more urgently than the Navy, realizing that this airplane will be flowing into the fleet in the years ahead.
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    I'm in the Department of the Navy, so the part that I'm most concerned about is getting the Marine version out there. So I'd like to see the Marines get theirs ahead of the Navy.

    I think the Air Force will tell you that they really want a replacement for the F–16 as soon as they can, and if you were to try to leave the Air Force and Marine versions where they are, and then plow the Navy one on top of it, I think you'd be talking about a ramp-up in those years that would be a pretty risk ramp-up.

    So I think the way we phased it is a fiscally responsible way. It fits into the Navy's planning. I don't know if either one of my colleagues want to add to that, about where the Marine version or the Navy version comes in, but——

    Mr. TALENT. My understanding is that——

    Mr. DOUGLASS [continuing]. I don't advocate moving it up.

    Mr. TALENT. My understanding is a minimum like a $4 million price tag also would——

    Mr. DOUGLASS. It's going to cost more money in the near-term, years, so I don't advocate that, sir.

    Mr. TALENT. Thank you. Thank you, Mr. Chairman.
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    Mr. HUNTER. Thank you, Mr. Talent.

    Mr. Secretary, what is going to be—what does it cost, the per-unit cost that as projected in real dollars for FN–18 ENF——

    Mr. DOUGLASS. Let me—I don't have it memorized, but if you'll give me a second, it will be given to me. But, see, one of the tricks to this, sir, is what year dollars do you want and what——

    Mr. HUNTER. Pick one.

    Mr. DOUGLASS. Huh?

    Mr. HUNTER. Pick one.

    Mr. DOUGLASS. Pick one? OK, let me pick fiscal year 1990 dollars, which is the baseline for the program. Let's see, the recurring flyaway cost for the ENF in 1990 dollars is—I'm trying to figure out how to read this paper they shoved up here under my nose—$39.5 million is the recurring flyaway cost. The total flyaway cost, which is adding all the ancillary equipment and the nonrecurring, is for $46.4 million. When you add in research and development, you know, and amortize it over the whole thing, you get the price up to $53.6 million. And if you add all the spares and everything else in there, and you amortize it across the thing, it's $73.8 million. Now that's for the smaller buy, not the big buy.

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    You may recall we had testified the same equivalent number for a thousand airplanes was $74 million for the final end number here. So when you cut back from 1,000 airplanes down to 568, I think is the total, you see the price has actually gone down, not up. Now the reason why that's true, Mr. Hunter, is because we have been able to do a lot of acquisition reform on this program, and it's because we're underrunning the production contract, and it's also because we've had a change in the inflation rates. So you add all that up, and essentially, what you would have expected to see is the price go up, if you bought fewer of them, but in fact we've been able to hold the price down. That's a good news story.

    The reason why I read off all these costs is because sometimes you hear this total cost compared to just the recurring flyaway on somebody else's programs. So you have to be very precise when you compare the numbers between two different programs.

    Mr. HUNTER. I've got you. Thanks.

    You know, the one thing—and we'll go next to Mr. Kennedy—but the one thing that has bothered me about F–18 ENF, and we've looked at the cost curve on F–18 ENF, joint strike fighter F–22. While this has stealthy characteristics and a signature reduction, it's not a stealth aircraft, and I think it's a tragedy the Navy's going to be flying a non-stealth aircraft for a long time. Now that tragedy—you know, I tried last year to go with C's and D's, continue the C's and D's, and bridge into stealth as fast as possible. The committee didn't agree with that. The Navy was well-mobilized. The House didn't agree with it. We're moving ahead on the NF program, but the tragedy will be compounded, and it will be real, if we end up with advocates for continued ENF production pushing joint strike fighter for the Navy out into the future further and further. And the same folks that made the argument that this is a superior airplane of the C and D's will have that argument rammed down their throats, if we have young pilots flying nonstealthy aircraft that are shot down with the increasing array of surface-to-air armaments that we're seeing now proliferated throughout the world, on the basis that they're not flying stealth aircraft.
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    So as I've told you before, John, I've got a real problem, a real worry, that we're going to see some folks trying to put off stealth aircraft for the Navy into the distant future in order to keep ENF, to keep the lines hot, and keep folks employed. So I hope that you'll resist that momentum, because it will be coming.

    Mr. DOUGLASS. Yes, sir, that's going to be—you and I know that in the years of 2005 or 2006, if both these programs have proceeded along the lines that we have in our program today, that there will be some competition between them. It won't be a formal competition, where the Navy's issuing bids and asking the two contractors. For all we know, it will be the same contractor building them both. It will just be a sort of dissimilar, you know, which one is the cheapest, what is the threat in those days? That debate is as inevitable as the change in the weather is inevitable.

    But your points are well-taken, sir. Nobody has a more lengthy record that I know of that that's in Government service today in regard to supporting stealth airplanes than me. I mean, I go back to the beginning of the program with Dr. Kiminski, and now that he's gone from office, I kind of feel like in some ways I'm the old guy on this subject.

    Mr. HUNTER. What's your take on joint strike fighter? What odds would you give it? What chance would you give it right now to come in with a decent number in terms of cost and schedule? And I know what you pay for airplanes——

    Mr. DOUGLASS. I think the schedule is going to be difficult for us to maintain, given the pressures on the budget, but I think it's an achievable schedule. I think the biggest pressure on the program is going to be in the cost area. Clearly, we are doing everything we can to stay with the costs that the war-fighters have asked us to stay. It's the first program I know of in which cost has been a part of the operational requirement. In other words, normally, the operators give us a requirement that says go this high; go this fast; drop these kind of bombs; have this kind of communication system, and so on, but they don't put the price in there. We estimate over on the acquisition side, and then it becomes an issue. In this case, the war-fighters have said, it's got to cost this much; that's first and foremost. So no matter what it does in terms of other things, it's got to cost less than this.
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    So we're working this as the premiere cost as an independent variable program within the Department of Defense. It's always touted by Dr. Gassler, Dr. Kaminski, and others as that, and so we're going to give it the best try, but it's going to be hard. It's a challenge.

    Mr. HUNTER. Thanks.

    Mr. Kennedy.

    Mr. KENNEDY. Thank you, Mr. Chairman.

    Mr. Secretary, Admiral, General, I just wanted to go back to a question that my colleague, Representative Allen, asked regarding those Trident submarines. The reason why I think we're interested in it particularly is because the USS Polk and Kemamaya are going to be decommissioned next year, and they've served as two platforms, as a former Trident submarine class for special operations purposes very effectively for the special operations community, and there's no reason why we shouldn't use some of those ships that are coming off from the start one for those same purposes. And it would be great to get about designing and preparing for that eventuality, given the new literal warfare presence that our Navy is in in terms of meeting its needs to deliver our special operations forces into settings in the most unobtrusive way possible, in ways that aren't threatening. I think that there is an opportunity for us to convert some of these.

    I'd love to get the same answer you're going to give to my colleague, Congressman Allen, and Mr. Bartlett, to me, when you sort it out——
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    Mr. DOUGLASS. Oh, yes, sir, we'll be glad to do that, sir.

    Mr. KENNEDY. And that's why we wanted to get language in there, because last year, under the authorization bill, it said, we're going to stick to start-one levels. That precludes us from thinking about converting those things. So if there was some language that would allow some flexibility, at least we could go ahead and begin the early R&D on that conversion without running into problems with the language that we just passed. That's why, before we pass the authorization this year, we're looking to get your feedback on what flexibility you can help us with in terms of that language.

    The other language issue that I'm concerned about, as you know, we do a lot of mine-hunting sonar research up in my State, and one of the areas that we've faced is the fact that we are seeing an end to the annual certification of now mine counter-measures, which used to be certified by the Secretary of Defense every year on how we're doing to progress in mine counter-measures. I know that's going away in 1997.

    If you can comment—and I've got a few questions, so if you can make a note, you could comment on that, and whether it's been an asset in helping us move forward on mine counter-measures, which have never been one of the priorities, unfortunately, as much as people know it's a real issue with the litter environment; it's never gotten that attention that it needs, and that's why we needed that certification in the first place. So with certification gone, how do we maintain that pressure to continue to go with mine counter-measures?

    [The information referred to can be found in the appendix beginning on page 247.]
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    Mr. KENNEDY. And then if the Admiral could comment on that as well, and also what are the reasons for the changes in the mine warfare plan and the new focus on the organic MCM capabilities? And what happens until the new organic capabilities are fielded, if you can comment on that aspect of mine counter-measures?

    [The information referred to can be found in the appendix beginning on page 247.]

    Mr. KENNEDY. And then the final issue—I need to get this all in because my time is going to be running up—is with respect to the antisubmarine warfare, and when is Congress going to expect to receive the Office of the Secretary of Defense's updated assessment on antisubmarine warfare? And what are the essential findings of this assessment that can be discussed for us at this forum or maybe in another forum with respect to the outyears, because that I think is going to be obviously an issue for us in terms of the technology there.

    And if the Admiral could also comment on the Aspin Panel's recommendations to have a flag-level focal point with the ASW, within the Navy staff, and how we're doing to meet that recommendation of the former and late Secretary Aspin.

    Mr. DOUGLASS. Let me take a quick crack at the first two, and then turn it over to Connie. As far as the mine warfare certification, Mr. Kennedy, these certifications are always somewhat difficult for us in the executive branch. In general, we don't like them because, when you think about it, what are we accomplishing? It's like you don't trust us if we don't sign a paper saying that we're going to do it.
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    But setting that aside, which is just a general comment, I fully, sir, recognize the political realities of why we end up with these, because, frankly, from time to time the bureaucracy just does a lousy job of paying attention to certain things, and you want to get the attention of the senior leadership, and so you put in provisions that require certifications.

    In this particular case, I would say to you that I can never remember a Secretary of Defense—and I've served over there now for a long time—that has a deeper and more forceful interest in mine-counter measures than Secretary Cohen. I have personally been in meetings with him in which he made it crystal clear to the leadership of the Navy that he expected to see a robust mine-counter measures program funded by the Navy, and I have used his name in the innerworkings of our budget deliberations to make sure that that happens. So as long as Secretary Cohen is there, I have no doubt that the mine-counter measures program is going to get properly funded.

    Mr. KENNEDY. All right, so we don't need a certification until he's out of office.

    Mr. DOUGLASS. Right.

    Mr. KENNEDY. I've got you. [Laughter.]

    Mr. DOUGLASS. So that's the good news.

    As far as ASW is concerned, we've submitted the report to the Department of Defense. It's working its way over to you. As you probably know, it ranges from an unclassified version all the way up to the highest classifications of security on how our programs are doing. The general tone of the report is that the Navy's programs are on track. It's always a debatable issue as to how many resources we're putting into it. I'm fairly comfortable with the new technologies that we're funding it the Anti-Submarine warfare program—the new lightweight arrays, the things that we intend to put on our DDG's, our cruisers, our DD–21 programs. As you know, we have other more sophisticated ways to do ASW.
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    So I'm comfortable with it. I'm hopeful that, when the report gets here, it will be well-received. If you have problems with it, sir, if you'd get back to me, I'll take them aboard and see what we can do to try to make sure that we fix them in a reasonable amount of time.

    I think, beyond that, Connie, it's over to you for your views on that.

    Admiral LAUTENBACHER. I would say that the certification has been helpful to build to this point, but I would also say that I think it's served its purpose. I can assure you that, as long as I'm around, and as long as right now you have three-numbered Fleet Commanders who are—the CNO, the Vice Chief, and myself are all three-numbered Fleet Commanders. I was the Commander in Riyadh that sat there; I had to deal with the mine warfare issue in the Gulf. Now I'm very, very sensitive to how to deal with the problem strategically, tactically, and what it takes to do it, sensitive to the need that it has to be a part of our Navy picture, and it has to be resourced properly. So I'm personally committed to it because of my experiences.

    I believe that the transition—this really is a revolution in warfare, to go from what we have as, what I call, a single-mission, single-purpose force, where it was kind of neglected, into bringing it into the organic part of every platform that we have, so it will be an in-stride capability. You won't have to have separate minesweepers at some point. Our DD–21 will have minesweeping capability built into it or mine reconnaissance capabilities built into it. The helicopters that we base on our ships will have those capabilities. The submarines will have the capabilities. So that we won't have to rely on air-lifting helicopters from Corpus Cristi to the Gulf or to there places where they're needed, and have the time late and a logistics problem, and all that. This is really a revolution in the way we're thinking about it. If we're successful on this, it's going to engrain it in everyone's culture within the Navy. I mean, this becomes part of how we deal with warfare in the future.
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    Mr. KENNEDY. What can we do to get to that point? What's the interim——

    Admiral LAUTENBACHER. We need to fund the program that we send over here, sir.

    Mr. KENNEDY. OK.

    Admiral LAUTENBACHER. We would appreciate your help. We have a number of technologies all lined up. Our mine warfare certification—in fact, I just finished briefing the Chief of Naval Operations, this morning on it, and he's happy with it. It's going forward to the Secretary. So the program, I think, looks very good, and once it gets through our wickets, we'll be delighted to talk to you about it.

    Mr. KENNEDY. Great. Great.

    Admiral LAUTENBACHER. You asked about the transition. The transition period, we are going to keep this dedicated force upgraded and able to respond as we do now—our minesweepers in Corpus Cristi and our MH–53 helos, they will be kept—we've programmed, put the money in there to keep them operationally effective through the transition period. So there's no attempt to try to go to something before you—to drop off the old capability before you have the new capability. There will be a smooth transition.

    Mr. KENNEDY. OK.
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    Admiral LAUTENBACHER. ASW, as the Secretary said, is working its way through the system. It keys on littoral warfare. We are looking at systems which will help us in the shallow water, little water environment, diesel submarine environment, building the kinds of training systems that you need to kind of change the way we approach the problem to a literal warfare.

    And we do have a position for a flag officer who reports directly to me. We don't have enough flag officers to fill it. I have a very senior captain who comes in and sits with the other flag officers. He is an equal to the other division directors.

    Mr. KENNEDY. OK, great. It's great to hear your testimony. I very much appreciate it. I commend you all on the job you're doing for our country. We're very dedicated to you and owe you a great debt of gratitude for all the work that you're doing.

    Admiral LAUTENBACHER. Thank you, sir, for your support.

    Mr. DOUGLASS. Thank you, sir.

    Mr. HUNTER. Thank you, Mr. Kennedy. Mr. McKeon.

    Mr. MCKEON. Thank you, Mr. Chairman.

    Just following along on the same line of questioning that Senator—Senator? [Laughter]—Mr. Kennedy was pursuing, during Desert Storm, it became apparent that our naval forces required a fast and effective capability to neutralize mines in a hostile area, and I'm glad to hear your strong commitment in that area.
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    I understand the Navy is renewing its commitment to mine warfare in general, and specifically, to the capability of neutralizing the mines, once they've been located and identified.

    Now just then one step further, would you please provide us with your plan, which includes a program schedule and the funding that you need to fill the mine neutralization capability consistent with the current fleet and operational requirements? And I understand that you'd probably have to do that later, but we——

    Mr. DOUGLASS. Yes, sir. We have the plan that goes with the certification. This year, this is the last year of the certification. We'll get it over to you, sir.

    Mr. MCKEON. Great.

    [The information referred to can be found in the appendix beginning on page 247.]

    Mr. DOUGLASS. It's pretty detailed. I spent a lot of time going through it, because I wanted to absolutely make sure that that certification was done properly. The first year the certification came out, there was what I considered to be a little bit of fudging going on in there, and I remember testifying before this Committee about my worries about that. I got a little tough on some of the folks over there and made them go back and put more money into the plan. So I'm pretty proud of it. I've done everything I could to hold the line, and we'll send it over.
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    Mr. MCKEON. Thank you. I'd also like to echo the words of Mr. Kennedy on our thanks for the job you're doing, and we appreciate it greatly. Thank you.

    Mr. DOUGLASS. Thank you, sir.

    Mr. HUNTER. Thank you, Mr. McKeon. Mr. Pappas.

    Mr. PAPPAS. Thank you, Mr. Chairman.

    Gentlemen, it's good to see you, and add my thanks to what you folks do for our country.

    I was not here when my colleague, Mr. Sisisky spoke of the IOWA class ships, and I'm wondering if we could just revisit that for a moment.

    Back in the 1996 defense authorization bill, there was a Section, 1011, that dealt with this specifically, and I'm wondering if you folks, Mr. Secretary or anyone else, might be able to comment on that, and tell how you responded to it——

    Mr. DOUGLASS. Yes, sir. I think the provision you're talking about is a provision that requires us to keep two battleships on the active roster until such time as we can certify that an equal amount of Naval fire support has been provided to the Marines ashore. We have several programs that will eventually get us to that point. They're not there yet. So we plan to keep the two battleships on the active roster until we get to that point, which I think is in about 2003.
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    The two that we're keeping are the New Jersey and the Wisconsin, and we have them on the active roster, and they're being kept up and maintained properly. One of the issues I've had with them is a couple of—the State of New Jersey is interested in eventually getting the New Jersey as a museum, and I think there's some other places that eventually want to get the Wisconsin. We get inquiries all the time, and we politely tell them, as long as they're on the active roster, we can't allow that to happen, because of the Public Law.

    The other point on this, Mr. Pappas, that I would tell you is that the Extended Range Guidance Munition program, which is the main program that will bring the new fire support into the fleet, is doing very well. It will allow us to put a 5-inch round into an area that's smaller than the table that we're sitting at here at quite an extended range. That program is moving along well. It's one of my highest priorities, and I periodically call them in to brief me, to explain where they're going. The last briefing had I shaved that program well on track.

    Mr. PAPPAS. Would you be able to, now or at some point in the future, provide for me or for us, what resources you believe would be necessary to accomplish that? I certainly understand the importance of the provision that's contained in section 1011, but we need to be able to, I think, understand the cost of maintaining, and if we would be in a position to, based upon our personnel numbers, the numbers within the Navy, be able to man those ships. Is that an accurate——

    Mr. DOUGLASS. Do you mean the two battleships?

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    Mr. PAPPAS. Yes, yes.

    Mr. DOUGLASS. Yes, I think one of the issues that we face with them is that there is a dilemma in the way the law was presented—was the ships themselves are being kept so that, within a reasonable period of time, we could take them back to sea. But, they don't have the crews aboard.

    Mr. PAPPAS. Right.

    Mr. DOUGLASS. So for us to get the crews for them would take a while. For example, let's say that a crisis occurred next week in which we made the decision, we want to bring those two battle wagons back into fighting shape and actually deploy them with a fleet. It would be a significant amount of time until we could do that. Now the ships themselves would be ready to go, but, there aren't too many sailors around who know how to work the engines and do the fire-control solutions with those old guns, and things of that nature. So there are certain skills that it would take us a while to spin-up in the Navy. If you'd like for us to get you an estimate of what that is, we'd be glad to do that, sir.

    Mr. PAPPAS. I would appreciate that. My foremost concern is just to be sure that we can respond, if we need to.

    Mr. DOUGLASS. Yes, sir.

    Mr. PAPPAS. And if we need to do more to provide the resources to bring these alternative systems up to speed, and if in fact 2002 or 2003 is a realistic timeframe, it would be helpful, I think, for the committee to know that.
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    From New Jersey, I have also an interest in the USS NEW JERSEY, but also don't want to do anything that would jeopardize our ability to respond. That's my foremost concern. So that would be certainly helpful to me in understanding the length of time that you think that it would be——

    Mr. DOUGLASS. Yes, sir.

    Mr. PAPPAS [continuing]. Necessary to bring personnel up to speed to man those ships.

    [The information referred to can be found in the appendix beginning on page 247.]

    Mr. DOUGLASS. You might be interested to know, Mr. Pappas, that one of the things that I do when I travel on civilian airliners is often sit next just citizens. When they find out that I'm the Assistant Secretary of the Navy, we naturally get into a dialog about, well, what's going on in the Navy? And probably the most commonly-heard comment from just average people is: Don't give up the battleships. It's kind of an interesting thing in terms of what our public perceives them to be. They're beautiful ships. They represent kind of World War II and America at its height, and after the war, and so on. So they do have a very strong following among our people. And I deeply believe—you weren't here when we were talking a little bit about my love of history and the need to remember history, but I hope that every one of those battleships eventually finds a home somewhere in a situation where the caretakers care about them, and they are open to our public. In the case of New Jersey, I know you're selling license tags, and so on, up there, and I hope that works out for your State, sir.
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    Mr. PAPPAS. Well, thank you. My father is a Marine veteran from World War II, and he always asks me to make sure I attend to those things that are important for the Marines.

    My last question really is one that's maybe somewhat more general. What efforts, combining of efforts, are being undertaken to see any technology that is being shared among the services?

    Mr. DOUGLASS. We have a tremendous number of programs that deal in technology-sharing among the services. At the very beginning of the research cycle, we have a thing called Project Reliance, in which we've gotten together and we've said, Air Force, you concentrate on this; Navy, you concentrate on that; Army, you concentrate on that. So we don't duplicate each other.

    Then as you go on up the spectrum of weapon systems, there is sharing across the board. One of the institutions within the Department of Defense that does the most sharing is our Marine Corps. A huge amount of the equipment that the Marines use is either bought by the Army or is derivatives of what the Army buys. We're joint with the Army on our lightweight 155 Howitzer. Our truck overhaul programs are done jointly with the Army. We do ammunition procurement through the Army. So the Marines are sharing all across the board.

    In terms of naval aviation, we have a lot of things we share with the Air Force. We buy most of the air-to-air missiles. They buy some of the air-to-ground missiles, and then we just get on their contracts. And there are technology-sharing mechanisms among the services. We have what we call executive committees in which we jointly look at where are we headed for the future, and then, of course, the penultimate of that is the Joint Strike Fighter program, in which the Air Force, the Marine Corps, and the Navy are all cooperating on the next fighter. Right now, I happen to be the highest DOD or Department official in charge of that program, but I have an Air Force general who reports to me, and she has a Marine Corps general who is her deputy. So you can see that we do share. Our staff is really about, I'd say it's about 43 or 44 percent Air Force, and then the rest is the Navy and Marine Corps.
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    Mr. PAPPAS. Thank you, gentlemen. Mr. Chairman, thank you.

    Mr. HUNTER. Thank you, Mr. Pappas.

    John, thank you for being with us today—Mr. Secretary, General Oster, Admiral Lautenbacher.

    I have one question, Mr. Secretary, on Magic Lantern. Duke Cunningham and I wrote the Secretary last month regarding our concern over the failure of the Navy to release the $7.5 million that was authorized in 1998 to outfit a second Magic Lantern squadron on the West Coast. I now know that the Navy has, in fact, reprogrammed those funds. Given that Magic Lantern is the only operational airborne mine counter-measure system in the Navy, and there's only one squadron available for worldwide contingencies, what's the reasoning?

    Mr. DOUGLASS. Why was it reprogrammed? Mr. Chairman, I don't know that right off the top of my head. Normally, when a person like yourself and Congressman Cunningham write us and express particular interest in a program like that, it doesn't get on the reprogramming list; in this case, maybe it did. Connie, do you know anything about that?

