[House Hearing, 111 Congress]
[From the U.S. Government Printing Office]
[H.A.S.C. No. 111-172]
MANAGING THE DEPARTMENT OF DEFENSE IN A TIME OF TIGHT BUDGETS
__________
COMMITTEE ON ARMED SERVICES
HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
SECOND SESSION
__________
HEARING HELD
JULY 22, 2010
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HOUSE COMMITTEE ON ARMED SERVICES
One Hundred Eleventh Congress
IKE SKELTON, Missouri, Chairman
JOHN SPRATT, South Carolina HOWARD P. ``BUCK'' McKEON,
SOLOMON P. ORTIZ, Texas California
GENE TAYLOR, Mississippi ROSCOE G. BARTLETT, Maryland
SILVESTRE REYES, Texas MAC THORNBERRY, Texas
VIC SNYDER, Arkansas WALTER B. JONES, North Carolina
ADAM SMITH, Washington W. TODD AKIN, Missouri
LORETTA SANCHEZ, California J. RANDY FORBES, Virginia
MIKE McINTYRE, North Carolina JEFF MILLER, Florida
ROBERT A. BRADY, Pennsylvania JOE WILSON, South Carolina
ROBERT ANDREWS, New Jersey FRANK A. LoBIONDO, New Jersey
SUSAN A. DAVIS, California ROB BISHOP, Utah
JAMES R. LANGEVIN, Rhode Island MICHAEL TURNER, Ohio
RICK LARSEN, Washington JOHN KLINE, Minnesota
JIM COOPER, Tennessee MIKE ROGERS, Alabama
JIM MARSHALL, Georgia TRENT FRANKS, Arizona
MADELEINE Z. BORDALLO, Guam CATHY McMORRIS RODGERS, Washington
BRAD ELLSWORTH, Indiana K. MICHAEL CONAWAY, Texas
CAROL SHEA-PORTER, New Hampshire DOUG LAMBORN, Colorado
JOE COURTNEY, Connecticut ROB WITTMAN, Virginia
DAVID LOEBSACK, Iowa MARY FALLIN, Oklahoma
JOE SESTAK, Pennsylvania DUNCAN HUNTER, California
GABRIELLE GIFFORDS, Arizona JOHN C. FLEMING, Louisiana
NIKI TSONGAS, Massachusetts MIKE COFFMAN, Colorado
GLENN NYE, Virginia THOMAS J. ROONEY, Florida
CHELLIE PINGREE, Maine TODD RUSSELL PLATTS, Pennsylvania
LARRY KISSELL, North Carolina CHARLES K. DJOU, Hawaii
MARTIN HEINRICH, New Mexico
FRANK M. KRATOVIL, Jr., Maryland
BOBBY BRIGHT, Alabama
SCOTT MURPHY, New York
WILLIAM L. OWENS, New York
JOHN GARAMENDI, California
MARK S. CRITZ, Pennsylvania
LEONARD L. BOSWELL, Iowa
DAN BOREN, Oklahoma
HANK JOHNSON, Georgia
Paul Arcangeli, Staff Director
Andrew Hunter, Professional Staff Member
Jenness Simler, Professional Staff Member
Caterina Dutto, Staff Assistant
C O N T E N T S
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CHRONOLOGICAL LIST OF HEARINGS
2010
Page
Hearing:
Thursday, July 22, 2010, Managing the Department of Defense in a
Time of Tight Budgets.......................................... 1
Appendix:
Thursday, July 22, 2010.......................................... 43
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THURSDAY, JULY 22, 2010
MANAGING THE DEPARTMENT OF DEFENSE IN A TIME OF TIGHT BUDGETS
STATEMENTS PRESENTED BY MEMBERS OF CONGRESS
McKeon, Hon. Howard P. ``Buck,'' a Representative from
California, Ranking Member, Committee on Armed Services........ 2
Skelton, Hon. Ike, a Representative from Missouri, Chairman,
Committee on Armed Services.................................... 1
WITNESSES
Conaton, Hon. Erin C., Under Secretary of the Air Force.......... 9
McGrath, Hon. Elizabeth A., Deputy Chief Management Officer, U.S.
Department of Defense.......................................... 4
Westphal, Hon. Joseph W., Under Secretary of the Army............ 6
Work, Hon. Robert O., Under Secretary of the Navy................ 7
APPENDIX
Prepared Statements:
Conaton, Hon. Erin C......................................... 79
McGrath, Hon. Elizabeth A.................................... 51
McKeon, Hon. Howard P. ``Buck''.............................. 49
Skelton, Hon. Ike............................................ 47
Westphal, Hon. Joseph W...................................... 60
Work, Hon. Robert O.......................................... 70
Documents Submitted for the Record:
[There were no Documents submitted.]
Witness Responses to Questions Asked During the Hearing:
Mr. Bishop................................................... 95
Mr. Forbes................................................... 95
Mr. McKeon................................................... 94
Mr. Skelton and Mr. Bishop................................... 93
Mr. Taylor................................................... 94
Questions Submitted by Members Post Hearing:
Mr. Critz.................................................... 110
Mr. Kissell.................................................. 109
Mr. Larsen................................................... 109
Mr. Miller................................................... 105
Mr. Ortiz.................................................... 99
Mr. Owens.................................................... 110
Mr. Turner................................................... 106
.
MANAGING THE DEPARTMENT OF DEFENSE IN A TIME OF TIGHT BUDGETS
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House of Representatives,
Committee on Armed Services,
Washington, DC, Thursday, July 22, 2010.
The committee met, pursuant to call, at 10:04 a.m., in room
2118, Rayburn House Office Building, Hon. Ike Skelton (chairman
of the committee) presiding.
OPENING STATEMENT OF HON. IKE SKELTON, A REPRESENTATIVE FROM
MISSOURI, CHAIRMAN, COMMITTEE ON ARMED SERVICES
The Chairman. Good morning, ladies and gentlemen. We
welcome you to today's hearing on managing the Department of
Defense [DOD] in a time of tight budgets. Our hearing continues
the committee's aggressive efforts to protect taxpayers at the
same time we protect the troops and ensure our national
security.
This discussion is very timely. First, consider the budget.
Much to its credit, the Obama Administration this year
delivered a budget with real growth in defense spending.
However, the rate of this growth will not support all the
spending practices which have arisen over the last 12 years,
during which the defense budget more than doubled. Furthermore,
the significant federal deficit will make continued real growth
in the defense budget a challenge.
Second, consider the Department of Defense's management
challenge. As illustrated in the ``Top-Secret America'' series
of articles in this week's Washington Post, the growth in
contractors and government offices devoted to fighting
terrorism since 9/11 is staggering. Most of this growth has
occurred within the Department of Defense, though much of it
falls in the area of intelligence.
But little of note at Department of Defense was eliminated
to make way for the new growth. Instead, the Department has
grown bigger.
Managing all this is exactly the job Congress assigned to
the Department's Chief Management Officer [CMO], a job
currently filled by Deputy Secretary of Defense, Bill Lynn. And
while Secretary Lynn could not be with us today, much to my
regret, we have an excellent panel of witnesses with us.
Beth McGrath, Deputy Chief Management Officer of the
Department of Defense; Joe Westphal, Under Secretary of the
Army; Robert Work, Under Secretary of the Navy; and one-time
staff director of this committee, one who has done a wonderful
job here and is doing a wonderful job for the Air Force, Erin
Conaton, the Under Secretary of the Air Force. We welcome you
back.
Secretary Conaton. Thank you, Mr. Chairman.
The Chairman. Under Secretaries were designated by Congress
to serve as Chief Management Officers of their respective
Departments. Now, I have asked these witnesses to update the
committee on exactly how they are creating the tools, the
structures and the systems necessary to manage the largest,
most complex institution in the world. I have asked them to
focus on a few issues in particular.
Congress has mandated that the Department must, as long
last, get its finances in order and be ready for an independent
audit by 2017. Will the Department comply with the law? What
progress has been made?
The Department has asked and received from Congress
billions of dollars to modernize its business systems over the
past 10 years. What do we have to show for this investment? Do
we now have the kind of management information about our
business operations that we need? When will we get there?
Last, the committee has followed with great interest the
efficiency initiative announced by Secretary Gates on May the
8th at the Eisenhower Library. We want to know how this
initiative will work? When the Department intends to share its
findings with Congress?
This committee stands four-square behind efficiency. At the
same time, we want to ensure that major budget decisions are
well considered. We should not attempt to find efficiencies
through the kind of mindless across-the-board cuts that
President Obama campaigned against.
For my own part, I will note loud and clear that I am not
for cutting the defense budget at this time. My understanding
is that the Secretary's efficiency initiative is not about
cutting the budget, but I look forward to hearing more about
exactly how this initiative is designed to work.
I would like to also mention the fact that this committee
successfully passed legislation regarding major weapons systems
last year--Rob Andrews, Mike Conaway, and the panel--and its
purpose was to reform the acquisitions system of major weapons
systems. And this committee is to be congratulated on that, as
well as those two leaders.
Also, we passed out and passed on the floor acquisition
reform, and it is pending in the Senate and hopefully will be
taken up with our defense bill that we have passed and sent to
the Senate. This is the efficiency we have already stepped up
to the plate and passed.
So with that in mind, I turn to my colleague, my friend,
the gentleman from California, Buck McKeon.
[The prepared statement of Mr. Skelton can be found in the
Appendix on page 47.]
STATEMENT OF HON. HOWARD P. ``BUCK'' MCKEON, A REPRESENTATIVE
FROM CALIFORNIA, RANKING MEMBER, COMMITTEE ON ARMED SERVICES
Mr. McKeon. Thank you, Mr. Chairman, and good morning.
I would like to thank our witnesses, all of you, for being
here today. It is unfortunate that Secretary Lynn could not
also join us. As both the Deputy Secretary and Chief Management
Officer for the Department, not to mention his role in helping
to craft Secretary Gates' efficiencies initiative, it would
have been valuable for the committee to hear from him at a
hearing specifically dedicated to the Pentagon's management.
As well, given that the formal responsibilities for CMO are
still relatively new for the Deputy Secretary, we were also
interested in his observations about that construct and his
ability to balance his policy and management portfolios.
With that said, we are grateful to have with us the Deputy
Chief Management Officer, Ms. Beth McGrath, whose full-time job
is to improve the Department's management. I know Ms. McGrath
has testified before this committee in the past, but I believe
this is our first opportunity to have all of the Under
Secretaries, and I welcome all of you here.
Given the important role that each of you play in serving
as the Chief Management Officer of your respective Departments,
I look forward to the chance to discuss the various management
challenges you face and your plans for mitigating risk to DOD's
operations while improving efficiency.
Secretary Conaton--notice how that just rolls off the
tongue--I know I echo the chairman's sentiments when I tell you
how pleased we are to see you again. Welcome home, so to speak.
This is a timely hearing. Although the GAO [Government
Accountability Office] and others have identified a series of
persistent management risk areas for DOD, the Department faces
a looming management crisis in light of congressional delay in
passing a clean wartime supplemental spending measure.
The Senate passed its version of the appropriations bill in
May, but the House failed to take up either a compromise-
version of the bill, or the Senate-passed bill, before the July
4th recess. Instead, the House amended the Senate bill by
adding extraneous domestic spending and returned it to the
Senate. Secretary Gates made it clear that, if the supplemental
was not enacted by July 4th, the Department would have to begin
to curtail defense operations.
I know the chairman shares my conviction that the men and
women in uniform operating in harm's way in Afghanistan and
Iraq deserve better. Therefore, it is critical that we hear
from each of you regarding the impacts this delay will have
within your Departments and how you intend to manage the risk
to ongoing operations.
Lastly, it should come as no surprise that we are
interested to learn more specifics about how the services are
implementing Secretary Gates' call for further efficiencies.
While no one would argue against reducing waste or needless
overhead, it remains unclear whether or not the Department can
find $100 billion in prudent savings over the next 5 years
simply from efficiencies.
In his May 8th speech at the Eisenhower Library, Secretary
Gates stated, ``The goal is to cut our overhead costs and to
transfer those savings to force structure and modernization
within the programmed budget.'' I support his intent to ensure
that we do not accept a peace dividend that will hollow out our
force structure and curtail modernization.
What gives me pause, however, is that, according to Deputy
Secretary Lynn, the plan calls for a third of this money, about
$33.3 billion, to come from ``developing efficiencies within
the force structure and modernization accounts.'' So I want to
make sure that we understand the plan. In order to protect
force structure and modernization, we intend to cut force
structure and modernization accounts? I hope that you will
clarify that for me.
Likewise, press reports indicate that funding may not go
directly to these investment accounts, and senior officials
have been recently quoted as forecasting gradual drawdown in
the investment accounts.
I know our witnesses are unlikely to reveal planned cuts
for future fiscal years, but I hope that you will provide
greater details regarding the process you are using to identify
both the puts and takes and what measures, besides funding
cuts, could generate savings, for example, what steps are you
taking to improve your financial management and accountability.
We look forward to your responses. And again, thank you for
your time at this critical juncture.
Mr. Chairman, I yield back.
[The prepared statement of Mr. McKeon can be found in the
Appendix on page 49.]
The Chairman. Thank the gentleman. Thank you for your
comments.
Now for the witnesses, and we, again, welcome each of you
for this very, very important hearing.
Elizabeth McGrath, you are on.
STATEMENT OF HON. ELIZABETH A. MCGRATH, DEPUTY CHIEF MANAGEMENT
OFFICER, U.S. DEPARTMENT OF DEFENSE
Ms. McGrath. Sir, thank you, and good morning.
Chairman Skelton, Congressman McKeon, members of the
committee, thank you for the opportunity to discuss the
Department of Defense's efforts to improve its business
operations.
It is a pleasure to appear before you with my military
department Chief Management Officer counterparts. We look
forward to continuing our work with you as we strive for
greater efficiency, increased effectiveness, and additional
agility within the Department.
While the Department has always worked to improve the
efficiency and effectiveness of its business operations, the
imperative to achieve lasting results in the engagement of
senior Department leadership have never been greater.
Secretary Gates and Secretary Lynn have clearly articulated
the pressing need for reform. Today, I would like to share with
you our overarching management reform efforts, as well as some
recent successes. Our approach emphasizes improving our ability
to assess execution through performance management; to develop
mechanisms to ensure leadership accountability; and to make
needed changes to the way we procure information technology
[IT].
In each of these areas, we rely heavily on the tools that
Congress has provided us through the last several National
Defense Authorization Acts. I will review with you our efforts
in the areas of strategy, governance, process improvement, and
information technology.
The Department has developed an integrated enterprise-wide
business strategy to guide our transformation efforts. This
strategic management plan aligns the planning and execution
documents that exist throughout the enterprise.
The plan identifies five cross-functional enterprise-wide
business priorities, each with specific outcomes, goals,
measures, and key initiatives that are critical for success.
They are: to support the all-volunteer force; to support
contingency operations; reform the DOD acquisition process and
support processes; enhance civilian workforce; and strengthen
financial management.
