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Hearing of the Readiness and Management Support Subcommittee of the Senate Armed Services Committee - "Defense Authorization Request for FY 2010 and the Future Years Defense Program for Military Construction, Environmental and Base Closure Programs"


Location: Washington, DC

Chaired By: Senator Evan Bayh

Witnesses: B.J. Penn, Assistant Secretary of the Navy for Installations and Environment; Kathleen Ferguson, Deputy Assistant Secretary of the Air Force for Installations; Joseph Calcara, Deputy Assistant Secretary of the Army for Installations and Housing; Wayne Arny, Deputy Undersecretary of Defense for Installations and Environment

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SEN. BAYH: (Sounds gavel.) The hearing will please come to order. I'd like to express my appreciation to our witnesses for joining us today, and to people in the audience for your time, and my ranking member, Senator Burr, for his attendance and interest in the subject matter today.

Today the Subcommittee on Readiness and Management Support needs to review the military construction and environmental programs of the Department of Defense and the fiscal year 2010 budget request for those programs.

Additionally, we will review and receive testimony in the department's Overseas Contingency Operations request for fiscal year 2010, which was provided by the president's regular budget request this year, and finally on the department's BRAC request for fiscal year 2010.

We welcome back Secretary Penn and Mr. Arny. Welcome back. The chair would note with particular pride that Mr. Penn originally hails from the state of Indiana, an obvious sign of intelligence, which we appreciate. (Laughter.) Not to suggest that the others don't possess a similar quality.

And we -- the deputies have -- and two new witnesses this year also, Deputy Assistant Secretary Calcara from the Army, and Kathleen Ferguson from the Air Force. Thank you both for joining us.

Mr. Calcara, did I pronounce your name correctly?

MR. CALCARA: Close enough, sir.

SEN. BAYH: Well, my last name is mispronounced regularly, so I hope I did well. What is the correct pronunciation?

MR. CALCARA: Calcara.

SEN. BAYH: Calcara. Calcara. Thank you.

Thank you all for testifying on such short notice. Because of the late arrival of the president's budget request and our committee's pending markup schedule, we unfortunately didn't have a very large window of time to schedule the hearing, so I appreciate your willingness to accommodate the short time frame.

We meet this afternoon to discuss DOD's military construction, housing and environmental programs, as well as the implementation of the 2005 base closure round. We have many challenges to discuss here today.

This year we have before us, again, one of the largest funding requests for military construction and base closure in memory. The fiscal year 2010 budget request for military construction, base closure and family housing programs totally $24.3 billion, is just slightly less than last year's record amount.

As our witnesses describe in their prepared statements, they are also responsible for billions of additional dollars requested for repair and maintenance, base operations, and environmental programs to keep those bases running.

This year is one of transition between two different administrations and perhaps two different philosophical approaches to force posture and station. It also appears that your service's MILCON budget requests have also deferred a number of decisions to the results of the Quadrennial Defense Review -- more than will likely be decided by that review, I suspect.

I realize for the Army in particular you were handed some last- minute decisions and guidance from Secretary Gates and have been scrambling a bit in order to put your program together. In some cases you've had to accommodate changes to projects that have already been authorized and appropriated and for which some contracts have already been awarded.

The Army recently announced a reduction from 48 to 45 brigade combat teams, with a reduction to come from Fort Carson in Colorado, Fort Stewart in Georgia and Fort Bliss in Texas. Last year Congress authorized and appropriated almost $1.4 billion in fiscal year 2009 military construction funds in preparation for the activation of those BCTs, which may not be needed now for that purpose.

In addition, there is approximately $600 million more in fiscal year 2010 military construction requests for barracks, health clinics, ranges and schools associated with those three BCTs, which also may no longer be needed. We look forward to hearing your plans to accommodate those changes.

The Navy's military construction requests include more than $650 million in projects to begin what will eventually be a $4.0 billion military construction bill associated with the relocation of 8,000 Marines from Okinawa to Guam. However, the environmental impact statement for the Guam facilities is not yet complete, and the Navy's Guam master plan has not been provided to Congress as required.

In addition, the commandant of the Marine Corps recently indicated in testimony before the full Armed Services Committee that he had serious concerns about the ability to train his Marines in Guam and the Northern Marianas, was concerned with the government of Japan's ability to provide an adequate replacement facility for Marine Corps aviation elements in Okinawa, and that relocation plans would be subject to review during the forthcoming QDR.

I look forward to the Navy's testimony on these points. I would also note that the Navy requests include significant funding for facilities to grow their Marine Corps.

While the Air Force has a significantly smaller request than the other two services, there are a number of MILCON projects that are planned for the CENTCOM area of responsibility that appear on the surface to be -- well, this testimony has been described -- supplied to me by the staff -- somewhat dubious. So, Ms. Ferguson, I look forward to hearing from you about that.

These projects appear to have been developed on an ad hoc basis without having been secured host country agreements to protect our increasing investments. I look forward to discussion this issue during the hearing. I think that may involve some of the missile sites in the Czech Republic and elsewhere.

Finally, fiscal year 2010 represents the last significant investment in military construction in order to complete the BRAC 2005 round. I would like to know if there are any potential stumbling blocks to completing BRAC on schedule by September 2011.

As for the environmental programs, the funding requests for fiscal year 2010 remains largely consistent with previous years, with the exception of pollution prevention, which is significantly lower than that requested for 2008 and 2009.

As for environmental restoration or remediation programs, the cleanup of unexploded ordnance, discarded military munitions and munitions constituents continues to be of higher interest to the committee.

The fiscal year 2007 National Defense Authorization Act set target dates for cleanup of these materials at active installations, formerly used defense sites and BRAC sites. While progress is being made, current projections suggest that these dates may not be met. The department must continue to press forward to address these important issues.

Lastly, encroachment on the installations, particularly on our training and testing ranges, continues to be a concern at many locations around the country. One program that has seen significant success in reducing encroachment while conserving areas around those installations is the Readiness and Environmental Protection Initiative, also known as REPI. The committee has encouraged greater use of this program in the past, and the program can be expanded even further in the future.

I will now turn -- I will note the presence of Senator Udall. Thank you for coming, Senator Udall, and your interest in these issues, and I will now turn to Senator Burr for any opening remarks that you may have. And, Senator Udall, if there's anything you'd like to add following Senator Burr, the committee would be happy to -- the subcommittee would be happy to hear from you.

SENATOR RICHARD BURR (R-NC): Thank you, Mr. Chairman. I want to also thank you for calling this important hearing to review the budget requests for installations and environmental programs for '10. I also want to thank our witnesses for their dedicated public service. As I review their testimony and this budget request, I'm struck by the sheer magnitude of the range and difficulty of the issues. You deserve our gratitude and sincere appreciation for serving our nation in this capacity.

I want to recognize Mr. Arny. It's my understanding this may be your last appearance before this committee in managing installations and environment for the secretary of Defense. I want to thank you publicly for your public service to this country.

This is a unique budget year in many ways as we consider decisions and authorizations that will have far-reaching consequences. This budget request includes the first increment of construction totally 378 million (dollars) required to move 8,000 Marines and their families from Okinawa to Guam. This construction, when completed in '14 may cost U.S. taxpayers well over $4 billion with another $3 billion loan to pay off over time.

And this amount does not include plans by the Air Force to establish a strike capability on Guam, which will add another 500 million (dollars) to the bill. The environmental impact statement to support the move is ongoing, but I know the Marine Corps has particular concerns with their ability to train in Guam. I look forward to hearing about plans to ensure that Marines can train effectively once the move is completed.

This budget request includes a request to authorize 116 million (dollars) for the Air Force to construct a new airbase in the Omani desert. The total bill required to ensure our airmen can use the base will exceed 380 million (dollars).

We have a similar proposal to spend over $60 million in Qatar for the second phase of a four-phase program that will require another $250 million to support over 6,200 U.S. military personnel at that Persian Gulf location.

Add to these requirements the money needed to build barracks and operational facilities for our soldiers and Marines added to the end strength of the Army and the Marine Corps, as well as the 1.4 billion (dollars) in '10 alone for facilities in Afghanistan. You don't have a lot left over to do much else at all.

My guess is that budgets are only going to get tighter in the years to come, but I can only guess that since we don't have the benefit of a future-year defense plan beyond 2010 to see how all these programs will be funded in out years -- (coughs) -- excuse me, Mr. Chairman -- I propose that this might --

SEN. BAYH: I thought you were choking on all this spending we were doing here.


SEN. BURR: I think it's a culmination of health care finally getting to me. (Laughter.) But never fear; the government is here to take care of it.

I propose that this might be a good year to take a critical look at some of these projects and to make some hard decisions about holding back on the spending until we have a better idea of where we're going with regard to the Quadrennial Defense Review.

We must avoid at all costs authorizing a project that becomes the bridge to nowhere, which is a real risk if we don't know for sure if the funding to make these projects complete and usable will be in future budgets. The taxpayers expect us to make prudent decisions.

