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                                                                             STATEMENT OF

MR. WILLIAM J. WALLENHORST

UNITED STATES MARINE CORPS

FISCAL DIRECTOR, UNITED STATES MARINE 

CORPS

11 JULY 01

CONCERNING READINESS

INTRODUCTION

Chairman Weldon, Congressman Ortiz, and distinguished members of the Committee, it is my privilege to report on the state of the Marine Corps' Fiscal Year 2002 budget request, particularly as it relates to readiness. I would like to begin by thanking the Committee for its continued support. Your efforts reveal not only a commitment to ensuring the common defense, but also a genuine concern for the welfare of Marines and their families. This Committee has been instrumental in supporting our budget requests and in providing much-needed enhancements to our budgets over the last several years. You have provided increases in areas such as military pay and entitlements; maintenance of aging equipment, replenishment/replacement stocks for Maritime Prepositioning Ships, depot maintenance, individual combat equipment, and other operating forces support; as well as procurement of ammunition. As a result of your support, we have enhanced the quality of life of our Marines, improved the condition of our aging equipment, and provided the latest available gear to our operating forces. This support has been critical to our continued near-term readiness. We are most grateful.

THE FOUR PILLARS OF READINESS

            The Marine Corps assesses readiness in terms of "four pillars:" Marines and their families, legacy systems, infrastructure, and modernization. The first two pillars - Marines and their families and our legacy systems - are most closely associated with near-term readiness; while infrastructure and equipment modernization are typically linked to future, or long-term readiness.

Properly balancing our resources across these four pillars is essential to ensure the Marine Corps remains ready, relevant, and capable. The Marine Corps always has and will continue to fund near-term readiness first. Unfortunately, as the Commandant and the Assistant Commandant have testified many times, dramatically increased operational requirements coupled with constrained toplines over the last several years have forced us to fund near-term readiness at the expense of our future, or long-term readiness - investment in our infrastructure and equipment modernization. The Fiscal Year 2002 budget funds our near-term readiness requirements and allows us to begin to address one of our "bill-payers" - our infrastructure. However, adjustments to modernization funding have been deferred to FY 2003 and out, pending the results of the ongoing Quadrennial Defense Review.      

The Administration provided additional funding in this budget for military pay and entitlements, health care benefits, flying hours, utilities at our bases and stations, depot maintenance, strategic lift, essential base operating support costs, and force protection requirements. In addition to these near-term readiness requirements, the Administration provided increased funding for one of our most underfunded areas - our infrastructure. Additional funds provided in this budget allow us to begin to address badly needed family housing requirements at Camp Pendleton, California, and bachelor enlisted quarters at various locations. Additionally, funding added to our military construction account allows us to reduce our FY 2002 replacement cycle to between 60 and 70 years. While these increases allow us to begin to address one of our most critical problem areas - our infrastructure - we remain concerned about sustaining that level of investment and accelerating the pace of equipment modernization. Following is our assessment of each Marine Corps Pillar of Readiness.

MARINES AND THEIR FAMILIES

Marines and their families -- our foremost pillar of readiness -- are grateful for the Committee's and the Administration's work to support our programs, improve health care, and provide increased compensation for their service. The Marine Corps has met its recruiting goals for six years, and is successful because of your help and the hard work of our dedicated recruiting force. Marine Corps recruiters make the crucial difference in today's increasingly challenging recruiting environment - a population marked by a low propensity to enlist in military service, a competitive economy, increasing college enrollment, and generational differences. With your continued help and the devotion of our recruiters, the Marine Corps will continue to attract quality young men and women to fill its ranks.

Retention is on track thanks in part, to the pay raises and incentives previously authorized by this Committee. To date the Corps has reenlisted 97.3% of the First Term Alignment Program goal for this fiscal year. More junior officers are electing to remain beyond their initial obligation, and the Marine Corps is achieving its enlisted retention goals. The Marine Corps continues to closely monitor retention issues and concerns, particularly in some of the harder to retain technical Military Occupational Specialties (MOSs) such as, intelligence, data communications, and air command and control technicians. While overall officer retention remains stable, the Corps continues to experience higher than average attrition in some skill areas among mid-grade officers, to include administration, command and control, intelligence, combat engineers and public affairs; and it remains guardedly optimistic about its stabilized fixed wing aviation attrition. Enlisted career force requirements, particularly mid-grade noncommissioned officers, present the Marine Corps' greatest retention challenges. The Selective Reenlistment Bonus Program (SRB) has been the single most powerful tool to influence enlisted retention behavior and meet MOS retention challenges. The increases the Administration provided in this budget for the SRB Program and the targeted pay raise initiative will go a long way toward assisting in meeting Marine Corps recruiting and retention goals and helping take care of Marines and their families.     