Of particular interest for today's hearing may be the
Department's efforts to improve financial management and move
toward audit readiness. We have developed a plan that focuses
on improving the quality of the information that we use. By
strengthening those processes that execute the dollars Congress
provides to us, we also unite the enterprise around an effort
that will benefit everyone, but also requires collaboration and
support across the defense enterprise.
We have also established long-term and near-term goals for
audit readiness, provided programmed resources in establishing
a governance structure that includes the DCMO [Deputy Chief
Management Officer].
Successful strategies rely on an effective management
framework. This area of governance includes the creation of the
Chief Management Officer, Deputy Chief Management Officer, and
military department CMO positions.
We recognize the committee's priorities include areas that
have been designated as high risk by the Government
Accountability Office. We share your focus on reducing such
risk in working across the Department and the executive branch
to address these challenges with the shared goals of removing
items from that list.
Personnel security clearances is a good example of where we
have made significant progress. In 2005, the average time for
the fastest 90 percent of initial clearances took 265 days.
Today, that number is below 60.
Additionally, in 2006, the backlog of pending clearance
investigations stood at almost 1,000 cases. Today, that backlog
is gone.
Speed without quality may result in the wrong outcome.
Therefore, we have actively engaged GAO to exchange ideas
regarding quality performance measures for clearance
investigations and adjudications. Collectively, we believe the
quality measures being developed identify specific quantifiable
targets linked to goals. This type of engagement is critical to
addressing and eliminating high-risk issues.
As the committee knows, information technology is the key
enabler of our business operations in an area with potential
for major improvements. One of the Deputy's highest management
priorities is improving the acquisition and development and
fielding of IT systems.
Our current approach to implementing IT takes too long,
costs too much, and often fails to deliver the performance
improvements we seek. On average, it takes 81 months in DOD
from when an IT program is first funded to when it is fielded.
We often deliver systems that are outdated before we ever turn
them on.
In contrast, the iPhone took 2 years from concept to
delivery. It is clear we need a different approach.
To that end, Secretary Lynn has established an IT
acquisition reform task force guided by four principles: speed,
incremental development, governance and adaptability. We need
to match the acquisition process to the technology development
cycle. We must also acknowledge the incremental development
testing wherever possible in fielding of new capabilities to
provide better outcomes in IT than trying to deploy a big-bang
approach.
We must carefully examine how our requirements govern
acquisition. We must recognize that different IT applications
demand different levels of oversight and enterprise
integration. With these principles in mind, we are working to
outline a series of acquisition tasks that apply high levels of
institutional due diligence where it is needed and strip away
excess requirements where it is not.
Focusing on business operations at the Department of
Defense is an area of great immediate interest to our senior
leadership, as well as an area of serious activity and
concerted efforts. We are on the way to creating better
business processes that would create the kind of lasting
results our country deserves. My CMO counterparts and I look
forward to the continued opportunities to work with Congress to
optimize performance across the Department.
Thank you, and I look forward to your questions.
[The prepared statement of Ms. McGrath can be found in the
Appendix on page 51.]
The Chairman. Thank you very much.
The Honorable Joe Westphal.
STATEMENT OF HON. JOSEPH W. WESTPHAL, UNDER SECRETARY OF THE
ARMY
Secretary Westphal. Mr. Chairman, thank you. Ranking Member
McKeon, thank you, distinguished members of the committee.
I would like to ask, Mr. Chairman, that my statement be
made part of the record. And I just want to make a couple of
brief points.
The Chairman. Without objection, each prepared statement
will be made part of the record. Thank you.
Secretary Westphal. Thank you, Mr. Chairman.
Just want to make a couple of brief points. The first is to
bring you greetings from John McHugh, Secretary of the Army. I
was with him this morning, and he really regrets not being
invited to this hearing. But he is thankful that Erin Conaton
is here, and that he figures he couldn't compete against her
today.
Mr. Chairman, members of the committee, you know, I think
we are all going to be very repetitive in stating to you over
and over how grateful I think we all are at the great care and
support that you give our sailors, marines, soldiers and
airmen, their families and our civilian workforces.
As some of you know, Mr. Chairman, I worked in this great
institution many years ago, and we know fully well how
challenged you are to make so many decisions across everything
from social programs to national security.
But we do know and understand that you know the great
sacrifices that our men and women in uniform and their families
make in support of our national defense and our freedoms and
our protections and our way of life every single day. And your
steadfast support is well known and highly respected by all of
us.
And so, I commit to you that we in the Army will do our
part to ensure that that support that we have from you is not
diminished. So we will increase our efforts to generate
savings, reduce cost, enhance performance, and create
efficiencies.
Our soldiers' ability to complete the mission depends on
it. Their families depend on it. The Secretary of Defense and
the President demand it. And as a Chief Management Officer,
this is my focus.
My two great colleagues to my left here and I are doing
something really unprecedented, having been in the Department
before. This is the first time, I think, that you have the
three Under Secretaries, not only now as Chief Management
Officers, but in their role as Under Secretaries as well,
collaborating on a regular basis to exchange ideas. We meet
regularly to find ways to make joint efforts work better and
create greater efficiency.
So your designation of us as Chief Management Officers has
actually created a great opportunity for our military
departments to be more co-joined and work together on a regular
basis.
We are also very closely aligned with OSD [Office of the
Secretary of Defense], and especially through the Deputy Chief
Management Officer, Ms. Beth McGrath. Her experience, her
leadership, her knowledge of these issues is helping us
immensely to get ourselves coordinated so that we are aligned
not only horizontally, but we are aligned vertically within the
Department.
Finally, Mr. Chairman, on March 1st, the Army submitted a
report to the committee on our business transformation. It was
an attempt to give you an idea of what we were working on to
put together our business transformation plan, which we intend
to deliver promptly and on time to you on October 1st of this
year.
So with that, I thank you again for your tireless efforts
in support of our armed services and our Army.
Thank you, Mr. Chairman.
[The prepared statement of Secretary Westphal can be found
in the Appendix on page 60.]
The Chairman. Thank you very much.
Robert Work.
STATEMENT OF HON. ROBERT O. WORK, UNDER SECRETARY OF THE NAVY
Secretary Work. Thank you, Mr. Chairman.
Mr. Chairman, Congressman McKeon, distinguished members of
the committee, it really is an honor--I will echo both Joe's
and Beth's sentiments on that--to be with you here today with
the other Under Secretaries, and with Beth to talk to you about
our plans to continue improvement within the Department of the
Navy.
I would also like to echo Joe's thanks to the committee.
After 9 years of war, your support has just been instrumental
to allowing us to maintain the Marine Corps and the Navy to the
high level that we have today. So on behalf of Secretary Mabus
and I, I would like to echo Joe's thanks.
And Secretary Mabus and I and the entire Department look
forward to future collaboration with you on the committee as we
partner to achieve these enduring transformation objectives
that you have set out for us.
I spent a lot of time trying to divine the intent of the
Chief Management Officer position. And as I see it, the
committee and Congress envisions this role to be the leader of
transformation across the Department enterprise. And I also
believe that you thought that business operations was a subset
of management, and management extends across the entire
Department of the Navy and in both the Marine Corps and the
Navy itself.
So we are looking beyond the business side of the
enterprise, and we intend to apply the same type of rigor that
I think that you are looking for in not only business
operations but weapons systems and other programs across the
Department.
Secretary Mabus is interested not only in making the trains
run on time, but on making the trains run to different places.
And we believe that that was your intent.
Our goal is to establish, then, a legacy of transformation
in the Department of the Navy, instill a culture of business
innovation and ingenuity, and codify the role of the Chief
Management Officer and the Deputy Chief Management Officer
within the Department.
We also are looking very hard at having the proper
government form, so our business transformation council is the
way we do this. That is chaired by myself, the Assistant
Commandant of the Marine Corps, and the vice chairman, because
we have found, in the last year--and this just reinforces a
long-known code--that you have to get both the Secretary and
the service staffs really invested into business transformation
or you are not going to be able to have any lasting change.
So we have the warfighters and the Assistant Secretary of
the Navy embedded in this process from the very beginning. We
are also trying to strengthen our Deputy Chief Management
Officer position. Also, we are doing consolidations within the
secretariat to align us better with the business operations
that Beth pointed out to you.
We are really focused on business processes, but we are
very, very focused on achieving fully auditable financial
statements by 2017. We actually are hopeful we will beat that
timeline. Implementing ERP [enterprise resource planning]
across the Department, really spending a lot of time on
acquisition and contracting excellence, following the lines of
what Secretary Carter set out a week ago, and really trying to
improve energy efficiencies across the Department.
So in closing, we very much appreciate the legislation that
Congress has enacted, which really allows us to delve deep and
to go into reengineering of our processes in implementing
transformational change. We recognize that this is going to be
challenging and difficult, but we are committed to working with
you to effect this change.
We definitely do want to foster the business
transformation. We need to efficiently and effectively support
the Navy and the Marine Corps and our civilians. And I thank
you again very much for your continued support, and I look
forward to working with all of you in the future.
I would be happy to answer your questions after the
completion of our statements.
[The prepared statement of Secretary Work can be found in
the Appendix on page 70.]
The Chairman. Thank you very much.
The Honorable Erin Conaton, please.
STATEMENT OF HON. ERIN C. CONATON, UNDER SECRETARY OF THE AIR
FORCE
Secretary Conaton. Thank you, Mr. Chairman, Mr. McKeon,
members of the committee. Given everything that my colleagues
have already said, I will try to be brief and just echo the
high points. But let me start by saying it is really nice to be
back in this room. I am convincing myself this is just markup,
you know? I am just sitting at the table, just like markup.
But it is great to see you and all my former staff
colleagues in the room here. I also, as long as I am in the
thanking mode, want to thank my colleagues at this table not
only for the partnership that Secretary Westphal talked about
in terms of our ongoing interactions, but I am very much the
new kid on the block.
I have only been in the job a couple months, and these
folks who have been outstanding in terms of not only partnering
but lending the benefit of their expertise in the Department
over the period of time that they have been there. So I thank
them for that.
I think I have to start the same way they did, by
acknowledging the work that this committee has done in numerous
National Defense Authorization Acts and in the Weapons System
Acquisition Reform Act. Your work has had tremendous impact in
the Department, and it is hard for me to think of a week going
by that I am not at a meeting where people are talking about
the implementation of WSARA [Weapon Systems Acquisition Reform
Act], what the intent of the Congress was.
So I know you know that your efforts have an impact, but if
we can reinforce that, I am happy to have the opportunity to do
so.
Like my colleagues, I would say that the Chief Management
Officer construct relies on strong leadership from the top. And
so, the fact that we have Secretaries and chiefs of our
respective services who are committed not only to making this
organizational construct work but also to help further the
business transformation objectives that we are working on,
makes a big deal.
The other thing I would say is that all of us put mission
first. So this is about the work that our soldiers, sailors,
airmen and marines are out there doing every day, and business
transformation can't be separate from that. It has to be very
much aligned with what we are asking servicemembers and our
civilian workforce to do on a regular basis.
And so, as I have been thinking about the Chief Management
Officer job, I think, first, what is the mission that we are
asking, in our case, our airmen to do, and then how do we get
processes and systems that help support that.
So I think whether it is with the business transformation
plans that you all have required or in our own thinking as
Chief Management Officers, it is important to align our
business objectives with what the service or the Department, in
Ms. McGrath's case, is doing overall.
We in the Air Force have a similar construct, I think, to
what Secretary Work talked about, which is that we have an
overall governance structure called the Air Force Council. It
is how we make our budget decisions every year. It is how we
adjudicate policy debates that are occurring inside the
service.
And it is also the group that we are using for governance
of overall business transformation and the efficiencies
initiative. It is critical that all of the folks who are
working, whether it be our Assistant Secretaries or the deputy
chiefs of staff on the air staff side, are invested in and
committed to working these efforts.
Once we get that done, then I think we can focus on the
goals on the business side of the house. We obviously have a
couple large information technology programs that I would be
happy to talk about if you want to get into that. We too are
very focused on the efforts led by this committee on getting a
clean audit in the fiscal year 2017 timeframe and doing
everything we can to do that as soon as possible.
And on the efficiency side, we are partners with the rest
of my colleagues in trying to find a way to--again, mission
first--get as much money and capability into the force
structure modernization and readiness sides of the account. And
I think that is what is motivating the work that Secretary
Gates has put forward, and it is certainly motivating the work
that Secretary Donnelly and General Schwartz are undertaking
for the Air Force.
So with that, I will turn it back to the chairman and just
say thank you, again, for the opportunity to come home.
[The prepared statement of Secretary Conaton can be found
in the Appendix on page 79.]
The Chairman. Thank you very much. It is great to have you
back.
Mr. Work, the spotlight has been on some shipbuilding. On
the one hand, we have the USS Missouri, Virginia attack
submarine being commissioned later this month, which, by the
way, is in the district of Congressman Joe Courtney, ahead of
schedule and under budget.
Compare that to the problems that you have been having with
the littoral combat ship effort, the excessive overruns. Add to
that the reform legislation that we passed from this committee,
and then it became law. Will the legislation that we authored
be of help in making the shipbuilding more like what is going
on in Groton, Connecticut? And if so, how, Mr. Work?
Secretary Work. Thank you, Mr. Chairman.
Secretary Mabus set as his number one priority, when he
came aboard last year in May, in really taking a hard look at
the shipbuilding. And that was followed quickly by the WSARA
Act, which really kind of struck a chord within the Department
of the Navy, making sure that we get the requirements
absolutely right, looking for the right type of contracts,
making sure that we demand performance throughout the level.
It is, of course, true, sir, that we have had problems with
the LCS [littoral combat ship], but I think as the committee
knows, as a result of the WSARA and also our determination to
make sure that that program is right, we completely changed the
acquisition strategy. And although we are not quite complete
with the down-select yet, I am quite confident in telling the
committee we will definitely reach the congressional cost cap
regardless of which ship is chosen.
As you said, I think we are having great success in our
attack submarine program, on our T-AKEs [dry cargo/ammunition
ship] that are being built at NASSCO [National Steel and
Shipbuilding Company], and we are having good performance
across the yard.
So right now, we are really focused on really making sure
we get requirements right. We are doing that on the SSBN-X
[ballistic missile submarine-future]. And Secretary Mabus and I
are committed to making sure that we get the best bang for the
buck for our shipbuilding dollars.
The Chairman. The GAO originally proposed a second Deputy
Secretary of Defense for Management. Is it reasonable to expect
the Deputy Secretary of Defense to serve as the Chief
Management Officer in addition to all of his other duties?
Ms. McGrath.
Ms. McGrath. Sir, thank you. The construct of the Deputy
Chief Management Officer working as a day-to-day focus of the
financial and other management issues, working with the other
Under Secretaries across the Department so far has been
extremely effective.
The Deputy Secretary spends quite a bit of his time on
management- and business-related issues, from financial
management to health, information technology, wounded warrior.
A lot of his time is spent on those topics today.
So I believe the construct of the Deputy Secretary as the
Chief Management Officer with someone in the Deputy Chief
Management Officer role, currently myself, working across the
Department from an OSD perspective and also with the Chief
Management Officers of the military departments thus far has
proven effective.