    Admiral LAUTENBACHER. We'll have to get the details for the record for you, but it has to do with our reserve components and when they transition helicopters. I just don't have it; I can't pull the——

    Mr. HUNTER. OK, if you could pull that one——
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    Mr. DOUGLASS. Yes, we need to give you a good answer. My memory tells me that we did have some—We've been doing a mine hunt fly off, I guess you'd call it, between Magic Lantern and two other systems, and we did have some equipment failures in the field. So there may be an issue connected to how soon you can buy things or something. But we need to answer that for the record.

    Mr. HUNTER. OK, if you could get that for us——

    Mr. DOUGLASS. Yes, sir.

    Mr. HUNTER [continuing]. And we'll have some other questions for the record.

    Mr. DOUGLASS. Yes, sir.

    Mr. HUNTER. So we'll submit those to you, if you could get those answered.

    [The information referred to can be found in the appendix on page 247.]

    Mr. HUNTER. Mr. Secretary, there are two areas I think we could—this hearing I think compels me to focus on two particular areas that I think are going to be very important to us. One you mentioned early on, which is the maritime industrial base.

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    Mr. DOUGLASS. Yes, sir.

    Mr. HUNTER. I mean, that question is unanswered. We're building to an extremely small Navy, a large commitment that still exists, and there's no answer. The budget keeps driving us lower and lower. We continue to apologize to each other, but there's no answer for that. And we're going to have to work, I think, creatively to come up with some ways to build some domestic maritime industrial capability. I think we need to undertake that challenge very quickly.

    The other challenge that I see as a major, major challenge for us that was enunciated by the CINC's this morning is our need to be able to shoot down incoming missiles.

    Mr. DOUGLASS. Yes, sir.

    Mr. HUNTER. Damn it, we've—I mean, we can buy 4 million times as much computing power with the same dollar as we could in 1962, when we first started being able to shoot down really slow-moving missiles, then for some reason we just stalled. The Navy upper tier has, I think, real promise. We need to break out of this stall and get moving, and maybe we need to re-look at this thing, develop an acceleration task force, or something.

    Along that line, we still have an acquisition system that moves, as you know and I know, with the speed of bureaucracy, and yet we've got threats that move with the increasing speed in the latest several years. We need to have a capability to fast-field technology. I don't know how we do that, because we've built in a lot of the hoops and hurdles that you have to clear in order to build things and get them into the field. But we need to have maybe some type of a fast-field program where we can waive a lot of stuff and move technology literally from the R&D phase into the field like that, to meet national threats.
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    Mr. DOUGLASS. We do have tools to do that, sir, and I'm fairly proud of my record in using those tools. As you know, like on the DD–21, we're using section 845 authority, which was provided to us by the Congress. But I would be more than willing, sir, to kind of give you an update on where we are on our theater ballistic missile defense programs, because I think there have been so many developments over the last year that it kind of needs a little bit more briefing from our point of view.

    I think you will be pleased when you see the management changes that I'm making in the next few days. We hope to be able to announce those on Friday, if we can get all our

    One other thing, sir, if you would allow me, just as we wrap up here, I want to mention to our colleagues over there in the press, when I mentioned earlier about the youth of the reporters today, I didn't mean that as a ding on you folks over there.

    Mr. HUNTER. Well, I think they kind of liked it. [Laughter.]

    Those whipper-snapper reporters.

    Mr. DOUGLASS. Yes. I'm deeply committed to——

    Mr. HUNTER. Extremely young.

    Mr. DOUGLASS [continuing]. Free press in our country, and they've treated me fairly. So I hope you all didn't misunderstand that I was trying to ding you or anything on that. I was just saying that——
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    Mr. HUNTER. When you call Otto Kreisher a young reporter, and he's from the San Diego Union Tribune, and he's dancing a jig for joy. [Laughter.]

    Mr. DOUGLASS. Were you in grade school, Otto, in 1930——

    Mr. HUNTER. He went out to run 5 miles. [Laughter.]

    But he left.

    Mr. DOUGLASS. I just felt that I needed to make that point because I really do—they do a terrific job, and they've treated me fairly, and I didn't mean that as a ding on them.

    Mr. HUNTER. OK. Well, listen, I'm sure they understand that. We always appreciate the media covering our hearings. We wish they'd cover more of them and do even a more thorough job of getting your views before the public.

    Thanks a lot. We're really looking at a fairly dim picture here with respect to procurement dollars and R&D dollars. It's going to take a lot of cooperation, I think, to work this thing through, but let's do it.

    Thank you.

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    Mr. DOUGLASS. Thank you, sir.

    Mr. HUNTER. The hearing's adjourned.

    [Whereupon, at 4:27 p.m., the subcommittee adjourned subject to the call of the Chair.]

    The official Committee record contains additional material here.

QUESTIONS SUBMITTED BY MR. HUNTER

F–18 MODIFICATIONS

    Mr. HUNTER. By the year 2010, as the Joint Strike Fighter begins service with the Navy, approximately half of the Navy's fighter/attack aircraft will consist of the older A, B, C, and D versions of the F/A–18. Therefore, modifications to the existing fleet need to be appropriately funded to enable these aircraft to be effective in future combat. The fiscal year 1998 budget request for F/A–18 modifications was $156.2 million. The fiscal year 1998 Appropriations Conference Report provided $164.7 million, which included $24.0 million for modifications for the Naval Reserve. However, the Department's fiscal year 1999 P–1 document shows that only $140.6 million is left in the F/A–18 modifications account for fiscal year 1998.

    Recently, Members of this committee toured Naval Air Station Fort Worth Joint Reserve Base. We spoke to some members of the Marine Corps Reserve F/A–18 squadron who told us that their aircraft to not have upgrades that would enable them to fire the AMRAAM and provide for more current avionics. Does that Navy have long range plans to keep the F/A–18A/B/C/D fleet current and capable? Also, did the Navy reprogram money out of its F/A–18 modifications amount in fiscal year 1998 and where did the money go?
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    Admiral LAUTENBACHER. The current budget reflects the Navy's long term plan to upgrade F/A–18A/B/C/D aircraft. Current plans call for the incorporation of Global Positioning System (GPS), XN–8 mission computers, ARC–210 radios, LINK–16 Multi-Information Distribution System (MIDS), ALR–67 missile warning receiver, Combined Interrogator Transporter (CIT), AHG–73 radar, Digital Communication System (DCS) for very high frequency communications in support of Close Air Support and fire support operations, and the Advanced Tactical Airborne Reconnaissance System for Marine Corps F/A–18Ds. While these upgrades are not retrofitted into every F/A–18 they are incorporated based on affordability, availability of retrofits and inventory requirements. The Navy is currently evaluating alternatives that would provide upgrades to older lot aircraft flown by the reserves to ensure that these aircraft remain capable into the next century.

    Although the Navy did reprogram $14.2M out of its F/A–18 modifications account in fiscal year 1998 to pay a Navy Manpower bill, the funds were not intended to enable any reserve aircraft to fire the AMRAAM or provide for more current avionics.

F/A–18E/F

    Mr. HUNTER. In Fiscal Year 1999, the Navy plans to purchase 30 F/A–18E/F aircraft at a total cost of $2.88 billion, or $95.87 million per aircraft. The F/A–18E/F will be flown by only the Navy. The Marine Corps has opted not to procure F/A–18E/F aircraft. Instead, it plans to fly its F/A–18A, B, C, and D aircraft until the Joint Strike Fighter becomes operational. Since last year, the QDR reduced the total buy of F/A–18E/F aircraft from 1000 to 548. The test program revealed a ''wing drop'' problem when the aircraft operates in the heart of the maneuvering envelope. If uncorrected, this problem could prevent a pilot from accurately employing the gun on an enemy aircraft. As a result, the Department has convened the ''Wing Drop Panel'' of outside experts to review the Navy's actions. Recently, the Department contends that it has made substantial progress in correcting ''wing drop'' permitting a timely decision on additional production aircraft.
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    Last year, the Department projected unit costs of the F/A–18E/F on the procurement of 1,000 aircraft. This year, the Department has reduced that quantity to 548, in accordance with the Quadrennial Defense Review. How has this decision raised the unit procurement cost?

    Admiral LAUTENBACHER. The decision has not increased unit cost. The estimated average unit procurement cost for 1,000 aircraft based on the Fiscal Year 1998/1999 President's Budget was $74.0 million (TY$) whereas the estimated average unit procurement cost for 548 aircraft is $73.8 million (TY$) as reflected in the Fiscal Year 1999 President's Budget. This lower cost for the 548 aircraft takes into account potential outyear multi-year procurement savings and inflation adjustments.

    Mr. HUNTER. We understand that the Navy's operational test and evaluation force found that when the F/A18–E is loaded with a relatively light load of air-to-air missiles, its performance is slightly less capable in terms of instantaneous turn performance, and in some cases of unloaded acceleration, than the F/A–18C it replaces. We also understand that the Program Risk Advisory Board believes that the F/A–18E/F may not be as capable as the most recently procured F/A–18C with an enhance performance engine. Are we ''lowering the bar'' with respect to performance on the F/A–18E/F?

    Admiral LAUTENBACHER. The F/A–18E/F is meeting or exceeding all Key Performance Parameters and the overall cumulative aircraft capability is significantly greater than the F/A–18C/D. In those capability deficiencies of the F/A–18C/D that the F/A–18E/F was designed to correct (increase mission radius/endurance, recovery payload, payload flexibility, improved survivability and growth capability), there is no comparison; the F/A–18E/F is clearly better. To attain these improvements, performance levels in turning, climbing, accelerating and maneuvering comparable to a F/A–18C/D Lot XII Hornet, were determined to be acceptable. Maneuver performance between the two aircraft in these functions is comparable. Some points in the envelope favor F/A–18C/D while others favor F/A–18E/F. Focusing on a very narrow performance measure could be misleading.
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MULTIYEAR PROCUREMENTS

    Mr. HUNTER. In Fiscal Year 1999, the Department proposes multiyear procurements of E–2C and T–45TS aircraft. In prior years, the Congress approved multiyear procurement of CH–60s, AV–8Bs, DDG–51s, the New Attack Submarines that are currently underway. One could also argue that budgeted funding for CVN–77 also becomes a ''must pay'' bill.

    Can the Congress expect further requests for multiyear funding next year or in any other years in the FYDP? Please provide your opinions on the trade-offs in funding flexibility of this increased level of multiyear procurement. Also, please provide your policy regarding approval of multiyear contracts.

    Secretary DOUGLASS. Congress can expect further requests for multiyear funding next year and in other years in the FYDP. Specifically, F/A–18E/F and V–22 are both considered strong candidates for future multiyear procurement. In the case of the F/A18–E/F, the outyear budget has been constructed on the assumption that multiyear contracting will be utilized. Funding flexibility is more important during a period of rapid force draw down, but less so in a period of relative budget stability. Multiyear procurement enables us to capitalize on the increased stability in our modernization accounts by accelerating procurement of crucial systems and reducing unit costs, increasing our modernization potential by the billions of dollars which this approach saves. Multiyear contracts are approved for proposal to the Congress based on the magnitude of the benefit they bring relative to their level of risk. Benefits must be substantial either in economic (total dollars or percentage savings) or national security terms. Risks are assessed in terms of requirement stability, funding stability, configuration stability, cost confidence, and contractor confidence.
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    Mr. HUNTER. Please review the considerations in selecting the E–2C and T–45 programs for multiyear procurement, including cost savings.

    Secretary DOUGLASS. Multiyear procurement for E–2C and T–45 bring substantial savings versus the estimated contract costs of annual procurement. E–2C savings are estimated at $106.5 million, or 8.3%, from the multiyear contract alone and $204 million, or 14.4%, when the acceleration, which is enabled through the multiyear contract savings, is also considered. The E–2C multiyear also brings the benefit of satisfactorily addressing parts obsolescence and eroding vendor base problems resulting from low production rates. For E–2C, all risk categories are rated low risk.

    T–45 savings are estimated at $47.4 million, or 5.2%, from the multyear contract alone and $246 million, or 18.5%, when the acceleration, which is enabled through multiyear contract savings, is also considered. The T–45 multiyear contract also enables replacement of the aging T–2 trainer aircraft two years earlier than previously planned. For T–45, all risk categories are rated low risk.

F/A–18 RDTE BUDGET REQUEST

    Mr. HUNTER. The total Fiscal Year 1999 budget request for F/A–18 RDT&E is $357.2M, an increase of $158.5M greater than the estimate for Fiscal Year 1999 that was provided in the Fiscal Year 1998 budget request.

    We understand that part of the difference results from a request for $43.4M to initiate a new start for development of a tactical reconnaissance pod for the F/A–18F. In view of the fact that the Navy is just now completing the adaptation of the Air Force's Advanced Tactical Airborne Reconnaissance Systems (ATARS) for use in the Marine F/A–18D, what is the justification for initiating a new start for a tactical air reconnaissance pod for the F/A–18F in Fiscal Year 1999?
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    Secretary DOUGLASS. ATARS is the culmination of decade-old technology to meet today's needs and will achieve IOC in Fiscal Year 1999 on USMC F/A–18Ds. Super Hornet Advanced Reconnaissance Pod (SHARP) is designed for the F/A–18F to meet requirements for the next two decades. ATARS does not meet the Navy's requirements for mission flexibility, reliability, and systems growth.

    The Navy's immediate tactical air reconnaissance requirements are being met with the F–14 Tactical Airborne Reconnaissance Pod Systems (TARPS) and TARPS(DI). In Fiscal Year 2003, as F–14A's are phased out, SHARP will begin deployments. SHARP will meet the Navy's long-term, multiple platform, tactical air reconnaissance requirements with cutting edge technology, resulting in improved quality imagery and system reliability. SHARP is a podded system which maximizes overall operational flexibility/utility, especially aboard an aircraft carrier. The pod is designed to be autonomous, with the capability to operate relatively independent of the host aircraft software.

    In House Report 105–135 the HPSCI stated ''The Committee has closely monitored the technical issues and difficulties experienced by the Marine Corps with its internally-mounted Advanced Tactical Airborne Reconnaissance System (ATARS) for the F/A–18D. These problems have led the Committee to believe that a podded reconnaissance capability is the most cost-effective and mission flexible approach for Navy fighter aircraft. The Committee applauds the Navy's decision to develop a non-dedicated podded reconnaissance capability for the Super Hornet.''

FUNDING
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    Mr. HUNTER. In fiscal year 1998, the Congress appropriated an additional $60.75 million (18% more) in the Navy and Marine Corps ammunition accounts to provide for improved inventories of both precision and non-precision guided munitions. In fiscal year 1999, the Navy weapons procurement request comes in about 7.5% below the level projected in Fiscal Year 1998, and the Navy and Marine Corps Ammunition request is 14% below the level in Fiscal Year 1999 anticipated when the FY98 request was submitted.

    Are precision guided munitions and ammunition accounts funded to meet current requirements and throughout the FYDP?

    Admiral LAUTENBACHER. Yes. Current stocks of precision and non-precision guided munitions for Naval aircraft are sufficient to comply with DOD requirements. These munitions have, and will continue to compete with other Navy requirements for funding priority as part of the Planning, Programming, and Budgeting process.

    Mr. HUNTER. In FY 1998, the Congress appropriated an additional $60.75 million (18% more) in the Navy and Marine Corps ammunition accounts to provide for improved inventories of both precision and non-precision guided munitions. In FY 1999, the Navy weapons procurement request comes in about 7.5% below the level projected in FY 1998, and the Navy and Marine Corps Ammunition request is 14% below the level in FY 1999 anticipated when the FY 1998 request was submitted.

    Are precision guided munitions and ammunition accounts funded to meet current requirements and throughout the Future Years Defense Plan?
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    Are precision guided munitions and ammunition accounts funded for Marine corps weapons and ammunition accounts?

    General OSTER. The Marine Corps ammunition program has been built to support the annual training requirements, meet the Combat Requirement through the FYDP, and preserve the Strategic and Residual Reserve inventories. Through the FY 1999 funded delivery period, the predominance of the Marine Corps training requirement is funded. However, spot shortfalls do occur from time to time. Once these shortfalls are identified they receive high priority attention until a solution can be determined.

    In addition to spot shortages, there are other shortfalls identified in items requiring large quantities of C–4 explosive. Due to the increased cost of these items, we are reviewing our requirements for these items and waiting for C–4 pricing to stabilize. As the situation becomes clearer, we will address all shortfalls as we develop the FY 2000 budget.

    Following is a list of ammunition we would procure if additional funds become available.

Table 1

    Marine Corps weapons are adequately funded. However, if additional funding were available in FY 1999 the following programs could benefit. Predator/SRAW is a one-man portable, fire and forget, missile system capable of defeating the next generation of advanced armor threats, filling the gap in USMC Short Range Anti-tank Weapon doctrine. This program could execute an additional $4.0M (R&D funds). The LW155MM Howitzer replaces the aging and operationally deficient M198 Howitzer and will be the Marine Corps' sole artillery weapon for all forces and missions. Additional funding of $6.8M (R&D funds) could be used for EMD testing and program support, evaluation of breech mounted laser ignition system, modification to accommodate the Army's new propelling charge system, and perform a minimal live fire evaluation of Weapon Crew Ballistic Protection. Finally, the Pedestal Mounted Stinger (PMS) Avenger ECP Forward Looking Infrared (FLIR) provides the day/night, all weather, capability for the Avenger weapon system. Additional funding of $7.6M (PMC funds) would purchase the remaining 154 ECP FLIR's which are needed to complete fielding to the fleet.
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HELLFIRE MISSILES

    Mr. HUNTER. The Fiscal year 1998 Conference Committee included $20 million for procurement of Hellfire Missiles for both the Navy and Marine Corps, which are launched from Navy SH–60B and Marine Corps AH–1W helicopters. It is Congress, understanding that these missiles will be procured through an ongoing Army Hellfire Missile contract.

    Secretary Douglass; Is this understanding correct?

    Secretary DOUGLASS. The Hellfire procurement will be made under an fiscal year 1998 U.S. Army letter contract.

    Mr. HUNTER. If yes, has the funding been obligated yet for this congressional plus up and has the Army been notified of the pending buy? If not, why not and when does the Department of the Navy intend to procure the missiles?

    Secretary DOUGLASS. The Hellfire procurement will be made under an fiscal year 1998 U.S. Army letter contract because all options on the existing fiscal year 1996 Army Hellfire Missile contract have been previously exercised. The estimated contract signing and obligation date for this procurement is June 30, 1998.

    Mr. HUNTER. Admiral Lautenbacher, Is there an unfunded fiscal year 1999 requirement for these missiles?
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    Admiral LAUTENBACHER. The amount appropriated in fiscal year 1998 for Hellfire fully funds these missiles. As with many warfighting programs, we are currently below our inventory objective.

NAVY/DOD SHIPBUILDING INDUSTRIAL BASE STUDY

    Mr. HUNTER. In May 1997, the Navy and DOD commissioned a study to assess the impact of the QDR on the shipbuilding industry's skills, capabilities, and capacity contrasted against future Navy requirements. The study also intends to analyze the possibility of offsetting the reduction in
Navy programs with more commercial opportunities, domestically and internationally, as well as exploring an increased role in Foreign Military Sales. This study is critical to defining the present and future role and position of the DOD regarding the domestic shipbuilding industry.

    In May 1997, you and Secretary Kaminski commissioned an industrial base study of the shipbuilding industry. Last week, Dr. Gansler told us that the report is nearly finished and should be available shortly. What is its objective? When will the results of the study become public? What can you tell us today about what you have learned so far, or what the results of the study will be?

    Secretary DOUGLASS. On April 7, 1997, Assistant Secretary of the Navy (Research, Development and Acquisition) and the Under Secretary of Defense (Acquisition & Technology) commissioned a Shipbuilding Industrial Base Study (SIBs). The study objectives were to respond to two questions:
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    (1) Should the Navy place future ship construction contracts without regard to possible yard closing?

    (2) Should the Department of Defense take a position with respect to mergers and consolidations within the domestic shipbuilding industry?

    While the study was originally envisioned to be completed by November or December, the magnitude of data received from the shipbuilders required additional effort on the part of the Navy and OSD. The SIBS Working Group has completed its efforts and is in the process of briefing senior Navy and OSD management. It is premature to release any findings and in fact, due to the proprietary nature of the data, it is doubtful that the results will be made public.

SEAWOLD COST CAP

    Mr. HUNTER. In Fiscal Year 1998, the Secretary of the Navy requested that $745.4 million in funding for canceled submarines be excluded from the $7.22 billion cost cap for the three SEAWOLF submarines. The fiscal year 1998 Authorization Act only excluded $272.4 million of initial class design costs that were previously allocated to other canceled ships in the class. The agreement would also require the DoDIG to provide a report to determine if the Secretary's fiscal year 1998 request was justified and to determine if any further exclusion to the cost cap will be required. The report is due to the Committee on March 30, 1998.

    Can you give us the status of the DoDIG's Cost Cap report due to the committee on March 30, 1998?
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    Secretary DOUGLASS. The DoDIG report 98–087 on the SEAWOLF Program was published on March 6, 1998.

NEW ATTACK SUBMARINE (NSSN)

    Mr. HUNTER. The fiscal year 1999 budget request included $2.003B for procurement and $218.8M for direct RDT&E for development of the NSSN, and a total of $484M for RDT&E related to development of the NSSN (advanced submarine technology, submarine combat systems, and nuclear power systems, etc.). In fiscal year 1998—after intense debate among the House, Senate, and the Navy—the Congress approved the Administration's plan to have Newport News Shipbuilding of Virginia, and Electric Boat of Connecticut, enter into a teaming arrangement to build the four NSSNs. A significant portion of the prior years' debate between Congress and the Administration focused on the appropriateness of the Navy's plan for research and development on advanced submarine technologies that might be incorporated into the NSSN program or future submarine classes. As a result of this debate, Congress increased funding for this work by about $60M a year.

    As you recall, last year's House bill contained a provision seeking the Navy to fund the technology insertion opportunities into the New Attack Submarine that you briefed to this Committee last year on May 18, 1997. On September 23, 1997, the Secretary of the Navy sent this Committee a letter certifying that he forwarded to the Secretary of Defense a budget request that met the funding levels of the House provision. Does the fiscal year 1999 Navy budget submitted to Congress reflect this same commitment?

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    Secretary DOUGLASS. Yes, in fact funding for technology insertion included in the Navy's fiscal year 1999 budget exceeds the level of commitment stated in the Secretary's letter. A year ago, the Navy had five new technologies funded for insertion; today there are 17 new technologies (15 that were included in the Secretary of the Navy letter of September 23, 1997, and two Design Improvement Proposals that were approved in December 1997) funded for insertion into the first four NSSNs. These technologies were selected based on Submarine Force needs, maturity of technology, total ownership cost, and to provide the best balance of improved combat capability and affordability for NSSN. This plan is described in detail in the Secretary of Defense report on Nuclear Attack Submarine Procurement and Submarine Technology.

    Mr. HUNTER. How is the Newport News/Electric Boat teaming arrangement working and do you see any changes from the original plan?

    Secretary DOUGLASS. The teaming arrangement is working well. To assure effective sharing of, and work package development from, a common 3–D digital product model, Electric Boat (EB) and Newport News Shipbuilding (NNS) formed 15 integrated process teams which have been working together over the past year. To date, about 50 NNS personnel have relocated to EB and are participating on the Design Build Teams to tune the data for efficient use of the specialized facilities and established skilled trades practices at both shipyards.

