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March 22, 2000, Wednesday

SECTION: CAPITOL HILL HEARING

LENGTH: 17166 words

HEADLINE: HEARING OF THE HOUSE ARMED SERVICES COMMITTEE

SUBJECT: FY 2001 NATIONAL DEFENSE AUTHORIZATION BUDGET REQUEST

CHAIRED BY: REPRESENTATIVE FLOYD SPENCE (R-SC)

LOCATION: 2118 RAYBURN HOUSE OFFICE BUILDING

TIME: 10:04 A.M. EST WEDNESDAY, MARCH 22, 2000

WITNESSES: LOUIS CALDERA, SECRETARY OF THE ARMY RICHARD DANZIG, SECRETARY OF THE NAVY F. WHITTEN PETERS, SECRETARY OF AIR FORCE

BODY:
REP. SPENCE: (Sounds gavel.) The committee will please be order.

Today the committee continues its oversight of the fiscal year 2001 defense budget request. We have with us this morning the three service secretaries, the Honorable Louis Caldera, secretary of the Army, the Honorable Richard Danzig, secretary of the Navy, and the Honorable F. Whitten Peters, secretary of the Air Force.

Last month the committee heard testimony from the secretary of Defense, from Secretary of Defense Cohen, the chairman of the Joint Chiefs, General Shelton, and the four service chiefs on the defense budget request. Since that time the committee has been reviewing the request in more detail. As I stated then, I am pleased that the administration has finally submitted a budget that calls for real growth in defense spending. But one year of real growth, as Secretary of Defense Cohen recently testified, does not a military make. In particular, procurement spending is one area where the disparity between the requirements and available resources continues to be unacceptable, adding to the level of risk of our armed forces and what they must face.

On March 8th, 2000, Deputy Secretary of Defense John Hamre testified that the defense budget request underfunds procurement and stated, and I quote him, "Sixty billion dollars does not provide enough money to recapitalize the force," unquote.

In a hearing last month before this committee, former Secretary of Defense William Perry stated that "the procurement funding probably needs to be perhaps 70 to 80 billion dollars." I was quoting him.

Moreover, each of our witnesses here today has also expressed concern over some aspects of the budget request. For example, the Army had expressed concerns over its ability to modernize the force as less than one-fifth of the procurement budget goes to the Army.

The Navy has expressed concern that its ship-building plan still does not reach the level necessary to sustain the current number of ships. In fact, the current rate of ship construction is insufficient to maintain the Quadrennial Defense Review's requirement to maintain a fleet of more than 300 ships.

The Air Force has cited shortfalls in the budget request with respect to real property maintenance and spare parts, and has recently pointed out that essential modernization programs remain underfunded.

The growing shortfalls were highlighted last month when the services submitted their unfunded requirements list to this committee. This year's $16 billion list is nearly double last year's submission of only $8.7 billion. This is hardly an encouraging trend.

These developments tend to reinforce the belief that we are staring at the front end of the defense train wreck that was predicted in testimony before this committee last month by authors of a recent study conducted by the Center for Strategic International Studies.

Avoiding the train wreck will require a sustained effort over many years. The key point is what level of risk we are willing to accept as a nation. The department's last QDR to Congress assesses that risk for ongoing operations or fighting two major theater wars is moderate to high. The report states that this level of risk increases the potential for higher casualties. I remain concerned that continued underfunding will lead to even a greater risk in the future.

Our witnesses today deal on a day-to-day basis with the challenges facing all of our armed forces. I look forward to discussing with them how the budget request addresses their concern, and which shortfalls require the most urgent attention. But before turning to our witnesses, I would like to first recognize the committee's ranking Democrat, Mr. Skelton, for any remarks he would like to make.

REP. IKE SKELTON (D-MO): Mr. Chairman, thank you very much. The peoples of the earth face the future with grave uncertainty, composed almost equally of great hopes and great fears. At this time of doubt they look to the United States as never before for good will, strength and wise leadership. That was true in 1949 when my fellow Missourian Harry Truman said it. It wasn't too long ago that America's involvement with other countries consisted of food and education and what these days we call nation-building. Well, we're still doing all those things of course, but more recently, and unfortunately, we have increasingly been called upon to keep the peace or to restore it rather than to build it.

My friend and chairman, Mr. Spence, used the term "level of risk." I think he's right. Does anyone hear us, the testimony in this room, talking about the federal budget for defense? Does anyone hear what we say? We've gone all the way from a maximum of $100 billion short to $16 billion short underfunding for requirements of the services, to 10 to 20 billion dollars short according to your former secretary of Defense Bill Perry. Does anybody hear us?

I am very, very concerned. The duty is falling on the men and women of our services, the men and women who the three of you gentlemen -- Secretary Caldera, Secretary Danzig and Secretary Peters represent. And their work of course makes us very proud. But their work is also at a great cost: families separated, budgets redirected, priorities shuffled. So I thank each of you for coming today. I hope you can tell us how while shuffling those priorities they intend to keep our soldiers, sailors, airmen and Marines whole. I know you can't always do very much about their operational tempo, but it's within your power to keep them and their families healthy and offer meaningful educational programs and keep American men and women in uniform every bit as leading edge in their weaponry. But more than anything else, gentlemen, tell us again, so we can hear it one more time, the budgetary needs for the defense of the United States. Please. And I thank you, Mr. Chairman.

REP. SPENCE: Thank you, Mr. Skelton.

Without objection, the prepared statements of all our witnesses will be submitted for the record, and you can proceed as you would like. Secretary Caldera.

SEC. CALDERA: Thank you very much, Mr. Chairman. I want to start first of all by saying thank you to you and to your committee as always for your continued support of our service members, and in particular of our soldiers. The support you provided last year in terms of addressing our readiness needs, as well as the pay raise and pay and retirement reforms, are having a very significant impact on our force.

Last year the Army had record reenlistment. We were able to meet our in-strength requirements because of that record reenlistment, which occurred in no small part because of our soldiers -- our soldiers felt that the Congress and the American people had recognized their service and their sacrifice by giving them that pay raise. And we thank you for doing that.

There are two things that I wanted to emphasize this morning. The first is the importance of a timely supplemental for the Kosovo operation. One and a half billion dollars of the Kosovo supplemental is for costs that the Army is incurring today. We need your help in speedily passing this measure. As you know, April 1st will soon be upon us. It is the midpoint of the fiscal year, and we need to know soon whether we are going to reimbursed for the operating and maintenance funds that we are exhausting today because of the Kosovo mission. It is not just a question of full reimbursement, it is also a question of timing. If we don't get timely reimbursement, we are going to have to find a way to find the money to keep the operation going. If we don't get full reimbursement, then we need to begin taking the steps now to avoid an anti-deficiency situation. And those steps become only more draconian the later you implement them. So it would be only prudent for us to start taking the steps soon, to start saving the money to pay for this operation. And those steps would begin to impact readiness.

The second thing that I wanted to talk to you about this morning concerns transformation of the Army. Since the end of the Cold War, it has been very clear that our military forces needed to change, both because of the reduced threats that came with the demise of the Soviet Union, and also because of the new threats that we saw and are seeing emerge.

The Army as much as any force was optimized for the Cold War, prepared for a heavy tank battle on the plains of Europe. Many of the most thoughtful watchers of our military have challenged us to think about how we will change our post-Cold War forces to give the nation increased capabilities across the full spectrum of operations that we will perform in the future. They have challenged us frankly not to continue to invest in refining the doctrine, weapons and capabilities that were appropriate and needed in the Cold War and at the end of the 20th century when we have an historic opportunity to leverage technology and to transform our forces so that they will be more relevant and responsive to the needs of the nation in the 21st century. And that includes our ability to get to the hot spots faster with the right force to get the job done.

That was Secretary Cohen's charge to me and to General Shinseki as he came aboard as our 34th chief of staff. And, as a result, General Shinseki and I created a vision for the Army. The Army vision: Soldiers on point for the nation, persuasive in peace, invincible in war. The vision stresses investment in the training and development of our people, improvements in our readiness and transformation of the Army.

As we looked at the Army, we saw that as good as our forces are today, and with all that they are doing for our nation -- boots on the ground and maintaining war-fighting readiness, deterring aggression and executing our nation's most important contingency missions -- that there were shortcomings, as illustrated by the deployment to Kosovo.

We saw that our heavy forces were too heavy, that they take too long to deploy, and are difficult to maneuver and maintain in parts of the world where we may need to operate. And we saw that our light forces were too light and lacked staying power and lethality if deployed into an area where they faced an armored threat. We also discerned that future opponents would not give us the long lead times to deploy, and will try to deny us the airstrips and ports that we traditionally used to flow our forces.

So we came up with this vision that stresses transforming the Army into a more responsive, more deployable, more agile, more survivable, more sustainable force than we have today, that is capable of being dominant at every point on the spectrum of operations that we may be called to perform. We have shared this vision with the other services and within the Department of Defense. Secretary Cohen has been very supported of where the chief and I want to take the Army.

To jump start transformation, we have begun in this fiscal year, with your help, to stand up the first two of the initial brigades at Fort Lewis, Washington. They are very different from any other brigades that we have ever had before. We are in the process of selecting the off-the-shelf weapons platforms that these brigades and others will use as interim brigades to develop the doctrine and refine the capabilities and requirements for this force.

We are planning to fund six brigades through '06, one a year, from within our own budget, to jump start this transformation process, and deliver as soon as possible the enhanced capabilities that this force represents.

And we have begun the investment in science and technology that will lead to the tailor-designed future combat system, the weapon system that our objective force will use. The objective force is the force that will be the end result of Army transformation. We do not have all the answers yet about what this force will look like, but standing up the interim brigades, demonstrating their capabilities, developing the doctrine and the returns on our science and technology investments will help answer these questions. We do not have all the answers, but we are committed to transformation.

