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DEPARTMENT OF DEFENSE MODERNIZATION PLANS
House of Representatives, Committee on National Security, Military Procurement Subcommittee, Meeting Jointly With Military Research and Development Subcommittee, Washington, DC, Thursday, October 8, 1998.
The subcommittee met, pursuant to notice, at 11:02 a.m., in room 2118, Rayburn House Office Building, Hon. Duncan Hunter (chairman of the Subcommittee on Military Procurement) presiding.
OPENING STATEMENT OF HON. DUNCAN HUNTER, A REPRESENTATIVE FROM CALIFORNIA, CHAIRMAN, MILITARY PROCUREMENT SUBCOMMITTEE
Mr. HUNTER [presiding]. The subcommittees will come to order.
Today marks the last hearing for the subcommittees in the 105th Congress. And it is, indeed, an important one as we preview the modernization issues that we're going to encounter in the first defense budget for the 21st century.
And Dr. Gansler is here with—you've definitely got the sympathy vote today, Dr. Gansler. We promised we won't shoot you below the waist today. [Laughter.]
Thank you for being with us.
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Last time you appeared before the subcommittees in late February, you'd only been on the job for a little more than three months, and you outlined for us your perspective as a senior acquisition executive on where you saw the Department heading in providing our forces with the best equipment, both within the near future and within the next 10 to 20 years.
This morning we need to have you update us on this perspective for us to compare and contrast it with other viewpoints being expressed, especially those of the Department's senior military leaders.
As most everyone in the room knows, the Department's procurement budget, limited by an essentially flat top line, has for the past few years been increased only because of congressional adds. And despite the fact that the Department's 1998 Quadrennial Defense Review, the celebrated QDR, asserted that, ''the dividend from procurement reductions has been spent, and modernization needs to rebound,'' the first post-QDR Future Years Defense Program actually reduced procurement budget forecasts in the previous Future Years Defense Plan by a cumulative $16.4 billion over the fiscal year 1999 through fiscal year 2003 period.
According to your previous testimony, Dr. Gansler, this was done to prevent resources migrating from future procurement budgets to pay for increases in operating and support costs. As you put it, ''By shifting resources now and implementing the Revolution in Business Affairs initiatives, we can significantly reduce the potential for resources migrating in the future and retain a much more staple modernization funding profile in the years to come.''
We would like to know if you still believe, today, this is the right course of action, in as much as you seem to be somewhat out of step with what we heard from the Joint Chiefs in their testimony last week before the Armed Services Committee of the other body.
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In their testimony, each of the senior Chiefs, or service Chiefs, stated that relying upon our present aged equipment at the expense of future modernization is the real readiness problem the Department faces, and that now is the time to address this problem.
Members will note that the staff-prepared memo for today's hearing includes a number of quotes from the Chiefs' testimony regarding the need for more modernization funds now, not beyond the end of the current FYDP. Indeed, Dr. Gansler, in your recent speech to the Association of the U.S. Army, you stated that, ''Events of the past few weeks have made it abundantly clear that the future is now if we are to achieve both the Revolution in Military Affairs and the Revolution in Business Affairs to maintain our military superiority into the next decade.''
But as we addressed the, ''what needs to be done now?'' we must also address the assumptions underlying alternatives courses of actions. For example, Dr. Gansler, you also noted in your recent speech that, ''the dilemma we face right now involves competing demands for limited resources.'' You stated that, ''with fixed total resources, the Department has resorted to 'robbing Peter to pay Paul,' taking from future investments in modernization to maintain current readiness.''
Your prescription for breaking out of the so-called death spiral calls for, among other things, additional base closures, termination of a number of unspecified weapon systems, reduction in the civilian and military workforce, and full implementation of acquisition reforms, in order to reallocate resources to our modernization goals.
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You do not speak to the need for additional funds to alleviate the problem and, again, seem to be out of step with the Joint Chiefs, who just last week clearly indicated the need for an increased defense budget, not a reallocation of funds, to address our concerns. In fact, I remember one of the former Chiefs yesterday making a very, very strong statement to the effect that we should not hold defense modernization hostage to some projected savings goal as a result of some base closures out in the future.
In reference to the need to implement the revolution in miliary and business affairs, you noted in your speech that, ''the transformation will not be an easy one since there are many who stand to not have the status quo upset and few who are willing to fight for the required changes.'' More on the transformation in a moment, but I would encourage you to apply your logic to your own actions in making a case for increased modernization funding.
As General Skibbie notes in his statement, and I quote, ''Whether the roadmap is based on the QDR or the National Defense Panel or variants or combinations thereof, the point remains that additional funds are required for modernization. Both the QDR and the National Defense Panel assume that these funds can be generated through savings from base closures, increased outsourcing and privatization, elimination of certain procurements, and other actions. It is important to note that these savings have not significantly materialized as assumed by the various studies.''
And you know, Dr. Gansler, you and I have been through this battle, with respect to my initiative and this committee's initiatives and, ultimately, the House's initiative, to cut the Army of shoppers. The acquisition worked for us, which numbers of 300,000, roughly twice the size of the U.S. Marine Corps, to cut that down to a level under the size of the U.S. Marine Corps, under 174,000 people.
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And I used to say that there were two things that Dr. Perry was adamantly worried about when he would come visit us, and one was, of course, North Korea achieving nuclear capability, and the second was losing a single shopper from the Pentagon. And that, losing just a few of those people who averaged $53 grand a piece per year and whose very payroll, in fact, if it was cut by 30 or 40 percent, could fund many weapon systems. Getting one person cut out of that thing was absolutely like one of the most difficult things we've ever undertaken. And I know we've been working together trying to make that come about, but with respect to people standing in the way, we agree there's lots of folks standing in the way. But we've seen, at least in the Department, a noted lack of enthusiasm in terms of cutting the shopper workforce rather than do the other things that we've had to do, which includes cutting really the tip of the spear, delaying modernization, and in some cases, depriving our personnel of what they need to have.
So, I would note that the General Skibbie describes the roadmap just referred to as a ''checklist of considerations for addressing the questions of what should be done in the future and how we're going to get there.''
That's the real purpose of having this hearing, and I'm pleased that you will provide some keen observation, from industries' viewpoint, in your testimony.
Now, regarding the transformation that was mentioned a moment ago, Dr. Krepinevich, I note that you have much to say about the need for military transformation, noting that it was declared a top priority by the NDP on which you served. We look forward to the intellectual stimulation that you are going to provide in your statement on this transformation and your observations. And your observations that we've noted go along this line: that while there appears to be a consensus among senior National Security officials that such a transformation is needed, it is not yet reflected in our modernization strategy or programs; number two, that a modernization strategy that supports military transformation must take into account that transformations typically take a decade, and often longer, to play out; and number three, that our current modernization strategy risk committing to single point solutions that assume away uncertainty instead of investing in options that hedge against it; and number four, that a transformation modernization strategy would place a higher priority on providing a wider range of systems to the war fighters, but that industry consolidation has made this a difficult proposition; and finally, that to be sure a transformation modernization strategy will require additional funding.
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I would note, however, that while you state that a transformation modernization strategy should take into account the need to create incentives for industry, you have not provided any prescription for doing this, and it is certainly not a point to be overlooked.
And, although you further state that additional funding will be required for a transformation modernization strategy, you don't state how much or when such funding is needed. You estimate that DOD's long-term plan, as outlined by the QDR, is likely to exceed assumed funding by over $25 billion a year during the 10 years following the fiscal year 1999 through 2003 5-year defense plans, but you do not specifically address the years prior to 2003.
But, furthermore, I believe you got it partly right when you concluded that Congress needs to ensure that we are buying the right kinds of weapons at the right time, rather than simply attempting to generate large increases in the procurement. No problem there.
We need to make sure that we are buying right weapons at the right time, but in my view, and apparently in the view of the Joint Chiefs, we also do need to generate increases in procurement spending. As I think everyone can see by now, the issues we face are complicated ones and there is not an unanimity of opinion on how to address them.
However, as Dr. Gansler put it so eloquently in his statement today, ''We have sometimes disagreed on details, but we have never wavered in our common goal to support our men and women in uniform by making them the best equipped and best sustained fighting force in the world.''
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Although I've already prominently mentioned some of our witnesses, let me now introduce all of them and thank them for being here today.
We have, of course, Dr. Jacques Gansler, Under Secretary of Defense for Acquisition and Technology, and he is accompanied by Lt. Gen. Frank B. Campbell, U.S. Air Force, Director for Force Structure, Resources, and Assessment, Joint Chiefs of Staff; Mr. Richard Davis, Director of National Security Analysis, U.S. General Accounting Office; Lt. Gen. Lawrence F. Skibbie, USA Retired, president of National Defense Industrial Association; Dr. Andrew F. Krepinevich, executive director, Center for Strategic and Budgetary Analysis, and member of the National Defense Panel.
Gentlemen, we welcome you all. We do appreciate your willingness to share your views with us today.
And before we begin, let me call on my distinguished colleague, Curt Weldon, chairman of the Military Research and Development Subcommittee and my cochair for today's hearing for any remarks he might have.
And following Curt, I would ask the distinguished ranking member of Procurement, Norm Sisisky, and, Owen, our ranking member of the Research and Development subcommittees, respectively, for any remarks they might wish to make.
Curt.
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STATEMENT OF HON. CURT WELDON, A REPRESENTATIVE FROM PENNSYLVANIA, CHAIRMAN, MILITARY RESEARCH AND DEVELOPMENT SUBCOMMITTEE
Mr. WELDON. Thank you, Mr. Chairman; and I want to add my thanks to you for continuing this series of hearings we've had throughout this session, as in the previous session, where we worked together as subcommittees on important issues facing national security.
I would ask unanimous consent to enter my statement in the record——
Mr. HUNTER. Absolutely.
Mr. WELDON [continuing]. Because I'd like to speak from the heart this morning to start this hearing off.
I think it's appropriate as we begin this hearing that we have the two chairmen, the two ranking members, the full committee chairman, and the ranking member. The six of us, along with our colleagues here, because for the past 4 years, the six of us, along with our colleagues on both sides of the aisle, have predicted that we would have this hearing today. We predicted that we would, in fact, see the day when we would be crawling on our knees attempting to find the dollars to fund the deployment rate and to fund the costs that are associated with our military.
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You can't continue to cut defense spending for 14 consecutive years, at the same time that you increased deployment rates up to 26 in the last 6 years, none of which were properly budgeted for, compared to 10 in the previous 40 years. These 26 deployments in the past 6 years have all had to be paid for out of an existing, already shrinking budget. A budget that today folks is on the quality of life of our all-volunteer force, as compared to the past when we had higher defense budgets and we brought people into the services through the Draft. A budget that today spends $11 billion on environmental mitigation that we did not have to deal with in the past. And yet we've been told, ''Don't worry; we will always find the money.''
When the Service Chiefs have come before us, they said, ''You know, we have just the right amount of money we need this year. It's amazing. We don't have any additional requirements.'' Of course, then, they have come to each of us privately in our office and said, ''Well, you know, Congressman, we really didn't mean that. That's what we had to say. We have all kinds of requirements that we've not been able to address publicly with you.''
Thank goodness this Congress, those Democrats on that side of the aisle joining with Republicans on this side of the aisle, had the foresight to increase defense spending over the past four years by $20 billion, more than the administration asked for.
But you know what bothers me and many of my colleagues? I remember very well that hearing when Dr. Perry came in, because he had criticized us in the 1 year for adding $10 billion of funding that the administration said wasn't necessary. He said it was pork, even though 98 percent of those dollars were for programs the Service Chiefs had asked us for.
The following year, he had the audacity to come in before this committee and show us charts where he said the administration had flattened out the procurement holiday. So, in effect, he was taking credit for the money that this Congress put in, that only the year before the administration called pork-barrel spending. And now it's caught up to us.
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We have, in some cases, systems that are being pushed so far out that we can't afford to buy them because the per copy cost is increasing dramatically, adding billions of dollars of costs to the overall procurement of those systems. We have a program for TACAIR, which we've held hearings on for the past 2 years, and have questioned the Pentagon how we're going to afford to buy the F-22, the Joint Strike Fighter, and the F/A–18E/F when the General Accounting Office and Congressional Budget Office say they will cost between $14 to $16 billion a year in the out years, and we're spending about $2.5 billion to $3 billion on TACAIR this year.
We have requested to digitize the Army, to provide the command centers for the Navy, the V–22 for the Marines, the Comanche for the Army, request to build more ships. Some in the Navy would tell us—and Mr. Sisisky has been a special leader, along with my friend, Mr. Pickett, on this issue, along with Mr. Hunter—that we're now building to a Navy that will have 190 ships. Is that the way we're going to be able to respond to the deployments of the future, with a Navy of 190 vessels? Because that's what we're building toward today.
The fact is, today, that we are facing serious problems. We are facing serious problems because we've not dealt with a budget for our military in a realistic manner. This is not to say that recommendations that we'll hear today aren't legitimate and aren't logical. I support an additional round of base closings, but you're not going to get it through this Congress. That's political reality. I support acquisition reform; in fact, our committee has shown that, but we're not going to get the savings necessary to acquisition reform alone.
It's time for us to face up to the fact that we have gone too far with the defense of this Nation. We have severely undercut the ability of our troops to be prepared to respond. I look at missile defense, alone, and I look at the entire Research and Development budget. We talk about being prepared for the future, yet the projection for R&D, alone, is a 14 percent decline over the next 5 years. I ask, How are we preparing for the future with a 14 percent decline in the R&D accounts?
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I look at missile defense; $3.6 billion this year, projected to go to $2.6 billion over 5 years. In fact, there are comments in the statements coming up that our priority is theater missile defense. Well, I thought that was our priority 2 years ago with programs like Medium Extended Air Defense System when we, on the R&D Subcommittee, cancelled the funding because we didn't think the commitment was there from the administration for the long-term funding for MEADS. We were pounded upon to put the money back in the budget, and we did. And what do we have this year? No, out year funding for MEADS. So what we heard 2 years ago of the outrage the Germans and the Italians would have toward America if we didn't fund the MEADS Program, now, the administration is, in fact, acknowledging it. There are no funds requested for MEADS in the out years, at the same time that the administration is saying, ''We want to spend more money on theater missile defense with our colleagues in Asia, the Japanese.'' I agree with that need, but you can't do it with rhetoric alone. You've got to have the dollars.
We don't even have the dollars in the budget necessary to fully fund Navy upper-tier to fund Navy Area Wide, to fully test the Theater High Altitude Area Defense program, to get over these hurdles, to fully implement and finish the PAC–3 deployment, let alone help the Israelis with ARROW and THEL. And talk about national missile defense, there is no Three-Plus-Three Program, because there's not been one dime of money requested for the long lead money necessary—necessary today to be able to make that deployment decision 2 to 3 years down the road.
If I sound somewhat frustrated, Mr. Chairman, it is because I am. I am because everything that we're seeing today, we talked about. And we didn't talk about it as Republicans. I constantly give credit to my Democrat colleagues on the other side for saying the same thing. This battle has not been between parties; this battle has been between this Congress and this administration, and I look forward to today's testimony to try to resolve those differences.
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[The prepared statement of Mr. Weldon can be found in the appendix on page 69.]
Mr. HUNTER. Thank you very much, Curt.
The gentleman from Virginia.
STATEMENT OF HON. NORMAN SISISKY, A REPRESENTATIVE FROM VIRGINIA, RANKING MEMBER, MILITARY PROCUREMENT SUBCOMMITTEE
Mr. SISISKY. Mr. Chairman, because of the time, I would ask unanimous consent to put my statement in the record.
Mr. HUNTER. Without objection.
Mr. SISISKY. I just might say a couple words. [Laughter.]
I really won't talk long. Mr. Weldon is absolutely correct. We did a review back a year or two of statements that I just made in this committee, and it was basically the same thing as I looked at the NDP. And I thank the people for doing that. I don't think you'll have that task anymore. I think we discontinued the permanence of the NDP and the QDR, and we will let any President who comes into office design his own way of evaluating the Department of Defense.
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But I made a statement on the floor the other day that I think is basically true, and I just do not think that we can say it enough. In the past year, I've been pretty much around the world. That's the thing of being here a long time and being an old man; they let me travel by myself and——
[Laughter.]
I've been to Army bases, Navy bases, Air Force bases, to Bosnia, to the Persian Gulf. The quality of our young men and women really is what makes the difference, the absolute quality of these people. And, I might also add the quality of us, civil servants, which is being destroyed day by day, is another great aspect that we have, and I'm very concerned that what's happening to them—and I'll get into that in some questioning—but, we're just very fortunate.
If you remember, Mr. Chairman, I raised the issue on the floor, if we don't get more money—if we don't get more money—I'm afraid we're going to have to get back to selective service. Twelve radio stations from around the country and about four newspapers called, and I was just trying to make the point to my colleagues. I said, ''Your worst nightmare, my colleagues, is to have to vote for selective service.'' And guess what? It may be male and female selective service. So if you really want to have a vote and deal with grandpas and grandmas with their little daughters being drafted, I mean, that could be something.
Now I don't really think that will happen, but I do agree that the quality of life issues, the readiness issues, and the procurement of equipment that our people can really react and protect themselves is of primary importance. And, that will prevent selective service. I don't think we need to have it. We know what our problems are with the retirement plan. I said it yesterday; we made a mistake in 1986 in the retirement plan and nobody complained. And I figured out why, you know, because we grandfathered everybody in. And the youngster joining the Service could care less about his retirement. He just wanted to get away from home or, you know, start a new field, so he didn't think. But when it comes to the second, third, and fourth reenlistment, then it becomes something. So I think we'll change that.
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But all of these things added together—and, Secretary Gansler, you know my feelings are, you know, the outsourcing and privatization and even base closures as the answer, and I've always said that may be one part of it, but it's the other part that's called appropriations, and that's what we're going to have to do.
And I thank you, Mr. Chairman.
[The prepared statement of Mr. Sisisky can be found in the appendix on page 7.]
Mr. HUNTER. Thank you, Norm.
The other distinguished gentleman from Virginia, Mr. Pickett.
STATEMENT OF HON. OWEN PICKETT, A REPRESENTATIVE FROM VIRGINIA, RANKING MEMBER, MILITARY RESEARCH AND DEVELOPMENT SUBCOMMITTEE
Mr. PICKETT. OK. Thank you, Mr. Chairman. I will also be very brief, but I don't want this occasion to pass without saying a few words about research and development, because of all the things we do, I think maintaining an adequate investment in research and development is one of the most important.
And, some of the numbers that have been recited by Mr. Weldon about the decline in the funding available for research and development are certainly cause for concern, if not alarm, about how we are handling our strategy about how we are shaping and executing our military program.
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Specifically, just a few years ago, we were talking about how we wanted to try and preserve the investment in research and technology to ensure a technological edge. We would even go so far to invest dollars in research and development to produce weapon systems that, perhaps, we would never actually manufacture, but we'd have them available. And we could manufacture them on fairly short notice if it became necessary because there were something equal or better somewhere else in the world.
But what we're doing is, that we're diminishing and reducing our investment in research and development which, in my judgment, makes us very susceptible to technological surprise, which is a terror that I think about and is one thing that I believe could be so detrimental to the future security of our Nation.
Just in recent weeks, we've seen examples of where intelligence assessments of missile technology have been woefully misguided, and we've seen that weapon systems are on the horizon that we've not anticipated to be there for another 5 or perhaps 10 years.
So I think it's past time that we move toward developing a sound and sustainable policy to make certain that our technology and technological superiority is second to none in the world. And that to me, Mr. Chairman, is a very, very important change that we and the Defense Department need to make, and insist upon.
And I hope that our witnesses here today can help us move in that direction.
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Thank you very much.
Mr. HUNTER. Thank you, Mr. Pickett.
And I want to ask the chairman—he didn't want to make any opening statement at this time. I think he wants to hear the testimony.
I want to ask the ranking member.
Mr. SKELTON. No, Mr. Chairman.
Mr. HUNTER. OK, thank you, Ike.
Mr. Davis, the floor is yours. Thank you, sir.
STATEMENT OF RICHARD DAVIS, DIRECTOR, NATIONAL SECURITY ANALYSIS, NATIONAL SECURITY AND INTERNATIONAL AFFAIRS DIVISION, U.S. GENERAL ACCOUNTING OFFICE; ACCOMPANIED BY ROBERT PELLETIER
Mr. DAVIS. Thank you. Good morning, Mr. Chairman, Chairman Hunter, Chairman Weldon, and the rest of the subcommittee members.
I have with me today Bob Pelletier, who will be assisting me.
Mr. HUNTER. Could you pull that mic up——
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Mr. DAVIS. Sure.
Mr. HUNTER [continuing]. A little closer there, Mr. Davis?
Mr. DAVIS. Is that better?
Mr. HUNTER. Yes. Pull it a little closer yet there.
Mr. DAVIS. OK.
Mr. HUNTER. If we do it that way, we don't have to turn up our hearing aids. [Laughter.]
Mr. DAVIS. OK; fair enough. I'll try and speak into it.
This morning you asked me to talk about the budgetary plans that we've looked at that DOD has to modernize its forces. I'd like to ask that my statement be submitted for the record, and then I'll just make some brief remarks on a couple different topics.
I would like to offer some remarks about DOD's attempt to shift infrastructure funds to the acquisition programs. I'd like to talk about some risks that we see in the defense program that was submitted here. And I'd also like to offer some observations about the implications for DOD's future modernization program.
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First, about the shifting funds, although DOD has reduced military and civilian personnel, force structure, and facilities over several years, it has been unable to follow through with planned funding increases for modern weapon systems. This has occurred, in part, because DOD has not shifted funds from infrastructure to modernization. In 1997, infrastructure spending was 59 percent of DOD's total budget, the same percentage that was reported in the bottom-up review of 1994. Consequently, DOD has repeatedly shifted planned funding increases for modern weapon systems further into the future with each succeeding Future Years Defense Program. DOD acknowledged in its——
Mr. HUNTER. If you could hold, Mr. Davis?
For members of the subcommittees, I think the best illustration of that is, if you look at the fiscal year 1995 5-year program, and what they, then, projected to spend this fiscal year. It was $60 billion, and when the rubber met the road—that is when we got to this year—as all the members know, it was $48 billion. Is that correct, Mr. Davis?
Mr. DAVIS. Absolutely.
In fact, I'm just going to move to this chart a little bit sooner than I had planned to if that's okay. I wanted to use this chart to make three points. And you took my thunder with my first point already. That's the prerogative of the chairman; that's OK. [Laughter.]
You're absolutely right. What we're seeing is the movement of the funds each year. This represents the last five programs that DOD submitted to the Congress. In 1995, they had planned to spend $57 billion in 1998; one year later, for that same year, they have reduced that to $51 billion. Again, one year later in 1997, 57 becomes 45 and so forth. The point is that this happens every year. In 1996, in 1997, you can keep seeing the numbers going down.
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The second point I wanted to make—I think you also mentioned, too—was in 1995, they had set a goal for themselves to increase procurement to about $60 billion. That was a benchmark they were setting for themselves. And in 1995, they said their goal was to try to achieve that in the Year 1999. One year later, again, in 1996, we see that that became the Year 2000. And, again, in 1997, it moved one year further into the future, into 2001. And that's where it is today.
The third point I wanted to make is one you also made in your opening remarks, but I wanted to reemphasis if that's OK. And these last two lines represented the budgets the DOD sent last year and this year. And when you look at the 5 common years of 1999 through 2003, what we're seeing here is a difference of $16 billion less this year than DOD had planned for those same 5 years 1 year earlier.
This 1999 program is the first program that represents the decisions that DOD made as a result of the QDR. They clearly made a decision that they were going to, in fact, reduce some procurement funds. And they, in fact, did reduce the quantities of some weapon systems.
The other thing that's not shown on this chart, but I wanted to point out, was that this year's budget, the 1999 budget that DOD sent to the Congress includes $25 billion more during these 5 years for operation and maintenance than it did last year. And, in essence, this procurement account is, in part, part of that bill payer for that $25 billion. I'm sorry——
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Mr. WELDON. May I ask you to clear up a point of clarification here, Mr. Davis?
In the request for procurement, are you only using the actual DOD request to us? Or, were you able to go back and talk to the service Chiefs? Because we know in at least two of those years, Shalikashvili briefed the Secretary of Defense on a higher number than was actually brought to us for a request. At least in—I remember one year we got to get the flip charts from Bill Gertz from the Washington Times that were used internally to brief the Pentagon leadership.
Did you look at those numbers that the Chiefs requested, or are you talking about only the numbers that the Pentagon, itself, requested of us?
Mr. DAVIS. These numbers represent the official numbers that the Department of Defense sent to the Hill. It's the official President's budget submitted by the Secretary of Defense.
Also, these numbers—I think it was either Mr. Hunter or yourself said that in the last couple of years, you have increased the defense budget by $20-some billion. That isn't reflected in these numbers. These are the numbers that the Department of Defense sent to the Hill.
So, those were the three main points I wanted to make with that chart.
Mr. HUNTER. What is the total unrealized procurement that's reflected on that chart? Have you got a total on that bottom line?
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Mr. DAVIS. I don't——
Mr. HUNTER. You've got, what, $9 billion?
Mr. DAVIS. I guess it would be—it's an average of 9 times—1, 2, 3, 4, 5, 6, 7, 8, 9 times 9 is 81. So, my guess is that that's a net 81 there, roughly.
Mr. HUNTER. OK. So we've slipped from the administration's own procurement projections and requirements $81 billion over the last 5 years. Is that right?
Mr. DAVIS. Well, it slipped it terms of the years that they wanted to spend that money; that's correct.
Mr. HUNTER. OK, and yet the Congress added approximately 21 over that budget, over the last 4 years?
Mr. DAVIS. That's my understanding.
Mr. HUNTER. So, we have a net loss at this point of about $60 billion. Would you say that's a fair estimate on how far behind we are?
Mr. DAVIS. In terms of the way they had planned it, that's correct.
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Mr. HUNTER. OK. That's right; I'm reminded. The $20 billion increase that the Congress added was not all procurement. All of the majority of it was. So, it would be $60 billion plus that we're behind.
Mr. DAVIS. The second point I'd like to share some observations on deals with the risk in the current program.
DOD made adjustments in its 1999 Future Years Defense Program to decrease the risk that funds would migrate from procurement to unplanned operating expenses. For example, DOD planned to reduce force structure and personnel; reduced quantities of some new weapon systems; increased the O&M accounts by $25 billion to increase spending for a number of things to include depot maintenance, real property maintenance, and spare parts; increased the Defense health program budget and establish an acquisition program stability reserve.
By taking these and other actions, the Secretary of Defense intended that the 1999 budget and its five-year program would be fiscally executable. Modernization targets would be met. The overall defense program would be rebalanced, and the program would become more stable.
Despite these planned actions, the 1999 to 2003 program, like previous programs, is based on optimistic assumptions about savings and procurement plans. For example, considerable risks remain in the service's plans to cut 175,000 military and civilian personnel and save $3.7 billion annually by 2003. Plans for some cuts were incomplete or were based on optimistic assumptions about the potential to achieve savings through outsourcing and reengineering.
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A further indication of the risks can be found in DOD's procurement plans. Specifically, the rise and fall of DOD's procurement spending over the last 33 years has followed the movement of the total budget. However, DOD projects that procurement funding will rise in real terms during the 1998 to 2003 timeframe—and that's the 48 to the 63.5, by 29 percent, while the total DOD budget will remain relatively flat. In other words, as we look at the defense budget, you're looking at a flat budget, but yet at the same time, they're looking to increase the procurement account by roughly—that's 29 percent in real terms, and that's contrary to the way it's worked in the last 33 years.
The last point I'd like to raise, or provide some comments on, are the implication for DOD's future modernization program.
In its QDR report, DOD recognized that current procurement trends have long-term implications. Specifically, it's said that as successive Future Years Defense Programs reduce the amount of procurement programmed in the 6-year planning period, some of these reductions have accumulated into long-term projections creating a so-called bow wave of demand for procurement funding in the middle of the next decade. The QDR report concludes that this bow wave would tend to disrupt planned modernization programs unless additional investment resources are made available in future years, though bow wave is particularly evident when considering DOD's aircraft modernization plans. And Mr. Weldon offered some thoughts on that earlier.