    There are no significant changes expected to the teaming arrangement.

CVN–77

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    Mr. HUNTER. In fiscal year 1998, Congress provided an additional $50 million for advance procurement of the Navy's next aircraft carrier, CVN–77, and established a limitation on the total cost of $4.6 billion. Last year, the Navy planned to complete funding for CVN–77 in fiscal year 2002, and the contractor proposed a way to use advance funding, procuring CVN–77 on the Navy's schedule, with $600 million savings from the Navy's $5.2 billion cost. In fiscal year 1999, the Navy plans to accelerate funding one full year to fiscal year 2001, and has applied a total of $241 million above last year's plan in fiscal year 1998 to fiscal year 2000. According to the Navy, this saves $732.5 million from the fiscal year 1998 plan.

    Secretary Douglass, we notices that the Department made a substantial revision from the original ''Smart Buy'' proposal by moving the carrier forward one year. Section 122 of the fiscal year 1998 Defense Authorization Act defines the procurement plan as the shipbuilder's plan that was submitted to Congress in March 1997. That plan would complete funding for the carrier in fiscal year 2002. Do you see the fiscal year 1999 funding plan to be in conformance with that legislation? Does the Congress need to change the legislation for fiscal year 1999?

    Secretary DOUGLASS. The fiscal year 1999 funding plan conforms with the intent of that legislation, and there is no need to change the legislation for fiscal year 1999. During deliberations over the fiscal year 1998 Defense Authorization Bill, Congress recognized that existing budgetary constraints might preclude funding the Newport News ''Smart Buy'' plan as initially proposed. Consequently, Section 122 of the fiscal year 1998 Defense Authorization Act specifically gives the Secretary of the Navy the legal authority to modify the $4.6 billion cost cap, as a result of ''changes the Secretary proposes in the funding plan (as contemplated in the March 1997 procurement plan) on which the projected savings are based.'' The fiscal year 1999 funding plan follows this guidance.
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    Mr. HUNTER. Dr. Gansler told us that the $4.6 billion cap will not provide the CVN–77 with the full combat systems capabilities or all of the technology improvements desired. What additional improvements does the Navy require? How much will they cost? Are they funded in the FYDP?

    Secretary DOUGLASS. The $4.448 billion SCN in the fiscal year 1999 President's Budget for the CVN–77 reflects the $4.6 billion cost cap adjusted for inflation. This is less than the amount required to build a CVN–76 which, under the cost cap imposed by the fiscal year 1998 Defense Authorization Act, is the baseline. As indicated in the Secretary's February 9, 1998, ''cost cap'' letter to Congress, the Navy is reviewing funding options which will generate real savings and also, provide for a fully capable CVN–77. A fully capable CVN–77 includes transition technologies which will improve the ship beyond the scope of a CVN 76 repeat, and aid the transition to CV (X). Once this review has been completed, the cost cap will be modified in accordance with the law, and funding requests will be adjusted to the appropriate level.

COMBAT LOGISTICS FORCE (CLF)

    Mr. HUNTER. The fleet of CLF ships is rapidly aging and the majority are approaching their nominal retirement age of 35 years. We understand that the Navy has a plan to replace its 16 ammunition and combat stores ships with a new class of 10–14 ships in its T–ADC(X) Auxiliary Dry Cargo Ship program. We also understand that the Navy was programmatically prepared to support the lead ship funding in FY00; however, the budget submitted to Congress does not fund the lead ship until FY02. That means that the existing ships, which are manpower intensive and costly to operate, will be approaching 40 years of age.
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    The FYDP shows 1 ADC(X) ship in fiscal year 2002, and 2 ADC(X) ships in fiscal year 2003. What funding is programmed beyond the FYDP to meet this requirement?

    Secretary DOUGLASS. Funding options for T–ADC(X) beyond fiscal year 2003 are being considered as part of Navy's budget process for Calendar Year 2000 build.

    Mr. HUNTER. Is the Navy meeting its requirements to protect against vulnerabilities such as those identified in the recent Eligible Receiver 97 (ER97) exercise?

    Admiral LAUTENBACHER. Navy is acquiring IT–21 components with COTS security features embedded from the beginning. COTS alone will not provide the total Information Assurance required in DOD. We will provide additional assurance by providing ''defense in depth'' to ensure protection against the vulnerabilities, such as those identified in Eligible Receiver. This concept is implemented through a combination of user workstation protection, local area network protection, enclave/boundary protection and an overall layer of intrusion monitoring. For interoperability, certain connections between levels of security (i.e. secret to unclassified) will be required and these connections will be protected by high assurance guards. Overlaying the entire information assurance area is the need to increase awareness and training of operators and security managers. We are, in coordination with the other Services and Defense Information Systems Agency, developing new or upgraded awareness and training efforts. Since ER–97, the Navy has instituted a policy requiring the Fleet Information Warfare Center to conduct a network vulnerability assessment and to run a ''Red Team'' against all Battle Groups/Amphibious Ready Groups prior to their deployment as part of their pre-deployment work-ups.
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INFORMATION TECHNOLOGY

    Mr. HUNTER. Subsequent to the FY98 budget submission to Congress, and before the HNSC marked up its FY98 bill, the Chief of Naval Operations introduced a new IT–21 program in his budget enhancement or ''wish'' list with a request for $157.2 million. The Congress authorized an increase of $58.0 million. This increase was distributed in various Other Procurement, Navy (OPN) accounts. This initiative seeks to fund continuing commercial-off-the-shelf (COTS) computer hardware and software upgrades, and the installation of fiber-optic backbones on ships, through funding various OPN accounts. The program seeks to link key personnel so that inputs to tactical situations can be made in a ''real-time'' fashion with more rapid course-of-action development and plan execution.

    Deputy Secretary John Hamre recently revealed that an ''organized and systematic'' attack had been made on DOD computers by unidentified computer hackers. This year, the Navy has programmed $472 million for its IT–21 program, much of which will buy COTS hardware and software. Will the Navy's new IT–21 equipment, used by Sailors and Marines in operational missions, be susceptible to attack during an actual ''real world'' contingency operation?

    Secretary DOUGLASS. To some extent all networked computer systems are susceptible to attack, but the IT–21 strategy is based on an architecture which is inherently more resistant to attack. The proposed architecture ensures the best COTS security features are included up front in the IT–21 components, and in addition, will enable us to accommodate any unique government security features deemed necessary.
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    Mr. HUNTER. History has shown that the Navy has a propensity to move CLF ships to the right as priorities change. Can you tell us for the record that the T–ADC(X) program will be funded in fiscal year 2002 and fiscal year 2003?

    Secretary DOUGLASS. Presently there is SCN funding in the Future Years Defense Program for one ADC(X) in fiscal year 2002 and two in fiscal year 2003.

    Mr. HUNTER. The Commandant's top unfunded priority for FY98 was $42.6 million for upgrades to four base telecommunications networks. The conferees authorized $24.6 million for upgrades to base telecommunications infrastructure at both Camp Pendleton, California and Camp Butler, Japan.

    Is this program still one of the Commandant's highest priorities in FY99?

    General OSTER. Yes, this is still one of the Commandant's top priorities.

    Mr. HUNTER. If so, how high of a modernization priority is it?

    General OSTER. In FY 1999, Base Telecommunications is the highest priority on the Commandant's modernization enhancement list.

    Mr. HUNTER. What capabilities do these telecommunications upgrades provide?
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    General OSTER. The Marine corps has developed a phased program to upgrade all bases and stations. The upgrades will consist of establishing a fiber optic backbone information transmission system providing 155Mbs service to all areas and essential buildings on the base or station, upgrade of the telephone system and all cable systems, including supporting structure. The existing cable systems were designed to support analog telephone service and are totally inadequate to support the rapidly escalating bandwidth requirements generated by modeling and simulation, telemedicine, optical disk imagery, the internet, intelligence programs and the Defense Messaging System (DMS). This program also provides the infrastructure necessary to support deployed forces access to information resident at sustaining bases and provides FMF and other commands at Marine Corps bases the means to access and exchange information such as data, video, imagery and voice at any required bandwidth. Additional funding in FY 1999 will accelerate the completion of upgrades for the entire Marine Corps infrastructure.

    Mr. HUNTER. The CBIRF is the Marine Corps' response team that will be used to secure and decontaminate an area and the people that my have been currently manned by Marine Corps personnel as a separate DOD entity, however, the Army is the DOD executive agent for chemical and biological response.

    Has the $10 million FY 1998 congressional plus-up been obligated yet?

    General OSTER. No, the $10 million FY 1998 Congressional increase is not obligated yet.

    Mr. HUNTER. If not, why not?
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    General OSTER. Significant time is required for the preparation of acquisition packages. These cover a variety of unique equipment items such as Command and Control Vehicles, Kilowatt Generators, Search and Rescue Mobile Video and Lights, VTC Mini-Camera, Biohazard Suites, Chemical Biological Casualty Evacuation Hoods, etc. The acquisition packages must be completed before the funds can be obligated to a purchase or contract. Currently, $276 thousand is obligated and $2.0 million is committed. All of the $10 million Congressional increase will be obligated by 30 Sept. 1998.

    Mr. HUNTER. Will this increase be used to procure replacement equipment taken from other units to stand up the CBIRF or for new equipment?

    General OSTER. The $10 million provided as a Congressional increase in FY 1998 will be used to finish the procurement of the mission essential equipment required for CBIRF.

    Mr. HUNTER. Is this a mission that the Marine Corps will continue or is this capability going to be transferred to the Army once the unit is fully stood up?

    General OSTER. CBIRF shares some equipment with other DOD agencies; however, CBIRF is operationally unique. No other DOD agency currently has the ''comprehensive'' capability or full complement of necessary equipment to provide the range of detection, decontamination, medical/security services and responsiveness necessary to respond to a chemical or biological related emergency. At this time, it is expected that the mission will continue with the Marine Corps.
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    Mr. HUNTER. If not transferred, how much additional funding will be required?

    General OSTER. The Marine Corps plans to maintain the CBIRF and the Marine Expeditionary Forces (MEF) with state of the art equipment. We will continue to upgrade this equipment with new technologies and exploit those technologies located in other arenas within the government and DOD Agencies. Additional FY 1999 funds needed and requested are $1.0 million in Procurement Marine Corps and $1.2 million for research and development.

    Mr. HUNTER. The FY98 Conference Report authorized a $30 million increase for the replacement of High Mobility Multi-Wheeled Vehicles (HMMWV). The FY99 budget request includes $39.3 million for procurement. Does the Marine Corps intend to buy new HMMWVs or remanufacture its fleet of HMMWVs with these amounts of funding? Is this requirement adequately funded in FY99?

    General OSTER. The Marine Corps intends to procure the current HMMWV A2 vehicle by exercising an option on the Army's current production contract. LTVR represents a high priority modernization item for the USMC. Marine Corps and Army FY 1999 funds support a total of 714 and 677 vehicles, respectively, The total funded vehicles is 1,391 or 909 less than the minimum economic production rate. However, given the potential for Foreign Military Sales and continuing commercial sales, as well as existing backlog, AM General has communicated no indication of a necessity to close the production line in FY 1999. An FY 1999 enhancement of $37M would allow the Marine Corps to purchase an additional 672 vehicles and bring the combined total procurement to 2,063. This increase would virtually assure that there would be no break in the production line.
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    Mr. HUNTER. The FY99 budget request for MTVR is $83.7 million. The MTVR program was originally conceived to remanufacture the currently fielded Marine Corps five-ton trucks into substantially more capable vehicles for the Fleet Marine Force. However, both competing contractors have now recommended that a new truck be procured to replace the current five-ton truck with an expanded capability truck capable of carrying up to 15 tons of equipment on road and greater than seven tons off road. The Marine Corps plans to request multiyear procurement authority in FY 1999 to begin procuring these trucks. However, the initial procurement contract will not even be awarded until November 1998 if the program remains on its current schedule.

    Why has the Marine Corps chosen to procure a new truck versus remanufacturing its current fleet?

    General OSTER. The Marine Corps originally intended to remanufacture its 5-ton truck fleet to achieve the enhanced performance requirements contained in the MTVR Operational Requirements Document (ORD). Component reutilization never extended beyond the frame, bed, cab and miscellaneous components (approximately $25,000 value). The Marine Corps always intended on replacing the entire powertrain and suspension system. Additional analysis since entering EMD, predominantly related to corrosion problems, reflects the fact that it is more cost effective to buy new versus remanufacturing.

    Mr. HUNTER. Has the requirement changed that dictates procuring a new truck?

    General OSTER. The Operational Requirements Document has not changed to dictate procurement of a new truck.
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    Mr. HUNTER. On what basis would the Marine Corps request a multiyear contract in FY 1999 if there is not even been a contracted award for low-rate initial production until the first quarter of FY1999?

    General OSTER. The basis for requesting a Multiyear Procurement (MYP) is reflected in the MTVR budget which has an orderly build up through Low Rate Initial Production leading to level-unit priced production rates throughout full-rate production. The strategy calls for a competitive run-off during EMD followed by the award of a five year multiyear procurement (for both LRIP and FRP vehicles). The Army Program Executive Office for Tactical Wheeled Vehicles has used this approach many times to fill Army tactical wheeled vehicle requirements. Some Army programs involved in MYP were the Logistic Vehicle System (LVS), the Family of Medium Tactical Vehicles (FMTV), and the 2 1/2 ton Extended Service Program (ESP).

    Mr. HUNTER. Is the current program funded in the future Years Defense Program based on a multiyear contract?

    General OSTER. The current MTVR funding requested in the Future Years Defense Program is based on multiyear procurement estimates.

    Mr. HUNTER. What would be the cost savings of procuring the vehicle under a multiyear contract versus annual contract awards?

    General OSTER. The cost savings of procuring the vehicle under a multiyear procurement are projected to be more than $86 million. These savings have already been taken out of program costs.
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    Mr. HUNTER. As a means of saving development and procurement costs, has the Marine Corps been collaborating with the Army in both the services' efforts to extend the life of their medium tactical trucks?

    General OSTER. The Marine Corps and Army are not collaborating on truck development due to different Service requirements. The Marine Corps and Army are ''harmonizing'' contract efforts by supporting one staff at the Tank and Automotive Systems Command (TACOM) for contract management and matrix support. This ''harmonization'' reduces contract overhead expenses for both Services.

    Mr. HUNTER. What results has this collaboration offered?

    General OSTER. N/A, since the Marine Corps and the Army are ''harmonizing'' their contract effort and not collaborating on truck development, there are no results.

    Mr. HUNTER. What difference in requirements still exist and will the same truck meet both services' requirements?

    General OSTER. The principle differences in Service requirements are that the Army variant is a single weight capacity truck rated as 5-tons both on-road and off-road, and plans a 70% on-road/30% off-road usage. The Marine Corps truck variant requirements are for a greater weight capacity at 7 tons off-road and 12 tons on-road, and plans for 30% on-road/70% off-road usage.
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    Mr. HUNTER. The MEP initiative should allow for a substantially better equipped Marine infantryman and enhance a Marine's quality of life in the field. The Committee included $10.0 million in its mark to be spent at the discretion of the Commandant of the Marine Corps for procurement of emerging advanced technologies that would increase, or eliminate identified deficiencies, in the warfighting capability of the Marine Corps. This provision did not survive the FY 1998 conference.

    Does the Marine Corps still have a requirement for establishing a similar type of account in FY99?

    General OSTER. Yes. The MEP procurement program is focused on non-developmental or commercial items which can be quickly tested, evaluated, modified if necessary and fielded. Also, the USMC has a requirement for an R&D funding line that will look at advanced and emerging technologies for the Marine Infantryman. This program is called the Integrated Infantry Combat System (IICS) and will be an overarching program that focuses on the Marine Infantryman as a complete system.

    Mr. HUNTER. What would its purpose be?

    General OSTER. The primary purpose of the MEP procurement account is to focus attention on low visibility, low cost programs that typically compete unsuccessfully in the budget process. These programs are focused on reducing the load, increasing survivability, enhancing safety and improving the lethality of the Marine Expeditionary Force (MEF) Marine.
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    The purpose of the R&D account is to integrate existing Infantryman's equipment, integrate new equipment that is forthcoming in the near future and focus on finding the ''Leap Ahead'' technology for the Marine Integrated Infantry Combat System of the future.

    Mr. HUNTER. Who in the Marine Corps would control what technologies would receive development funding from this account?

    General OSTER. Both programs are resident within Marine Corps Systems Command (MCSC) at this time. It is anticipated that Marine Corps Systems Command would be responsible for the decisions on the expenditures of these funds.

    Mr. HUNTER. What process would be used to determine what technologies would be further developed with funding in this account, (e.g., Marine Corps Sea Dragon Advance Warfighting Experiment)?

    General OSTER. The MEP Working Group hears proposals on possible projects for the MEP program. The MEP Working Group consists of users, testers and trainers, program managers, headquarters personnel and others as appropriate. The Working Group recommendations are forwarded to CG, MCCDC for approval. Marine Corps Systems Command then executes those decisions. The program is reviewed annually to determine which projects have been completed and which require continued funding.

    The IICS would be set up in the same fashion as the MEP program where a working group hears proposals on possible projects for the IICS program. This working group would consist of users, Training, Program Managers, Headquarters personnel and others as appropriate. This group would screen proposals against an ''IICS template'' for the future direction of the Infantryman. The Working Groups recommendations would be forwarded to the CG, MCCDC for approval and then execution by Marine Corps Systems Command.
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    Mr. HUNTER. This portion of the budget request is the largest of all Procurement Marine Corps Accounts with $318.5 million included in the FY99 budget request. Additionally, this is the account that all Marine Corps Command, Control, Communications, and Intelligence (C4I) equipment is procured through. The Marine Corps has placed an increased emphasis on buying advanced technologies to meet the challenges, dynamics and uncertainties of 21st Century warfare.

    Is this account adequately funded in the FY99 budget request?

    If not, what C4I programs/areas of procurement are lacking funding and why?

    General OSTER. As is the case with all Marine Corps programs, this account is adequately funded as possible within topline constraints. There are unfunded items however, that could be procured in FY99 if additional funds become available.

    $64.1M Base Telecommunications Infrastructure—The Base Telecommunications Infrastructure program provides a backbone information transmission system at every Marine Corps base and station. This will support the capability to electronically transfer all types of information—data, imagery, voice and video from, to, and between all locations aboard the base or station. It will provide access to and from worldwide systems, including those supporting deployed forces. Additional funds would accelerate completion of 8 bases and stations. There are existing contracts to enable execution of additional funds.

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    $20.0M Y2K Compliance/Computer Replacement—The Year 2000 compliance/computer replacement provides for the centralized procurement of 8,000 workstations to accelerate the Marine Corps-wide replacement of obsolete 286, 386 and low-end 486 computers that are not Y2K compliant, can not operate software that is Y2K compliant, and do not meet the published IT–21 technical standards mandated by 31 Dec 1999.

    $16.5M Network Infrastructure—The Network Infrastructure project provides for the standardization of all Marine Corps Local Area Network (LAN) and Enterprise Network data communication equipment. Additional funds would accelerate Network Infrastructure Upgrade of all remaining Marine Corps Bases that are currently not scheduled for an upgrade until FY00 and thus ensure that the Y2K compliance requirements are met at each base in a timely manner. The Marine Corps Bases at the following locations rely on outdated network infrastructures that are neither Y2K compliant nor scheduled to be upgraded until FY00 and beyond: 29 Palms, Fuji, Quantico, Hawaii, Albany, Yuma, Barstow, Parris Island, and San Diego. The enhancement funds will pay for all LAN upgrade requirements and provide network hubs for all essential service buildings at these bases.

    $7.6M Avenger—The Avenger Engineering Change Proposal (ECP) Forward Looking Infrared (FLIR) provides the day/night, all weather, capability for the Avenger weapon system. Additional funding would purchase the remaining 154 ECP FLIR's needed to complete fielding to the fleet. Due to the existing obsolescence and electro-magnetic interference problems, the current FLIR underwent an ECP during Marine Corps Avenger production. The Marine Corps received the last 81 Avengers off the production line with the new ECP FLIR at no cost to the government. The remaining 154 Avengers now require a retrofit to upgrade the ECP FLIR configuration.

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    $3.0M Joint Tactical Information Distribution System (JTIDS)—Nomenclatured as the AN/TYQ–82, this lightweight, highly mobile JTIDS communications system provides a single configuration shelter for receiving and transmitting tactical data within the Marine Air Command and Control system (MACCS) and joint agencies. This program supports both the Tactical Air Command Center (TACC) and the Tactical Air Operations Center (TAOC) mission. Additional funding would allow for incorporation of all tactical data links, communications equipment, and peripherals to meet current optional requirements.

    $1.2M GPA–123 IFF Antennas—This new GPA–123 Identification Friend or Foe (IFF) antenna replaces obsolete and unrepairable UPA–22 antennas. The GPA–123 antenna is currently in production, is logistically supportable and has been fully integrated and tested with the new AN/TPS–59(V)3 radar. Additional funding would procure 8 antennas and buy out the approved acquisition objective (AAO). The TPS–59 radar IFF is the primary method of combat ID in the MAGTF. Although currently compatible with the UPX–27 IFF interrogator used in the 59 radar, the new antenna is forward compatible to the new TPX–56 IFF interrogator.

    Mr. HUNTER. As military operations at night increase, requirements for more night vision devices increase. The FY99 budget request includes $11.6 millions for night vision equipment. The FY98 Authorization Conference Report provided a plus up of $7 million for night vision equipment, for which no funding was requested.

    Does the FY99 budget request provide adequate funding to meet these requirements?

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    General OSTER. The FY99 request will not fully fund all requirements.

    Mr. HUNTER. With the FY99 budget request and the FY98 plus up, does the Marine Corps still have unfunded requirements for night vision equipment?

    General OSTER. Yes, there are still unfunded requirements.

    Mr. HUNTER. If so, what type of equipment and how much would it cost?

    General OSTER. The Marine Corps has a requirement to procure additional GEN III image intensification tubes at a cost of $6.1 million. The equipment is the Generation III drop in retrofit tube for the Generation II image intensification tubes used in the AN/PVS–4 and the AN/TVS–5 individual/crew served weapons sights and the M36E3 periscope. The Generation III tube provides a higher level of reliability and improves resolution. The $6.1 million buys out the approved acquisition objective.

    Mr. HUNTER. The FY 1999 Marine Corps Ammunition budget request is $146.7 million—$50 million higher than the FY 1998 request and $22 million more than the amount appropriated in FY 1998.

    With this increased budget request for FY 1999, does the Marine Corps still have an unfunded requirement for ammunition shortfalls in FY 1999?

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    General OSTER. Yes, although the shortfalls have decreased over the last two years.

    Mr. HUNTER. What are those unfunded requirements?

    General OSTER. The FY 1999 President's Budget continues the effort to attain the Marine Corps goal of satisfying the Combat Requirement portion of the War Reserve through the Future Years Defense Plan, while meeting the annual ammunition Training Requirement and preserving the Strategic and Residual Reserves. Through FY 1999, the predominance of the Marine Corps requirement is funded. However, spot shortfalls do occur from time to time. Once these shortfalls are identified they receive high priority until a solution can be found. Currently, out of a $2.1 billion Marine Corps goal, we have identified a shortfall of approximately $30.5 million of which $26.8 million is executable.