The Chairman. Allegedly, there will be savings identified
in the effort to have efficiencies across the Department. If
that is the case, where do those savings go? I for one am not
for cutting the defense budget. Where do they go, Ms. McGrath?
Ms. McGrath. Sir, as you articulated in your opening
statement, Secretary Gates has identified a call to look across
the Department, every aspect of the defense business and
everything we do, from our support structures to our
organizational construct, to see if there is a better, more
efficient and effective way that we can deliver our capability.
The Secretary has articulated that the military departments
will keep the savings that they identify. And again, I think it
was mentioned in the opening statements that we are looking to
shift dollars from support to force structure and operations.
The Chairman. Let me ask you this. Are the respective
services making the necessary investments to meet the 2017
auditing mandate?
Ms. McGrath. Each of the military departments' service and
defense agencies' components have identified their milestones
to achieve the 2017 goal of the clean audit opinion. Those are
captured in the financial audit improvement report.
Financial Improvement Audit Readiness, the FIAR plan, is
the document where each of the milestones for each of the
components are articulated, marching toward the 2017 goal.
The Chairman. I think it was the gentleman from Texas, Mr.
Conaway, who brought it to our attention about the lack of
auditing within the Department and the panel's role of putting
together the second initiative that we passed and is now
pending in the Senate.
How did this ever happen that the Department and its sub-
departments were not subject to auditing, Ms. McGrath?
Ms. McGrath. I am not sure that we were given a pass from
audit. I think the responsibility for--our fiduciary
responsibility and our stewardship of taxpayer dollars
certainly is a responsibility identified and acknowledged
across the Department.
I think the challenge in actually delivering an auditable
financial statement has many factors to it. Some of it is human
capital-based. Other is the fact that our financial systems
today--our financial plus our other functional feeder systems
are not interoperable, which poses a huge challenge for us.
And then that it must be a Department-wide function to
actually achieve auditability. It cannot be viewed as just a
comptroller responsibility, given that most of the information
comes from other functional areas.
So I think there is a recognition within the Department
that we understand what we need to do from a departmental
perspective, that we do have a plan in place with goals and
milestones. We have appropriate governance that reaches
horizontally and vertically in the Department. And without
those, we would not be able to achieve that, and I believe we
are positioned to do that today.
The Chairman. Mr. McKeon.
Mr. McKeon. Thank you, Mr. Chairman.
As I alluded to on my opening statement, I remain
particularly concerned about the steps the Department of
Defense is having to take to manage its finances in lieu of
passage of the 2010 wartime supplemental appropriation.
Secretary Gates has told us that, if we don't have it enacted
by July 4th, stupid things would begin to happen.
I would like to ask each of the witnesses to address the
following: what specific steps are you having to take now to
avoid running out of money? Please describe the overall risk
and the impacts these steps will have to ongoing operations,
routine business, the military and civilian workforce,
training, other important parts of the responsibilities that
you have.
And when specifically will each of your Departments run out
of money? When will you be unable to provide cash flow? What
are the additional consequences of your Departments, and the
Defense Department as a whole, should Congress fail to pass a
clean supplemental before the August recess, which starts after
next week? Please?
Secretary Westphal. For the Army, the consequences are
pretty significant. I think the Secretary is right. This is
very, very important that, before you leave in recess, we have
the supplemental approved.
We have been fronting some of the resources from our O&M
[operation and maintenance] accounts to ensure that all
operational requirements are kept fully funded, and we continue
to do that. We expect some reprogramming. We have prepared in
anticipation of this some potentially reprogramming requests.
We hope that they are not going to have to be exercised and the
supplemental will be passed.
To your question specifically, you know, we will run out of
money about the middle of August for some of these functions in
our O&M accounts. And so, we will have to begin to take steps
to ensure that we, first of all, continue to support fully all
the operational requirements.
I don't think we are going to have any issues with that,
but we will have to make some decisions in terms of our O&M
functions, particularly CONUS [continental United States], that
may have some impact. And that depends on how quickly you can
get back and pass a supplemental after that.
And if we get those reprogramming requests done, that may
help us to weather that storm through the period of time during
recess.
Secretary Work. Sir, from the Department of Navy
perspective, failure to pass a supplemental before the recess
would really essentially hamstring the Department's operations
for the remainder of this year and significantly disrupt
operations within the Department.
Our analysis is the same as Secretary Westphal's, that we
would run out of money for civilians probably around the middle
of August and have to start furloughing civilians in large
numbers. We think we would run out of money to pay active duty
members some time in the mid-September to late-September
timeframe, and that is not even accounting for all of the
movements in the O&M programs that would have to occur to make
sure that we would continue wartime operations.
From our perspective, then, it would be a very great burden
on the Department, and the Department of Defense as a whole,
and would really significantly prevent us from pursuing the job
of the Department and the nation.
Secretary Conaton. Mr. McKeon, for the Air Force, it is a
very similar situation as to what my other two colleagues
mentioned. Certainly encourage, as quickly as possible, the
passage of the supplemental.
In terms of specific dates, the Air Force runs out of O&M,
Operations and Maintenance, funding to do the whole range of
operational activities at the end of August, and then has
military personnel accounts running out by the third week in
September.
Like my colleagues, we are very hopeful that you all will
be able to send something to the President prior to the August
recess, but we are starting to think about what would have to
be done in the event that that didn't occur, which would
include things like furloughs. We may be able to do some
temporary additional reprogramming, but that wouldn't buy very
much time. So, very consistent with what my colleagues have
said.
Mr. McKeon. I think it was about 2 months ago that we had
General McChrystal here, and I asked him the same question, and
he said, if it went into the summer, it would cause problems.
But he had been assured it would pass before the Memorial Day
break.
Now we missed that. We missed the Fourth of July break. If
it were passed today, does that money immediately flow, or how
soon before that money reaches you? If it were passed today by
the House and today by the Senate, how long would it take for
that money to actually get into your accounts?
Secretary Westphal. It would be very quick, and it would be
a seamless process. We wouldn't have these effects that we all
outlined today.
Mr. McKeon. You have already taken some steps, though.
Secretary Westphal. We have. In the Army, we have moved
monies from our base into some of our operations to support
those missions to keep them moving, in theater in particular.
So we have addressed that issue internally. And we do that
always with the permission of the Congress.
Mr. McKeon. So are you saying that, if we passed it today,
you would have the money in your accounts next Monday?
Secretary Westphal. That technicality I don't really
understand, but----
Mr. McKeon. Does anyone here understand that?
Ms. McGrath. I think we all have an appreciation for the
process, but the specific date, how many days specifically it
takes to get from passage into the accounts I certainly would
be--probably take that for the record to find out how many days
that would be.
[The information referred to can be found in the Appendix
on page 94.]
Ms. McGrath. But I think the message is that we believe
that, if it was passed today, would be in sufficient time such
that other activities would not have to be executed as the
Under Secretaries have articulated.
Mr. McKeon. Could you get that back to us----
Ms. McGrath. Yes.
Mr. McKeon [continuing]. As quickly as you can? Today I
would like to know, if it is possible, because my concern is
that, among some people in the House, there isn't quite the
sense of urgency.
I have been given different timeframes that, even if we
passed it today, it would take some time, and I would like to
know that. Obviously we are not going to pass it today, and we
are not going to be in session tomorrow, so it will be some
time next week at the soonest.
And I for one think that if it is not done, we shouldn't
leave town until it is done. So I am hopeful that we will get
it done as soon as possible next week so that you don't have to
take some of these steps.
I am concerned that some things that are happening--I know
we are not going to leave the troops in harm's way without
ammunition and without food and without the things that they
need to carry out their mission, but I am concerned about
training or some of the other ongoing activities that take
place for the troops that will be going over there next. And I
am very concerned about getting that money there.
Yes?
Secretary Westphal. Well, just to add to what you were just
saying, for example, in the Army, one of the ways we support,
of course, or the way we support our ongoing missions is
through what we call a generating force, which is exactly what
you mentioned, it is training and readiness of our Army forces
here to go forward.
And of course, all the infrastructure that we have in the
Department is to support those missions, in any case. And there
are rules, personnel rules. As Secretary Conaton mentioned, if
there are furloughs, there are rules about advanced notice to
employees and things of that nature that we have to take into
account.
And we are either passed or dangerously close to those
deadlines. I am not sure what they are. We will get you that
information, as well. But all of that causes us a great deal of
concern, as you have heard from all of us.
[The information referred to can be found in the Appendix
on page 94.]
Mr. McKeon. That is a concern I have. Then, after the
supplemental is done, then we get to the point of talking about
the defense appropriation bill, the year ends September 30th.
It looks to me like we are not going to have an appropriation
bill passed by September 30th, which means then we get to a CR
[continuing resolution], hopefully, so that we don't shut down
the government on September 30th.
So if we get a CR, that also is disruptive with ongoing
operations, is it not?
Secretary Work. Well, sir, we have all lived with
continuing resolutions before, so it does cause us to do
choices in business that we otherwise wouldn't have to.
But if the supplemental is not passed, we would be in an
emergency situation. I mean, we have already talked about this
within the Department, where all of the Unders and all of the
Secretaries, we would all have to get together to try to work
our way through it.
So the continuing resolution is something the Department is
used to handling, and we are able to handle it much better than
if the supplemental isn't passed. We would consider that an
emergency.
Mr. McKeon. Thank you very much.
The Chairman. Thank the gentleman.
Gentleman from Mississippi, Mr. Taylor.
Mr. Taylor. Thank you, Mr. Chairman. I want to thank all of
our guests, but particularly Secretary Conaton for joining us
today.
Secretary Westphal, I received a really disturbing e-mail
from a Mississippi National Guardsman on his second deployment.
It is from his dad, who is a Vietnam combat veteran, and it
mentions the lack of ammunition, but, equally importantly, the
lack of rollers, that this unit is doing a mine-clearing
mission in Afghanistan. They do have the MRAPs [mine resistant
ambush protected vehicle]. But, unlike when he served in Iraq
and had a roller in front of that MRAP, he doesn't have it in
Afghanistan.
Now, and this really is to this point, that I appreciate
that you are trying to save dollars where you can. But there is
an inconsistency here that I don't understand.
We apparently have excess rollers in Iraq now because of
the drawdown. We have the Air Force telling us that they do not
need additional C-17s, but I am told we can't get the rollers
to Afghanistan because of a lack of airlift.
Now, either you have enough C-17s to get them there, or you
don't. And if you don't have enough to get them there,
obviously you don't have enough C-17s.
So I certainly hope this isn't a case where we are trying
to save a couple of pennies and will unnecessarily lose
American lives or limbs. And I would very much encourage you to
look into this, because it is a matter of life and death.
Secondly, if you could comment to it, I remember, as we
were losing our bases in Panama, going to visit that country on
several occasions, our bases there, and seeing--having started
off in local government and state government and realizing that
their budget is always tight--seeing a heck of a lot of things
there we should have brought home--fire trucks, bulldozers,
trackhoes [tracked excavator], backhoes--that state surplus
agencies would have loved to have had. And encouraging a lot of
people in the Army then to bring those things home, only to be
told, well, the shipping costs don't make it worthwhile, and
being particularly angry when ``60 Minutes,'' or someone like
them, ran a special showing that those bulldozers, in some
instances, ended up in Havana instead of some down in
Mississippi or some other state.
I visited Balad just before Christmas last year, and the
colonel there told me about--that he had an amnesty for people
to turn in equipment. And on the amnesty day, he had a 2-mile
line of equipment that people had turned in that was not on the
books, that had been paid for by the American taxpayer, that
some clever unit commander had figured out a way to get it
there because he felt like his unit needed it. And I commend
those clever unit commanders for getting the things they
needed.
What I don't see is an equally clever effort to get those
things home. Just this week in the Transportation Committee,
most of the carriers that have brought the equipment to Iraq
testified before the committee that they are bringing some of
that equipment out.
Most of the carriers--no, all of the carriers testified
that their ships are leaving Kuwait anywhere at 40 to 60
percent of capacity, which means that those ships are leaving
Kuwait with either anywhere from 40 to 60 percent excess
capacity to be bringing these things home.
Given that, you know, money is tight, that the taxpayers
paid for these things, what are you doing to incentivize unit
commanders to bring these things home, even if they don't need
it, that some other governmental entity may need it, or that a
state or local government may need it? Because, again, we got
burned when we left Panama. We got burned when we left
Roosevelt Roads. How many times does the Department of Defense
have to keep making the same mistakes?
Secretary Westphal. Well, actually, the two issues you
raised, you know, specific points like that have been made by
other members and by our own folks. I believe it was in late
July that I was going to go to theater, go to Kuwait and then
Iraq, and look specifically at the drawdown and at the movement
of equipment both back to CONUS and into Afghanistan.
Now decided to do that in September to wait till after we
are supposed to be down to the 50,000 level. I discussed this
with General Odierno and General Webster, the ARCENT [United
States Army Central] commander. I have asked the Vice Chief of
Staff, Pete Chiarelli, to go with me because we are doing a
whole bunch of work together, the Vice and I, on the
management, on the acquisition side, and on the contracting
side. So we are going to team up to go there and take a hard
look at all these things----
Mr. Taylor. Mr. Westphal, before the chairman gavels us,
could you find the time to stop by and see me on those two
items?
Secretary Westphal. I will do that.
Mr. Taylor. Thank you, sir.
The Chairman. Thank the gentleman.
Mr. Bartlett? Who is next?
Mr. Forbes.
Mr. Forbes. Thank you, Mr. Chairman.
And thank all of you for taking time to be here with us
today. The title of this hearing, the chairman correctly said,
was managing a budget in a time of tight budgets.
And Secretary Work, one of the things that I think every
one of you would agree with is the key to that is consistency,
which probably has at least two components. One is a careful
selection of our priorities initially, and the second thing is
the ability that we have to predict circumstances that could or
would change those priorities down the road.
Now, we have a number of different major opportunities to
both set those priorities and look at circumstances that could
change them. One of the big ones is BRAC [base closure and
realignment commission], where we just bring everybody together
and we say, ``What are our priorities,'' and we look at that.
The other one, of course, is the QDR [quadrennial defense
review].
And I am particularly concerned, because in the last BRAC
we had this huge laydown we had looking at priorities and where
we were, in BRAC of 2005, and also in the QDR of 2006. There
wasn't a blip on the screen about homeporting a carrier in
Mayport, Florida.
My good friend from Mississippi mentioned saving a couple
of pennies. This isn't a couple of pennies. This is almost a
billion dollars.
Can you tell me today, what were--and I know the priorities
haven't changed because I have a memorandum from the President
on June 10th where he says, for decades, the federal government
has managed more real estate than necessary to effectively
support its programs and missions, and he says we need to take
immediate steps to better use the remaining real estate assets
that we have.
Can you tell me what were the circumstances that changed
between BRAC 2005 and the QDR in 2006 and the QDR in 2010 which
would lead the Navy to want to homeport a carrier in Mayport in
the QDR in 2010 when it didn't raise that at all in BRAC 2005
or 2006? And then, why was it that we didn't have the
capabilities of predicting that change in BRAC in 2005 and the
QDR in 2006?