In the '01 budget submission we have reprioritized $1 billion toward this effort. We did this largely within the Army budget, by making some very tough decisions. We made some very difficult budget kills and program restructure decisions in order to generate the internal savings that we could devote to transformation. Transformation is funded as best we could in the '01 budget. It is not fully funded for '02 and beyond at the pace that we would like to see the Army transform. We need your help to fund that transformation. As we have shown, we are willing to make the tough decisions from within the very small procurement budget that the Army gets. Mr. Chairman, you said we get one-fifth of the procurement dollars -- we get less than $10 billion of DOD's $60 billion procurement -- less than one-sixth of the procurement dollars.

We cannot devote all of our resources to transformation, because we still have a very grave and very important responsibility to recapitalize and modernize our equipment, to continue our digitization efforts and to replace and upgrade our aging tanks, fighting vehicles, our helicopters, our artillery and chemical and engineering combat platforms that our war-fighting CINCs are counting on today, weapons systems that even with transformation will be part of our force for the next quarter century.

Two systems of immediate concern, Grizzly and Wolverine, are not funded in our budget because of our having to juggle the budget priorities to accommodate transformation. But they remain Army requirements.

We would welcome any assistance the Congress may have in restoring these programs consistent with keeping the Army's budget submission which carefully balances readiness, transformation, modernization and other priorities fundamentally in check.

Mr. Chairman, we are excited about transformation, committed to working closely with members of this committee to deliver the benefits of transformation to the nation. I state again that we will need your help this year and in the years to come. We simply cannot do it all within the Army's existent procurement budget. And we should not have to do it at the expense of reducing the Army's n-strength, which will always further aggravate our deployment turbulence, our retention challenges and threaten our war-fighting capabilities and our readiness.

Thank you for the opportunity to make this opening statement. I look forward to your questions.

REP. SPENCE: Thank you. Secretary Danzig.

SEC. DANZIG: Thank you, Mr. Chairman. Mr. Chairman, if I might, since you have my prepared statement, I'd just like to use this time to briefly provide a compliment to the opening comments that you and Mr. Skelton made in your opening statement.

I very much applaud the perspective that you have in talking about risk and threat, and it seems to me to be very right and has led to substantial contributions from the two of you individually and this committee as a whole with respect to strengthening America's military. And I share your desire that we go further and strengthen it further.

There is another way of looking at this that I think provides another support for the angle of approach that you're encouraging. And that is to look not so much at the risk as at the opportunity - - at the terrific things that we can do for sailors and Marines and for the nation's security if we martial the resources with respect to that and get organized in the right kinds of ways.

A lot of my efforts have been in that direction. And I would just like to touch on three areas that are suggestive of that. One, what we're doing with respect to people; second, with respect to technologies, and third, operations.

We have the potential to build, in my view, not only a Navy and Marine Corps that does what it does today, which is always there for America and performs splendidly, but to build a really better and stronger one if we grasp the opportunities that are here now. And your support for that -- your funding support for it, your support in terms of your understanding -- is vital in that regard.

People -- in the near term, what we've accomplished already over the last couple of years together is I think very, very important. The Navy and Marine Corps have met their recruiting goals of last year. We came in over our n-strength goals. We have taken the number of gap billets at sea, which was 18,000 and reduced it to 9,000. And the pay and other initiatives that you've given us have increased our retention and fundamentally helped our well-being.

In the longer term, we can do things though that make the experience of being a sailor or Marine a much better one, a much stronger one, a more professionally successful one.

We have, for example, launched the Navy College Program. What we're doing is giving people credits for Navy training -- college credits. We've worked with the American Council of Education. Every person who now enters boot camp receives a transcript showing how many college credits he'll get for his Navy training. The typical sailor will receive 30 credits for his training in the course of his first term. You need 60 credits for an A.A. degree. When we link this with distance learning and the tuition support kinds of opportunities that you have so much helped us with, the kinds of professional education opportunities that you, Mr. Skelton, have given so much emphasis to, we have the opportunity for bringing our sailors to A.A. degrees either in their first or second terms in the Navy.

We will give out to this year's boot camp entrants -- 50,000 of them -- some 1.5 million college credits over the course of their first term in the Navy.

At the same time, you, Mr. Skelton, mentioned in your opening statement how hard people are working. Sailors and Marines are working too hard. The basic truth is one that you see and I see.

One of the ways of dealing with that is for us to use civilians more and to introduce better equipment, better support, better supplies. We're automating our Navy ships so as to relieve the burden from sailors. We're not cutting end strenghts.

We're designing our ships differently. We're providing tools for sailors through Smart Work kinds of programs in ways I think that make the sailors' and the Marines' experience a more professional one and a better one. Your support for those programs is vital over the longer term. As we automate more and more and as we do more of what we call Smart Work and Smart Ship programs, we will achieve a different kind of Navy.

In the technology area, the improvements go hand-in-hand for this. We've designed the DV-21 in a different way from any previous ship. We're looking towards reducing the manning requirements of that ship from over 300 for the destroyers that we have now to under 100. And in doing that, we change the living circumstance of our sailors. We can give sailors staterooms on a ship like that. And that goes with the college education to again create a different kind of experience for sailors.

Then, in addition, we are reducing the risk associated for our sailors. If we can reduce the number of sailors on a destroyer by two-thirds, or as we plan to do, the number of sailors required to man a carrier by one-half, then we wind up dramatically reducing the total ownership cost of those ships and we can buy more ships - - a major concern you mentioned in your opening statement, Mr. Chairman.

DV-21, for example, is a class of 32 ships. We can save 70 percent in the total operating cost of those ships and save $30 billion as against what they've normally been up till now and use that $30 billion to buy some 30 additional ships.

Down this route lies, it seems to me, enormous reward. The support of this committee is essential in that regard, because we are now for the first time in recent years investing dramatic amounts of money in research and development. We have $3.9 billion associated with research and development for the DV-21. That research and development investment compares with our starker investment in surface R&D -- R&D for surface ships -- of about $5 million a year in the 1970s and 80s.

From $5 million a year to $3.9 billion in the program -- that's how we buy a future Navy. Similarly, we have invested with this committee's support one and a half billion dollars in carrier R&D over these program years. That's a big change from the way we've historically done business.

And those are pots of money that sometimes get challenged, people say "Why are you spending that money on the future?" I think this committee understands its support is crucial in this regard.

I'd mention also in the technology arena finally Navy-Marine Corps Intranet. What we are doing in this context is transforming the way in which the Navy functions in the information age. We're taking 143 or so separate networks that now operate and realizing dramatic economies by consolidating and integrating them into one single network.

That also gives us great gains, not only in economy but also in terms of security. We can manage essential network and monitor it against intrusions, introduce firewalls and other safeguards much more effectively.

But most of all, it lays the base for us to do what IBM and General Electric and General Motors have done, which is to create one central corporation in an information age that has the ability to talk amongst its members, sharing databases and very dramatically increasing the access that any individual operator has to being able to order, for example, the spare parts that he needs, to call up the personnel system, et cetera, without going through intervening layers of command and managers of data. We can talk more about it.

Finally, I'd underscore that operationally, we are also changing and changing in ways that this committee has encouraged and that I think are very, very healthy. If you look at what the Navy did off of Kosovo in Tomahawk missiles, it's very different from what we did with Tomahawks as recently as the last couple of years in the Persian Gulf. We've increased our timed speed with which we can plan and program those missiles so that they're now for the first time usable against movable targets.

We've increased the efficacy with which we target in ways that make I think the Tomahawk the weapon of choice for the 21st century. We are emphasizing the ability through the Marine Corps to undertake what we call "ship to objective maneuver" -- to actually move people from ships direct to the battlefield without intervening places on the beachhead.

The V-22 now coming into production gives us a lot of progress in that regard. With our information age advantages, including IT- 21 and the Supernet, we are able to see the battlefield in ways that previously didn't ever occur.

So I would only emphasize in conclusion, Mr. Chairman, that in addition to rightly worrying about risks and threats, as you have underscored in your opening statement, I also see a world of opportunities here -- a world of reward for the nation in terms of how it mans its Navy and its Marine Corps. And we are together working towards that. Your financial support is fundamental to it. And above all, your understanding of it and your caring about it in the way that you do and your reaching out to grasp the future is for us an immensely positive thing. And I thank you for it.

REP. SPENCE: Thank you, Mr. Secretary. Secretary Peters.

SEC. PETERS: Thank you, Mr. Chairman, Mr. Skelton, and distinguished members of the committee. Let me begin by adding my thanks to this committee for its strong support for the pay raise and retirement reform last year, and also for the many adds we had in readiness over the last several years. These have really helped the Air Force tremendously and I think you saw the result of this in Kosovo.

I am pleased to appear before you today to talk about the Air Force's FY 2001 budget. Our goal in developing this budget was to provide a balanced and integrated plan that supports our evolution into an Expeditionary Aerospace Force and which also implements lessons learned from Kosovo.

Over the last 18 months, the Air Force has shown that its investments in Stealth, Precision Munitions, unmanned vehicles and improved ISR systems have matured into unparalleled combat power. For the first time in history, we deployed a significant number of GPS- guided munitions in combat and demonstrated an all-weather day/night precision strike capability far more lethal and accurate than ever before possible.

Used in combat for the first time, the B-1 demonstrated that its new radars and defensive systems allowed accurate bombing using dumb, or gravity bombs. The B-2 also performed magnificently. It demonstrated the power of the Joint Direct Attack Munition and our ability to fly from bases inside the United States to strike at the very heart of heavily defended areas thousands of miles away.

We made extensive use of UAVs in combat, and for the first time, we fused UAV intelligence data in real time with data from overhead sensors, both aircraft and space systems, to find fixed target and engage enemy forces.

But equally important, we increasingly brought raw intelligence data from our ISR platforms directly back to the United States for processing and returned it to deployed units as finished products in minutes to hours. We believe that this ability to reach back to the United States for support is absolutely critical to the 21st century, since it both reduces the airlift requirements -- which are a major limiting factor -- and limits the number of airmen we must put forward into harm's way and the threat of terrorism, nuclear, chemical and biological weapons.