Last year we reported that DOD planned to buy, or significantly modify, at least 8,500 aircraft and 17 aircraft programs at a total procurement cost of about $335 billion in 1997 dollars through the aircraft's planned completions. DOD's planned funding for these aircraft programs exceeds, in all but 1 year between the fiscal years 2000 and 20015, the long-term historical average percentage of the budget devoted to aircraft purchases.
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The good news is that as a result of the QDR, the total procurement of some systems has decreased.
In conclusion, Mr. Chairman, although DOD tried to rebalance its program through a number of initiatives following the QDR, the Chairman and Joint Chiefs of Staff testified last week DOD continues to face difficult funding decisions in trying to balance current readiness against modernization, infrastructure, and quality of life issues. DOD has and will continue to face difficult decisions in an effort to balance its program within projected budgets. Optimistic planning provides an unclear picture of defense priorities because tough decisions and tradeoffs are avoided. In order for DOD to have an efficient, effective program and for Congress to properly exercise its oversight responsibilities, it is critical that DOD present realistic assumptions and plans in its future budget.
Mr. Chairman, that concludes my remarks. I'll be happy to answer any questions that you may have.
[The prepared statement of Mr. Davis can be found in the appendix on page 79.]
Mr. HUNTER. Thank you, Mr. Davis. And, Mr. Davis, I understand you when you refer to the $300 plus billion, you're referring to the TACAIR program and the expected expenditures.
Mr. DAVIS. It's more than just those—it's the $335 billion represented the cost for the 17 programs that we looked at, at that time.
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Mr. HUNTER. And yet, during the period, as I understand it, and as our bomber study panel has acknowledged, the administration doesn't plan to spend a dime for long-range bomber aircraft, with the projection that we can fly B–52's until they're approximately 80 years old. Is that correct?
Mr. DAVIS. I'm not quite sure about that. I think——
Mr. HUNTER. OK.
Mr. DAVIS. I could check that for the record, but I'm not positive of that.
Mr. HUNTER. OK, if you could check on that and get back with us.
Mr. DAVIS. OK.
[The information referred to can be found in the appendix beginning on page 125.]
Mr. HUNTER. Thank you for setting the stage, Mr. Davis. I think you've painted a fairly somber picture, but I think, appropriately, you've simply laid out the facts as they have occurred.
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Thank you, and I'd like you to stick around and listen to the rest of the testimony today and——
Mr. SISISKY. Just one question——
Mr. HUNTER. Yes, sir. Mr. Sisisky.
Mr. SISISKY. Did you say a reduction of 175,000 in uniform personnel?
Mr. DAVIS. No, that included active duty, reserve people, and civilians. That was their plan coming out of the QDR. It was roughly 60,000 military, I think 61,000 civilians, and I think it was like 55,000 or so reservists. I have the specific—I can get you the specific numbers.
Mr. SISISKY. Thank you.
Mr. HUNTER. OK.
And, Mr. Weldon, we'll ask some—any clarifying questions, and then we'll have Dr. Gansler——
Mr. WELDON. Sure.
Mr. HUNTER [continuing]. Take the table.
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Mr. WELDON. Mr. Davis, thank you for your work, and there are a number of questions I could ask. I'll only ask one. In your assessment, I know one of your paragraphs refers to the cost of contingency operations. Contingency costs have been one of the real problems you've had to deal with, simply because of the rate of increase in deployments. My last assessment on using DOD's own numbers was that it's cost us $15 billion in unplanned contingency costs. Do you agree with that assessment? And did you project if the current deployment rate continues—which I mentioned in my opening statement, is higher than any point in time in the last 50 years by a factor of at least 2.5. If that deployment rate continues, did you project out the additional shortfall that's going to occur because we have to pay for those contingency costs?
Mr. DAVIS. Contingency costs, the number that I have in my head is that it's been since the gulf war in 1991, it's well over $10 billion, and I can get those specific numbers. For Bosnia, alone, as of June 1998, when they made the decision to go forward, it was about $6.5 billion, then the costs for the rest of this fiscal year plus future years. So, I'm not sure it's 15, but it's over 10.
Mr. WELDON. We were given $9.4 billion for Bosnia and $15 for—and these are DOD's own numbers that we were given.
Mr. DAVIS. And they may be right.
Mr. WELDON. But did you factor those into your look for the future? Did the current rate of contingency operations and the impact it's going to have in the out years on modernization and R&D if, in fact, this rate of deployment continues?
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Mr. DAVIS. We've discussed that in our report as one of the issues in terms of the risks involved and whether DOD can execute the program that they submitted to you within the timeframes that they submitted to you.
Mr. WELDON. You did not include a specific dollar allocation, so am I correct to assume that if this current level of contingency operations continues, there is going to be even more further harm to our ability to do the kinds of things that DOD says they need to do? Is that correct?
Mr. DAVIS. It depends, from this perspective. For example, this Congress approved an emergency supplemental for contingency operations for fiscal year 1998, and when you—as you well know—when you grant an emergency supplemental, that's over and above the money defense gets. And to the extent that DOD properly accounts and categorizes the incremental costs for these type of operations and, in fact, in your emergency supplemental, you give them the money for that. And they will also ask for an emergency supplemental, I believe, for monies for fiscal year 1999, also.
So, I'm not so sure, therefore, that—now if you ask them to—if they don't account for that in their budget, and, then, they come up and present you a bill and you tell them to, through reprograms or rescissions or whatever, to account for that, then, that clearly exacerbates the situation.
Mr. BATEMAN. Mr. Chairman.
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Mr. HUNTER. Yes, sir.
Mr. BATEMAN. May I clarify something here? Perhaps it's been covered and I missed it as I was reading over the statements. But the DOD supplemental appropriation, is that a supplemental for fiscal year 1998, or are we already talking about a supplemental budget for appropriations for DOD for 1999? Or, are we talking about both?
Mr. DAVIS. It was either March or April of last year, I believe, this Congress passed a supplemental for fiscal year 1998. And they gave them the money, and included in that supplemental was the money to continue, for example, Bosnia operations beyond June.
Now that did not include money for fiscal year 1999, and they did not include money for Bosnia in the 1999 budget that's before Congress that you just authorized. So they're asking for more money for that, and they're asking it as an emergency supplemental; therefore, it would be above the top notch.
Mr. BATEMAN. Emergency supplemental to what, the 1998 appropriated funds or a 1999 appropriated fund?
Mr. DAVIS. It's 1999, it's my understanding. It's 1999, sir.
Mr. BATEMAN. Is there something unusual in a procedure where the administration submits a fiscal year 1999 budget and operation is ongoing and expected to continue well beyond the period for which the budget is submitted, but zero funding is provided for that operation?
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Mr. DAVIS. It's my understanding, Mr. Bateman, that when they submitted—they developed the budget for fiscal year 1999 and submitted it up on the Hill, that the final decision had not been made, or at least announced, regarding the extension of United States forces in Bosnia beyond June of this year.
Mr. BATEMAN. Well, I understand that some people have said that. It stretches my ability to accept it in terms of a credible statement in view of the actual facts, but I understand they've said it. But isn't it kind of remarkable that you go about paying for something the way it's being done if you're interested in any efficiency?
We have been there in Bosnia all through fiscal year 1998; we're going into 1999. We've paid for it, even though it was not budgeted. That means we've paid for it out of something else. What we've paid for it out of has been detrimentally affected by this ''Mickey Mouse'' way of financing things that weren't contingencies, but known, ongoing operations.
I know it's not your fault, but am I wrong to be a little bit disturbed that this is the methodology that's being pursued in defense budgeting by the Pentagon? Or, by the administration—I'll put it that way.
Mr. DAVIS. I think to the extent that operations are ongoing when you prepare a budget, that it's reasonable to assume that you should include the cost of those operations in your budget. And I think that for the 1998 budget, DOD did include a cost of the Bosnia operation through June, and they were working under the assumption that United States forces would be out of there by then.
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Mr. BATEMAN. Well, they worked under that assumption because that's what the American people were told. But even at the time the policy changed, it was virtually conceded, we knew it was going to have to be changed all along and that June 30 was unrealistic.
You made the statement, ''It is reasonable to believe that they should have.'' I'll be more blunt. Isn't it unreasonable for them not to have? [Laughter.]
Mr. DAVIS. I don't think—in fairness to DOD, I don't think it's possible for them to submit a budget to include costs to cover an operation for which the President had not approved yet, or at least hadn't been announced yet.
Mr. HUNTER. Thank you, Mr. Davis.
Do you have any other questions? Does anybody else have any clarifying questions before we get to Dr. Gansler?
Herb, you want to?
Mr. BATEMAN. Mr. Chairman, we'd be here all day if——
Mr. HUNTER. OK. [Laughter.]
Mr. BATEMAN [continuing]. I asked all the questions I have in mind, so I'll forego.
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Mr. HUNTER. OK.
You might—Mr. Davis, I think one good thing we could do to follow up on Curt's question and Herb's statement is, you talked about the O&M shift, the procurement to O&M shift that is taking place. That, obviously, is an unreimbursed, out of hide shift; that's why you have to make the shift, because those were contingency operations presumably that weren't reimbursed. Is that right?
Mr. DAVIS. No. They're not necessarily contingency operations.
Mr. HUNTER. Well, O&M, yes. But that encloses some contingency operations?
Mr. DAVIS. Not necessarily——
Mr. HUNTER. OK.
Mr. DAVIS [continuing]. Because to the extent that they get paid through supplementals for the incremental costs for the contingency operations. In other words, costs that they wouldn't have incurred, had they not been participating in a contingency. What happened, as we understand it, that coming out of the QDR, there was a recognition that the budgets that had been submitted to the Hill were not fiscally sound. In other words, to use DOD's terms, funds were being migrating from certain accounts to others to pay for expenses, some that they maybe should have been able to predict, and others were less predictable. And so, their statement was that in order to put the defense budget on a more fiscally sound basis, that they were going to recognize this upfront, because in the QDR they said that they could conceive of possibly the risk that we could migrate between $10 to $12 billion worth of funds annually. So they were trying to say, ''I'm going to meet this head on.''
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In doing that, they said, ''Based on our Fiscal Year 1998 plan that we submitted to the Hill, we can reasonably see that we're going to need $25 billion more in the period 1999 through 2003.'' So they said, ''Let's not kid ourselves; let's add it to the budget.'' And I think that's not a bad—I think that's being a good process and a good procedure to follow.
But it just so happened, we were working under the budget agreement which said that the top line doesn't change. So, if you move money into O&M, you're going to have to take it from someplace. And the two accounts that became the bill payers were procurement in the neighborhood of $16 billion, and military personnel, in a little over $6 billion. That represents about $22 of the $25 billion, and then there was money in some other accounts.
But what I find interesting about that is that a good deal of that money that was being moved into the O&M account was for real property maintenance, depot maintenance, and spare parts. Now that's to begin for this fiscal year. Those are some of the same items that we hear defense officials talking about in terms of maybe we need more money I think for, and those are the things that are stretching some of their readiness issues that they're talking about.
Mr. HUNTER. OK.
Mr. Chairman, did you have a question?
Mr. SPENCE. Yes, I do, Mr. Chairman.
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Mr. Davis, you've proved some things we've been saying for a good while, relative to your chart on procurement and these 5-year plans. It's always been amazing to me that every time we try to bring up a problem, procurement or otherwise, the answer is, ''We're going to fix that 5-years hence.'' And people forget in five years, hence, those people aren't going to be here. So you're putting it on somebody else's watch to take care of. You're passing the buck to someone else. We've said that time and time again. It doesn't seem to resonate.
And another thing, every time we bring up the problem of trying to point out the difficulties we're having and the readiness and all the rest of these problems and the needs for increased funding, up until just recently, we've either heard denials from the administration, that's DOD, too, as to there being a problem, number one. And, No. 2, we're going to save enough money in other places to fix it. And you point out on page 3 in your testimony about the same thing. ''Specifically, we said that although DOD projected billions of dollars in savings due to management initiatives, it did not have details on how all these savings would be achieved.'' Which brings me to a point maybe you might can help me with.
Every time we bring these points up again, the current diversionary tactic is to say—and I have to say it's been bought into by the military leaders, too, not just the Secretary of Defense—''Give us two more rounds of base closures in 2001 and 2005, and we're going to get enough money from that to fix all these things that need to be fixed right now.'' And I've asked time and time again for them to show me how that's going to happen. Even if we have incurred any savings from the base closures we've already had in realignments—which I doubt, if you don't cook the books by not factoring in the environmental cleanup costs—I don't know that you've had any savings yet. But even if you have had, how are you going to get savings out past 2001 and 2005, ten years past that time to help us in these problems right now? Maybe you can answer that question for me.
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Mr. DAVIS. Well, I can tell you there is no way that base closures in the year 2001 and 2003 is going to produce any savings in this FYDP. In fact, the Future Years Defense Program that you've already authorized included a—they anticipated that they would get base closures; that was their going in assumption. And what they did in the program that they submitted to you is a cost of, I believe, it's about $2.3 billion. In other words, they recognized to have a base closure, there's upfront costs, which is what happened in last base closures. You have upfront costs before you can achieve savings. So this FYDP that they presented to you includes a cost of $2.3 billion for base closures, not any savings through the future rounds of base closures. They cannot save money in—I mean, I guess, I mean you just can't do it. Obviously, they could defer some construction maybe, but their own numbers are that it's upfront costs in this through 2003.
Mr. SPENCE. Obviously, you can't. But all they do is keep repeating it. [Laughter.]
And you try to ask them that or tell them that, and they keep repeating it. They don't give you an explanation for it, and that's what you're seeing right here.
Mr. DAVIS. Right. The only way, outside of as long as you're operating within a level budget—now if you increase the budget, you know—the only way that you're going to get more money into a procurement account is that you've got to, in part, reduce the infrastructure part of defense. And in order to do that, you have to have fewer people, and you're going to have to have fewer facilities, and you're going to have to consolidate, streamline, and make more efficient the operations that are already ongoing.
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Mr. TALENT. I'm sorry, is the chairman finished? Mr. Chairman, can I——
Mr. HUNTER. Surely.
Mr. TALENT. I'm sorry, Mr. Chairman, are you finished?
Along those lines, Mr. Davis mentioned, I think, in several statements here that we thought earlier in the decade that we could save money by postponing modernization. So they continued to use existing platforms, even though they became very old. And then we found out—and why this should have surprised anybody, I do not know that actually it cost an enormous amount of money to keep older weapons platforms in operations, and so that, in fact, you were not getting as many savings. [Laughter.]
As you thought, because the maintenance costs of maintaining those platforms and those systems were so high.
Now given where our tempo is, I don't know how—would you explain to me how we can save money by reducing the number of people? It just means we're going to have work the people we already have a lot harder. I have talked to people in the armed services who are working, in effect, two jobs now. It's going to make retention more difficult. It's going to exacerbate the pay problems.
Mr. DAVIS. Yes.
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Mr. TALENT. I mean, has anybody studied that end of it, when you talk about reducing the force further to save money?
Another thing, in the Reserves—I heard you mentioned a 50,000 reduction in the Reserves. My brother-in-law is in the Reserves. I'm very close to the Reserves. They're going to start leaving.
Mr. DAVIS. Yes.
Mr. TALENT. They didn't sign on for this. And then what are we going to have pay? So, I mean is that really an answer, even assuming we are willing to do it?
Mr. DAVIS. Let me try to answer maybe—and if I don't answer it, get me to try to do a better job. Mr. Weldon, in his opening remarks, talked about deployments and 26 deployments, I think, in a certain timeframe. And he said that, within the top line and with reducing money and increasing deployments, how could we do it? And I wrote down here, to me, what we have is a mismatch. And that's the point that we've been reporting for the last number of years.
When DOD sends their budget up to the Hill, they have a whole bunch of programs in there. And those programs, when you add them all up, really don't add up to the dollar figure that's in there. And we've always referred to that as a mismatch between program and budget.
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And I think Mr. Weldon was basically saying it in another way. He was using deployments—if I can use this analogy—he was using deployments for programs. In other words, ''This is what I want to do; this is what my plans are.'' And when you look at it and the amount of money you have, maybe you just can't do it. And you have to have a mismatch. So you have to figure out—and that's a management challenge—to figure out how you're going to get those two things in line. And that's part of the management.
Now one way is, I mean, you can throw more money, you can give them more money, and maybe that's the right answer. But I would suggest, though, that if you have a problem, necessarily more money might not be the right answer. We need to begin fixing some of their problems because, for example, we've been hearing testimony and seeing articles in the press recently about the inefficiencies and the sloppiness that exists in the defense accounting systems. As a result of that, millions and billions of dollars are being lost to defense through all kinds of mismanagement, fraud, and so forth.
So, there is money out there. With better management and more attention to some of these things, and correcting some of the root causes, can also be a help.
I hope I——
Mr. TALENT. That's fine.
Thank you, Mr. Chairman.
Mr. HUNTER. OK; thank you.
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And, Mr. Davis, thank you for setting the stage here for the testimony of the Department.
And, Dr. Gansler, you're up. Get those crutches and hobble up there, and you can bring anybody that you'd like to up to the table. And you might, if you'd like to introduce any of your folks, please feel free.
And, Dr. Gansler, welcome, and if you could in your opening statement—your written statement will be accepted for the record without objection. We'd like you to include in your testimony any disagreement that you have on the basic statements that Mr. Davis has laid out.
STATEMENT OF JACQUES GANSLER, UNDER SECRETARY OF DEFENSE FOR ACQUISITION AND TECHNOLOGY, U.S. DEPARTMENT OF DEFENSE; ACCOMPANIED BY LT. GEN. FRANK CAMPBELL, U.S. AIR FORCE, DIRECTOR FOR FORCE STRUCTURE, RESOURCES, AND ASSESSMENT, JOINT CHIEFS OF STAFF; REAR ADM. RICHARD WEST, DEPUTY DIRECTOR, BALLISTIC MISSILE DEFENSE ORGANIZATION; LT. GEN. PAUL KERN, MILITARY DEPUTY TO THE ASSISTANT SECRETARY OF THE ARMY FOR RESEARCH, DEVELOPMENT, AND ACQUISITION; LEE BUCHANAN, ASSISTANT SECRETARY OF THE NAVY FOR RESEARCH, DEVELOPMENT, AND ACQUISITION; LT. GEN. GREGORY MARTIN, AIR FORCE PRINCIPAL DEPUTY ASSISTANT SECRETARY FOR AIR FORCE ACQUISITION; LT. GEN. MICHAEL WILLIAMS, U.S. MARINE CORPS, DEPUTY CHIEF OF STAFF FOR PROGRAMS AND RESOURCES; AND REAR ADM. CHARLES YOUNG, DIRECTOR OF SUBMARINE TECHNOLOGY, NAVAL SEA SYSTEMS COMMAND
Dr. GANSLER. Let me first apologize for having hopped up here. I've played one too many volleyball games, and at my age I should know better.
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Let me also begin by thanking you for inviting us here. I have a formal statement that I'd like to have read into the record, and I'd like to give a brief summary of that. I'd also like to introduce the people with me here.
At your request, you had suggested that I bring along a representative of each of the services in order to answer some specific service-oriented questions, so we have that as well. In addition, Lieutenant General Campbell, from the Air Force, who is the Director for Force Structure, Resources, and Assessment, will be here to answer any questions from the Joint Staff.
Specifically, people who I have here with me are Rear Adm. Richard West, who's the Deputy Director of the Ballistic Missile Defense Organization; Lt. Gen. Paul Kern, from the Army, he's the Military Deputy to the Assistant Secretary of the Army for Research, Development, and Acquisition; Lee Buchanan, who has recently been sworn in as the Assistant Secretary of the Navy for Research, Development, and Acquisition; Lt. Gen. Gregory Martin, Air Force Principal Deputy Assistant Secretary for Air Force Acquisition; Lt. Gen. Michael Williams, U.S. Marine Corps, Deputy Chief of Staff for Programs and Resources; and, finally, Rear Adm. Charles Young, Director of Submarine Technology at the Naval Sea Systems Command.
I'd like to begin very much by addressing the fact that I think your hearing here today is the right one. I mean I think we need to address the critical long-term readiness issues that are basically underlying the questions that were raised earlier.
As far as the GAO comments, Mr. Chairman, we don't disagree with the numbers that they've presented. Essentially, those are the numbers as I see them as well. Clearly, the Secretary, Secretary Cohen, has tried to address some of those issues in submitting the 1999 budget; that was his budget, and we're trying to address the specific issues of that shift from modernization into operation and support dollars.
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I and the Service representatives, who are here with me today, very much appreciate the fact that you and this committee are committed, as we are, to maintaining the national defense that is the strongest and, clearly, the envy of the world.
You asked me here because, I think, of our mutual concern for the state of our long-term military readiness. So it comes as no surprise when I tell you that the most powerful Nation is beginning to show some wear around its defensive edges. We are, undoubtedly, still the unchallenged military power. Our readiness is still high, but that won't last long if we don't act now. This is an era of rapidly changing threats. And I need not tell you that; we've discussed that recently. Technical requirements to meet those threats require us to keep pace. But there are so many conflicting demands for defense dollars and so many competing demands for a dwindling supply of funds that we are very hard pressed to meet even our most critical needs for items that we cannot do without, let alone to have funds to do some of the things we must do or would like to do, certainly.
I suppose that, with hindsight, we can see why we are in the situation we are today, where we haven't kept step with the changing requirements of the military. I believe the answer lies, in part, with the decision to cut back on modernization after the end of the cold war. We had the best equipment in the world, and we had lots of inventory, so we decided to coast for awhile. As the defense budget rapidly declined, however, modernization was deferred in order to fully fund current operations and support. And that's the data that we saw. And as a result, to ensure current readiness, we did impact long-term readiness.
This strategy enabled us to maintain high readiness and the operational tempo required during the extremely unstable period that followed the collapse of the former Soviet Union.
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As you know, during the past 8 years, we've deployed forces around the globe 38 times, almost 4 times that of the previous 30 years. But, meanwhile, our procurement account to fund modernization has fallen 56 percent in real terms over the last 10 years.
The reduced modernization budgets, combined with the increased military deployments that you've noted already this morning, have taken their toll. Our weapons are overworked, and they're aging. By next year, for example, the average age of the aircraft fleet will be over 20 years. Because many of our systems are old and overworked, they require more frequent and costlier maintenance. This accelerated maintenance is costing us much more each year in repair costs, down time, and maintenance tempo.
We must keep our equipment in good repair to maintain readiness—no question about that. However, it drains our resources—resources which we should be applying to modernization or even replacement of some of the existing systems as they become increasingly old and obsolete—particularly obsolete, relative to the rapidly changing technology of the information age. And we also have to devote resources to the development and the deployment of the new systems that are required to counter the anticipated asymmetric threats of the early 21st century—biological, chemical, ballistic missiles, so forth.
Thus, with constrained resources and increased costs to maintain readiness, we continue to stretch out our modernization schedules and reduce the quantities of the new equipment and information systems we purchase, thereby, raising their costs still further and adding to the delay in modernization.
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It will be extremely difficult to reverse this trend. In fact, I've called this situation the death spiral in the speech that you quoted, Mr. Chairman. And, in fact, we will come to that; we will come to the death spiral if we don't act decisively, now. It will require significant cultural change in the way we've been doing business. It will also require a sense of urgency that, in many cases, we don't perceive today—although I do perceive it here—and very difficult program decisions in terms of funding.
Three things drive our need for immediate action. First, while we were once able to talk about threats that we anticipated in the early 21st century——
Mr. HUNTER. Dr. Gansler, just on that point——
Dr. GANSLER. Yes.
Mr. HUNTER [continuing]. Because it's such a significant point. Would it also require a higher top line?
Dr. GANSLER. It would be—I mean, everyone would like to have more money.
Mr. HUNTER. Well, yes; that's not what I asked, though.
Dr. GANSLER. The constraint that we've been living under, as you know that your agreement between the Congress and the administration, and I'm going to actually refer to the possibility of more dollars in a minute. The constraint we've been living under, in terms of the agreement between the Congress and the administration on the balanced budget agreement, required us to stay at that top line.
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Mr. HUNTER. I understand that.
Dr. GANSLER. So, we were doing the shifting within that.
Mr. HUNTER. We understand that.
Dr. GANSLER. Certainly, everyone would like to have had more money for this area. Unfortunately, it probably is the same situation for other areas of the Government, and that decision is one the President makes, as you know.
Mr. HUNTER. Well, I understand that——
Mr. BATEMAN. Mr. Chairman.
Mr. HUNTER [continuing]. But you've opened that question, ''What's it going to take?'' And you said cultural change, difficult decisions.
And my question is, will it also require, in your personal judgment, a higher top line?
Dr. GANSLER. I think if we're unable to achieve—and I'm going to actually comment on that a little later—but if we're unable to achieve the needed changes—the base closures, the reductions in the infrastructure, the acquisitions reforms, and, in some cases, I believe, even termination of some traditional programs, or less procurement of the traditional ones, in order to shift our resources. Then, we'd essentially have no alternative. We just are not going to be able to buy that equipment that would require more dollars.
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My personal assessment is that we could, within approximately the dollars that we have now, if we could make these changes, be able to live with it.
Mr. HUNTER. OK.
Mr. Bateman.
Mr. BATEMAN. Yes. Mr. Chairman, I think it ought to be useful to try and get some clarification about the fiscal mess that we're in, in which Dr. Gansler can speak of, an impending or possible death spiral.
It's not to be blamed just on the fact that we had a budget summit agreement with a top line for the defense that's inadequate. Because I want to hear some recognition from the administration—and that means from the Commander in Chief—that we, on this committee, who would have been happy and did resist, as far as we could, as much as we could, the imposition of an unrealistic top line on defense, but where we got no support, but, in fact, opposition from the Commander in Chief. Now the Commander in Chief can't have it both ways. If we've got virtually a very, very unsatisfactory situation confronting us and that others have recognized for years, how dare him say it's your fault because of the budget summit agreement that I insisted upon and opposed being increased for defense.
Dr. GANSLER. As you know, Congressman, the President, after listening to the Chiefs and the Commanders in Chief, has recently said that he was going to be willing to consider an increase.
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And, of course, the first priority, as stated by the Chairman of the Joint Chiefs, was associated with immediate readiness, then, also, with quality of life—which a number of you have commented on already—and, also, with modernization. We have the sort of duel, you know, revolving set of priorities, if you will, that all have to be satisfied. Clearly, the longer term readiness, the modernization that you're addressing, is one of those priorities and the one that, of course, I'm most responsible for, personally.
Mr. BATEMAN. Well——
Mr. WELDON. Mr. Chairman, I just want to add one thing here, since we're in this line; I don't want to interrupt.
Mr. HUNTER. And, Dr. Gansler, yes, we're going to let you finish your testimony. [Laughter.]
But this is a very important point here.
Dr. GANSLER. I agree; it is.
Mr. WELDON. Because I think all of us—and I'll speak for myself, but I think it's safe to say, knowing the feelings of my colleagues—agree that we should have more top line money available for defense. But, you know, I don't think you should limit, the way you have, your solutions to the problem, which you're only shifting dollars within. I mean, why haven't you even considered the fact that this administration, when we get into the deployment level we're in, ought to ask our allies to pick up some of the cost of that deployment? Why isn't that one of the options?
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I mean, Desert Storm cost us $52 billion, and the President went out and got us $53 billion. We could solve $15 billion of the contingency problem if, every time he commits to troops, he says to the nations of the world that we'll put their troops in, help us pay for it. Now that's a realistic option. That doesn't even involve breaking the budget caps. What's your thoughts on that?
Dr. GANSLER. Well, first of all, I believe personally, that all of our future conflicts, or certainly the overwhelming majority of them, will be coalition operations. There's no question about that. I mean, of course, that's what we're going through now, with respect to Kosovo, you know, building a coalition. And I think that, clearly, we are going to have to do that.
We are, also, continuing to get money from our allies. I mean, Korea, for example, right now, given their economic conditions is not in a very strong position, but they are continuing to pay for the troops there.
I think your point is well-taken. We need to continue to get support from our allies.