Turning to the environmental program, the services continue to face significant environmental challenges that could impact their ability to deploy and maintain readiness. I'm particularly interested in hearing from Mr. Penn about recent revelations regarding the contamination of drinking water at Camp Lejeune from 1950 to the mid- 1980s. Recent developments have raised more questions that answers from many of my constituents who were stationed there during these periods.

In May, the Agency for Toxic Substance Disease Registry removed from it website the ATSDR 1997 Public Health Assessment on the impact of Camp Lejeune water contamination. In describing its rationale, ATSDR said that it did not fully take into consideration the documented presence of benzene in the water.

After 12 years the agency now says that they can't say for sure whether children or adults had been adversely impacted by exposures to volatile organic compounds in the water. ATSDR also says that it's conducting further studies to determine if past exposure can be linked to certain birth defects and childhood cancers, as well as other studies of illness.

This month the Academy of Sciences issued a report in response to a mandate from Congress. It also concluded that while water systems at Camp Lejeune were contaminated, they cannot say for sure whether people at Camp Lejeune may have suffered adverse health outcomes as a result of their exposure.

Even more disturbing for former Marines and other residents of Camp Lejeune, the report concludes that, given inherent limitations in the data, additional research is unlikely to provide a direct basis for drawing more definitive conclusions. In other words, limbo forever.

Again, these revelations have been leaving veterans and their families with more questions than answers. I'd like to know what the Department of the Navy and the Marine Corps plan to do next and how they intend to answer the concerns of former Marines, their families, and former employees of Camp Lejeune.

Mr. Chairman, it's also come to my attention that Mr. Arny is a former top gun pilot, former principal deputy assistant secretary of the Navy Shipbuilding Logistics, former SASC professional staff member, serving on this committee from '81 to '84.

He has also invited one of his two sons to attend this last public hearing that he's doing. The son attending the hearing, Commander Skip Arny, is a top-gun pilot flying F-18s. He just finished as the commanding officer of the Strike Fighter Weapons School at NAS, Lemoore, California, and is getting ready for a tour as a defense attache in Poland, following his dad's path. He's a 1990 graduate of the U.S. Naval Academy.

Wayne's youngest son, Matt, is a lieutenant commander, naval flight officer who recently returned from a deployment to Iraq, Afghanistan and Somalia with VFA-103, on board the USS Eisenhower, flying F-18s as well, and is now attending the Naval War College in Newport, Rhode Island. He is also a Naval Academy Graduate, 1993.

Wayne, if it doesn't embarrass you, could I ask you son, Commander Skip Arny, to recognize himself? Commander, thank you for your service. (Applause.)

Thank you, Mr. Chairman.

SEN. BAYH: Thank you, Senator Burr. Senator Udall, any opening comments you'd like to make?

SENATOR TOM UDALL (D-NM): On that note, maybe Mr. Arny should start testifying right now. (Laughter.)

SEN. BAYH: It is a first for the subcommittee that testimony begins to applause. I'm sure it will end that way too.

Mr. Arny, we'll begin with you. And welcome back to this committee, where you served with great distinction.

MR. ARNY: Thank you, sir.

Chairman Bayh, Senator Burr, Senator Udall, I'm honored to appear before you today to discuss our MILCON program for 2010.

I thank you for acknowledging my son, Skip. As you said, he recently finished command and fighter weapons school of Lemoore, and we have the pleasuring of having him and his -- our grandchildren in the area. His brother is in -- as you said, just finished a tour at the War College, and he's in training to command a squadron at -- also at Lemoore. So like it or not, my wife and I have spent a lot of time in Lemoore and we'll continue to, as well as lots of time in Eastern Europe. Unfortunately, these two have never been stationed at the same base together for more than three months.

In the last 10 years, the department has come a long way in improving the facilities and infrastructure in which our military and civilian workforce and their families work and live. We could not have progressed as far as we have without the continuing support of Congress and, in particular, this subcommittee.

Today we manage over 500,000 facilities worth over $700 billion located on approximately 29 million acres of land around the world. In comparison, about 10 years ago, we had 115,000 more facilities. And the principal program that has helped us balance the infrastructure has been the BRAC authority. It's enabled us to close over 121 major installations and realign 79 major bases after five rounds. The 2005 decisions alone affected over 800 locations and included 24 major closures, 24 major realignments and 765 lesser actions.

I'd also like to comment on the disposal process for these bases. We've been asked as a department how we feel about pending legislation that would mandate no-cost EDCs or no-cost economic development conveyances. We currently have a full range of conveyance mechanisms available to the services, and they already include no-cost EDCs. We are and always have been open to this conveyance method and are more than willing to review such requests based on the needs of the local communities.

Indeed, my data indicate that since -- that since 2002, the Army has granted 68 EDCs on -- I mean, EDCs on 68 parcels for 32,000 acres. Now, of those, there were 23 parcels at no cost for 31,000 acres and 45 parcels for cost at 1,000 acres on five bases. The Navy has done eight no-cost EDCs for 4,000 acres and have no cost conveyances -- no for-cost conveyances. And the Air Force has had 19 no-cost EDCs covering just under 24,000 acres.

But to mandate no-cost EDCs would only advantage some locations where potentially valuable property for the taxpayers of the -- with potentially valuable property, where the taxpayers and the rest of the nation could perhaps benefit from participating in the profit from the development of that valuable property, especially the development of housing areas that don't bring permanent job growth, as is normally required with no-cost EDC.

Also, the services are required to plow back any funds they receive from BRAC disposals into BRAC purposes, and that has primarily been to accelerate the required environmental clean-up of former BRAC bases. A mandated no-cost EDC would essentially be giving a particular community that normally wouldn't qualify for it a windfall profit that would divert money from the taxpayers.

We will continue to evaluate the legislation we've been presented through the department's legislative review process, but I wanted to give you this position on the record.

We also believe it is not enough to -- just to close bases and move functions. We also need to conduct our business more efficiently as prudent caretakers of the taxpayers' resources, and I believe we are. An excellent example of this is joint basing. As part of BRAC 2005, we are forming 12 new joint bases from 26 separate bases to consolidate installation management functions under one component. Five of the joint bases involving 11 installations will reach full implementation on October 1st of 2009. The remaining seven joint bases will reach full implementation in October 2010, well ahead of the BRAC statutory deadline of September 2011.

As for housing, a decade ago we were maintaining over 300,000 family housing units, two-thirds of which were deemed inadequate by the military departments who owned them. With your help and vision, we put housing privatization authorities in place and the private sector responded by delivering modern, affordable housing. And with appropriate oversight, we ensured the federal government's needs were met. With this year's request, over 98 percent of DOD's housing inventory in the United States will be funded for privatization.

With regard to barracks, the military departments are modernizing their facilities to increase the privacy and amenities in permanent party bachelor housing. Using MILCON, much progress has been made, but there is still a need for almost $15 billion to complete the permanent party buy-out.

Privatizing bachelor housing is one way to go, but it has unique challenges compared to family housing. We have seen recent innovative concepts where the Army has added bachelor officer quarters and senior enlisted bachelor quarters to its existing family housing privatization projects.

The Navy is mainly focusing its unaccompanied housing privatization efforts to bring shipboard junior enlisted sailors ashore. The first unaccompanied housing privatization pilot project was awarded in December 2006 at San Diego. The second was executed in December 2007 at Hampton Roads in Virginia. And a third project is under consideration at the Jacksonville-Mayport area in Florida. Both of the awarded projects have demonstrated that with this authority to pay junior enlisted members less than (full ?) housing -- (inaudible) -- we have had -- we are on our way to very successful enlisted privatization.

This year's budget signals yet another banner year for installations with about $23 billion in military construction and about 8 billion (dollars) in facilities sustainment, restoration and modernization. A 23 billion (dollar) military construction program is very robust, especially when I compare it to the 8 (billion dollar) to $9 billion levels we were receiving 10 years ago.

Similarly, our sustainment budget this year is also more robust as compared to 10 years ago. Although much remains to be done, we've made steady headway over the last decade through two administrations to improve the overall condition of our facilities inventory by using the facility sustainment model. It has given us a sound target by which to measure our sustainment budgets. As a consequence, we've been able to defend our requirements and increase our overall funding in spite of significant competing demands.

Recapitalization has been more challenging. We've moved away from believing a single recap rate expressed in years applied across myriad category types could provide a funding level that was rational and defendable (sic), because it didn't work right. When I was with the Navy Secretariat, I personally observed the inaccuracy as Hurricane Ivan hit Pensacola. The sudden infusion of restoration funds skewed the Navy's recap rate to a lower number than the targeted 67 years, but the condition of Navy facilities across the inventory did not improve.

Because of this and other factors, I've directed my staff to revisit the facilities condition indices that the federal agencies are mandated to include in their real property. My staff will work with the military departments and Defense agencies to set up program guidelines for determining which facilities require priority for funding, reassessing how (Pew ?) ratings are determined and their frequency and, most importantly, reestablishing how the department uses master planning at the installation level and, eventually, in each of the overseas COCOM regions.

