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General MYERS. This budget provides significant increases in both national and defense intelligence, surveillance, and reconnaissance (ISR) capabilities. National programs raised in your question are found in the National Foreign Intelligence Program (NFIP) submission. In the DOD request are significant investments in manned and unmanned airborne programs, space reconnaissance, and space control systems and processing, exploitation, and dissemination capabilities.

Following the tragic events of September 11, the Department's supplemental request to support Operation Enduring Freedom included both additional ISR aircraft, e.g., EP-3, additional sensors for the U-2, and replacement Predator air vehicles, as well as modifications to existing manned platforms to support operations in the Global War on Terrorism.

The fiscal year 2003 budget includes the most significant increases in ISR capabilities in years. Priorities for investment in this budget are counterterrorism and transformation. For example, the request accelerates investment in the high altitude UAV system, Global Hawk, and sustains an accelerated acquisition program across the FYDP. It accelerates acquisition of the Army short range UAV, continues acquisition of our workhorse Predator systems and replacement air vehicles, invests in an advanced air vehicle testbed, and continues preacquisition activities for a space based radar surveillance system. The budget sustains development and deployment of the Distributed Common Ground Station (DCGS), the multi-source deployed and shipboard systems that process and disseminate fused intelligence to forward forces and fleets. Imagery processing, exploitation, and dissemination received a substantial increase.

Investments included in this budget establish a solid foundation for critical improvements in ISR capabilities that provide our eyes and ears on the battlefield now and in the future.

CARRIER SUPPORT

61. Senator Thurmond. General Myers, I understand that at the height of our operations over Afghanistan, we had to pull the Kitty Hawk from its station in support of Korea to provide support for United States Central Command (USCENTCOM). Although they deployed appropriate aviation assets to Korea, there were some shortfalls in specific types of aviation support for the Korean operation plan. Was this change in mission for the Kitty Hawk due to a shortage of carriers in the number of carriers or due to the unique capabilities of the Kitty Hawk?

General MYERS. The U.S.S. Kitty Hawk and a portion of her Aircraft Carrier Battle Group (CVBG) deployed to the USCENTCOM Areas of Responsibility (AOR) from 10 OcHO Dec 01 as an Afloat Forward Staging Base (AFSB) for Special Operations Forces. All Aircraft Carriers and CVBGs have similar capabilities; however Kitty Hawk is home ported in Japan and the transit times from Japan to USCENTCOM AOR is appreciably quicker than from either the east or west coast of the United States.

OPERATIONAL TEMPO

62. Senator Thurmond. General Myers, Title 10 of the United States Code directs that effective October 1, 2002, the number of major headquarter activities personnel in the Department of Defense may not exceed 85 percent of the number in such positions as of October 1, 1999. Considering the current operational requirements, what is the impact of a 15 percent reduction in such headquarters as CINCPAC or CENTCOM?

General Myers. Whether in peacetime or wartime, a 15 percent reduction will certainly impact the operational capability of the combatant commanders. However, the Department is committed to making further efficiencies within the management structure. All combatant command headquarters are impacted to some degree by the Global War on Terrorism, but the greatest impact is on USCENTCOM headquarters. Additional operational headquarters support for Operation Enduring Freedom has driven increased augmentation requirements at USCENTCOM headquarters. At this time, USCENTCOM is exempted from the 15 percent major headquarters reduction to minimize the impact on the warfighting efforts. The other combatant headquarters are moving forward to execute the 15 percent reduction.

63. Senator Thurmond. General Myers, would you favor a waiver in this requirement beyond the current 7.5 percent authority?

General Myers. No. However, congressional approval to defer reductions for a year or two would help us stand up USNORTHCOM while we focus on current operations and streamline our major headquarters.

CHANGE IN FORCE STRUCTURE

64. Senator Thurmond. General Myers, based on the current operation in Afghanistan and the needs of any further operations in our Nation's war on terrorism, what changes would you recommend to the force structure of our military services?

General Myers. Although we have several on-going studies examining the impact of our forward presence and engagement levels, I do not believe it is necessary to make any major changes to the force structure at this time. During development of the Quadrennial Defense Review (QDR), we spent a significant portion of our effort reconciling the mismatch between strategy and resources. The new strategy calls for, among other things, the ability to defeat the efforts of one adversary while decisively defeating another. The War on Terrorism, including our operations in Afghanistan, approaches a level of effort and commitment from our force along the lines of the forces QDR would call "defeat the efforts." As the war's requirement for military forces matures, and our on going studies near completion, we may have more insight into any emerging requirements in terms of additional force structure.