Mr. BATEMAN. Mr. Chairman, I've read Dr. Gansler's statement that refers to the importance of coalition efforts and how we're going to fight our future battles through coalitions. But I also read the newspapers, and everywhere I can look we've got less and less coalition support, not more and more. Even to the extent where of anything that I read and anything that I've heard, even from some circles in the administration, would indicate if you want to do Kosovo, you've got to almost cudgel us to even participating at all, or not do it at all.
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That doesn't speak to me that we are sufficiently competent in the management of our foreign policy that we can depend upon coalition partners anymore. Or, if so, it's to a decidedly lesser degree than it used to be. And, yet, you're going to solve the dimensions of our defense budgetary problems by, ''Oh, we're going to do it by coalition.'' Doctor, it just doesn't work.
Dr. GANSLER. No, I did not mean to imply we're going to solve our budgetary constraints by that way. I was commenting on Chairman Weldon's suggestion about the cost-sharing part of it.
My personal view was, with regard to the fact that from a geopolitical viewpoint, we are going to end up in coalitions. I don't think that will solve our budgetary problem; we have to solve our budgetary problem. I agree with you, Congressman.
Mr. SISISKY. Since we got in this, I want to——
[Laughter.]
And since you got into, you know, if we can work some other things out, other than appropriations, I believe it has to be appropriations. And let me tell you why. Just quoting from you. You said additional base closures. Well, you heard if we pass in the next Congress, it will be 2002 and 2003. And I'll guarantee you, I will never vote for two additional base closings, and let me tell you why. And this is what is discouraging. I think you need to know this.
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Just an example, I think in 1991 base closings, they closed the Naval Aviation Depot [NADEP] in Norfolk, Virginia; 6,000 people out; moved it to Jacksonville. Fine; they won the—there ain't no problem. I mean it was a problem but——
[Laughter.]
Guess what? In 1993, they took the planes out of Jacksonville and sent them to Norfolk. So we got them repaired down in Jacksonville—I mean it helps US Airways, I grant you, flying people back and forth, but it doesn't make sense.
They did the same thing when they closed Charleston. Took the ships out of Charleston; sent the Navy communications network down there. I think it was called NAVELEX or something. So, the ships are in Norfolk and Jacksonville——
[Laughter.]
And doing the communications in Charleston. This is why I lose faith in it. And I would only want one base closing. I mean so at least we could plan constructively of what we do.
Now, you talked about termination of contracts for a number of traditional weapon systems. I know everybody is sitting on the edge on their chairs——
[Laughter.]
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But could you give me some examples——
[Laughter.]
Of what you're talking about?
Dr. GANSLER. I thought you might ask. [Laughter.]
Mr. SISISKY. I couldn't let that one go by.
Dr. GANSLER. What I have in mind there is not specific programs, but the difficult decisions that we have to make. Historically, as programs grow in cost or run into trouble technically, we continue to increase the cost for them and continue to accept the technical reductions in performance. At some point, I think, clearly, we're not going to be able to do that.
And that's what I really think we need to do, is to look very seriously at two sets of issues; one of which is programs whose costs are unaffordable and/or in trouble; the second one is those systems that we have to be able to afford. And if we have resource constraints which, no matter whether we get more appropriations or not, we're still going to have resource constraints to be able to make sure that those things which are the highest priority threats—such as the ballistic missiles that we were talking about earlier—are getting the resources, at perhaps the expense of some of the more traditional systems.
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That shift is very difficult and politically to make. I mean not just from the Congress, but also from the military as well. I think we're going to be faced with some difficult decisions, in terms of which programs we're going to be able to pay for with or without increased appropriations.
I'm just saying I think that's one of the things we're going to have to pursue is to be——
Mr. SISISKY. Well, I won't put you—obviously, you don't want to mention systems.
The next one was drastic improvement cycle time. Certainly, if you can do that, then you've really done something. But the next one is the one that get's me. Competitive sourcing through all but inherently Government functions and a rapid reduction in the civilian and military workforce. And I tell you why it bothers me.
I got a call about a month ago from TRICARE, which is outsourcing now—and I won't mention the base here—but I would mention that they had to put Federal workers in there to answer the phones and make the appointments. We had one criteria in the contract—which fortunately they're going to cancel that contract—that they had to answer the phone in 120 seconds. But guess what? They kept them waiting 45 minutes on the phone. We had to use civilians; I complained to Secretary DeLeon.
Dr. GANSLER. Yes.
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Mr. SISISKY. If anybody is going to do anything—because these are the corporations for profit. It's going to be, number one, in training and it's going to be, No. 2, in staffing. U.S. Army Training and Doctrine Command is doing an outsourcing now, an A–76 program, that's going to come due, I think, in November, the study, eight bases.
Dr. Gansler, guess what happened? And I found out the 1999 budget is already cut 20 percent. So, when I questioned this, they said, ''Well, we're really save 30 percent.'' I asked the TRADOC commander, a four-star general who I respect—he just retired, I have a lot of respect. ''General Herzog, is this going to have any impact on training?'' And he thought for just a moment and he said, ''Yes.'' We can't afford that, and that's what's happening in the ounce that we forget. All we care about—and I'll have to say this administration, too, and I mean I'll say it—is the reduction of FTE's. That's all I hear, full-time equivalents. Now you can reduce a 100 full-time equivalents, but you may add 120 on other jobs on it——
[Laughter.]
But that doesn't make any difference. You've reduced the FTE's. And that, to me, is that all of the things that we've been doing—and I've been saying that now for two or three years, and everybody says, ''Well, you have a proverbial interest.'' You're not going to save the money that you think that you're going to save, and still do the same thing.
Now you've got some other ones, but I don't want to take too much time——
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Dr. GANSLER. Well, no. Let me comment on both points, the base closures and the competitive sourcing, because they are issues of significance in both cases.
On the base closures, the savings do not come in the first five years, as the GAO properly pointed out. In fact, there's actually money upfront that you have to put in, in order to make the savings in the out years. Those savings from the base closures are going to be required because of the bow wave in procurement that we have coming up beyond the 5-year period, in order to be able to buy the ships, planes, and tanks that are under development now.
What the GAO has shown, what the CBO has shown, Inspector General has shown is that, in fact, the base closures to date have resulted in the savings. I mean those analyses, not by the DOD—we've done them, also—but by the CBO, Congressional Budget Office, by the GAO, and by the IG. Now we have disagreements about the amount of savings and the methodology and so forth, but the bottom line in all of those reports were that there were significant savings. And we're talking about billions of dollars per year in savings. Now, the fact that it doesn't appear in this immediate 5-year period, you know, you're not going to make the benefit from that in this short-term period.
The competitive sourcing—I think it is important to distinguish competitive sourcing—which is what Secretary Cohen has been pursuing through the defense reform initiative—and simply outsourcing, which is different, in the sense that competitive sourcing says even if the public sector wins through these competitions, that the Government benefits in terms of, first, improved performance, and, second, in terms of cost reductions. Now what we have found in over the 2,000 competitions that have taken place to date, about 50 percent of the time, the public sector wins, and about 50 percent of the time, the private sector wins. When the public sector wins, there is at least a 20 percent saving, on average. When the private sector wins, it's about a 40 percent savings. That's why the response you got was that there would be a 30 percent savings on average projected. But we didn't, in the budget, take that 30 percent. What we did was we put the 20 percent in.
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Now, let me make one other point, because I think it's a relevant point to the question of the military reductions. It is our intent wherever it makes sense—we have a lot of people who wear uniforms that don't carry guns, if you will. In other words, they were doing nonmilitary jobs but in the uniformed positions. We would like to convert those into combat positions. And if we can get a 30 percent savings, and if some of those happen to be military as a result of the administrative-type functions, then we want to put those into combat positions. I mean this is certainly, I know, the intent of the Marines and others to do that, to shift that. In some cases, where we're having to force downsizing, we'll take it in the military side, as well. But the real objective here, we have not over the past 10 years now, matched on the civilian downsizing equivalent to the total force structure downsizing, and we have to do that. Same thing, we haven't downsized the infrastructure corresponding to the force structure. We need to do that.
All right, go on with——
Mr. HUNTER. Go right ahead, Dr. Gansler. And you might want—once again, your statement is admitted for the record, without objection, so if you—this was an important point that we get to, the top line point. If you want to go ahead and summarize from there.
What we're going to do, incidentally, when Dr. Gansler finishes his statement, and we might have—I tell you what we'll do. Why don't—we'll break. I don't want to take a full hour or so for lunch because we have a limited amount of time. We've got a hearing on the New Jersey at 4:00 here. So, we'll break for about 30 minutes when you finish your statement.
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Yes, when is the——
Mr. BATEMAN. Mr. Chairman, I think the vote is about 1:00, so I don't know how that figures into your plan.
Mr. HUNTER. The vote's going to be about 1:00?
Mr. BATEMAN. That's what I am told; yes. And there will be two votes.
Mr. HUNTER. Why don't we go until about 12:45, and we'll try to resume maybe about 1:15 or so, then.
So go ahead, Dr. Gansler, go ahead and finish your statement. And we'll have, also, General Skibbie and Dr. Krepinevich also make their statements. Then, we'll presumably, we'll be close to that time. We'll take a break; we'll come back after the vote.
Dr. GANSLER. What I was commenting on was our need, I believe, for some immediate action in some of these initiatives that we were just talking about.
First, I believe that three things drive this need for immediate action. First, I believe there's a need because the threat has become much more real in terms we've talked about longer term threats in the 21st century with the bombings in Kenya and Tanzania and the missile from North Korea. We see the threat is obviously much closer. Second, we have to reverse the budget-consuming spiral that I described by our escalating maintenance costs. If we don't improve the reliability of our current equipment, the maintenance costs are going to totally drain the funds from the long-range readiness programs. And, finally, many of the systems under development today will not become fully operational until the end of the first decade of the 21st century. So, further delays in those programs, due to the budget shortfalls, will make it even more difficult to meet a threat that's coming closer today. This is that bow wave that I mentioned in the out years.
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As I said, President Clinton has responded to our immediate readiness needs by requesting additional funds. And we must also respond to the urgent need to act on our longer range readiness problems, the need to modernize. I think it is of the highest priority and the greatest urgency that we act now in this modernization area.
We have to make the necessary transition away from traditional weapons systems that were designed to counter a cold war. We have to move ahead without delay on those new systems which we believe will be the most effective in meeting the unpredictable and dangerous threat from terrorism, rogue nations, and other asymmetrical threats, programs such as theater missile defense, counters for biological, chemical, and, also, information warfare. We have to modernize those legacy systems we have to live with as we engage in long-range modernization, increasing the reliability, creating an integrated digital battlefield. And the same thing applies in our infrastructure systems that have to be modernized, like our logistics systems. And last, we have to design and build our future systems to be much more affordable so that we can buy them in sufficient quantities.
Now these are all difficult, but absolutely essential, decisions that have to be made.
In closing, let me observe how much we appreciate the past support we have received from you, in the Congress, as we make the necessary transformation to ensure long-term readiness. In the past, you have responded to our need to cut back on unnecessary infrastructure and to take positive steps to reform our acquisition process, and we greatly appreciate that.
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Clearly, further steps are required. We look forward to continuing the positive and beneficial partnership we have with you today. The representatives of the services who are here with me today join me in pledging our continued best efforts to achieve modernization and to improving both our short-term and, particularly, our long-term readiness.
Thank you, Mr. Chairman.
[The prepared statement of Dr. Gansler can be found in the appendix on page 96.]
Mr. HUNTER. Dr. Gansler, thank you. We appreciate your statement and bearing with our questions here as you went through it. We'll have some more questions for you when we get finished.
What I'd like to do now is to ask General Skibbie, president of National Defense Industrial Association, to come up. And also Dr. Andrew Krepinevich.
And General Skibbie, why don't we give you an opportunity to speak first.
And we'll try to get our opening statements finished by about 12:45, and then we'll take at least a 30-minute break for a quick bite or whatever respite other folks might want, and also the congressional vote.
Don't trip over Dr. Gansler's crutches there, that could be dangerous.
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STATEMENT OF LT. GEN. LAWRENCE SKIBBIE, PRESIDENT, NATIONAL DEFENSE INDUSTRIAL ASSOCIATION
General SKIBBIE. Well, we commensurate about broken bones because I was—last year at this time I was on crutches.
Chairman Hunter, Chairman Weldon, members of the Procurement and Research and Development Subcommittees, I'm Larry Skibbie, president of the National Defense Industrial Association. And it's certainly a privilege to be here today to discuss the issue of defense modernization. That's a subject worthy of a great deal of thought and discussion.
Since my full statement has been submitted, I'll summarize my remarks with your permission.
Modernization is even more challenging during transition periods such as the one we're now in, as we seek to change out current systems for the next generation of systems. Of course this change out has to be done without downtime and often, in many cases, when using the current systems to their fullest. Whatever choices are selected will certainly have an effect on the vitality of both the Government and commercial technology base and industrial bases, the size of those bases, the people, the facilities. Further, such issues as retention of requisite skills in those bases, core competencies, critical capabilities, and adequate competition in those bases are significantly influenced by whatever course we take on the course of modernization.
In our view many elements should be considered when determining what should be done in the future. We believe those elements fall into four basic categories, and they are: requirements, timing of the process, budgetary factors, and policy. And in the interest of time, I'll only concentrate here in my comments on the issue of timing of the process.
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That's the second element of those we think you should consider, and it refers to the timing of the process. Today, for example, nearer term modernization of current equipment has properly taken priority over new starts. We're doing this in order to leverage information age technologies that make our smaller forces more effective for the full spectrum of challenges that we face.
This nearer term leveraging needs to be continued because in the year 2010, all the services will essentially field combat forces that are 70 to 80 percent legacy systems—that is, those we currently have in being, whether that's aircraft, ships, or tanks. And that means that Air Force F–15's, Army M1's, Navy Aegis cruisers, and Marine helicopters, as examples, will continue to be deployed. But 2010 is not the end of the story. Many of those war fighting platforms now in the hands of our combatant forces will continue well into the future, beyond 2010.
Thus, it will be necessary to continue to support current systems, provided they're technologically improved from earlier models, reverse escalating maintenance cost trends, reflect service requirements, can operate in a joint environment, and support coalition warfare.
Now notwithstanding the long system lifespans, I think our military planners have properly recognized the needs for changes that we're now experiencing. And they've developed a clear logic stream for making the transition from current systems to modernized legacy systems on into new systems. Their work in battlefield labs, through maneuver exercises, advanced war-fighting experiments, have allowed them to make decisions with regard to modernizing the legacy systems, developing new doctrine and tactics to go with those improved systems, and in many cases modifying and downsizing their force structures in response to other budgetary demands.
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Accordingly, the investments in modernizing legacy systems we think needs to continue, since that is the presumption upon which the new force structures have been made, which new doctrine and tactics are based. If these investments are not made, our military forces will be faced with reverting to their former cold war structures and configurations. And, of course, those are much more manpower intensive.
If we now reverse course on modernizing legacy systems, we'll have witnessed an apparent bait and switch that modernization would occur, thus permitting the forces to downsize, and then recanting on that essential modernization of equipment.
Therefore, we believe that our commitment to modernization and upgraded legacy systems must be sustained. Furthermore, we think it should not be an either/or proposition; nor is it something that occurs overnight. That is, we simply cannot declare we're going to eliminate legacy systems and wait for the next generation. Lead times involve not only production, but also logistics support, training, and doctrine development. So appropriately, the services have or are developing logical, evolutionary transition plans that must be viewed on a continuum over time. And in the nearer term, we believe we should proceed with modernizing those legacy systems that meet the criteria that I mentioned. In the mid term, we should begin with the introduction of new systems and the retirement of old systems. And, finally, in the longer term, we should field and deploy to the maximum extent feasible the new systems.
So our suggestion to the subcommittees would be that in the future years, they look for balance in the Department of Defense investment strategy, with sufficient funding provided for nearer term life extension and upgrade of current equipment, and for the few high-priority new starts that will selectively replace and augment legacy force equipment. The industrial base supporting that and the technology base will evolve as those systems go through the process of development and transition to production.
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In addition, the services should provide you their vision and program structure to ensure that this incurs without significant risk.
So finally, in the policy arena, there are a number of actions that can be taken to stretch needed funds for modernization. And I think they've already been mentioned, because they include drastically reducing the cost of logistics tail, eliminating the excess infrastructure, and additional acquisition reform initiatives, as well as strengthening our defense export posture.
Chairman Hunter, Chairman Weldon, members of the subcommittee, thank you for this opportunity to comment, and I'll be able to respond to your questions.
[The prepared statement of General Skibbie can be found in the appendix on page 106.]
Mr. HUNTER. Thank you, general, and we'll let Dr. Krepinevich make his statement, and then we'll take a break for about 40 minutes or so—that should get us past this vote and give everybody a chance to take a little break.
Doctor, the floor is yours.
STATEMENT OF ANDREW F. KREPINEVICH, JR., EXECUTIVE DIRECTOR, CENTER FOR STRATEGIC AND BUDGETARY ASSESSMENTS, AND MEMBER, NATIONAL DEFENSE PANEL
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Dr. KREPINEVICH. Thank you, Mr. Chairman; and thank you for the opportunity to address the two subcommittees on this important issue of defense modernization.
I've submitted a prepared statement for the record and, with your permission, will summarize my remarks.
I would like to focus on three issues. First, what is the goal of our defense modernization effort? And is our current approach to modernization likely to achieve it? Second, what are the challenges for defense modernization? And, third, what are the characteristics of a modernization strategy that would support military transformation?
I believe the goal of our defense modernization program is to ensure that as new capabilities are fielded, we are acting to minimize the risk to our security over the long term. And, in fact, there appears to be a broad consensus among senior defense officials that we need to transform our military.
But I would argue that our modernization strategy is more oriented currently on meeting the challenges of an era that is passing from the scene, than the one that will soon emerge and that will present us with new and very different kinds of challenges as the consequence of an emerging miliary revolution.
Moreover, the mismatch between what we're planning to spend on defense modernization and the budgets we are currently projecting to fund it is crowding out resources needed to sustain transformation. Consequently, our modernization effort may produce a force whose effectiveness will decline rather precipitously at some point over the next two decades, while its principal value will be realized during a period of relatively low risk to the national security. If this occurs, the consequences may be severe. At best, we would have to recapitalize the force at great expense; at worst, we could see our vital security interest placed in jeopardy.
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In short, while the modernization program suffers from a serious program funding mismatch, the primary problem with the approach to our defense modernization is not at its core budgetary, rather it is strategic.
Now why the need for defense transformation? Well, simply stated, we need to transform for two reasons. One, because the challenge is that our military forces are going to face are going to change dramatically over the next 10 to 20 years; and, second, because rapid advances in technology are going to allow us to place new and different kinds of tools into the hands of our commanders to meet these challenges and to exploit opportunities.
Now the National Defense Panel, of which I was a member, laid out a number of these challenges, but let me—just for—summarize one. It has to do with power projection.
Our belief—or my belief, I should say—is that our traditional method of deploying air and ground forces at or through forward ports and airfields is almost certain to be invalidated by the growing proliferation of national and commercial satellite services and a proliferation of missile technology. Such satellite services will allow even regional rogue states to monitor U.S. deployments into forward bases and hold them at risk through the employment of large numbers of ballistic and cruise missiles.
Senior U.S. military leaders have already voiced concern over our ability to deal with such a contingency. For example, Gen. Ronald Fogleman, then the Air Force Chief of Staff stated,
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Saturation ballistic missile attacks against littoral forces, ports, airfields, storage facilities, and staging areas could make it extremely costly to protect U.S. forces into a disputed theater, much less carry out operations to defeat a well-armed aggressor. Simply the threat of such enemy missile attacks might deter the United States and coalition partners from responding to aggression in the first instance.
And then there's a Chief of Naval Operations, Adm. Jay Johnson, who expressed very similar concerns when he declared,
Over the past 10 years, it has become evident that proliferating weapon and information technologies will enable our foes to attack the ports and airfields needed for the forward deployment of our land-based forces. I anticipate that the next century will see those foes striving to target concentrations of troops and material ashore and attack our forces at sea and in the air. This is more than a sea-denial threat or a Navy problem. It is an area-denial threat whose defeat or negation will become the single most crucial element in projecting and sustaining U.S. military power where it is needed.
If this is the case, if forward bases, ports, and airfields are at high risk of destruction or preemption early in a conflict, how will we safely deploy our relatively short-ranged tactical air forces, our heavy mechanized divisions? Will we be able to move carriers through choke points like the Strait of Hormuz or even the Taiwan Strait, at an acceptable risk?
Yet our modernization program calls for the military to spend tens and, in some cases, hundred of billions of dollars to deploy new tactical aircraft, upgrade our tank fleet, and launch a new class of aircraft carriers before we really have addressed how we're going to meet this kind of challenge.
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At the same time that we're facing challenges, we're also facing perspective opportunities. The emerging military revolution offers the potential to create new forms of operations; for example, long-range precision strike, space control, information superiority and integrated information defense, and electronic strike.
Given such challenges and opportunities, what are the implications for how we think about modernization?
I think, first, we have to recognize that we're dealing with a period in which we face a far greater level of uncertainty than we did during the cold war. We know the change is great. We know that a transformation is coming, but we don't know who will be the challenger. We don't know when the challenger will appear, and we don't know how they'll threaten our interests.
It's also not clear what technologies, systems, and operations will best position us to meet these kinds of challenges. Yet, our modernization program calls for buying a relatively large number of a relatively few new systems whose life cycles range from 20 to 40 years or longer. In other words, we're buying systems that we have a pretty high confidence are effective on the near side of transformation, but we haven't really explored the value of these systems on the far side.
Our modernization strategy must take these sorts of uncertainties into account. Such a strategy must support efforts not only to modernize our forces, but to modernize them to meet posttransformation challenges, such as the example I mentioned, and also to provide them of ways to hedge against uncertainty and surprise.
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Such a transformation strategy would have, among other things, the following characteristics. It would support wildcatting. What I mean by wildcatting is developing a limited but operationally significant number of a wide variety of systems to support experimentation. This wildcatting would be linked to service and joint experimentation. In a sense, what you do is you bring together the military and the operational challenges, and you put into their hands as broad a range of tools as technology and physical limitations will apply. You maximize the number of tools and that toolbox to give them the opportunity to determine what will work, what will work in the posttransformation environment, what's the proper mix of new systems and legacy systems. This sort of service and joint experimentation doesn't have to break the budget but, again, the cost will likely be nontrivial.
We also need to avoid lock-in in our transformation modernization strategy. Again, as I said, the current approach is to buy relatively few systems in large numbers so as to minimize costs. That's an advantage. But we also face two consequences. No. 1, it locks us when we buy a large number of a single system into the current state of technological progression. And this is particularly a problem where technology continues to move ahead rapidly in certain areas. And it also decreases the number of options we give our commanders to address these future challenges.
Our modernization strategy also needs to provide incentives for industry. Now we have seen the consolidation of industry, but we've seen it accomplished in such a way that it really is not incentivized to support innovation, the kind of innovation that is going to be needed to support the wildcatting and the experimentation that will fuel transformation.
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I think it's particularly important to exploit advances being made in the commercial sector. If you look at what is going on, for example, today in the commercial satellite business. I would say it's akin to what happened with the railroads in the middle of the 19th century. Then, the commercial sector puts something into place to make money, and it turned out that the military could exploit it to great advantage. Think of the commercial satellite structure in space as an information railroad. And we need to address now, as this constellation is being put into place, how we can leverage that to meet these new challenges and to improve the effectiveness of our forces.
The same thing applies in other areas. For example, commercial initiative to provide armor plating for their information systems against information attacks. We need a defense modernization strategy, also, that emphasizes time-based competition. The idea here is not to build the military of the future today, since we don't know what it is. It will depend a lot on where technology goes and where the threat goes. But the key is to put ourselves in a position so that when the time comes, when we've identified what works and what doesn't, and when the threat begins to materialize itself—this power projection threat, for example—that we can create the future military more quickly than our perspective competitors or enemies can develop the capability to threaten our interests.
And finally, as Dr. Gansler mentioned, this involves near and long-term tradeoffs. We're not just talking about the military of 1998 and the posttransformation military. We're talking about a process that has to get us from here to there, and every step along the way, we have to be ready for today, as well as positioning ourself for a very different tomorrow. And that involves a very tough mix of calls on how you treat legacy systems, how far you go on wildcatting, and when you lock in.
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In conclusion, let me say I think there's broad agreement—at least from what I've heard today—that we're at a period of geopolitical and military technical revolution that is going to see our military presented with challenges over the next 10 or 15 years that are very different from those we saw during the gulf cold war or even the gulf war. Hence, the need to transform to meet these challenges. It's not clear, however, what combination of new capabilities and existing legacy systems will provide the optimal mix for dealing with this posttransformation world.
Consequently, we need a transformation modernization strategy that buys our commanders a broad range of options for the future by supporting wildcatting, and also that avoids locking us in to legacy systems whose value may decline dramatically once the new challenges to our security manifests themselves. We also need to find a way to incentivize industry to support such a strategy and to exploit advances in the commercial sector that are military related.
Finally, we need to begin now. Transformation typically takes a decade or two to occur. Consequently, the longer we wait, the more our long-term readiness will suffer.
Thank you, Mr. Chairman. I'd be happy to answer any questions.
[The prepared statement of Dr. Krepinevich can be found in the appendix on page 114.]
Mr. HUNTER. Thank you, Dr. Krepinevich. It's Krepinevich; is that right?
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Dr. KREPINEVICH. Actually, it's Krepinevich.
Mr. HUNTER. Krepinevich. Great; I knew that. [Laughter.]
Thank you for a very provocative statement. I'm going to—we're going to take a break. When we come back, I want you to be prepared, and the other witnesses also, to answer three provocative areas that I thought about as you went through your statement.
You're basically saying we need to build flexibility into the system? I want you think about cost, because you're going to need to be able to respond on that, and also to respond to the idea that we have in this environment with a few big companies with a few programs how you develop what you've called wildcatting.
Thank you, and General Skibbie, thank you for your very provocative presentation, too, and Dr. Gansler.
And we'll be back at, let's say, 30 minutes after the hour. That should give us time for this vote and time to reassemble. Thank you.
[Recess.]
Mr. HUNTER [presiding]. Please forgive us for this extremely long break. This is one of those things, kind of a historic issue before the House, and so we had to take this intermission. So we'll resume.
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And, Dr. Gansler, go right ahead.
Dr. GANSLER. I've finished, and I'm ready for questions, sir.
Mr. HUNTER. OK, that's right. We had you finished, and General Skibbie had finished. And Dr.—once again, it's——
Dr. KREPINEVICH. Krepinevich.
Mr. HUNTER. Krepinevich, OK. [Laughter.]
You've finished. Let me start off with another rephrasing of the question we asked earlier, Dr. Gansler. I said, Do we need to raise the top line? And you said, to paraphrase you, you said, well, if none of these things work—base closing, cultural change, transformation in the way we business, then we do.
Let me say it in another way. Do we need to increase the modernization account above the line that is presently manifested in the President's programs?
Dr. GANSLER. When Secretary Cohen set the numbers, the $60 billion in 2001, 2002, and 2003, it was a goal that we're certainly striving to try to achieve at this point. When you go out beyond that time period, we haven't yet defined that. We have the bow wave that I mentioned earlier coming up when we want to really try to procure significant numbers of these systems. I think we have the time period between now and then to see if these other if's that you listed are going to, in fact, be realized. You know, there's obviously risk associated with it. Some of that was pointed out by the GAO as well.
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Whether we're going to be able to realize the benefits of the acquisition reform, of the base closures, of the other initiatives that have been assumed in order to be able to make the dollars available, the shift, essentially from infrastructure, we——
Mr. HUNTER. Yes; and I'm asking you now to presume that the—I want you to segregate the question about whether or not we can make this shift that you've talked about. Simply stated, do we need to increase the top line on the procurement accounts above and beyond what the administration projects with their 5-year plan?
Dr. GANSLER. As I said to answer the earlier question, my honest opinion is that we can do the modernization that's required within the top line under the assumption we can make those significant changes. Obviously——
Mr. HUNTER. Well, I'm talking about the procurement top line.