    There are other shortfalls identified in items requiring large quantities of C–4 explosive. Due to the increased cost of these items, the Marine Corps is reviewing its requirements for these items all waiting for C–4 pricing to stabilize. As the situation becomes clearer, the Marine Corps will address all shortfalls in its FY 2000 budget development.

    Based on the current Ammunition acquisition strategy, the Marine Corps has identified executable FY 1999 shortfalls in the following items in priority order:

Table 2



    Mr. HUNTER. The MCWL has been established to investigate concepts and technologies to create a marriage of technology and advanced concepts which is the essence of the future Marine Corps.
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    The insertion of developed technology to enable the warfighter is being verified through the Sea Dragon process using focused experimentation.

    Are there improvements to the acquisition process which would facilitate better and more rapid transition of technology developed within the MCWL to operational units? Would additional funding be needed to facilitate this process development?

    General OSTER. New concepts, tactics, techniques and procedures, as well as their supporting technologies are discovered through experimentation by the Marine Corps Warfighting Lab, and forwarded to the Marine Corps Combat Development Command and the Marine Corps Systems Command for inclusion in their combat development and acquisition processes. We are focusing improvements in technology transition through rapid fielding teaming efforts for these three organizations.

    Coupled with ongoing acquisition reform initiatives from Department of Defense and Department of Navy, this rapid fielding organizational teaming has the potential to significantly reduce transition times to our operational units.

    However, funding for the future years cycle is not planned to support the accelerated acquisition that a rapid fielding technology team would require. Without the ability to program funds for indefinite or undefined efforts in the future, interim funding of individual programs at the appropriate technology transition point is necessary. While the program objective memorandum (POM) and budget funding is being discretely planned, interim rapid fielding technology funds would transition a program from a validated technology phase into a fielding phase for our operational units.
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F/A–18E/F

    Mr. HUNTER. Has the Navy solved the ''wing drop'' problem? Will the proposed solutions be implemented on production aircraft without additional cost?

    Secretary DOUGLASS. Yes. The porous wing fold fairing solves the wing drop problem. We will have a production wing fold fairing for the production aircraft, without adding cost to the program.

    Mr. HUNTER. The January 14, 1998, report of the Wing Drop Panel stated, ''Although the Panel is optimistic that an acceptable combination of fixes can be found, some of the more promising fixes will increase the drag to some extent, may impact the observability characteristics, and may alter the design loads on the wing and flap components.''

    Will the corrections to the F/A–18E/F wing result in an aircraft that still meets the Navy requirements?

    Admiral LAUTENBACHER. Yes. The F/A–18E/F still meets or exceeds all of its Key Performance Parameters. The porous wing fold fairing that has been designed to correct the wing drop has minimal impact on aircraft performance and observability characteristics, and will produce negligible change in loads on the wing and flaps.

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    Mr. HUNTER. Will it meet the range requirements?

    Admiral LAUTENBACHER. Yes. There are range requirements for the Fighter Escort and Interdiction missions, both of which the F/A–18E/F will meet or exceed with the porous wing fold fairing installed.

COMBAT LOGISTICS FORCE (CLF)

    Mr. HUNTER. The oldest ship in the fleet built in 1967 reaches its useful lifetime in three years, the youngest ship built in 1972 in the year 2007. Wouldn't it be more beneficial and cost effective to move construction up in order to replace the fleet ship by ship as they reach their useful life?

    Secretary DOUGLASS. Recapitalizing the CLF force to coincide with expected service lives saves costs associated with Service Life Extensions and manpower dollars associated with Service Life Extensions and manpower dollars associated with operating older, less efficient assets. However, recapitalizing the CLF force is just one of many SCN challenges currently faced by the Navy. Navy is considering several modernization alternatives and funding options as part of the Fiscal Year 2000 budget development process to recapitalize the CLF force.

    Mr. HUNTER. Can you provide the committee with a model of comparative cost (O&M) between the proposed fleet and the current fleet.

    Secretary DOUGLASS. The President's Budget has approximately $894 million per year (in FY 1997 constant dollars) to operate the current Combat Logistics Force (CLF). Under a Charter & Build lease agreement, the total annual costs (including lease payments) for the proposed fleet will be roughtly equal to today's larger, less efficient force.
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    Mr. HUNTER. If an alternative method of funding such as Charter and Build could be implemented wouldn't it then be more beneficial for construction to begin in Fiscal Year 2000 so these ships could begin delivery in 2002 or 2003?

    Secretary DOUGLASS. If Charter and Build for T–ADC(X) could be implemented in Fiscal Year 2000 with delivery starting in Fiscal Year 2003, it could be advantageous for two reasons. First, earlier implementation could reduce the need to perform Service Life Extensions on older vessels to extend their service lives. Second, an earlier start could promote the shipbuilding industrial base. Competitive contract awards to key U.S. shipyards in Fiscal Year 2000 would support job creation and sustainment as other work tapers off in Fiscal Year 2000–2002.

    Mr. HUNTER. If we wait as the current plan proposes we are looking at a 05 delivery and that's assuming the program dollars are still there to begin construction in 02. Aren't we taking a chance in allowing ourselves this critical gap between retiring the old CLF fleet and bringing the new fleet of ships into service?

    Secretary DOUGLASS. Assuming TADC(X) construction starts in Fiscal Year 2002, the Navy will extend the lives of aging CLF assets to fill the gap until TADC(X) delivers.

    Mr. HUNTER. Do you have estimates of what the SLEPed costs will be for the current fleet if the first new ship will not reach the fleet until the year 2005 (long after most of the ships in the current fleet, will have reached their useful life)?
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    Secretary DOUGLASS. The cost estimate for conducting Service Life Extension on the current fleet is $111.0M. This includes six AFSs at $15.0M each and one AE at $21.0M.

    Mr. HUNTER. Can you provide to the committee the readiness and duty status of each ship in the current fleet for the last two years?

    Admiral LAUTENBACHER. Yes. Navy intends to provide this type of data in the Expanded Quarterly Readiness Report to Congress (EQRRC). If required sooner, Navy can make the necessary arrangements to provide this information prior to the first EQRRC. The first EQRRC is due to Congress in October 1998.

    Mr. HUNTER. The Navy needs long-term lease authority to replace its CLF fleet with the now ADC(X) (10–12 ships). This authority is also necessary for prepositioned sealift and special mission ships. The biggest obstacle to this program is the need for Congress to direct a change in OMB's scoring guidelines for long-term leases. The Navy has failed to address this issue head on with OMB and elected to insert additional budget authority in the Fiscal Year 2002 timeframe in the SCN account for the ADC(X) Charter and Build program. The concern is that this money will not be there in Fiscal Year 2002 and therefore the scoring issue needs to be addressed.

    Secretary DOUGLASS. The Navy is in dialogue with OSD and OMB on the scoring aspect associated with Charter and Build.

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    Mr. HUNTER. As you know, the House-passed version of the FY98 Defense Authorization Act supported the ''build and charter'' concept to save scarce SCN funds. Please provide your opinions on this concept and explain why it is not included in the Fiscal Year 1999 budget request.

    Secretary DOUGLASS. The Navy views Charter and Build as a promising concept. However, OMB and the Budget Committees expressed concern with last year's House-passed version of the Charter and Build concept, particularly with regard to how the leases should be scored. The issues raised by OMB and the Committees have required detailed analysis into the scoring and financial aspects of a Charter and Build program. The time necessary to perform this detailed analysis precluded inclusion of Charter and Build in the Fiscal Year 1999 President's Budget. The Navy continues to discuss Charter and Build within DOD and with OMB. The three T–ADC(X) ships included in the SCN account in Fiscal Year 2002 and Fiscal Year 2003 illustrate the Navy's commitment to recapitalizing the Combat Logistics Force (CLF) fleet and allow us to continue exploring this alternative while ensuring the needed CLF replacement program starts.

TACTICAL TOMAHAWK

    Mr. HUNTER. The recent report of the National Defense Panel (NDP) places significant emphasis on future development and deployment of near-zero miss, long range stealthy cruise missiles with increased stand-off launch ranges. This is not the direction the Tactical Tomahawk Program is headed.

    How does the Navy defend the Tactical Tomahawk Program in view of the National Defense Panel Report?
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    Admiral LAUTENBACHER. Tactical Tomahawk is being pursued because it is more capable and affordable than the current Block III missiles. The satellite data link, anti-jam Global Positioning system (GPS), bomb damage indication sensor, in-flight re-targeting, launch platform mission planning all contribute to greater accuracy and operational flexibility and responsiveness. Tactical Tomahawk meets or exceeds all performance requirements, including range, accuracy, reliability, survivability as identified in the current Operational Requirements Document. It is therefore, exactly in line with the spirit of the NDP report.

    Mr. HUNTER. Secretary Douglass: Wouldn't it be both timely and prudent to step back from making a quick decision on the next generation of Tomahawk to conduct an in-depth review of all the issues and then make an informed decision while continuing production of the highly successful current Tomahawk missile?

    Secretary DOUGLASS. This has not been a quick decision. The Navy and OSD reprogramming request was based on careful consideration of all relevant issues, including detailed operational requirements analyses and independent cost estimates. In addition, DODIG has conducted an audit of the current contract management. Congressional staffs have been receiving briefings since August 1997 with frequent updates.

    Mr. HUNTER. With no new missile production or missile remanufacturing for at least the next five years, what will happen to the Tomahawk production team (including the second and third tier subvendors)?

    Secretary DOUGLASS. The Tomahawk production is contracted to continue new missile delivery through fiscal year 1999. The move to tactical Tomahawk would result in the Tomahawk missile production line closing only one year earlier than planned under the present program, i.e. fiscal year 1999 vice fiscal year 2000. Under the current program, only the remanufacture line (for Tomahawk Baseline Improvement Program) and the recertification line (for Block II/III) missiles would remain in operation as previously planned. The Tactical Tomahawk production line would, in turn, open in fiscal year 2002, and remain open through fiscal year 2008.
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    Mr. HUNTER. In the event of hostilities where additional Tomahawk Missiles could be required on an expedited basis, or in case the Tactical Tomahawk development program fails, what would be the lead time and cost to reconstitute the Tomahawk Block III production team?

    Admiral LAUTENBACHER. The existing Tomahawk inventory of 2,800 BLK II/IIIs provides the inventory reserve for any operational requirement. Also, the proposed plan poses very little additional risk over the current plan which has the production line closing permanently in Fiscal Year 2000. The Tactical Tomahawk opens up in Fiscal Year 2002 providing the means to acquire new, more capable, weapons, thus allowing the Navy to replenish inventory faster for less money.

    Mr. HUNTER. What risks are we taking by shutting down missile production in the face of the very real likelihood that the President will have to use large numbers of missiles against a recalcitrant Iraq or someone else while the production line is closed for several years?

    Admiral LAUTENBACHER. The proposed plan poses little additional, and possibly less risk than the current plan. Under the current program, the Tomahawk new production line permanently closes in Fiscal Year 2000. Under Tactical Tomahawk, the existing Tomahawk inventory (2,800 Block II/IIIs), which are still tactically viable, would provide the strategic reserve for any operational requirements. The Tactical Tomahawk production line would open up in Fiscal Year 2002, providing an opportunity to acquire new, more capable weapons at a significantly lower price allowing the Navy to replenish the inventory faster for less money. This is a prime reason the Navy is considering this program.
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    Mr. HUNTER. Will our commanders feel compelled to use solutions which place our personnel at greater risk to preserve the Tomahawk inventory?

    Admiral LAUTENBACHER. No. our inventory of tactically viable Tomahawk Block II and IIIs is 2,800. To date, 400 Tomahawk Land Attack Missiles (TLAMs) have been used operationally including DESERT STORM.

Table 3

TACTICAL TOMAHAWK ALTERNATIVE APPROACHES

    Mr. HUNTER. What are the costs and benefits of shifting to an entirely new missile design, versus incorporating some of the Tactical Tomahawk improvements in the existing version of the missile (the Block III version)?

    Admiral LAUTENBACHER. Some of the tactical improvements planned for the Tactical Tomahawk were to be implemented in the Tomahawk Baseline Improvement Program (TBIP) which is an improvement over the Block III missiles. However, due to high cost, TBIP missiles were only planned as remanufacture of existing missiles rather than new production. Tactical Tomahawk would build inventory from new production rather than consuming existing missile inventory for remanufacture. Tactical Tomahawk would also have significantly lower life cycle costs compared to the TBIP by replacing 1970s technology with 1990s technology and improved manufacturing processes.

    Mr. HUNTER. The Navy Tomahawk Program Office states that the new Tactical Tomahawk Missile represents moderate risks. What are the risks involved with the integration of a new missile body, new wing, different engine, (turbojet derivative of 15 minute Harpoon engine), new engine inlet, shallow submarine launch only, new missile computer and software, and much greater reliance on GPS guidance as opposed to more accurate DSMAC?
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    Admiral LAUTENBACHER. The Navy's overall assessment is that the program contains medium risk. The missile modifications are well within the current state of technology and the risks associated with this development are primarily a function of cost and schedule:

    The body modifications are principally to simplify the manufacturing and assembly process and reduce costs.

    The wing is a known airfoil that has been previously tested and is considered low-isk.

    The engine is based on the Harpoon core and some modifications planned for SLAM–ER and JASSM. The techniques and technology to extend the endurance of the engine (from approx. 30 min to several hours) are well known and have been incorporated in other engines.

    The inlet size and configuration is similar to the Tomahawk Anti-ship Missile (TASM) inlet, which has been tested in the wind tunnel, and in flight.

    The missile computer and software will be redesigned to incorporate the improved tactical response and flexibility, and new operational flight software. Most of this effort will be based on reusing approximately 50 percent of the already developed software for the TBIP.

    The submarine launch depth requirements are different for the Tactical Tomahawk than for the current missiles. The deep launch requirement represents the 1970s threat environment and does not reflect current Fleet doctrine or requirements. Periscope depth launch meets the fleet requirement at substantially reduced development and production cost.
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    The accuracy requirements for Tactical Tomahawk are better than for the current Block III program and the design incorporates both the Digital Scene Matching Area Correlator and Global Positioning System.

TACTICAL TOMAHAWK ACQUISITION STRATEGY

    Mr. HUNTER. How was Best Value in terms of mission effectiveness evaluated in establishing the cost of Tactical Tomahawk?

    (a) Number of missiles per target kill?

    (b) Number of missiles required for continuous target area coverage during loiter (suppression of mobile SCUD launchers)?

    Secretary DOUGLASS. The number of missiles per target kill and the number of missiles required for continuous target area coverage during loiter requirements for Tomahawk have been determined by the CINCs. Tactical Tomahawk will be designed to meet those requirements at the lowest cost to the taxpayer.

    Mr. HUNTER. In evaluating the cost of future Tomahawk options, how did you arrive at pricing?

    Secretary DOUGLASS. The production price offered by Raytheon and used in the program estimates is based on a Navy commitment to purchase 1,353 missiles within a six year period. The production price is consistent with a Navy independent cost estimate review.
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    Mr. HUNTER. Were the vendor prices which support the $569,000 missile price for the 1,300 Tactical Tomahawks based on multi-year and quantity guarantees?

    Secretary DOUGLASS. The production price offered requires the Navy commit to buy the 1,353 missiles needed to meet inventory requirements within six years of low rate production start.

    Mr. HUNTER. Did the prime contractor obtain similar price commitments on the current Block III Missile from its vendors for 1,300 missiles based on the same Tactical Tomahawk pricing assumptions? If not, do you intend to do so?

    Secretary DOUGLASS. The current program does not include production of any Block III missiles after the fiscal year 1998 buy of 100 missiles. The new production line would be shut down. All future missiles are Block IV which are remanufactures of existing missiles.

    Mr. HUNTER. The Tactical Tomahawk is an entirely new missile design with a development and production program amounting to perhaps $2B. For a decision of such importance and with long term national security considerations, wouldn't it be prudent to identify if there are more capable solutions for the next generation of Tomahawk which could be significantly different that those proposed in Hughes unsolicited proposal for the Tactical Tomahawk program?

    Secretary DOUGLASS. The Tactical Tomahawk missile is a redirection of the existing Tomahawk Block IV Tomahawk Baseline Improvement Program (TBIP) effort to reduce production costs, address an obsolescence issue, improve tactical capability, and provide for a long term Tomahawk missile production line. The proposal would be funded within the existing funding line for the TBIP missile, which Hughes (now Raytheon) successfully won in competition in 1994. Following the initial report and evaluation of the proposal, the Navy published a Commerce Business Daily (CBD) synopsis stating its intentions to award to Hughes Missile Systems Corp. (now Raytheon), and invited other interested parties to respond. Discussions were held with two potential sources, however, no proposals were received in response to the CBD announcement.
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    Mr. HUNTER. What are your negotiated firm price guarantees for development and the production of 1300 missiles?

    Secretary DOUGLASS. The development effort will be a cost plus fixed fee basis. The firm price commitment for 1,353 missiles in six years in $569K fiscal year 1999.

    Mr. HUNTER. It has been indicated that the production price of Tactical Tomahawk is $567,000. Is this a firm contractual commitment? Are there or will there have to be firm government or congressional commitments to obtain this price such as multi-year, firm quantity guarantees, indemnification protection, etc? At what point in time must these commitments be made with firm production price guarantees in place?

    Secretary DOUGLASS. As part of the proposed development contract, Raytheon offered to include a fixed price for the missiles in rate production. The firm commitment is for a price of $569,000 each (not $567,000) within a six-year period. A government commitment to production quantities is not required at this time, and would not occur until satisfactory completion of operational testing and formal approval for full rate production. The Navy will continue to assess the merits of various acquisition strategies in the interim. Should the Raytheon offer remain the most attractive, the Navy will request Congressional approval for a quantity commitment at the appropriate time.

    Mr. HUNTER. The Tomahawk price that the prime contractor is contractually committed for the 100 Block III Tomahawk missiles for fiscal year 1998 is a price of about $500,000 each. Is there a point in time where this buy must be placed on contract to guarantee the previously negotiated price?
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    (a) We believe this date to be sometime in January 1998. Is this still the case?

    (b) How long is the $500,000 per missile price for the FY98 valid?

    Secretary DOUGLASS. The option to procure 100 Block III missiles for $506K each expires April 28, 1998.

TACTICAL TOMAHAWK CAPABILITY CHANGES

    Mr. HUNTER. Although there are some capability improvements planned for the Tactical Tomahawk, we understand that there may be capabilities in the current missile that may be given up in shifting to the new missile design. Have you or the Navy conducted the analysis to show that these tradeoffs are worth making and do not entail unnecessary risk?

    Admiral LAUTENBACHER. Comparing the Concept of Operations (CONOPS) of Tactical Tomahawk, Block III, and Block IV, Tactical Tomahawk was the top performer in all areas.

    Mr. HUNTER. What happens if the Tactical Tomahawk has problems during operational evaluation?

    Admiral LAUTENBACHER. As with all acquisition efforts, the Navy will not proceed with the full rate production decision until the missile system has completed operational evaluation?
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    Mr. HUNTER. Is the contractor obligated to correct performance deficiencies?

    Admiral LAUTENBACHER. The missile would be designed under a performance specification, which identifies the key performance parameters. These parameters establish the minimum acceptable operational capability and may not be violated. Full rate production would be authorized only after performance standards have been met.

    Mr. HUNTER. We know of no major missile development program with the sophistication of a Tomahawk missile that has come anywhere close to meeting its projected cost or schedule goals. TSSAM ended up as being a $2B development program with an expected missile recurring price of close to $1.5M each when the program was terminated. The original planned TSSAM program was a firm fixed price development program with a firm production pricing. A firm production price of $250K per missile was negotiated which ended up costing several times this amount. The current Tomahawk program which has been judged to be extremely successful has required hundreds of millions of dollars to increase its range, accuracy and to limit collateral damage. In light of Tactical Tomahawk being a new missile, what leads the Navy to believe that its announced schedule and cost commitments can be met?

    Secretary DOUGLASS. Missile hardware design is a redirection from the design currently in Tomahawk Baseline Improvement Program Engineering Material Development program to reduce cost using three years experience of the Raytheon team. The technology being used is proven, unlike the TSSAM program. In addition, the Naval Center for Cost Analysis (NCCA), with OSD concurrence, has conducted an independent cost analysis that substantiates the Navy's estimate.
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    Mr. HUNTER. What consideration was given on operational and survivability issues involving longer range, terrain following performance, loiter time, IR and radar signature, improving guidance accuracy and redundancy, all of which are degraded to some extent with Tactical Tomahawk as compared to the current Tomahawk Block III performance?

    Admiral LAUTENBACHER. Tactical Tomahawk meets or exceeds all performance requirements including range, accuracy, reliability, and survivability as identified in the current Operational Requirements Document (ORD).

    Mr. HUNTER. What is the long term threat that a Tactical Tomahawk can expect over the 30 to 40 year life of the missile?

    Admiral LAUTENBACHER. Tactical Tomahawk meets or exceeds all performance requirements, including range, accuracy, reliability, survivability as identified in the current Operational Requirements Document, which is based on time realistic threat projections.

    Mr. HUNTER. Is it in our national interest to be investing in an overall less capable missile in light of these long term threat considerations?

    Admiral LAUTENBACHER. The Tactical Tomahawk is not a less capable missile. In fact, it is a much more capable missile at a much more affordable cost.

    Mr. HUNTER. What is the implication of continuing advances in long-range, anti-ship cruise missiles being developed by our adversaries using similar technology contained in Tactical Tomahawk, i.e., GPS and turbojet engine?
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    Admiral LAUTENBACHER. If anything, advances in adversary antiship cruise missile argue for Tactical Tomahawk. When employed utilizing the tactical mission profile (above 15,000 ft) its significantly increased range (+60%) provides operational flexibility limiting launch ship exposure to anti-ship cruise missiles.

    Mr. HUNTER. Tomahawk is our only high performance ship and submarine launch precision strike weapon. Why shouldn't it be our national strategy to be pushing for a more capable Tomahawk in longer range or loiter capability, more accurate guidance, greater survivability, increased stealth, and better penetrating warheads in an increasingly hostile threat environment?

    Admiral LAUTENBACHER. Tactical Tomahawk will leverage highly on the substantial knowledge gained in the development of the current variant of the missile. It will be designed to defeat the projected threat while meeting carefully developed performance requirements. Tactical Tomahawk will replace the 1970's technology of the current missile with 1990's technology at a substantially reduced cost to the taxpayer.

SHIP BUILDING RATE

    Mr. HUNTER. Why has the Navy's objective in number of ships changed since the BUR? Does the current shipbuilding rate meet Navy requirements? If not, when is the bottom number of Navy ships before the total begins to turn back upward?

    Does this planned force structure put the Navy and our Nation at risk of not meeting presence or combat requirements?
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    Admiral LAUTENBACHER. In order to sustain a 300 ship Navy our shipbuilding rate must be maintained at approximately 8–10 ships per year. Within the fiscal year 1999–fiscal year 2003 budget, we buy an average of 6 ships per year which is not sufficient over the long term to sustain a 300 ship force.