In closing, Mr. Chairman, I sincerely thank you for this opportunity to highlight the department's management of installation assets. To meet the ever-changing warfighting landscape, our military must be flexible and responsive, and our installations must adapt, reconfigure and be managed to maximize that flexibility and responsiveness. We believe we're working on the right issues, and while we cannot fix them overnight, we appreciate your continued support and we look forward to working with you and this subcommittee to provide quality installations that our military forces and their families need and deserve.

SEN. BAYH: Thank you very much, Mr. Arny.

Secretary Penn?

MR. PENN: Thank you. Chairman Bayh, Senator Burr, Senator Udall, it's a pleasure to come before you today to discuss the Department of the Navy's installation efforts.

Before I touch on a few highlights in the department's overall facilities budget request, I'd like to take a moment to discuss the report released over this weekend related to past contaminated drinking water at Marine Corps Base Camp Lejeune, North Carolina. It was the desire of this committee to evaluate the available scientific and medical evidence regarding association between the prenatal, child and adult exposure to drinking water contamination with trichloroethylene and tetrachloroethylene that resulted in the fiscal year 2007 National Defense Authorization requirement for the Navy to enter into an agreement with the National Academy of Sciences to conduct the study.

The National Research Council, which operates under the auspices of the National Academy of Science, concluded that the available scientific information does not provide sufficient basis for determining whether the population at Camp Lejeune has suffered adverse health effects as a result of exposure to contamination. It further concluded that research is unlikely to provide more definitive conclusions. The department will thoroughly review and consider the council's report, after which it will identify the next steps to take as it continues to work with the appropriate agencies, including the Agency for Toxic Substances and Disease Registry.

Finally, I want to underscore that, above all else, the long-term health effect and welfare of our extended Marine Corps family is our utmost concern. We will keep this committee apprised of the status as circumstances develop.

The Department of the Navy's fiscal year 2010 military construction request of $3.8 billion continues the Marine Corps' "Grow the Force" initiative with a $1.9 billion investment targeted primarily at infrastructure and unit-specific construction required to move Marines from interim facilities and provide adequate facilities for new units.

The fiscal year 2010 MILCON budget also provides funds for the first five construction projects to support the relocation of Marines from Okinawa to Guam in the amount of $378 million.

Our fiscal year 2010 budget request complies with OMB and the DOD Financial Management Regulation and establishes criteria for the use of incremental funding. The use of incremental funding in this budget has been restricted to the continuation of projects that have been incremented in prior years. Otherwise, all new projects are fully funded on our complete and usable bases.

In family housing, our budget request of $515 million reflects the continuation of investment funding for locations where we still own and operate military family housing and where additional privatization is planned. Prior requests reflected an accelerated program to address additional housing requirements associated with Marine Corps force structure initiatives.

The Navy and Marine Corps have privatized virtually all family housing located in the United States. Where we continue to own housing at overseas and foreign locations, we are investing in a steady state recapitalization effort to replace or renovate housing where needed. Our request also includes funds necessary to operate, maintain and lease housing to support Navy and Marine Corps families located around the world.

Regarding legacy BRAC, we continue our request for appropriated funds in the amount of $168 million, as we've exhausted all land sale revenue. We've disposed of 93 percent of the prior BRAC properties, so there's not a lot left to sell. And the real estate market is not as lucrative as it was several years ago. We expect only limited revenue from the sale of Roosevelt Roads in Puerto Rico and other small parcels.

With respect to the BRAC 2005 program, our budget request of $592 million represents a shifting emphasis from construction to outfitting and other O&M costs.

We have made significant progress in the past year in planning for the relocation of Marines from Okinawa to Guam. The environmental impact statement for Guam is under way, with a targeted record of decision and plan for construction in fiscal year 2010. The government of Japan ratified the international agreement on 13 May 2009 and appropriated $336 million -- fiscal year 2008 equivalent dollars -- to complement our own fiscal year 2010 investment. We expect to see Japanese contributions deposited into our Treasury by July.

Finally, sir, it has been an honor and privilege to serve this great nation and the men and women of our Navy and Marine Corps team, the military and civilian personnel and their families. Thank you for your continued support and the opportunity to testify before you today.

SEN. BAYH: Thank you, Secretary Penn. We appreciate your service very much.

Mr. Calcara, I think we'll turn to you next, and then Ms. Ferguson.

MR. CALCARA: Thank you, Mr. Chairman. Good afternoon, Senator Burr and other members. I think Senator Udall stepped out.

It's my distinct honor to present the FY '10 Army budget, what has been an extremely challenging and dynamic year for us all, working with a compressed schedule. I really appreciate the tremendous support your staff and you have provided us over the years, and we look forward to continuing to work with you.

Our budget is about $10 billion in the construction-investment arena across FY '10. About $4.2 billion of it is tied to base closure, which will allow us to complete on time what has been the largest base closure for any service ever taken. The Army's BRAC '05 round is bigger than all four rounds combined, and we are on track to complete it with this funding by the deadline.

There's about a billion dollars in contingency funding in there for our Operation Enduring Freedom in Afghanistan. The rest of the money is tied to military construction. And I know the question of the hour for the Army is, with the recent decision by the secretary of Defense on 45 brigades versus 48, how does that affect our budget?

Well, let me just address the top-line issues. You have my written statement for the record. I would request that you make it part of the record.

SEN. BAYH: So ordered.

MR. CALCARA: Inside the military construction request, including the Guard, the Reserve, housing and military construction, we have about $1.47 billion tied to the brigade Grow the Army initiative. About half of those dollars are tied to combat support and combat service support functions that are not affected by the brigade configuration. The population will be there, as requirements are there. We need those projects.

Of the remaining half of the $1.47 billion, about half of that is tied to housing and our military construction for the Reserves. So that leaves us with about half of half of half, or a quarter of the $1.47 billion that we needed to revisit for prudent investment decision-making.

Now, we met with your staff -- I think it was last week -- and we went through our plan. We looked at those dollars and have looked at requirements that still exist at Fort Carson, Fort Stewart and Fort Bliss. And our recommendation is to take those dollars -- in the case of Fort Stewart, for example -- and buy out of relocatable facilities.

We have a one-for-one match on brigade configuration, facility category code, that will allow us to reduce the number of relocatables that we have left to buy out across the future years defense plan, and bring our percentages up in terms of being out of relocatable facilities. It's something you've asked us to do. We think it's the right thing to do.

In the case of Fort Carson, we've looked at that location, and there we have chronic shortages. When the original brigades were stood up, the facilities were undersized. But as we were on a critical time line to get to 48, we allowed them to go as is.

The dollars in the program in '10 will go back to Fort Carson and buy out of those substandard and capacity shortages that exist there. Again, we have population, brigade-centric population, that marries up to those requirements.

In the case of Fort Bliss, we have two brigades there, a fire brigade and another brigade, who currently have shortages in facilities. Our plan would be to continue with the investment there, which will allow us to efficiently and effectively contract at a lower cost structure than if we deferred it, pending the QDR decision. In all likelihood, at least one or both brigades coming back from Europe will wind up at Fort Bliss. That will be that much facility that we will not have to program for in the out years if we allow those investments to continue.

Otherwise, it has been a challenging year for us working this. Again, I do appreciate your support. And I look forward to your questions. Thank you.

SEN. BAYH: Thank you, Mr. Calcara.

Ms. Ferguson?

MS. FERGUSON: Thank you, Mr. Chairman, Senator Burr. On behalf of America's airmen, it's my pleasure to be here today.

I'd like to begin by thanking the committee for its continued support of your Air Force and the thousands of dedicated and brave airmen and their families serving our great nation around the globe. Today, more than 27,000 airmen are deployed in support of ongoing Operations Enduring Freedom and Iraqi Freedom, daily demonstrating their importance in support of joint combat operations.

Within the secretariat for Installations, Environment and Logistics, we fully appreciate the efforts -- we fully appreciate the impact our efforts have in support of these airmen and how it affects their ability to positively influence our Air Force's war-fighting abilities and capacity to counter hostile threats.

Military construction, family housing and BRAC programs form the foundation of our installation structure. Our installations serve as the primary platforms for the delivery of global vigilance, reach and power for our nation, and our fiscal year 2010 investments reflect a direct connection to this vital work.

As we continue to focus on modernizing our aging weapon systems, we recognize that we cannot lose focus on critical Air Force infrastructure programs. Our FY 2010 president's budget request of $4.9 billion for MILCON, family housing, BRAC and facility maintenance is a reduction from our 2009 request of $5.2 billion.

We intend to mitigate potential shortfalls in MILCON and facilities maintenance by bolstering our restoration and modernization programs as much as possible. Using an enterprise portfolio perspective, we intend to focus our limited resources only on the most critical physical plant components by applying demolition and space utilization strategies to reduce our footprint, aggressively pursuing energy initiatives, continuing to privatize family housing, and modernizing dormitories to improve quality of life for our airmen.

One ongoing modernization effort within the Air Force that I would like to mention is the joint strike fighter. At the direction of the secretary of the Air Force, we are taking a deliberate Air Force enterprise-wide look at all installations to -- (inaudible) -- the joint strike fighter. This review will provide an open, transparent, repeatable and dependable process to ensure the secretary has appropriate and accurate information to make all joint strike fighter strategic basing decisions.