While Marines and their families have benefited from recent increases in pay and allowances, the increasing costs of the basics, such as rent, utilities and fuel, require continued annual increases in pay and Basic Allowance for Housing to ensure Marines maintain an acceptable quality of life. Further, we need to provide and maintain those essential support systems that benefit and protect Marines and their families; especially accessible, responsive health care. We are extremely thankful to the Congress, Mr. Chairman, for the recent enactment of much-needed improvements to the TRICARE system for our active duty personnel and for our retired veterans. And we are thankful to the Administration for providing increased funding for improvements in this area. We expect these improvements to make a significant difference in retention and morale.

Another issue affecting the first pillar of readiness is the Quadrennial Defense Review (QDR). Although the last QDR led to tangible improvements, it also resulted in a reduction in Marine Corps end strength that essentially removed the warfighting "shock absorber". As a result, there remains little flexibility in meeting the personnel demands inherent in a robust operational tempo. In order to improve near-term readiness, the Marine Corps has made significant internal adjustments over the past two years. Through reduction in attrition of first-term Marines, internal management efficiencies, outsourcing, and privatization, the Marine Corps will eventually return approximately 4,000 Marines to the operating forces. The Corps is also utilizing numerous better business practices to make its operations both efficient and effective and it now has the largest Activity-Based Costing/Management program in the Department of Defense.

The readiness impacts of the personnel tempo legislation contained in the FY 2001 National Defense Authorization Act run counter to the Corps' rotationally deployed, expeditionary ethos as well as our limited budget. Marines are deployers by nature; men and women join the Marine Corps to see the world and the Marine Corps does not disappoint them. The Corps' successful recruiting and retention efforts bear testament to the viability of its service culture. Marine Corps forward-deployed crisis response forces and security forces, the units we need most ready to engage the threats to our national security, are the ones this legislation will have the greatest negative impact upon. Although the personnel tempo legislation may be appropriate for the other services, its present construct does not comport with the Corps' culture and missions and is likely in the long run to have a profoundly deleterious effect on cohesion and on the Corps' ability to conduct operations and training.

OUR LEGACY SYSTEMS

            Our second pillar, legacy systems, is key to near-term readiness. This pillar represents the equipment, aircraft, and weapons systems currently in the inventory of the MAGTFs. Although the ground equipment readiness rates of Marine Corps operating forces and prepositioned assets remain relatively high, most of the primary equipment and weapons systems in our command element, ground combat element, and combat service support element have reached or exceeded their programmed service lives. As the Commandant and the Assistant Commandant have previously testified, the Marine Corps is facing block obsolescence in its major legacy systems. The cost to maintain these systems, in terms of both dollars and man-hours, continues to climb. We have taken maximum advantage of Service Life Extension Programs, which marginally improve our legacy systems, but these programs cannot fulfill the Corps' modernization needs. Our reliance on aging equipment negatively impacts our capabilities. The countless hours of maintenance required to keep these systems operating safely, directly impacts the quality of life of Marines and allows less time for their training. We can no longer afford to delay the modernization of our force.

The situation is the same in the aviation combat element. Many of our aircraft are approaching block obsolescence. In fact, the majority of Marine Corps primary rotary-wing airframes are over twenty-five years old. The majority of our key aviation equipment is older than the Marines who use it. Our KC-130Fs are 19 years past planned retirement. When our first KC-130F rolled off the assembly line, President Kennedy was beginning his first year as the Commander-in-Chief, thus underscoring the importance of the KC-130J. Our CH-46Es and CH-53Ds are more than thirty years old, and the average age of our CH-53Es is 12 years. Some of our younger pilots are flying the exact same aircraft that their fathers flew.

Continued aviation modernization is a critical path that should be accelerated at every opportunity. Currently, we are seeing an associated decrease in the reliability and maintainability of aircraft components. Recent studies demonstrate that demands for aviation spares are increasing as our aviation fleet ages. The challenges associated with unanticipated parts failures on older aircraft, diminishing manufacturing sources, and long delays in delivery of these parts all place demands on readiness. While recent increases provided by the Administration for Program Related Engineering and Program Related Logistics (PRE/PRL) are extremely helpful, only modernization programs will ultimately relieve the strain being placed on these older airframes.