Dr. GANSLER. Yes. I am, too—the procurement dollars. Within the procurement dollars we have now, I think we can achieve the modernization that's the sort of minimum required. I would obviously like to have more; you'd like to have more in each of the accounts—the R&D account, the procurement account, and certainly in the quality of life account, and so forth. Trying to balance each of those requirements, I think that my own assessment is that the Secretary and President's submittals will do the job, but it's going to be very hard to do, and we have to have the changes that we discussed and——
Mr. HUNTER. But I'm not asking you to judge whether or not you're going to be able to get base closure. I'm saying, regardless of where the money comes from, do you need to increase the top line on procurement? Whereas, you're saying we do need to buy more; there's other places we can get the money.
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Dr. GANSLER. Some of it is actually in not just in procurement in the sense of buying new systems, it's also in modernizing the current systems, you know, reliability improvements, adding the digital battlefield, and so forth. My opinion is that, as I guess General Skibbie mentioned, 70 or 80 percent of the equipment that we're going to have is still going to be the equipment that's out there. Part of that can be done through O&M account. It's not all coming out of procurement account. But that modernization is absolutely required. I think we can live within the dollars that are shown in the 5-year plan for procurement, but I sure wouldn't mind having more.
Mr. HUNTER. OK. I want to have staff at an appropriate time, as soon as they get a chance here, to give you this summary of military aircraft losses. And I haven't run it up against the historic norms, but I've got one member of my staff that compiles losses, aircraft losses as they come in, and it was quite remarkable. He faxed it out here today. This is simply off the news wires; 43 crashes this year to date; 70 dead.
Last time we did a safety analysis, the answer that we got back from DOD was that that was within acceptable—what we had at that point and that was last year—was within the acceptable norm. It was basically an average number of crashes for the surfaces given the flying hours. But it looks like it's an extraordinary number, so I want to give that to you, Dr. Gansler.
But, Dr. Gansler, without going through all of the issues that you brought up, you know and I know that base closing is paralyzed. It's paralyzed because we had a process where there was a modicum of trust vested in the system by both the executive and the legislative branch that we would let hands off—we'd keep our political hands off the process. And that ended up with guys like Jim Courter going to States like California, where one of his best friends, Pete Wilson, was Governor, and cutting a bunch of his bases. And a lot in doing that I think was symbolic of what happened throughout the country where we went out, did our best job to defend our bases when you cut half the NADP's, for example, put our best foot forward, and made our best argument. When the verdict was in, and the base closure committee made their decision, we complained to them about them, but we didn't complain about the process, and basically most members acknowledged that it was fair system. When the President refused to make the final two recommendations, after political visits—those were the two air bases in California and Texas that do big vote-getting States—the process became poisoned, and you know that. Now you're a smart guy, and you know that the Congress is not going to trust the executive branch again for a long time.
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So knowing that, why do you offer up possible base closures as somehow a way to get extra procurement dollars?
Dr. GANSLER. Let me comment on——
Mr. HUNTER. I mean we got to be realistic with each other. You're not being realistic with us when you lay that out there.
Dr. GANSLER. Let me first comment on the aircraft losses because that's something that I personally care a lot about.
Mr. HUNTER. OK.
Dr. GANSLER. I also get a report every day when there is one.
Mr. HUNTER. I got you. And incidentally what you're going to comment on, I just want to review with you real quickly, review these losses with you: Two F–16 fighters, mid-air collision in the hill, January 7, 1998; one F–16 flameout, January 8, 1998; F–18, I don't have a date, 1 dead; B–1 Air Force bomber, crew ejected; A–4 Marine jet, 20 deaths, that's when they sliced the cable in Italy; one Army chopper; Blackhawk Navy chopper; HUEY, 5 dead; Navy chopper, Sea Knight, 1 dead. It's a mix of rotary and fixed-wing aircraft and goes basically throughout the array of systems.
The indicia to me, even though I haven't looked at the statistical data, is it would be nice if we could replace some of these systems. And we do, to some degree, a disservice to our people flying them with our, as you said, our decision to coast for awhile in terms of modernizing systems.
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Dr. GANSLER. Well, first of all, I don't think anyone in the service has commented that those losses, especially the lives, were acceptable. I think what they said was it was an historic trend.
Mr. HUNTER. Not acceptable, but within——
Dr. GANSLER. Clearly——
Mr. HUNTER [continuing]. But historically low, in fact, for last year.
Dr. GANSLER. Well, and that's the point I was going to make, that although it—as Secretary Cohen has said, every one of those is unacceptable, and we'd like to get it down to zero. The fact is that, as you point out, historically, we are below the historic annual loss rate. On the other hand, there are——
Mr. HUNTER. Now are you sure of that, considering the number of aircraft that are operating now? Forty-three aircraft crashes to date this year is within the historic range?
Dr. GANSLER. That's what they told me as of the last one, I mean, because I had the same question. It seemed high to me, and I asked that question. On the other hand, as I say, it's really unacceptable in any case.
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One of the things we're trying to do now is to put significant investments into things like the ground collision avoidance systems and the in-air warning systems. We do program for attrition losses. And so that, in a sense, the attrition loss issue, which is the point you're raising, has been planned into the system. That doesn't make it acceptable, and certainly these need to be replaced, and that's the reason that they're programmed for the losses.
As to the base closures, the reality is that what we'll save in the out years from the base closures is in the range of $4 to $6 maybe billion a year, $3 to $6 billion, depending upon, you know, whose numbers you want to use. That's not going to make the whole difference, and so we don't want to say that based on base closures we will or will not make the difference. On the other hand, when you look at the efficiencies that can be gained, and we have—I mean I think universally there's an agreement there is excess capacity out there in terms of the bases haven't been shrunk.
Mr. HUNTER. But, Dr. Gansler, you know I thought that General Sullivan, former Army Chief of Staff, made a very telling statement yesterday when he said we should not hold modernization hostage to base closures. The point is, whether or not base closures are good, bad, or whether they reap benefits or don't reap benefits over a certain time period, they're not going to happen because of what happened politically. You know that, and I know that. The Congress is poisoned on base closures and will be for a long time.
So, when we owe a duty of trust to give the best modernization possible to the men and women who wear our uniforms, why are we offering up base closures as a possibility? We have a duty to them to see the world as it really is.
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Dr. GANSLER. I think——
Mr. HUNTER. We can't use it as an excuse that we didn't give them the best equipment, that we were waiting for base closures, when you knew that they were never going to happen.
Dr. GANSLER. We certainly agree with you. We want to give them the best possible equipment. We also owe it to them to point out areas where there is current inefficiency that can be improved.
Mr. HUNTER. Well, we understand that, and I agree that there is current inefficiency. But the process is we have to take the world as it is.
Dr. GANSLER. Well——
Mr. HUNTER. That's like if you say you know that if we just converted some national parks to training ranges, we'd operate much more efficiently. You know that nobody is going to vote in Congress to have national parks be training ranges. You know that the Congress is not going to vote to close bases. So, we have to protect our people. We have to modernize for them. And we're not doing that if we take a solution that we know is totally unworkable for whatever reason, whether it's fiscal or, in this case, political, and offer that as an answer to it. It's like saying, ''We're going to give you guys the ammunition you need as soon as base closures reap us a benefit.''
Dr. GANSLER. One of the things that Secretary Cohen has emphasized is that if the Congress feels that there's some conditions that would be desirable in the base closure provisions so that it doesn't have the political connotation—you know, we'd welcome those. I think what we're trying to do is to find a way, collectively, between the Congress and the administration, to find a way to get rid of that inefficiency. And you know, we're not even saying that you shouldn't propose how it should be done. We're just saying it should be done.
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Mr. HUNTER. Well, Dr. Gansler, you know it's not going to be done. Because there's one thing that is required in a base closure process once you start it and that's trust. There is not trust in the Congress, and I'm not talking political in a partisan way, just Republicans, but Democrats or Republicans, who have bases in their district, there's not a trust in the process at this point because of what the President did at the tail-end of the process. So you know it's not going to happen. And once again, you have a duty of trust to the people that wear the uniform to modernize their equipment, and you can't base that on something that's not going to happen.
Dr. GANSLER. First of all, as you know, Secretary Cohen had proposed that for 2001 partly to accept the change in administration that is going to take place at that time. Second, I think we owe it to the people to modernize our forces, and I agree with you. And that's the reason in my talk that I'm trying to emphasis the importance of modernization. I'm not disagreeing with you about it. I think that base closure is one of a number of things that offers the potential for being able to do it. I understanding the difficulty but, frankly, most of these have difficulty——
Mr. HUNTER. And, Dr. Gansler, I know the difficulty, because cutting down the shopper contingent of 300,000 shoppers was something that we offered up at $53,000 a piece instead of cutting riflemen. And let me tell you, you guys gave us enormous resistance. And you went over and told the Senate not to go with a single cut. Somebody in your shop did, and they came up with zero. So, we came up with 40,000 shoppers of the 300—the two Marine Corps of professional shoppers in the military buying this very small procurement budget, and the Senate had nothing. So, you know you say there's going to have to be a cultural change, I agree. But you aren't helping us change that.
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Dr. GANSLER. Well, in that particular area, as you know, we had a significant reduction last year or the year before. Actually, in the acquisition work force, we've had a 43-percent reduction since 1989, so we have been——
Mr. HUNTER. Well——
Dr. GANSLER [continuing]. And we continue to. We're actually projecting it again for next year. The problem of it is having——
Mr. HUNTER. Dr. Gansler, we've cut the Army in half. You cut your fighter air wings from 24 to 13; you've cut the Navy ships from about 546 to 333. We have sliced our military almost in half, so the fact that the shoppers were reduced earlier, but they still number at the level of two U.S. Marine Corps and you won't take them down. And those guys are knocking out—that's $53,000 a piece. That's a lot more expensive than a rifleman.
So, you know, let me just say you're giving me all the answers that you say we're going to have overcome if we're going to change the culture.
Dr. GANSLER. The current plan for 1999—we had in 1998, a significant reduction; it was around 18,000 people. And for 1999, it's around 19,000 that are planned. So we are planning on continuing to go down. The only problem we were having—and you and I have talked about this—is whether you have a firm number that's, you know, legislated or whether we continue to work together to try to keep cutting down through improved efficiency.
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Mr. HUNTER. Yes.
Dr. GANSLER. But we definitely agree with you that the numbers are going to be going down.
Mr. HUNTER. Well, let me just say they're not going down nearly as quickly on your program as you took down people that carry bayonets. The 18 Army divisions that went to 10, those guys went like that. There were no tortured discussions about that with Congress. That thing went like lightning. The 24 fighter air wings went right on down to 13, and we didn't have the Secretary coming over here and complaining about that. So I need to say——
Dr. GANSLER. Well, personally, I agree with you that the civilian work force has not gone down as rapidly as the military side, and that's why we need to go. Continue with that, where the military we're not doing that with—it's the same as the, you know, all the infrastructure areas, I think——
Mr. HUNTER. OK.
Dr. GANSLER [continuing]. Are the areas for opportunities for us.
Mr. HUNTER. Let me ask, so you don't think we need to change the top line for procurement?
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Dr. GANSLER. You know——
Mr. HUNTER. That's the bottom line?
Dr. GANSLER. If you ask me if I'd like to have it increased, I certainly would. If you ask me if we can live within it and do the other efficiencies, I think I have an obligation to make those efficiencies before I come to ask you for more money.
Mr. HUNTER. OK. Well, I don't agree with that obligation. I think you've got an obligation to put bullets in the ammo pouches of the people in the field. And the idea that you're going to wait on some political solution in Congress that isn't—that everybody predicts won't happen—is tantamount to sending them out without what they need, without their necessary, required modernized equipment.
Your duty is to them; it's not to the political system here to make us work better or more efficiently.
But anyway, let me ask if we can put up that—go, ahead, Herb.
While you're doing that, Herb, let's put up that budget one more time that the GAO brought out, because we did agree on those numbers. Have we got that thing?
Mr. DAVIS. I think it escaped, sir.
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Mr. HUNTER. You think it got out of here? [Laughter.]
Mr. DAVIS. I think so.
Mr. HUNTER. OK.
Go ahead, Herb.
Mr. BATEMAN. Well, Mr. Chairman, along the line of the dialog between you and Dr. Gansler, I just wanted to offer this observation.
I don't know that I can disagree with Dr. Gansler that we ought to achieve efficiencies. We owe it to the taxpayers to achieve efficiencies. But I very, very strongly disagree with you that we postpone doing those things vital to our national security in the hope for the efficiencies some time in the future. How much better, how much more realistic, how much more logical? Spend what you need to spend to ensure our national security and reduce it as and when you got the money, based upon the efficiencies.
But I've sat on this committee now for at least 14 years, and every session that I've sat here, we have talked about in some manner or form we've done something called acquisition reform in one degree, manner, or another. We've talked about being more businesslike. We've talked about this; we've talked about that, and we're going to get this savings and that savings. We've never gotten them. And why in the world does anyone, given the circumstances that now we're in, continue to persist? And, well, we will fund modernization, we will do things when we get all these wonderful savings. They're somewhere out there in never, never land, at least until they are, in fact, realized. Then you can reduce what you're expending by that amount.
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But, gee whiz, you don't modernization with theoretical savings. And that's the flaw of the last 6 years of what we've been about. And we are now beginning to reap the consequences.
Thank you, Mr. Chairman.
Dr. GANSLER. If I could, let me comment. Because I do believe that we have to make increased investments. In fact, that is why Secretary Cohen is projecting this increase, you know, from the current level of procurement up to the $60 billion. And that was under the assumption of a constant top line. I mean I'm not disagreeing if the top line goes up, you'd get more. But even that would represent significant, you know, over 10 billion dollars worth of increases that we have to be able to generate, no question about it.
I do want to comment on the fact that I think the combination of the allowances and provisions and so forth that the Congress gave us with the Federal Acquisition Streamlining Act [FASA] and the Federal Acquisition Regulations [FAR] and FASA, that as a result of that, we have made significant improvements. And I think that we should take credit for that.
And the procurement process today is genuinely different than it was 5 years ago. It is more streamlined; it is more efficient, and it isn't there yet either. And that's your point, and I agree with it. We still have a long way to go, and we do need to increase the dollars for procurement, and it is in the plan—the one that GAO had up there. Now, the question is, Will we realize it? And that's your question, and I think we're going to do everything we can to realize that $60 billion.
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Mr. BATEMAN. Well, Dr. Gansler, I wish you well in that endeavor, and we would all have reason to criticize you if you didn't give it your best try. I'm just saying, don't count those chickens, those eggs before they hatch.
Now, Mr. Chairman, if you'd indulge me a little longer, since I've already interrupted everybody's train of thought——
[Laughter.]
I've sat here today and I preside over the Military Readiness Subcommittee.
Mr. HUNTER. Yes.
Mr. BATEMAN. My committee for at least 3 years has been decrying the fact that readiness is degrading; readiness has become a problem—not future readiness, but readiness right now. All of a sudden, 2 weeks ago, the Joint Chiefs and the Secretary are advising the Senate Arms Services Committee——
[Laughter.]
Indeed, we have readiness problems. We've known it all along. We've tried to get things done about it all along.
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Now you have made reference at some point to the fact that the President, having met with the Secretary and the Joint Chiefs some 10 days ago, 2 weeks ago, has agreed with them that more money is needed. The immediate response, I am sad to say, was, ''We'll throw another billion dollars on the table to be offset.'' That was his letter. As best I now understand it, almost a fourth, if not more than a fourth of the $1 billion is going to be offset by the Department of Defense budget. Now, where offset within the Department of Defense budget? And, can the Department of Defense budget stand it?
I've heard testimony today that the reason we've got this predicament is it's about modernization, as we reduced procurement in order to fund readiness. Well, we've reduced procurement; we've reduced R&D; we've reduced what's available for readiness, and readiness has degraded.
Now, we aren't in need of something to immediately prop up immediate readiness, because I've tried to make the point through all of our deliberations and discussions about readiness, that readiness a year or 2 years from now, or 3 or 5, is as important almost, if not more so, than the immediate readiness of today. But we aren't faced with a readiness problem that requires money; we're faced with a situation where one command within the U.S. Army needs about $300 million or $400 million to do deferred maintenance on their installations. That's one command within one branch of the service. The needs go on and on and on because those accounts have been denied to try and take care of immediate readiness problems, which we're now saying, well, we're taking care of them because we've sacrificed procurement.
We need a dramatic infusion of money and a billion dollars, a fourth of which is offset from the defense budget, and talk about future increases which I hope I will not learn are going to be recommended when we get the year 2000 budget proposal for a point after this Commander in Chief is no longer Commander in Chief. I hope that's not going to happen. Because if it does happen, it will be a clear recognition that he doesn't understand the dimensions of the problem of the military and the strategic roles and missions they have been assigned to.
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About 4 years ago—and I don't do this often but, Mr. Chairman, you're letting me, so I'm going to get a little bit personal in this. Some 4 years ago, I was invited to make a presentation at some seminar at one of the think tanks. I think it was in the fancy auditorium at the State Department. And somebody asked me a question about where we were headed in terms of our military capabilities. And I made the observations then, and I think the facts have boarded out to be very, very accurate, that we had a Commander in Chief more prone to deploy to our forces, but less prone to pay for them than anything in our national experience. Your testimony points out how often they have been deployed. And they have been deployed and been deployed. They've been reduced, and they've been reduced. Called upon to do more with less, do more with less. We cannot go down that road any further. And we, in this Congress, who have recognized the problem and tried to point out the dimensions of the problem, cannot solve this problem until we have a Commander in Chief who has been persuaded that the problem is real and that he must ask that the forces that he commands and so often uses are properly prepared for and cared for.
Thank you, Mr. Chairman.
Mr. HUNTER. Thank you, Mr. Bateman.
Mr. Evans.
Mr. EVANS. Thank you, Mr. Chairman.
Dr. Gansler, you have proceeded with cuts in military and civilian positions to help finance modernization programs, but I see no discussion from the Department of Defense about looking at contractor work for us. This is deeply troubling to me because I believe we're sacrificing a vital resource while ignoring real savings. I just received information that an internal Army study shows that the Department employs anywhere from 160,000 to 180,000 contract employees at a cost of $14 billion to $16 billion. I must tell you I'm shocked by the size of those numbers, but even more shocking has been the silence from the Department. I know of no efforts underway to weed out its waste or efficiency from this shadow work force.
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As you may know, I've been critical of the Army's reengineering plan which I understand you have directed for the Army Materiel Command. In over the last 5 or 6 years, AMC has shrunk in half, but according to an Army contracting study, AMC employs over 30,000 contractors at a cost of close to $3 billion. Are we really giving the American taxpayer the best value for his dollars when $3 billion worth of contractors are seemingly immune from reductions?
I'll be writing to you and the Secretary of the Army to ask that you postpone any further cuts until contract workers are included in the reengineering review.
Can you please explain why the Department of Defense is not looking at the shadow work force and steps that we can expect you to take in the meantime to get on top of this troublesome issue?
Dr. GANSLER. Well, let me first comment, Congressman, that we are obviously concerned about the contractor work for us, as well as the Government work for us. In fact, the whole idea of the competitive sourcing that we talked about earlier was to try to get the efficiency through competition that you should get. And as I indicated, the empirical data show that when we have these competitive sourcing, the public sector tends to save around 20 percent and the private sector around 40 percent. Both of them improve performance as a result of competition.
So we are very interested in trying to achieve the efficiencies in public and private sector, not simply in the public sector.
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As far as the contractor work force reductions, I mean I hear everyday from them about the reductions. You probably saw in the Washington Post this morning, there were over 5,000 people planned on being laid off at Raytheon, one of the prime contractors. There's very significant cutbacks, consolidations, that have been taking place in the private sector along with that of the public sector. In fact, much more significant, the empirical data show—and I'm sure General Skibbie has the data to show it—that the contractor community has taken much larger reductions than the public sector work force.
Mr. EVANS. That's not my understanding. In fact, I understand that the contract work force has been very stable over the last few years.
I wonder if General Kern——
Dr. GANSLER. I can't see how it could be stable with a 70, 60 percent cut in total dollars.
Mr. EVANS. I will get you some of the information I have.
Mr. Chairman, I ask unanimous consent that I be able to ask a few more questions and submit data.
Mr. HUNTER. Without objection, so ordered.
Mr. EVANS. I'd like for General Kern to make any remarks, if he would like to, in this matter.
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Are you still here? OK.
General KERN. Congressman, I have not seen the particular study that you're referring to. We are doing a number of reviews right now, both within the Army Materiel Command and within the entire Army on how we do the A–76 comparisons and looking at contracting versus in-house Government. I think you're aware of all those studies that are ongoing.
Our purpose is to achieve the best balance and efficiencies for the Government. The concerns that you expressed with respect to the numbers of people that we would have and how we define as what is inherently governmental are being looked at very carefully within the Army. And I think the concerns that the Army Materiel Command, in particular, has in the studies that they are doing right now, which will be presented to the Vice Chief at the end of this month, will take that into account.
Mr. EVANS. General——
General KERN. None of those are made decisions yet on any cuts. They are still in the studies.
Mr. EVANS. Well, the GAO specifically criticizes AMC's reengineering efforts because, and I quote, ''The command did not have specific plans to achieve these reductions.'' The thing I'm most afraid of is that you'll cut into tens of thousands of loyal civilian employs and then find out that we saved nothing. And once that is done, we won't be able to bring them back. And the double whammy is that we will have to give up more money and more savings to cover those that have already been programming your budget plans.
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It just does not seem a good way to run a railroad, General.
General KERN. Well, I agree with your concerns; they are the same that the Army has, that we cannot expect savings that don't result in real dollars for the effort.
Mr. EVANS. Thank you.
Mr. Chairman, could I redefine my unanimous consent request? I'd like the general and the doctor to respond to some information I'll submit for the record, and ask that the questions and answers be made part of the official record.
Mr. HUNTER. Certainly, without objection.
[The information referred to can be found in the appendix beginning on page 125.]
Dr. GANSLER. I might make an observation to make sure you understand, Congressman, that the assumptions made in the out year plans relative to the civilian work force, the 20 percent reductions that the Army has assumed are actually assuming that the public sector wins the competitive sourcing. The assumption being that these are competitively sourced, so the efficiency achieved through competitive sourcing results in some reductions in people, but it does not assume that these are won by the private sector. It actually makes the opposite assumption because the empirical data show that if you wanted to assume the private sector won them, you would probably take a 40 percent savings. So that's why we only put into the planning a 20 percent saving.
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So what we're getting here is the assumption of increased efficiency by the public sector in the future, and that's what we need to get in order to be able to make the savings. So the public sector can continue to do this work; just do it more efficiently and better, and that's all we're looking for.
Mr. EVANS. When's the last time you've had a discussion within the Department about contracting contractor work force?
Dr. GANSLER. This morning.
Mr. EVANS. OK. All right. And your conclusions this morning?
Dr. GANSLER. This morning the conclusions were that we need to continue competitive sourcing because of the benefits in performance and cost reductions.
Mr. EVANS. All right. Thank you.
Thank you, Mr. Chairman. I appreciate your time.
Mr. HUNTER. Certainly.
Mr. Weldon.
Mr. WELDON. Thank you, Mr. Chairman.
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Dr. Gansler, I'm sure you know that the comments that are coming out here aren't aimed at you personally. This is an ongoing process that we're involved in. The problem is that we've been here for a number of years and most of us, I think, are not leaving on both sides of the aisle.
You all down at that end of the table come and go. And unfortunately the rhetoric that comes out, not just of those on that side of the table, but from the White House, doesn't in our opinion match the substance. And that's very troublesome to us.
In fact, I think—and this is very unfortunate for me to have to say because I take great pride in being here—I think this period of time that we're in right now is going to go down in history as the worst period of time in undermining the capability of our military in this century, these last 6, 8 years. That really troubles me.
You know if you look at our retention rates for our pilots. It's now at the lowest ever in terms of the Air Force and the Navy. If you look at—Tillie Fowler mentioned yesterday on the floor of the House—we had an aircraft carrier leave port 700 and some people short in terms of its crew.
If you're talking about the capability of us to meet the needs we have, you talk to our young military personnel that are being deployed. The moral is suffering in some cases because they're being asked to go to back-to-back deployments. It's great for us to be all over the world, you know, but these are young people that have families and because we've shrunk our size of our force so much, they're being asked to do more and more.
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And we're in an impossible situation, and I just don't know whether the President is getting the right information. I mean I would like to think that he, you know, is a bright person and understands, but I look at this letter that he sent to Secretary Cohen, dated September 22; he barely even mentions modernization. Sure, he talks about readiness and how important that is and how we have to fund it. The only things he mentions of modernization is, ''We will need Congress to approve infrastructure reductions.''
Well, duh, Mr. President, wake up. I mean, you know, you're the one that caused us not to be able to close more bases. I wanted to vote for another round of base closings. And believe me, the first round was very difficult for me. I was the only one in the Philadelphia region to vote for it because I knew what was No. 1 on the target list for the Navy. It was a Philadelphia Navy Yard. I voted for it; all my colleagues didn't in the region, and they all blasted the administration and blasted me and the 13,000 workers blasted, but I knew we had to make some tough decisions. And they were right. The first base we closed was the Philadelphia Navy Yard, 13,000 workers out the door.
You know you have to make tough decisions, and for us to say that, you know, the base closing process needs to move forward—as my colleagues said, you can ask every member on that side of the aisle, you're not going to get that through this Congress. You're not going to get it through the next Congress. Not because it's not logical or right, because I'd like to vote for it. But because of what this President did to the process.
And he has to understand that being supportive of the military is not just leading them down the White House lawn for a photo op, or standing on the deck of a new carrier and saying great things about how great our troops are, how they're the best trained, best equipped, best lead in the world. Well, who doesn't agree with that?
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Supporting the military means giving them the resources they need and not coming up with the constant rhetoric about, ''Yes, we support you. And in the next administration, they're going to take care of you. They're going to plus up your acquisition money. We didn't do it, even though we said we should have, but, you know, they'll do, whoever that 'they' is.''
And that's why there's frustration here, and it is unanimous on both sides of the aisle. And it is not over anything that's partisan; it is over the fact that we have to deal with these issues every day. I mean the service Chiefs came in last week before the Senate and the cumulative total of what they said we need right now in this year is $17.5 billion more than what they have—$17.5 billion. Now these weren't Republicans or Democrat members here. These weren't people advocating for bases or for companies in their districts. The service Chiefs outlined $17.5 billion more this fiscal year. And the President offers $1 billion. And as my distinguished friend and colleague said, and that assumes three-quarters of that $1 billion is going to come out of other areas of defense spending.
So there's no reason—I mean you have to understand why there's a great deal of cynicism and skepticism here, and it's aimed at you because you're in an impossible task. It's being aimed at the people above you.
Let me get into the specifics, though, of where I want to focus a couple of questions and that involves missile defense. Now in your statement, you made the point that the administration is committed to theater missile defense. Now I'd like to believe the administration when they say that, because I think you'll agree, besides the asymmetric threats we face of information warfare and weapons of mass destruction, missile proliferation is certainly one of the top ones. Would you agree with that statement?
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Dr. GANSLER. Yes.
Mr. WELDON. And I would agree with you that theater missile defense should be a top priority and in our opinion is a top priority. But let me ask you about some confusion I have. Two years ago we zeroed funding for MEADS. And I zeroed it because I didn't think the administration was committed to it, that they were leading Italy and Germany down a rose path that they would not follow through on. The administration came to us, chastised us publicly, and said, ''You cut the money for this program that we have committed to Italy and Germany. You have to put it back in.'' We said, ''Are you committed to it?'' The administration said, ''Yes.'' We put the money back in.
Have you made out your requests for MEADS yet for the next 5 years?
Dr. GANSLER. Let me tell you where we stand on MEADS. At the time when the administration came in and asked you about keeping the money in, this was for the current phase of the effort and we had committed to those dollars being spent. The out year dollars we have under review right now for the MEADS. And, as you know, the problem is one of priorities, not a question of, would you like to have the MEADS?