In regards to military family housing, our master plan details our housing military construction operations and maintenance and privatization efforts. Since last spring, we completed new construction or major improvements on more than 2,000 units in the United States and overseas, with another 2,286 units under construction in the U.S. and almost 3,000 units under construction overseas.

Our 2010 budget request for housing is just over $567 million. Air Force request for housing investment is $67 million to ensure the continual improvement of our overseas homes. Our request also includes an additional $500 million to pay for operations, maintenance, utilities and leases for the family housing program.

BRAC 2005 impacts more than 120 Air Force installations. Unlike the last round of BRAC, where 82 percent of implementation action affected the active Air Force, in BRAC 2005 a full 78 percent of implementation actions affect the Air National Guard and Air Force Reserve. In fact, the Air Force will spend more than $478 million on Air National Guard and Air Force Reserve BRAC MILCON projects. The Air Force's total BRAC budget is approximately $3.8 billion, which the Air Force has fully funded. Our FY 2010 BRAC 2005 budget request is approximately $418 million, of which less than 20 percent is for BRAC MILCON projects.

I'd like to emphasize the Air Force BRAC program is on track to meet the September 2011 deadline.

Air Force MILCON, military family housing and BRAC initiatives will continue to directly support Air Force priorities. It is imperative we continue to manage our installations by leveraging industry best practices and state-of-the-art technology.

Our civil engineering transformation effort, now entering its third year, continues to produce efficiencies and cost savings that enhance support for the war-fighter, reduce the total cost of installation ownership, and free resources for the recapitalization of our aging Air Force weapon systems.

More importantly, these investments reflect effective stewardship of funding designed to serve our airmen in the field, their families, and the taxpayer at home.

Before I close, I'd like to highlight one additional area of importance to both the committee and the Air Force, and that area is the Air Force's stewardship of energy. The Air Force has launched an aggressive program to invest in facility energy conservation and renewable energy alternatives.

Recently the secretary of the Air Force signed a mission directive institutionalizing energy policy within the Air Force and (deriving ?) more efficient energy management practices. Together these policies will direct specific actions in the areas of operational processes, training and installation management, geared towards reducing our energy footprint and increasing our use of cleaner energy alternatives.

Our new infrastructure energy strategy is founded on four pillars that are designed to improve current infrastructure, improve future infrastructure, expand renewables, and manage costs. We intend to achieve the four pillars by incorporating best business practices into our education and training programs, pursuing cultural change in our organizations, and improving our asset management.

We are seeing potential indicators that our efficiency strategy is providing return on investment. In fact, between the 2003 baseline year and FY 2008, the Air Force decreased energy intensity by 17.8 percent.

Mr. Chairman and Senator Burr, this concludes my remarks. Thank you and the committee again for your continued support of our airmen and their families. And I look forward to your questions.

SEN. BAYH: Thank you, Ms. Ferguson.

We're going to have five-minute rounds?

STAFF (?): (Off mike.)

SEN. BAYH: Five-minute rounds. So you'll let me know when my time has expired.

Mr. Arny, I'd like to start with you. Is there any reason to believe that the services won't complete the BRAC process on time? Do you feel pretty good about how things are going?

MR. ARNY: Yes, sir, we do. We've looked at it very closely, and we will meet the deadline. This question has been asked at each of the hearings we've been in, and all the services agree.

SEN. BAYH: What's your understanding of where we stand on construction of missile defense sites in the Czech Republic and Poland? We had some testimony just yesterday from some officials involved in this area, and it appears that things are changing, but we're being asked to appropriate some money for some sites that may be somewhat in flux. What's your understanding about that situation?

MR. ARNY: The department is currently conducting a ballistic missile defense review, and we think that'll review the rationale and requirements for the third site and explore alternatives that may exist. No final decisions have been made on that. From a policy perspective, we follow the lead of our policy --

SEN. BAYH: I understand. From our perspective, since no final decisions have been made, how are we supposed to appropriate the money?

MR. ARNY: Well, I could just say that we believe that the authorization appropriation is justified, that there'll be sufficient funds to continue the program. We had a review of the MDA program ourselves within house in the MILCON, and we think there's enough flexibility in the program to handle the contingencies.

SEN. BAYH: You can understand why we'd ask the question.

MR. ARNY: Yes, sir, I do. That's why I have an answer right here.

SEN. BAYH: Very good.

Let me ask you one that you may not be prepared for, then. By the way, that's good staff work.

I sit on the Intelligence Committee and the Energy Committee, and we've been briefed multiple times, as Senator Burr would know, recently about the vulnerability to cyber attack, possibly terrorist attack, focused on the nation's power grid.

And in particular, some of our defense sites are vulnerable. If you wanted to attack a defense site, in some cases you wouldn't strike it directly; you'd strike the civilian power upon which the site relies. And many of our facilities only have a few days' backup of kerosene for some reserve generators they have. So it's a real vulnerability for us.

What's going on to try and build in some redundant capacity so that, if such an event took place, some of our important DOD facilities wouldn't be brought down in a matter of days? As I understand it, if you take out some of these transformers in the power stations, it could be months before they get back online.

MR. ARNY: We have looked at that. We are continuing to look at it. There's a great debate going on within the department. Some people have advocated islanding, where we could be completely self- sustained. If you recall, the last decade we were looking at privatizing our utilities. So from my perspective, we have -- it's a real approach avoidance. On some of our -- we tried to make sure, on our bases, that our critical facilities have sufficient backup for a long period of time.

We're also looking at ways that we can benefit from power sources near us. As you've seen, we're putting photovoltaic at Las Vegas --

SEN. BAYH: Maybe some geothermal potential at some of the sites, that kind of thing.

MR. ARNY: Exactly. The Navy's had -- but again, you have to be careful how you work around the law on that. When the Navy put in 225 megawatts of geothermal at Fallon -- I mean, at China Lake -- back in the '70s and '80s, the law did not permit us to take any of that power.

We're now developing about 30 megawatts at Naval Air Station Fallon. But, again, the way the procurement laws are written, it was much more beneficial for us to sell that power to the outside and take a cut on our electric grid.

SEN. BAYH: Well, this is a matter of, you know, of national security. So, if you need some changes in the law to help us address this threat, please let us know what needs to be done. You know, ordinarily -- as my later questions will emphasize, I'm in favor of, you know, saving money wherever possible, being as efficient as possible.

This is actually an area where some redundancy, some duplicative capacity may be in order to protect, you know, defense sites, because if we're completely reliant on the civilian power grid -- and that's vulnerable to attack, which we've been informed it is fairly vulnerable, then we've got to, you know, anticipate that sort of thing.

So, you let us know what need to be done to help you address this situation.

MR. : It's definitely an issue we're looking at.

We don't want to be in the position of -- in my perspective, of your sitting on the ridge in San Diego overlooking a city that's black, and there on the other side of the bay is Coronado all lit up like a Christmas tree, that would last for about 24 hours before, you know, we would have to be dumping power to the outside.

So, it's a definite -- we are definitely considering it. We're trying to figure what the middle way is. And if we do need any changes in the law, we'll come to you.

SEN. BAYH: Well, the last thing I'll say -- and then turn to the ranking member, is there was a study done about some of these vulnerabilities that unfortunately found its way into the Press. And some of the chatter suggested that the bad guys noticed that. And so this is not just hypothetical.

MR. : Yes, sir.

SEN. BAYH: Senator Burr.

SEN. BURR: Secretary Penn, I think it's safe to say I'm deeply concerned with some of the conclusions that the National Academy of Sciences' review came to, as it related to Camp Lejeune, and, specifically, the water contamination.

The report lists 14 disease and health conditions it concludes have limited or suggestive evidence of an association with human exposure to the chemicals identified in Camp Lejeune's water system. What is the Navy going to do to work with the scientific community to collect the additional information for former residents who are experiencing some adverse health conditions?

MR. PENN: (Off mike.) After a thorough review and consideration of the report, the Marine Corps -- who's responsible, will identify the next steps to take as it continues to work with the appropriate agencies, constituents, and potentially-affected former residents.

Thus far, we have over 137,000 former residents registered on our pipeline. We get a report weekly on the number of people that may have been exposed. We have over 43,000 phone calls coming into the call center since then. We're not going to let our military -- our folks down.

SEN. BURR: But, that's -- and I appreciate your answer, and I think what you read was the same thing you read in your opening statement.

The population -- potential population affected is 500,000. We've tracked down 137,000. The report recommends -- and I want to quote from it, the report recommended, quote, "policy changes or administrative actions that would help resolve the controversy should proceed in parallel with any current or future scientific studies," unquote.

So, what are the Navy's ideas about how it can move towards a resolution for the Navy and for former residents? I mean, the report said, 'Don't stop right here. Have a parallel effort figured -- to figure out how you move forward.' When will we have that?

MR. PENN: I don't know exactly when we'll have it. I know the Marines are looking at it as we speak.

SEN. BURR: Mr. Secretary, how long have we been looking at this?

MR. PENN: About seven years, as I recall.

SEN. BURR: I think it's more like 12.

MR. PENN: Well, I've been here seven years.