We stood up and deployed our new Aerospace Expeditionary Forces. We are now fielding Forces Five and Six. One, Two, Three and Four have already been fielded. Each of these is made up of a combined active-duty Reserve and Guard units.

And last, but certainly not least, with you help, we began to address serious pay, personnel, modernization and readiness challenges. Today, as a result, we have an increasing inventory of spare parts with back orders down by over 50 percent and mission- capable rates stabilizing.

Our pilot shortage, predicted to be 2,000 pilots short, as I speak, will bottom out this year at about 1200 and should be about half that number by the end of 2001. Our enlisted retention rates for the last few months have been better than the same month last year. And indeed, in February, we retained almost 60 percent of our first term airmen against a goal of 55 percent, and we retained almost three-quarters of our second-term airmen against a goal of 75 percent.

On the other hand, Air Force recruiting remains a very difficult problem, one that we are addressing by more than doubling the number of recruiters in the field, and by developing creative new ways to market an Air Force career.

The Air Force budget for FY01 builds on these successes and we hope continues them. But first and foremost, it takes care of our great Air Force people, who are really the true enablers of what we do. It provides improvements in pay, benefits, health care housing and other vital quality of life concerns.

It completes the first stage of important improvements in our recruiting programs and continues to employ and expand our system of bonuses and other incentives to address our recruiting and retention challenges. Our modernization and readiness programs continue our commitment to ensuring that when our airmen are called on to go into harm's way, their success will never be in doubt. But we owe them nothing less than that.

This budget also provides a balanced and integrated plan that supports our evolution into an Expeditionary Aerospace Force or EAF. The EAF represents a fundamental restructuring of the way the Air Force does its business. By presenting our force structure as 10 rotational forces, we ensure that the majority of our forces are trained to meet our obligation to be ready on very short notice to fight and win two nearly simultaneous major theater wars.

At the same time, we have two very highly capable forces deployed or trained and ready to deploy for contingency operations to support the increasing need for a persistent forward presence in the aftermath of regional contingency operations.

The EAF structure improves the quality of life for our men and women and their families by giving them a stable and predictable schedule and ultimately by reducing the number of days deployed. It also enhances our ability to use traditional Guard and Reserve forces by scheduling their deployments a year or more in advance. As a result of the EAF schedule, over 10 percent of deployed manpower requirements will be met by Guard and Reserve forces.

Finally, through our efforts to reengineer the way we do business, we continue to move active-duty manpower from supporting units into deploying units, bringing about 6,000 positions into that change this year in an effort to cut the workload on our people.

This budget is guided by our recent combat experience. That experience has underscored the fact that the Air Force must remain ready to respond to a full range of missions, from humanitarian and peacekeeping to cyber terrorism, weapons of mass destruction and major theater wars. To do this, we have put renewed emphasis on upgrading ISR and space assets, and we continue to fund significant improvements in our communications, network defense and command-and-control infrastructure.

Working together with this committee, we are taking the best, most potent aerospace force in the world and making it lighter, leaner and more flexible to meet the national security challenges of the new century.

Thank you, Mr. Chairman. I look forward to answering your questions.

REP. SPENCE: Thank you, Mr. Secretary. Before we begin questioning, I'd like to remind the members of the committee that the time allotted to each member is about five minutes. My observation has been in the past that some members have exceeded that by asking questions of all of our witnesses and sometimes asking five questions, and by the time the witnesses answer all of it, they've extinguished about 20 minutes.

By doing this, of course, I need to point out that some of our junior members never get around to asking a question if we take up too much time. I would like to re-emphasize that this morning. And with that, I'd like to yield my time right now and skip to Mr. Skelton. I'll reserve my time.

REP. SKELTON: Mr. Chairman, I will be brief. Secretary Danzig, I wrote you and the CNO, the chief of naval operations, a letter last week enclosing the data showing the declining number of people in the Navy going to intermediate and senior war colleges. I will not ask you to go into that today, except would you do me a favor and look at it and give me your best thought? Because, quite honestly, you don't get to be an O-5, an O-6 in the other services unless you go to these war colleges. And I would hope that the Navy would take a good, hard look at that.

I spoke to a capstone group the other day and asked them what intermediate and senior war colleges they went to, and they all answered me, except the Navy, none of them; they hadn't been to any of them. And I think it's proper to do so. The United States Navy War College, both intermediate and senior, up at Newport is just excellent. You have a golden school up there. And I would hope that you would take a hard look at making sure that more folks go to either one or both.

On February the 10th, the military service chiefs testified that their combined unfunded requirements for Fiscal Year 2001 total $15.5 billion. According to the service chiefs, the Army faces a shortfall of five and a half billion dollars. Navy and Marine Corps shortfall totals over six and a half billion dollars. And the Air Force's unfunded requirements exceed $3.5 billion.

I noticed, Mr. Secretary, the defense level -- Secretary Caldera the Wolverine and Grizzly, which will help the engineers fight future wars -- and but for the engineers, we would not have had such a smooth-running operation as we did in Desert Storm, so thank goodness for them -- that was canceled. If we keep on the same rate, Secretary Danzig, we'll end up with a 200-ship Navy. And someday when that happens, if that happens, our potential adversary is going to say, "America, go home," and we're going to go home, because there will not be enough to literally cover the waterfront. And Secretary Peters, your F-22 joint strike fighter is -- both of them are in danger because of a lack of funding.

My only question of you is this: Do any of you disagree, do any of you disagree with the figures given by your service chiefs? Army shortfall of five and a half billion; Navy and Marine Corps shortfall of six and a half billion; Air Force unfunded requirements, three and a half billion. Do any of you disagree? If so, say so.

SEC. CALDERA: No, Congressman Skelton. And indeed, I would just point out that that shortfall is a shortfall of critical readiness requirements, the most important things. It does not represent everything that's a shortfall. That can be executed in '01. That is, there are other shortfalls that we could not execute in '01, and so it really goes beyond that.

REP. SKELTON: Thank you, Secretary Caldera. So in essence, you agree. Senator Danzig, do you agree or disagree?

SEC. DANZIG: Mr. Skelton, I would just note that I think the list is a very valid list of very desirable procurements and other investments. I would note that they are drawn from, in overwhelming measure, our program as planned over these next years. For me, the proposed investments on that list fall both in the category of things that are desirable, and then also, in some of them, things that have fairly high urgency, as, for example, investment in ship maintenance this year or investment in real property maintenance, which would otherwise grow worse.

So I see the list is really having components that are desirable, and the sooner we get to them, the better; and at the same time, a smaller number of components that have high urgency. And I particularly call the committee's attention to the ones that have special urgency.

REP. SKELTON: Thanks. So in essence, you agree.

SEC. DANZIG: Yes.

REP. SKELTON: Secretary Peters.

SEC. PETERS: I agree with it. In fact, the Air Force list is a joint product of General Ryan and myself. Let me add one thing, as Secretary Caldera did. We did not put into the list things that couldn't be executed in '01. And the Air Force, like the other services, is very short on money to recapitalize its force. In particular, we're looking at some year in the future 550 KC-135 tankers aging out, and there is no money at this point anywhere in sight to fix that problem.

REP. SKELTON: You agree.

SEC. PETERS: I agree.

REP. SKELTON: Thank you, Mr. Chairman.

REP. SPENCE: Thank you. Mr. Hunter.

REP. DUNCAN HUNTER (R-CA): Thank you, Mr. Chairman. Gentlemen, I looked over some of the testimony before the Armed Services Committee that took place shortly before June 1950, when North Korea moved into the South. And to me, there was a lot of similarities. Particularly, Secretary Danzig, you've given us some very optimistic talk. And that was the theme that I gleaned from this testimony in 1950. Only Omar Bradley kind of told it like it was and said, "We can't win a major war at this time."

You have massive shortages right now, and your commanders of the third and fifth fleet just sat there and gave us a testimony that they have big shortages. They mentioned the lack of precision munitions to train with; a falling mission capability rate for their aircraft; cruise missiles, Tomahawk cruise missile shortages, where they have to exchange them between ships as they go out; massive personnel shortages, especially in skilled personnel that we talked about.

Beyond that, they said that you couldn't get there from here. These are your operating commanders. They can't carry out the missions of the U.S. Navy with a 300-ship Navy. They said that. And that was across the board. They said you need at least 350 ships. That requires a build rate of between 12 and 14 ships a year. You're doing much less than that, and you don't have any plans to ramp that up.

So my question is first, do you think that you agree or disagree with their assessment that you need to have a 350-ship Navy? Do you think we can get the job done with a 300-ship Navy? And secondly, why aren't you banging the table with the administration and letting them know about these shortages? Now, you know, the chairman mentioned that we had Jim Schlesinger, former secdef, highly respected, who came in with one of the defense think tanks and said you don't have to be a rocket scientist to look at this big inventory of platforms that we've got across the services -- Army, Navy and Marine Corps, and, of course, Air Force.

And you look at the life expectancy of the platforms and you look at the rate that we are replacing them with, and you said you come up with a massive cost of replacement, even as you move into new systems. In fact, the new systems are invariably going to be much more expensive than the old systems. And the number that this group came up with was close to $100 billion extra a year defense shortfall.

Even CBO said that we need to be spending $90 billion -- they put the same pencil to this thing; said you've got to spend $90 billion minimum per year just to maintain the platforms that we have now in your services at a moderately old age; in other words, to maintain these old taxi cabs to the point where you can operate them halfway safely. They came up with a $90 billion procurement bill. And even Bill Perry, Secretary (sic) Clinton's secretary of Defense, then came on and said, "I disagree. You actually need to be spending maybe close to $80 billion a year in procurement, but not $90 (billion)."

Now, my question is, do you agree with those numbers, that we're spending much less than we need to be to modernize the force? And, you know, if you look at this unfunded requirements list, it's mostly short-term stuff. It is "Let's keep the wheels turning for right now and keep treading water." It's not replacing of our platforms. So do you agree that we need, number one, a 350-ship Navy, Secretary Danzig? And secondly, do you agree that we need to be spending a lot more if we're going to maintain a halfway modern Navy with respect to the surface and submarine platforms?