In addition to ground and aviation equipment concerns, today's Navy-Marine Corps team relies on amphibious ships that are reaching the end of their service lives. The Marine Corps' amphibious lift requirement is well defined. We require ships to meet forward presence requirements while maintaining the flexibility to surge additional forces for the uncertain crises of the future. Although our amphibious lift requirement is for sufficient ships to lift 3 MEB Assault Echelon (AE) equivalents, fiscal constraints have resulted in plans which limit the programmed amphibious force to 2.5 MEB AE equivalents, a total of 36 ships (or 12 Amphibious Ready Groups). This requirement is presently sustained with a combination of active and reserve Navy ships and inactive ships maintained in the Amphibious Lift Enhancement Plan (ALEP). Our 2.5 MEB (AE) lift requirement can be achieved by active Navy amphibious ships upon the delivery of the twelfth LPD-17 class amphibious ship. Currently, the Navy is planning a future amphibious force of 12 big deck ships (a mix of aging LHAs and newer LHDs), 12 newer LSD 41/49s and, with your continued support, the 12 LPD-17 San Antonio Class ships. We remain concerned about schedule slippage in the LPD-17 program.

Another critical component of Marine Corps strategic lift capability is the Maritime Prepositioning Force (MPF), which provides the Unified Commanders thousands of C-17 sortie equivalents of combat equipment and sustainment already forward located in their areas of responsibility. However, the MPF ship leases will expire in FY 2009 and FY 2011 and we will need National Defense Sealift resources to replace these cost-effective and proven strategic assets with MPF Future ships. Because the U.S. has never been able to rely exclusively on forward basing or overseas access as means of positioning forces, and with base access increasingly problematic, Naval forces must continue to provide robust assured access with forward presence and the projection of power and influence from the sea. Our future operational concepts envision use of the sea as maneuver space and as a sanctuary to base long range, precision Naval fires, force assembly, maintenance, and resupply base in future operations. MPF Future will be a key enabler of the sea-based logistics operations necessary to support expeditionary maneuver warfare, providing support for forces already forward-deployed or deploying in amphibious ships as well as rapid response with tailorable and scalable stocks for crises.

INFRASTRUCTURE

Our third readiness pillar, infrastructure, is so significant to the Marine Corps' overall readiness that the Commandant refers to it as the Fifth Element of the MAGTF. Marine Corps bases and stations are the platforms from which the Corps projects expeditionary power by deploying and sustaining MAGTFs. They are the platforms for developing, training, and maintaining Marines, and they serve as the centerpiece for Marine Corps quality of life programs.

We have a long-range plan that will guide the strategy for our infrastructure through the year 2020. Our intent is to have an infrastructure that minimizes redundancy, maximizes efficiency, is cost-effective, environmentally sound, and capable of supporting the weapons systems and operational concepts we are developing. Along with equipment modernization, however, infrastructure (Military Construction, Maintenance of Real Property, and Family Housing) has long been a bill-payer for near-term readiness.   

Thirty-five percent of Marine Corps infrastructure is over 50 years old. Our supporting infrastructure - water and sewage systems, bridges, and roads - is antiquated and decaying. They constitute a "quiet crisis" looming across our bases and stations. The increases provided in this budget allow us to begin to address this problem but we remain concerned. Prior to the Administration's increases, the Marine Corps' military construction replacement cycle approximated 100 years in FY 2002; the industry standard is 50 years. While this budget allows us to attain an over 60 year cycle of military construction replacement in FY 2002, the average recapitalization rate rises to nearly 100 years across the Future Years Defense Plan (FYDP).

We have made no significant progress in the maintenance and repair of our existing infrastructure. While we had slowed the growth of backlog of maintenance and repair (BMAR) at Marine Corps bases and stations to approximately $650 million this fiscal year, it rises to $687 million in FY 2002 and averages approximately $660 million across the remainder of the FYDP - far exceeding the goal of $106 million by FY 2010.     