Secretary Work. Well, thank you, sir.
As you know, this has been an issue that the Department of
the Navy has been examining for quite some time. Essentially,
we believe in efficiencies. We believe in establishing
priorities, and we also believe in using our real estate
wisely.
As you know, Mayport has long been a carrier port.
Mr. Forbes. Yes. And Mr. Work, again, just because I have
got a limited amount of time, I want you to have all the time
you need, but I just want the change in circumstances between
BRAC 2005, the QDR in 2006, and the QDR in 2010.
Secretary Work. All right, sir.
BRAC 2005 really was focused on closing properties, and in
this instance, we are maintaining the property at Mayport, the
base, which is going to house a lot of our surface combatants,
and we want to make it a carrier home port for a nuclear
carrier.
So the movement from BRAC to the QDR, which looked at the
strategic rationale on doing that----
Mr. Forbes. But didn't you have that same strategic
rationale in the QDR in 2006?
Secretary Work. Sir, I would have to go back and see
exactly what the 2006----
Mr. Forbes. Is there a difference in rationale we have on
any QDR? Don't--we always looking at the same basic criteria in
our QDRs?
Secretary Work. Yes and no, sir. We have the basic
priorities set, but we look at our posture, both in the United
States and globally----
Mr. Forbes. Can you do this for me? Would you just get back
to me in writing on the exact changes that happened between
BRAC 2005, the QDR in 2006, and that QDR in 2010 and why we
couldn't have predicted those and raised them in the BRAC 2005
and 2006?
[The information referred to can be found in the Appendix
on page 95.]
Mr. Forbes. And I have got one other question that you can
either answer now and get back to me. Chairman asked, ``Will
the Department comply with the law?''
Can you give us a comfort level that we will have the law
complied with when, a year ago, we had in the statute a
requirement for a shipbuilding plan and an aviation plan that
be sent to us by the Department? Not only was the statute not
complied with, but when we had a congressional inquiry that was
unanimously agreed upon by this committee, there was not even
an explanation of why that wasn't complied with.
How do we have comfort that you are going to comply with
the law down the road if we didn't get a compliance with that
statute?
Secretary Work. Well, sir, I know I can speak with
Secretary Mabus. Both he and I will comply with every law that
we can. We also respond to guidance from the Secretary of
Defense. And in the case of last year, the Secretary of
Defense, I think quite rightfully said, because of the
difficulties we were having in shipbuilding, that we would move
that up and have the Deputy Secretary sign it out.
Mr. Forbes. My time is up. The only thing I would say is, I
hope that we don't come back on the audits and say that,
because of the difficulties we have in complying with the
audits, we are not going to do them.
And Mr. Chairman, I yield back the balance of my time.
The Chairman. Thank the gentleman.
Dr. Snyder.
Dr. Snyder. Thank you, Mr. Chairman, and thank you for
holding this hearing.
Just wanted to make an introductory comment. I appreciate
the leadership of both Mr. Skelton and Mr. McKeon on the issue
of the supplemental. I guess our most junior member here is Mr.
Critz, but from the most senior to the most junior member, we
agree with you. We need to get this supplemental passed sooner
rather than later. And I think your candor this morning helps
that.
I am always struck by these kinds of hearings in which the
goal is to help American taxpayers save hundreds of billions of
dollars. It always strikes me like a junior high sex education
class. It should be really exciting, but it turns out it is
not.
But Secretary Conaton, I think I will direct my questions
to you since we have Little Rock Air Force Base in my district.
Help me understand--and I have read through the statements and
all, and we can get bogged down in kind of the jargon of
business transformation, those kinds of things. But let me give
you a couple examples and just how you put them in the context
of what you are trying to do.
We have a military construction project that is about
finished at the Little Rock Air Force Base. It is outside the
perimeter. It is an education center where Arkansas State
University offers classes, and some of the institutions that
offer classes around the country offer classes there for both
military personnel and civilian personnel from the community.
Several years ago, the city of Jacksonville passed a
millage on themselves, raised $5 million to donate to the
military to help in the construction of the facility. But the
only way we were able to get that done was to do it as an
earmark in the defense bill because it was like the Air Force
wasn't agile enough to figure out a way to accept $5 million of
local dollars. So my question is, why don't we have that kind
of agility?
Another issue is on the--and this is where Congress gets
involved. Have we given you the kind of flexibility you need in
the terms of the retirement of old planes? I think we are doing
okay with E model C-130s. I am not so sure we are doing so well
with C-5s and some of the others.
And finally, any kind of update you can give on the
aviation modernization program with regard to C-130s. But use
those examples and explain how that fits into what you all are
trying to do.
Secretary Conaton. Thank you, Dr. Snyder. I am not familiar
with the specifics in this instance with Little Rock, but let
me speak more generally to agility.
I guess where I would start is--and I knew this going into
the job, but it is remarkable how large these organizations are
and how diffuse responsibilities are. But to that end, I think,
as we have started to think about Secretary Gates's mandate on
efficiencies, one of the things we have done, and I suspect my
colleagues have done something similar, is to engage not only
our major command commanders, so folks who are not in
Washington, who are out in command and with responsibility for
our numbered air forces, to get their perspective and to get
their views of how we can do things better.
Because I think there is often a Washington perspective,
and those who are elsewhere in the country and who have a more
operational day-to-day focus we have to take those views on. So
from my perspective, increasing agility is one piece of the
larger perspective that we have got on doing our work better
and, in the process, freeing up resources that can be put
toward modernization and force structure.
On the issue of retirement of aircraft, certainly
appreciate the support of the Congress in trying to ensure
that, whether it is C-130s or whether it is our larger
strategic airlift aircraft, that we can get the most modern
planes to our units. And in many cases, that involves trying to
retire some of the oldest fleets on the book to put savings
into our more modern aircraft.
I think on the C-130 side that we are in good shape in
terms of authorization. I know there is some language in this
committee's bill that deal with some of the specific issues
around National Guard C-130s, and we will certainly work with
the committee on that.
I think, as we go into next year, we may need to be in
dialogue with this committee about the Title 10 restrictions on
the size of the strategic airlift force structure dealing with
C-5 and C-17 modernization. But I think that is an issue for
2012, and we would be happy to work with you all on that.
Dr. Snyder. I was on a live media show this morning back
home, and they called us to ask about this hearing today. And
one of the questions was, ``What kind of message does this send
to troops in the field that we are trying to,'' in their words,
``cut defense budget?'' My own view is--well, I will direct
that to you, Secretary Work. How do you respond to that
question?
Secretary Work. Sir, I have been the victim of many a cut
drill, just a budget cut drill, and this is fundamentally
different. We are trying to find efficiencies to actually help
the marine and the soldier in the field, and to help the airmen
and the sailors.
The guidance has been very clear. Secretary Gates has said
we get to keep the money. And therefore, I think there is
widespread enthusiasm to go after these types of efficiencies
to help our soldiers, sailors, airmen and marines.
So I think I can speak for my colleagues, because we meet
so often, as Secretary Westphal and Secretary Conaton said. We
do not in any way think this is a cut drill, and we think this
is going to directly benefit our young service men and women.
Dr. Snyder. Okay. Thank you.
The Chairman. Mr. Kline.
Mr. Kline. Thank you, Mr. Chairman.
Thank you all for being here. Welcome, or welcome back. I
am getting nostalgic here for a minute in perhaps an unpleasant
way, and I was thinking of Dr. Snyder's comments and question
about agility.
And if I go back to 1988 when I had hair and was much
younger and was still in uniform, I reported to Marine
headquarters and found out that there was a discussion going on
in the acquisition world in the Marine Corps, the famous ACMC
[Assistant Commandant of the Marine Corps] committee, about how
we were going to buy computers.
And while they were trying to decide how to buy computers,
there were marines in the Marine headquarters in every base
across the nation who were going out and using O&M funds and
buying computers and operating systems and software however
they saw fit. And then those got old, and they bought new ones
with O&M while the ACMC committee was still trying to figure
out how to buy computers.
Now, that was over 20 years ago. New marines have signed
up, gone on active duty, served 20 years, retired, and I hear
from Secretary McGrath that it is taken 81 months, 7 years to
bring on IT systems.
I am just a little depressed, but it does tell me that we
still don't have the agility that Dr. Snyder was talking about.
And it seems to me that you Chief Management Officers have got
to figure out how to get agile for the services and for the
Department.
And I don't have a question because I simply wouldn't have
enough time for you to try to answer--well you can't answer,
but please, let us look at the agility.
I do have a question, and it is connected to another
nostalgic kind of flashback, this time going back to post-
Vietnam when we ran out of money. Department ran out of money.
Services ran out of money, and we parked them. I was flying
helicopters, except we couldn't fly them. We put them on the
flight line. We couldn't even go out and turn them. We
certainly couldn't fly them because we were out of flight hour
program. We were out of O&M, or O&MN [Operation and
Maintenance, Navy]. We couldn't fly.
And today if that were to happen, if we don't have the
supplemental that Mr. McKeon was talking about, would prevent
us from training if you have to park or anchor or dock the
ships, and if you have to park the planes. And I find that
pretty scary.
But what I find terrifying, and I want to just make sure I
understood this, is I thought I heard each of you, or at least
two of you say that your O&M accounts were being affected. You
were shifting O&M money, and that tells me that we might be in
that situation where, once again, we have to park them.
But what I found truly shocking was that I thought I heard
you say that you were going to not be able to pay in the
manpower accounts the men and women that we are asking to sail
and fly and drive and fight, aren't even going to get paid. And
if that were so, how do you make a distinction--because one of
our assumptions has been, ``Well, the troops in theater are
going to have what they need, and we will let the troops at
home and their families suffer to make sure that those that are
in harm's way have everything they need.''
But it sounds to me like we might not even be able to pay
those troops in harm's way unless you somehow split the
manpower account and say, ``Well, we are going to pay those
soldiers in Afghanistan but we are not going to pay the
soldiers at Ft. Campbell.''
So my question is, are we really looking at not paying not
only civilians, which is horrifying enough, but not paying the
men and women in uniform that are flying, sailing, fighting?
And I guess I don't know if it is Department-wide or varies by
service, so please give us an answer. Are they going to get
paid or not?
Secretary Westphal. They will get paid. I will speak for
the Army.
What we are concerned about is many of our civilian
workforce in some of these O&M accounts. That is our chief
concern.
Mr. Kline. Okay. So for the Army, the soldiers get paid,
but civilians may be furloughed and not paid.
Secretary Work, what about the Navy?
Secretary Work. Sir, as you have said, we have sometimes
dealt with having to shift O&M monies at the end of a fiscal
year. But quite frankly, the Department was expecting the
supplemental to be before the Fourth of July. There was really
no serious thinking that it would go beyond the summer recess.
And so our analysis, which isn't complete, as I said, we
would shift into an emergency mode if the supplemental was not
passed. As Secretary Westphal said, the first thing that would
happen is we would have to probably furlough civilians without
pay. And in mid-to-late September, there is a chance that we
would run out of money to pay active duty personnel.
Mr. Kline. The sailors in uniform would not get paid.
Secretary Work. There is----
Mr. Kline. Secretary Conaton, how about the Air Force?
Secretary Conaton. Mr. Kline, it is very similar to what
Secretary Work said. If we still did not have money the third
week of September, that is when the military manpower accounts
would be affected.
Mr. Kline. So the pilot, the bomber, the attack pilot in
Afghanistan would be asked to fly those missions and would not
be paid.
Secretary Conaton. If we go beyond the third week in
September.
Mr. Kline. Thank you. I yield back.
The Chairman. Mr. Andrews.
Mr. Andrews. Chairman, these are all the reasons why I am
confident the supplemental will be quickly enacted.
I am well aware of the fact that there is a broad consensus
in the United States that we want to have every dollar
necessary to defend our country. There is an understanding that
there are asymmetric threats and different qualitative threats
than we faced in 1998.
But here is the way--and this is not meant to be a
rhetorical question--here is the way many of our constituents
would ask the question about management and budget in the
Department of Defense.
If you exclude spending for foreign operations, if you
exclude supplementals for Iraq and Afghanistan as special needs
and go back to the base defense budget, the base defense budget
in the fiscal year in which we are presently living is 47
percent higher than it was in 1998. Again, that counts none of
the Iraq and Afghanistan supplemental.
Our end strength is eight-tenths of 1 percent higher. The
number of ships we have is 15 percent lower than it was in
1998. The number of planes we have is 11 percent fewer than
1998.
And I do not mean this to be combative or rhetorical, but
the logical question a taxpayer would ask is this: If we are
spending nearly 50 percent more than we did exclusive of
special operations overseas, Iraq and Afghanistan, and we have
essentially the same number of people in uniform, we have 15
percent fewer ships and 11 percent fewer planes, why does it
cost 50 percent more?
Secretary Westphal. Well, you are absolutely right. You
know, I left the Pentagon in 2001 where the Army budget was
about 70--the base budget was about 76, $78 billion. That base
budget has more than doubled.
So there has been a lot of growth. There has been growth in
structure. There has been growth in personnel. There has been
growth in a whole host of activities that we weren't engaged on
to the extent that we are engaged in now, in the intelligence
community, for example.
And it is exactly, I think, this growth that Secretary
Gates wants to get to.
Mr. Andrews. I, frankly, asked my question because I am
very sympathetic to Secretary Gates' premise, which is that
there is an important distinction between our ability to
vigorously defend our country and the overhead costs associated
with that vigorous ability.
I think the job for this committee, for the Department, for
the public, is where to draw that line. And I want to caution
us against using superficial ways to draw that line.
Mr. Conaway and I were just discussing before the hearing,
it might be tempting to say, ``Well, we have more accountants
than we did in 1998.'' We may or may not, but just say,
hypothetically, we do. So, therefore, that is overhead that we
don't need.
Well, if those accountants are helping to better manage,
get better quality out of technology programs, that is a
superficial and inaccurate measure. So I raise my question to
really make this point.
I think the Secretary's premise is exactly right. I think
that we have too much in the way of logistical support to
execute our mission. I don't think we have too much mission. I
don't think we overspend on the mission. I think we should be
vigorous in pursuing it in every respect.
But a hard question the Department has to ask, the Congress
has to ask, the country has to answer, is how do we focus on
this logistical overhead and do a better job. I mean, I think
that the rhetorical answer to the question I just asked is that
we have had excessive growth in the overhead categories in
these 12 years. And whether it is the way we buy technology or
the way that we provide housing or the way that we move goods
and services around the world, we have to do a better job at
assessing what that is.
Anybody else care to comment on that?
Ms. McGrath. So I would actually like to agree, the
statements that you just made. The Defense Department is a
corporation. I think the construct of the Chief Management
Officer and having us look across the Defense Department as a
business enterprise is different from--see, each of the
military departments looks--and this is true for every
component--tends to naturally look very locally to solve an
immediate problem. I think the example of the computer
solutions, right, that, you know, everybody buys locally.