SEC. DANZIG: Well, you're raising, Mr. Hunter, very important questions, and I admire both the passion with which you're raising them and also the angle of approach that you are taking, which is an angle of approach that I share with you.

First, with respect to the question about pounding on the table, I have very much pressed within the administration and publicly for increases in the Navy budget and in the size of the Navy. I think we've actually made some important steps in this regard, and I thank this committee as a whole and you individually for your contribution to that.

I came into office some 16 months ago. We had some intense discussions within DOD involving a lot of people more essential to them than me, though I was definitely a participant in them. And the administration then came back with a substantial raise in the amounts of money we were spending on the military over these years. And we've had some discussions in this committee about whether that amounted to $112 billion or some other number and how to properly account for it. But I think there's no doubt that the Navy and Marine Corps, and I dare say the other services as well, are dramatically stronger because we have put money in. And I have joined with you in pressing for that.

I'd add that we had an intense discussion internally in the administration this year about submarine force. The program before you increased the size of the submarine force from 50 to 55, and we funded that. And I know that you've been very supportive of that move. I think the record will show that I also have been very supportive of it. And you see me pressing for other kinds of opportunities in that regard; for example, conversion of Trident submarines into conventional missile shooters rather than simply retiring them, et cetera.

I'd add that we have, during the time I've been secretary, substantially raised the build rate of our ships. And I'm quite proud of the fact that I've given you a program which two years ago, I think, was not anything -- nothing as good as this was expected, a program that builds eight ships a year.

Now, you make the perfectly correct point that that's not enough over the longer term, and I share that point with you. You're absolutely right. My own calculations about build rate, I think, more precisely lead to a steady-state force build rate, if you need 300 ships, of 8.6 ships a year. But we could argue about the numbers. We're not there, we would agree. And we also have some deficit we need to build against. So just building at 8.6 doesn't quite get you there.

I'd note, though, that our ships are now younger than they have historically virtually ever been. We benefited from the buildup in the early Reagan years in the early 1980s, and our ships came on-line in very large numbers in the later 1980s. Those ships typically have 30-year ship lives. So at the moment, I'm dealing with ships that are 15 or so years old.

The time for me to build and replace those ships is not right now. It is more further out. And what I ought to be doing at the moment is taking advantage, in my view, of the youth of the Navy to invest heavily in the research and development that I've emphasized and which you have stressed on so many occasions, so that I can build better ships more cheaply in the time ahead.

I'm trying to put us in a position where we are building now at a healthy rate that sustains the industry, eight ships a year, and where, in the time ahead, we are making investments so in the time ahead we can build ships more cheaply and, above all, operate them more cheaply, so we can buy more when the ships get older and we need them.

Finally, on the question of 350-ship Navy, I, I'm sure like any other secretary of the Navy and any operating commander in the Navy, would like to see a bigger Navy. I wouldn't, though, say that there's some dramatic breakpoint, some magic number, that when we get there, we have arrived at nirvana, and short of that, we're in some kind of purgatory. You instanced the Korean War in the 1950s circumstance. You're absolutely right. The nation was woefully underprepared. The Navy is not now woefully underprepared, whether it's for a Korean contingency or anything else. And I think we are ready to handle the contingencies of today.

So, in sum, you are raising, I think, very right issues. You and I are probably much closer together than most people in the political arena who are discussing these things. But I would put it in the perspective that I've just offered. Thank you.

REP. SPENCE: Mr. Sisisky.

REP. NORMAN SISISKY (D-VA): Welcome, gentlemen. I really didn't want to get into this argument, but I will.

SEC. DANZIG: I had a feeling.

REP. SISISKY: You know, I don't understand what you just said. (Laughter.) You said we can take care of anything, but we really couldn't. For instance, in the last three years the Western Pacific was without a carrier battle group -- am I right or wrong -- for a certain amount of months?

SEC. DANZIG: Correct.

REP. SISISKY: In the most dangerous spot in the world, or one of the most dangerous spots in the world. So that, you know, to me negates the argument that we'll need more ships. You have to be on station really to make a difference. But I won't get into that, because it's not fair. But let me tell you what this is all about, all three of you. As I see it -- and I'm almost like a broken record , like my colleague over here, the QDR is taking place next year, and I think we have to build, we have to build something for the QDR to see. And it's you gentlemen that are more meaningful to the QDR than us. We just keep pulling that out of you, and to the chiefs to try to pull that out of you, because for the first time, hopefully, by law the QDR will be threat driven rather than budget driven. So, it's imperative that you make the case now for next year.

We are woefully -- I could go into the things in intelligence that it's just hard to believe that a commander on a J2 in the most troublesome spot in the world would say what our intelligence is because of lack of assets that we have in the air, under the sea, and other things. But I won't get into that. I'll ask a question for all three of you. And I might add, the Army too, I, you know, you're playing the Army is just great, but you're going to try to do it with the same amount of money, and I'd like to see how you put an Abrams Tank in a C-130, I mean, without designing a new tank, but that's beside the point.

Earlier this year, the service chiefs testified that the Junior ROTC program was a great program. And approximately 30 to 40 percent pursued some type of service, either enlistment, Reserve, National Guard, or ROTC. I had my office do a study since that time. The figure is 35 percent. But the great thing about this is that the average per recruit of all service is$10,472. You know what the cost is in the Junior ROTC, per recruit joining -- $450. That's a great disparity, and I don't think we can use that entirely. But we called the Pentagon to find out that six hundred and -- I'll find it in a minute -- over 600 schools that can get it, that's been budgeted for, and they said they can't do it until 2004 to 2006, and they can't expedite because they have to train people. Give me a break. I mean, you're using retired military, which is a great thing for somebody to do, and I intend to give a study, and Mr. Chairman of the Personnel Subcommittee, Mr. Buyer, because it just seems to me this is an opportune time that we could jump on something that could help our recruitment. And I'd just like to have you, any comments that you may have, concerning the Junior ROTC.

SEC. CALDERA: Congressman, we think it's a great program. We're investing in increasing Junior ROTC. We're adding 50 schools a year over five years. There is a DoD cap on the number of schools that you can have, so it is -- we will hit that cap once we add those 250 schools. We cannot add more schools unless we lift up that cap.

REP. SISISKY: Whose, whose -- excuse me, whose cap is that? Is that the Department of Defense or is that our cap? Because can change anything. I think.

SEC. CALDERA: And we're putting almost $100 million --

REP. SISISKY: Mr. Hunter tells me he can.

SEC. CALDERA: -- against the Junior ROTC. So, I would -- and I've got some correspondence I would like to send you on that, because we are big believers -- we would do more. We've got -- almost half the programs in the country are Army programs, and we would add more schools if we could.

SEC. DANZIG: I agree with you, it's a very attractive program. Our estimate from the Marine Corps experience is that of the people who participate in JROTC, over a third wind up becoming Marines. And as you say, it's a very good economic calculation when you look at the cost of recruiting, et cetera.

We also are moving to the maximum number permitted -- it's 700, as I recollect -- over the course of these program years. And I'd be delighted to look with you at possibilities of accelerating that.

REP. SISISKY: You were right on the number. It is 700.

SEC. DANZIG: We even understand each other on this one.

REP. SISISKY: Army is 1,645.

SEC. CALDERA: Right. Thank you.

REP. SISISKY: Secretary Peters.

SEC. PETERS: We also are expanding that program up to its maximum. The other thing the Air Force is doing is working with the Civil Air Patrol to increase the Civil Air Patrol Cadet program, which is equally attractive to many people, and which has, I believe, equally good results in terms of getting people into the military.

SEC. DANZIG: Mr. Chairman, I take to heart your point about brevity. Could I just come back for less than a minute to Mr. Sisisky's point about size of the Navy? Thank you.

I just want to clarify, I agree with you that a 350 ship navy does a better job of extending our presence everywhere in the world. And we are not able to meet all of the requests from CINCs and so forth now with respect to presence. And I think that's a quite important point. I merely was responding to the question of a Korean contingency, or a contingency like that, are we prepared for it. In my judgment, the answer to that is yes. Thank you, Mr. Chairman.

REP. SPENCE: Thank you. We need to break for a vote, and we'll be right back.

(Recess.)

REP. SPENCE: (Gavel.) The committee will please be in order. Before we proceed, I'd like to ask unanimous consent that Mr. Bateman, who can't be here any longer today, be allowed to ask questions for the record of Secretary Danzig.

REP. BATEMAN: Thank you.

REP. SPENCE: Mr. Hansen.

REP. JAMES HANSEN (R-UT): Thank you, Mr. Chairman. Mr. Chairman, I had a question for Secretary Peters about the Civil Air Patrol, but I think he answered it to Mr. Sisisky, which I appreciate very much. Therefore, I would like to ask a question to Secretary Danzig about Vieques if I could. Mr. Chairman, I'd like to ask unanimous consent that I could pass out to members of the committee a letter that was written by the secretary to Mr. Frank Rush on 15 July 1999, a very eloquent letter and very well done that was written by the secretary, and may I have unanimous consent to pass this letter out?

REP. SPENCE: Without objection.

REP. HANSEN: Thank you. Mr. Secretary, if I may, I would like to refer to the letter that you wrote that I was just referring to to the chairman. And in that, it was a very well written letter. And let me just go through a few highlights if I may. Questions asked in the letter: Why is Vieques important as a training ground for the United States Navy Marine Corps. Answer: The training wins wars. Many Americans in uniform owe their lives to this crucial training. Many would perish without it. The letter describes the critical importance of combined combat training under live-fire conditions and states flatly that, quote, "This is our most effective training for combat." It describes the $3 billion investment made to support the operations of the Puerto Rico operating area. It describes the 57 other locations -- 57 other locations -- in the United States where live-fire training is conducted, and calls any claim that the site poses a unique burden for Puerto Rico, quote, "plainly wrong." Perhaps most importantly, the letter states there is no justification for applying different standards to Puerto Rico than for the mainland of the United States.