SEN. BURR: It's growing hair and it smells. And my hope is that we're going to find some path that we can confidently tell people we're going to pursue. And I look forward to working with you on that.

Mr. Secretary, let me also ask you, what the status of the environmental impact study is for the outlying landing field for East Coast Navy and Marines?

MR. PENN: The EPA directed us to include the F-35 and (RES ?) analysis. So, that will probably take -- will probably add a year to the study.

SEN. BURR: And what do you intend to do with the land that was purchased in the Washington County --

MR. PENN: We have been trying to return the land to the individuals we purchased it from. And we're in the process of trying to get some laws changed so we can do that.

SEN. BURR: And are you finding that --

MR. PENN: And I'll just go out and -- we kind of just go back to them say, "okay, we don't want to use your land; here's your money back". We cannot do that.

SEN. BURR: Are you finding the public receptive to that?

MR. PENN: Yes, sir.

SEN. BURR: Mr. Calcara, the Army has recently completed transactions with the local private partners to construct unaccompanied -- (inaudible) -- or senior enlisted barracks at Fort Bragg, Fort Stewart and three other locations. From initial reports, these townhouse-style complexes seem to be a raging success.

What are the pros and cons to using a private developer, similar to housing privatization, to build and maintain Army barracks for junior enlisted personnel?

MR. CALCARA: It is a rising success. In fact, earlier today I met with the RCI partners in our semiannual meeting, and we are looking at doing it in other locations.

The biggest issue with moving down to the lower ranks, obviously, is less cash flow to work with at the E1 to E4 level. The other issue that we have is, as we start looking at these projects in areas where there isn't a secondary market, the underwriters are asking for us to put in additional guarantees on occupancy; to forward-finance one year's worth of debt service; and some other controls to offset what they perceive is liquidity risk.

When you start adding those pieces into the transaction, we start bumping up against the financial controls under the -- (inaudible) -- program.

SEN. BURR: So, does it make economic sense over the lifecycle of the barracks?

MR. CALCARA: It does, but we have to be able to meet the statutory tests of no more that 33 percent cash investment in the transaction.

MR. : Senator Burr, if I could add on that.

We had similar problems with family housing privatization when we started. We did smaller projects and, as it became more successful and our personnel commands got used to it, we then began to expand to where the Services -- Navy, for instance, I think started first, where we'd do major regions.

Both my sons are at Lemoore, and I, frankly, never thought we'd ever privatize Lemoore, because the secondary market around it is -- there isn't, very little. But, when you put that together with all of San Diego, that gives the bankers and the developers confidence that if they have shortages at Lemoore, they'll be able to make it up in the San Diego area.

So, there are a lot of things we're doing. It's the right way to go.

SEN. BURR: My time has run out, but the chair has allowed me to ask another question because it dove-tails on this.

Mr. Calcara, a question about the contracts used by the Army to manage housing privatization transactions and (holding ?) partnerships. I read the testimony for last year when Secretary Easton (sp) stated that the Army's portfolio and asset management programs were strong and proactive. An overwhelming majority of the Army's housing inventories are now privatized and under the management of the partnership.

The Department of Defense efforts over the past 10 years to increase the Service members' base allowance for housing has resulted in sizable reserves growing in housing privatization reserves accounts, which can be used to accelerate renovation and recapitalization activities. Eventually, though, the housing inventories for each transaction will reach a point of optimal performances measured by the occupancy rates and reserve funds will still be growing.

Can you provide, for the record, your assessment of the current management practices used by the Army for housing privatization?

MR. CALCARA: Well, in terms of managing the reserve accounts, we are still aimed at development periods on virtually all of our projects. I think there is one project that we have finished the development period. So, what you're referring to, in terms of capital reserves, building, really doesn't occur until we get to -- out of the development period, because we continually reinvest the dollars into the construction plan.

I can tell you we are basically doing well in virtually every location.

SEN. BURR: Would you say you need to change the methods or processes used by the Army to manage these partnerships.

MR. CALCARA: I don't see a need to change I. I think what we are talking about, you may be hearing about the role of our consultants in supporting our transactions and oversight. They're taking a bigger role in government oversight on the transaction and using our consultants more in a deliverable-based, targeted approach as opposed to a portfolio-wide application. And it's not going to change what they're doing for us, it's just going to refine the way they do it for us.

SEN. BURR: I appreciate your answers. I would only say that everywhere I've looked, this has been an incredibly successful program (of ?) everybody who's testified. More importantly, the folks who (occupy ?) probably to do a program like this in the most difficult place on a base. And I would only caution you, sometimes a little tweak here and little tweak there doesn't come to the same outcome. You've got something that works, stick with the model. If it isn't broke, don't fix it.

MR. CALCARA: And again, sir, that model grew. If you look back to the -- I looked back to the history of it before I got here, and we were doing single bases. In some cases, the Air Force was doing partial bases. And as we got more experience service wide, all three services, including the Marine Corps as well, we've expanded to larger projects. And you're right, it's been a success. We don't want to break it.

SEN. BAYH: Thank you, Senator.

Senator Udall.

SEN. UDALL: Thank you, Mr. Chairman.

Mr. Calcara, if I could address the issue of the reductions of brigades under the president's budget you are well aware of, but I think we all are. Forty-five brigades now out of an initial plan that had 48, three installations, including Fort Carson in my home state, are now left short of a brigade they've been planning for. As you know, the state of Colorado, Colorado Springs community and -- (inaudible) -- fought hard to get one of the Grow the Army brigades and base them at Fort Carson. And the community made investments based on DOD's comment that a new brigade was headed our way.

We find ourselves short of a brigade, so there are some outstanding questions I'd like to throw your way today. First, I'd be interested in knowing whether decisions have been made about where to put the 10,000 soldiers that will not be filling out these three BCTs. Where will they be based? And will they even be going to Fort Carson?

MR. CALCARA: The answer is I don't have a definitive answer today. In fact, the Army is at the full population strength required in the Grow the Army initiative. What we are looking at doing now is assigning, you know, increments of that population to current installations. In most cases, a place that has a brigade now, like Fort Carson, may in fact see as many as, you know, 3,500 going there anyway without the additional brigade configuration because the current brigades there now don't have the full population or because we're reconfiguring combat support.

What we did for the purpose of the analysis on investment was we did assume that all 3,500 would not show at Fort Carson, which would be a worst-case scenario, and then looked at investments and capabilities based on a reduction of 3,500. And we're still comfortable that what we've asked for in the '10 budget supports that population.

And what I'm telling you is when the smoke clears on all this there probably will be some more growth at Fort Carson incrementally from the original 3,500 lost in that brigade.

SEN. UDALL: This is in part tied to the secretary of Defense's observation we might be overstructured and undermanned, as I understand.

MR. CALCARA: It goes to thickening the force, yes.

SEN. UDALL: Yeah -- (inaudible).

MR. CALCARA: Yes, we're saying the same thing.

SEN. UDALL: Let me move to the construction dollars that Fort Carson has been counting on to prepare for the new soldiers. It's my understanding that the MILCON dollars for arranged projects are programmed when an installations population and force structure trigger across certain requirements, thresholds. Even without the BCT 47 which was originally planned for Fort Carson, are there still sufficient training requirements at Fort Carson to justify the Army's fiscal year 2010 arranged projects at Fort Carson?

MR. CALCARA: Yes, sir. In fact, there will still be some shortages after the FY '10 investment level. So we can in fact support everything that's been requested in '10 for Fort Carson.

SEN. UDALL: And that's good news and, I would argue, appropriate news, given the commitments on both sides that have been made.

If I could, let me speak to the QDR broadly but then specifically. It's my understanding that the QDR still approves relocating a Germany-based heavy BCT back into the U.S. in fiscal year '13. It would seem to me that the top three best military value stationing alternatives for the Army would be Fort Carson, Fort Stewart -- I'm sure Senator Chambliss would agree with me -- and Fort Bliss, in no particular order. I didn't hear what you had to say in your opening statement. Did you say one or both of these brigades would go to Fort Bliss? I thought it would be decided in the QDR.

MR. CALCARA: It would be decided in the QDR. What I said is that there is a potential that that could occur. Certainly, Fort Carson, I would consider it competitive in the stationing decision. It is in the top-three tier of siting locations tied to not only military value but capabilities and current investment that's there.

I would tell you, though, that to the extent that expansion of our ability to train there gets reduced, that would, I think, ultimately affect some of the decision-making on where the two brigades might go.

SEN. UDALL: Let me pursue that a little further. I heard you say Fort Carson is still in the running, so let me direct the question, prefaced with a couple of comments. I think that you would agree that one of the key factors that go into a stationing decision is the training land an installation has. The more training land an installation has, the higher its military value and the better stationing appeal.

As you know, Congress has not approved expansion at its current maneuver site at Pinon Canyon. But I would add, Fort Carson still has the second-highest amount of training land of any installation in the country. So here's the question. With or without the expansion, Fort Carson should be a strong stationing candidate if this Germany-based BCT is relocated. Would you agree?