I think the construct of a Chief Management Officer really
forces the Department to look corporately at what we do, how we
do it, is it tied to the strategy, the overarching mission of
the Department, and really analyze the execution piece. And I
think that is one of the most powerful things that the Chief
Management Officer legislation has enabled us to do, and I
think we are taking full advantage of that.
Mr. Andrews. Thank you very much.
Thank you, Mr. Chairman.
Mr. Taylor [presiding]. The chair thanks the gentleman.
The chair now recognizes the gentleman from Arizona, Mr.
Franks, for 5 minutes.
Mr. Franks. Well, thank you, Mr. Chairman.
And thank all of you for being here.
Ms. McGrath, my first question has to do with the
PowerPoint presentation that accompanied the Under Secretary of
Defense, Ashton Carter's memorandum. You are probably familiar
with it. It was titled, ``Better Buying Power: Mandate for
Restoring Affordability and Productivity in Defense Spending.''
And I thought it was pretty interesting. I actually agree
with a lot of it. He used ``leveraging real competition'' as
his first initiative for greater efficiency, and I certainly
think that makes all the sense in the world. And it was to
support a continuous competitive environment.
You probably know where I am going here. Given that
language and the fact that the F-35 is the largest weapons
system acquisition program in the Department of Defense, how
can the Administration, with a straight face, support the
termination of the F-35 alternate engine, given that that is
just clearly providing a continuous competitive environment
consistent with the debate in Under Secretary Carter's
memorandum?
Ms. McGrath. Sir, I would like to say that I agree with
Secretary Carter's approach to trying to achieve better, I will
call it, holistic acquisition. And there are a lot of different
attributes you can use to achieve that, one being competition.
I am not familiar with all of the specifics on the issue
that you raise, and I will be happy to come back to you with
any specific answers that I can.
Mr. Franks. Well, let me do this. Let me let anyone else on
the panel have a shot at that question. This is, again, the
largest defense-related acquisitions for the Department.
And this is clearly one of those things where we are
underscoring a continuous competitive environment, which is
mandated. It is not suggested, it is mandated in Mr. Carter, or
Under Secretary Carter's memorandum. And how do we synchronize
those two things? How do we make them fit together?
And Mr. Westphal or anyone else that would like to take a
shot at it?
Secretary Westphal. Well, luckily for me, I don't have to
deal with that on the Army side. But I will tell you this: we
face that similar issue across all our portfolios for our
weapons systems.
And what the Vice Chief and I--Vice Chief of Staff for the
Army have done, at the direction of Secretary McHugh, is to
stand up a holistic review to validate all our requirements
across all portfolios of our systems. We need to go back and
say, ``Do we need this today?''
We may have needed it 5 years ago, 10 years ago, 3 years
ago, but are we using it? Is it of value? Are we spending more
money? Do we have duplication and redundancy in those systems?
So we have taken the approach that, in order to manage this
better--and this gets to a lot of the questions you are
posing--that we have to go back to the requirements piece. We
have to validate those requirements across a series of
portfolios of systems that we have and ensure that that makes
sense today.
Mr. Franks. Well, I am sure it doesn't shock any of you
that this Republican is talking about competition, but I--go
ahead.
Secretary Conaton. Mr. Franks, I will jump in. And as both
the Air Force and the Navy and Marine Corps are involved in the
Joint Strike Fighter program, I will let Secretary Work jump in
as needed.
I think what you say about competition across the board is
very important. I think where Secretary Gates and the two
service Secretaries came down on the question of the alternate
engine was a judgment call and a balance, looking at the cost
of the program in the near-term, the benefit that may accrue
over time, and the benefits of competition.
As you know, some former programs, fighter programs, have
had an alternate engine. Some have not. And I think in the
judgment of the Secretary of Defense, the up-front cost over
the next couple years of completing that program did not, on
balance--was not outweighed by the benefits on the other side.
And definitely understand the committee has strong feelings
on this subject.
Mr. Franks. Well, thank you.
I am going to try to squeeze one more in, Mr. Chairman. In
the last 2 years, many of the programs, particularly many
missile defense programs that I believe are actually vital to
our national security, have been cut substantially, or even
zeroed out. And many of our technological programs require time
to realize those successes.
Even though the technology shows great promise and has
demonstrated its knowledge points--for instance, the airborne
laser I think is a good example--what are the services doing to
make sure that we don't incentivize the termination of programs
that could ultimately prove vital to our national security? And
I am going to throw that out to anyone, as well.
Secretary Work. Well, sir, from the Department of the
Navy's perspective, the way this works is, within the
Department, we have a very structured way to go about the
different requirements: a deputy advisory working group, which
reports to the Secretary, who holds small and large groups with
all the combatant commanders, and that is where the
requirements are really set.
As far as ballistic missile defense goes, we think it is
actually a very good news story. I will let Secretary Westphal
speak to THAAD [Terminal High Altitude Area Defense] and PAC-3
[Patriot Advanced Capability-3 Missile].
Mr. Taylor. Mr. Franks? You actually expired. What I am
going to ask is that each of the witnesses submit that for the
record.
[The information referred to can be found in the Appendix
beginning on page 94.]
Mr. Franks. All right, Mr. Chairman. Thank you.
Mr. Taylor. The chair now recognizes the gentleman from
Georgia, Mr. Marshall, for 5 minutes.
Mr. Marshall. Thank you, Mr. Chairman.
My questioning has to do with the F-35 alternate engine, as
well. And since it is pretty clear that nobody here is prepared
to testify too much on that subject, I am just going to make
some observations.
I think most on the committee agree that this is not a
close call. This is an exercise of very poor judgment by the
Secretary and the two service Secretaries. It is such poor
judgment that we can't even figure out really where it is
coming from. It is arguably defensible, but here we are going
to spend $110 billion over a 20- to 30-year period of time, and
we are essentially saying we are going to sole-source that
contract.
We will buy thousands of these engines. This is not a small
buy. It is not for a brief period of time. And the idea behind
the competition is that it is ongoing.
Now, Secretary Gates has recently said that he believes--
his notion of competition is ``winner takes all.'' I think he
needs to have a little bit broader notion of competition with
regard to these long-term projects like this one. We want
competition throughout the duration of the project.
I talked to a retired Navy commander, marine, flew fighter
jets, and he described the problems that they were having with
the F-16 when there was only one engine, and then the benefits
that they experienced once there was a competing engine.
I don't know that this is actually how it was structured,
but he believes that the way the competition was structured--
and it was annual competition here for better performance,
better reliability, better responsiveness--every single year,
the two competing companies were vying with one another to see
who was going to get 60 percent of the buy in the following
year.
And it went back and forth, back and forth between the two
companies, the effect of which, at least according to this
retired commander, was a remarkable improvement in the number
of F-16s that could actually fly, their performance, their
reliability, et cetera. GAO, looking at the F-16, if I recall
correctly, it was either 21 percent or 34 percent savings over
the life of the program as a result of competition.
The Pentagon's own figures acknowledge that the short-term
costs that you described the Pentagon as not being interested
in incurring right now--because we have got tough budget, you
know, nobody disputes that at the moment--those short-term
costs will be repaid, almost certainly, and it doesn't take
into account the likelihood that there will be huge savings as
a result of the competition that I described that went on where
the F-16 is concerned.
So I don't have a parochial interest in this at all. You
know, when I first started getting involved in this, I didn't
know who was building the engines. But we make a huge mistake
by sole-sourcing a 20- or 30-year, $110 billion program.
And I hope that that message gets back to the two
Secretaries and the Secretary of Defense, all of whom I respect
enormously. I think they are doing a great job for the country.
But their judgment is really flawed on this one, and I don't
know where it comes from. It is so off-base.
And with that, I yield back, Mr. Chairman.
Mr. Taylor. Chair thanks the gentleman for yielding back.
Chair now recognizes the gentleman from Texas, Mr. Conaway,
for 5 minutes.
Mr. Conaway. Thank you, Mr. Chairman.
Witnesses, thank you for being here this morning.
I don't discount for 1 second the difficulty in achieving
auditability or business management systems transformation, all
those things. It is spectacularly complex issue across all your
agencies. In a 2-hour hearing, you just simply cannot do
justice to that.
But I am concerned that, given the revolving door that is
your jobs, that 6 years from now we will have someone sitting
in Ms. McGrath's position talking about yes, the Deputy Chief
Management Officer system is working, it is working fine,
auditability and business management systems transfer, those
words roll off your tongue very well, business enterprise
architecture, enterprise transition plans, enterprise resource
planning, Business Transformation Agency.
All of that sounds wonderful, and to the uninitiated, it
sounds like we are making progress. But I believe it creates
fog. And we hide in the fog the lack of progress that we are
making. There is a long litany of FIARs [Financial Improvement
and Audit Readiness Plans] or Financial Improvement--whatever
that thing is--from 1990 to today. And each time we have a
change in leadership, we have a new plan, and we don't execute
the plan fully to the end----
So it is not really a question, but it is an observation
that this is hard, and I recognize how hard it is, but it is
important, as well. It is no different in the business arena in
which a pointy end of the sword in business doesn't like the
back office guys, and there is always that tension between
resources and, you know, the mission and those things.
But we can't, I don't believe, do the mission properly for
the taxpayer of this country without being able to tell them
that we spend all this money correctly. We may spend every
nickel perfectly, but we can't prove it to anybody.
GAO has a litany of high-risk arena areas that the DOD has
never had one come off their list. It just gets longer. And so
all of us on this side are committed to doing what it takes to
get you the resources and have you keep those resources as you
go forward.
I am concerned that, as this efficiency model that
Secretary Gates has talked about, if you looked at that chart,
and it looks to me like it is an across-the-board cut.
Everybody gets $28 billion, and you figure out where it comes
from even though your individual budgets may be different, your
individual needs in the next 10 years may be different.
And it doesn't appear to be, at least on the surface,
rational as to how we came to the goal, the $101 billion, over
that timeframe, which I think is about 3-plus percent of total
spending within the Department over the next 5 years.
But I worry that you will inordinately punish or take
advantage of the resources that ought to be used to attain
auditability, and these management systems transfer because
those don't have a lot of champions in the system, but spending
money somewhere else in O&M do have champions in the system.
Long statement, 3 minute, 4 minutes' worth.
Can you talk a little bit about cross-pollinization between
particularly the three service branches? Because each of you
has an auditability goal, and I am hoping that the Marine Corps
is still on track to get their goal accomplished.
The goal of that first audit is laudable and is important,
but the better goal is auditability over--going forward. We can
all make Herculean efforts one time to get something done, but
if you can't replicate that because the systems didn't get
developed along the way, then we really haven't achieved much
beyond just that--pat ourselves on the back for that first
audit.
So do you have some sort of a cross-pollinization system
among yourselves? Because you are going to be doing the same
back office functions across your three Departments.
Ms. McGrath. So if I could just make a couple of comments,
and then to the extent my counterparts want to add, the Under
Secretary of Defense Comptroller, Under Secretary Hale, hosts
or convenes a FIAR, Financial Improvement Audit Readiness,
governance board where we all participate. We are all members
of the governance board. And in fact, I co-chair with him
because we are taking a look across the defense enterprise, not
just in the financial space, understanding the systemic changes
we need to make to ensure auditability.
So it isn't----
Mr. Conaway. Well, let me ask you this. You get to that
point, and you have got to make a decision. The Army wants one
system, the Navy-Marine Corps wants a system, the Air Force
wants a--who makes the hard call to say, ``This is the system
that we are going to go to, we are going to go common across
all three,'' and force it on them? Is there a system? Is
anybody in the Department of Defense have that authority to do
that?
Ms. McGrath. The common piece are the standards. So if each
of the military departments today in the services are pursuing
different financial solutions that, at the end of the day, will
enable auditability across the enterprise because we are using
a common set of standards. It is the standards that will drive
the auditability.
Mr. Conaway. All right. Well, thank you for what you are
doing. I know it is hard, but it is important.
Thank you, Mr. Chairman.
The Chairman [presiding]. Thank the gentleman.
Gentleman from Connecticut, Mr. Courtney.
Mr. Courtney. Thank you, Mr. Chairman.
Your first question, Mr. Chairman, regarding the
commissioning coming up a week from Saturday, the USS Missouri,
again focused on a successful program in the Navy, which again
I think, just to reiterate the point that you made, this ship,
this submarine, was built with 10 million man-hours. The first
in its class from the Virginia class, the USS Virginia, was
built with 14 million man-hours, in other words, a 4-million
man-hour reduction.
The first submarine was built. It took 87 months. This one
will take 60 months. And as we go into the next block of
submarines that are in the block 3 contract, which the Navy
executed in December of 2008, we are shooting for 55 months in
terms of the construction.
And what I would say is that we are not cutting corners. In
fact, I think the capability of the Missouri surpasses the
first in its class so that--obviously, you know, we have got a
program where we have figured out a way to do it more
efficiently, in fact improve quality. And it was done because
we innovated in the yard, because we created a culture of cost
containment and cost savings. And it really, I think, is a
model, which particularly in a shipbuilding account that is
going to be stressed over the next 10 years or so, that I think
we all should really pay heed to.
And again, I think Mr. Andrews and Mr. Conaway's reform
bills, the acquisition reform bills which, again, are about
trying to statutorily create a system where design and research
is done up front rather than on top of production, which is
where I think we got into trouble with the LCS program.
And I guess, you know, Mr. Work, I mean, we have spent a
lot of time this year already talking about the SSBN, which
clearly, looking out on the horizon, is going to put a lot of
stress on the shipbuilding budget. And I guess my question to
you is, is the Navy prepared to look at lessons learned from
the Virginia program, the success which we clearly are seeing
in real savings and quality, and applying it to that program?
Which again is going to be a challenge for this committee for
many years to come.
Secretary Work. Yes, sir, we are. The Virginia is actually
the model we are using on the SSBN-X. It is very important.
Secretary Mabus himself is following the development of the
requirements for that boat extremely carefully and is working
directly with the Chief of Naval Operations and Secretary
Stackley, our Assistant Secretary of the Navy for RDA,
research, development and acquisition, to really get those
requirements right so we don't overprice the boat.
We understand the requirement to put the R&D [research and
development] in and getting our engineering drawings to a high
degree of fidelity before we start construction. That is
exactly our plan. We hope to be ready for the first boat in
fiscal year 2019. So we are using the Virginia as the model for
that program.
Mr. Courtney. Thank you. And I think, you know, some of the
questions which have taken place this morning about not
sacrificing our defense needs in the mission of trying to
create efficiency, I mean, this clearly, I think, is the
ultimate challenge, because the need for an Ohio replacement
has been articulated in the QDR, the 30-year shipbuilding plan,
the nuclear posture review.
So, I mean, obviously the need is there, and your budget
shows a commitment to satisfy that need. But clearly, we have
got to use every tool possible to try and create the efficiency
so that we get that cost down to a manageable level. And I
would certainly encourage you to keep going down that path.
And with that, I yield back, Mr. Chairman.
The Chairman. Mr. Wittman.
Mr. Wittman. Thank you, Mr. Chairman.
Thank you, members of the panel. Thank you for joining us
today, and thank you so much for your service.