My questions would go this way, Mr. Secretary. I assume, and you wrote that letter last July which is very clear and the meaning very to the point, I assume you stand by that. If this training is directly related to the lives of our front-line servicemen, why would you support a vote on the matter? And isn't that implying a different standard to Puerto Rico? Would you support a vote for the hundreds of thousands of Americans who live closer to the live-impact areas in Yuma, in Egglin, in Pine Castle, Utah Test and Training Range, or any other range? Because in my investigation, we have found that there's 48 other states that have live fire under almost the same conditions, even closer than you have in Vieques. If this training is the most effective training for combat, why would you allow your carrier battle groups and amphibious groups to deploy without it?

Mr. Secretary, have you or Admiral Johnson, or General Shelton, or any other official in the Pentagon met with Attorney General Reno of the Justice Department to request their assistance in evicting or arresting the trespassers on the range? If not, why not? And is it true that the trespassers now control the front gate of Camp Garcia and now block all access to the property except by boat or air? And I may ask the question, what would you do if a similar trespassing was going on in Quantico, or Utah Test and Training Range, or any place else? It worries a lot of us who have gone and fallen on our sword for this military on these test and training ranges -- and believe me, I have -- that now we just kind of look the other way on that. Mr. Secretary, I would appreciate your response.

SEC. DANZIG: Well, thank you for raising these questions. They're questions that I have, as you know, have spent a lot of time with myself over the course of the last year. First of all, I do stand by the statements in that letter, and I appreciate your praise of it. Vieques is a unique training ground. It's uniquely valuable. It's very important to us, if at all possible, to retain it. It offers a kind of training that I don't think that we're going to be able to replace anywhere else in the world. The operational question for us is how do we best proceed, given the intensity of the opposition to the use of the range in Puerto Rico.

You ask whether this is different, or in what ways it's different from other places in the United States. I think your point is entirely correct, that it is not different in the sense that there are a lot of other ranges where there are a lot of places close to the live fire and that Vieques is not unique in that regard. Vieques is in a special circumstance in two respects. One is, unlike most other places in the United States, while we operate the military there and do burden citizens there through our activities, there actually are no benefits for the people of Vieques from that presence.

In other jurisdictions, I find military bases are warmly supported, and you know this quite well. And I ask myself why that occurs there and not in Vieques, and one answer is because we have a military presence in other places. Our military personnel go to the send their children to the schools in that area. They participate in the economy. The attend the churches. They are part of the community. Vieques is an island. We use it as a target. And since the Marines left Camp Garcia in 1979, we do not have a military presence that is a positive force at all on that island.

So, one thing from my standpoint is that it's very valuable to move towards correcting that by engaging us in the economy of the island and doing things like supporting the $40 million the president's program has proposed by way of investment and having the Navy do things like contribute land, provide or participate in training programs, provide emergency services and the like.

The second special thing about Vieques is that the whole issue, as you are well aware, inevitably, I think, became intertwined with issues about Puerto Rico's status. Some people in Puerto Rico see this as an argument for independence, others as an argument for statehood, others as an argument for the status quo. Underlying it is a sense for the people in Vieques that they don't have a vote in Congress and do not have a voice in the outcome. That's different from other American constituencies.

The president's conclusion and my conclusion was that on balance, in order to sustain our operations there, we needed to give them a sense that they had that possibility of participation. Realistically, the Vieques training range is some 50 square miles -- 35 miles of water, 15 miles of land. We need the cooperation of the local citizenry in order to be able to test on those ranges. Anybody coming on that range prevents our ability to train in the way we need to. We need some degree of goodwill and support from that community to make it work, and giving people there some sense of voice and participation is, from my standpoint, an important thing.

I recognize that it puts us in jeopardy, but the question is, how do we best increase the probability that we can move forward, and I genuinely believe this is the way.

Finally, you raised the question have I talked with Attorney General Reno, and what do we do about the protesters. And the answer is yes, I have talked with her. We are working with the Justice Department. And from my standpoint it is important that the rule of law be reasserted in this context and that we resume training on that range for all the reasons you referred to. I've pressed hard for that. I think we've made progress. I'd like to add that from my standpoint it is desirable that any economic support to Puerto Rico of the kind that's involved in that $40 million package be premised on a certification from me or from the secretary of defense that we can in fact use the range. And that money should be made contingent on clearance of the range. I'm hopeful we will reach that point in the time soon ahead.

REP. HANSEN: Thank you, Mr. Chairman. I really feel, however, that the attorney general has let us down a little bit. Thank you.

REP. SPENCE: Mr. Ortiz.

REP. SOLOMON ORTIZ (D-TX): Thank you, Mr. Chairman. I do have a question for Secretary Caldera. But first of all, Mr. Secretary, I want to compliment you and your staff, as most of us know that the Apaches were grounded. They couldn't fly because a lot of problems with it. They went to the outside industry to see how soon they could get them ready, and it was going to take 16 months. But they took them to one of the best Army depots, that just happens to be in my district, Corpus Christi Army Depot, and they were able to do it before the outside industry could get started. I just wanted to compliment you, your staff, and the civilian workers who were able to save a lot of money to the taxpayers, and for us to be able to be on the ready in case it's needed.

MR. : What's the name again?

REP. ORTIZ: It's Corpus Christi Army Depot. I wanted to be sure that he knows where it's at.

SEC. CALDERA: Congressman, we -- and we thank you for your assistance. But the people there worked around the clock, put in a lot of overtime, working weekends and everything, and it was critical to maintaining our readiness and all the other forces that use the Apaches, to getting those back up and running. And so we appreciate all that the workers there did.

REP. ORTIZ: Thank you, Mr. Secretary. It has been brought to my attention that the Army is planning in fiscal year 2002 to initiate a recapitalization program for its CH-47 Chinook and UH-60 Blackhawk helicopter fleets. The recapitalization program is planned to modernize both the air frame and components to greatly extend the service life for these operation and support costs, improve reliability and maintain ability safety, and efficiency and enhanced capability. Considering now that the Army plans to produce -- procure only a small number of new helicopters in fiscal year 2001, it appears most prudent to proceed as soon as possible with the life expansion of these essential assets through the recapitalization program. If the funding resources were available in fiscal year 2001, would the Army accelerate the start of this program?

SEC. CALDERA: Absolutely, Congressman. The Chinook has just been a work horse that has proven its value over and over again all over the world in being able to move men and material and equipment, supply refugee assistance, humanitarian assistance, and so it is a great helicopter. They are getting pretty old, but we expect to have them around for a couple of decades more. And the way that we're going to have them around is by doing these service life extension programs and trying to take them back basically to reset the clock on their life to zero.

And so that is a program that could be accelerated and could be executed if the funding were there for it, and we would do that.

REP. ORTIZ: Thanks again. Thanks for a great job. And I don't have any other questions, Mr. Chairman.

REP. SPENCE: Thank you, Mr. Ortiz.

Mr. Hefley.

REP. HEFLEY: Thank you, Mr. Chairman. Thank you, gentlemen. I think the Pentagon as well as the Congress has finally recognized that we do owe a debt to those who served us in the past, and that we promised them that we would take care of their health care, and we haven't lived up to that like many of us would like for us to do. We made a step in that direction when we passed several years ago this pilot project for subvention. It seems to be going fairly well. I have one of the largest populations of retirees in the country in Colorado Springs, and now they seem to be pretty happy with it, and we are at the point where we need to expand it nationwide. I think the joint chiefs recommended we go from 10 pilot projects sites to 15. I would like to know you how gentlemen feel about expanding it nationwide.

And then I understand that there is a problem that HCFA is not paying you, that that was a part of the doggone formula, and that you are not getting paid for it. If that's the case, what would you like us to do to see that they hold up their end of the bargain, because that took many months of negotiation to get that deal. We got the deal, and it sounds to me like one side of the deal is not living up to it. So if you would comment on those two things, I would appreciate it.

SEC. CALDERA: Congressman, we agree -- I'd certainly agree with you that we need to keep our commitment to our veterans, and it impacts retention and recruitment, because they are talking to young people about their experiences in the military and about our country's owning up to their commitments.

As we have downsized, and we have reduced our presence in installations in many communities, we no longer have the kind of health care presence that we used to have in the past. And so finding things like the Medicare subvention are important. There is an evaluation of this program that is going on now. One of the supplementals is that it was supposed to be cost neutral, and that there is in fact a significant cost. I believe it's about 40 million that we are putting into it to make this work. And so that really is what is of concern to us, because we need to keep those commitments to our veterans. But we also have to be mindful that if you don't control the health care costs you will start -- the costs will grow in a way that will start making it hard for us to meet our other requirements for readiness and modernization and quality of life for our current soldiers.

REP. HEFLEY: Is that 40 million you're putting into it, is that money you should be reimbursed by HCFA?

SEC. CALDERA: That's correct.

SEC. PETERS: Congressman Hefley, I believe you are correct that we have not been reimbursed by HCFA. We also are not being reimbursed, even if we were given at the money at the rates that we need to be -- at which we need to be reimbursed. We are reimbursed at a lower rate than other equivalent providers. In the Air Force, we have retailored the Air Force medical service so that it is nor, or soon will be, a primary care service at the medical treatment facilities. We also of course have some specialty folks not only at Wilford Hall and Air Force hospitals, but also working in community hospitals. Our surgeon general feels that we need to have a more complex program, which I'll provide for the record.

But just a couple of key points. Number one, we do need to be funded at the same levels as other providers. Now, we don't intend to charge for military manpower, but we need to be reimbursed for the other portions. Second, we think that the program clearly does need to be extended in time as well, because it's running out on time -- is a pilot program. Our experience is that it works well. However, it does not recognize the reality that military service -- medical service is also provided in civilian community hospitals near the base. In fact, we often don't have critical care capabilities in the medical treatment facility. We handle that either by contract with civilian providers; or, alternatively, by having military doctors at the local hospital. And that piece of it needs some work just conceptually. Those are the major issues we see.