    The QDR affirmed the need for 12 carrier battle groups, 12 amphibious ready groups, 116 surface combatants and 50 attack submarines, as well as the strategic force that we have, in support of START I and START II. This represents the core capability necessary to meet the needs of national defense. In addition, we need to provide the combat logistics and other support ships to make this core capability a world wide force. When looking at our force structure from a capabilities focus, it is more essential to ensure we provide the required capability and not a specific number of ships. Navy's shipbuilding and modernization efforts are designed to produce ships that will provide the core capabilities well into the 21st Century.

    Mr. HUNTER. Given that Magic Lantern is the only operational airborne mine counter-measure system in the Navy, and there's only one squadron available for worldwide contingencies, what's the reasoning?

    Secretary DOUGLASS. The House National Security Committee Report recommended an increase of $7.5 million for: (1) equipping the West Coast squadron with two Magic Lantern systems; (2) procuring spares and support equipment for the West Coast Magic Lantern systems; (3) provisioning eight Reserve LAMPS aircraft with Magic Lantern engineering change proposals, including miniaturized airborne Global Positioning System (GPS) receivers; and (4) converting the Magic Lantern adaptation systems to the Magic Lantern deployment contingency configuration. However, no funding was appropriated to support this effort. The Magic Lantern Deployment Contingency (ML[DC]) resides with Helicopter Anti-Submarine Squadron (Light) (HSL–94). As indicated in an August 12, 1996, letter to Congress by Under Secretary Danzig, the Department has no requirement for an additional contingency capability and is pursuing a fleet capability with the Airborne Laser Mine Detection System (ALMDS). Additionally, the host platform for the MC (DC), the SH–2G is being retired starting in fiscal year 2000. As a result, the Department is investigating alternative uses for the Operations and Maintenance, Navy funding ($1.3 million) and Reserve Personnel, Navy funding ($1.7 million) that has been appropriated and authorized for Magic Lantern.
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QUESTIONS SUBMITTED BY MR. WELDON

LIGHT STRIKE VEHICLE

    Mr. WELDON. The Marine Corps and Special Operation command have as of January 1998, signed a joint requirement document for a V–22 internally transportable vehicle.

    Why is this vehicle required and what is its purpose? When must it be available to support V–22 operations for the Marine Corps and SOCOM? Is its development funded in FY99?

    General OSTER. The Light Strike Vehicle (LSV) was initiated in 1992 as a result of Operation Desert Shield. In 1994 Congress directed OSD to consolidate several Service LSV efforts into a single program. The LSV program competed unsuccessfully for inclusion in the FY 1996 and FY 1998 President's Budget. However, a joint operational requirements document was signed in January 1998.

    The LSV is a replacement for the aging M–151A2 jeeps which are becoming unsupportable. The Army removed the M151 jeeps from the supply system in 1992. The current M151 support is through non-system means, such as cannibalizations, ordering parts through catalogs, etc. These support channels are projected to no longer be available by the end of FY 2003.
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    The LSVs will allow the Marine Air Ground Task Force (Special Operations Capable) to support Operational Maneuver From The Sea (OMFTS), Ship To Objective Maneuver, Non-Combatant Evacuation Operations, Tactical Recovery of Aircraft and Personnel, Airfield Seizures and security missions conducted by heliborne forces that require heavy weapons support. The LSV will provide the reconnaissance elements mobility equal to that of the maneuver elements they support in OMFTS.

    The expected entry into the Marine Corps inventory for the V–22 aircraft is FY 2001. The LSV will need to support the V–22 and Special Ops missions at that time. Currently, no developmental funding is budgeted for LSVs.

    Mr. WELDON. The lightweight 155 howitzer is being jointly developed by the Army and Marine Corps to replace the M198 155mm Howitzer which has severe maintainability deficiencies and lacks the mobility. It is to weight 900 lbs and have a rate of fire of 5–8 rounds per minute with a range of 30 km. It is to be transportable by CH–53 and CH–47 helicopters, as well as the MV–22.

    Why must the MI198 howitzer be replaced and what added capability will the lightweight give the Marine Corps? Does it fit properly into the future Marine Corps warfighting capability? What will the Preplanned Product Improvements of GPS, laser ring gyro direction and the ballistic computer provide?

    General OSTER. Our fleet of operationally-deficient M198 howitzers approaches the end of its twenty-year service life beginning 2001. Very limited in mobility and maintenance-intensive, the 8-ton M198 howitzer is incapable of keeping pace with the infantry and mechanized maneuver elements it supports. The 9,000-pound lightweight 155mm howitzer (LW155) will arm us with a Howitzer of significantly improved transportability and mobility by sea, land and air platforms. The LW155 also provides a higher rate of fire, better reliability, and dramatically enhanced survivability—with range and lethality superior to any comparable light towed 155mm howitzer available today.
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    LW155 is the centerpiece of Marine Corps fire support capability in Operational Maneuver From The Sea (OMFTS). The 7,000-pound reduction in weight from the M198 translates directly into dramatically increased vertical lift deployment by the MV–22 Osprey and CH–53 helicopter—enabling delivery of this weapon, with its greatly enhanced 155mm lethality, from over the horizon rapidly in Ship to Objective Maneuver. Our OMFTS artillery system includes not just this nimble gun, but a more powerful medium tactical vehicle replacement prime mover to ensure the complete LW155 system keeps pace with our fast moving maneuver forces, across the complete spectrum of terrain in which we expect to fight.

    LW155's Pre-Planned Product Improvements (P3I) will provide this expeditionary weapon with advanced technology modules currently found today only on heavy self-propelled weapons. The P3I system will feature ''bolt-on, bolt-off'' installation by the crew and their battalion mechanics. The P3I ''Mission Manager'' is an on-board computer with an integrated radio modem, allowing each gun to compute its own ballistic solution. The VHF digital radio provides rapid, secure communication to the fire direction centers, target acquisition radar, and forward observers. The computer will also be digitally linked to the common Army and Marine Corps Advanced Field Artillery Tactical Data System, allowing even greater interoperability.

    The inertial navigation system combines a three-ring laser gyroscope, with global positioning system (GPS) backup, to provide inertial navigation during a move. It also provides orientation updates to the Mission Manager during emplacement and fire missions—eliminating the need to prepare surveyed battery positions. The on-board radar velocimeter provides the Mission Manager with automated projectile velocity corrections with each round fired, improving projectile accuracy. The digital direct fire sight will provide a first-round-hit capability by combining night vision, laser range finding, and computation of firing elevation based on the selected charge and projectile. An on-board battery power supply system will provide reliable electricity, with access to a generator and vehicular power for backup power and recharging.
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SUBMARINE R&D FUNDS

    Mr. WELDON. Please review how the additional submarine R&D funds have been spent, the results of the work to date, and whether the investment plan needs to be adjusted in any way to respond to new technological opportunities or other recent developments?

    Secretary DOUGLASS. The March, 1997, Secretary of Defense Report to Congress provided the initial investment plan for the fiscal year 1997 Congressional $60M plus up. In general, the funds were invested in acoustic sensors and processing, platform and structural acoustics, hydrodynamics, and propulsion. The results of the work to date are as follows:

SENSORS AND PROCESSING

    Augmentation Systems—Four augmentation systems were purchased in fiscal year 1997. Augmentation systems support equipment operational demonstrations to assess advanced concepts and technologies.

    Lightweight Wide Aperture Array (LWAA) Fiber Optics development efforts—LWAA Fiber Optics provides the functional replacement of the current ceramic hydrophone with fiber optic hydrophones. A partial test of the fiber optic module was completed in November 1997. NSSN LWAA design is in progress.

    HFSP development efforts—The HFSP program provides improved volume/bottom mine detection, improved restricted water navigation, and provides full imaging capability in the vicinity around the ship. Successful lake and at sea testing was accomplished in Calendar Year 1997.
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V–22

    Mr. WELDON. The budget request for development of the V–22 ''Osprey'' tilt-rotor aircraft for the Marine Corps and for Special Operations Forces includes $355.1M in RDT&E and $664.8M for Procurement of seven additional MV–22 aircraft. The fiscal year 1999 that was provided in the fiscal year 1998 budget request.

    The Quadrennial Defense Review (QDR) reduced the planned procurement for the MV–22 from 425 aircraft to 360 aircraft. What was the basis for this reduction? What are the implications of the reduction, and what appears to be the lack of an MV–22 attrition reserve for the Marine Corps?

    Admiral LAUTENBACHER. The decision to procure 65 fewer aircraft by the QDR does not affect the Marine Corps' plan to transition to 22 active duty and reserve MV–22 squadrons (23 including Fleet Replacement Squadron). Expected increases in aircraft reliability and maintainability, resident within the MV–22, will allow the Marine Corps to operate the fleet with fewer aircraft than originally anticipated. We expect to operate with an on-site depot level repair/modification capability which allows us to eliminate the requirement for pipeline aircraft. We have also calculated a 20 year attrition rate at 0.5 percent which again reduces our original requirement.

    Passive Sonar development efforts—APB–98 and APB–99 Towed Array processors provides operator machine interface and processing improvements. Accomplishments include the completion of TB–23 Towed Array APB–98 Definition in fiscal year 1997, TB–23 Towed Array APB–98 Build 1 in October 1997, and the initiation of TB–23 and TB–16 Towed array ABP–99 development.
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PLATFORM TECHNOLOGIES

    Structural Acoustics—Launched efforts in seawater piping quieting and improved noise isolation in machinery decks and mounts. Developed and demonstrated an advanced pneumatic mount. Demonstrated and validated the NSSN shock isolated deck concept.

    Elastomeric Ejection System—Completed elastomeric disk testing and acoustic evaluation that supports NSSN hull four.

    Hydrodynamics—Performed model experiments on advanced sails, initiated flow management project, and upgraded hydrodynamic computational tools.

    Advanced Submarine Propulsion System—Completed assessment of propulsor/hull configurations. Currently down-selecting to the most promising candidates for further development.

    Advanced Hybrid Propulsor—Completed acoustic testing using the Large Scale Vehicle KOKANEE.

    The Submarine Technology Management Process continues to assesses existing and potential technology insertion opportunities and will make recommendations through the Submarine R&D management process.

THIRD LARGE SCALE VEHICLE (LSV)
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    Mr. WELDON. In fiscal year 1997, the Congress provided $98 million to address the development and inclusion of advanced technologies in the NSSN and also re-authorized $50 million in fiscal year 1996 funds to be used for large scale vehicles or LSVs ( 1/4 scale submarines) for hydrodynamic and hydroacoustic research on development designs for submarine hulls and propulsion systems. The fiscal year 1998 Defense Authorization Act provided a total of $104 million (an increase of $54.9 million above the budget request) for advanced submarine systems development. The act authorized the Secretary of Navy to pursue to third LSV demonstrator that would not be limited by form or single hull design and to issue a competitive solicitation for such a demonstrator.

    What progress is being made in the development of large scale vehicles and their use in the NSSN program? What are the Navy's intentions with respect to the third large scale demonstrator that was authorized in the fiscal year 1998 Defense Authorization Act?

    Secretary DOUGLASS. The Navy's plans for LSV development to support inserting new technologies in NSSN and existing submarines to enhance combat capability or affordability include:

    (1) Developing a second large scale vehicle, LSV 2 (CUTTHROAT), that includes fiscal year 1998 plans to enhance the original design.

    (2) Modifying LSV 1 (KOKANEE) to improve the accuracy of the model with respect to SEAWOLF; and

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    (3) Upgrading LSV support systems.

    Currently, the LSV 2 project is progressing toward a Concept Design Review in May, 1998, with Navy acceptance of the vehicle planned for the first quarter of fiscal year 2001.

    The Navy has carefully considered the option of pursuing a third large scale demonstrator, along with other system options, and has determined that the two autonomous large scale vehicles (LSV 1 and LSV 2) will provide the most affordable approach to support rapid prototyping of submarine technology developments. The current planned system provides an affordable and technically sound approach. The approach outlined above is consistent with the technology goals outlined in the fiscal year 1998 Defense Authorization Conference Report 105–340.

    Mr. WELDON. How long do you think it will take for us to replace all those old OBAs with the new self contained breaking apparatus into place?

    Secretary DOUGLASS. The SCBA outfitting strategy replaces existing OBAs on ships with the longest remaining service life first. A production line has been established and an integrated outfitting priority plan across all warfare sponsors has been developed. All new construction ships will be equipped with SCBAs. Although a full production line would support 30 ship outfits per year, we must factor in ship availabilities and funding constraints. Additionally, the return on investment, ship service life and current OBA supply do not support a total Navy upgrade. For this reason, we estimate support of OBAs in the Navy through the year 2010.
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DD–21 ACQUISITION STRATEGY

    Mr. WELDON. The Navy's next generation of surface combatants, the DD–21 program, is just entering Phase I, Program Definition and Risk Reduction. The Navy plans to let the contract for the lead ship advance design in fiscal year 2003, and for the lead ship to join the fleet in 2009. The class would be composed of 32 ships intended to replace an aging fleet of SPRUANCE-class destroyers and PERRY-class frigates. The Arsenal Ship (renamed to the Maritime Fire Support Demonstrator) was to have been a test bed for DD–21 technology, but was terminated by the Department for insufficient funding in October 1997. Recently, Bath Iron Works, Ingalls Shipbuilding Company, and Lockheed Martin have entered a teaming arrangement to compete as one entity for the program. Raytheon objected to this arrangement and filed a protest with the Justice Department. The Navy released a Request for Proposal that would prevent exclusive teaming arrangements, in order to allow a company to enter into multiple teaming arrangements. For example, Bath could set up another business unit to form a team with other shipbuilders and system integrators, as long as the new business unit does not share information with the unit teamed up with Ingalls and Lockheed. The revised Request for Proposal also embraces a ''Section 845/804'' acquisition strategy. This refers to Section 845 of the FY 1994 Defense Authorization Act and means that contractors will not be subject to the full Defense Department acquisition regulatory system. Section 804 refers to legislation in the FY97 Authorization Act that extended authority in Section 845 to the military services. Acquisition rules are thus simplified and more flexible, but also means reduced government oversight of contractors.

    What is the operational requirement for the DD–21 and what is the Navy's program for meeting that operational requirement?
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    Secretary DOUGLASS. The operational requirements for DD–21 are detailed in the DD–21 Operational Requirements Document (ORD), validated and approved by the Joint Requirements Oversight Council (JROC) on November 3, 1997. The ORD is supported by the SC–21 Mission Need Statement (validated by JROC on June 2, 1994) and is analytically grounded by the SC–21 Cost and Operational Effectiveness Analysis (COEA), completed in July 1997.

    DD–21 is required to provide an advanced level of land attack in support of the ground campaign and to contribute to Naval, Joint and Combined battlespace dominance in littoral operations. The DD–21 requirement also addresses maritime dominance capabilities lost with the retirement of SPRUANCE-class destroyers and PERRY-class frigates, and provides the land attack capabilities needed to support Joint forces ashore.

    These operational requirements will be met by a sound DD–21 acquisition strategy that fosters competition and innovation. The lead ship award is scheduled for fiscal year 2004 and the Navy plans to procure a total of 32 ships to satisfy the operational requirement. DD–21 initial operationing capability is scheduled for fiscal year 2009.

    Mr. WELDON. How much government funding was spent on the MFSD program, and what was the return on this investment?

    Secretary DOUGLASS. From the program's inception in fiscal year 1996 through its termination in fiscal year 1998, the Navy spent a total of $43,975,000 and DARPA spent a total of $19,577,000 for a total of $63,552,000. An additional $1,500,000 was spent to allow the Navy to transfer all of the MFSD contract deliverables and key personnel supporting the MFSD program to the DD–21 Program Office.
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    The Arsenal Ship/MFSD program provided an excellent return for the investment. It successfully demonstrated that industry, involved early in the ship design process, could develop an optimum mix of performance capabilities that could be accommodated within affordability constraints. MFSD also successfully demonstrated the soundness of teaming combat system integrators with shipyards, producing innovative concepts in reduced manning, automated damage control, topside integration, and modular design. This investment has and will continue to facilitates DD–21 development, and will pay significant dividends in other joint warfighting arenas.

    Mr. WELDON. Without the Maritime Fire Support Demonstrator, how will the Navy test technologies for the DD–21? What other effects does the termination of MFSD have on the DD–21 program?

    Admiral LAUTENBACHER. The Navy will use a combination of land and sea-based environments to test technologies for DD–21. The Navy will conduct sea-based testing using decommissioned ships or fleet assets when it is prudent (i.e. SmartShip, Ex-Shadwell, Ex-Decatur, USS RADFORD, or other fleet assets, as appropriate). The DD–21 Full Service Contractors (FSC) will be required to develop a Smart Product Model (SPM) which is a digital version of the ship system, consisting of product model data and performance and behavior characteristics of the ship. Data within the SPM will be of sufficient detail to support modeling and simulation verification of ship system performance with respect to operational requirements. In addition, the DD–21 FSC will conduct component and system level testing at a land-based engineering facility. The most significant effect of the termination of MFSD on the DD–21 Program is the added risk from the fact that there is no dedicated platform to test selected technologies for DD–21. In order to mitigate that risk the Navy added approximately $110 million in the Future Years Defense Program (FYDP) for additional DD–21 land and sea-based testing efforts. In addition, the DD–21 program has incorporated lessons learned and technical expertise from MFSD Program to minimize any impact to DD–21.
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    Mr. WELDON. Please describe the new draft RFP on the DD–21 program.

    Secretary DOUGLASS. The final Request for Proposal (RFP) for Phase I of the DD–21 System Program was released March 24, 1998. Industry proposals are expected by May 22, 1998. This solicitation is expected to result in the award of Section 845/804 Agreements with up to three successful Offerors to produce a System Design Concept for the Land Attack Destroyer. The Agreements are based on ''Other Transaction'' (for prototypes) authority, provided by Section 845 of the National Defense Authorization Act for FY 1994 (P.L. 103–160), as amended by Section 804 of the National Defense Authorization Act for FY 1997 (P.L. 104–201). Up to two Phase I successful offerors will be selected to advance into Phase II to produce a Preliminary Design. The prototype being produced is the initial version of the Smart Product Model (SPM). The SPM is a digital version of the ship system, to model performance and behavior characteristics of the ship.

    The Phase I RFP provides the Government's overall DD–21 objectives and Operational Requirements, as well as specific objectives for the twelve month period of performance for Phase I. The Agreements will be at a firm fixed price of $9M each. The Offerors are encouraged to be innovative, both technically in developing a Design Concept and in establishing business and teaming arrangements. To maximize innovation in teaming, without interfering with industry teaming desires, the Government has precluded shipbuilders and integrators from entering into exclusive teaming arrangements.

    Mr. WELDON. Even if some portion of Bath or Ingalls were to try to create a new business unit to compete, it still seems hard to see how any other shipyard or integrator could think it can win DD–21 without being on the same team as either Bath or Ingalls. If Lockheed were to match any deal by any other systems integrator, why would Bath or Ingalls have an incentive to ''break ranks'' and make a deal with Raytheon or some other systems integrator?
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    Admiral LAUTENBACHER. The Navy believes there are more than two shipbuilders capable of building future surface combatants and effective competition will be realized regardless of whether or not Bath or Ingalls ''break ranks''. The Navy has stressed the need for innovation. Innovation is a must to meet the stringent operational requirements for DD–21. There are several potential offerors with system integrator capabilities that are showing signs of being very innovative. The incentive for a Bath or Ingalls to ''break ranks'' or join multiple teams is to increase their probability of being a part of the ultimate successful offeror.

    Mr. WELDON. The committee has strongly supported research and development of clothing and equipment such as improved boots, thermal underwear and other garments. These programs have also reportedly developed improved equipment such as lightweight body armor, safe tent heaters that run on standard heavy fuels rather than gasoline, and similar burners for cooking. I understand that these items are not yet completely provided for even our deployed Marines. Do we need to provide additional R&D or procurement funding to completely replace World War II and Korean vintage equipment? If so, how much?

    General OSTER. The Initial Issue Program items provide Marines in the field with the clothing and equipment they need to survive and sustain themselves during combat operations. Improving this equipment also ensures that Marines will maintain a competitive advantage over the enemy by being more comfortable, rested, nourished, and ready to fight. Initial Issue Program items are as essential to the mission as high technology weaponry and aircraft and make the individual Marine a more lethal foe. Additional O&M funding will accelerate the procurement of better equipment for our Marines. Up to an additional $25 million for the active forces and $10 million for the Reserve forces could be used in FY 1999.

Table 4


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    Mr. WELDON. The FY99 budget request includes $149.5M for research and development for a future aircraft carrier and $40.6M for feasibility studies for CVX, the next generation aircraft carrier. The request also includes $38.5M for CVN–77 contract design. The request represents a significant increase from the FY98 budget request for CVX ($90.2M) and the amount ultimately provided by Congress ($12.2M). The conference report that accompanied the FY98 Defense Authorization Act placed priority on the CVN–77 and provided $34.9M in RDTE for that program (an increase of $17M). The report encouraged the Chief of Naval Operations to define the operational requirement for the CVX program and to develop a road map for a future aircraft carrier RDTE program that would ensure the capability of the CVX to meet that requirement. The Navy has stated that CVN–77 will provide a transition from the Nimitz-class nuclear aircraft carrier to the next-generation CVX. (NOTE: Committee staff has been briefed on aircraft carrier advanced technology requirements and the FY99 program for CV(X) and CVN–77. The definition of the CVX RDTE program is significantly improved over what was provided at this time last year.)

    What has been done to define the operational requirement for the CVX and to develop a road map for a future aircraft carrier research and development program that will ensure the capability of the CVX to meet that requirement?

    Admiral LAUTENBACHER. Over the past year, the Navy has conducted fleet team seminars with joint military representation to document warfighter operational needs. In addition, Navy activities and six industry teams were tasked to conduct engineering and requirements studies. Based on this ongoing work, the Navy plans to issue top-level requirements and CVX by the end of this fiscal year. Additional studies will be tasked next fiscal year leading to a refinement of the initial requirements document into the Operational Requirements Document for program Milestone One.
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    The CVX Analysis of Alternatives (AOA) is proceeding concurrently with, and provides inputs to, the requirements definition process. The first part of the three phase CVX AOA process was completed last year and determined the size of the embarked airwing. The second phase of the CVX AOA will complete this year with recommendations on ship characteristics related to survivability, ship size, and a determination on propulsion type.

    Based on the fleet's input, results of studies, and input from the AOA, the CVX program has identified seven major technology areas shown below:

          Aircraft Launch, Recovery & Support

          Combat & Intelligence Systems

          Propulsion & Power Generation

          Hull, Mechanical, Electrical & Auxiliary

          Manpower & Material Support

          Battle Damage Prevention & Recovery

          Design Tools & Processes

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    The R&D projects within these major areas address cost avoidance over the ship's life cycle as well as its operational capabilities. The R&D program is totally integrated with the R&D planning for CVN–77 to ensure a clear transition path from CVN–77 to CVX.

    Mr. WELDON. What research and development and other initiatives are being considered for CVN–77 that will facilitate the transition to CVX? What justifies the large increase in the fiscal year 1999 budget request for CVX-related research and development and why should that increase be provided in fiscal year 1999?