Questions Submitted By Senator Rick Santorum
Army Legacy Programs

65. Senator Santorum. General Myers, the Army has terminated 18 programs and/or systems as part of the fiscal year 2003 request. Among the terminations are: TOW Fire-and-Forget, Ml 13 recapitalization, Armored Combat Earthmover, Wolverine, Hydra Rocket, Improved Recovery Vehicle, and Bradley Fire Support Team. Is the Army or the Office of the Secretary of Defense expecting Congress to "buy back" these terminations? Put another way, should Congress expect to see these programs and/or systems on the Army's unfunded requirements list? While 18 programs and/ or systems have been terminated, have the requirements that supported these programs gone away?

General MYERS. The full promise of transformation will be realized over time as we divest some legacy systems and transfer those resources toward new concepts, capabilities, and organizational arranagements that maximize the warfighting effectiveness and lethality of our men and women in uniform. Any discussion pertaining to termination of legacy systems can best be articulated by the services.

EFFICIENCIES

66. Senator SANTORUM. Secretary Rumsfeld, a recent report indicated that the Department of Defense is in the final stages of crafting an incentive plan that would allow defense contractors to keep some of the savings they achieve when they cut costs, reduce overhead, and consolidate operations. In other industries, companies slash costs and benefit when profits jump. But when a military contractor consolidates facilities, implements cost-savings technologies, or adopts other efficiencies, the government reaps the benefits by deducting the amount saved from what it pays the contractor for the product. Military contractors have argued that such a system gives them little incentive to make the hard, and sometimes costly, decisions to boost efficiencies. Can you elaborate on the plan and when you hope to implement these changes? Will these changes require legislative changes to current statute?

Secretary Rumsfeld. We agree that the Department needs a policy to encourage contractors to undertake aggressive cost reduction programs at business segments that contain a large proportion of DOD cost-based contracts. Our plan is to publish a proposed policy by the end of April for public comment. The policy will be structured to permit the sharing of savings over a 5-year period when DOD will achieve savings of at least $2 for every $1 in costs it pays to generate cost efficiencies. We do not need legislative changes to implement a policy to share savings.

INTERIM BRIGADE COMBAT TEAMS

67. Senator SANTORUM. General Myers, the Army is already forming two Interim Brigade Combat Teams (IBCT), the 3rd Brigade of the 2nd Infantry Division (Medium) and the 1st Brigade of the 25th Infantry Division (Light), at Fort Lewis, Washington. Yet when it came time this past November to insert ground forces into Afghanistan, it was the Marines that were tasked the responsibility of taking control of a base near Kandahar. Some have commented that these Marine forces combine more tactical maneuver capability and more firepower to sustain themselves than the Army's comparable rapid-deployment forces. Why were the two Interim Brigade Combat Teams—currently using surrogate equipment similar to the Marine Corps' equipment—not deployed to Afghanistan? Wouldn't a deployment to Afghanistan offer the perfect opportunity to demonstrate the training, tactics, and doctrine that are inherent to the Interim Brigade Combat Teams?

General Myers. The two EBCTs at Fort Lewis have not yet reached their initial operating capability. The first IBCT has received a limited number of surrogate vehicles, but there are not enough for the entire brigade, thus limiting combined arms training at the battalion and brigade level. The focus thus far has been on small unit training, battle drills, and developing the new capabilities. The second IBCT has just initiated its transformation process in January 2002. If the brigades had attained initial operational capability, they would have been candidates for deployment to Afghanistan and this certainly would have demonstrated their capabilities.

[Whereupon, at 1:12 p.m., the committee adjourned.]

DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR 2003

TUESDAY, FEBRUARY 12, 2002

U.S. Senate,
Committee On Armed Services,

Washington, DC.

SERVICE SECRETARIES

The committee met, pursuant to notice, at 9:38 a.m. in room SH216, Hart Senate Office Building, Senator Carl Levin (chairman) presiding.