Secretary Work, I want to go to you, and I want to expand
upon Secretary Gates' efficiency initiative that he announced
on May 8th at the Eisenhower Library.
It seems like to me under that--and I want to get your
assessment of that--it seems like to me that, under that
efficiency initiative, that that is going to require an
objective analysis of all decisionmaking surrounding
expenditures. Am I correct in assuming that that is what will
happen out of this process?
Secretary Work. Yes, sir.
Mr. Wittman. Okay. So under that, would you say that it is
safe to assume, then, that there are going to be significant
differences or changes in how Departments make decisions on
expenditures?
Secretary Work. I am not so certain it would be different,
sir, in that Secretary Mabus has set up a procedure to get
decisions to his level, the Commandant's level and the CNO's
level so that those three leaders make decisions that are right
for their Department. So I don't think that the efficiency
drill will change that, but it will just really tighten down
when we look at every single decision on the final calculations
we make.
Mr. Wittman. So you would say, then, that we would be
applying a pretty strict model of objective decisionmaking
within deciding on the expenditures?
Secretary Work. I believe that is Secretary Mabus's intent
in every decision.
Mr. Wittman. Okay, very good.
Let me go back a little bit, then, and go to some testimony
before this committee of both the CNO [Chief of Naval
Operations] and the Chairman of the Joint Chiefs. When asked
about decisionmaking with the home-porting there in Mayport,
when the CNO was asked, ``Tell us about the objective analysis
that was done, the risk assessment that was done behind that
decisionmaking,'' the CNO said specifically hadn't been done.
This was a seat-of-the-pants judgment they were going to make
about strategic dispersal.
Asked the same question of Admiral Mullen. Admiral Mullen
said the same thing, hasn't been an objective analysis done.
This is a decision that we are making based on our best
judgment, or again, seat-of-the-pants decisionmaking.
I go back to a quote by Secretary Gates. Secretary Gates
said specifically, ``We need to decide dispassionately about
these sorts of efforts.''
Within that realm, do you believe, then, that the decision
about home-porting a carrier in Mayport should require an
objective analysis before that decision is complete, since none
has been done, since there hasn't been a risk analysis? Do you
believe that, under this efficiency initiative, then, that we
need to go back and do an objective decisionmaking, or go
through an objective decisionmaking process on this homeporting
decision?
Secretary Work. Sir, I don't believe we do. There is a
balance between strategic requirements as well as efficiencies.
In this case, the Department--and as affirmed by the QDR--that
the strategic rationale for the homeporting decision is a good
one.
And this reminds me somewhat--before the DDG-1000 [Zumwalt-
class destroyer] program was truncated, the Department of the
Navy wanted to single up into one yard for efficiency's sake,
and we made the case that we would save about $300 million per
boat, or per ship. And it was the Congress that intervened and
said, ``Look, you cannot take the risk of singling up into a
single yard because what would happen if that yard was hit by a
catastrophic event?'' And the wisdom of the Congress was proven
a year later in Katrina, when the yard down on the Gulf Coast
was knocked out for a while.
There was no objective risk analysis would give you a
number on why you would do that. It is a strategic judgment of
leadership that we basically say this is a good call and would
trump a mere efficiency argument.
Mr. Wittman. Well then, where would the line be drawn
between when you make a strategic decision without objective
analysis and when you make an objective analysis, which in this
case you can easily quantify the risks that you are trying to
mitigate? So can you let me know where that line is? Is that a
line that, through this efficiency initiative, that we are just
going to kind of meander with?
Secretary Work. No, sir. I think the process is, on a
quadrennial basis, do that in the Quadrennial Defense Review,
so we actually teed that up. At the request of the committee,
teed that up to the Secretary of Defense to ensure that our
strategic judgment was sound, and they actually supported us.
So every 4 years we have that, and then every year we have
a means by which to bring up strategic concerns to the Deputy
Secretary and the Secretary. And it is, in my view, a very
effective way. I have been quite pleased over the last year to
see it in action.
Mr. Wittman. I would like to get a copy, too, of the
response to Congressman Forbes' question about how those
scenarios then changed. Obviously there must be some
quantifiable change that is there between the QDR, the BRAC,
and then the 2010 QDR.
Thank you, Mr. Chairman. I yield back.
The Chairman. Thank the gentleman.
We have two votes. We will return as quickly as we can and
resume the inquiry. And so, please have patience with us. We
shall return. We are in recess.
[Recess.]
The Chairman [presiding]. The hearing will resume.
Mr. Nye, gentleman from Virginia.
Mr. Nye. Thank you, Mr. Chairman.
Secretary Work, I had the pleasure of attending recently a
breakfast where you were the guest speaker, and you laid out
and described for us the challenges that you are facing right
now in terms of Secretary Gates' charge to look carefully at
all your spending accounts and find ways to save some money,
particularly looking in the overhead arena.
And I offered to provide some ideas for ways that I thought
we could do that, and that is part of our ongoing communication
with you and Secretary Mabus.
But I wanted to note, you were describing what Secretary
Gates said in May, essentially said military spending on things
large and small can and should expect closer, harsher scrutiny.
And I think that is a reasonable statement, given the fiscal
environment that we are in right now.
In fact, Secretary Mabus recently said, quoting him, ``The
expected level of resources over the near- to mid-term will not
sustain every program and every program objective, warranting a
willingness to consider trade-offs in even our most deeply held
priorities. And there are no sacred cows. Everything is on the
table.''
Do you agree with Secretary Mabus in that assessment?
Secretary Work. Yes, sir, I do.
Mr. Nye. Okay. What I wanted to ask was, given that
constrained environment, and given the new charge that you have
been provided by Secretary Gates, even subsequent to the QDR
being released, and considering the fact that the proposed
redundant nuclear carrier homeport in Mayport carries a price
tag of approaching a billion dollars estimated, that four
equivalent facilities exist in the country, including another
one on the East Coast, and that, theoretically at least, those
funds could be used for other priorities that are on our list,
getting the 313 ships, fixing all of our maintenance backlogs
at the facilities and of the ships that we have in the fleet,
strike fighter shortfall, all those things that are on that
list, including every other priority?
What I wanted to ask is, would you agree that those are the
kinds of trade-offs that you have to consider?
Secretary Work. Yes, sir. In fact, we are in the process of
considering them for this budget submission, which I think you
know is due up to OSD on the 30th of July.
As we looked at Mayport, really it is we believe the costs
are far closer to about $589 million instead of 6 billion, and
it is really stretched out over a long period of time. Between
fiscal year 2011 and fiscal year 2015, it is a grand total of
$239 million.
So this is a cost that we believe is very manageable and
does not in any way, shape or form take away from any of the
other higher priority goals in the Department. We actually
think it fits well within the guidance we have been given on
the QDR, and don't believe it will, in any way, shape or form,
cause a problem in any of the other things you mentioned.
Mr. Nye. Well, we can agree or disagree on cost, and
oftentimes we do. And this committee has actually ask for, in
this year's NDAA [National Defense Authorization Act], some
further studies into what all might be on the table that would
lead to a good estimation of what that cost might be at the end
of the day.
But I think the bottom line of what I am getting at here
is, we know there is a cost involved, and it is significant. We
know that we are in a very tight resource-constrained
environment and that we have got to make some tough choices and
some tough trade-offs.
And that is the charge that you are left with. That is the
charge that I am left with in terms of representing a district,
but also taxpayer dollars and trying to ensure the folks that
fund us that we are using that money as efficiently and
appropriately as possible when making some of those tough
trade-offs.
I just want to note that recently Northrop Grumman
announced that it is closing its Avondale shipyard due to
excess infrastructure. In fact, they noted that, since the Cold
War, the size of our fleet has shrunk significantly, and they
just can't afford to keep open an extra facility.
I know there are a lot of folks who would like to see that
facility remain open. But again, that is a tough choice they
had to make about facilities and what we are able to afford,
going forward.
I just say that to highlight the environment that we are
in, and I have made no secret of my position on this issue. I
strongly believe that whatever the final cost, whether it is a
billion or something in that region, over time, we can use that
money on things that are more urgent and more pressing for our
Navy.
So I just want to close by urging you again, in the
strongest way I can, to, as you said, consider those possible
trade-offs, you know, take a look at that project again. And
going forward, carefully decide whether or not that is really
the best possible use of our scarce Navy dollars.
But I thank you all for your service. I understand what you
have been asked to do is you have been asked to make some very
tough, difficult choices. And we want to work with you in that
process.
Thank you. I yield back, Mr. Chairman.
The Chairman. Thank the gentleman.
Before I call on Mrs. Davis, Mr. Work, recently I asked the
proposed price tag on a replacement vessel for the Ohio-class
submarine. Has the Navy done any studies on whether a
replacement, such as the Virginia-class submarine, can perform
the same duties with obviously an alteration in the missiles
and the ship somewhat?
Secretary Work. Yes, sir, we have. Secretary Mabus, when he
came aboard last year, and I were first given the briefing on
how much this boat could potentially cost, this became one of
his focus items from day 1.
For the last year, the AOA, the Analysis of Alternatives,
for the submarines has occurred. The judgment is that, because
we have elected to go with the D-5 missile, that using the
Virginia is not the right way to go, that it is a much better
and more efficient thing to exploit our existing infrastructure
on a 42- or 43-foot diameter hull.
Once that decision was made, Secretary Mabus has asked
every single requirement, what is the basis for that
requirement, and what is the thing that is driving the cost in
the boat. I don't have a final answer for you, Mr. Chairman,
but this is at Secretary Mabus's level, and I can assure you
that we will have an affordable boat that we can afford in the
20s.
The Chairman. Well, what is interesting, based upon your
testimony today, the missile is driving the boat. Have you
asked engineers to redesign a missile that might fit on a
Virginia-class submarine? This isn't brain surgery. Have you
done that?
Secretary Work. Sir, I will have to come back and see if we
have done an actual costing, but at the Office of the Secretary
of Defense level, it really was can we afford to design a whole
new missile mount, and the decision was to stick with the D-5
through about 2040. And that will sustain our solid rocket
motor base industry. It will take advantage of all of the
investments that we have had up to this point. And we believe
that is the most inexpensive and the right way to go.
The Chairman. Well, we may be of some help to you on this,
and help you with a decision, Mr. Work, because it appears the
replacement of Ohio-class submarine is just phenomenal and
might well eat into your attempt to reach the 313 ships that we
want for the United States Navy.
I think you ought to ask the engineers about a missile that
might fit in a smaller submarine rather than the multi-billion
dollars you might have to sink into a replacement for the Ohio-
class submarine. We are talking about efficiencies.
Secretary Work. Sir, Mr. Chairman.
The Chairman. Mrs. Davis.
Mrs. Davis. Thank you, Mr. Chairman. Thank you to all of
you for being here and for staying, and a special welcome to
Secretary Conaton. Good to have you here. Thank you.
I understand that the Department and the individual
services are looking very, very hard to cut whatever programs
are possible, and clearly understood, and I think that we
should be doing that. I also understand that we are looking for
some efficiencies, and hopefully some of those might even go
into quality of life programs for our military personnel and
their families.
But I am concerned that we may be cutting, or even
eliminating, some programs that are extremely valuable, and I
wanted to talk for just a moment about the My CAA [military
spouse career advancement] program, the career accounts for our
military spouses, career advancement accounts.
That program has been wildly popular, as you know. And I
wanted to ask, particularly Ms. McGrath, if you could help me
understand better the process for weighing programs like that
which, when compared to other programs, are relatively small
dollar amounts, and yet we have many far larger ticket programs
out there that gain a lot more attention.
But this one in particular I think is important to many. So
what is it that we are really specifically looking at here? It
is been scaled back, and may, in fact, not have nearly the
impact that it could have had with a relatively small--larger
dollar amount.
Ms. McGrath. Yes, ma'am. We have been talking this morning
about obtaining efficiencies across the Department of Defense.
We are looking at--and I think it is been mentioned by
everybody here--we are looking at everything we do, how we do
it, and are we optimizing our performance, the way we currently
execute today. So major programs, organizational structures,
are there better ways to execute.
And then, when the decisions are made, it is through what I
will call an analytical process where all of the submissions
are brought together and every aspect is looked at, both from
efficiency, effectiveness, quality of life, things like Wounded
Warrior certainly would be maintained. We are not looking to
degrade, you know, quality of life, but I would say that we are
looking at every aspect of what we do when these decisions are
made.
And so, it is not just about, you know, trying to save a
dollar or move things exactly from, you know, support to
infrastructure without the input of quality and quality of life
for our servicemembers and their families.
Mrs. Davis. Does the impact in the popularity, in many
ways, of a program--I have had spouses tell me, of all the
things they have been looking at over the years, all the
programs that are offered, this one resonated more than
anything else. And I would submit that I think it is worth a
second look in that program. And I appreciate your response.
We are going to nudge on that one, because it clearly can
make a difference down the line. And I think by so narrowing
the program and what has happened in the last directive, we are
going to be missing out on a lot of the kinds of opportunities
that many of our families might be entering into, which is
going to turn around and help the services in the long run. And
I don't think this is the time to lose out on those
opportunities.
I also wanted to just raise one other issue, if I may,
within the time that I have, and that is for you, Secretary
Work. If you could just speak for a moment, because Admiral
Roughead had said that predictable ship procurement allows the
industry to stabilize its workforce and retain the critical
skills necessary to national security. And Admiral Mullen also
has noted earlier.
And in light of that, when we look at the MLPs, the Mobile
Landing Platforms, being spread out over a period of 5 years
versus 3 years, which does not maximize the workforce, how do
you look at those programs and try and make those decisions?
Because I think we certainly have a strong example or two of
where pushing up, you know, the opportunity to move within a 3-
year period would make a huge difference in terms of
maintaining the kind of people that we need to be involved in
those programs.
Secretary Work. Yes, ma'am. Secretary Mabus is committed to
maintaining 10 ships per year across the FYDP [future years
defense program], 50 ships per year, and within the balance of
the resources that we can put to new ship construction. And we
have to make these choices every day.
I mean, sometimes we do have to go to every other year
procurement, but in this case we work directly with NASSCO, for
example, to work out with them on how they could achieve
favorable rates using existing legislation. And we will
continue to work with the industrial base in every case to try
to work through in the most efficient and effective way, given
the limitation of resources and the priorities that we are
trying to balance across the Department.
Mrs. Davis. Thank you. I know they are difficult questions
and issues, but I think, in the long run, the taxpayer will be
saving if we can figure out a better way to do that.
And I would like to yield to my colleague, Mr. Nye, for my
remaining time.
Mr. Nye. I want to thank Mrs. Davis for her interest in the
My CAA program and just follow up by saying I also think the
program has provided some tremendous value to our military
spouses.
And earlier this year, I was contacted by a number of
spouses who complained that the program was changed without a
lot of notification to them. And I want to urge you, in your
review of this program, to please do as much outreach with the
military spouses as possible to hear their views about it
before you make changes.
Thank you.
Mrs. Davis. Thank you.
Thank you, Mr. Chairman.
The Chairman. Thank you very much.
Does any other member wish to ask a question? Mr. Bishop.