    Secretary DOUGLASS. The major thrust of both the CVN–77 and CVX design effort is to reduce the total ownership costs of aircraft carriers. The Navy is examining major life cycle cost drivers to identify the specific development efforts which will return the greatest cost reductions over the ships life. CVN–77 design work is targeting those areas which will reduce costs or improve performance while still meeting the planned construction schedule. Design improvements on CVN–77 will establish baseline design for CVX. For example:

    For CVN–77, the Navy is redesigning the island using an Integrated Product/Process Development effort (IPPD). This pilot project in carrier design will begin the process of integrating all aspects of the ship's life cycle (operations, maintenance, and construction) to help mitigate the risk of designing CVX.

    The CVN–77 topside design effort is evaluating multi-function RF apertures to reduce topside clutter, reduce operating and support cost and improve performance for the 21st Century warfighting environment. CVN–77 will also incorporate many technological and design improvements for hull, mechanical and electrical systems that will reduce life cycle costs for CVN–77, and serve as a starting point for CV(X).
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    With regard to the fiscal year 1999 request for CVX research and development, it is critical to initiate key technology programs that have major ship configuration and design impacts in fiscal year 1999 to provide sufficient opportunity to reduce risk before critical design decisions are made.

    Key areas of focus are:

PROPULSION AND POWER GENERATION

    Due to its location in the construction sequence, the propulsion plant (whether nuclear or non-nuclear) is one of the longest lead systems for the carrier. Additionally, the plant is a large life cycle cost driver. R&D funding is required to develop and explore technologies for the propulsion and power generation systems of the future class of aircraft carriers. The NIMITZ Class propulsion plant is proven, but the design is over 30 years old, and there have been many advances in propulsion technology since the 1960's. This technology will be incorporated to provide enhanced performance as well as to significantly reduce life cycle costs.

HULL, MECHANICAL, ELECTRICAL AND AUXILIARY

    Current aircraft carriers suffer from labor intensive corrosion control requirements and are limited by mission critical auxiliary systems that experience extremely high failure and repair rates. Development of lightweight primary and secondary structural components is essential for both improving maintenance as well as providing greater operability in high seas. New technologies in corrosion control will reduce manpower requirements and the need for costly maintenance. Advanced auxiliary machinery will provide an integrated fluid and controls architecture that will give the war fighter improved reliability, maintainability and flexibility.
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MANPOWER AND MATERIAL SUPPORT

    Logistics systems, processes and equipment have remained relatively unchanged for decades. Many systems and processes are inefficient, labor intensive and drive excessive manpower and material costs. Critical logistic support functions aboard carriers, such as aviation weapons information management, stores loading, inventory management and material handling equipment are increasingly less productive and costly. CVX provides the opportunity to capitalize on current technologies, processes, equipment and systems to produce a lean ship logistics structure, which better supports the war fighter.

BATTLE DAMAGE PREVENTION AND RECOVERY

    To develop required CVX survivability characteristics against projected anti-shipping threats in 2015 and to achieve reduced operating and manning costs, several areas must be explored. New magazine protection technology must be applied. Development of new protection philosophies and technologies for protection against proximity and contact underwater delivered threats must be undertaken. Streamlined damage control communications and integrated new technologies for automation, sensors, and equipment for damage control/fire fighting/chemical, biological and radiological defense must be achieved.

DESIGN TOOLS AND PROCESSES

    The two major areas of development in this area are Advanced Carrier Production & Modernization Technology (ACPMT) and Advanced Carrier Design, Modeling and Simulation Technology. ACPMT will develop systems and components, which can efficiently be integrated into a ship during production and changed out with least cost during the life of the ship. Advanced carrier design, modeling and simulation technology will serve as the CVX program's primary decision support tool. Virtual prototyping will enable the ''just in time'' introduction of new technologies to minimize obsolescence at delivery. These initiatives are at the core of life cycle and construction cost reductions.
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AIRCRAFT LAUNCH, RECOVERY AND SUPPORT

    To reduce the Total Life Cycle Cost it is essential to invest in flight deck and flight deck support techologies. Over 25 percent of an aircraft carrier's manning supports flight deck operations. This is a critical area to reduce TOC. Additionally, the development of aircraft launch and recovery equipment that will be capable of meeting the future demands of more powerful and faster aircraft, as well as UAV's and UCAV's, is essential.

COMBAT AND INTELLIGENCE SYSTEMS

    Current aircraft carriers have over 140 antennas/apertures. The present configuration is unable to meet simultaneous mission capability requirements due to electromagnetic interference and blockage. Due to obsolescence and rising maintenance costs, new antenna technology is required. Additionally, current shipboard information systems are largely self-contained, end-to-end systems. These systems lack compatibility and are expensive to maintain. This funding will provide development of ship systems with open architectures that could apply across CVN's and other classes, providing reduced cost and facilitating future insertion of up to date technology.

NAVAL SURFACE FIRE SUPPORT

    Mr. WELDON. For FY98 Congress provided a total of $60.8M for development of Land Attack Technology (the Navy's Surface Fire Support program), an increase of $23M to the budget request. The increase included $10M for development concept definition and risk reduction of a naval version of the Army's Tactical Missile System (NTACMS) an $3M to pursue a flight demonstration program for a land attack version of the Standard Missile (LASM). The FY99 President's Budget request is $110.1M, and increase of $57.1M above the FY99 estimate provided with the FY98 request. The request includes $25.2M to initiate a new start for a vertical gun system for advanced ship (VGAS), which is envisioned as an advanced 155mm land attack gun system for the DD–21, next-generation destroyer.
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    Previous analysis provided to Congress on Naval Surface Fire Support has indicated that the requirement could best be met by a combination of guns and missiles and that the most cost effective near-term weapons mix is a combination of advanced projectiles compatible with the Navy's existing 5/54 gun and ship launched variant of the Army Tactical Missile System. The Navy's 1995 cost and operational effectiveness analysis indicates that an advanced 155mm gun employing a family of rocket assisted precision guided munitions would be the most cost effective gun alternative. What further analysis has led the Navy to conclude that the VGAS concept is the best solution to its long term requirements?

    Admiral LAUTENBACHER. Additional analysis supporting the VGAS concept was conducted as part of the SC–21 Cost and Operational Effectiveness Analysis (COEA). The SC–21 COEA validated VGAS' significant contribution to fire support in two separate Major Theater War scenarios. Additionally, the DD–21 Operational Requirements Document (ORD) requirements for an advanced 155mm gun system support the VGAS design. For example, a twin barrel 155mm, flush deck, fully automated, modular gun system meets the ORD's stringent reduced manning, radar signature and maintenance requirements, as well as providing the range, lethality and volume of fire required by both the ORD and the Marine Corps.

    Mr. WELDON. Reports in the media have indicated a range of views within the Navy on the best missile solution for naval surface fire support: NTACMS, Land Attack Standard Missile, and a high speed version of Tomahawk have been indicated as possible candidates. What is the current Navy position with regard to meeting the missile requirement for naval surface fire support.

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    Admiral LAUTENBACHER. To support Operational Maneuver From the Sea (OMFTS), the Marine Corps requires responsive, lethal, and accurate Naval Surface Fires out to 200 NM. To meet this requirement, the Navy is considering two supersonic land attack missile alternatives: a marinized version of the Army's ATACMS missile (NTACMS) and a Land Attack variant of the Navy's Standard Missile (LASM).

    NTACMS flight demos and lethality analysis are complete and LASM flight demos and lethality analysis are underway in fiscal year 1998. Initial LASM demonstrations in fiscal year 1998 yielded valuable preliminary data to assist in determining the best supersonic land attack missile candidate. To further assist in the analysis of the two missile systems, the Surface Warfare Directorate directed Johns Hopkins University/Applied Physics Lab (JHU/APL) to conduct a land attack missile assessment. An interim report was completed in January 1998 and reviewed by a panel of retired Flag and General officers to determine whether the analysis provided sufficient foundation for selecting between alternative missile systems. The panel found the information in the missile assessment to be thorough and sufficient for determining a land attack missile development strategy. The Navy will decide on a supersonic land attack missile as part of the fiscal year 2000 budget development process.

NAVY SCIENCE AND TECHNOLOGY

    Mr. WELDON. The Navy's fiscal year 1999 budget request for science and technology totals $1.3B and is essentially flat from that provided for fiscal year 1998. The 7 percent increase in basic research (6.1) and exploratory development (6.2) is more than off set by an almost 10 percent reduction in advanced development (6.3) and creates some concern relative to our ability to field advanced technology system capabilities that would overmatch those of a peer competitor which intelligence sources predict could emerge 10 to 15 years from now. The 1997 report by the Naval Studies Board of the National Academy of Sciences cited the need for a focused, integrated, and sustained research and development program with clearly defined goals and schedule, industry-government collaboration, and stable funding, as fundamental to the future success of U.S. naval forces.
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    What is the role of the commercial sector in the development of science and technology and what use is being made by the Navy of basic research and exploratory development in the private sector?

    Secretary DOUGLASS. The commercial sector is very important to the Navy R&D strategy. Since 1980, the commercial sector has spent more money on R&D than the Federal government. Even though this expenditure is usually specific to commercial product development, the commercial sector, both nationally and internationally, is a significant contributor to the advancement of science and technology within the Navy generally and in specific technology niches.

    For example, the Navy does not do generic research or technology development in computer science, robotics, communications, or biotechnology because our contributions would be minuscule compared to the commercial market investment, and more importantly, to commercial progress. The Navy benefits from the continuing commercial progress in these and many other areas just as other consumers do and focuses its research and development resources for specific naval needs. Torpedo propulsion is an excellent example. No commercial enterprise expends money to produce a compact, reliable, and safe power plant that produces over 500 horsepower for 45 seconds and then is discarded. A principal function of Navy research program officers is to remain abreast and apply the latest commercial advances in fields of interest to the Navy such as semiconductor materials and processes, electronics, advanced structural materials, industrial processes, algorithm research, oceanography and many others. An example of the application of commercial products directly to Navy needs is the adoption of the Windows operating system for portions of F/A–18 aircraft software.
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    Another way the Navy utilizes and integrates commercial sector development with Navy needs is found in the 11 Manufacturing Technology Centers of Excellence which bring industry and university partners to a central location to work leading edge technology issues related to Navy needs, joining, welding, acquisition practice, electronics, electro-optics, and others.

    Also, the Navy works in industry-university consortia on specific technical areas where there is benefit to be gained by all parties. Navy participation in the Integrated High Performance Turbine Engine Technology Program with the Air Force, many commercial partners and others is a good example. The Power Electronic Building Block Program to provide high speed, high power switching and universal solid state power conversion for ships and local electric utilities is another.

CHEMICAL-BIOLOGICAL DEFENSE PROGRAM

    Mr. WELDON. In response to Congressional direction in the FY94 Defense Authorization Act, the DOD implemented an improved management structure for the Nuclear, Biological, and Chemical (NBC) Defense program. The Secretary of Defense designated the Assistant to the Secretary of Defense for Nuclear and Chemical and Biological Defense Programs, ATSD (NBC), as the focal point for NBC defense within the Office of the Secretary of Defense and appointed the Secretary of the Army as the Executive Agent for DOD to coordinate and integrate research, development, test, evaluation, acquisition, and military construction requirements of the military departments for the NBC defense program. A joint Service Agreement for the Joint NBC Defense Management was implemented in 1994 and a program management plan established in 1996. The Secretary of the Army accomplishes Executive Agent responsibilities from the Joint NBC Defense Board and two subordinate supporting joint groups, the Joint Service Integration Group and the Joint Service Materiel Group.
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    The Defense Reform Initiative recommends a number of changes in the organization of the Office of the Secretary of Defense. Among these are assignment to the Director, Defense Research and Engineering of those ''corporate level policy functions'' that are currently assigned to the ATSD (NBC). Program management functions currently exercised by the ATSD (NBC) would be assigned to a new Defense Treaty Compliance and Threat Reduction Agency, which would be formed by combining the Defense Special Weapons Agency, Defense Technology Security Agency, and On-site Inspection Agency.

    What are the Navy's and the Marine Corps' views on the Chemical-Biological Defense Program? Is the program meeting the needs of the Navy and the Marine Corps? How effective have the Joint NBC Defense Group and its supporting Joint Service Integration Group and Joint Service Materiel Group been in coordinating and integrating Service chemical-biological defense requirements and development programs?

    Admiral LAUTENBACHER. The current system works well and Navy appears to benefit from it. An effective NBC defense must be diverse and multi-layered. One single Service cannot fill the NBC defense needs of the CINCs. The Navy has benefited from DOD defraying costs of procuring technically complex systems that are procured in limited quantities due to unique Navy missions. Similar benefits should accrue in the future.

    Mr. WELDON. What are the Navy's and the Marine Corps' views on the Chemical-Biological Defense Program? Is the program meeting the needs of the Navy and the Marine Corps? How effective have the Joint NBC Defense Group and its supporting Joint Service Integration Group and Joint Service Material Group been in coordinating and integrating service chemical-biological defense requirements and development program?
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    General OSTER. The Marine Corps has benefited from the joint chemical and biological process established several years ago. The Joint Service Integration Group (JSIG) is melding individual service requirements and many joint operational requirements documents have been produced since 1996. The Joint Service Material Group (JSMG) has consolidated numerous individual service programs into joint service programs with an approximately 50% reduction in the total number of programs. underway. The Joint Nuclear Biological Chemical Defense (JNBCD) Board has coordinated the efforts of the two subordinate boards. The joint process has achieved significant headway and chemical/biological defense equipment will be fielded to Marine Corps units. This joint process should remain intact through the current Future Years Defense Program and undergo reevaluation for continuance at the end of that time.

    Mr. WELDON. What are your views on the proposed assignment to the new Defense Treaty Compliance and Threat Reduction Agency of the program management functions for the NBC Defense program that are currently assigned to the ATSD (NBC)? Should these management functions be assigned, instead, to one of the military services?

    Admiral LAUTENBACHER. Because NBC defense cuts across Service lines, its management belongs at the DOD level. My concern is that in an organization as large and diverse as the Defense Treaty Compliance and Threat Reduction Agency, NBC defense will lost out in competition with other missions.

    Mr. WELDON. Admiral Lautenbacher and General Oster: What are your views on the proposed assignment to the new Defense Treaty Compliance and Threat Reduction Agency of the program management function for the NBC Defense programs that are currently assigned to the ATSD (NBC)? Should these management functions be assigned, instead, to one of the military services?
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    General OSTER. The Marine Corps supports the formation of the Defense Treaty Compliance and Threat Reduction Agency and believes the program management function currently assigned to ATSD (NBC) should be assigned to the new OSD agency. The NBC Defense Program reaches broadly across the services and is multi-faceted, including for example the Naval Medical Research Institute developing personal bio-assays for Joint Service use; the Improved Toxicological Agent Protective System, an integrated mask and suit being developed for joint use under Army cognizance; and the Chemical-Biological Incident Response Force (CBIRF) under the Marine Corps. The Joint Service structure currently established for overall program management of NBC defense, with oversight and budget control provided by ATSD (NBC), works well. The structure includes a tiered system of Joint Service management under the Joint NBC Defense Board, which in turns provides oversight to the Joint Service Integration Group and the Joint Service Material Group. The Marine Corps' NBC defense program has benefited significantly under this framework. Keeping the program management functions at the OSD level will ensure the joint perspective is maintained and continued overarching direction and guidance is provided.

    Mr. WELDON. Hunter Warrior, the first of three Advanced Warfighting Exercises (AWE) of Sea Dragon, tested and evaluated concepts and equipment in a littoral and desert scenario.

    What were the lessons learned from this AWE?

    General OSTER. Hunter Warrior was a watershed event for the Marine Corps with potentially the same impact on the future Corps as the Culebra experiments, conducted during the 1920's, had on the development of amphibious capabilities that were used so effectively in the Pacific Theater during World War II. Simplistically, it was a return to the idea of concept-based experimentation that has been a past hallmark of our Corps. On a large scale, it gave us an indication that our future concepts for sea-based operations—such as Ship-to-Objective Maneuver, Advanced Expeditionary Fire Support, and MPS–2010—do result in a significantly increased naval capability for joint warfighters. More specifically, we learned three lessons. First, we can, in some circumstances, dominate large coastal areas with modest naval forces. Second, we can employ successfully dispersed elements of a seabased Marine Air-Ground Task Force ashore as a part of a naval task force and create circumstances that can result in the defeat of larger, heavier ground forces. And third, with relatively small improvements in technology and major changes in training of our small unit leaders we can improve significantly the effectiveness of our infantryman. On this last point, Hunter Warrior reaffirmed that we must continue to focus on ''equipping the Marine,'' and not ''manning the equipment.''
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    Mr. WELDON. What new capabilities and equipment will be integrated into the Marine Air Ground Task Force as a result of this AWE?

    General OSTER. None of the specific technologies or equipment introduced for experimentation in Hunter Warrior are currently scheduled for immediate acquisition. In most cases, the technologies/equipment were surrogates rather than items in pre-acquisition. However, in the Marine Corps Warfighting Lab's report on exploiting the results of Hunter Warrior, the Lab recommended a close review of the following items: (1) Reconnaissance variant of the LAV–25 currently in production for use by the Canadian Army, (2) Solar communications battery charger, (3) Skyhook '98, (4) Guided Parafoil Air Delivery System—Light (GPADS–L), (5) Remote Fuel Monitoring System, and (6) the Tactical Training Tool. Each has been evaluated by our Combat Development System. More significantly, several equipment/technology items from Hunter Warrior have been continued within the Lab for further experiment during Urban Warrior, to include the Dragon Drone Tactical UAV Testbed and Dragon Fire autonomous 120mm mortar.

    Mr. WELDON. What is the cost of these new technologies and are they adequately funded in the FYDP?

    General OSTER. None of these initiatives is funded within the FYDP.

    Mr. WELDON. To what extent has the Marine Corps and the Army been sharing their lessons learned with each other from their AWEs.
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    General OSTER. The Marine Corps and the Army encourage observers from the other service to attend our respective AWEs. During Hunter Warrior, an Army Colonel from TRADOC even actively participated in the Experiment Control Center at MCAGCC–29 Palms and had total visibility of the entire experiment. In addition, Army officers were present during the after experiment review with the Officer Conducting the Experiment and an participated in the initial ''hot washup'' experiment assessment. Likewise, Marine Officers attended the TFXXI AWE and immediate after experiment review.

    Mr. WELDON. Are both services' information infrastructures and networks being individually developed under separate initiatives capable of seamless connectivity for joint operations and warfare?

    General OSTER. Both services are examining different approaches to information infrastructures and networks at the tactical level. During experimentation these systems are not inherently seamless in their interoperability. For example, during Urban Warrior the Marine Corps in exploring the potential tactical applications of commercial off-the-shelf cellular technologies for communications at the battalion and below. However, both services are cognizant of the requirement to build information and network approaches that are system compliant and capable of incorporation into joint architectures.

    Mr. WELDON. If not, why?

    General OSTER. Both services are conducting experimentation based on their unique Title X requirements and views on future technology solutions. Experimentation is concept-based rather than focused directly on pre-acquisition technologies.
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    Mr. WELDON. When will they be?

    General OSTER. The services will ensure their future information infrastructures and networks are seamlessly interoperable at the levels of joint interface as a necessary characteristic during acquisition and systems design for future fielding as a result of proof of concept during experimentation.

    Mr. WELDON. Mr. Secretary, so how do we then deal with the taxes that you're paying on these programs? What's the solution?

    Secretary DOUGLASS. I propose the following approach by Congress to reduce the adverse impact to our acquisition programs from various taxes. This approach would satisfy any final balancing by an ''undistributed,'' not pro rata, reduction.

    Ideally, offsets required to fund Congressional program increases or to balance to spending controls should be made by Congress at the program level. However, if this is not achievable, the remaining reduction should not be applied as a legally directed pro rata ''tax'' against every program. Rather it should be identified as a true ''undistributed'' reduction at the appropriation level, that may be assigned by the Department to appropriate programs. To ensure Congressionally directed programs also are treated fairly, I propose that a legislative provision be adopted that would limit the amount of any undistributed reduction for Congressionally directed programs to no more than a pro rata share, the pro rata percentage being the percentage that the undistributed reduction is of the appropriation.

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    Under my proposal, our highest priority national defense programs can be protected from the unintended adverse consequences of ''taxes'' and Congressionally directed programs would be protected.

    Historically, our largest tax to RDT&E programs is for Small Business Innovation Research (SBIR)/Small Business Technology Transfer (STTR) programs. The SBIR/STTR tax has increased significantly since its inception, from 0.2% in fiscal year 1983 to a combined 2.65% today, an increase of over 13 fold. Current SBIR/STTR legislation sets the tax rate for RDT&E appropriations at 2.5% for SBIR and .15% for STTR. These taxes are assessed at the appropriation level based on the total extramural of ''contracted'' portion of the appropriation. Since our acquisition programs comprise the largest portion of the RDT&E extramural program, the bulk of the SBIR/STTR tax is assessed to those programs. The impact of the SBIR/STTR tax on the execution of major acquisition programs has been significant. This problem has been exacerbated by the size of the tax and the fact that the programs were not allowed to openly budget funds to cover the tax. The impact on imposing the tax was loss of planned program. While I would support a change in SBIR/STTR legislation which might lessen the tax and the burden on our acquisition programs, I am a realist on the possibility of Congress passing such a change. Therefore, I am instituting a policy which hopefully will assist program managers in minimizing the impact of SBIR/STTR tax while providing the Department a more effective use of the SBIR/STTR resource.

    This new policy requires a minimum of 50 percent of all SBIR resources channeled into initiatives leading to Total Ownership Cost reductions. Each program manager is to include SBIR as part of their ongoing program planning and present their SBIR plan during milestone reviews. In the end, I want the SBIR/STTR programs not to be a tax, but a resource that we can use wisely.
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QUESTIONS SUBMITTED BY MR. KENNEDY

NAVY'S MINE WARFARE PLAN

    Mr. KENNEDY. What are the reasons for the changes in the mine warfare plan and the new focus on ''organic'' MCM capabilities that would be an integral part of submarine and ship combat systems?

    Admiral LAUTENBACHER. The changes in the Mine warfare Plan reflect our development of an organic capability for Joint Task Forces to carry out all phases of mine countermeasures in a timely fashion. This initiative will be fully integrated into the fleet in the 2006-2010 time frame. By putting organic sensors and systems into our surface ships and submarines, ''first to arrive'' forces will be able to operate in the littorals while scouting the waters for mines.

    Mr. KENNEDY. What has been done for upgraded interim Mine Countermeasures (MCM) capabilities for the fleet until the new ''organic'' capabilities are fielded?

    Admiral LAUTENBACHER. The Navy's top mine warfare priority is to maintain readiness and sustainability of the current mine warfare forces. The Navy will resource a modern dedicated MCM force, while pursuing the introduction of an organic capability to the fleet. A conscious effort is ongoing to ensure that current mine warfare capabilities are not degraded while pursuing programs to field organic MCM systems. Innovative operating methodologies for mine countermeasures assets have been implemented to include: foreign homeporting (MCMs in Japan), rotational crew supported permanent forward deploying (MCMs in Arabian Gulf), and rapid deployment contingency response capabilities (MH–53E and Explosive Ordnance Disposal Detachment 72 hour rapid response capabilities).
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MINE COUNTERMEASURES (MCM)

    Mr. KENNEDY. Secretary Douglass: Media reports in November 1997 indicate that the Secretary of Defense expressed some concern about proposed reductions in the program to the Secretary of the Navy. What were Secretary Cohen's concerns and what was done to accommodate them?