There is a requirement from both the Army and the Marines for a mobile system of that sort. When we go to the Chairman of the Joint Staff, the so-called Joint Requirements Oversight Council evaluation of priorities, this ends up relatively lower on the priority lists than the theater, first, lower-tier, higher upper-tier, and so forth. And so, then, it becomes a question of the relative priorities. We're spending, as you pointed out I think in your testimony one of you, about $3.5 billion this year on the theater missile defense area. And so it's a question of, do we spend the extra, you know, couple hundred million dollars a year associated with MEADS? We also are looking at the question of, how much will MEADS cost? The requirements versus costs on the current designs. We're going through that now, that evaluation, in fact, with our allies in Germany and Italy. We believe that because of the decision that was made, not by the authorizers but by the appropriators, to cut out the money this year, that we're forced to make that decision perhaps earlier than we would have—by only a couple of months—but we are going to have to make that decision much earlier now as a result. So we will be bringing this to the Secretary for a decision, in terms specific to your question, of the out year commitments that we're going to make.
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I mean, would we like to? Of course; I mean it really is something we'd like to have. Do we want to take that couple of hundred million dollars a year from THAAD or Navy upper-tier or some other program associated with either modernization, quality of life, readiness. Those are the tough choices that we have to make, and we're counting on the military to help us with those decisions.
Mr. WELDON. Dr. Gansler, this gets at the heart of the issue you're hearing from us. Here we have missile proliferation, which you've acknowledged is one of our most severe threats increasing dramatically. We were told we wouldn't see the Iranian medium-range missile threat for a couple of years. In fact, Dr. Hamre wrote me in February of this year and said the worst-case scenario, and I quote him, ''The worst-case scenario would be that Iran would not test a medium-range missile until mid-1999.''
Thank goodness this committee and this Congress put $170 million of extra money in this year because, as you know, on July 22 they tested it. We assume they now have a system that we can't defeat with a highly effective response system, which means that we have 25,000 troops in the Middle East at risk, all of Israel is at risk, all of our Arab allies are at risk, and they're going to be at risk for 12 to 18 months.
And then you can look at North Korea. They tested and deployed the No Dong missile earlier than we thought. And as General Luck told us 2 years ago, ''You got a real problem here, fellows, you better get on the stick and get it dealt with.'' Two years later, we have no medium-range highly effective system to deal with the No Dong missile, so our 80,000 troops in that theater are at risk in South Korea and Japan and all of our allies in that area are at risk from the No Dong 1 missile. And then we see the Koreans—again, 3 or 4 years ahead of that, that NIE that all of us took the heat for on this committee, the 1995 national intelligence estimate that we said was politicized, that we said was impossible to understand. And the administration railed at us saying, ''You people are just trying to scare the American people. You're trying to justify more money. You're trying to make the case for something that doesn't exist.'' And now what do we see? North Korea tests a three-stage missile over Japan's territorial land and waters, that now has the range, if you calculate out the distance, that hits the United States. In fact, I don't know whether you've had a chance yet to get the most recent code word briefing on the North Korean missile which I got yesterday which was just released 2 days ago. You know the severity of that threat. And you know what we're facing.
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And for all of these reasons, we sit up and we say, what is going on? Are we talking to ourselves in a box? I mean we hear the right words coming out of the White House. We hear the right words coming out of the Secretary of Defense. But when it comes to the support to move forward with the programs, it's like, well, we're going to do this in 5 years. We'll do that in 3 years. And if you help us, we'll do this 6 years down the road.
The largest loss of life we had by our troops in this decade was when those young troops were killed in Saudi Arabia, and we vowed to never let that happen again. Here we are in 1998 doing the 1999 budget, and we're not going to have a system in place to deal with that threat for at least 2 to 3 more years. That is absolutely outrageous.
And on top of this lack of commitment, I think—and I think your decision is going to eventually pull out of the MEADS program, that's only by guess. I guess only time will tell after the election whether or not that's true. You're going to disappoint the Germans and Italians, and on top of disappointing them, you're now telling—not you personally—the administration is now telling the Japanese, ''Oh, by the way, here we are. We're going to help you build a theater missile defense system.''
Well, how does that sound to the Italians and Germans as we tell them we can't fund MEADS? Sounds to me a little hypocritical, that we're doing one thing when we've told the other two countries we have to pull out of this program because the GAO estimates that program would cost between $9 billion and $11 billion, the total cost of deploying the MEADS program over a period of time.
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I'm very upset with where we're going with missile defense because, while it's the most increasing threat we face, it is the fastest growing decrease in defense spending according to your projections; $3.6 billion to $2.6 billion, it is impossible to do what you want and, therefore, you're going to be forced to use budget numbers to drive major changes.
My prediction is you'll probably come back to us after the election and say we've either got to cancel or postpone for 2 to 3 years the THAAD program. And what you're going to probably say is it's a technology problem. And for those people who aren't informed, they may believe you. But you and I both know THAAD has done more in 6 years than any other technology program with the challenge it faces of its type; 28 of 30 milestones achieved. And the problems aren't with the hit-to-kill. The problems are with the technology and the quality control in the company itself, which we've all agreed on, and which we've worked with Ballistic Missile Defense Organization to correct. But to do that to THAAD is a terrible disservice to our military personnel, because it was the Chiefs and it were our military leaders that told us that we need to have a layered approach. And the layered approach should involve PAC–3, THAAD, Navy area wide, Navy upper-tier, MEADS. And now you're going to come back and tell us, ''Well, we really didn't mean all that. We can really do with what—we can put wheels on THAAD, or we can put wheels on PAC–3, or maybe we could put wheels on one of our ships and bring it ashore and we'll use that to provide the protection that we need for our troops.''
It's extremely frustrating to see us facing the prospect of not being able to meet what is, I think, one of the most urgent needs we have. So, therefore, let me ask you some questions.
You said you got the most recent North Korean briefing, so you're aware of the problem. Two years ago, John Hamre, Secretary Kaminski, came in here—and the President said publicly—Mal O'Neill even said it when he was in charge of BMDO, ''We now have a solution that's going to satisfy you, Congress. We have this grand scheme for protecting our Nation. It's called Three-Plus-Three. We're going to spend three years to work on a technology, and at the end of those three years, then we can make a decision based on the threats.'' Well, that was 2 years ago. Now you let the LSI contractors this past year, and Boeing is involved in looking at what's necessary. You and I both know, for you to make a deployment decision, you've got to put long lead money upfront because there's all kinds of leg work that has to be done to be able to make that decision. You just can't wait for 3 years and then in a vacuum say, ''Okay, ready to go. Three years from now, we'll be deployed.'' You've got to start providing long lead money years in advance that have nothing to do with the technology itself, because that's still under consideration, but relative to the other systems that are necessary for a national missile defense.
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Now up until now, my understanding is you've not programmed $1 of long lead money for engineering marketing development [EMD]; is that correct?
Dr. GANSLER. What we're doing now is part of the review for the 2000 budget is looking at some of these questions that you're raising, Mr. Chairman. We have funded some areas. In fact, I've just signed off the approval for what I think is one of the longest lead items——
[Laughter.]
Namely, the environmental impact statement for Alaska and North Dakota. I mean it takes——
Mr. WELDON. I know we're always there for the environment, Mr. Secretary, I appreciate that.
Dr. GANSLER. It takes a long time——
Mr. WELDON. The troops may suffer, but whatever the environment needs we're they for that. Boy, I tell you——
Dr. GANSLER. No; my reason for pointing that out is it's one of the longer lead requirements, unfortunately.
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We are assessing now whether there's any additional requirements that we would have to put into the 2000 budget in order to maintain and make sure that we have the Three-Plus-Three capability.
Mr. WELDON. What is the Three-Plus-Three? Tell me, you know, we hear that term thrown around, but the media doesn't pay attention to this. They think Three-Plus-Three means three plus three. Now we're into two. So, am I right in saying we have 1 more year and then we make a decision to deploy?
Dr. GANSLER. The original plan and still the current plan is the year 2000 you make the decision and you would have the deployment, you know, in 2003. That has always represented a very high risk for the schedule part of it, as you know. We obviously—the technical portion of it, we've had a couple of flights, not intercept flights but, you know, recent check flights that were very successful. We're going to have some more. We think that that program is in pretty good shape. Still the plan is to maintain that Three-Plus-Three, whether we make the decision in the year 2000 to go ahead and deploy in 2003 is still not determined, and I think it's a technology-driven question. In other words, we want to make sure that we can, in fact, have a system that works.
But, as you know, we've been looking carefully at the whole development question of each of these programs. You know, how many flights you have to have to have some confidence that it works. You saw Larry Welch's report on the number of flights that we traditionally used to have on intercept systems, many more flights than what we're talking about now. I mean the whole concept of having one successful flight and committing a system is totally different than what we have traditionally done, but it's because we're trying to as soon as possible get these systems deployed.
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I happen to agree with you that this is a high priority and it's a short schedule driven program. It should be, I think. The threat, if anything, is getting more real than it was before for the theater and I think even for the national as it's growing.
But I think, particularly, I would prioritize—and I know that the Chiefs have as well and the CINC's have—the theater being the immediate problem. I mean here we have a large number of short-range missiles in North Korea aimed at us, you know, and we need to develop and deploy the PAC–3 to complement the PAC–2, you know, GEM versions. We need to continue with the THAAD development. We need to push, I think, accelerate the Navy upper-tier. We're looking at what we can do to try to put together a package that will satisfy you as well as ourselves of a program that: (A) Meets the fastest schedule, and (B) makes sense. And we'll be coming back in to you, I think, with some modifications to these programs.
Mr. WELDON. I would like to believe that everyone above you agrees with you. My problem is that I really, looking at what's happened in the past, I have problems agreeing that those above you agree with the statement you've made.
I mean you mentioned the Welch report which said that we need additional robust testing for our systems. Well, that's exactly what this Congress did in a bipartisan way for the past 3 years. We've plused-up funding for missile defense by $1 billion each year over the President's request, and that was to give BMDO money for additional testing. In fact, I thought it ironic that Paul Kaminski was on the Welch panel, that Paul Kaminski resisted every one of those plus-ups that we gave them, and then had the audacity to sit on the panel and criticized us for not having a robust test program. It reminded of Harry Critas taking credit for what he had criticized us for the year before.
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It gets a little frustrating up here to listen to the words as opposed to the substance of what's happening, especially when—when it's really going to hit the fan is when we have another attack and our young troops are killed. And then everyone is going to wonder why we didn't do anything. And the administration will say, ''Well, the Congress was as much to blame about this as we are.'' And I can't buy that because Democrats and Republicans, alike, here have been making this case. If fact, I was somewhat outraged by the comments on the Defense Authorization Act for next year. We were told that the administration didn't like the fact that there were $900,000, I believe it was, of increases in the R&D accounts—$900 million in the R&D accounts. That's right; million—what's a thousand to a million down here; it's pocket change—and the question was how can—over $300 million of these adds for basic applied research that we felt were necessary. But then we put money in for theater missile defense which you've just testified is necessary. My question is, how can we consider $270 million for BMDO programs to be considered ''pork'' because they were not on the service Chief's list? There is no service Chief for BMDO. How could it be on a service Chief's list if there's no service Chief for BMDO? In fact, you all just moved the BMDO head a couple of steps below where it had been. Isn't it true that you've now moved General Lyles down one, at least one step, and put him under someone under you, where he used to report directly to you?
Dr. GANSLER. No; actually, in fact, I just officially released an organization chart yesterday because I had heard that people had said that. John Lyles reports directly to me. In fact, I spend more time with him than any member of my staff I can tell you.
Mr. WELDON. Well, the website of one of your subordinates for the past 2 months, as you know, has stated that he is responsible for all missile defense activities and acquisition decisions.
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Dr. GANSLER. Dr. Mark is the Director, Defense Research and Engineering. He has been helping me in a lot of these areas. This ballistic missile defense and the Defense Threat Reduction Agency both continue to report directly to me, but he has an enormous expertise that I want to draw on over the years. You know he was Secretary of the Air Force. He's had a really terrific background, so I want to just draw on that experience, and so I'm having him involved in these meetings with General Lyles. But, General Lyles still reports directly to me.
There's no question that we need to continue to push both the schedule and the programs in this area. As far as I'm concerned, it is a high priority. And that's why I'm spending so much time on it personally. As I say, hopefully, being able to come in to you with some revised plans for these programs.
I sympathize totally with your frustration, frankly. I also appreciate your statement that it's a hard thing to hit a bullet with a bullet and recognizing that it is a technical challenge. I would have like to have seen the THAAD actually test the technical challenge rather than the quality of the building that they did in 1994 and 1995 with those missiles. It would have been a lot more rewarding for both of us. But we are where we are, and we have to figure out now how to get something soon that works, not just get something soon.
Mr. WELDON. Some simple questions. Are you still committed to THAAD?
Dr. GANSLER. We're assessing now—well, first of all, let me say, yes. The THAAD system—and I think you're observation about various parts of the THAAD system is a very important point. The radar works; the radar is a key element of THAAD, and the radar works. And I want to take full advantage of that. In fact one of the things—this is somewhat over the side—but one of the things that the Joint Staff has indicated in their reviews is the importance of the inter-operability associated with these systems. So if you can get some cueing from various systems, you can get a better force multiplier, if you will, than a kill probability out of multiple systems. I mean this whole concept of the layered approach is really something that we strongly support. And the more you can take full advantage of multiple radars, multiple interceptors, the better off you are. So we're going to try to really do a better job of that integration of those systems, including with the THAAD radar.
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What I'm concerned about is those THAAD missiles that were built in 1994 and 1995 that have such low quality, as demonstrated by the last five flights and whether or not one ought to fly those or use them for engineering tests or something else in order to determine what next to do on THAAD. And that's what we're kind of trying to assess more. It's the interceptor missiles that are the only question part.
We haven't gotten to the tough part of THAAD which is, you know, does the interceptor work in a combined exoatmospheric and endoatmospheric interceptor? The easier job of the two is to solely have an exoatmospheric interceptor or an endoatmospheric interceptor. So we're trying to access now what kind of an integrated program makes sense.
Mr. WELDON. That concerns me, because it leads me to believe that what will happen is because—again, of budgetary concerns—what you've just mentioned in terms of the missiles, will be the reason why the administration won't try to justify to us that we should have a 2- to 3-year delay in the THAAD program. It's a very convenient situation, and at a time where we desperately need a theater ground base system. We should not be playing budget games. And if we have the need there, since you and I agree it's one of our highest priorities—and this Congress agrees to that in repeated votes—we've got to find the money without taking it from other programs. This Congress will support you. Find the money to build the THAAD program, deploy PAC–3, speed up Navy upper-tiers as quickly as possible, put in place that layered approach you want, work with the Japanese. I even advocate working with the Arab countries, the gulf countries, Jordan and Egypt, that want us to work with them, alone, with our commitment to Israel to provide missile defense. And change the debate between Russia so that we can allow for deployment of a national missile defense system.
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My final question; are you going to request additional long lead money? And if so, approximately what amount for NMD in the next year's budget request?
Dr. GANSLER. That's the one that I answered a few minutes ago that says that's what we have under evaluation right now. I don't want to preempt the Secretary's decision on how much and when. But Secretary Cohen will be making that evaluation in the next couple of months. We have to do that as part of the 2000 budget.
Mr. WELDON. One final point; John Spratt and I introduced a bipartisan bill that has about 60 some co-sponsors right now. When I introduced it, it had 24 Democrat and 24 Republican sponsors that said that based upon what we're seeing—and you've had the updated code word briefing on North Korea so you know what's contained in there. Do you think it's time now that the official position of this country should be to deploy a national missile defense? Realizing that along with that decision, it requires us to begin serious discussions with the Russians so that they understand that this decision is not about scoring a strategic advantage over them, but rather it's one for our own best self interest.
Dr. GANSLER. Well, you recall I testified before this same committee earlier in the year and said that it was my personal opinion that we will end up deploying a national missile defense system. I still believe we will do that. I think the question is, when. And when we'll be ready technologically to do that. And that's what we're going to be trying to make an assessment of. And, you know, whether it's in 2000, or whether it's in 2003, I'm not going to make a commitment to that, but it's very clear to me we will be deploying a system. And how much we have to do in 2000, 2001, you know, that's a function of what I think we learned in 1999.
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Mr. WELDON. I guess——
Dr. GANSLER. In terms of the system itself that we have under development, the Boeing work that we now have under development——
Mr. WELDON. I don't want to put words in your mouth, but correct me if I'm wrong. Is what you're saying that it's not a question of if we will build national missile defense, it's a question of when?
Dr. GANSLER. That's my personal opinion.
Mr. WELDON. Thank you.
Mr. HUNTER. Thank you, Mr. Weldon.
Did, Herbert, you have another question?
Mr. BATEMAN. Mr. Chairman, I think it's time for a little note of whimsy here. Dr. Gansler has had a rather rigorous day and a long time in that chair. [Laughter.]
But when he mentioned the——
Mr. HUNTER. Yes, but he got a big break there. He got a big intermission.
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Dr. GANSLER. Yes, that's right.
Mr. BATEMAN. When he mentioned the 2000 budget, it occurred to me that we hope it won't be ''Uh, oh,'' budget. [Laughter.]
Dr. GANSLER. Actually it's my personal hope that both of us can come back in 5 years and say we did the right thing.
Mr. HUNTER. Thank you, Mr. Bateman.
Dr. Gansler, I want to ask our other panelists to pick up here where we left off, especially with Mr. Krepinevich's comments about needing to start to wildcat, because I'd like to hear your response on that. But, first, let me go through a few basic programs and get a response from you.
The B–2 Bomber Panel recommended—and I have their recommendation here—that we make the present B–2 force ''all it can be,'' and that requires a number of upgrades including the low observability, maintainability, and situational awareness upgrades. We put in following that report's directives $86 million, in this subcommittee and full committee. The Senate had done nothing. Ultimately, what was appropriated in the conference was $50 million. Are you up to speed with the new initiatives on low observability that are being offered right now, being proposed?
Dr. GANSLER. Not on the B–2, maybe some of the others on the panel——
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Mr. HUNTER. Yes. General Mark, maybe you'd like to answer that.
Yes; pass that. Yes; what are you going to do with the $50 million? That's a good—I think, a good question.
General MARK. Well, first of all, Mr. Chairman. As you well know, the B–2 is a very important and critical program for a long-range precision employment. And the comments that were made by the long-range air power study I think are very important, and we've taken those to heart. We do have a bomber roadmap underway. You have asked to see that. Next March we will bring that to you. That is in draft, in fact, in work in the building between the Air staff and Air Combat Command now where some of those modifications are being addressed.
Mr. HUNTER. OK.
General MARK. There are also——
Mr. HUNTER. I hope the bomber roadmap goes beyond——
General MARK. Yes, sir.
Mr. HUNTER [continuing]. Upgrading B–2.
General MARK. Yes, sir. But it does look very hard at those most important features that we should use in the B–2 to make it ''all it can be'' as you said.
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Some of the Tier 1 initiatives that were mentioned by the long-range air power study did deal with the low observability that you talk about, as well as the R&M. And it was their belief that we could do both low observable [LO] improvement and R&M in the same modifications. And those dollars were in the neighborhood of $50 to $80 million. As it turns out, and as we've gone into that, we are going to be able to take many of the R&M activities that were associated with that and get some marginal improvement in the LO for the kinds of dollars that were initially suggested to the low rule initial production [LRIP] by the contractor. But, in fact, the rest of the LO capability that they addressed requires significantly more money than originally estimated. That is a part of what the roadmap is looking at to see how much of that we can do and if, in fact, it is appropriate for us to spend the additional money necessary, to the tune of another $80 million or so, to get the improved LO characteristics, and their operational value with respect to how we intend to employ the B–2.
So, we are taking the action now to ensure a reduced maintenance man hours per flying hour and some marginal improvement to the LO, but not as far as was originally presented to the LRAP.
Mr. HUNTER. OK. Thank you.
At this time, I know Mr. Battista is in the back of the room. If you'd come up, Tony. We had Mr. Adcock here who was a representative of the Bomber Panel and we outwaited him. [Laughter.]
Mr. Adcock, I think, finally had to leave.
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But thank you for that presentation, General. I think we're going to need to engage a little bit here in the coming weeks. I would like to see this upgrades manifest in the administration's program so that this doesn't end up becoming a congressional add that's required to put on—I'd had to see you folks refer to it as ''pork'' when it comes up here next year.
I asked Mr. Battista to come up because he's a longstanding member of the Blue Ribbon Submarine Panel that was initiated by Les Aspin, in fact, helped to put it together under Les and then we carried on that panel with he and Dr. Johnny Foster and several other experts during the last major policy decisions with respect to submarines.
I've got a couple of questions with respect to the subs.
And, Tony, I want you, since you've reviewed this as our Blue Ribbon panelist here for the committee. You might take that seat right at the end there. And see if you can move a microphone to him. And I would like the Navy to respond on this, as well as Tony.
But, first, Tony, I'd like to give your impressions. The fiscal year 1998 House authorization bill contained a provision requiring the Navy to fund in the fiscal year 1999 FYDP 50 percent of the technology insertion opportunities into the new attack submarine that were briefed to the subcommittee on May 18, 1997. In September 1997, the Secretary of the Navy sent the subcommittee a letter certifying that he forwarded to the Secretary of Defense a budget request that met the funding levels of the House position.
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Now we had a major wrestling match over the new attack submarine. This subcommittee wanted to do some innovation. We wanted to do some prototyping. In the end, the Navy got most of its way and that it managed to rebound quickly from our divorce with Seawolf into a quick marriage with the so-called new attack submarine, and move off into that class under a new set of rules called partnering or teaming or between the two major sub yards.
Now we have a major interest and have seen to it that those insertions of technology which were promised to us by the Navy are, in fact, accomplished. And to those ends, we asked members of our Blue Ribbon Panel to be briefed on what's happening.
So to the Navy and I want—Admiral, perhaps you can respond to this after Mr. Battista's statement. I want you to be thinking about what is the status of the Navy's technology insertion plan? What technologies have been funded and which have not? What decisions were made at the most recent sub-talk meeting? And, what is the status of the second large-scale vehicle?
So, you can be thinking about those questions, because I'm going to ask you to answer them in a minute.
And, Mr. Battista, first, thank you for all the time that you've put in on these issues as a member of our panel with our other members, and your pay will be doubled next year, believe me. And tell us what happened——
Mr. BATTISTA. What about last year, Mr. Chairman. [Laughter.]
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Mr. HUNTER. That's right. We promised that last year. We did double it.
Mr. BATTISTA. Next year's doubling will have the same effect as last year's, so that's all right.
Mr. HUNTER. Well, along with a cost of living increase, zero is still zero. [Laughter.]
Could you tell us what the upshot of your review was? First, I asked you the broad question, has the Navy kept its word on insertion of new technologies into the new attack submarine program?
Mr. BATTISTA. All right. In the event some of you have to leave early, I'll give you a brief answer: No.
I reviewed the program several months ago. Johnny Foster was there, the other member of the four-person panel. And I advised the Navy at the time that I was very impressed over what they had accomplished with regard to the development of this new attack submarine and extremely disappointed over what they haven't accomplished. That is to say I don't believe the Navy is building the submarine that it's capable of building. The Navy is much smarter than that.
If you recall, in March 1996, the Navy tasked Admiral Borachocio to head a Submarine Technology Panel. I have gone through that review. It was merely a confirmation of all of the concerns that this committee has had for the past decade, in fact, decade and a half, over the development of a new submarine.
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You can recall that I gave you the assessment that I thought the Soviets, at the time, had closed the gap and the Russians continue the submarine program. I believe that they have achieved an unparalleled advance in submarine quieting, that they could conceivably possess the quietest submarine in the water today, and certainly in overall quieting. That is acoustic, plus nonacoustic.
That Borachocio panel stated very strongly that in the area of hydrodynamics, the United States was not only behind the Russians but, in fact, behind several other countries.
My overall concern is that submarine quieting consists of two major factors: nonacoustic and acoustic. And it's in the area of nonacoustic that I feel that the Navy continues to drop the ball.
Mr. Weldon said in his opening remarks that he could have predicted these hearings 10 years ago. I believe he came to the Congress in the early 1980's. Had he come in the mid-1970's, he would have been able to say that he could have predicted these hearings 20 years into the future. It's sort of deja vu all over again, in the words of Yogi Berra.
Similarly, in the case of Soviet and now Russian submarine advances, we could have predicted where they were going and where they'd be. We have, very accurately, on the committee. It differs from the Navy's assessment, but I think history will show that the committee was right more often than the Navy. Certainly in terms of the speed of the Alpha, certainly in terms of the TPK data on the Oscar, certainly in terms of the codings on the Oscar, certainly in terms of their developments of new polymers.
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So I'm deeply disappointed. I don't believe, in my review that is, of the submarine technology program. Everything is a POM issue. And I've subsequently learned that some of the money that the Congress has put in has been taken away from the Navy by Office of the Secretary of Defense, by the CNO. I find that only a fraction of the funds have been expended in some areas, and that indeed the first five submarines that are deployed will have zero hydrodynamic improvements over the Seawolf or over any other submarine that we've built in the past.
In talking to the Navy, I get all kinds of excuses. Excuses that, from a scientific perspective, I find are totally incorrect. I heard one statement made that the use of polymers, for example, would have an adverse effect on power. I checked with some submarine experts that I've trusted for all the years and find that that's sort of a ridiculous claim. So, it seems as though reasons are being concocted not to get a lot of these technologies—granted some will be in the first five boats—but certainly not to the level that we had expected or that the Admiral Borachocio panel had recommended.
You can put part of the blame on the Navy submarine community, but not all of it. Indeed, the funds that you authorize don't ever reach the submarines. And as I said, only a fraction of the money that you have authorized and appropriated has been obligated and expended so far. Those are my findings.
What else disturbs me is that one significant program, one that we felt was significant, flow management, is going to be brought to a hurdling conclusion. And when I heard that I thought, ''Well, gee, that means you're going to finish it and put it on the submarine.'' Because in talking to the people who are developing it—by the way, this is a teaming effort on the part of the two shipyards, the Applied Research Lab at Penn State, Dow Corning, a company called Cortania—and when you go through all the assessments that these people have made—and by the way, one of these outfits employs a retired admiral by the name of Tom Ryan, who also has a doctorate and is no stranger to science—you find that they believe that this could be put into the third boat. Yet there's no plan on the Navy's part to put in into the first five boats.
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So summing it up, you're getting a lot of promises and a lot of smoke, but no fire. That's my opinion. I'm sure the submarine community will differ, but if you wanted to go into a closed hearing at a later date, I think you'll find that, once again, you're going to get a submarine that doesn't reflect what the Navy is capable of doing. Rather, you're going to get a submarine that is based on ''let's hurry up; let's get it out there; let's get the new class.'' And relative to the SSN21, I would say that you might appropriately call this the ho hum class, in terms of hydrodynamics anyway.
That's it in a nutshell. I'd be glad to—I've got another commitment, but I would be glad to stand by and talk to Admiral Young or the new Secretary.
And let me say that, please be very patient with the new Secretary. He's only been on board a week, and I've known him for a long time. He's one of the brightest, most honest people I know, and I think he'd be committed to doing a good job in this technology assessment program.
But I'll be glad to stand by if you feel it's necessary.
Mr. HUNTER. Well, that's a kiss of death for him if you've complimented him like that. [Laughter.]
Mr. BATTISTA. Well, probably.
Let me say one other thing——
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Mr. HUNTER. Sure.
Mr. BATTISTA [continuing]. With regard to your overall hearing here today. You've got a lot of answers today, and no solutions. I'm going to give you my impression. You have got to increase the top line. But that, alone, won't do it. You've also got to force programs out of research and development into procurement. And when we talk about saving money, you're not going to save money by closing down other bases and drawing from other accounts to beef up the procurement account, because national security is a function of a lot of dependent variables. You cannot cut readiness at the expense of R&D. You don't get there from here. You can't cut procurement at the expense of R&D. You can't cut military-paying compensation and still, you know, have a viable national security program.
And let me say we've got all kinds of new buzz words that we invent, and I do not mean to say anything derogatory about anyone at the table, but Dr. Krepinevich talks about, for example, ''wildcatting.'' That's an all new buzz word. You know we call it advanced concept technology demonstrations. We've had one successful ACTD, Predator. And do you know that the Department of Defense doesn't know how to take a successful ACTD program and transfer into an acquisition program? That's pathetic. Two years ago, you mandated the elimination of all the stovepipe communication systems in favor of something called tactical control system. The Navy has done a magnificent job in bringing that to fruition. The Air Force won't sign up to it. The program is under funded, and guess what? It's probably going to go away. And that will save you a large fraction of a billion dollars over the next 10 years by eliminating all these stove-pipe type communication and control system.