Committee members present: Senators Levin, Lieberman, Landrieu, E. Benjamin Nelson, Carnahan, Dayton, Warner, McCain, Inhofe, Santorum, Allard, Sessions, Collins, and Bunning.

Committee staff member present: David S. Lyles, staff director.

Majority staff members present: Daniel J. Cox, Jr., professional staff member; Kenneth M. Crosswait, professional staff member; Richard D. DeBobes, counsel; Creighton Greene, professional staff member; Jeremy Hekhuis, professional staff member; Maren Leed, professional staff member; Gerald J. Leeling, counsel; and Peter K. Levine, general counsel.

Minority staff members present: Judith A. Ansley, Republican staff director; Charles W. Alsup, professional staff member; L. David Cherington, minority counsel; Ambrose R. Hock, professional staff member; George W. Lauffer, professional staff member; Patricia L. Lewis, professional staff member; Thomas L. MacKenzie, professional staff member; Ann M. Mittermeyer, minority counsel; Joseph T. Sixeas, professional staff member; Scott W. Stucky, minority counsel; and Richard F. Walsh, minority counsel.

Staff assistants present: Daniel K. Goldsmith, Thomas C. Moore, and Nicholas W. West.

Committee members' assistants present: Frederick M. Downey, assistant to Senator Lieberman; Andrew Vanlandingham, assistant to Senator Cleland; Jeffrey S. Wiener, assistant to Senator Landrieu; William K. Sutey, assistant to Senator Bill Nelson; Eric Pierce, assistant to Senator Ben Nelson; Neal Orringer, assistant to Senator Carnahan; Brady King, assistant to Senator Dayton; Benjamin L. Cassidy, assistant to Senator Warner; Christopher J. Paul and Mark Salter, assistants to Senator McCain; John A. Bonsell, assistant to Senator Inhofe; George M. Bernier III, assistant to Senator Santorum; Robert Alan McCurry, assistant to Senator Roberts; Douglas Flanders, assistant to Senator Allard; James P. Dohoney, Jr., assistant to Senator Hutchinson; Arch Galloway II, assistant to Senator Sessions; Kristine Fauser, assistant to Senator Collins; and Derek Maurer, assistant to Senator Bunning.

OPENING STATEMENT OF SENATOR CARL LEVIN, CHAIRMAN

Chairman Levin. Good morning, everybody. The committee meets this morning to receive testimony from the Secretary of the Army, Secretary of the Navy, and Secretary of the Air Force on the fiscal year 2003 budget request and on management and organizational issues facing the military departments. Secretary White, Secretary England, Secretary Roche, we welcome you back to the committee and look forward to your testimony.

Secretary White. Thank you.

Secretary England. Thank you.

Chairman Levin. As we meet today, the new administration has been in office for just over a year and our three service secretaries have been in office for slightly less time than that. Much of their tenure in office has necessarily been taken up by the pressing issues of the war in Afghanistan and the effort to respond to terrorism here at home. The performance of our men and women in uniform has been exemplary and is a tribute to the entire leadership of the Department of Defense, including our three witnesses here today.

The three service secretaries have played a central role in the formulation of the administration's budget request for fiscal year 2003, which includes the largest proposed increase in military spending in 2 decades. This increase comes without a comprehensive strategy or a detailed plan to guide that spending. A year into office, the administration has not yet issued a national security strategy, a national military strategy, or detailed plans for the size and structure, shape, or transformation of our military.

As Secretary Rumsfeld testified last week, few of the investments that this administration will ask Congress for will benefit our national defense during this presidential term. These are long-term investments. The investments that we make today are needed to ensure that our military is as prepared for future wars as it has proven to be for Operation Enduring Freedom.

So we are going to be particularly interested in the tradeoffs that our witnesses have made between investments in our legacy forces and investments in the military transformation and the basis upon which they have made these tradeoffs.

Last summer Secretary Rumsfeld designated the three service secretaries to serve on two new committees, a Senior Executive Council and a Business Initiative Council, with broad responsibility for planning and implementing improved management practices across the entire Department of Defense. The Secretary has set a goal of achieving savings of 5 percent or more by bringing improved management practices from the private sector to the Department of Defense.

Longstanding problems in areas such as financial management, acquisition management, management of information technology, and personnel management have not disappeared just because we are fighting a war. If anything, heightened concerns about national security and increased levels of defense spending give us an even

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