We also -- you know, also, unfortunately, the medical treatment facility with military doctors is never going to be large enough to deal with the complete retiree population. It isn't scaled for that. And if we were going to scale it for that, we would have to really do a lot more work on what the real requirement is and probably limit space available care, and basically look at retirees as people who have to sign up for the program. Trying to do space available is very difficult on a widespread basis with lots of retirees, because you don't know what your demand is. So we need to work on these issues.

If I may, I will provide a paper that our surgeon general has done for the record which recounts our experience and thoughts about the program.

REP. HEFLEY: (Off mike) -- the spare parts. We put a lot more money into spare parts and all, and I think we have gained on that problem. But it doesn't seem to be filtering down to the Guard. For instance, in Colorado we have 38 Army Guard UH-1s. Of those 38, 4 can fly. In Minnesota they've got a situation where I think one can fly. I understand the necessity to keep the active duty going, but if we are talking about a total force, then you can't have most of your equipment for the Guard and Reserve down. They are not ready to do anything then when the time comes. Would you like to comment on that?

SEC. CALDERA: The UH-1s we are trying to get out of service, out of the fleet eventually, and replace them. There is some going on to try to -- and we will shortly give you the air modernization plan that is due on April 1st for Army helicopter programs, and that plan does provide for being able to have the Reserve components maintain their flying skills by having enough helicopters through some distribution. It doesn't mean repairing every single one of the UH-1s. Some of them will be repaired, some of them by cannibalizing frankly from others, in order to be able for them to keep their skills up to invest in maintaining the amount of UH-1s we can, but to try to deliver the newer models with greater capability as we go through implementing the air modernization.

REP. SPENCE: Thank you.

Mr. Pickett.

REP. PICKETT: Thank you, Mr. Chairman. Secretary Danzig talked several times with Navy representatives about the commercial repair yards in the Hampton Roads area in Virginia, and how they are often confronted by the Navy with a spiking up and down of the work that's available for them. This is a very fundamental and very important industrial base issue. There is, as you know, if the Navy follows through on its plan to put more of the nuclear refueling work into the Navy yard there is going to be a demand for more commercial capability to do the surface ships, the non-nuclear surface ships of the Navy. And at the rate the Navy is going now, you are going to put a lot of these folks out of business before we ever get to that point.

So, number one, I would hope that you would try very hard to do something to smooth out this line that has been spiking up in a way that is totally unanticipated by these small business concerns.

Now, this leads me into the question that I want all three of the members, all three of the secretaries, to answer. And that is I know the supplemental has money in it for all three services, and one of the items that the Navy is requesting in the supplemental is additional ship repair funds. But the supplemental has been kicked around and there's talk now that perhaps it's not going to get out at all, and that you won't have a supplemental this year. Already we are six months into the 2000 fiscal year. I know that every single one of your services has spent money in contingency operations that you didn't intend to spend. You have taken that money out of operations and infrastructure maintenance and other things, where you are not going to be able to use it. And if this supplemental is not passed, you are just going to be put in a much worse position. I would like to know, in addition to you responding to the ship repair issue, Mr. Secretary, how the other two of you gentlemen's services are going to be impacted if this supplemental is not passed.

SEC. DANZIG: Well, perhaps I should go first, Mr. Pickett. Your point is well taken, and the connection to the supplemental is quite appropriate. We estimate that in round numbers the Navy maintenance budgets on the East Coast are about $400 million, and on the West Coast about $400 million, and that unexpected contingencies are really driving the demand more toward the $500 million level on each coast. We are opening up ships and finding repair requirements that were greater than we had anticipated. We are finding that there was a grounding and an injury to a ship that gives us unexpected costs.

To the degree that the supplemental can correct that, we are going to realize efficiencies and increase the readiness of the Navy. To the degree it doesn't, we are going to wind up having to impose costs not only in future years but also generate delays and a lot of difficulties and frustrations for sailors.

And, in addition, there is a point you make about the uneven workloads. And it is the practical reality, as you say, that we look first in the Navy to supplying work to the public yards whose operations we guarantee in terms of the work and the like, and that that causes fluctuation in the private yards. So the supplemental is very helpful.

I would point out as well that there is some $1.6 billion in there for DOD for rising fuel costs. If those fuel costs, which are fact-of-life changes, are not dealt with in that context, we are going to wind up having to raid our O&M budgets yet further, and that will create more disruption. So I would very much like to see the supplemental get through as fast as possible.

SEC. CALDERA: Congressman, for the Army, $1.5 billion of the supplemental is to pay for the Kosovo mission. And it's critical that we get full reimbursement as early as possible. We are extending our O&M funds today to support that mission. We will run out of those funds by July without the supplemental. In Europe they will run out of those funds by June.

So, and of course in order to avoid being in the position where we cannot support the Kosovo mission, or being in an anti-deficiency situation at the end of the year, we would have to start cutting back on training, cutting back on training rotations at the National Training Center, furloughing civilian employees. I mean, we would have to do those things to get our budget back in line with the money that was appropriated for us to operate with. So it's both a question of full reimbursement and of timely reimbursement, because those decisions will have to be made. If we don't see that reimbursement is coming, we will have to start taking those actions. If you don't take actions early, you are left with only much more draconian measures later as you have fewer options about how to accumulate the savings you need to to live within your budget.

SEC. PETERS: Congressman Pickett, we have I think about $100 million of operational funds which we would obviously like to have. Let me second what Secretary Danzig said. The fuel cost adjustments in the supplemental -- and also there is a medical cost piece in the supplemental -- are really critical overall. The medical costs -- there are large claims against Tricare. What those will settle out for is unclear. It is clear they have some value. And there are funds in the supplemental now to try to pay for those medical costs, which are obviously essential for us. We need to fund medical care.

That is now for the Air Force probably the number one area which our young men and women cite as a reason they may want to leave the Air Force. I think they feel good about pay and retirement, and they are beginning to feel better about op tempo; but medical care is still a major problem. And obviously if fuel costs continue to go up, they will ultimately constrain our ability to do the blocking and tackling work we have got to do in training. And we need to get those in there as well.

REP. PICKETT: Thank you very much. Thank you, Mr. Chairman.

REP. SPENCE: Thank you. Mr. Buyer.

REP. BUYER: Thank you, Mr. Chairman. I've got two housekeeping measures. One, with regard to Mr. Sisisky's question earlier about the Junior ROTC. The 3,500 limit is not DOD. It is statutory. It was done by us. And my present sense is -- I have the letter by you, Mr. Sisisky, and also one by Mr. Kuykendall, and I am familiar with the concerns with the United States Marine Corps. What I would submit, gentlemen, is that rather than for me to raise a cap, I would suggest that I draft language that directs the secretary of Defense to review and redistribute the current service Junior ROTC allocations between fiscal years 2001 to 2006. I would view it, if one of you -- Secretary Danzig, if the Marine Corps had the present number -- if they're at 170, and their cap is 210, and they want to move everyone off the waiting list, which means they have to bust the cap, and they are willing to fund that, then the DOD ought to give you permission to do that, rather than me do something over here. So I am going to work on language to direct the DOD to make redistributions among these different allocations based on what each of you want to do with your particular service. I think that would be the best way, Mr. Sisisky, to handle that. If they are willing to fund it, willing to do it, then we'll make that directive to DOD. Will that satisfy the gentlemen?

I -- and with each of the secretaries? Is that all right with each of you?

SEC. PETERS: (?) Thank you, I think it's a good idea.

SEC. CALDERA: Thank you. Congressman, the only thing I would note is we are on track and we have committed the funding to hit our cap. And I believe that is what I heard the other services say. So at this time I don't believe there is any -- to redistribute, because we are all intending to fully fund all programs that --

REP. BUYER: Yeah, but the Marine Corps want to go beyond their cap. And if the secretary of Navy wants to do that, then DOD ought to set a new level.

Let's -- the other issue that Mr. Hefley had brought up about Medicare subvention, I'd say, gentlemen, you are absolutely correct: it is costing DOD about $2,000 per beneficiary, and it's a good thing we did this as a pilot program. Dr. Bailey testified here last week that she is in negotiations with HCFA on a new number. But to say that we should immediately then move to a nationwide expansion of Medicare subvention is not the favored winds at this point.

I would ask Secretary Caldera this question, because I am -- I want you to convince me that I am wrong. That's my supplemental to you, okay? Because my present sense is that the Army, the active Army, is not taking care of the Army Reserve when it comes to its recruiting. So the Army Reserve missed its recruiting objective by -- of 52,084 by 10,302, which is 19.8 percent for fiscal year 1999. And they are projecting to be about 5,000 short for 2000. And my sense is whether I should remove the recruiting for the Army Reserve away from the active Army and create the Army Reserve to have its own recruiting function. So I am interested in your opinion on that, and to convince me that that is not necessarily a good idea.

And, last, Secretary Danzig, let me join in the chorus of those of whom have great concern with regard to Vieques. I also compliment your letter. But I also would like for you to define for the committee -- when they talk about "resume training," what does that mean? Inert? Or do you mean live fire? Because those of whom I speak to, it's all about live fire. The coordination of everything on a particular target at a moment in time when it's live, not inert. And so I am curious about -- for you to define for us.

I am also deeply concerned about the precedent that will be set for other ranges where our troops train with live fire, and do other operations that may not always be popular with a given community around the country and our territories. I am also particularly and extremely concerned about our operations in Okinawa as an example. I think the idea of giving the people the right to a binding referendum on these kinds of questions as a result of civil disobedience is completely the wrong way to go.

I will use the Air Force as an example. We have a very good relationship with the Tohono O'odham Indian Tribe in Arizona. But let's just use this as an example. The Barry M. Goldwater Range sits in the middle of an Indian reservation. If they said that they wanted to take their sacred lands back and exercise civil disobedience to do so, now you're in negotiations with a sovereign nation.