MR. CALCARA: I would conclude that it is in the top three in terms of where we site it. I would also tell you that beside training, we look at growth capacity, power projection and overall well-being to be supported for the soldier. So there are three to four factors that play into that mix.

My short answer would be, all things considered equal, obviously a location with greater training capacity has a higher chance of being selected than one who does not.

SEN. UDALL: Thank you, Mr. Chairman.

SEN. BAYH: Thank you, Senator Udall.

SEN. : Senator Udall, I have to comment that you have to understand this is quite amazing to watch Mr. Calcara talk all these Army things given that he started out as a Navy civil engineer.

MR. CALCARA: Working for Mr. Arny, by the way. (Laughter.)

SEN. BAYH: Senator Chambliss.

SEN. CHAMBLISS: Well, obviously, the Navy trained you well. You've adapted to the Army.

MR. CALCARA: Hoo-ah! (Laughs.) My staff is laughing. I don't say hoo-ah often, so I appreciate the --

SEN. CHAMBLISS: I want to pick up there where Senator Udall left off, because one of those other bases that's been left standing at the altar is Fort Stewart in this process. You know, over the past two years, Army leaders repeatedly oppressed local and government community leaders at Fort Stewart. To date, the investments that the Army encouraged the local community in Hinesville -- and Liberty County is a small rural county, as you well know -- but they were pressed to make investments totaling over $450 million, which they did. We received some state money, but basically most of it was local money.

The Army came down, briefed investment bankers and builders on several occasions in an effort to solicit their support, which we got great community support, and they really stepped up to the plate. During the briefings, they showed both projected dates for new soldier arrivals, unit deployment dates and so forth.

Additionally, the department sent the Office of Economic Adjustment to Hinesville to assist the community in properly preparing for the reception of the BCT and provided a grant to organize and conduct a study of what was required.

In addition to private investment, Congress has appropriated 400 million (dollars) in military construction from 2006 to 2009. Currently, 244 million (dollars) was awarded on a contract with a projected penalty of 30 percent if canceled. Some of this work was contracted as recently as May 10, 2009.

Additionally, the dining facility, which was 15 million (dollars), is slated to be let to contract next week.

Now, much along the lines of what Senator Udall asked about there -- obviously, when the secretary announced on April 6 a decision to stop the growth of the Army of 45 BCTs was a surprise. Then on June 1st, the Army announced that a BCT would not be stood up at Fort Stewart. And this decision has had very serious and immediate consequences and impact on my home state as well as directly in the community of Fort Stewart.

That same June 1st decision, though, did state that Fort Stewart still would grow by about 4,500 soldiers by 2013. Now, there are a number of MILCON projects that we talked about. Again, let me ask the question to you with respect to those. Where do those projects stand in the eyes of the Army? Are they justifiable? Do we need to go forward with construction as proposed?

MR. CALCARA: Yes, sir. As I mentioned in the opening -- I think you may have missed it -- we are recommending to stay the course with investment at Fort Stewart, to not only correct what we think are facility deficiencies but to also buy out relocatable facilities sooner, which we were going to circle back and do in the out years anyway.

So you're absolutely correct. We still see growth there of 5,500. We think it's a wise thing to do to buy out of the relocatables. And in fact, when we do make the final stationing decision, we may in fact grow the 5,500 to a higher number as we thicken the force, as Senator Udall mentioned.

SEN. CHAMBLISS: Is there a potential for still another BCT to come back from Germany, I believe in about 2013? And the one I'm speaking of was to be located at White Sands Missile Range in New Mexico. I think the decision has been made not to bring it from Germany back to New Mexico. But no decision has been made relative to where it will go, is that correct?

MR. CALCARA: That's correct, sir. The reason why we took New Mexico off the list was because it was a cost-prohibitive investment there. We originally had 48, and we had no room at the inn to put them anywhere else. And New Mexico became a target receiver location. Now that we're back to 45, we've taken White Sands off the table. And certainly, Stewart would be in consideration for one of those brigades.

SEN. CHAMBLISS: We're 280,000 acres, the largest Army base east of the Mississippi. And we look forward to bringing all those folks to Fort Stewart.

Ms. Ferguson, I want to talk with you for a minute about our situation at Moody Air Force Base. We worked very hard last year to close this deal to transfer the former American Eagle projects to a new developer. And I believe the developer that bought it was Pinnacle Hunt. That was a very painful process for both the Air Force as well as the Valdosta community to go through. As you know, Moody was one of, I think, three or four projects, I believe it was four projects, that were included in that privatization issue.

The situation with respect to that project now. Tell me where you think we are and where you see us going with respect to filling this gap of some 229 shortfall in houses that were anticipated for new air men and women coming into Moody.

MS. FERGUSON: I first want to publicly thank your community and specifically Judge McLane for the work that he had in helping to get the project sold from American Eagle -- (inaudible) -- to Hunt Pinnacle.

I was down there two weeks ago and actually bumped into Judge McLane at dinner, and he was really pivotal in helping work that, helping make that closure go through in November of last year. So I wanted to thank him publicly.

On site down there, we took about a four-hour tour of the housing at Moody just two weeks ago, saw significant improvements certainly over the last year. Hunt Pinnacle is working on 50 of the homes that American Eagle had partially out of the ground. Nineteen of those homes were accepted for occupancy on Monday, and families are beginning to move in, including the new wing commander.

SEN. CHAMBLISS: He's getting the first house, I think.

MS. FERGUSON: He's getting the first house. We toured the house when we were down there. It's a great looking house.

They're also doing a number of minor renovations in the Quiet Pines area. They're doing roof replacements, window replacements. And we also went through the Courts. And the Courts area is eventually going to be demolished. But Hunt Pinnacle is really doing a good job of going in, replacing doors, carpeting, making them quite nice for the families that are going in there. And the Moody housing has great occupancy rate. We're hovering 98, 99 percent occupancy.

But as you point out, though, the project as it is today is not the project that it was originally. And we are still committed to the community, both outside the fence and inside the fence. We know we still have a deficit to work there, and we're continuing to work that now. We're working a number of different options to try to close that gap. And we're hoping within the next six to nine months we'll be able to do that.

SEN. CHAMBLISS: I thank the Air Force and you for really prompt attention that matter because it truly has been painful. As you observe from your viewing of it, it's got such great potential down there. And to see all those houses literally falling down in some cases now, it's a pretty sad sight.

Mr. Chairman, with your indulgence, could I go back and ask one other quick question to Mr. Calcara?

I should have included this in my statement to you with reference to the MILCON projects. Because we're going to see an increase in the population anyway at Fort Stewart, about 4,500 over the next couple of years, in addition to the MILCON projects, does the Army not agree that from the standpoint of providing schools for educating our children that we need to move forward with the construction of additional classroom facilities for those additional children that will be there, children of Army soldiers?

MR. CALCARA: Well, sir, I'm unaware of any specific authority we would have to construct schools. My understanding is that, you know, our aid that's provided down there is through impact aid that's given to the Department of Education.

SEN. CHAMBLISS: I didn't mean to implicate you had MILCON money for the construction of schools. But we're going to have 4,500 soldiers, and they're going to bring families in, which means we need more classroom capability.

MR. CALCARA: Yeah, I think that's a reasonable conclusion that based on the demand analytics for a family size and your current school population characteristics down there, you would need more schools.

SEN. CHAMBLISS: And if there is any money in the budget -- and I frankly can't remember if there's any specific MILCON money for schools -- the Army would anticipate continuing with those projects.


MR. : But Senator, if I could. We at the department, unless the base has a DODEA school system, which there are only a few bases in the states, the schools are all provided by the outside school districts.

Some of our bases, we do provide land so the school district can build on the base if that's required. But we do not -- unless it's a DODEA school, we do not provide MILCON for the construction of schools.

SEN. CHAMBLISS: Staff has just reminded me of what I thought was a fact. There are two schools at Fort Stewart to be built in the FY '10 budget from MILCON money.

MR. : Then Fort Stewart must have a DODEA school system.

SEN. CHAMBLISS: Okay. And from the Army standpoint, there is no reason not to continue with those two projects I assume.

MR. CALCARA: No, sir, you're absolutely correct. The population is growing by a minimum of 4,500 service members and their families.

SEN. CHAMBLISS: Thank you, Mr. Chairman.

SEN. BAYH: Thank you, Senator Chambliss.

Senator Thune.

SEN. THUNE: Thank you, Mr. Chairman.

I want to thank our panel for their testimony today and responses to the questions and for the important work that they do day in and day out.

I have a question I'd like to direct, I guess, just to kind of the panel generally and whoever would care to maybe respond to it. But it's dealing with the whole issue of renewable energy projects near military training ranges or, for that matter, even 30 miles away from training ranges. The military is not particularly enamored and some have argued undercut renewable energy projects due to issues like radar signature interference. And that's had a chilling effect on renewable energy projects, which I think you've got a number of training ranges that are in the desert which has tremendous capacity for solar energy, for example.

And so I guess my question is, what steps could be taken, could the DOD take to work with the renewable energy industry to try and establish more of a presence in some of these remote areas that are often quite distanced from training ranges?