Approximately half of our family housing units are inadequate, and we have a deficit of almost 9,000 homes in FY 2001. Our goal is to eliminate inadequate family housing units by FY 2010. This budget allows us to revitalize our current inventory and to accelerate the elimination of substandard housing; however, it does little to address our family housing deficit. As currently planned, assuming Basic Allowance for Housing is increased to reach zero percent out of pocket by FY 2005, we will reduce our family housing deficit by approximately 20% by FY 2006.

One last area of concern in our infrastructure programs is the rising cost of utilities. Based on current projections, the Administration provided funding for 60% of our estimated requirement for both bases and stations and family housing. With the preponderance of our utilities cost increases in Southern California, we are assuming a measured risk in this budget.

MODERNIZATION

Finally, I would like to address our fourth pillar - modernization. Equipment modernization, like infrastructure, has long been a "bill-payer" for near-term readiness. For most of the last decade, Marine Corps ground and aviation equipment funding was below the "steady state" requirement level. Unfortunately, this trend continues. While the FY 2002 budget does not include increases for equipment modernization pending results of the ongoing QDR, FY 2002 ground equipment modernization is currently funded below our "steady state" requirement level. Based on today's National Military Strategy, we have identified the direction we need to go and the equipment we need to meet tomorrow's challenges and maintain the "expeditionary force in readiness" our Nation requires. We are optimistic that the FY 2003 budget will allow for acceleration of the pace of equipment modernization.     

The replacement of the 17,000-vehicle fleet of HMMWVs with the HMMWVA2 and the replacement of the 5-ton medium truck family with the Medium Tactical Vehicle Replacement (MTVR) are crucial steps in our effort to modernize our ground mobility. The planned replacements for these two aging families of vehicles will begin to lower maintenance costs and associated readiness challenges. Acquisition of other major replacement systems such as the Advanced Amphibious Assault Vehicle (AAAV), the High Mobility Artillery Rocket System (HIMARS), and the lightweight 155mm howitzer are also part of the solution. Lethality and the ability to maneuver our forces remain cornerstone requirements for the ground combat element.

We also have a viable, balanced plan to field new and improved aviation platforms: Joint Strike Fighter, KC-130J, AH-1Z/UH-1Y, and the MV-22. The V-22 program is being restructured based upon recommendations from the Secretary of Defense-chartered Blue Ribbon Panel. The Panel recommended that the Department of Defense proceed with the program but temporarily reduce production to a minimum sustaining level to provide funds for a Developmental Maturity Phase that may take from one to two years. We are hopeful that needed changes and improvements to the program will be funded at the most economical rate of production in the FY 2003 budget.

Just as with our ground equipment, the pace at which we field aviation platforms is a critical issue. Our success in keeping Marine Corps aircraft safe and operational is the result of a sustained and intense maintenance effort. Since 1995, our direct maintenance man-hours per hour of flight increased by 16% and our "cannibalization" rate increased by 24%. During the same time period, our full mission capable rate, though still within acceptable parameters, decreased by almost 17% across the force. These statistics represent data for all Marine Corps aircraft and are indicative of our aging fleet.

The burden of maintaining readiness at acceptable levels has been increasingly borne on the backs of our Marines. Readiness sustainment programs such as Program Related Engineering (PRE), which identifies necessary component improvements before incidents occur, have been underfunded for so many years that we have had to rely primarily on vigilance in maintenance from our Marines to ensure safety of aircraft. Fortunately, this budget includes increases for this critical program. The longer we defer the acquisition of new weapons systems, the more critical it becomes to fund programs needed to maintain and reduce associated risks of aging legacy systems.

With your help and that of the Administration, the Marine Corps is on a modernization track that, in 2008, will result in the initial convergence of a number of major programs. If realized, this will profoundly modernize the Corps and dramatically enhance our strategic agility, operational reach, and tactical flexibility.

SUMMARY

Sustaining the readiness of the Marine Corps remains our highest priority. With the Administration's support, the programs affecting near-term readiness are funded at prudent levels in the FY 2002 budget. Our challenge is to properly balance Marine Corps resources across all four pillars of readiness and accelerate investments in infrastructure and equipment modernization that are required to keep the Corps ready and relevant in the 21^st Century. Dramatically increased operational requirements and constrained toplines over most of the last decade have forced us to accept a level of measured risk in our infrastructure and equipment modernization. We can no longer afford to defer investment in these critical areas. With the continued support of the Congress and the Administration, we will maintain the high level of readiness that the American people expect from the Marine Corps. Thank you for the opportunity to present testimony on this important issue.