Mr. Bishop. Thank you for staying around so long. You timed
it very well.
Ms. Conaton, I am extremely happy to see you here again in
your current position, and I want to thank you for all the
service you gave to us, both when you were in charge of the
Minority council and then Majority council. I wish you best in
this new endeavor, as well.
I am also most familiar, I suppose, with the Air Force
bases, and I realize that we have a lot of infrastructure needs
in all the military, but especially the Air Force right now,
and especially with the MILCON [military construction]
processes we have.
One of the idea this committee has long promoted for years
is the concept of enhanced-use leasing, which tries to leverage
private sector dollars along with military spending to try and
utilize our under-utilized properties that may belong to the
DOD for the benefit of both the private sector as well as for
military spending.
I know in my area, Falcon Hill project, which is extremely
important, we are looking at maybe $500 million worth of
revenue that can come to the Air Force over 30 years for needed
infrastructure development.
So I guess a couple of questions on that line. What is the
Air Force position, going forward, about promoting and
fostering enhanced use leases as a tool to help bridge the gap
between the lack of MILCON resources and the need that is out
there?
Secretary Conaton. Thank you, Mr. Bishop, and appreciate
the opportunity to continue what has been a dialogue with you
and other members of your delegation on this issue.
I think enhanced-use leases [EUL] are a very important tool
as we look at how to best invest our MILCON dollars. So I would
agree with the premise of your question.
Mr. Bishop. Does the Air Force have a process, or a system
in place, to help review potential problems with EULs or to
recommend to Congress any legislative fixes or authorities that
may be needed to promote them?
Secretary Conaton. Sir, I would like to get back to you, I
think, with a more precise answer for the record about any
additional needs that we might have there. I guess all I would
say in a general sense is that I think the dialogue between
these committees and the services in between individual
delegations and the services is critically important on this.
And I will get you a more detailed answer for the record.
[The information referred to can be found in the Appendix
on page 95.]
Mr. Bishop. That would be fair, and I think also better for
me, as well as the Department or the Air Force, in this case,
with a more detailed answer later on to that question.
I am making the assumption that you have not experienced
any institutional resistance from the Department of Defense in
fostering an EUL?
Secretary Conaton. Sir, not that I am aware of. As you
know, there are a number of enhanced use leases that are very
complex and complicated in their specifics. And so, the Air
Force staff has been working to talk through those issues that
might be of concern to OSD, recognizing that some of these
instances are more complicated than others.
Mr. Bishop. In every effort where we start something that
is a little bit innovative, or new or different, there are
sometimes institutional concerns or problems that probably can
be easily worked out if our mindset is that we want this to be
successful from the outset.
And I think--I appreciate you saying very clearly that this
is one of those vehicles that we can use to try and move
forward into helping some of the infrastructure needs that we
have, and I appreciate your positive answers. I look forward to
the more complete answer. And I look forward to working with
you in the future.
Thank you.
Secretary Conaton. I do as well, sir. Thank you.
Mr. Bishop. Yield back.
The Chairman. Thank the gentleman.
Ms. McGrath, what progress has been made in addressing the
items on the GAO's latest high-risk list for the Department of
Defense?
Ms. McGrath. Sir, as I mentioned in my opening statement,
we address the high-risk areas not as sort of an additional
thought. That is our everyday thought. They are included in our
strategic planning document for the business base, which is the
strategic management plan. They are aligned within those four
goals, so we take proactive measures to address them each day.
Each one of the high-risk areas has a plan identified. It
has appropriate governance in place. We utilize the Defense
Business Systems Management Committee [DBSMC] to review each
one of the high-risk areas. We meet with the Government
Accountability Office frequently on each of the areas in
addition to the Office of Management and Budget, to ensure that
we are keeping our eye on the ball.
We also have identified milestones and measures for each
one of them, and we track performance quarterly through the
DBSMC. So I would say I mentioned some specifics on the
personnel clearance reform. We have made certainly a lot of
progress there, the management attention, the plan, the
proactive measures, all our tools we need to actually make
progress on each one of those. And I believe that we are making
progress in each one, and I am happy to talk about any of them
in specific detail or just talk in sort of general terms about
where we are with each one. But I am comfortable, and I can
clearly state that we are making progress.
The Chairman. To each of the Under Secretaries, let me ask
this: each of you have an adopted, it appears, different
management structures for business transformation--for
instance, I note that Lieutenant General Durbin is here--and
why are your approaches and staffing levels for this endeavor
so very, very different?
Mr. Westphal.
Secretary Westphal. Mr. Chairman, you are right, every
service has different processes, although some of our processes
are, of course, the same.
In the case of the Army, prior to Secretary McHugh and I
coming on board, the Army had instituted, under the previous
Administration, an enterprise task force, an enterprise
approach to management. We examined that closely, and with the
mandate from Congress to establish an Office of Business
Transformation, we made the decision to incorporate that
management enterprise approach within the context of business
transformation and apply it holistically across the Army.
Now, that enterprise approach had a staff that had been
created to help manage the process under the then Deputy Under
Secretary of the Army. I took some of that staff and brought it
into the--and to create and establish the Office of Business
Transformation because they had already been engaged in
business transformation activities.
That helped me immensely to be able to then immediately
take hold of the planning, programming, budget execution piece,
which we sort of came in in the middle of and really manage the
POM [program objective memorandum] process, the planning
process, and establish what I call the Army Management
Enterprise, which is basically the Secretariat, in lead, with
the Army staff in support, to put forth what we call the Army
Campaign Plan, which is essentially the direction that we at
headquarters give to the Army holistically across the board.
So it allows me to integrate planning, business
transformation, the resourcing decisions to bring it to a level
of integrated discussion among and across all sectors of the
Army, led by the Assistant Secretaries with me and through to
the Secretary of the Army to get decisions done.
And then, in addition to that, we established something
called the Army Enterprise Board, which is a four-star board,
led by me but an advisory board to the Secretary of the Army,
of all the four-stars, that is Secretariat and uniform, to
basically become a forum for discussion of major issues that
need to be resolved across the Army.
The Chairman. Thank you. Mr. Work.
Secretary Work. Sir, the way I would answer this is I think
there is great strength in the way the Department is handling
this now. Each of the Unders come with a little bit of
different background. Secretary Conaton comes from Congress.
Secretary Westphal has been in the building before, and Ms.
McGrath.
The way it works now, sir, is that we establish common
goals across the Department of Defense and the military
departments. We each have to come up with our business
transformation plan and our business enterprise architecture.
But each of us come at it a different way, and I would argue,
it is a strength.
We have meetings at the DBSMC, the Defense Business Systems
Management Council, chaired by Secretary Lynn, in which we come
in and say how we would approach a problem, and we have
discussions on what are best practices. Ms. McGrath meets with
the Unders quite often, and then the Unders meet themselves,
along with our financial management and Comptrollers.
And by setting it up the way we do, where we all have
common goals and common plans, but we can approach the problem
differently, we actually, I think, are better for it, and it
makes for a very innovative approach to this where we all have
a common goal, and that is to prepare the best and most
efficient business operations for the Department.
The Chairman. Ms. Conaton.
Secretary Conaton. I certainly agree with everything that
Secretary Work just said. Just for a brief moment talk about
the Air Force structure.
Obviously, like my colleagues, serving as the Chief
Management Officer, I have a very able Deputy Chief Management
Officer, Mr. Tillotson, who also is dual-hatted as our director
of the Office of Business Transformation. The choice in Air
Force was to relatively leanly staff that office and rather to
make use of expertise that exists throughout the functional
secretariat and air staff, recognizing that transformation has
got to occur in the actual activities of those parts of the
Department rather than mandated from the outside.
We also have representation, folks in different parts of
the country at our major commands who have expertise in Lean
Six Sigma approaches and have gone through the effort that the
Air Force has, Air Force SMART Operations for the 21st century,
what we call AFSO 21, which is our continuous process
improvement, which will help drive transformation outside of
the headquarters level, as well as in the headquarters itself.
But I guess I would come back to things we have talked
about, which is that leadership really matters in driving
transformation. And so, the fact that these issues are brought
to the Air Force Council, which is our governance process, has
helped us keep a continuous leadership eye on where we need to
go with mission and transformation.
Thank you, Mr. Chairman.
The Chairman. Thank you.
I believe Mr. Bishop has an additional question.
Mr. Bishop. Thank you. I thought that was an important
question. I appreciate your answers. Could we have, though, for
the record if necessary, the staffing levels, the number that
we have, from each of you on those particular areas? And if you
would like to do that for the record so you can get the exact
number correct, that would be okay.
The Chairman. Along with that, could you give a summary of
the duties about the leaders? You don't have to go all the way
down to the bottom, but at least give a summary of the top few,
please.
[The information referred to can be found in the Appendix
beginning on page 93.]
The Chairman. The gentlelady, Ms. Carol Shea-Porter.
Ms. Shea-Porter. Thank you very much.
And thank you all for being here. I wanted to pursue the
supplemental and the impact that you believe that it would
have. I know that we have seen a lot of votes for and against,
both Republicans and Democrats voting for it and against it
over a period of time. Has that caused any problems so far? And
with the size of the budget, where exactly would you cut? I
know that you had talked about pay, but what other options
would there be if you didn't receive the supplemental?
Secretary Westphal. I am not sure exactly--well, first of
all, they would come mostly from our O&M accounts. So,
depending up if the supplemental is not passed before the
recess, we would then have to go into those accounts and look
at what we can do.
We have tried to anticipate the possibility that the
supplemental wouldn't be passed, and we have submitted, or have
ready to submit--I can't tell you which one of those two it
is--some reprogramming to avert any major issues during August.
But some time in August, we would be having to weigh in how we
address a lack of funds in some of those accounts.
Ms. Shea-Porter. Okay. Any idea about what you would be
looking at?
Secretary Westphal. We would be looking at the possibility
of some furloughs in some of those O&M areas in the Army, and
that would be across various departments and various agencies
of the Army.
Ms. Shea-Porter. Okay. Has there been any problem to date
with the fact that there have been, you know, inability to
bring this all the way through? Have you experienced trouble?
Secretary Westphal. No. You know, I mean, we watch
carefully. We monitor and we certainly have a lot of
conversations with staff and members about--well, about the
progress made, and we try to anticipate. And so we have been in
an anticipatory mood, at least in the Army, and I think all of
my colleagues would say the same thing in their service.
But it is a very unpredictable process, and at the end of
the day, we have to just wait until you make those decisions
and accept whatever the consequences of those are.
So we are reasonably hopeful that you will have a
supplemental approved before you leave for recess. We hope that
is the case and that we then will proceed to make sure that we
account for those resources the way you want us to.
Ms. Shea-Porter. Okay.
Anybody else want to answer that?
Secretary Work. Well, as you know, ma'am, Secretary Gates
sent a letter to Speaker Pelosi, as well as all of the
chairmen, and basically said this is kind of an unprecedented
situation. We haven't been--we know that if the supplemental is
not passed, that some of our base budget operating accounts
would begin to deplete in August.
And although we would keep exempt civilians on duty, as
everyone has said, other civilians might have to be furloughed
without pay. And of course, we would keep our men and women on
active duty, but at some point in the latter part of September,
we would run out of money to pay for those.
So this is quite an extraordinary circumstance. I can speak
for the Department of the Navy for certain. This is not a
circumstance that we would like to be faced with.
Ms. Shea-Porter. Right. Would you have to look at some of
the contracts, or is that separate? I mean, would you
reevaluate some of the contractor deals that we have made?
Secretary Conaton. I think it would depend on what the
contract is. To the extent that contracts are issued for work
that comes out of the operations and maintenance accounts, I
think it would be affected by the drawdown of those accounts in
the middle part of August.
And the only other thing I would add to what my colleagues
have said on a more general level is the Secretary of Defense
has told the services, and I think told other parts of the
Department, really clearly that we should minimize the
disruption to the programs and to our deployed men and women.
And we are relying upon Congress, this institution, to
provide that supplemental, and that we are going to keep moving
on that path. Obviously we will plan, as we need to, for a
worst-case scenario, but I think the direction he has given to
the services is to trust that the Congress will provide.
Thank you.
Ms. Shea-Porter. I just wanted to make sure that the plan
would be to protect the men and women who were in uniform.
Either way, that is the mission that we all share, and you have
reassured me that that will be the top priority.
Thank you so much, and I yield back.
The Chairman. Thank the gentlelady.
If there are no further questions, we thank our panelists
for your testimony, for being with us, for your expertise, and
especially for your leadership. Thank you again.
[Whereupon, at 12:48 p.m., the committee was adjourned.]
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A P P E N D I X
July 22, 2010
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PREPARED STATEMENTS SUBMITTED FOR THE RECORD
July 22, 2010
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WITNESS RESPONSES TO QUESTIONS ASKED DURING
THE HEARING
July 22, 2010
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RESPONSE TO QUESTION SUBMITTED BY MR. SKELTON AND MR. BISHOP
Secretary Conaton. The Air Force Business Transformation Structure
is comprised of the Office of Business Transformation, and the
transformation organizations of the key Headquarters Air Force
functional teams. This team comes together as the Enterprise Senior
Working Group, under the leadership of the Director of Business
Transformation, to make up the total transformation team. This
approach, which was built to take advantage of the already existing
functional transformation teams, allows the Business Transformation
Office itself to remain small (a staff of 41 (19 military and 22
civilian) government positions plus 81 full and part-time contractor
personnel), while directing the efforts of a total transformation team
of over 370 personnel. Key positions within the Office of Business
Transformation include:
The Under Secretary of the Air Force serves as the Chief Management
Officer (CMO). The CMO duties are outlined in Headquarters Air Force
Mission Directive 1-2. By Secretary of the Air Force guidance, the
Under Secretary performs duties in accordance with Section 904, of the
FY08 NDAA, as designated by the Secretary to have primary management
responsibilities for business operations and to be known in the
performance of such duties as the Chief Management Officer. This
includes directing and overseeing activities of the Deputy Chief
Management Office, and serving as the co-chair of the Air Force Council
which advises the Secretary and Chief of Staff on resourcing decisions
(and related business transformation initiatives) and efficiencies and
related performance management.
The Director of Business Transformation also serves as the Deputy
Chief Management Officer (DCMO). The DCMO duties are also outlined in
Headquarters Air Force Mission Directive 1-2. As directed by the Under
Secretary, the DCMO serves the Under Secretary of the Air Force in
exercising the assigned duties and authorities relating to the
management of business operations for the Air Force. The DCMO exercises
the Under Secretary's CMO responsibilities for business operations by
effectively and efficiently organizing the business operations of the
Air Force and providing information related to Air Force Business
Operations to the CMO and DCMO of the Department of Defense as is
necessary to assist those officials in the performance of their duties.
The DCMO also represents business transformation interests in the Air
Force Corporate Structure by serving as the chair of the Air Force
Board when discussing issues involving business practice and process-
related topics.