MR. : Senator, that's an issue that we're addressing. When I took over this job, I formed a Defense Energy Working Group in which all the services participate, the engineers. And that's an issue that's come up.

Frankly, it's a matter of us educating the bases. There has to be a compromise. We're the largest single consumer of energy when you consider our mobility fuels as well as base facilities. So we have to consider all the alternatives.

Frankly, unless we own the land, if somebody wants to put in a solar site or wind on private land, there's not much we can do. Now, obviously, from what you're telling me, and I've heard this, too, we're jawboning and causing a chilling effect. We've got to reverse that. We have to work with people, look at alternatives.

Now, I will tell you that these wind farms with some of the kinds of radars we use, it's not only the blades are causing disruption of the radar but also the turbulence downstream. But again, if we've got an area, we the Department of Defense have an area, that where we have to have exclusive use of that territory, then we better consider buying easements or buying land. We've got to work with people that are trying to produce electricity, especially PV in the Southwest, so that we can accommodate each other, so we understand each other's problem.

Let's face it. A base commander and folks in the field get promoted by pushing their primary mission which is testing or training or doing something else. We as a department and the services have to educate them to open their mind a little bit and look at alternatives.

SEN. THUNE: I appreciate your answer to that, and I hope you will. I think there's a tremendous synergy in there and opportunity to achieve a couple of critical objectives.

MR. : We can't sit there, like I said, as a major consumer of energy and say, you can't produce energy outside my base. It's just incompatible.

SEN. THUNE: Right. I have another question that's related to energy, a different subject. But if I could direct this to Ms. Ferguson.

Last year, Secretary Donnelly signed the Air Force Energy Policy which, among other things, establishes a couple of goals with respect to using alternative fuels in the Air Force aircraft fleet. One goal is to test and certify the aircraft fleet on a 50/50 alternative fuel blend by the year 2011. A follow-on goal is to acquire 50 percent of the Air Force's domestic aviation fuel requirement via an alternative fuel blend in which the alternative component is derived from domestic sources.

And from what I understand, an initiative to build a coal-to- liquid plant on Malmstrom Air Force Base in Montana was abandoned earlier this year. And a similar plan to build a plant in Alaska with a guaranteed five-year contract is still up for grabs with no takers.

So I guess my question is, how well is the Air Force proceeding toward reaching these alternative fuel goals? And how can the committee help the Air Force reach its goal of using domestically produced alternative fuel?

MS. FERGUSON: I will have to take that back for the record for you. I don't have enough data on that with me today.

SEN. THUNE: Okay. I would be very interested in knowing that, Mr. Chairman, for the record. This whole initiative at Malmstrom was sort of highly touted for a while and it's just all of a sudden sort of fallen off the grid. And these other initiatives that the Air Force had undertaken, I think are critically important. The Air Force is the largest user of fuels, obviously, and if we can use domestically produced alternative fuels here, it lessens the very dangerous dependence that we have on foreign energy. So I would appreciate if you could get back to me on that.

MS. FERGUSON: We'll get back to you.

SEN. THUNE: Thank you. I appreciate your testimony. And again, thanks for what you do.

Mr. Chairman, I yield back.

SEN. BAYH: Thank you, Senator Thune.

Mr. Calcara, I had a couple of questions for you.

Let me ask you, the number of brigades was 42, correct? And it was then proposed to increase the number of brigades to 48, is that right? They've now been scaled back to 45.

But it was the increase from 42 to 48 that occasioned the proposal to station the three additional brigades at the three sites that will now not get them, correct?

So knowing what we know today, if the proposal had been 45, as it is today, originally, there would have been no money proposed for those three additional sites. Isn't that true?

MR. CALCARA: That's true. Yes, sir.

SEN. BAYH: And yet, we're now being asked to devote money to sites that otherwise there would have been none authorized for. So that money would have been available to address the range of requirements. I understand that there are needs at those sites. I heard your testimony, and I'm sure that's true. But those funds would have been available to address all of the needs facing the military in this area at all the sites. And so, you know, I ask you, are these really the most pressing needs out there in your area of jurisdiction?

MR. CALCARA: Well, I think if you look at our plans for what amounts to the 335 million (dollars) or the 25 percent of that 1.4 billion (dollars), most of it is going to take care of training barracks. It's going to get us out of reloctables, and it's going to correct what was original capacity shortages.

SEN. BAYH: I know that. This is not a bridge-to-nowhere kind of situation. But my point is that this would never have been authorized originally, and now we're being asked to sort of devote it to this anyway. And so are there really no more pressing needs than what is being proposed here at these three sites?

MR. CALCARA: Well, there's always other pressing needs. But I guess I would say to you that we read from you a strong policy imperative to correct our barracks, to get out of relocatable facilities and to help sustain or propel, I should say, the Army modular force. And these investments will do those three things which rank very high --

MR. CALCARA: So it's just a coincidence that the most pressing needs in those particular areas happen to be at these three sites?

MR. CALCARA: I wouldn't say it's a coincidence, but when we looked at the dollars potentially available for reinvestment, we did consider all other priorities across the Army. And if we felt that we had higher-ranking priorities, we would come to you and suggest, we would have briefed you that, you know, the 335 million (dollars) we think x should go to that or y to go to that. We recognized it was a unique situation. We did not intend to mislead anybody in the program or --

SEN. BAYH: Do you see why a taxpayer might be a bit skeptical that, you know, these three facilities were proposed to be expanded and now that's no longer being proposed, and it just so happens that the money that would not have been authorized for them in the beginning is now the most pressing need facing the department in this area? That seems to be rather remarkable.

MR. CALCARA: I see your point, sir. But again, you know, we felt that training barracks, relocatable facilities and enabling the Army modular force had enough gravitas as our strategic priority to sustain the investment decision.

MR. : Senator --

SEN. BAYH: Your testimony to the subcommittee is that there is not one dollar that can be saved that was originally authorized for this program?

MR. CALCARA: No, sir, that's not true. We did identify, I believe, $190 million in the session the other day we had with your staff, that was available.

SEN. BAYH: What of these funds? There's nothing that can be saved that was originally authorized for these three sites?

MR. CALCARA: I would take exception to the word "saved." I mean, I think our understanding is that we were going to use these dollars to buy out a requirement that we had at some point in the process. Whether or not they should have been at the top of the order or at the bottom, you know, in a lower position, we did consider that. And we felt training barracks, modular force were high priorities.

MR. ARNY(?): Mr. Chairman, we at OSD did review the priorities with the Army and agree with them as well.

MR. CALCARA: The other point is we have already discussed about our military or high-military-value locations across the Army. And they are in fact Bliss, Stewart and Carson. So in some ways, we are investing where we think our future is going to be.

SEN. BAYH: Let me ask the Navy about that. Apparently, the decision about where to locate the 8,000 Marines from Okinawa is going to be decided in the QDR -- (inaudible).

MR. PENN: No, sir, that's not true. The QDR is going to decide the training areas that we will be using, and it's a joint training, all services, training specific.

SEN. BAYH: Right. The commandant has expressed some concern about the ability to train the Marines in Guam and the Marianas. Isn't that true?

MR. PENN: That's correct. That's training. Yes, sir.

SEN. BAYH: Okay. Well, let me ask you then, how much of the size and composition of the Marine Corps move to Guam is being reconsidered and debated in the QDR process? None?

MR. PENN: Zero. That's correct.

SEN. BAYH: Richard, I'm going to turn to you, although if you would indulge me for just a moment, I had a couple of questions for Ms. Ferguson.

The proposal for the investment in Oman. As I understand it, we had invested in an airfield there before, and they're now running us out because they'd like to turn it into a civilian airport. Isn't that true?

MS. FERGUSON: Sir, we've been there for quite a number of years. And between 1982 and 1989, the Air Force invested about $65 million for some WRM facilities there. The Omanis would like to use that for more commercial (lift ?). The area is very cramped. And they've invested 200 million (dollars) at the Al Musana'ah site, and would like the Air Force and the U.K. to move to that new site. And these facilities provide the start of locating those WRM facilities.

SEN. BAYH: Do you think we ought to get an agreement with them in place before we spend this money?

MS. FERGUSON: My understanding is we do have an agreement in place with the Omanis now for the two FY '10 projects. And I've got some recent (cost side ?) information that we can certainly share with the staffers -- (inaudible).

SEN. BAYH: Good. I mean, given their previous behavior, it would be kind of nice to nail this down before we spend the money.

The base in Italy -- I hope I'm pronouncing it correctly -- Sigonella -- I think that's close enough -- it's been historically underutilized by the Navy. Do you feel that we should more thoroughly explore using those Navy facilities for the Global Hawk basing before building another hangar facility which might only compound the underutilization situation?

MS. FERGUSON: We have worked with the Navy, and we are being afforded the opportunity to use a hangar on a temporary basis. And the Navy has long-term plans for the remainder of the facilities, and they are not available to the Air Force for any long-term needs that the Air Force has to bed down the Global Hawks.

SEN. BAYH: Thank you, Ms. Ferguson.