And they could lay on the same claim. "You're bonding our scared grounds, yet we're not deriving a special benefit from it." And when you lay out $40 million to people, in fact, you're in -- a what? They now want monies? And you could do it one after another after another after another.

So the precedent is very concerning to us. So when you say "no benefits," freedom and liberty is real. Thank you, gentlemen.

SEC. CALDERA: Congressman Buyer, the Reserve components are very important to the total Army. Fifty-four percent of our force structure is in Reserves. We are utilizing them in Bosnia and Kosovo, throughout the world. We couldn't accomplish our mission without them. So Reserve recruiting is critical to the total Army.

The kinds of challenges that we had with recruiting last year are being met this year. That is, we are in much better shape in terms of meeting our accession goals for this year even though they are higher, and we have taken some of the steps that I think will yield the right results for us in the future.

We're adopting best business practices in how we do research into young people's needs and attitudes, how we convert that into the right message to express to them the kinds of opportunities there are for service and education and training in the wonderful experience of serving in the Army.

And I believe that is going to pay great dividends. And within that whole concept of adopting best business practices, there is a specific focus and accountability for the Reserve component of that recruitment. We're also encouraging the Reserves to do more within the unit effort to reach out and recruit locally, because that is where they have to get their members -- from their local areas.

And certain of our recruiting stations have goals that are specifically focused more on Reserve recruiting than they are on active recruiting in areas where we have a large number of Reservists. For example, in Sacramento.

So I think that we are doing the kinds of things that will help us meet our recruiting challenges, not just for the active component but for the Reserve components as well. I think that we are starting to prove those out. Today we've made all our goals for recruiting for every month that we have results in for so far this year. We're guardedly optimistic about what the final numbers for the year will be. And I think this will inure to the benefit of the active and Reserve components equally.

SEC. DANZIG: On the subject of Vieques, Mr. Buyer, you've asked two questions. One is what do we mean by training, in terms of the certification. You're quite correct in pointing to the difference between inert and live fire. We greatly value live fire and value the inert less so -- substantially less so.

Still the understanding is that the certification that would be required would be simply for inert fire. And live fire would not be expected to be reinstituted prior to a referendum on that point. The reason that we'd value that is twofold -- the inert in the interim. One is the actual utility of the inert.

Second is simply the resumption of the use of the range and establishing the rhythms of cooperation and a relationship there that enhanced the probability that in a referendum, which could occur as soon as nearly immediately under any conditions within nine months of May 1 of next year, we should be able to arrive at some greater probability that we can get back to live fire, which is what we really would value especially.

The second part of your question is: Aren't we really conceding to civil disobedience here and what kind of precedent does that set? I don't feel that, in any respect, our actions here are being driven by the acts of civil disobedience and the presence of protesters on the land.

It's a complicating factor, but we have never negotiated with those people or accommodated our actions on some theory about what would be persuasive to them. In the end, as earlier discussion/dialogue here with Mr. Hansen suggests, it's likely that that's a law enforcement action, not an action relating to these main understandings.

The understandings that we have developed are not with protesters. They're with the government of Puerto Rico. And it is the participation and support of the lawful authorities there in this process that I think is so important. If incidents like this occurred elsewhere, I think residents of the kind you point to would express themselves through your offices or through others, and there would be a vital kind of role here through you.

We need to achieve that with the government of Puerto Rico. I think through the understandings we've described we have achieved that. And I don't feel in this matter that the protesters really are the central issue, by any means.

REP. SPENCE: Now to get down for us to break for this next vote, and we'll be right back.

(Recess.)

REP. SPENCE: (Gavel.) The committee will please be in order. Mr. Taylor.

REP. GENE TAYLOR (D-MS): Thank you, Mr. Chairman. I want to thank you three gentlemen for being with us today. Secretary Danzig, I'll start with you. It is my understanding that the plan on DDG-21 is slipping a little bit. I know from a publication that your office sent me just this week that the nation saves a good deal of money by having a multi-year procurement of the DDGs -- the existing group.

I was wondering and hoping that you would take a look at putting together a -- but as you know, that multi-year procurement ends with this year's budget cycle. I was hoping that you would take a look at one more multi-year, keeping in mind that we're not going to get into the DDG-21s as soon as we'd hoped and hopefully going for a volume by once again that would ensure that we have a hot production line all the way through the end of the DDGs to the DDG-21 and hopefully save some money and putting some great ships in the fleet at the same time.

Secretary Caldera, this is going to be totally out of character for me. I'm normally going to bat for the little guys. But it has come to my attention through several publications that I read that the little guys are upset that Major General Grange (ph) is going to be -- has been reduced one star in rank in his retirement. And I would certainly hope that you would take a look at a waiver in his case. He certainly seems to -- from what I have read, I don't recall ever meeting him, but from what I read, he certainly seems to have deserved to retire a major general.

All three of you -- I'm going to ask a question. As you know, going back to 1956, the Congress enacted the Department of Defense Medical Care Act, which provided health-care benefits to military retirees and their dependents, contingent upon the availability of space in military facilities. In 1966, they passed what became CHAMPAS -- that members could use until age 65, at which time they were required to enroll in Medicare. There is a program out there that would allow Medicare-eligible retirees to use the base hospitals, which, in my opinion, is what enlistees were promised 20, 30, 40 years ago. It was lifetime health care for themselves and their dependents at a military care facility.

I know that's what it was in 1971, when I enlisted. So I've got to believe that retirees we're dealing with now weren't told anything different.

As you know, there has been some debate as to whether or not you're being fairly compensated. So I would like you to provide to me the language that it would take for HCFA to compensate the base hospitals properly. But I'd also like you to take a look at a bill that has been drafted by Congressmen Skelton, Abercrombie and myself: H.R. 3655, which would fulfill that promise of lifetime health care at a base hospital and have Medicare pay the base hospitals for providing that health care.

I think the important thing there is it keeps the promise that was made but it also does so in a way that does not come at the expense of the DoD budget. It would come at the Medicare budget. And therefore, that would probably provide an addition of $2 billion worth of health care for everyone in uniform without sacrificing procurement or readiness or any of the other programs, all of which are underfunded.

It is my hope that that or something like that is included in the chairman's mark. But I can say with absolute certainty that if that is not included in the chairman's mark, it will be offered as an amendment before the full committee. I would certainly like to have you gentlemen endorsing that move.

I know the budget deal was signed and the parties who signed that are supposed to live by it. But as you know, my Republican colleagues have a tax break du jour to take care of some fat cat du jour. And as we speak, the guys on the Ways and Means committee are finding the last fat cat in America who hasn't gotten a tax break. And quite frankly, I'd rather take care of our nation's defense. So if they can break the budget deal to take care of the fat cats, I think we ought to be able to break the budget deal to take care of the lifetime health-care commitment that was made to our military retirees, regardless of the cost. And I would like to have you gentlemen helping in that effort. So I will ask for your thoughts on those lines.

And Secretary Danzig, I would also like to meet with you on Vieques, because I have -- I understand everything that you've said. But I think this is special. I don't think the Navy ought to give up one square inch of land. We do have to be a much better neighbor, and I know you're capable of doing that, and I'd hope you'd take the time to come visit with me, because I have some thoughts on how we can do that.

SEC. DANZIG: Well, perhaps I could start first on Vieques. I'd be delighted to talk with you. I'm aware of your own visits to Vieques and your deep involvement in this issue. And I thank you for it and I'd be glad to talk more about it and take advantage of your insights with regard to it.

On the question of the DDGs and the multi-year procurement that you raised, we are requesting a revision to the multi-year language that would enable us to do a multi-year procurement for DDG-51s in the program years beyond this budget year. And from my standpoint, that is a potentially very attractive route to go, in terms of both providing insurance to the industrial base that I know you value, and also achieving economies that we normally obtain from multi-year procurements, which I know you also value and obviously so do I. So I think that's a very attractive route.

It's very important to us to transition to the DD-21. It's a program that I'm ardently supportive of. And I view it as a program that gives us rewards that nicely complement those we've gotten from the DDG-51 program. But to transition to the DD-21, we need to do exactly what you said, which is buy DDG-51s, and multi- year procurement will help us do that.

SEC. CALDERA: Congressman, just first of all, just on General Grange (ph), I'd like to come talk to you about the thinking behind that decision. When General Grange (ph) retired before completing three years' time in grade after his division command, he knew that by retiring before reaching three years' time in grade, that he would not be eligible to retire as a two-star without a waiver. And he turned down a very prestigious job on Chairman Shelton's staff to be a member of the Joint Staff, which would have allowed him to meet the time-in- grade requirement. So I want to be able to come talk to you about that situation.

With respect -- I appreciate your concern that our country ought to own up to its promises to our veterans, and I share that belief. Our concern with the Medicare subvention program has been related to the cost because the pharmacy benefit is included as a normal part of how we operate our insulation hospitals and our no co-pays, et cetera. That is part of what has led to the cost differential and the costs that we're absorbing in a pilot project of about $40 million a year.

And so that is what is making it difficult for us to embrace expanding this program, because of the cost implications in the number of veterans who are out there. But I think we do need to look at how we can meet that commitment that we met -- that our country made.

SEC. PETERS: Congressman, we in the Air Force are also very supportive of the idea of the -- expanding Medicare subvention. I'd like to send you a paper from RSG that explains not only some of the cost issues but some of the structural issues which need to be resolved to make that an effective program. So I'll send that up to you.

REP. TAYLOR: Mr. Chairman, Mr. Secretary, I know my time is out. I would like to hear your thoughts on possibly, since you have a fuel problem, for the services tapping the Strategic Petroleum Reserve just to take care of the military while the price is very high. Get back to me when you can.

REP. SPENCE: The gentleman from Alabama, Mr. Everett, is recognized.

REP. TERRY EVERETT (R-AL): Thank you, Mr. Chairman. Thank you, gentlemen, for being here today. I don't know a single member of the House Armed Services Committee or this Congress that isn't interested in keeping the promise we made as far as health care is concerned to our veterans.