So when Mr. Weldon talks about R&D, and when he asks, are you committed to this program? You've got to follow it up with more questions. Show me where your commitment is, dollar-wise. Show me, for example, where TCS is. It's been in R&D for a couple of years now, and it's ready for production. How come we can't make these things happen? Now we call them legacy systems. That's a very fancy term for a lot of old junk that we've had that's expensive to maintain. We've got the answers in many cases.
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Dr. Gansler points out how hard it is to hit a bullet with a bullet. Do you know it took this country 5 years to go from concept formulation to deployment of the Hawk missile system? Two years and six months for Nike Ajax? And yet you look at recent experiences. Aegis took 20 years; Patriot took 22 years. You could have been a lieutenant working on the design of the Patriot system when it was called SAM–D and retired 20 years later, never having seen one deployed. So we've got the wherewithal; it's the commitment that we need, and we've got to get rid of some of these bureaucratic obstacles that prevent us from getting there from here. I mean we've hit bullets with bullets 20 years ago. We know how to do it.
Mr. HUNTER. Mr. Battista, thank you, once again. And we're going to put you down as undecided, as usual. [Laughter.]
Mr. BATTISTA. All right. Thank you.
Mr. HUNTER. I want to—because we've got to move along, we've got our other panel.
I do want to give Admiral Young a chance to basically answer us the main question that we posited to Mr. Battista that came back in the negative and that is, have you kept your word to this committee and subcommittee on the time table for injecting the new technologies that you laid out for us into the NAS program, including hydrodynamics?
Mr. YOUNG. Mr. Chairman, as you know——
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Mr. HUNTER. And, Dr. Gansler, you had sub-talks, so you might want to jump into this and give an answer, too.
Mr. YOUNG. Mr. Chairman, as you know in our report to you this past spring, we reported the numbers of technologies that we were working on, including 17 technologies that we had planned and funded for insertion in first 1 or more of the first 4 hulls of the new attack submarine. We did send forth a budget that you have since authorized that does do that.
As you know, we're in the middle of our POMO deliberations, and we're looking at the impacts and priorities of the fundings that we're doing there.
The second question that you asked me was what was the decisions made at the last sub-talk, which was on the 31st of August? At that time, we actually did not make any decisions at that point, but I did present to the co-chairman, Dr. Gansler, who supports this, where we were in the budget process. We are still working that very hard. We are committed, OSD, as well as the Navy, in putting these technologies in. At this point, a snapshot in time will tell you that, based on where I stand looking at the budget as we continue to negotiate it, there are some technologies on that list that I may not be able to fund in the future budget.
This third question, sir, was on the large scale vehicle 2, where we stand on that process. We have completed concept design for the LSV 2, the Cut Throat. We recently received the proposal from the contractors. It is a teaming arrangement from Newport News as the prime, Electric Volt, as a sub, as well as several other contractors. We are getting ready to let that contract in the December timeframe, and we will continue on a schedule of delivering that in the first quarter of fiscal year 2001 and put it in the lake for testing.
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Mr. HUNTER. OK. Thank you.
And we're going to need to move along, but we want to expand on your answer. And I'd like you and Mr. Battista to engage with Mr. Thompson here at a time in the near future, maybe in the next several weeks so we can get a very good snapshot on exactly where we stand with respect to our contract here.
Mr. YOUNG. Yes, sir.
Mr. HUNTER. Mr. Battista.
Mr. BATTISTA. Yes. Just one point, Mr. Chairman, I think you'd want to ask the admiral.
When I received the briefing, not one technology was fully funded. There were all POM issues. And to me, a contract would imply that all of these issues have been addressed and have been put to bed and not left remaining for POM issues. This isn't Admiral Young's fault, by the way. This is, frankly, it's from Dr. Gansler on above. And let me say that nothing was excluded from being a POM issue at that time. Is that correct, Admiral?
Mr. YOUNG. At the President's budget, 1999, as well as the authorized budget that's coming forward, is fully funded for the technologies that we reported in that report. All 17 technologies had the appropriate amount of 6.4 development money, as well the appropriate amount of 6.5 integration money, and the appropriate SCN and OPN dollars to put it on the ships.
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Mr. HUNTER. OK. Let's engage on this here later. We're going to have to move or we're going to get bogged.
Yes, sir, Mr. Pappas.
Mr. PAPPAS. One question, if I could. Gentlemen, thank you for coming and I'm sorry I couldn't be here to hear your opening statements and the other questions from the other members of the committee. But we've all heard within the last couple of weeks that the President, Secretary Cohen, and the Joint Chiefs, I think have met, at least on one, probably a couple of occasions. And there have been, I think, a letter sent from the President to Secretary Cohen that he looked and worked with OMB and the National Security Council to look for possible supplemental funding for fiscal year 1999 and possible an increase in 2000 and beyond. And I also believe that when the Joint Chiefs met with the Senate Armed Services Committee, they expressed concern about recruiting, retention, training, and modernization. And I am told from at least our memo, Dr. Gansler, that early last month you spoke to the Association of the U.S. Army and acknowledged that the Department was trapped in a, quote, ''death spiral.'' There are many within our country, maybe even some around this town, that still with all of those statements from those individuals that certainly know our situations that are advocating for a decrease in defense spending. And I've even heard some people say $20 billion decrease or more would be appropriate.
I'm wondering, Dr. Gansler, General Campbell, General Skibbie, and Dr. Krepinevich—I hope I pronounced that properly—I'm wondering if each of you might be able to comment on what you think that kind of defense spending decrease could do.
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Dr. GANSLER. First of all, I'm obviously not an advocate of the defense spending decrease. I'm here to argue that, in fact, we better increase our procurement account over the coming years, and that's what's intended to be done. I think it's important that Secretary Cohen did go to the President with the Chairman, with the CINC's, and with the Chiefs to explain the current problems that we have in short-term readiness and also in long-term readiness. The President heard their comments. They actually went through a set of priorities and problems, both. We actually went through priorities that the CINC's have, as well, including some of the issues that we've already talked about here, ballistic missile defense and others.
Based upon these discussions, the President did, as you said, say that he would be willing to go for, first of all, a short-term increase in immediate readiness and then to listen to some discussions about potentially increases further, both in readiness and modernization and certainly in quality of life considerations, such as salary and retirement.
So those are the things that we're now going through for the 2000 budget. I mean if you took $20 billion out, it would just totally destroy all of the planning that we have now. I mean we have enough problems right now if we don't get the Bosnia supplemental. That would be serious to us.
So, clearly, we're not thinking in terms of the kind of numbers that you mentioned. If anything, we're thinking of some up ticks rather than some down ticks.
General CAMPBELL. A $20 billion reduction in the top line of DOD would put at serious risk our whole modernization plan and have a very serious impact on our long-range planning, as Dr. Gansler said.
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General SKIBBIE. I think a $20 million reduction to the top line question is, it's a function of where those cuts are taken. But obviously the discretionary accounts are normally the R&D and procurement accounts, and so that a major portion of it would trickle down there. And if you think you have seen consolidation in defense industry so far, you would see an even further round of consolidation in defense industry.
Dr. KREPINEVICH. I would agree with what's been said that a $20 billion reduction next year in this defense program would essentially put it in whatever Dr. Gansler describes as a ''death spiral.'' I think there are enough indications that there are red flags with respect to near term readiness. If we don't have a hollow military, and I don't think we do. I think you can certainly see that in some spots, we're on the ragged edge. I think that would accelerate that process.
As I mentioned in my testimony, it's not clear to me that we're necessarily on the right modernization path, but if this is the path you choose to purse, it makes it extremely difficult to get there from here.
Mr. HUNTER. OK. Thank you, Mr. Pappas.
Go ahead, Norm.
Mr. SISISKY. I just want unanimous consent to request some questions to you, Dr. Gansler, at your leisure.
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Mr. HUNTER. Certainly, without objection.
We're going to have—since we had a truncated hearing today with the impeachment inquiry debate and vote, we will—all members will have an opportunity to present some questions for the record, and we'd like you to answer those for the record, gentlemen.
Dr. Krepinevich, you talked about the need to have this flexibility to end this capability to wildcat systems. Dr. Gansler talked about having to have the tough political will to kill some of these systems, some systems that we have going. I think that of the fact we have very few aircraft systems, really just a few tactical, the joint strike fighter, and the F–22, and the F–18. We don't have many fixed wing programs. We've got very few rotary wing programs. We've got a shipbuilding budget that is building to a 190-ship Navy, 1 attack boat per year, no bomber program in terms of new construction.
What systems do we have to cancel, Dr. Gansler?
And, Dr. Krepinevich, your question is with the systems—and I'd like, General Skibbie, you to comment on this and, Mr. Davis, if you would also. With only a few big companies with a few big programs, how are we going to provide—and a very, very constrained defense budget—how can we without raising the top line, provide for this innovation, this wildcatting that you speak about? And when we have good programs that are innovative and are a departure from the major programs, how do you keep the big boys from killing them off politically?
So, why don't you go ahead, Dr. Gansler, and start off?
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Dr. GANSLER. Let me——
Mr. HUNTER. And then Dr. Krepinevich.
Dr. GANSLER. Let me comment first on the importance of the flexibility which we fully accept. One of the most important things I think that we're initiating now is the effort with U.S. Atlantic Command to try to do a significant amount of experimental work that's both joint and it's experimental in the sense of bringing in new ideas, trying to actually develop not new equipment so much as new tactics, doctrine, operations, even structure on the basis of new technology.
Now, part of that new technology we can demonstrate through things like the ACTD's or quick demonstrations of systems. Part of it can come through simply the exercises themselves. I have to emphasis they're not training exercises; these are experimental, and that's the important part of it in terms of the idea of the flexibility to be able to try different ideas.
We are going to, in the out year budgets, significantly increase the money associated with Atlantic Command's experiments to do that. Now——
Mr. HUNTER. But do you think we're going to be able to have the capability in the Department when we come up with a new idea and it infringes on the turf of big systems and threatens to take some of their money? Are you going to be able to keep these small, innovative systems alive and funded when the ire of the largest companies with large systems is invoked? Now, to date, I haven't seen too much of that. It's tough for these small ideas to survive.
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Dr. GANSLER. Clearly, the lobbying power, both within the executive and legislative branches of the few large companies——
Mr. HUNTER. And in the services, I might add.
Dr. GANSLER. That's what I say, in the executive and legislative side, and the service I was including in the executive side, but definitely within the services there's an institutional desire to keep the current programs, the traditional programs, if you will, going.
On the other hand, when one demonstrates the significant performance improvement that you can get in joint operations and with new ideas and new concepts, I think the Services will sign up to them.
I think the big problem we've been having—and I hear it frequently from the services—is ''show me.'' In other words, what they don't want to do is to risk the current operations which have been successful. I mean we are starting from a successful military to suddenly shift to some totally new ideas and totally new equipment, until it's been demonstrated and proven——
Mr. HUNTER. OK.
Dr. GANSLER. Because we'd be abandoning something that works in order to get something that's new.
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Mr. HUNTER. I understand that.
Dr. GANSLER. From the military, I think we can overcome it. Now, the institutional push from the industry, I think we can address in a somewhat different way, and that a lot of this technology is actually coming from the commercial marketplace.
Mr. HUNTER. OK.
Dr. GANSLER. And we can capture of these—now that requires acquisition reform, and it's going to require, I think, even some cooperation maybe from the Congress in terms of being able to bring in, in a commercial-like business practice, some of these commercial firms and commercial ideas. But that expands the industrial base, expands the ability to draw on these quickly developed technologies. I mean information technology is evolving very rapidly. Tony's point about the time period of our weapon systems is absolutely true. In fact, I was going to cynically say since I had designed the Hawk missile in the 5 years, I ought to go back and become a design engineer instead of an under secretary. Maybe we can get the schedules a little faster. [Laughter.]
Mr. HUNTER. We may need you on Theater Missile Defense. [Laughter.]
Dr. Krepinevich.
Dr. KREPINEVICH. Yes, Mr. Chairman, you asked a lot of big questions. Let me try and boil it down in a relatively brief statement.
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As Tony Battista indicated, and certainly my testimony indicates, wildcatting is not new. We've done a number of historical case studies under the premise that average people learn from their own experience and wise people learn from the experience of others.
And so you see, wildcatting or broad experimentation as characteristic of successful transformations of military organization, these are not ACTD's. What I would argue is wildcatting is linked, again, to the attempt on the part of military organizations to solve new problems. And so I would applaud both the Congress and the Pentagon for negotiating the new responsibilities for ACOM to start up this experimentation, as Dr. Gansler said, on this post-transformation conflict environment.
Let me give you, perhaps, an example of what I mean by wildcatting. If you take the power projection case that I presented earlier, where you don't have access to forward bases, at least early on in a conflict, wildcatting would have the ACOM commander say that is our experiment. That is our exercise. We don't get to use bases in the first 90 days, 120 days, either that or you guys show me how we do it under this very different kind of environment.
Under that situation, you might want to experiment with systems that allow you to see in the absence of having troops on the ground—long-range UAVs, unattended ground sensors, microsatellites, expand the Marine Hunter Warrior concept that says we don't seize bases, we operate independent of them. Work in some of the work that's been going on in the Army special ops forces, the ranger forces. Link those with strike systems that can't be deployed quickly into theater like the arsenal ship that was canceled last year that converted Trident that the Navy is considering. The Army has had on the drawing board anyway variations of what is called the Deep Strike Brigade that is relatively light, but deep striking, unmanned combat aerial vehicles, along with long-range bombers and an expanded suite of precision-guided munitions. Now that's not to say that there isn't room for TACAIR, heavy ground formations, and high signature Naval forces operating close in. But again, what is the mix of cutting edge and legacy forces? So I think that is what these exercises are determined to help establish.
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If I could give you an example, just looking at an unmanned aerial vehicle. A UAV is not a UAV, is not a unmanned aerial vehicle. Just as in the period of the 1920's, 1930's, a tank wasn't a tank, wasn't a tank. For the Germans, because they had blitzkrieg in mind, tanks that were fast that could concentrate quickly and that had long ranges, so once they broke though the lines could go deep into the energy rear, those were two key design parameters for the German army. For us, we may look a UAV and say it may be difficult to forward base, therefore, we want range, we want stealth. We may want to weaponize it, in which case——
Mr. HUNTER. Yes, But I think you've come to a challenge for Dr. Gansler, and that is this: UAV's were loved by all the services until they get to the point where we're actually going to build them and maybe produce them. And then they become the enemy of guys that have money that want to build good old fixed wing aircraft with people in them.
And we've had a heck of a time when we had all the UAV program managers up here at the same time, and I've never seen a more—probably one of the most confusing hearings I've ever chaired.
So you've given this—you've painted Nirvana, and I'm here to tell you that more often than not, it's when you invade Grenada and you end up calling the officers' club at Fort Benning to get artillery on the target.
It's the real—there's a fog in a war, and there's also a fog in acquisition. And fielding American technology quickly is a real problem for us.
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Dr. KREPINEVICH. I would agree with you, Mr. Chairman, but I think if you look, again, on the basis of our historical assessments, you see that these sorts of transformation typically take a decade, sometimes two decades as I mentioned earlier, which is why it's important to start now. You're right; there are a number of hurdles to overcome, and you've just named two. I could give you six, or seven, or eight more.
One of the optimistic bits of information I could give you is that oftentimes historically it has not taken a great many of the post-transformation systems to make an enormous difference. Germany in World War I had a handful of submarines. The U.S. Navy in 1942 had over 500 ships; it had 8 aircraft carriers out of those 500 plus ships. The German army that overruns Europe is less than 15 percent mechanized in 1939 and 1940.
So the seed money you put in, the R&D you do, the wildcatting you do, oftentimes, if it doesn't give you that critical mass when the balloon goes up and the war starts, at least it puts you in a position to move rapidly as we did with carriers and as other countries have done to finally overcome that bureaucratic resistance and the cultural resistance that——
Mr. HUNTER. There's nothing like a war to make you move out quickly——
Dr. KREPINEVICH. Well, it certainly has——
Mr. HUNTER [continuing]. In R&D and procurement.
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Dr. KREPINEVICH. Focusing the senses, as they say.
Mr. HUNTER. Right.
Dr. GANSLER. If I could——
Mr. HUNTER. Thank you very much.
Dr. Gansler, thank you. I think we're going to have to—I think I'm about 2 minutes away from this vote, and we're going to have to go into the New Jersey hearing here in just a few minutes.
I want to thank you for being with us. I'd like you to comment very briefly if you could on build and charter before you take off. Could you do that? And that's the idea that's very simply, we allow and score a system in which shipyards can build our sea lift capability and rent it to us, basically, over a long period of time without scoring that upfront and the big appropriations that pull down the SCN account.
Dr. GANSLER. Let me comment. Let me just make one point for the record that I wanted to make clear——
Mr. HUNTER. Sure.
Dr. GANSLER [continuing]. When I made the significant argument about the dollars for ACOM. I think it's equally important to point to the enormous amount of experimentation and demonstration going on within the Services themselves. In 1999, we had about $600 million in that for the service experimentation demonstration.
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Mr. HUNTER. I've got a minute, 30 to go. I'll get your build and charter for the record.
Dr. GANSLER. OK.
Mr. HUNTER. And the subcommittee is adjourned. Thanks for your patience.
[Whereupon, at 4:53 p.m., the subcommittees adjourned subject to the call of the Chairs.]
The official Committee record contains additional material here.
QUESTIONS SUBMITTED BY MR. HUNTER
Information Assurance
Mr. HUNTER. Dr. Gansler testified earlier this year that protecting the Defense Information Infrastructure against physical, electronic, and cyber threats is one of the Department's highest priorities and most formidable challenges. Recent exercises and ''real world'' intrusions clearly demonstrate that a Defense-wide improvement in Information Assurance is an absolute and enduring operational necessity.
The Department has budgeted $40 million per year on average from FY 1999 through FY 2003 for various Information Assurance-related projects. What is the basis of this amount and is it sufficient?
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Dr. GANSLER. The $40 million per year figure discussed by me in my testimony before the Subcommittees on Procurement and Research and Development was funding added to the Information Assurance (IA) program by the Program Decision Memorandum (PDM) regarding Department of Defense programs for fiscal years 1999–2003. The PDM, signed by Deputy Secretary of Defense John J. Hamre on November 6, 1997, directed that additional resources be specifically targeted against high pay off IA initiatives. The initiatives included development of a Global Security Management Infrastructure, additional efforts to evaluate and develop security enabled commercial-of-the-shelf (COTS) software, and development of improved cyber attack sensing and warning tools. Funding was also provided for 24 hour, 7 days a week operation of the Services' (Army, Navy, Air Force) Computer Emergency Response Teams and to conduct two Eligible Receiver-like exercises per year. The funds budgeted are sufficient for the purpose stated but only represent a portion of DOD IA total investment.
The DOD FY99 Information Systems Security Program (ISSP) totals $884M and provides for a broad range of information assurance solutions. The ISSP recognizes security issues involved in a globally networked environment. These security needs are the result of the explosive proliferation in networked services and our nation's increasing reliance on information networks to conduct essential business, to include military operations, civil government, and national and international commerce. As a first step in developing a solution, the ISSP budget provides for advancement of information systems security technology and vulnerability discovery. A primary focus of the ISSP is the need to secure the Defense Information Infrastructure (DII)—to protect the DII from attack, to detect attacks on the DII, and to react to detected attacks. The DII encompasses all computer and communication systems controlled by the Department from tactical hand-held radios to supercomputers.
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Investments within the ISSP to meet this challenge range from research, as discussed in Dr. Gansler's October 8, 1998, statement, product and service development to information assurance operations (e.g., vulnerability assessment and remediation, training and education efforts, incident detection and reporting, and security solution implementation).
Year 2000 (Y2K) Computer Problem
Mr. HUNTER. The software function that will identify and control whether computers will recognize the date change from December 31, 1999 to January 1, 2000—the millennium change—is critical to ensuring that defense weapon systems, command, control, communications, and intelligence systems and defense information systems continue to operate smoothly on the January 1, 2000 and beyond. The Office of Management and Budget (OMB) has accelerated the completion date for renovation of systems government-wide from December 1998 to September 1998 and for implementation of fixes to these systems from November 1999 to March 1999.
In June, the Secretary of Defense stated that DOD was making considerable progress to solve this dilemma and did not deserve the poor marks it received from separate reviews by the General Accounting Office and the OMB. However, in an August memorandum the Secretary said the Pentagon ''is making insufficient progress in its efforts to solve'' the Department's Y2K computer problem and directed that a comprehensive joint Y2K operational evaluation program be submitted to him by the Chairman of the Joint Chiefs of Staff by October 1st.
Is there adequate funding planned for in the FY 1999 emergency supplemental appropriations bill to complete fixing and testing of DOD systems to ensure they are Y2K compliant?
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Dr. GANSLER. The Department of Defense (DOD) does not anticipate requiring FY 1999 funding for Year 2000 (Y2K) computer compliance costs beyond those costs included in the FY 1999 budget. Additionally, the FY 1999 Omnibus Appropriations Act establishes for DOD the Information Technology Systems and Security Transfer Account ''for emergency expenses relating to Y2K conversion of information technology and national security systems, for information technology, and infrastructure protection to include computer security/information assurance programs, and for related expenses'' in the amount of ''$1,100,000,000, to remain available until September 30, 2001.'' DOD is working with the Office of Management and Budget to determine the appropriate criteria for use of the Transfer Account. The use of the Transfer Account must be within the context of priorities related to Y2K spelled out by the Secretary of Defense and Deputy Secretary of Defense.
The Deputy Secretary of Defense has directed the heads of the DOD Components to address Y2K as a top priority national security issue and to resource Y2K conversion efforts accordingly. DOD's target completion date for Y2K compliance is more aggressive than the OMB date you have cited. DOD's target date for its mission-critical systems to be Y2K-compliant is December 1998. DOD has set the more aggressive date for Y2K compliance of its systems so that the department can engage in a series of large-scale evaluations of DOD readiness in a Y2K environment throughout 1999.
To verify Y2K national security readiness, DOD will conduct Y2K operational evaluations and end-to-end Y2K tests of its mission-critical support capabilities. The Secretary of Defense and the Deputy Secretary of Defense directed these multi-agency, cross-functional and multi-system tests, which will begin early in FY 1999. The Secretary of Defense's memorandum, which you quote, also imposed tight funding controls on DOD's mission-critical systems to make sure that Y2K compliance is the highest priority for these systems. Additionally, DOD has increased its support for the President's Council for Y2K Conversion and the associated outreach to governmental and industry bodies.
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To date, we have not identified Y2K funding shortfalls. DOD's quarterly report to the Office of Management and Budget provides estimates of the funding allocated for Y2K compliance for Defense systems, by fiscal year and by DOD Component. We provide copies of these quarterly reports to the House National Security Committee staff. We continue to evaluate Y2K efforts on a regular basis to accomplish our efforts within existing funding to the fullest extent possible. Should this process reveal funding shortfalls, we will advise the Committee immediately of details of the requirement.
Maritime Prepositioning Force (Enhancement)
Mr. HUNTER. The Marine Corps requirement for three MPF(E) ships will now go unfulfilled due to problems encountered during conversions of existing vessels. The Congress redirected the funding for the third conversion to pay for the completion of the second conversion and to fund R&D MPF 2010 studies. This subcommittee favored new construction for the three ship MPF(E) program and still does. The LMSR program, which is now a mature program, has two shipyards currently in production of proven hull forms.
If funding can be found, would you support the building of another LMSR to complete the Marine Corps MPF(E) program and to incorporate features to be used as a technology demonstrator for MPF 2010?
Dr. GANSLER. The requirement for a third MPF(E) ship is still valid. However, there are no funds in the President's budget to support construction or conversion of a ship to meet this requirement. As part of the FY 1999 Defense Appropriations Conference Report, the Secretary of Defense must report to the Congressional Defense Committees by February 1, 1999, on how technical issues in the MPF(E) conversion program will be resolved and a potential new construction program implemented. We are working with the Navy and Marine Corps to meet this deadline and will include construction of another LMSR as an option to be considered. There are numerous options that we are exploring to best utilize the $10M R&D to ensure transition technology for MPF of the future are demonstrated and risks are mitigated.
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Mr. HUNTER. Would you agree to use the $10 million just added to the Sealift Fund for MPF 2010 studies to reconfigure an LMSR design to meet the above requirement?
Dr. GANSLER. As part of the FY99 Defense Appropriations Conference Report, the Secretary of Defense must provide Congress a report by February 1, 1999, which would provide details on how we plan to expend the additional $10 million. This report is under development and will address and evaluate benefits from mitigating risks for MPF of the future through transitioning of technologies on existing hull forms, including the LMSR design.
Overall Navy Shipbuilding Rate
Mr. HUNTER. Several Navy officials have recently acknowledged that the Navy needs to procure an average of 8 or 9 new ships per year to replace the planned 300-ship fleet on a steady-state basis. The planned rate of Navy ship procurement in the Future Years Defense Plan, however, seems stuck at 6 or 7 ships per year—a rate that would reduce the Navy to a force of only 215 to 245 ships by the 2020s, assuming an average 35-year ship life. Even a procurement rate of 8 or 9 ships per year, moreover, would not reduce the backlog of deferred ship procurement that has been accumulating since the ship procurement rate first fell below 8 ships in FY 1994. Is DOD committed to maintaining a 300-ship fleet through the 2020s, or is the 300-ship figure only a near- to mid-term force-level goal for DOD? What is your view on how to achieve a Navy ship procurement rate that will sustain a 300-ship fleet not just in the near- to mid-term, but through the 2020s?
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Dr. GANSLER. The Department of Defense remains committed to maintaining the force structure established by the Quadrennial Defense Review (QDR). The QDR Naval force comprises: 12 Carrier Battle Groups (CVBG); 12 Amphibious Ready Groups (ARG); 116 Surface Combatants; 50 Attack Submarines; and 14 Ballistic Missile Submarines. When combined with the ships required to support the forces listed above, the total is about 300 ships.
The QDR strategy sought to shape and respond to the world of today, while continuing to prepare for the world of tomorrow. The QDR was designed to be a comprehensive examination of America's defense needs from 1997 to 2015. Beyond 2015, the numbers represent analyst projections and do not account for major technological/conceptual leaps or changes in operational requirements. Along with the Navy, we will continue to review the numbers of ships required to support the operational requirements centered around the 12 CVBG/12 ARG force.
The Chief of Naval Operations recently stated that increasing our shipbuilding rate to the necessary level of eight to ten ships a year would cost $900 million annually throughout the FYDP. After that, this figure would increase to $1.6 billion per year to maintain the required force levels.
Achieving these increases in our shipbuilding rates will be a considerable challenge. The Department of the Navy (DoN) will continue to pursue and fund Total Ownership Cost (TOC) reductions and other efforts that will free up future dollars for shipbuilding. Additionally, the service lives of ships being constructed today are projected to be longer than some ships within the existing force and some service lives can be extended beyond their original estimates.
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We estimate two additional rounds of Base Realignment and Closure (BRAC) could save the department $3 billion per year in the long term. A portion of these savings could be applied to increasing our shipbuilding rate.
New Attack Submarine
Mr. HUNTER. The Navy acknowledges that it is having difficulty fully funding its plan for developing and incorporating certain new technologies into the New Attack Submarine. Some of these technologies could reduce the procurement and life cycle costs of these ships. Meanwhile, the planned procurement rate for the New Attack Submarine in the Future Years Defense Plan equates to an average of less than one boat per year. An eventual rate of two boats per year will be needed to prevent the attack submarine force from eventually falling below the QDR-established force-level goal of 50 boats. Defense reporter George Wilson, in an op-ed piece in the September 29 issue of the Washington Post, wrote that ''A four-star admiral trying to build a modern Navy of 300 ships said he cannot do it if he has to maintain the specific undersea fleet of 50 nuclear attack submarines.'' What is your view on how to resolve this situation regarding affordability of submarine technology development and procurement?