MR. ARNY: And Mr. Chairman, if I could follow up for just a second on the Marine Corps training. The commandant's concern is inadequate, I will say, unit training, but that inadequacy exists now with the forces in Okinawa. We do not have adequate Marine Corps training throughout the Pacific. So the movement to Guam of 8,000 Marines, leaving 10,000 in Okinawa, the EIS for Guam does include individual weapons training facilities on Guam. He's concerned that he doesn't have the kind of unit training he needs.

The secretary and the deputy secretary have committed to the commandant that we will look at unit training in the Pacific because the Army has got some shortfalls, the Marines definitely have shortfalls whether they move to Guam or they stay in Okinawa. So it is an issue that goes beyond the move to Guam. And we are definitely going to look at it, and I believe there will be a separate study and a separate environmental impact statement to cover that.

SEN. BAYH: We just wanted to make sure we weren't spending money to build facilities on Guam that then we weren't going to end up --

MR. ARNY: Absolutely not.

SEN. BAYH: Okay, great. Well, thank you very much.

Senator Burr.

SEN. BURR: Not only are we --

SEN. BAYH: Richard, forgive me. I need to get to a briefing here before our markup coming up. So if I could turn the gavel over to you, you promise you won't exceed our authority?

SEN. BURR: We will not spend anymore money, I can assure you. (Laughter.) We might find some cuts while you're gone.

SEN. BAYH: I'm not sure the Treasury has anymore.

SEN. BURR: Things might move to North Carolina all of a sudden. (Laughs.)

SEN. BAYH: Well, you know, it's a good state. Thank you all very much. I appreciate your testimony here today and your service to the country.

SEN. BURR: As Evan said, we'd like to make sure that the investment we're making in Okinawa is an investment that's going to be utilized. I was going to ask Secretary Penn, but I'll ask you, Mr. Arny, aside from the basic estimate of $4 billion for the U.S. investment, does the Department of the Navy have a detailed, current estimate of costs to U.S. taxpayers to complete the initiative, including one-time construction costs and additional base operation costs?

MR. ARNY: Sir, we're putting that plan together, and we'll be able to provide you that as we complete the planning process and as we complete the environmental impact statement which is scheduled for completion in 2010.

I've discussed with your staff, we're trying to get those numbers together now. The new deputy secretary has taken on the leadership of the Guam move himself and has a group, chaired by him, we are meeting every two weeks to make sure that we get all this stuff in a package. I know we are a little bit late in getting some of that to you, but we definitely have a commitment to you and to the Japanese government to get that movement in place as well as all the other movements that take place and to make sure they're properly funded. But we will get the details to you as soon as we can.

SEN. BURR: Well, it's clearly not an inexpensive move.

MR. ARNY: No, sir, it is not.

SEN. BURR: We want to make sure that the investment is wise.

Ms. Ferguson, let me turn to you, and I want to talk specifically about the F-35. What's the current status of the EIS for the joint initial training site at Elgin?

MS. FERGUSON: We signed a record of decision for the initial EIS back in February that allowed the delivery of 59 airplanes there. We are in the process of kicking off the supplemental environmental impact statement as required by the record of decision. In fact, just yesterday, I briefed the Air Force Board on the proposal for the range of alternatives that will be considered in the supplemental EIS, and I brief that to the chief and secretary next week.

The contract has been awarded for that activity, and we anticipate, our schedule anticipates having a new record of decision specifically on the 59, how to operate the 59 and what it will require to mitigate the 59 in September of 2010.

SEN. BURR: There's currently litigation on the move to Elgin.

MS. FERGUSON: Currently, there's actually two components of litigation. One, there is a FOIA request, and then there is also litigation that was levied by the community of Valparaiso over the -- (inaudible). We have reached agreement. The Air Force, Department of Justice have reached agreement for a 90-day stay with the city's attorneys. And there's another meeting with respect to that. That was reached the first week in June, and there's another meeting with respect to that on the 30th of June.

SEN. BURR: Potentially when that stay goes away, if litigation is still pursued, what does that do to delaying our ability to meet the deadlines that we've got for the purposes of training?

MS. FERGUSON: Of course, I'm not the lawyer, I'm the engineer, so --

SEN. BURR: No, but I think everybody in this room knows that in 90 days this is not going to be settled because we don't even have the EIS done, taking into account the noise of the F-35.

MS. FERGUSON: It's probably best for me, rather than to speculate that, provide that for the record to the committee.

SEN. BURR: Let me ask you then in a different fashion, if I can. Is there a plan b if in fact litigation drags out and Elgin is not an eligible place to stand up for this purpose?

MS. FERGUSON: We don't have a plan b. I can tell you the Air Force does not have a plan b for it. BRAC directed the stand up of the initial joint training site at Elgin, and the Air Force is working towards accomplishing that.

SEN. BURR: I'll hope that our staff converses with you about whether there should be a plan b or not. I think it would be prudent to pursue that. There's enough of a challenge with the completion date of the F-35 and the gaps that it may cause. I'd hate to see a delay in our ability to train pilots in that new aircraft.

MR. ARNY: Sir, there are ways to mitigate that I believe -- again, I'm not the lawyer, either, but I've been around enough of these EISs. We can mitigate. And if we can't, we will adapt and move as quickly as we can to train in other locations.

SEN. BURR: Thank you. Let me just go back to Secretary Penn real quick. I asked a question relative to the move from Okinawa to Guam while you were out. In response to a hearing question posed to you last year concerning the costs incurred over the long term by the Department of the Navy for rent payment to reimburse the Japanese government for their investment in new housing in Guam, you said this, and I quote, "Impacts to the Navy's budget from this agreement continue to be assessed. Until final implementation details are determined, any additional impacts cannot be fully determined." Do we have the final implementation details?

MR. PENN: No, sir, we do not. And we probably will not have them until the record of decision. Once we go through the EIS, then we'll have all the numbers of the exact people, the mix that we'll be putting on Guam.

We're building a city on Guam. We have 75 different environmental impact statements that were conduced. And it's taking us a long time, longer than we thought, to put them all together.

SEN. BURR: Trust me, I get a full sense of the scope of what we're trying to do. What I'm desperately trying to do is get a sense of what is this going to cost us. I know what the initial cost is. I'm not sure that anybody has addressed for us what the overall cost of this is. And I'd be willing to bet -- is anybody in a position to tell me now?

MR. ARNY: Sir, we'll be able to -- we could probably give you an estimate based on the forces in our normal term and our normal multiplier effects. Part of it is resolving the (laydown ?) with the Marine Corps of which facilities go where. And I know that Mr. Penn is wrestling through that on a day-to-day basis. We could probably look at, you know, like I say, based on Guam, what it's going to cost to sustain it.

Again, if you just give us a little more time, we are going to plan this, we are going to make this work because it's of such strategic importance to us, not only for the Japanese-U.S. Relationship, because now we'll have Japanese units training with our units in Guam, but also for the strategic necessity of the United States.

You know, full disclosure, I represented the government of Guam for 10 years when I was in the private sector. And we never really had a plan to make use of the most forward-deployed piece of U.S. territory for which we lost a lot of lives to retain in World War II. We're three hours by air from almost every part of the Pacific Rim. It is such a key location with a population that is so pro-American, you know, pro-citizen because they are American citizens. They've died in all the wars and enlist in higher percentage per capita than any other group in America.

And so for our strategic needs as a nation, it's absolutely essential to get this right. And so we're working very hard at it.

MR. PENN: Sir, some of the things we were doing that we're not including in the Guam move, like we're putting carriers in there temporarily. In fact, one just arrived yesterday. So we'll be taking carriers, and when they go to WESTPAC, Guam will be a visit for them.

The Army will be putting a ballistic missile battery in. And the Air Force is going to be putting several things on there as well. So we're wrapping everything together, but they're coming under different funding pots.

SEN. BURR: Well, I appreciate the answer, Secretary. And were this a weapons platform, we'd probably walk away and say, interagency, they're still trying to figure out how much stuff they're going to put on it, that's why they can't identify what the overall cost is.

It's not a weapons platform, it's a strategic base for the future. And I hope you understand why I'm so persistent on this. Because if in fact you can't provide the details to me, why should I authorize $378 million to pursue it? If you can't tell me the overall costs of it, then how do I turn a year from now, two years from now, three years from now, and figure out, are you in line with exactly what you told us this was going to cost?

Now, some of you may not be here, but I plan to be. So these are accountability methods that are going to be applied to me. And I think there's probably a warning shot here that says, if we haven't decided everything that's going to be there, let's do it real quick, let's figure out what it's going to be. Let's figure out what the partner's obligations are. Let's figure out what ours are. But let's get the details before we start talking about the funding.

MR. PENN: (Off mike) -- end of next year.

SEN. BURR: Mr. Arny, do you have anything you wanted to add?

MR. ARNY: No, sir. Again, I think we can provide general, long- term sustainment numbers for you based on multiplier factors. We'll work with your staff to, as we refined these numbers, and get you numbers as quickly as we can.

SEN. BURR: Again, on behalf of the chairman, let me thank all of you for your testimony today. It's invaluable. Again, we apologize for the expedited hearing, but we need to do that to meet the time frame.

At this time, the subcommittee is adjourned.


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