It is unfortunate -- and to our military active and retirees - - it is unfortunate. It shouldn't be a partisan issue. And it's unfortunate from time to time there are those who will grandstand under the pretense of helping our military retirees and active duty and veterans, and yet they're pushing for some agenda.

Having said that, and it is particularly disturbing when this administration has consistently underfunded the Department of Defense. I think this Congress has since I've been here -- or since '94 -- has added about $48 billion back above the administration's requests.

Having said that, let me get to some issues I have. Secretary Caldera, two weeks ago, Lieutenant General Kern (ph) testified before a joint subcommittee here on "Army Transformation and Modernization Plans." And I live five miles from the gate of Fort Rooker. I live five miles from the gate of Fort Rooker. Obviously, I'm interested in Army aviation. I was pleased to hear him say that aviation is still the centerpiece of the Army's combined armed forces. Mr. Secretary, is that your position as well? And is the Comanche helicopter still your number one acquisition priority?

SEC. CALDERA: The helicopters are a very important part of our capabilities, and Comanche is going to be the quarterback of the digital battlefield. So it provides us an attack reconnaissance capability that we have not had. That is our number one need in terms of modernization.

We're going to provide to you, to the Congress, our Army air modernization plan that is due to you by April 1 that lays out what it is that we are trying to do, both in terms of production of Comanche as well as taking the Hueys that are Vietnam-era helicopters out of the force, replacing them with the Apaches and upgrading those, eventually taking the Kiowas out of the force as well. Those are important capabilities for the Army combined arms as a team that supports the maneuver elements. So they are a critical part of how the Army fights.

REP. EVERETT: Mr. Secretary, I think my question was, is the Comanche still your number one acquisition priority?

SEC. CALDERA: It is our number one unmet need, our number one acquisition priority. We do have in the budget this year, as you know, money dedicated toward transformation. That is critical for giving the nation greater capabilities and a lighter, more deployable, more lethal force. And so the money that we have committed to transformation is a critical part of how we will change the Army for the future to meet the threats that the nation will face in coming decades.

And that, of course, is also critical for us to keep the transformation funding on-line. We did that largely by reprioritizing a billion dollars within the Army's budget, and we made some tough program decisions. We've not touched the Comanche program in terms of looking at it as a way of keeping transformation on track.

REP. EVERETT: Let me go a little further in something that was mentioned by both the chairman and later by you. The Army really will get about $9.4 billion of the $60 billion for modernization, and that's a decrease of about 40 percent over the last 10 years. Even if you adjust, as you point out in your testimony, for a smaller Army, we're still spending $5,000 less per soldier than we did in the previous decade.

Let me ask you to look into that crystal ball that is always pretty foggy for all of us, but let's clear up the crystal ball a little bit. Let's assume that neither the Congress nor the administration breaks this cycle of low funding for the Army and that that continues over the next 10 years. Tell me what, at the end of that 10 years, tell me what kind of Army we'll be looking at as far as modernization will be concerned.

SEC. CALDERA: Well, I will be very candid with you. The Army cannot replace its equipment today on the procurement budget that we have. It is less than $10 billion of the $60 billion that DOD will commit to modernization this year. We don't have a (metric?) like the Navy does -- 300 ships, build rate, et cetera. And frankly, we need to find a metric like that, because when you get to the fight, taking and holding terrain is about being on the ground.

Defending terrain is about being on the ground, and it is soldiers who ultimately suffer the highest casualties, the ones who have to face the enemy eyeball to eyeball. And they need to have their equipment modernized just as much as the pilots do or the sailors do, and we're not doing it. And we don't have an easy metric that tells you if you're adequately replacing your tanks, your fighting vehicles, your helicopters. And we can't do it within the budget that we have today.

We get the smallest share of DOD's money as a service, and because we're a people-intensive service, we have the highest personnel cost, operating and maintenance cost, as a percentage of our budget. And that's why we have such little left over to try to recapitalize the force.

All of -- it is something that I'm trying to get my hands around, because I think it goes farther than just this administration. I think it is a historical anomaly in the way that we have allocated our defense dollars. Today's soldiers are the ones who are doing the engagement mission, boots on the ground all over the world. They are a tremendously important conventional force for our nation. It is not less expensive to replace their commitment.

We're trying to leverage technology just as much as the other services. We have as much technology in an M1-A1 Abrams tank as you do in an F-16. And so if you're going to leverage technology for the benefit of the soldier, to give the one who has to sit down there and hunt the enemy down and kill them, if you're going to give him the protection and the tools that he deserves to have to fight our nation's wars, then you've got to replace and modernize his equipment. And we're simply not doing that today.

REP. EVERETT: My time is up. Let me just say I was pleased to hear all your comments on the Junior ROTC. And Mr. Peters, since Montgomery is in my district, I hope you will keep me informed on the current status of the CAP and the regular organization that we've undergone there and Air Force's response. Please submit that for the record. We've got a vote coming on. Thank you very much.

REP. SPENCE: The gentleman from Pennsylvania, Mr. Pitts, is next. Joe, do you want to try to squeeze your question in, or do you want to come back? We may be --

REP. JOSEPH PITTS (R-PA): Squeeze it in.

REP. SPENCE: You're recognized.

REP. PITTS: Of all the aircraft that were involved in Operation Allied Force, the EA-6B was most heavily tasked, and perhaps one of the most important to ensuring the success of U.S. and NATO strike aircraft. Secretary Danzig, the budget request funding is to add an additional squadron. That's good news. But I have a couple of concerns.

One concern is about mission capability of our current inventory. Today, according to reports, approximately 42 Prowlers out of an inventory of about 124, I believe, are out of service. And the plan is to have an operational inventory, I believe, of 104. What specific efforts are being made and will be made to get our operational inventory up to 104?

And another part, aspect of this: Press reports indicate the rate of aircraft cannibalization in the Navy has doubled since 1995. For the EA-6B, the cannibalization rate has jumped from 11 per 100 flight hours in '95 to 24.4 in '99. And how accurate are those reports, and how does our 2001 budget address these negative trends?

REP. SPENCE: Mr. Secretary, before you answer that, we've got about six minutes. We're trying to squeeze two people in, if you could abbreviate. Thank you, sir.

SEC. DANZIG: I will. Or if you'd prefer, sir, you can have the other questions asked and I can come back to this after all and submit it.

REP. SPENCE: Well, that's up -- Mr. Pitts deserves an answer now if you want to give it. I'm just trying to expedite. We have one more gentleman who wants to ask a question.

SEC. DANZIG: Okay. Well, let me say very briefly, Mr. Pitts, I appreciate your concern here. We will get to 104 aircraft in terms of actual operations. The maintenance of our EA-6Bs is something that we are very focused on. Equally important is the agreement on a follow- on aircraft so we can replace it. One of the reasons that cannibalizations occur increasingly is because we're dealing with an old aircraft that is no longer in production, and we need realistically to move to the new aircraft to deal with that.

I can speak for the record with respect to the precise cannibalization numbers that you have, and I'd be happy to correspond with you on that. I think we are getting, though, to a notably stronger EA-6B force as we add this squadron and get to 104 operating aircraft.

REP. PITTS: And Mr. Chairman, I had another question. Maybe they can respond in writing. Secretary Peters, generally, where does electronic warfare fit into the Air Force transition to the expeditionary force? And how does the budget reflect that?

SEC. PETERS: I can get you that for the record.

REP. SPENCE: Thank you, Mr. Secretary. The gentleman from Arkansas, Dr. Snyder, is recognized.

REP. VIC SNYDER (D-AR): Thank you, Mr. Chairman. Thank you, Mr. Pitts. Secretary Peters, I wanted to ask you a question if I could. I thought at first it was just a local question, but I'm now starting to get some hints from some others that it may be a more regional or national problem with regard to Tri-Care. And I've been hearing from some providers who have gone through a lot of problems over the last several years with Tri-Care anyway and now are having some problems in their negotiation with Foundation Health, which is a Tri-Care provider in region six.

And two issues: Issue number one is, in their dealings, Tri-Care is kind of playing the -- or Foundation Health is playing the doctors versus the hospitals. Specifically, the hospital contract runs out in June of this year. And Foundation is telling the hospital in the town of Jacksonville they will not renew that contract unless the doctors, whose contract isn't up for renegotiation until October of '01, unless they agree to have their contract opened up and renegotiated now.

Point two is, in the course of that, the reason they're doing that is they want to only reimburse the doctors 80 or 85 percent of what Medicare pays. You know, Tri-Care is a big pain for providers anyway, and we try to keep as many options as we can for our personnel and retirees when they're dealing with Tri-Care in terms of choice of providers. But we've just gone through about a three-year ordeal in this Congress about are Medicare reimbursements too low, and now it appears that our contract for providing military health care is trying to get providers to take four-fifths of what a lot of people think has been too low for Medicare. Is this just a local problem, or is this more of a national problem? And what are we going to do about it?

SEC. PETERS: I don't know about the negotiating issue, but the general problem of low pay for certain services under Tri-Care is, in fact, a very significant problem, particularly in the Air Force. In the OB-GYN area, we have a number of OB-GYN providers who have abandoned the program because of low payment rates. And, of course, that's probably the most important medical service that many of our young men and women need. So it is a problem and is one that is in the focus of the Defense Medical Oversight Committee, which is the service undersecretaries and vice chiefs. And we've been working with OSD health affairs and Tri-Care management agency to try to get those adjusted to what they need to be to provide the care.

I'll get back to you on the hospital issue. I don't know the answer on that one.

REP. SNYDER: Is the provider -- is it a regional problem or is this a national problem?

SEC. PETERS: It's very much a national problem.

REP. SNYDER: Thank you, Mr. Chairman, for your indulgence.

REP. SPENCE: Thank you. Any concluding comments, gentlemen? We have four minutes to make a vote. (Laughs.) If not, the meeting stands adjourned.

END

LOAD-DATE: March 23, 2000

Document 99 of 203.


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