Dr. GANSLER. We must recognize that nuclear attack submarines are and will continue to be expensive to buy. However, affordability is, and will continue to be, a major factor in acquisition decisions. The SEAWOLF class was truncated for this reason. Its replacement, the VIRGINIA (SSN 774) class submarine, has been designed from its inception to balance capability and affordability to meet projected military requirements while maintaining the flexibility to accept emerging technologies that will further reduce Total Ownership Cost. Let me address procurement and force level, and technology development separately.
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Procurement and Force Level. A build rate of two to three ships per year will be needed to prevent the attack submarine force from failing below the QDR-established force level of 50 attack submarines. The program of record begins this build rate in FY05. Although the Department is working hard to reduce acquisition and Total Ownership Costs, achieving this goal will be difficult given the current Department acquisition budget and resource projections.
In order to enable the Revolution in Military Affairs, the Department must first engage in a Revolution in Business Affairs (RBA). A major objective of the RBA is to reduce costs dramatically. The VIRGINIA class submarine is being designed with state of the art computer aided design processes that have already shown reduction in cycle time for design, and allow for seamless integration of new technologies into the design of subsequent ships. Its modular design will allow for the insertion of technologies with a significant reduction in effort, time and cost.
Technology Development. Today a number of factors dictate a different approach to technology management. A smaller force increasingly depends on exploitation of new technologies to maintain its military effectiveness. Thus, while the fleet size is decreasing, the need for developing new technologies is increasing. The rapid pace of technological advancement throughout much of the world challenges the U.S. to avoid technological obsolescence and surprise. These factors demand an effective and focused approach to R&D management.
We face an urgent need to reverse the budget-consuming spiral that is created by escalating maintenance costs on aging and overworked systems. We must improve the reliability of the current systems we will be using until new systems are deployed. If not, the costs of maintaining our current equipment will increasingly drain funds from long-range readiness programs—as has been the case in recent years. New technologies being fielded for the first time on the VIRGINIA class are being tested at sea on existing fleet submarines, and will be considered for back-fit into the entire fleet when necessary to meet mission requirements, or when reduced total life cycle costs are shown to be worth the up-front investment.
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While continuing to explore other long-term qualitative leaps forward in military technology, we must also lead the way in low cost, advanced technology. Affordability is just as great a technical challenge as performance. Here we must take full advantage of the cost-sensitive, product and process technologies and the management lessons that have turned around American commerce and industry during the past decade. Technologies being considered for insertion into new and/or existing submarines must demonstrate that a reduction in life cycle cost will be obtained in return for the up front acquisition expenditure. The VIRGINIA class is a Department leader in this effort; for example:
The Acoustic Rapid COTS Insertion (A–RCI) program into all classes of submarines is an excellent example of the use of commercial standards and equipment to deliver significantly increased performance, at lower acquisition and life cycle cost.
The Reverse Osmosis Desalination Plant and emergency diesel engine use commercially adapted systems with high reliability and lower operating and maintenance costs than the systems they replaced on the LOS ANGELES class.
Life of the ship core and simplified propulsion plant will reduce ship acquisition cost, avoid costly mid-life refueling, and reduce operating and support costs.
A balanced investment strategy and the ability to leverage other DOD and industrial resources are key to building on this success and maintaining an affordable technology insertion plan. The Department is investing resources based on submarine warfighting priorities and balances the trade-offs between mission benefit, affordability, and risk, to prioritize technologies. The level of funding and return on investment determine the number of technologies pursued. A prime example of leveraging resources is the DARPA/Navy memorandum of argreement, wherein DARPA and the Navy are funding industry teams to design submarine concept that will embrace future missions and payloads as described in the Defense Science Board's 1998 Future Submarine Study.
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Acquisition Program Stability Reserve
Mr. HUNTER. The 1999 FYDP included an acquisition program stability reserve to address unforeseeable cost growth than can result from technical risk and uncertainty associated with developing advanced technology for weapons systems, for example, unexpected engineering programs. Currently, cost growth in one program requires offsets from other programs, which in turn can disrupt the overall modernization program. During consideration of the FY99 budget request, committee staff were briefed that the DOD's plan was to distribute the reserve among programs for the budget year before a President's budget is submitted to Congress.
What is the current status of the acquisition program stability reserve and what does the Department plan to use the reserve for in the FY2000 budget request?
Dr. GANSLER. In building our FY2000 budget, we liquidated approximately $320M of previously held reserves. These funds were applied to over a dozen acquisition programs to offset unavoidable cost growth attributable to technical risk and uncertainty. My staff reviewed the application of these funds to ensure that they were utilized in a manner consistent with the intent of the stability reserve. No funds will be left in ''reserve'' in the budget request for FY2000; however, we intend to retain reserves in the outyears of the FYDP for future circumstances consistent with the policy briefed to the committee staff.
Procurement Bow Wave
Mr. HUNTER. Over the 1995–98 FYDPs, DOD did not meet its plans to increase procurement. For example, since 1995, DOD has lowered the estimated funding for 1998 procurement from about $57 billion in the 1995 FYDP to about $43 billion in the 1998 FYDP. The FYDP continued this trend with 1999 procurement being reduced from $60 billion in the 1995 FYDP to $48.7 billion in the 1999 FYDP. The impact of these reductions over the FYDP period ending in 2003 is to defer over $72 billion in procurement, creating a ''bow wave'' of demand for procurement in the middle of the next decade. The QDR report concluded that ''this bow wave would tend to disrupt planned modernization programs unless additional investment resources are made available in future years.''
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The procurement bow wave is particularly evident when considering DOD's aircraft modernization plans. In September 1997, the GAO reported that DOD's aircraft investment strategy involved the purchase or significant modification of at least 8,499 aircraft in 17 aircraft programs at a total procurement cost of $334.8 billion (in 1997 dollars) through the aircraft's planned completions.
What is the DOD's plan for dealing with the procurement bow wave that lies just beyond the current FYDP period?
Dr. GANSLER. I am acutely aware of the post-FYDP procurement bow wave. Unfortunately, its presence is not a new phenomenon to the DOD investment plan. Institutionally, some have come to accept it as a normal and constructive part of the long term planning process. I do not share this view. The biennial accommodation of this bow wave causes the Department to either terminate or stretch acquisition programs. Invariably, the latter is the case creating a continual cycle of program delays and cost increases.
I have made one of my primary goals creating acquisition programs that are both affordable in the current FYDP and beyond the FYDP within the constraints of the existing budget environment.
Additionally, my efforts to greatly expand and institutionalize the concept of ''Total Cost of Ownership,'' through transformation of our acquisition and logistics processes, are fundamental to addressing the bow wave. These efforts will serve to make efficient use of the available modernization dollars and arrest the ever increasing demand for Operations & Maintenance (O&M) funds.
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Global Positioning System
Mr. HUNTER. It is my understanding that the Global Positioning system (GPS) is vulnerable to collateral interference and intentional jamming. While the Department of Defense (DOD) is pursuing approaches to address this problem they may require a major investment to modify and improve the currently installed base. What plans does the Department have to address this problem in the short term? What plans does the Department have to address this problem in the long term?
Dr. GANSLER. Your understanding is correct. The signal strength of GPS is weak enough to be impacted by interference. The Department is responding to mitigate this vulnerability. In the short term, before a new on-orbit capability can be fielded, the Navigation Warfare (Navwar) initiative is developing enhancements to GPS user equipment to increase security, anti-jam protection, and direct acquisition of the encrypted code. In the longer run, the GPS Modernization program is focusing on the addition of new encrypted signals from space with Navwar characteristics—better security, higher signal power, and easier direct signal acquisition. Together, these GPS user equipment and spacecraft enhancements will progressively decrease GPS vulnerabilities to maintain our military advantage, through the next two decades, without impacting current GPS users, military and civilian. These efforts are under the oversight of the Interagency GPS Executive Board. Unfortunately, the FY99 Appropriations Conference seriously impacted the Navwar program with a significant reduction to the President's budget request. This action will delay the development and fielding of a new generation of military user equipment having substantially better performance in a jamming environment.
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DD 21 Destroyer
Mr. HUNTER. In granting Milestone I approval for the Navy's DD 21 Destroyer program in January 1998, you stated that ''Viable competition (especially regarding new system concepts) in the early stages of this program is critical to success in developing, producing, and operating and supporting an affordable DD 21. The Navy shall keep me informed of the adequacy of competition through these stages.'' The Navy's competition plan includes two industry teams, each of which includes a shipbuilder and a combat systems integrator. The two shipbuilders are the leading potential sources for innovations in the ship's hull, mechanical, and electrical (HM&E) features, while the two system integrators are the leading potential sources for innovations in the ship's combat system. The DD 21 Program will feature only one winning combat system integrator. But it is generally understood that the winning DD 21 design will be built by both of the shipbuilders in roughly equal numbers. Are you satisfied that the acquisition strategy subsequently developed by the Navy for the DD 21 program will achieve viable competition in the early stages of the program, especially regarding new system concepts? More specifically, are you satisfied that the competition between the shipyards for HM&E innovations will be as vigorous as the competition between the system integrators for combat systems? What do the shipyards have at stake in this arrangement that will ensure vigorous competition between them for HM&E innovations?
Dr. GANSLER. At this point I am satisfied that the acquisition strategy developed by the Navy for the DD 21 program will foster aggressive and innovative competition in the early stages of the program. The acquisition strategy requires that industry take a total ship systems engineering approach to the design of the DD 21 System.
Competition among the shipbuilders is driven in part by their teaming arrangements with systems integrators, who have a big stake in winning the competition in order to be part of the Full Service Contractor Team that ultimately builds the ships. In this capacity, the system integrator on the team with the winning design will be the combat systems integrator. This competition should stimulate the innovation and cost control needed to meet the DD 21 cost, schedule, and performance objectives.
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The integrator and shipbuilder on each team must operate as an integrated entity, combining combat systems and HM&E innovations to achieve a winning design, which the Navy will select in 2001. This means each industry team must perform tradeoffs among all aspect of the DD 21 System, including HM&E systems, combat systems, crew size, software, and support infrastructure, to develop a cost-effective design that satisfies DD 21 operational requirements. Without aggressive shipyard participation, the team will not be able to meet our stringent requirements.
Finally, what the shipyards have at stake in this arrangement is the prospect of being the leader of the Full Service Contractor Team that will complete DD 21 design and be the lead contractor for the duration of the competitively-sourced production program. This prospect provides a strong incentive to each shipbuilder to support its team through innovation.
Army's Airborne Reconnaissance Low (ARL)
Mr. HUNTER. Dr. Gansler, during this strategic period for the Department of Defense of increased OPTEMPO with decreasing assets, there is a dilemma of how to meet today's challenges and still progress to future systems for the Army After Next with limited funding. This is truly a significant problem for the war fighting Commanders in Chief (CinCs) with validated requirements to execute the National Military Policy while minimizing risk to U.S. lives and equipment. The CinCs rely on you leading the Acquisition Community to leverage commercial off-the-shelf (COTS) and government off-the-shelf (GOTS) technology to streamline the Acquisition process and procure the best capability available now which can transition to the future. While I am convinced that stopping the procurement ''death spiral'' is important, it must not be at the expense of American lives because the near term validated CinC requirements are neglected to have funding for future capability.
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While there probably are several examples of a proven system in great demand by the CinCs and underfunded by the service in anticipation of a future system, I would like to focus on the Army's Airborne Reconnaissance Low (ARL). ARL is a ''real world'' example of streamlined acquisition with system fielding within two years due to COTS/GOTS with a proven reliability (90%+Availability). ARL is in great demand (18 systems) required by various CinCs, but is funded by the Army for only 8 systems in anticipation of the future Aerial Common Sensor (ACS) capability which is in the conceptual phase. If this is the case why is the DOD using the flawed strategy of borrowing ARL from one CinC to provide a system to another CinC rather that procuring sufficient ARL systems?
Dr. GANSLER. Yes, the ARL used considerable COTS/GOTS systems to reduce its fielding time. Segments of the ARL COTS/GOTS were grown from the results achieved from other platform's COTS/GOTS usage. We must continue to utilize COTS/GOTS where possible on all systems to ensure maximum use of scarce acquisition funds. Our acquisition strategy is to try and capitalize on the limited procurement dollars available by acquiring systems that will increase the effectiveness of all our Intelligence, Surveillance and Reconnaissance (ISR) systems. One example is the Joint SIGINT Avionics Family (JSAF) airborne SIGINT sensor procurement by the Joint Airborne SIGINT Program Office (JASPO), of which the Army's ARL team is a member. The JASPO is taking COTS equipment and GOTS software to build a common system for all airborne SIGINT platforms.
We believe we can provide the warfighter with a significant increase in capabilities from within the budget by utilizing common COTS base systems on multiple platforms. We would like to provide each of the CinCs with the requested number of ARLs as well as their requests for more RC–135s, EP–3s, and U–2's. Fiscal realities however prevent us from being able to procure all the support that the CinCs request.
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Mr. HUNTER. While ACS may have potential, it is still poorly defined and obviously does not have a proven capability. ARL's open architecture can rapidly adapt to meet most of the future requirements and seems like the logical next acquisition step en route to a future system such as ACS. This seems to be a logical approach to progressing to the Army After Next while still meeting near term CinC requirements.
Therefore, my last question is: Why not procure ARL systems to meet validated CinC requirements and use it as a procurement success story for meeting the needs today, tomorrow, and for the year 2025?
Dr. GANSLER. Our strategy is to apply the limited Intelligence, Surveillance and Reconnaissance (ISR) procurement dollars available across areas that will provide the greatest return for the dollars invested. The Department would like to be in a position to satisfy the ISR needs of all the CinCs in terms of aircraft requested not only for the ARL but also for the RC–135, EP–3, and the U–2. Unfortunately, fiscal realities prevent us from meeting everyone's hardware needs.
1998 Army Modernization Plan
Mr. HUNTER. The April 1998 Army Modernization Plan states that the R&D and procurement budgets are underfunded by $3–5 billion per year in today's dollars. All but two of the core mission areas outlined in the 1998 Plan are rated Amber for both the near- and long-term. This Amber designation indicates that a limited capability exists to support achieving full-spectrum dominance required to execute the operational concepts of Joint Vision 2010. Is the April plan still applicable?
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Dr. GANSLER. Yes, the Army Modernization Plan, published in May 1998 is the most current plan. The Army assesses its modernization effort yearly and publishes a new plan yearly. Currently, the Army is working to publish the 1999 Modernization Plan, which is an update of the 1998 plan.
Mr. HUNTER. In recent press articles the Assistant Secretary of the Army for Research Development, and Acquisition, Mr. Paul Hoeper, has indicated that some acquisition programs will have to be cut. Which programs are candidates?
Dr. GANSLER. We do not maintain a list of programs to cut. Today, many of our procurement programs are at minimum sustaining levels. Further reductions will result in program terminations. This makes us keenly aware of potential impacts of any change or decrement to the modernization accounts.
From 1990 to 1998, we have had to terminate of restructure over 100 of our modernization programs. Historical and current affordability constraints have reduced modernization flexibility. Our operational requirements are tightly balanced against limited resources. This requires that we engage in constant top down affordability reviews and bottom up reviews of the programs.
Mr. HUNTER. The April 1998 Army Modernization Plan states that the R&D and procurement budgets are underfunded by $3–5 billion per year in today's dollars. All but two of the core mission areas outlined by the 1998 Plan are rated Amber for both the near-and-long term. This Amber designation indicates that a limited capability exists to support achieving full-spectrum dominance required to execute the operational concepts of Joint Vision 2010. If the DOD topline were increased, which programs would be increased?
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Dr. GANSLER. If the topline were increased we would look at those programs that continue to refine our modernization strategy to ensure we protect near-term readiness while adequately preparing for the future. We would focus on information dominance while maintaining combat overmatch to allow us to eventually field a full-spectrum, dominant land warfare force for the next century. We would also realign resources to meet new National Military Strategy based on the three pillars of respond, shape, and prepare.
On two separate occasions this year the Army has submitted its Unfinanced Requirements (UFRs) for congressional consideration. These UFRs have not significantly changed since the September submission. The Army's submission is consistent with the Joint Chief of Staff testimony to the Senate Arms Service Committee, 29 September 1998.
Mr. HUNTER. General Reimer, the Army Chief of Staff, told the SASC last week that, ''. . . we must prepare now for the future by investing in long-term capabilities through modernization and force development. We cannot continue to mortgage our future. If we fail to begin to modernize now we risk block obsolescence of systems in the future, putting future generations of soldiers and citizens at risk. In order to preserve future readiness, we must begin today to increase our modernization accounts . . .'' What specific systems risk ''block obsolescence'' in the future without modernization funds now? Does the Army propose to upgrade these systems or replace them?
Dr. GANSLER. I would like to expand on General Reimer's comment about the inadequacy of Army modernization accounts. Although Army Research, Development and Acquisition (RDA) is currently planned at about 4% above inflation across the Future Years Defense Plan (FYDP) funding is still about $3 billion below requirements annually. While the Army received an infusion of dollars to the Research, Development and Acquisition (RDA) accounts from the Quadrennial Defense Review (QDR), it applies mainly to the Program Objective Memorandum (POM) out-years. The Army included this infusion in their current planning and it helps to attain the Army's goals. Historically, however, out-year dollars are decremented as we move closer to them, in many cases to pay for near term readiness requirements. Without this infusion of resources, current production and fielding rates of many Army systems do not meet the levels required to prevent fleet-aging from becoming a chronic problem. For these reasons and to balance risk with affordability, the Army adjusts on a regular basis their maintenance and overhaul plans to accommodate for extended life cycles.
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In order to guard against obsolescence, the Army plans to replace some systems while recapitalizing others through Pre-Planned Product Improvements (P3I), Service Life Extension Programs (SLEP), depot rebuild and technology insertion. Examples of replacement include Crusader to replace Paladin, Comanche to replace Kiowa Warrior, and the Family of Medium Tactical Vehicles program to replace the Army's aging truck fleet. Examples of P3I
and Service Life Extension include M1 Abrams and Bradley Fighting Vehicle upgrades and modifications; and the Improved Cargo Helicopter (ICH) program to extend the life of the CH–47 helicopter fleet. Without additional resources in modernization accounts, approximately $3B in RDA funding and reasonable assurance that out-year funding will actually materialize, the Army faces significant risk in future readiness.
Ammunition
Mr. HUNTER. In response to the Chairman's request, the Army provided an unfunded ammunition requirements list to the subcommittee on March 4, 1998, just prior to mark-up of the fiscal year 1999 (FY99) authorization bill. This list noted that the ammunition procurement account was underfunded by $1.7 billion in FY99; however, that only $44 million of that amount was executable. Last week the Army provided an updated list that changed these figures to $7.5 billion and $225 million executable. What is the explanation for the large variation in the updated figures?
Dr. GANSLER. The data provided on March 4, 1998 was preliminary and had not been through complete staffing. It did not include some munitions found on the subsequent list (for example—critical training pipeline requirements) and data was not complete on some munitions. The data was updated and the finalized list was provided to Congress, including an executable range, as an insert for the record in response to Congressman Visclosky's question during the House Appropriation Committee hearings. Through an oversight, the House National Security Committee was not provided a corrected copy until recently.
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Mr. HUNTER. When were these new requirements established?
Dr. GANSLER. These are not new requirements. The numbers were based on the Army's Wartime Requirements 03, Standards in Training Commission approved in 1996, and the President's Budget for fiscal year 1999. As noted above, the information provided on March 4, 1998 was incomplete and not fully staffed.
HEMTT
Mr. HUNTER. The HEMTT truck is the mainstay of the Army's heavy truck fleet. Does the Army have a shortage of these trucks, in particular the tanker configuration? Is a shortage of HEMTT tanker trucks having an impact on readiness?
Dr. GANSLER. Yes; the Army does have a shortage of HEMTT trucks. The Army is particularly short HEMTT tankers and HEMTT wreckers. The Army is short 757 wreckers and 958 tankers. The wreckers are key for recovery missions of heavy vehicles such as HEMTT, PLS, and Line Haul tractors. Without this wrecker, the Army does not have the equipment needed to recover these heavy vehicles. As a result maintenance is delayed. The Army has been able to fill the most critical shortages with assets on hand. While units have not indicated a direct correlation between lack of readiness and HEMTT wreckers, they have indicated that it makes operations less efficient and more difficult.
The HEMTT tanker shortage affects fueling equipment particularly in combat units such as tank, artillery, aviation, and air ambulance. Without the HEMTT tanker units have to rely on slower, less efficient methods to refuel or do without the capability. Units have indicated that the lack of HEMTT tankers prevents them from having the desired levels of mobility. Further, the lack of HEMTT tankers will degrade the capability of newly designed units to meet their full mission capability.
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It would cost approximately $261.2M to procure the wreckers and approximately $257.7M for the tankers. However, because of Army TOA constraints, it has not been possible to fill the shortages.
1995 Army Truck Investment Plan
Mr. HUNTER. In the 1995 Army Truck Investment Plan there was an Extended Service Program for HEMTT Trucks.
a. Why has this program not been funded to date?
b. Could additional funds be used in fiscal year 1999 to start this program?
c. What is the impact of the readiness of the HEMTT fleet from the lack of an ESP program?
Dr. GANSLER. a. The Extended Service Program for the HEMTT was not funded to date because the Army did not have sufficient funds to support the program. The Army is short HEMTT tankers and wreckers. Any funds available would be used to reduce the shortage.
b. The Army plan is to request additional funds through the Warfighter Rapid Acquisition Program (WRAP), to fund the program in FY99. The Army will also request WRAP funding for FY00. The Army would be able to use additional funds for the HEMTT Extended Service Program. Lack of sufficient TOA has prevented the Army from starting the program sooner.
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c. The HEMTT fleet has had problems meeting the readiness goal of 90%. It has been generally below that level. It is expected that the Extended Service Program will improve the readiness of the HEMTT fleet as well as extend fleet life.
Palletized Loading System (PLS)
Mr. HUNTER. The Palletized Loading System (PLS) truck is a key piece of equipment for Combat Service Support Army units. It is also required for PREPO ships and new design divisions—active and reserve component. Does the Army have a shortage of these trucks that could be alleviated with additional procurement? Would filling these shortages improve readiness?
Dr. GANSLER. Yes, the Army does have a shortage of these trucks. There is a requirement for 4,764 and there are 2,898 on hand. Additional procurement would certainly alleviate the shortage situation.
The PLS trucks are not only used in the Combat Service Support units but also in Combat and Combat Support units. The field artillery and the engineers also use these vehicles. The artillery uses them for ammunition transport. The Engineers use the vehicles for various modules such as dump trucks, water tanker, cement mixer and bituminous distributor.
The National Guard divisions are particularly short of these vehicles. Further, the new design divisions require 33 more per heavy division. In order for the new design to meet Force XXI goals and for the National Guard divisions to be effective they need the PLS trucks. For the Army's Engineer units to meet their full operational requirements they need the PLS trucks. The PREPO sets require the trucks so our soldiers can fall in on modernized equipment when they deploy. Filling these shortages would make the Army a more efficient fighting force.
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The Army has had to use less capable vehicles to substitute for the shortage of the PLS trucks. For example, some units use over age 2 1/2 or 5-ton trucks instead of the required PLS trucks. While the substitute items may be ready in terms that they are operational, this use of these less capable vehicles prevents the unit from operating at its full design potential.
Multiple Launch Rocket System (MLRS) Launchers
Mr. HUNTER. The conference agreement on the 1999 authorization billincludes $21 million for Associated Support Items of Equipment (ASIOE) (support equipment) for two MLRS battalions of the Army National Guard, which are receiving ''cascaded'' launchers from active units. The conferees note that there is an additional 11 Corps artillery battalions which need this ASIOE equipment. How much will this equipment cost and what are your plans for funding it?
Dr. GANSLER. There are a total of 11 Corps Artillery Army National Guard 155 mm, M109 howitzer battalions that are being converted to MLRS battalions with ''cascaded'' MLRS launchers. Unless there are objections from the defense Authorization committees, the Army will use the $30 million provided by the Appropriations conference in fiscal year 1999 (FY99) to start the conversions of three battalions. The estimates for total cost of these conversions range from $150 million to $300 million. The costs for ASIOE is very dependent on availability of ASIOE for redistribution within the Army as a result of larger Army reorganization efforts. In addition to ASIOE costs, there are training, initial spares, transportation and other fielding related costs that are estimated at approximately $7 million per battalion conversion.
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The Army has programmed funds in FY00 to partially fill the ASIOE needs for these conversions. After refining the ASIOE cost estimates based on availability, the Army will identify the total conversion costs as a high priority funding requirement during the upcoming FY01–05 mini-Program Objective Memorandum build and will seek to fund them within resource constraints.
Medium Tactical Vehicles
Mr. HUNTER. The Army's fleet of 2 1/2 ton trucks is the oldest and least modernized. Would an infusion of funds help accelerate displacement of the old trucks and reduce the costs to support these vehicles?
Dr. GANSLER. Yes, an infusion of funds would help to displace the older trucks and reduce operational and supports costs. The Family of Medium Tactical Vehicles (FMTV) manufacturer has the capability to produce more trucks than the Army is buying in its budget request.
Mr. HUNTER. During the period, as I understand it, and as our Bomber Study Panel has acknowledged, the administration doesn't plan to spend a dime for long-range bomber aircraft, with the projection that we can fly B–52's until they're approximately 80 years old. Is that correct?
Mr. DAVIS. The administration's budget request for fiscal year 1999 included $189.9 million in post production support for the B–2 bomber and $15.7 million, $91.6 million, and $38.3 million for aircraft modifications for the B–2, B–1, and B–52 bombers, respectively. The Long Range Air Power Review panel recommended that the Department of Defense better exploit the potential of the current B–1, B–2, and B–52 bomber force through more operational attention and additional investment in support and upgrades, and that the Department develop a plan to sustain the bomber force for the longer term. The House National Security Committee agreed with the panel's assessment and directed the Secretary of the Air Force to prepare such a plan and submit it to the congressional defense committees by March 1, 1999. The Air Force's Air Combat Command is preparing a Bomber Roadmap that is to identify future needs and funding plans and priorities for the bomber force. The Roadmap is to be used to develop the Air Force's bomber plan due to the Congress by March 1, 1999.
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Mr. HUNTER. Secretary Gansler noted that the Department's current trend of draining modernization funds to pay for more frequent and costlier maintenance expenses resulting from overworked and aging equipment—in essence, mortgaging future readiness to pay for today's—must be urgently reversed. Among the initiatives he suggests must be taken to ''fund required newer systems'' is the termination of the number of ''traditional weapon systems.'' How does the Association view this particular initiative?
General SKIBBIE. In response to your question, the following comments are provided, which we believe reflect the general sentiment of our membership. For those companies currently working on ''traditional systems'', cancellation of the programs will probably be devastating. Anytime a sudden termination of a program takes place the financial impact is acute. Whether it threatens the very existence of the company normally depends upon the size of the cancelled program as a percentage of the size of the total business. In general, very large companies will survive, medium-to-small companies will not.
Industry will not be the only player impacted. The DOD stands to lose. In almost all cases the ''traditional weapon system'' under contract today is undergoing an upgrade, not a new build. Again, in virtually every case the upgrade involves:
Adding significant capability to current systems;
Improving system operation and maintenance costs by incorporating cost saving changes; and
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Design changes that allow for crew size reductions.
So while the surface of the term ''traditional systems'' conjures up thoughts of obsolescence, Cold War, expensive platforms; in fact, the rebuilding and upgrading of these systems is a very effective approach to modernizing capability and reducing operating and support costs.
Finally, Secretary Gansler's objective ''to fund the required newer systems'' is being interpreted differently by many. Some argue that he is referring to Joint Strike Fighter, DD21, Crusader and Comanche; others argue that this refers to more futurist Year 2025+ systems—for the Army; it would be the Army after Next.
This is an important distinction. No one, to my knowledge, has been able to really articulate the systems that will be key to the Year 2025+. Therefore, it is probably safe to say that the industrial base for these systems does not exist.
Finally, as we discussed last Friday you can not examine acquisition in isolation. Doctrine, force structure, strategy, and tactics dictate the required systems. The acquisition plan is the result. Available and projected technologies certainly influence, but the final acquisition requirements are the result of extensive study and examination. To come in at the end of the process and ''lop off'' major portions of the acquisition plan without the same intellectual rigor that led to the plan seems inadvisable.