    Secretary DOUGLASS. Secretary Cohen was concerned with initial drafts of Navy's budget that included a proposal to terminate the advanced towed sonar program (AN/AQS–20) for airborne mine countermeasures as well as reductions in procurement funding when compared to previous Mine Warfare Plans. The AQS–20 termination rationale was based on a history of schedule slips and cost growth, the revision of requirements to include an identification capability and an initial analysis of potential incompatibility of the AQS–20 with the future ''organic'' airborne mine countermeasure H–60 helicopter.

    In response to Secretary Cohen's concerns, Navy reviewed the Mine Warfare Plan and dedicated additional funding to enhance the readiness and maintainability of systems currently employed in MCM. Additionally, Navy decided to evolve the AQS–20/X (advanced mine hunting) sonar from the AQS–20 program. The AQS–20 program will proceed through operational evaluation and then transition the AQS–20 EDMs to meet the AQS–X requirements.

NAVY'S MINE WARFARE PLAN CERTIFICATION

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    Mr. KENNEDY. The National Defense Authorization Act for FY92 and 93 required annual certification by the SecDef that the Navy has an updated and funded MCM master plan and that the Chairman of the JCS has determined that the plan and its supporting budget are sufficient in terms of military requirements. The requirement expired at the end of fiscal year 1997.

    In your view, has the requirement for annual certification of the adequacy of the plan been useful in ensuring the adequacy of the plan?

    Admiral LAUTENBACHER. In the five years that the requirement in Public Law 102–190 has been in effect, annual recertification has been a useful tool in focusing the Navy's planning and resourcing for mine warfare into a consistent and comprehensive campaign plan. Annual certification has provided continuity in managing scarce fiscal resources and ever-increasing operational requirements while highlighting mine warfare as a key warfighting area.

    Mr. KENNEDY. Should the Congress consider extending the requirement?

    Admiral LAUTENBACHER. No. The annual recertification is no longer required. Mine warfare has clearly become institutionalized as a top Navy priority, particularly with our operational focus toward the littorals and expeditionary warfare. The effort of producing an annual certification outweighs the information provided in the document. The Navy is completing research and development and beginning to field innovative systems for organic force mine warfare while maintaining our increased mine warfare capabilities in the fleet today.
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ANTI-SUBMARINE WARFARE CONCERNS

    Mr. KENNEDY. The fiscal year 1996 Defense Authorization Act directed the Secretary of Defense to assess the current and projected U.S. anti-submarine (ASW) capability in light of the continuing development of quieter nuclear submarines, the proliferation of very capable diesel submarines, the sale of sophisticated, submarine launched weapons, and the declining trend in budget resources associated with the ASW program. The Secretary's July 1996 assessment identified both short and long term improvements that are needed to cope with the evolving submarine threat in both littoral and open sea areas. But the assessment lacks extensive analysis and did not prioritize future investments within ASW nor within overall Navy requirements.

    The fiscal year 1998 Defense Authorization Act directed Secretary to address these weaknesses with estimated costs and schedule to develop and procure. Committee staff has been advised that Navy's report has been forwarded to OSD for approval.

    Secretary Douglass: When can the Congress expect to receive the OSD updated assessment of the ASW program? What are the essential findings of the assessment that can be discussed in this forum? Does the Navy's fiscal year 1999 budget support the findings? Looking into the outyears, what can be expected for fiscal years 2000–2003?

    Secretary DOUGLASS. ASW is a top priority mission and a core and enduring naval competency. The OSD 1997 ASW Assessment, forwarded to Congress on March 9, 1998, concludes that although current ASW capabilities can adequately counter any potential threats likely to develop over the next 5 years, the Navy needs to improve ASW proficiencies. As a consequence of this finding, the Department is re-focusing ASW training opportunities in the fleet. To enhance training effectiveness, the Navy is developing instrumented shallow water training ranges and experimenting with the fleetwide implementation of new training technology. These technology initiatives permit accurate reconstruction and feedback which is essential for the Navy's ''continuous improvement'' approach to training.
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    ASW modernization is balanced with the competing warfighting areas of Strike, Mine Warfare, Theater Air Missile Defense, Ship Self Defense and Nuclear Deterrence. Highest priority modernization efforts are funded as an integrated system of systems. The fiscal year 1999 President's Budget provides adequate equipment to respond to likely submarine threats to the end of the Future Years Defense Program.

    Mr. KENNEDY. Admiral Lautenbacher, given ASW is an interdisciplinary warfare approach, where does the Navy stand with the recommendation of the 1989 Aspin Panel on Submarine and Anti-Submarine Warfare to have a flag-level focal point for ASW within Navy staff? What other recommendations are included in the Secretary's assessment?

    Admiral LAUTENBACHER. In November 1996, Navy created the ASW Requirements Division, OPNAV N84. The Division Director, Captain John Morgan, a uniquely experienced senior naval officer, reports directly to me and provides a mission area focus on ASW requirements. He is one of only a handful of naval officers qualified as both a submarine and surface warfare officer with more than 26 years of ASW experience. Captain Morgan spearheaded the 1997 ASW Assessment. That assessment has been approved by the Chief of Naval Operations and Secretary Dalton, and will be forwarded to the Congress shortly.

    Since the Aspin Panel report in 1989, the world has undergone tremendous change. The intense focus on ASW, made necessary by the large, effective Soviet submarine force, shifted after the Cold War and declined in relative importance as a national defense priority. Although our warfighting priorities shifted, a core ASW program was retained. Today, proliferating technology on the world market and evolving threat scenarios clearly indicate the importance of continuing to retain ASW as a top priority core mission and an enduring naval competency.
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    The 1997 ASW Assessment concludes that our ASW forces are able to counter the likely threat over the next five years. However, it also states that the Navy needs to improve its ASW proficiencies and organization. As a result the department is refocusing ASW training opportunities in the fleets. To enhance training effectiveness, we are developing instrumented shallow water training ranges and experimenting with the fleet-wide implementation of new training technologies, such as the Interactive Mulisensor Analysis Trainer (IMAT), which is essential for accurate reconstruction and feedback.

    Mr. KENNEDY. Does the Navy have a requirement to reconfigure the four oldest trident submarines? Does the Navy anticipate funding for this program to begin in fiscal year 2000? And do you consider this proposal to be an alternative to the arsenal ship? And finally, in the absence of the program to reconfigure the four tridents, what are the Navy's plans for these four boats?

    Secretary DOUGLASS. At present, there are no plans to convert any of the TRIDENT submarines to dedicated SOF platforms. The Navy's current short term modernization plan for sustaining our submarine based SOF capability provides for upgrading five Los Angeles Class (SSN–688) submarines for DDS compatibility and a minimum of four Los Angeles Class submarines for Advanced SEAL Delivery System (ASDS) compatibility. These ships will maintain a SOF support capability from 1998 until their eventual replacement by the NSSN Class.

    SSN–23, the third of the Seawolf Class submarines, has been designed to accommodate DDS and ASDS.
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    The NSSN Class is the first submarine designed from the keel up with integrated SOF support features. In addition to DDS and ASDS compatibility, the NSSN will have an organic nine-man lockout trunk (LOT) and a reconfigurable Torpedo Room for improved SOF habitability.

RDT&E FUNDING CONGRESS

    Mr. KENNEDY. The Navy's RDT&E fiscal year 1999 budget request is $8.1 billion, an increase of 2.9 percent from fiscal year 1998. While the science and technology account saw an increase of 7 percent for basic research, I am especially concerned because advanced development saw a decrease of 10 percent (the decrease is what will impact NUWC).

    I am especially concerned with the decrease because it may negatively impact our ability to field advanced technology systems that would be superior to those of a peer competitor which, intelligence sources say, could emerge in a decade or 15 years from now.

    This also raises another related concern: Since technology advances at a very fast pace, products have the potential of becoming obsolete by the time they are produced because technology development moves faster than our current acquisition process.

    Secretary Douglas, What is the Navy planning to do to shorten the R&D cycle of concept exploration to full scale development?

    Secretary DOUGLAS. I share your concerns about both the health of the science and technology accounts as well as the need to shorten the transition time from basic research results to product development.
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    Addressing the health of Navy science and technology, I agree that Advanced Development for fiscal year 1999 reflects a decrease from the fiscal year 1998 appropriation. However, the President's fiscal year 1998 budget for this account was increased by Congress by approximately 20 percent in fiscal year 1998.

    Actually since 1986, the Navy Advanced Technology Development budget has increased at an average rate of 12 percent per year with larger increases early in the period and smaller increases more recently. In general, I believe the Advanced Development account is adequate, but I am concerned about the long term decline in the Technology Base accounts—Basic and Applied research.

    Addressing the other issue of shortening our transition times, the Navy has undertaken several initiatives aimed at shortening the R&D cycle:

    First, the Office of Naval Research (ONR) was reorganized in 1993. This reorganization functionally integrated the three phases of research (Basic, Applied and Advanced Technology Development). The explicit purpose was to move scientific advances forward to development faster and to have the real-world experiences from advanced research experiments fed back quickly to scientists to achieve complete understanding of emergent technologies.

    Second, ONR has recently entered into a Memorandum of Agreement with one of the major Naval acquisition programs to install a permanent Science and Technology Director reporting to the Program Executive Officer for the purpose of coordinating the integration of the latest, mature science and technology advances into acquisition and construction.
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    Third, the Naval Systems Commands responsible for procurement of aircraft, surface ships, submarines, and weapons systems have established liaison offices within the Office of Naval Research so that the latest, mature science and technology advances can be more easily transitioned into planning for new procurements of weapons systems and platforms.

TRIDENT SSGN

    Mr. KENNEDY. The National Defense Panel (NDP) outlined actions that should be taken to transform the nation's military forces to meet the challenges of the future. One recommendation was to ''Move toward small signature ships capable of providing sustained long-range, precision fire power.'' The Panel also stated that ''the Navy should look closely at converting one or more of the 4 Trident ballistic missile submarines coming out of strategic service to alternative missions.''

    I agree that this conversion option should be considered carefully.

    It seems to me there is great merit in converting these very capable submarines into stealthy, multi-mission platforms for surveillance, covert precision strike, and the covert insertion and recovery of Special Operations Forces. Using these ships, which are already bought and paid for seems to make sense.

    Secretary Douglass, please describe what the Navy (DOD) is doing to plan for and fund conversion of Tridents to a conventional strike/Special Ops configuration. What can we, the Committee, do to support the Navy in seizing this unique opportunity?
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    Secretary DOUGLASS. Current congressional language prohibits removal of any of the 18 Trident SSBNs from strategic service prior to START II ratification. Pending START II ratification, the four oldest Trident SSBNs are planned for removal from strategic service, two each in fiscal years 2002 and 2003.

    Right now, the Trident conversion (SSGN) concept is just that, a concept and not a program. No funds have been requested in the fiscal year 1999 budget, but the Navy continues to evaluate the concept.

    Conversion costs are currently estimated to be approximately $400M per ship (includes the refueling overhaul required for 20 additional years of service life), with a one time initial design cost of approximately $170M.

    The Navy's program of record currently has a nominal $90 million per ship ($360 million total) programmed for the fiscal year 2002 and fiscal year 2003 inactivations of these ships. These funds could be reapplied to conversions if Navy decided to go forward with a program of this nature.

RDT&E FUNDING CONCERNS

    Mr. KENNEDY. Secretary Douglass, the USS POLK and the USS KAMEHAMEHA are converted SSBNs that have been dedicated to SOF operations. I am told that the Special Operations Command greatly values its special capabilities such as its ability to carry two dry deck shelters and a large number of Special Op Forces. I also understand that the USS POLK and KAMEHAMEHA will be inactivated in 1999 and 2001, respectively.
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    Please tell me the Navy's plans to replace the unique capabilities these two ships provide to the Special Operations Command.

    Secretary DOUGLASS. The Navy's current short term modernization plan provides for upgrading five LOS ANGELES Class (SSN–688) submarines for dry deck shelters (DDS) compatibility and a minimum of four LOS ANGELES Class submarines for Advanced SEAL Delivery System (ASDS) compatibility. These ships will maintain a Special Operations Forces (SOF) support capability from 1998 until their eventual replacement by the NSSN Class.

    SSN–23, the third of the SEAWOLF Class submarines, has been designed to accommodate DDS and ASDS.

    The NSSN Class is the first submarine designed from the keel up with integrated SOF support features. In addition to DDS and ASDS compatibility, the NSSN will have an organic nine-man lockout trunk and a reconfigurable Torpedo Room for improved SOF habitability.    

QUESTIONS SUBMITTED BY MR. HANSEN

TACTICAL TOMAHAWK

    Mr. HANSEN. Does the Tactical Tomahawk as proposed have decreased range?

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    Secretary DOUGLASS. Tactical Tomahawk exceeds the current Operational Requirements Document (ORD) range requirement. When employed in the planned tactical mission profile, flying high above low level threats currently in the Tomahawk threat assessment, Tactical Tomahawk range exceeds the ORD requirement by up to 60 percent. During terrain following in the traditional mission profile, the range of the proposed Tactical Tomahawk is slightly less than the current missile, due to the incorporation of a lower-cost, turbojet engine. The turbojet engine meets the ORD requirements at all altitudes, and can operate at altitudes above the current turbofan engine.

    Mr. HANSEN. Does the Tactical Tomahawk as proposed have decreased terrain following capability?

    Secretary DOUGLASS. During terrain following in the traditional mission profile, the range of the proposed Tactical Tomahawk is slightly less than the current missile due to the incorporation of a lower-cost, turbojet engine. The turbojet engine meets the ORD requirements at all altitudes, and can operate at altitudes above the current turbofan engine.

    Mr. HANSEN. Does the Tactical Tomahawk as proposed revert to a single-guidance package?

    Secretary DOUGLASS. The Tactical Tomahawk as proposed has the same guidance package as the Block III. The guidance package consists of a coupled Global Positioning System/Inertial system with Terrain Contour Matching (TERCOM) back up and Digital Scene Matching Area Correlator (DSMAC) in the terminal area. Improvements for Tactical Tomahawk include post-DSMAC Global Positioning System (GPS) navigation which provides significantly improved accuracy in the terminal area. Unlike the Block III missile, Tactical Tomahawk with its two-way satellite communication capability has the ability to receive and execute both in-flight mission flex commands which direct the missile to a new pre-planned target and in-flight mission modification messages which direct the missile in real-time to a new target or aim point.
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    Mr. HANSEN. Does the Tactical Tomahawk as proposed retain the deep submarine launch capability?

    Secretary DOUGLASS. The submarine launch depth requirement is different for Tactical Tomahawk. The deep launch requirement for the current system was designed in response to the threats and tactics of the Cold War, nuclear environment. Current and projected threats and tactics facilitate operations at shallow communication depths. The Tactical Tomahawk periscope launch depth has CINC concurrence and will significantly reduce development and production costs. Periscope launch is today's fleet standard launch procedure.

    Mr. HANSEN. What are the Navy's plans to replenish Tomahawk Block III inventories if a significant number of missiles are launched within the next five years?

    Secretary DOUGLASS. The move to Tactical Tomahawk would result in the production line closing one year earlier than planned under the current program (i.e., fiscal year 1999 vs. fiscal year 2000). The Block III remanufacture line for Tomahawk would also close in FY99. The Tomahawk recertification line (depot maintenance) would remain in operation as previously planned. The Tactical Tomahawk production line would open in fiscal year 2002. Replacement Block III missiles can be obtained from the remanufacture of the approximately 550 Tomahawk anti-ship missiles currently in storage or the upgrade of the approximately 700 older Block II missiles to the Block III configuration.

    Mr. HANSEN. Is the current Block III under fiscal year 1998 fixed price contracting the lowest cost most capable Tomahawk ever produced?
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    Secretary DOUGLASS. The current fiscal year 1998 Block III production option is a fixed price contract for the last 100 Block III missiles at a cost of $506K per missile. This price is the lowest price in the competitively awarded, five-year production contract, which ends in FY98. The price for new production of Block III missiles in fiscal year 1999 and beyond would be approximately $1.2M per missile. The Tactical Tomahawk missile price of $569K includes increased capabilities not in Block III: high anti-jam Global Positioning System (GPS), two-way satellite data link, bomb damage indication sensor, in-flight retargeting, and launch platform mission planning.

    Mr. HANSEN. A recent audit report by the DoDIG said the newer Tactical Tomahawk missile would have the required enhanced capability, costing about $569,000, and would require recertification every 15 years. The missile under development in the Improvement Program is estimated to have a unit cost of about $800,000 and require recertification every 10 years. Is $569,000 the fixed price for the current tactical tomahawk proposal?

    Secretary DOUGLASS. Yes. The development contract includes a commitment for a firm price of $569K (FY99$) for 1,353 new missiles, less Low Rate Initial Production. These missiles must be procured in six consecutive years.

    Mr. HANSEN. Was the unit cost of $800,000 (cited in the above audit) for the TBIP Tomahawk the result of the same favorable procurement assumptions such as long term, economic ordering, multi-year procurement, for a guarantee of 1,350 missiles?

    Secretary DOUGLASS. $800K is the estimated cost to remanufacture older anti-ship and Block II missiles to the Tomahawk Baseline Improvement Program (TBIP) baseline. It is not the cost of a new missile. It reflects the planned procurement of TBIP missiles from fiscal year 1999 through fiscal year 2006 (eight years). As a result of remanufacturing existing hardware vice the production of new hardware, the TBIP cost savings associated with economic, multi-year quantity guarantees would be significantly less, since the majority of the effort is labor intensive and not subject to economic quantity adjustments.
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    Mr. HANSEN. Have these favorable conditions been formally offered to the current Tomahawk vendor base and what were the cost results of this analysis?

    Secretary DOUGLASS. The Navy does not break out the procurement of individual components in the missile. Raytheon, the prime contractor for the Tactical Tomahawk missile, conducted trade studies or competitions on 85 percent of the major components in developing their proposal.

    Mr. HANSEN. Is the proposed Tactical Tomahawk sole source contract a firm fixed price contract, and if so, what are the total costs per missile per year of the contract?

    Secretary DOUGLASS. The only contract currently being proposed is for the development of the Tactical Tomahawk missile. The proposed development contract is a Cost Plus Fixed Fee type contract with incentives for accomplishing the development effort under budget and penalties for overrun of the contract. As an attachment to the development contract, Raytheon has offered the Government a firm product price commitment of $569K (fiscal year 1999$) per missile for the first 1,353 missiles (less Low Rate Initial Production). In full rate production, the cost of missiles will be $569K on a Fixed Price type contract.

    Mr. HANSEN. Congress has never approved such a long term, sole source, multi-year contract for a new, unproven system, why should we now?

    Secretary DOUGLASS. Tactical Tomahawk represents a unique opportunity to transition a major legacy system from traditional acquisition, to a commercial type approach which takes advantage of a partnership with industry to substantially reduce cost and risk to both parties. If Congress is unwilling to authorize the Navy to commit to procuring the required 1,353 Tactical Tomahawk missiles, the missiles will be procured on an annual basis. The initial contract planned for 1998 is only for the development of Tactical Tomahawk. Procurement will be a future contract with firm terms available under the development contract.
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    Mr. HANSEN. What happens to the fixed price if a future Congress or Administration decides not to support spending for such a multi-year deal or to reduce the number of missiles in the buy?

    Secretary DOUGLASS. If the request to Congress is denied or the quantities do not support acquisition of 1,353 missiles over the six-year period, the Navy will execute a firm fixed price annual buy with options for additional years. The annual buys would still represent a substantial savings in production from the current program.

    Mr. HANSEN. The current prime contractor has been unable to bring the costs of production in line with their ambitious fixed price proposal, given that you are considering a sole source award to the same prime contractor what guarantees do you have that they will be able to bring costs in line with the promised price this time.

    Secretary DOUGLASS. General Dynamics/Hughes/Raytheon has been producing Tomahawk missiles since the mid 1980s and have never defaulted on the delivery of missiles at the fixed price awarded at the start of the contract. Since the Tactical Tomahawk production contract will be a fixed price contract, the risk to the Government in obtaining missiles at the contract price is low.

    Mr. HANSEN. Have you considered an open competition for Tactical Tomahawk under the 1,350 missile, multi-year, plan that would allow any prime contractor, or team, to develop their own tactical tomahawk program? What were the results of this study?

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    Secretary DOUGLASS. Tactical Tomahawk is a redirection of the ongoing development of the Block IV missile by Raytheon in order to reduce cost of ownership of the missiles. The development takes advantage of the three years of experience Raytheon has in developing the Block IV capability. Because of this experience, Raytheon is the only contractor capable of meeting the timeline required by the CINCS to begin delivering more missiles to the fleet. In September, 1997, the Navy published a Commerce Business Daily synopsis of the Tactical Tomahawk missile program, stating the intention to award a sole source contract, and inviting interested parties to respond. Discussions were conducted with two contractors. No proposals were submitted in response to the announcement.

   

QUESTIONS SUBMITTED BY MR. MCKEON

    Mr. MCKEON. Would you please provide us with your plan, which includes a program schedule and the funding that you need to fill the mine neutralization capability consistent with the current fleet and operational requirements?

    Secretary DOUGLASS. The Mine Warfare Plan is still under review within the Department of the Navy. The Plan will be provided by the Office of the Secretary of Defense when finally approved.

MINE NEUTRALIZATION CAPABILITY

    Mr. MCKEON. During Desert Storm it became apparent that our naval forces require a fast and effective capability to neutralize mines in a hostile area of operations. I understand the Navy is renewing its commitment to mine warfare in general and specifically to the capability of neutralizing mines once they have been located and identified.
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    Would you please provide us with your plan, which includes program schedule and funding, which will field a mine neutralization capability consistent with current fleet and operational requirements?

    Admiral LAUTENBACHER. The Navy has the operational requirement to clear mines from the deep water all the way to the beach in support of amphibious operations. In the next few years, that requirement will be extended to include the craft landing zones for our Landing Craft, Air Cushioned Vehicles. A variety of systems are under development to neutralize moored, bottom and buried land mines in depths ranging from 200 feet to the beach. These systems will be fielded in accordance with their individual program schedules and are listed below by platform type. (Funding totals for FY 1998–2003 are extracted from the FY 1999 Mine Warfare Certification Plan.)

Table 5

———

QUESTIONS SUBMITTED BY MR. SNYDER

SHIP CONSTRUCTION PLAN

    Mr. SNYDER. Concern has been expressed in this hearing by several members of the subcommittees and by yourself that given the current ship construction plan the Navy will be faced with a shortage of ships in the future and that we will not be able to maintain a 346 ship Navy. If there is concern about the number of ships in the fleet, can you explain to me why the Navy has chosen to decommission so many ships before the end of their planned service life? I cite, among many other examples, the forty-six Knox-class frigates that have been or will be retired an average of 14 years early, the fourteen Perry-class guided missile frigates retired an average of 19 years early, the four Kidd-class guided missile destroyers retired an average of 18 years early, and seven Spruance-class destroyers that will be retired an average of 16 years early? Would it not have maintained more ships in the fleet, as well as possibly being more cost effective, to explore upgrading these ships?
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    Secretary DOUGLASS. The Navy decision to decommission several surface combatants ahead of their projected retirement dates was driven by the results of the 1997 QDR, which identified a requirement for 116 surface combatants. In addition to reducing the number of surface combatants to the QDR-mandated number, early retirement of these ships has resulted in significant O&S cost savings through the Future Years Defense Program, which will allow for increased procurement spending for more modern Navy systems.