Navy—Aviation
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Mr. HUNTER. Admiral Johnson, the Navy CNO, told the SASC last week that ''Aircraft procurement is too low today, but reaches acceptable rates by late in the FYDP. If we could reach higher rates sooner, especially for our F/A–18E/F, T–45 and Joint Primary Aircraft Training System (JPATS), we could accelerate the retirement of older, more expensive aircraft. An additional $1B per year would allow us to retire these aged airframes in a timely manner. Is this shortfall in aviation funds the highest unfunded priority?
Dr. BUCHANAN. While the CNO stated that aircraft procurement is too low today, the highest aviation unfunded priority on the Navy's above core list is F/A–18 Correction of Discrepancies.
Mr. HUNTER. With the addition of $1B per year in the FYDP, what are the proposed higher production rates for the F/A–18E/F, T–45 and JPATS?
Dr. BUCHANAN. Acceleration of aircraft procurement to higher levels, in the event of additional funding, would need to be planned and reviewed by the acquisition community and industry in order to realistically propose specific rates and costs.
Mr. HUNTER. Admiral Johnson also told the SASC last week that, ''I am concerned about the inventory levels of modern weaponry, particularly the Tomahawk Block III missile, and the resultant increased risk in fighting two nearly simultaneous Major Theater Wars. We have maintained the current level by limiting the fleet's training allowances, with some units only receiving one training missile per year of our costly leading edge weapons, and by significantly reducing funding for development of future weapons. I believe an additional $1.1B per year is required in the area of weapons development, maintenance, and procurement to sustain acceptable weapon inventories and training levels.'' Specifically, which other weapons now have low inventories and what are objective inventories of these weapons?
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Dr. BUCHANAN. Inventories of SLAM ER, AMRAAM, JSOW, JUDAM and General Purpose Bombs (MK83—1000 lb., MK84—500 lb.) have lower inventories than we would prefer. Of these, all weapons, with the exception of SLAM ER which is a new technology weapon, are listed on the CNOs above core list. Additionally, all will increase inventory levels toward their respective inventory objectives through the FYDP. The inventory objective, the Non-Nuclear Ordnance Requirements (NNOR), is a balance between warfighting requirements, shipfill and affordability.
Overall, munitions levels are adequate for two Major Theater Wars (MTWs). However, the lower than desired levels of the more modern weapons contributes to an increased element of risk in a two MTW scenario.
Mr. HUNTER. Is this shortfall in weapons funds the highest unfunded priority?
Dr. BUCHANAN. The shortfall in weapons funds is not the highest unfunded priority. The concern for near term readiness, specifically manpower, traditional readiness accounts (O&M,N) and infrastructure, are the highest priorities. The future readiness and modernization accounts, in which weapons funding is contained, is the next highest priority of unfunded items.
Mr. HUNTER. With the addition of $1.1B per year in the FYDP, which weapons would receive increased funding?
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Dr. BUCHANAN. An additional $1.1B per year across the FYDP would be applied toward a multitude of weapons programs and include efforts in weapons development, maintenance and procurement to sustain acceptable weapon inventories and training levels. Specific programs that would likely receive the additional funding include Tomahawk, Joint Standoff Weapon, Joint Direct Attack Munition, HELLFIRE, Evolved Seasparrow Missile, Standard Missile, Extended Range Guided Munition, Advanced Medium Range Air-to-Air Missile, general purpose bombs and a variety of training ordnance.
Navy—Upgrades to Current Systems (Organic Mine Warfare Capabilities)
Mr. HUNTER. Admiral Johnson further told the SASC last week that, ''Modernization is . . . one of our traditional bill payers. Funding for modernization of our ships and aircraft has declined by more than 50% since 1990, and our anticipated funding for the outyears is insufficient to perform needed capability and reliability upgrades. Key modernization efforts include Theater Ballistic Missile Defense, Cooperative Engagement Capability, Ship Self Defense System and Organic Mine Warfare capabilities. I estimate that an additional $1B per year is required to achieve these modernization efforts.'' Is this shortfall in upgrade funding the highest unfunded priority?
Dr. BUCHANAN. It is near the top of Navy's priorities balanced with recapitalization and readiness.
Mr. HUNTER. What would the addition of $1B per year in upgrade funding provide for theater ballistic missile defense, cooperative engagement capability, ship self defense system, and organic mine warfare capabilities?
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Dr. BUCHANAN. The addition of $1B per year would advance the procurement of Maritime Self Defense installations for CVN and LHD class ships, reduce risk in development of battle force interoperability, CEC, and TBMD, and accelerate the introduction of fully integrated organic mine countermeasures systems to the fleet, allowing the first Carrier Battle Group to deploy with organic systems one year earlier than planned.
Force Structure
Mr. HUNTER. The Bottom-Up-Review (BUR) set an objective of a 346-ship Navy. The Quadrennial Defense Review did not mention any new numerical objectives, leaving the assumption that the Navy still plans to maintain the BUR force structure. However, the current FYDP shows the number of ships declining from 315 at the end of FY 1999 to 306 at the end of FY 2003. In FY 1999, the Department requested funding for five new ships. One year ago, at this committee's shipbuilding hearing, Mr. Ron O'Rourke of the Congressional Research Service testified that the Navy would need to build an average of nine or ten ships per year in order to sustain a 346-ship fleet. He further testified that every year we fall short of that rate, we are adding to an approaching bow wave that will crest over us about 15 years from now. Last week, the Chief of Naval Operations testified before the SASC that ''we need to increase the shipbuilding rate from today's 6–7 ships per year to 8–10 ships per year by the middle of the next decade in order to maintain the Quadrennial Defense Review force.'' How small will the Navy's ship fleet become?
Dr. BUCHANAN. If the ship build rate that is currently being executed in Fiscal Year 1999, and planned for in Fiscal Year 2000, is maintained, the Navy's fleet will number 165 units by 2044.
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Mr. HUNTER. How many shipyards does the Navy envision employing beyond the turn of the century?
Dr. BUCHANAN. Currently the Navy plans to retain Norfolk, Portsmouth, Pearl Harbor, and Puget Sound Naval Shipyards. As a result of the BRAC process and our policy of maintaining essential core capabilities in public depots, we are bringing the size and capacity of the Naval Shipyard establishment in line with the size and needs of the operating fleet. Our current intention is to preserve essential workforce skills and ensure that these four shipyards continue to operate reliably and efficiently. However, changes in future force structure may require us to revise or redefine some of our infrastructure requirements.
Mr. HUNTER. How many ships must be built annually to sustain the fleet?
Dr. BUCHANAN. Using current plans, approximately nine to ten ships must be built annually to sustain a fleet of at least 300 ships.
Mr. HUNTER. How much funding does this require in a given year?
Dr. BUCHANAN. In order to increase the ship build rate to nine to ten ships per year, total SCN should be at $9.7 billion per year, or about $3 billion greater than the FY 1999 President's Budget.
Mr. HUNTER. Is such funding now anticipated to be available?
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Dr. BUCHANAN. The sources of additional funding required to sustain the Force Structure Account are varied. They include efficiencies sought from the Revolution in Acquisition Reform, realignment of funds from other USN accounts, the benefit of infrastructure reductions, possible reduction in CINC requirements and the infusion of funds from non-U.S. Navy sources. It is premature to anticipate funding availability at this time.
Charter and Build
Mr. HUNTER. For the last two years, my subcommittee has tried and failed, due to Senate opposition, to enact charter and build legislation which would allow the Navy to construct naval auxiliaries using long term leasing instead of SCN funding. This approach would take the pressure off of SCN in favor of other shipbuilding priorities. Do you support the charter and build concept?
Dr. BUCHANAN. The Navy is reviewing the concept of Charter and Build as a method of acquiring our auxiliary, sealift, and prepositioning vessels. Charter and Build permits the Navy to contract for a service rather than buying the asset. To make Charter and Build a financially attractive option, the navy must have additional up-front budget authority or changes in scoring rules. As currently structured, Charter and Build for the navy's auxiliary ships would require budget authority in the year the lease is singed. This is equivalent to procurement with Ship Construction Navy (SCN) funding.
Mr. HUNTER. Will it be included in your Fiscal Year 2000 budget request, along with a specific request to build the ADC(X) Program using this authority beginning in Fiscal Year 2000?
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Dr. BUCHANAN. the Navy is currently reviewing long-term leasing of our Auxiliary, Sealift, and prepositioned assets. Until all reviews are complete, it is premature to predict whether it will be included in the Fiscal Year 2000 President's Budget submission.
Mr. HUNTER. If not, will you support SCN funding for the lead ship of the ADC(X) program in Fiscal Year 2000 using a multiyear procurement approach, as suggested by the Senate?
Dr. BUCHANAN. There is a valid requirement to replace the Navy's aging TAEs and TAFSs. The Auxiliary Dry Cargo vessel program (T–ADC(X)) is the proposed replacement for this aging fleet. The current Navy budget programs a lead T–ADC(X) in Fiscal Year 2002.
However, if SCN funds became available, the Navy would accelerate a T–ADC(X) start in Fiscal Year 2000. Multiyear procurement for lead ship of a class is unprecedented but considering the low technical risk of the platform, it could be accomplished.
QUESTIONS SUBMITTED BY MR. EVANS
Competitive Sourcing and Privatization
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Mr. EVANS. GAO, CBO and other experts have questioned whether DOD's initiatives to increase competition and privatize current governmental functions will free up the ''savings'' estimated in the QDR and DRI for additional modernization. GAO has testified that neither of these initiatives has an overarching strategy or implementation plans to reach their budget bogeys.
When will Congress see the strategic and implementation plans, down through the Services, that translate these budget bogeys into specifics that crosswalk to the work that must be accomplished to meet DOD's missions?
Dr. GANSLER. The Defense Management Council has made a greater commitment this year to its oversight of the competitive sourcing program. The result is that we will: (1) inventory commercial activities, (2) institutionalize focus on competitive sourcing, and (3) remove barriers that impede program execution. The additional oversight attention will also increase fidelity of the Services' plans for competitive sourcing. Some of that detail with respect to competitions planned for FY 1999 will be evident when we submit the budget. More fidelity will be developed now that Defense Reform Initiative Directive 20 is nearing completion, and we will have a comprehensive inventory of commercial activities and a better baseline from which to plan competitions that will substantiate the program. We will submit master plans next spring.
Fallback To Fund Readiness Capabilities
Mr. EVANS. What is your fallback position if the ''savings'' that have been taken from the Services budgets do not materialize to prevent serious erosion of readiness capabilities?
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Dr. GANSLER. To achieve our modernization requirements and thus assure future readiness capabilities, it is essential that DOD achieve savings in the Operations and Support accounts through the ''Revolution in Business Affairs.'' Faced with this scenario, I have pushed for dramatically expanding the full implementation of the acquisition reforms undertaken during the past few years, including: increased use of commercial practices and distribution systems to satisfy materiel support requirements; more competitive sourcing of current in-house work; and greatly expanded purchase of common-use, commercially available items. I am looking to competition as the key to obtaining a wide range of goods and services to be provided better, faster, and cheaper.
I am working to greatly expand and institutionalize the concept of ''Total Cost of Ownership'' through transformation of our acquisition and logistics processes. The goal is to achieve cost reductions throughout the entire lifecycle of a weapon system. In the cost area, I have two specific objectives. One is to advance the application of ''Cost As An Independent Variable'' in acquisition programs. The other is to reduce the annual support cost per fielded weapon system. I will seek increased competition in both system development and in support (via competitive sourcing).
Another major objective I am pursuing is to operate acquisition programs on much faster cycle times in order to make the best use of continuing advances in technology. Shorter cycles also reduce costs dramatically. Our goal is to reduce the average acquisition cycle time (measured from program start to initial operating capability) for all program starts in FY 1999 and beyond by 25% over the historical averages.
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Additionally, significant reduction in repair cycle times for end items and reparable parts is being pursued.
I am also focusing on developing a more effective—and much less expensive—logistics support system than we have now. At the present time, more than one-third of the U.S. Department of Defense total budget is earmarked for logistics. Nearly 25% of our manpower is in logistics. Here, as has been clearly demonstrated by world-class commercial logistics organizations, modern technology can come to our aid—dramatically reducing inventory, personnel and response times. We are working to reduce the ratio of logistics (maintenance, supply, and transportation) funding to Total Obligation. Additionally, we are working to reduce other support (medical, personnel, training, installation support, and force management) funding requirements. The result of these shifts will be to annually make tens of billions of dollars available for modernization and combat.
Competitive Sourcing and Privatization
Mr. EVANS. DOD and your office have put such pressure to privatize and outsource on departmental managers that they are ignoring the A–76 process and current law in a rush to eliminate government civilians and push work into the private sector. One recent example is the privatization of the Logistics Support Systems Command in the Army where the Commander was told to privatize the Command's functions, without allowing current government workers to compete for the work. The Command is currently doing a cost-benefit analysis, after the decision to privatize had been made, to justify their actions. Is your real agenda to eliminate civilians and privatize current government functions?
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Dr. GANSLER. As stated in the Quadrennial Defense Review and the Defense Reform Initiative, the objective of competitive sourcing is to reduce costs and improve the performance of the commercial functions on which we depend. Reducing costs will result in improved readiness and quality of life. Improving performance will allow our support structure to harness the ''revolution in business affairs'' that has transformed private industry in the past 20 years, and it will allow DOD to keep pace with innovations in our concept of military operations. We are committed to competing the performance of commercial functions through the cost comparison process defined by OMB Circular A–76, whenever it is applicable.
We fully expect that both our military and civilian work forces will win a significant number of these A–76 competitions—roughly one-half. Regardless of who wins the competition, DOD and the American taxpayer will benefit through the achievement of significant savings. We recognize that some employees will face dislocation. We will utilize every tool available to assist in retaining, relocating, and retraining displaced employees.
Mr. EVANS. This rush to outsource and privatize may have the exact opposite effect of your public goal of freeing up funding for additional modernization because, if the cost-benefit analyses are done, you may find that outsourcing/privatization may be more expensive than retaining the current government employees. What are you doing to ensure that all initiatives are properly studied and the required cost/benefit analyses are done before any government functions are converted?
Mr. GANSLER. Our experience demonstrates that competitive sourcing has yielded significant savings. As a result of over 2,000 cost comparisons conducted between 1978 and 1994, the Department now saves about $1.5 billion a year. On average, these competitions—about half of which were won by in-house government activities—have reduced annual operating costs of the functions involved by about 30 percent. The most recent studies have attained savings greater than 30 percent—and these have frequently been won by the public sector.
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Like the best companies and organizations in the United States, DOD has embarked on a systematic and vigorous effort to reduce the cost and improve the performance of its support activities. However, support activities will only be considered for outsourcing, privatization and competition when they meet three conditions: (1) Private sector firms must be able to perform the activity and meet our warfighting mission needs. (2) A competitive commercial market must exist, or be capable of being created, for the activity. DOD will gain from outsourcing and competition when there is an incentive for continuous service improvement. (3) Outsourcing the activity must result in best value for the government and therefore the U.S. taxpayer. Activities will be considered for outsourcing only when the private sector can improve performance or lower costs in the context of long term competition.
Depot Maintenance 50–50 Rule
Mr. EVANS. Current law—10 U.S.C. 2466—requires no more than 50% of depot maintenance work be performed by private contractors and the remainder in public depots. GAO's report—NSIAD 98–175—cites numerous instances where DOD was not reporting all of the work being performed by private sources. More importantly, the report cited a number of cases where the Services were planning to divert additional work to private contractors and change the rules so that the work would not be reported as depot maintenance to Congress. In addition PBD 21 appears to be an effort to move work out of the depots by ''reclassifying'' it as procurement or RDT&E work. What are you doing to ensure that these smoke and mirrors games are stopped and that the Department is complying with the intent and language of 2466?
Dr. GANSLER. First, I would like to point out that most of the workload identified by GAO as not reported was for interim contractor support (ICS) and contractor logistics support (CLS). The Department believes that the GAO was attempting to apply the National Defense Authorization Act for Fiscal Year 1998 definition of depot-level maintenance and repair retroactively to the report covering fiscal year 1997. As required by law, ICS and CLS will be reported beginning with the report covering fiscal year 1998. Second, 10 U.S.C. 2460 establishes that the criteria for determining whether maintenance and repair are ''depot level'' shall be based on the ''nature'' of the work to be performed, ''regardless of the source of funds.'' We intend to fully comply with the requirements of the law when making our report to you.
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Program Budget Decision 021
Mr. EVANS. What are you attempting to accomplish with PDB 21 and how does it comply with 2466?
Dr. GANSLER. PBD 021 is a budget decision that directed funding realignment. It does not alter compliance with 10 U.S.C. 2460 and 10 U.S.C. 2466. Section 2460 states that the criteria for depot maintenance and repair involves the ''nature'' of the work to be performed, not ''the source of funds.''
Depot Maintenance Workload and Staffing Requirements
Mr. EVANS. The GAO has determined that the Army and Navy—and probably the Air Force and Defense Agencies—have a ''material weakness'' in that they cannot determine their staffing requirements based on analytical workload tools, which means that until they can develop methods to determine their staffing and workload requirements they don't know if they are complying with current law regarding workload allocations? What are you doing to ensure that the Services develop corrective action plans to correct this material weakness?
Dr. GANSLER. The Army and Navy are both working on implementation of predictive staffing modeling that will allow them to predict indirect and overhead staffing requirements. The Army has already conducted a prototype at Letterkenny Army Depot and the results have satisfied requirements accurately. The Department believes that initiatives already underway will address the material weaknesses identified by the GAO.
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Depot Maintenance Core Capability
Mr. EVANS. Current law—10 U.S.C. 2464—requires the services to establish depot maintenance capability for most new systems within 4 years after achieving initial operating capability. Yet, DOD's 1998 Logistics Strategic Plan advocates privatizing most depot maintenance activities. Why are your long-range plans in direct opposition to current law? What is your fallback position if Congress doesn't repeal these laws?
Dr. GANSLER. I would like to point out that the Logistics Strategic Plan specifically limited competition for depot-level maintenance and repair to that allowed by statue. We will maintain depot maintenance logistics capabilities required by 10 U.S.C. 2464, and we will comply with the 50–50 limitation established by 10 U.S.C. 2466. Subject to these limitations, it is the Department's objective to competitively source, using public-private competition in some cases, to the extent permitted in order to maximize cost savings so that they can be used for modernization. We are not depending on the repeal of any existing law.
Acquisition Workforce
Mr. EVANS. The Department is currently redefining who is to be included in the definition of the acquisition workforce. At the same time, you have an initiative to include the logistics function within the acquisition community. What is the current status of your efforts to redefine the acquisition workforce and what functions are being considered for inclusion?
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Dr. GANSLER. The final count to baseline the Fiscal Year 1999 Key Acquisition Workforce is in the last stages of staffing and will be completed in December. The only logistics personnel being included at this time are those performing acquisition tasks within the logistics function. Operational and retail logistics are not considered as acquisition. The functions we have included represent the cradle-to-grave activities described in the DOD Directive 5000 series that are required for the Department's acquisition of systems and services. As stated in the December 18, 1997, report to Congress on ''Acquisition Workforce Reductions'' (National Defense Authorization Act for Fiscal Year 1998, Section 912(b)), the identification is based on an algorithm using occupations and organizations as the input. Although the approach is not functionally based in the way some older methodologies are, functional descriptions of occupations and organizational missions determine which ones have acquisition as a primary function and which are accordingly included in the algorithm that defines the workforce.
Mr. EVANS. Is your effort to expand the definition of the acquisition workforce really aimed at spreading the Congressionally mandated reductions across a wider base than currently defined and, more importantly, how is Congress going to be sure that the reductions, which are specifically targeted at ''buyers'' aren't deflected to other areas?
Dr. GANSLER. The redefinition of the workforce is to meet the requirement in Section 912(b), National Defense Authorization Act of Fiscal Year 1998, for ''a definition of the term 'defense acquisition workforce' that is to be applied uniformly throughout the Department of Defense.'' The Defense Authorization Act for Fiscal Year 1999, Section 931, ''Further Reductions in Defense Acquisition and Support Workforce,'' will be implemented in a similar manner as Section 912(a) of the Defense Authorization Act for Fiscal Year 1998. We are following Section 931, which is very specific as to the intent of Congress.
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Acquisition/Logistics Integration
Mr. EVANS. The Congress had considerable concern about any attempts to merge logistics with the acquisition community as recently expressed in a letter to the Secretary of the Army. What possible rationale is behind such an initiative and, more importantly, when do you plan to consult with the Congress prior to any such major move of a critical function like logistics?
Dr. GANSLER. To meet the demands of the 21st Century, the Department of Defense is migrating to an integrated life cycle process of developing, acquiring, providing, and supporting systems for our warfighters. In that context, logistics (i.e., supporting systems) is an integral part of acquisition. Of course, logistics supports more than systems. It supports people, facilities, and operations, all of which, in the Office of the Secretary of Defense, is part of my charter. The Joint Chiefs of Staff consider acquisition and logistics as a single process, although they characterize it as logistics in their joint publications. There are different organizational structures for acquisition and logistics in each of the Military Departments. However, in each Service, acquisition and logistics are functionally integrated. Regardless of how we are organized, the integration of all these functions is critical to providing effective systems while reducing total ownership costs. Reduction of total ownership costs allows us to put more money into readiness, quality of life, and modernization. Therefore, a more dramatic approach is required.
Acquisition and logistics are always interrelated. The supportability of systems is heavily influenced by the design process. Likewise, the cost of supporting our legacy systems can be decreased by the acquisition of modifications and upgrades. We must have logistics integrated with acquisition if we are ever to achieve our goal of providing better performing (including more reliable), less costly systems in a shorter time.
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In no way is this integration meant to diminish the critical role of logistics in delivering customer service, providing readiness, and enabling effective military operations. Further integration of acquisition and logistics serves to clarify and simplify organizational relationships where today inefficiencies often exist. These approaches are directed as much at strengthening the performance of the Department's acquisition responsibilities as improving logistics performance.
We believe that we made it clear to the Congress, through our Section 912 reports in December 1997, April 1998, and June 1998, that logistics is a key part of the overarching acquisition process and of our acquisition workforce definition. When Congress established the position of Under Secretary of Defense for Acquisition and Technology, it included in the duties of the office, ''establishing policies for acquisition (including procurement, research and development, logistics, developmental testing, and contract administration) for all elements of the Department of Defense'' (10 U.S.C. §133).
As that definition suggests, we must approach systems acquisition and support using an integrated process if we are going to be able to maximize the capability of our warfighters while reducing costs.
The Army's objective is not to merge acquisition and logistics, but rather, to investigate how we can better manage and reduce the life cycle cost of weapon systems. Unlike Under Secretary of Defense (Acquisition and Technology (USD (A&T)), the Air Force and Navy, which all have logistics and acquisition under one assistant secretary, the Army has these functions under two different assistant secretaries. Before any decision is implemented, we will, of course, make the appropriate consultations.
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QUESTIONS SUBMITTED BY MR. CHAMBLISS
Depot Maintenance Policy
Mr. CHAMBLISS. Dr. Gansler, last year, we worked very hard to achieve consensus in Congress on the very important readiness issues relating to our military maintenance depots. After years of discussion, what was passed by the Congress and signed by the President was, in my opinion, good policy that modernized our military's approach to maintenance. In that language, we recognized the need to promote a more efficient depot maintenance infrastructure through a more competitive contracting environment, through encouraged use of public/private partnering, and through increased capacity utilization rates. One basic policy tenet that we were unwilling to concede, however, is the notion that ''core'' workload must remain at the heart of our maintenance planning. There exists key weapon systems and capabilities that are so integral to our national military strategy that we must retain an organic competence. I am deeply concerned that the current Administration, lead principally in this area by you, do not share this view.
Let me offer one specific example of my concern. Last year's law included an important provision relating to the creation of Centers of Industrial and Technical Excellence. First, the law required the Secretary to designate each depot-level activity to existing military depots, organized as Centers of Industrial and Technical Excellence. Second, the Secretary was to establish policy to encourage each service Secretary to adopt best-business practices and reengineer industrial processes (I can tell you from my own experience that our depot commanders have good ideas, ideas that make sense and would save money—they simply need the authority to do so). Third, the Secretary was directed to enable our services to enter into public/private partnerships with industry so as to reduce our under capacity problems.
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One year later, I have seen very little movement on any of these directives. Why has the Department failed to meet the requirements of the law? More importantly, I would like your personal commitment today to meeting these requirements.
Dr. GANSLER. I would like to assure you that it is the intent of the Department of comply with the law on this issue. The identification of Centers of Industrial and Technical Excellence has long-term strategic planning implications and the Department has been moving carefully in its efforts to complete the task. This is taking more time than we anticipated because we want to get it right.
Modernization Plans
Mr. CHAMBLISS. Joint STARS, with its unique moving target detection and tracking capability, continues to impress our field commanders with its ability to revolutionize warfare. Comments I have seen coming from real warfighters at squadron and battalion level who are participating in deployments and exercises involving Joint STARS, are quite revealing. Even though we have recently decided to add an additional Joint STARS to the fleet, wouldn't you agree that we are setting up Joint STARS to become another heavily tasked, high OPTEMPO system with too few assets and people trying to cover too many simultaneous real-world and training taskings? If I look at AWCAS and RivetJoint, both operating with larger fleets, it appears obvious that we will see a serious force structure issue in the immediate future. Shouldn't fielding and modernizing of this critical joint service asset be a top priority for the Joint Staff?
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General CAMPBELL. We agree with your assessment on the initial success of Joint STARS as both a force multiplier ready to support the land component commander and as a theater-wide joint surveillance, targeting, and battle management command and control system. We have already seen where this weapon system is in high demand by the CINCs. The fact that JSTARS was added to the Low Density/High Demand (LDHD) asset list for management under the Global Military Force Policy (GMFP) program indicates that it is receiving appropriate attention as a critical resource. The Joint Staff supports the Fiscal Year 1999 President's Budget for procurement of 13 Joint STARS E–8C aircraft.
To fully answer your question, the Joint Requirements Oversight Council validated Joint STARS fleet is 19 aircraft to meet a two MTW scenario. The Quadrennial Defense Review (QDR) reduced the planned procurement of Joint STARS aircraft from 19 to 13 after examining Joint STARS together with other surveillance systems that would provide the commander dominant awareness of the battlefield. The Joint Staff and the Services have conducted a DOD analysis of requirements and technical alternatives. This analysis is currently in coordination, and the SECDEF is expected to make a decision by the end of the year whether more than 13 Joint STARS should be procured.
Joint STARS Initial Operational Capability (IOC) occurred in December 1997 with Full Operational Capability (FOC) projected for Fiscal Year 2002. Modernization of Joint STARS continues to be a high priority, the Joint Requirements Oversight Council will review the Joint STARS Radar Technology Insertion Program (RTIP) during Fiscal Year 1999.
QUESTIONS SUBMITTED BY MR. EVERETT
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H–60 Procurement
Mr. EVERETT. The current multi-year procurement contract for H–60 aircraft has a rebaseline option in it. If exercised, that option will save approximately $1 million per aircraft if DOD increases the procurement quantity to 36 U–60 aircraft a year for FY 2000 and 2001, the two remaining years on the contract. Is that option being considered in your preparation of the FY00 and 01 DOD budgets?.
Dr. GANSLER. We are aware of the potential savings for H–60 procurement if the Department provides the additional resources to rebaseline the contract at 36 aircraft per year. However, increasing H–60 production rates would require significant additional resources in FY00 and FY01. It is uncertain whether the Department can commit to increased H–60 production rates given other Defense priorities. However, the option to procure additional quantities of H–60s is available until we finalize the President's Budget for FY00.
Mr. EVERETT. The Congress has shown over the last several years the desire and willingness to add H–60 aircraft to the budget, primarily to meet the unfilled requirement in the Army Guard for UH–60's in warfighting units. It would be a lot cheaper for you to add those additional aircraft in the budget and get the $1 million per aircraft savings as opposed to waiting for Congress to do it and not get the savings at all. Why don't you take the initiative, save the money and help meet the requirement?
Dr. GANSLER. The Department would certainly like to buy aircraft as efficiently as possible. However, as discussed before, it is uncertain whether the Department can commit to increased H–60 production funding in the FY00 President's Budget.
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