   

QUESTIONS SUBMITTED BY MR. REYES

LAND ATTACK MISSILES

    Mr. REYES. For several years the Navy has been studying the Land Attack Missile issues as related to Naval Surface Fire Support, with the two candidate systems being Navy TACMS and Land Attack Standard Missile. Given that the Applied Physics Laboratory study is completed and the Red Team has reported out, has the Navy made a decision with respect to which missile to procure?

    Secretary DOUGLASS. The Navy is considering Navy TACMS (NTACMS) and Land Attack Standard Missile (LASM) as candidate supersonic land attack missiles to meet the Marine Corps' requirements for long range, lethal and responsive fires in support of Operational Maneuver From the Sea (OMFTS). The Navy will decide on a supersonic land attack missile, as part of the fiscal year 2000 budget development process.
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    Mr. REYES. In 1998, the Congress provided an additional $10 million to the Navy for the specific purpose of facilitating initiation of an Engineering Manufacturing Development (EMD) program for Navy TACMS in 1999. How is the Navy utilizing this additional funding?

    Secretary DOUGLASS. The Navy is using the funds to define and develop required modifications to Army TACMS (ATACMS) for applications on board surface ships and submarines; for the engineering analysis required for ATACMS integration to Navy mission planning, weapons and fire control systems; and for studies and assessments to include initial planning for underwater ejection testing, weapons system safety and NTACMS/submarine missile tube compatibility.

    Mr. REYES. Will the Navy fund a Land Attack Missile program in fiscal year 2000?

    Secretary DOUGLASS. The Navy is evaluating the Land Attack Missile options and will make a decision as part of the fiscal year 2000 budget development process.

   

QUESTIONS SUBMITTED BY MR. CHAMBLISS

SLAM–ER & JASSM
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    Mr. CHAMBLISS. The fiscal year 1999 budget request includes $5.2M to continue development of the Navy's SLAM–ER and $39.5M for low rate initial production of 54 additional SLAM–ER missiles. The budget request of $2.1M for the Navy share of the joint Air Force-Navy JASSM program includes only the cost of Navy unique testing for the JASSM and was reduced significantly when the Navy decided to defer integration of JASSM on the F/A–18/F until late in development of the missile and development testing of that aircraft.

    The fiscal year 1996 Defense Authorization Act stressed the expectation that the Secretary of Defense would establish a joint program in the Air Force and the Navy for development of a system which would provide the operational capability that would have been provided by the canceled Tri-Service Stand-off Attack Missile (TSSAM). The Navy selected the SLAM–ER, a retrofit of the SLAM to provide an interim capability for Navy aircraft until the JASSM (which began development in Fiscal Year 1996) would be fielded. The Navy intends to procure a total of 700 SLAM–ER. During consideration of the Fiscal Year 1998 budget request by the Congress, the Navy proposed replacing the joint program for JASSM with SLAM–ER. Subsequently, Congress directed that SLAM–ER be included with the two JASSM program candidates in the analysis of alternatives for JASSM that is due to be completed in April 1998, prior to the JASSM Milestone II program decision.

    In February 1998, in the basis of a single controlled flight test and almost two years before the completion of SLAM–ER operational testing, the Navy made a low rate initial production (LRIP) decision that will result in the procurement of almost 20% (135 missiles) of the total planned buy of SLAM–ER. Since that decision, four additional developmental flight tests have been completed.
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    What are the Navy's operational requirements for SLAM–ER and for JASSM? Does the Navy have any requirements for SLAM–ER beyond the approximately 700 now planned? Will SLAM–ER be integrated on the F/A–18E/F? Why did the Navy choose to defer integration of JASSM on the F/A–18E/F?

    Admiral LAUTENBACHER. The operational requirements for both SLAM–ER and JASSM are to provide an air-to-surface precision standoff strike capability to place high value, highly defended point targets at risk. SLAM–ER also fulfills the operational requirement to attack mobile/moving targets including ships at sea. Navy Concept of Operations for SLAM–ER also requires Man-In-The-Loop data link capability to retain mission flexibility, minimize the possibility of collateral damage, and provide precise bomb impact assessment.

    The Navy's total air launched Standoff Outside of Area Defense (SOAD) missile inventory objective is 700 SLAM–ER's.

    SLAM–ER will be integrated on the F/A–18E/F as a ''Legacy'' weapon as well as on the F/A–18C/D.

    With all forecast air launched SOAD requirements being met by SLAM–ER, it is prudent to defer investment in Navy platform integration for JASSM until additional requirements emerge and/or until some of the risk associated with this new development missile has been mitigated. If JASSM delivers the capability intended for the cost anticipated, and if either inventory or operational requirements change, the Navy will reevaluate the need to integrate and procure JASSM.
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SLAM–ER LRIP DECISION

    Mr. CHAMBLISS. Secretary Douglass: In missile programs in order to minimize the government's exposure, low rate initial production (LRIP) is supposed to be used only to produce those missiles required for developmental and operational testing, or to keep a new production warm until testing is completed and a decision is made for full-rate production. In the case of SLAM–ER, on the basis of a single controlled flight test and with (at the time) no test of a full-up system with active seeker, the Navy authorized LRIP leading to a total of 135 missiles, almost 20 percent of the total buy for SLAM–ER. We also understand that the Navy intends to incorporate an automatic targeting acquisition capability in the missile beginning in fiscal year 2000, before that capability has been fully evaluated in follow-on test and evaluation. In view of the problems that the Navy has encountered in other programs in which relatively large LRIP was authorized before completion of development and operational testing, such as the AN/SLQ–32 electronic countermeasures system, do you regard the LRIP decision on such a high concurrent development program as SLAM–ER to have been a prudent decision?

    Secretary DOUGLASS. SLAM–ER is essentially an upgrade of the existing SLAM, with low technical and programmatic risk. The fiscal year 1999 President's Budget request is $39.5M for procurement of 54 SLAM–ER Full Rate Production retrofit missiles, not a procurement of low rate initial production (LRIP) missiles. SLAM–ER is on track to complete its Milestone III production decision in the second quarter fiscal year 1999.

    Additionally, the SLAM missile was only intended to be an interim weapon until Tri-Service Standoff Attack Missile (TSSAM) was fielded. The SLAM–ER program was to convert SLAM from an interim system into a viable long term weapon that would meet the Navy's Standoff Outside Area Defense (SOAD) needs through the year 2015. When TSSAM was canceled, the Navy and Army were granted approval to upgrade existing missiles to fill the TSSAM requirement. SLAM–ER entered pre-Engineering & Manufacturing Development (EMD) in June 1994 and completed Milestone II in February 1995 well before a Joint Air-to-Surface Standoff Missile (JASSM) Operational Requirement existed. As such, the decision to go to LRIP on SLAM–ER was, and, as the flight tests continue to bear me out, is still, a very prudent decision. The following program and platform specifics further support my decision:
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    A combination of 6000 laboratory, ground, and captive carry flight tests and one SLAM–ER missile free flight (that exceeded all required test thresholds) gave the Navy the confidence to begin SLAM–ER low rate initial production and avoid over $35M in retrofit costs.

    SLAM and SLAM–ER are built on the same production line, using existing tooling, fixtures and support equipment.

    SLAM–ER is a leader in acquisition reform, making extensive use of Non-Developmental Items already flight proven in other DOD weapon systems: Tomahawk Block III warhead and fuse; Tomahawk planar wings; TSSAM data link; SLAM engine/control sections; Maverick Imaging Infrared seeker; GPS Joint Project Office common embedded GPS/INS and the F/A–18C JSOW MIL–STD–1760 interface software.

    All SLAM–ER LRIP missiles have been procured with firm fixed price contracts, to a performance specification, and with a five year warranty. The contractor has assumed the full risk of ensuring that SLAM–ER meets Navy performance requirements.

    The Navy's SLAM–ER Automatic Target Acquisition (ATA) capability has been flight tested not only as part of the SLAM–ER program, but also as part of the United Kingdom's Conventionally Armed Stand Off Missile (CASOM) competition and in the Boeing JASSM pre-EMD contract.

    The cost to incorporate the ATA box into a production SLAM–ER represents less than five percent of the SLAM–ER cost. Conversely, the cost to retrofit a SLAM–ER with an ATA box after production would increase the cost by more than ten percent. The ATA SLAM–ER PLUS missiles are also being procured with firm fixed price contracts, to a performance spec, and with a warranty.
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    The SLAM–ER is designed to retain full Man-In-The-Loop (MITL) capability in the event that the ATA box fails in flight. MITL is considered critical for the Navy's warfighting strategy and employment of this weapons system.

    The Navy's SLAM–ER acquisition strategy has been an unqualified success. The program is on cost and on schedule. Furthermore, it is meeting or exceeding all operational requirements, has successfully completed five out of five development test flights and is now entering the combined operational/development test phase.

   

QUESTIONS SUBMITTED BY MR. WATTS

    Mr. WATTS. General Oster, in your efforts to provide Marines with the finest weapons available you must review hundreds of different systems from this country and allied nations. Can you comment on the Marine Corps' need for a next-generation, precision strike, artillery shell? Do you believe that the solution to this issue might lie in a product being developed by the Swedish government called Trajectory Correctable Munition (TCM)?

    General OSTER. The Marine Corps generally follows the U.S. Army lead in the development of a new type of ammunition. We normally cannot afford to develop and procure ammunition as a single Service. The Marine Corps currently has a future requirement for a next-generation artillery shell, but the specific requirements are not finalized. We are observing the U.S. Army lead in the development of this munition and will make a future decision on whether or not to procure this item.
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    Mr. WATTS. Why did the Marine Corps decide not to procure the F/A–18EF?

    General OSTER. First let me say that we support the Navy's requirement for the F/A–18E/F. Our position has not changed. The USMC has been working toward obtaining an all STOVL force since General Randolph McCall Pate, our 21st Commandant, first stated that goal in 1957. Our steady march to that force has been evident in the deployment of the Harrier and the impending delivery of the MV–22. Since the late 1970s we have been engaged in ''necking down'' our TACAIR forces to fewer but more capable multi-role aircraft. Any USMC buy of the F/A–18E/Fs would have resulted in deliveries in the 2007 timeframe. Because deliveries of the JSF will begin in the 2007–2010 timeframe, we will wait to get the aircraft that meets our requirements for a single type/model/series STOVL TACAIR force. Given the relatively low threat projections until past our 2010 JSF IOC, and given the great opportunity to complete our neckdown with a common Joint Strike Fighter that is affordable, lethal, survivable and supportable, we believe the time is right for us to take that risk for this leap ahead technology.

    Mr. WATTS. General Oster, can you comment on the Marine Corps' success in fielding a lightweight 155mm howitzer? Will you be able to procure enough of these systems to meet the need? Has the Army fulfilled its commitment to team with the Marines in the procurement of this artillery system?

    General OSTER. The lightweight 155 millimeter howitzer (LW155) is now in the engineering and manufacturing development (EMD) phase of the acquisition cycle. The Marine Corps LW155 program progressed from Milestone 0 concept studies to MS II development in one year under the new acquisition reform guidelines. After a competitive shoot-off, the contractor down-selection was held in 1996 and the international team of Textron/Vickers Shipbuilding and Engineering, Ltd (TM&LS/VSEL) was awarded a contract in March 1997. The EMD contract is now a year old with significant progress made in correcting the shortcomings discovered during the shoot-off. The program is on schedule to meet its acquisition program baseline requirements, with MS III approval for production scheduled in FY 2000. Funding is available to meet the latest Marine Corps approval acquisition objective of 465 systems, with production starting in FY 2000. This includes the funding to procure the preplanned product improvements (P3I) to be developed by the US Army. The Marine Corps is currently planning P3I procurement to begin in FY 2004, concurrent with the final year of Marine Corps LW155 howitzer production.
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    The latest Army budget planning includes RDT&E funding in FY 2000–2003 for P3I items. The Marine Corps needs this Army RDT&E commitment. Although Army requirements for LW155 procurement are not firm, outyear planning currently includes the production quantity of 273 LW155/P3I systems starting in FY 2004. The Marine Corps intent is to procure 468 LW155 systems, and retrofit the P3I suite into them.

    Mr. WATTS. What potential do either the TCM project or the lightweight howitzer hold for use in Naval gunfire Support?

    General OSTER. I understand TCM to be Trajectory Correctable Munition. TCM is designed to improve accuracy for amphibious force in close support missions out to 34.2 kilometers (21 nautical miles). It is currently under Swedish Army development (Bofors AB and SAT, Inc.) and is marketed in the U.S. by American Defense International, Inc.

    In OMFTS with ships at least 25 nautical miles from shore, TCM would not be useful for naval gunfire support due to its limited range. The program manager for NSFS, is currently working with the U.S. Army for the capability to fire future munitions (the XM 982 Extended Range Improved Conventional Munition and the Sense and Destroy Armor) from the naval surface fire support ship gun mounts.

    I understand the lightweight howitzer to be the Lightweight 155mm towed howitzer. There is no intent to use the LW 155 on shipboard as a Naval Gunfire Support weapon. The LW 155 will be deployed ashore and used as shore based fire support. The LW 155 will have a maximum range of 30 kilometers (approximately 19 miles) or with a RAP round, approximately 22.5 kilometers (approximately 14 miles) with standard ammunition.
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    Mr. WATTS. General Oster and Adm. Lautenbacher, I think that you would agree that our Navy/Marine Corps team is vastly overstretched and suffering a deficit in Procurement and R&D funding. We know that you have been asked to do more with less by others in the National Command Authority. I believe that you cannot, not for lack of trying, but because even your Herculean efforts cannot satisfy the need for new weapon systems. For the record, can the Navy and the Marine Corps do more with less and continue to face any challenge you might face?

    General OSTER. The Marine Corps has aggressively pursued improved business practices, bought used items, remanufactured aviation assets, and has deferred modernization in its efforts to mitigate the impact of an inadequate budget top line while maintaining a high state of readiness. We are ready to meet today's challenges, but if forced to continue in the same fiscally constrained environment, the overall readiness of the Marine Corps will begin to fall. Increases in funding are required to support our equipment modernization needs, the revitalization of our infrastructure, improvements in quality of life, improved training, and meeting all of our operational commitments. We have a cogent, common sense approach to obtain a 21st-century Marine Corps that will be effective, efficient and affordable, but that plan cannot be executed without additional funds.

    Mr. WATTS. Can the Navy do more with less and continue to face any challenge you might face?

    Admiral LAUTENBACHER. Successfully meeting tomorrow's challenges will be dependent on an ability to balance carefully between warfighting requirements and the activities that support them. We must continue to shed excess infrastructure, become more efficient in the manner in which we operate and support our forces, and make a larger proportion of funds available to support needed investments. As we seek to modernize and recapitalize the fleet, and to reap the benefits of new modernized platforms, we must be careful not to do so at the expense of readiness or reduced QOL for our Sailors and Marines. The Navy is capable of meeting our current warfighting requirements, but we are at the margin of our resources.
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QUESTIONS SUBMITTED BY MR. PAPPAS

    Mr. PAPPAS. From New Jersey, I have also an interest in the USS NEW JERSEY, but also don't want to do anything that would jeopardize our ability to respond. That's my foremost concern. So that would be certainly helpful to me in understanding the length of time that you think that it would be necessary to bring personnel up to speed to man those ships.

    Secretary DOUGLASS. The battleship requires a crew of approximately 1675 (1600 enlisted, 75 officers per ship), which is manning intensive. The Engineering Department requires 500 individuals, and the gun systems require approximately 100 gunner's mates and fire controlmen. Training the crew to support reactivation and operation of the battleships would require a minimum of four months from the start of individual training until the commencement of shipboard team training. Engineering training would consist of 11 weeks of initial training in existing schools located at Service School Command, Great Lakes, IL. Follow-on training for Engineers would be aboard ship and would require a minimum of four weeks of shipboard system familiarization. No battleship gunnery training sites exist. The gun training would require creation of a new, one-month 16-inch Gun Weapons System course of instruction, either at Fleet Combat Training Center Atlantic, Dam Neck, VA, or aboard ship. A minimum of eight weeks of on-the-job training is required aboard ship following the shore-based training to familiarize the gun crews with the unique nature of the 16-inch gun. Instructors for the Gun Weapons System would necessarily come from Navy retired ranks or from the few active duty Sailors with previous 16-inch gun and fire control experience. After initial training, the ship would enter a tailored pre-deployment training phase that conservatively, would take an estimated six months.
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    In addition to personnel and training, there is the cost of reactivation and operations. Reactivation costs are estimated at $120M to $240M (fiscal year 1999) per ship, depending upon the amount of modernization authorized. $107.4M operating cost per year is required (includes personnel, fuel, parts, supplies, repairables, services, depot maintenance, intermediate maintenance). Mothball recurring costs are $200,000 per ship per year.

    In order to meet USMC requirements for Naval Surface Fires, the Navy is developing a variety of weapons systems that can provide the required range, lethality, accuracy, and responsiveness. The Navy currently has acquisition programs that will produce gun systems and precision guided projectiles that will satisfy the Marine Corps range (near term objective—63nm), lethality, and volume of fire requirements. The 5/62 gun system and Extended Range Guided Munition (ERGM) will be operational in 2001, and an advanced 155 MM gun system by 2009.

    Pros—The IOWA class battleships' 16 guns have twice the range of the 5/54 guns in the fleet today, and once on station, could provide the high explosive, high-volume fire support needed to support landing forces out to a range of 26nm.

    Cons—The 16 guns of the IOWA class battleships have a maximum effective range of 26nm. They do not meet Marine Corps Naval Surface Fire Support (NSFS) requirements for OMFTS, which requires that the Navy be able to provide NSFS out to a near term objective range of 63nm; even with 11-inch guided sabot rounds, they do not meet the full range requirements of 200nm.

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    The Navy's NSFS program will forward fit the 5/62-ERGM on DDGs 81–107 beginning in 2001 and backfit it on 12 CGs beginning in 2003. By fiscal year 2005 there will be 39 5/62 guns on 27 highly survivable ships capable of providing flexible, sustainable response worldwide. The 155MM VGAS system will be installed on 32 DD 21s beginning in fiscal year 2008. Each of these systems will consist of two 155MM guns with a combined firing rate up to 24 rounds per minute, supported by an automated magazine carrying 1,500 rounds. The guns will fire rounds with a variety of payloads, including high explosives and armor killing submunitions, to a range of 100nm. These ships are also equipped with vertical launchers capable of firing supersonic land attack missiles to provide responsive fire support out to 150–300nm (depending on variant selected).

    Two cost and Operational Effectiveness Analysis (COEA) conducted by the Center for Naval Analyses concluded that the 5/62–ERGM, Land Attack Missile and VGAS (for DD 21) was the most cost effective approach to satisfying current and future NSFS requirements over all other options, including the battleships. The cost of reactivating one battleship, for example, is more than twice the cost of the entire 5/62 and VGAS development programs. Operating, manpower, and maintenance costs associated with the battleships are three to five times those of DDG–51s. DD 21 will produce even more savings due to reduced manning (95 person crew) and the reduced maintenance requirements which result from newer, more reliable systems.

    Battleships are very large, noisy ships with unique acoustic signatures and minimal anti-submarine and mine warfare capability. To employ battleships at an acceptable level of risk in littoral areas, which have high potential for mine and diesel submarine threats, requires a significant amount of additional support from escort ships. Modern warships are very quiet and have excellent acoustic sensors.
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    The battleship's very large radar cross section will make it vulnerable to coastal cruise missiles. Significant upgrades to the battleship's air defense capabilities would be required to operate in the littoral. A cruise missile does not have to sink a battleship to provide a ''mission kill''. A missile which damages topside antenna systems can eliminate the battleship's communications connectively and thereby eliminate the ship's ability to provide responsive fir support. Modern warships such as DDG 51 and DD 21 have very small radar cross sections and superb air defense capabilities.

    Battleships do not have the Chemical, Biological or Radiological (CBR) defense capabilities that have been designed into modern surface combatants. Battleships will be in range of coastal defense cruise missiles, artillery, and land based aircraft, all of which are capable of delivering chemical or biological weapons. Significant CBR protection capabilities will be required in order to operate in the littoral at ranges that allow employment of 16 guns in support of landing forces. Modern warships are built with excellent CBR survivability systems.

    Having only two battleships in the inventory severely limits their availability and employment flexibility. Our modern fleet of warships, equipped with the improved NSFS systems we are developing, provides a year-round, flexible, survivable, sustainable, and robust capability to support amphibious operations and the joint land battle with highly responsive, long range, accurate, and lethal fire support.

    Unmanned Aerial Vehicle (UAV) data link on the USS IOWA (or any other BB) is based upon obsolete technology that is not supported on new generation unmanned aerial vehicles. The data link will support older generation UAV's, but because it is based upon a non-standard protocol and at a soon-to-be reallocated radio frequency wavelength, can not be made to operate with the newer systems. New generation UAV's operate in the Ku band (about 3 times the frequency of C band) and utilize a ''TCDL'' (Tactical Common Data Link) protocol. The date link onboard USS IOWA isn't going to be of any value to anyone much beyond fiscal year 2000.
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QUESTIONS SUBMITTED BY MR. TAYLOR

AMPHIBIOUS READY GROUPS

    Mr. TAYLOR. Is there still a firm requirement for 12 Amphibious Ready Groups (ARGs) built around 12 large deck, aviation-capable amphibious ships for the foreseeable future?

    General OSTER. Yes. Consistent with the QDR, the Navy is committed to an amphibious force structure of 12 ARGs. The LHA (or LHD) is the cornerstone of an ARG; therefore, the Navy is also committed to maintaining 12 LHAs/LHDs within the amphibious force structure.

AMPHIBIOUS FLEET

    Mr. TAYLOR. What is the preferred way, from an operational and efficiency point of view, to maintain the large 12 deck amphibious fleet—building additional, more efficient LHD class ships or repairing the older LHA's?

    Secretary DOUGLASS. The Navy is committed to maintaining 12 LHAs/LHDs within the amphibious force structure, as called for in last year's QDR. The Navy does not support funding a new LHD in FY 1999 if offsets are required. It does not support partial funding of an LHD in FY 1999 because additional funds would be needed in future budgets to fully finance the ship. Currently Navy planning projects LHAs to begin reaching the need of their service lives (35 years) in FY 2011, about 12 years from now. The President's FY 1999 Budget supports concept exploration of a new-design amphibious ship, called LHX, which could replace the LHAs. The Navy is also evaluating an LHA SLEP, and has initiated an Analysis of Alternatives in FY 1999. Due to the life remaining in the existing LHAs without a SLEP, there is no requirement for funding an 8th LHD within the current FY 1999–2003 FYDP. A final decision to include funding to extend the service life of the LHAs, or to plan for new-construction replacements, will likely be reflected early next year in the FY 2000 President's Budget and FY 2000–2005 FYDP.
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