The Deputy Director, Office of Business Transformation coordinates
and recommends strategic priorities and performance goals for
logistics, personnel, training, acquisition, and finance activities Air
Force-wide; establishes and deploys a business and data architecture to
support those operations; synchronizes business process changes and
system deployments in support of those operations and in compliance
with the architecture; and synchronizes those business operations with
other services and defense agencies to ensure end-to-end performance
improvements across the Air Force and in support of DoD and joint
forces. The Deputy Director provides guidance and direction on Air
Force policies, plans, and programs related to all aspects of Business
Transformation. He directly assists in transforming the budget,
finance, accounting, and human resource operations of the Air Force in
a manner consistent with the comprehensive business transformation
plan. The Deputy Director also provides guidance and direction
pertaining to the elimination or replacement of business systems
inconsistent with the architecture and transition plan; and is directly
responsible for the development of the comprehensive business
transformation plan, with measurable performance goals and objectives.
The Air Force Office of Business Transformation is further divided
into two branches, each led by an Air Force Colonel (O-6) with the
duties of Transformation Outreach and Enterprise Transformation. The
Air Force Transformation structure explicitly includes synchronizing
the activities of transformation teams across the Air Staff and Major
Commands as part of the total effort, rather than creating redundancies
in the Office of Business Transformation staff itself. These teams
oversee the current business processes and systems Air Force-wide, as
well as the implementation of new systems, processes, and training.
a. Deputy Chief of Staff, Manpower, Personnel & Services (AF/A1).
Focused on end-to-end improvement of the ``hire to retire'' human
resource processes, the team consists of 50 personnel (9 military, 19
civilians, and 22 contractors).
b. Assistant Secretary of the Air Force for Financial Management
and Comptroller (SAF/FM). Focused on improving resource management
processes, including establishment of a clean audit capability for the
Air Force, the team consists of 107 personnel (28 civilians and 79
contractors).
c. Deputy Chief of Staff for Logistics, Installations & Mission
Support (AF/A4/7). Focused on end-to-end supply chain and maintenance
management, and on installation efficiencies, the team consists of 117
personnel (3 military, 56 civilians, and 58 contractors).
d. Major Command (MAJCOM) Master Process Owner teams. Focused on
providing direct advice and support to MAJCOM commanders to support
business transformation activities within each of the MAJCOMs, each
team consists of 5-10 personnel. [See page 39.]
______
RESPONSES TO QUESTIONS SUBMITTED BY MR. MCKEON
Ms. McGrath. Once the President signs the bill, the Department will
work with OMB and Treasury to begin flowing funds to the field for
execution within a matter of Days. The Department needs final
Congressional action on the supplemental prior to the August recess.
While we will react quickly once the supplemental is signed into law,
this does not change the fact that we cannot make it through the August
recess without these supplemental funds. [See page 14.]
Secretary Westphal. Agencies may use furloughs when they no longer
have the necessary funds to operate. For a furlough 30 days or less,
the employee should have at least 30 days advance notice. The notice
period begins upon the employee's receiving the proposed action.
A furlough of 30 days or more requires at least a 60 calendar day
specific written notice of the furlough action; however, the Office of
Personnel Management may approve notifications of 30 to 59 days.
In the event of a lapse in appropriations, the Office of Personnel
Management provides that while an employee must ultimately receive a
written notice of a furlough decision, it is not required that such
written notice be given prior to effecting the furlough. Issuing a
written notice prior to the furlough is preferable, but when it is not
feasible, then any reasonable notice (telephonic or oral) is
permissible. [See page 15.]
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RESPONSES TO QUESTIONS SUBMITTED BY MR. TAYLOR
Ms. McGrath. It is critical that we make the most effective use of
our limited resources. As the Department makes tough decisions about
funding for specific programs, we must prioritize competing
requirements and ensure our prioritized and validated requirements are
satisfied in the most cost effective manner. When a program faces
significant technology risk, affordability problems or excessive
schedule slip, cancellation remains an important tool for the
Secretary. It is important to note, however, that program cancellation
does not necessarily constitute cancellation of a particular
requirement. In many cases program cancellation allows the Department
to take a fresh look at the requirement and determine the best approach
to equip our warfighters. The Department's rigorous requirements
validation process, its Planning, Programming, Budgeting and Execution
System, and other high-level review and oversight mechanisms ensure
these decisions are made in a thoughtful, reasoned manner. [See page
26.]
Secretary Westphal. The Army is conducting a deliberate and
thorough portfolio review that encompasses our research and
development, procurement, and sustainment accounts. We are holistically
examining, validating, or modifying requirements, ensuring the Army is
being a good steward of resources. As we conduct our portfolio reviews,
we are validating the use and battlefield impacts of redundant and
duplicative capabilities; performing a critical analysis of areas where
manageable risks can be assumed to gain greater efficiencies. This
review process not only looks at our current campaigns, but is also
rigorously evaluating what capabilities we need for future warfighting
and emerging threats. [See page 26.]
Secretary Conaton. The Air Force (AF) process to terminate a
program ensures that those vital to national security are retained by
calling for multiple layers of scrutiny by the Program Executive
Officer, the Service Acquisition Executive, USD (AT&L), the sponsoring
Major Command, the AF Corporate Process, the Secretary and Chief of the
Air Force, and Office of the Secretary of Defense, prior to
recommending termination to Congress. [See page 26.]
______
RESPONSE TO QUESTION SUBMITTED BY MR. FORBES
Secretary Work. The Department of Navy (DON) has been reporting to
Congress on the development of plans to make Naval Station Mayport a
potential homeport for a nuclear-powered aircraft carrier since the
late 1990s. As a result of the 2001 Quadrennial Defense Review (QDR),
the DON prepared an environmental impact statement to review and assess
a broad range of options for homeporting additional surface ships at
Naval Station Mayport. The 2005 Base Realignment and Closure (BRAC)
process did not provide for operational homeporting decisions due to
the near-simultaneous strategic analysis on-going in the 2006 QDR.
However, the DON premised its 2005 BRAC configuration analysis on a
minimum of two ports on each coast capable of cold iron berthing a
nuclear-powered carrier to allow for dispersal. The 2006 QDR provided
the strategic direction for the Navy's 60/40 split of operationally
available and sustainable aircraft carriers and submarines between
Pacific and Atlantic homeports, but did not specify homeport locations.
In January 2009, the DON issued a record of decision to homeport one
nuclear-powered aircraft carrier at Naval Station Mayport. Although the
Department of Defense decided to delay the Mayport homeporting decision
pending outcome of the 2010 QDR analysis, the final 2010 QDR fully
supported the Navy's 2009 decision to homeport one nuclear-powered
aircraft carrier at Mayport. [See page 18.]
______
RESPONSE TO QUESTION SUBMITTED BY MR. BISHOP
Secretary Conaton. The Air Force does have a process in place to
help review potential problems with potential Enhanced Use Leases
(EULs).
Prior to commercial solicitation of a potential EUL, the local
installation, working with Headquarters Air Force seeks to identify and
resolve any issues. Thorough up-front due diligence is being done on
EUL concepts, in which market demand and possible Air Force EUL sites
(supply) are evaluated for EUL viability. The objective is that all
demand factors, development constraints (with appropriate options), and
EUL benefits are identified and communicated, prior to taking a project
to market. The Air Force has broadened our use of EULs beyond
traditional real estate to renewable energy ventures. Additionally, any
future EULs will be reviewed by the Strategic Basing Executive Steering
Group to ensure maximum benefit to the Air Force and the taxpayer.
If during the EUL review, the Air Force determines that a proposed
EUL will require legislative relief, the Air Force submits a
legislative proposal through the Department of Defense Legislative
Review Process. [See page 36.]
?
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QUESTIONS SUBMITTED BY MEMBERS POST HEARING
July 22, 2010
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QUESTIONS SUBMITTED BY MR. ORTIZ
Mr. Ortiz. The House Armed Services Committee believes compliance
with Section 803 of the FY 2010 National Defense Authorization Act will
provide the Congress with much greater clarity on procurement of
contractor services. The failure to comply is a source of great
concern. Why has the Department (or the military departments) taken no
meaningful steps to implement Section 803 and to improve its strategic
sourcing decisions for contract services?
Ms. McGrath. Due to the timing of the Fiscal Year (FY) 2010
National Defense Authorization Act and budget preparation cycle, the
Department was unable to comply with the requirements of Section 803
for the FY 2011 budget submission. DoD is currently working to comply
with Section 803 in a phased approach beginning with the FY 2012 budget
submission. The Under Secretary of Defense for Acquisition, Technology
and Logistics, the Under Secretary of Defense (Comptroller), the Under
Secretary of Defense for Personnel and Readiness, and the Director of
Cost Assessment and Program Evaluation are working closely together to
develop and execute the Department's approach for collecting, analyzing
and reporting the data on contract services required by Section 803.
Mr. Ortiz. The House Armed Services Committee believes compliance
with Section 803 of the FY 2010 National Defense Authorization Act will
provide the Congress with much greater clarity on procurement of
contractor services. The failure to comply is a source of great
concern. How can the Department and the military departments exercise
appropriate stewardship over its service contractor dollars (which have
more than doubled, if not tripled, since 2000) if it does not make
strategic sourcing decisions through the program and budget process?
Ms. McGrath. The Department utilizes the Planning, Programming,
Budgeting and Execution (PPBE) process to make effective program and
budget decisions. The PPBE process is a well established and robust
oversight mechanism supplemented by the many efforts of the Under
Secretary of Defense for Acquisition, Technology and Logistics to bring
greater transparency and efficiency to the acquisition of services.
Phased implementation of Section 803, beginning with the Fiscal Year
2012 budget submission, will help bring even greater clarity to these
issues.
Mr. Ortiz. Given the Secretary of Defense's May 8 speech on defense
spending, what is each Department's methodology regarding combining its
functions and realigning or reducing resources to achieve efficiencies
in overhead, support, and non-mission areas? In lieu of simply re-
categorizing functions and funds in a shell game of sorts, what staff
layers are being removed and what subordinate commands or middle
echelons are being eliminated to reduce redundancies, overlap and
overhead?
Ms. McGrath. Consistent with the Secretary of Defense's speech on
May 8, 2010, each of the Defense Agencies, Military Departments and
Combatant Commanders were provided savings and efficiency goals, but
they have been allowed broad discretion on how to reach these goals as
they prepare their programming and budget submissions for Fiscal Year
(FY) 2012. The Secretary of Defense provided additional information,
including specific savings initiatives such as the elimination of
certain Components, in his speech on August 9, 2010. However, at this
time, except for the specific initiatives identified in his speech,
Components have developed their own methodology to specifically reduce
redundancies, overlap and overhead. Additional decisions will be shared
with Congress when the President submits the Department of Defense
budget request for FY 2012.
Mr. Ortiz. The House Armed Services Committee understands that it
can take as long as two years in some components between the initial
identification of a function that should be performed by civilian
employees and the documentation for the authorizations for the in-house
personnel necessary to perform that function. What are the causes for
delays in the civilian authorization process and how can such delays be
minimized? If this is a problem only for some components, why?
Ms. McGrath. Defense Activities are funded, and positions filled,
consistent with mission priorities, budget constraints and
Congressional direction. This is consistent with 10 U.S.C. Sec. 129,
which states that ``civilian personnel of the Department of Defense
shall be managed solely on the basis of and consistent with (1) the
workload required to carry out the functions and activities of the
department and (2) the funds made available to the department for such
fiscal year.'' There are a number of reasons why Department of Defense
(DoD) civilian manpower requirements may not be authorized for fill,
including funding shortfalls and temporary impediments to acquiring DoD
civilians such as an apparent lack of qualified candidates,
insufficient office space, security clearance requirements, etc. If
this is the case, the DoD Component may elect to contract for the
service on a temporary basis and transition to DoD civilian performance
once impediments have been satisfactorily addressed. These types of
delays could be experienced by any DoD Component. Such delays could be
minimized through enhanced strategic human capital planning, leading to
better anticipation of overall needs.
Mr. Ortiz. The House Armed Services Committee understands that it
can take as long as two years in some components between the initial
identification of a function that should be performed by civilian
employees and the documentation for the authorizations for the in-house
personnel necessary to perform that function. Is it the Department's
policy or the policy of the military departments to ``lock'' the
personnel authorization levels until the next budget cycle,
notwithstanding changes in workload that may occur, even if this
results in either ``over-hires'' or hiring additional contractors to
meet workload changes? What challenges does this present in terms of
efficient management of its workforce, particularly with respect to the
imperative to right-size the civilian workforce?
Ms. McGrath. Consistent with 10 U.S.C. Sec. 129(a), Department of
Defense (DoD) Components are required to manage their civilian
workforce ``solely on the basis of and consistent with (1) the workload
required to carry out the functions and activities of the department
and (2) the funds made available to the department for such fiscal
year.'' It is not DoD policy for the Military Departments to ``lock''
their databases at the end of the budget process. Each Military
Department has taken a different approach to managing their personnel
authorization levels and striking a balance between workforce stability
and changing workload or priorities to enable effective personnel
management. In some cases ``over-hires'' or service contracts can be
the best answer to emerging or short-term requirements.
Mr. Ortiz. The House Armed Services Committee believes compliance
with Section 803 of the FY 2010 National Defense Authorization Act will
provide the Congress with much greater clarity on procurement of
contractor services. The failure to comply is a source of great
concern. Why has the Department (or the military departments) taken no
meaningful steps to implement Section 803 and to improve its strategic
sourcing decisions for contract services?
Secretary Westphal. The Army has taken preliminary steps to
implement Section 803 of the FY 2010 National Defense Authorization
Act. We are reviewing all functions on the service contract inventory,
which we are using to track service contract execution. The Deputy
Chief of Staff for Operations and Plans is using the results of this
analysis to project contractor full-time equivalents in our manpower
documentation systems. These are the necessary precursors to Section
803 implementation, which is essential to ensuring the Secretary of
Defense efficiencies actually happen as intended.
Mr. Ortiz. The House Armed Services Committee believes compliance
with Section 803 of the FY 2010 National Defense Authorization Act will
provide the Congress with much greater clarity on procurement of
contractor services. The failure to comply is a source of great
concern. How can the Department and the military departments exercise
appropriate stewardship over its service contractor dollars (which have
more than doubled, if not tripled, since 2000) if it does not make
strategic sourcing decisions through the program and budget process?
Secretary Westphal. The Army has taken preliminary steps to
implement Section 803 of the FY 2010 National Defense Authorization
Act. We are reviewing all functions on the service contract inventory,
which we are using to track service contract execution. The Office of
the Deputy Chief of Staff for Operations and Plans is using the results
of this analysis to project contractor full-time equivalents in our
manpower documentation systems. These are the necessary precursors to
Section 803 implementation, which is essential to ensuring the
Secretary of Defense efficiencies actually happen as intended. Full
implementation of Section 803 will follow receipt of final guidance
from OSD (Comptroller).
Mr. Ortiz. For purposes of the Defense Secretary's overhead
reductions, how do the Department and each military department define
``overhead''? Does it include all civilian employees, including those
who work in depots, arsenals, and installations? Does it include
contractors? If not, will reductions in overhead simply lead to more
contracting out? Without Section 803 being implemented, how can
contractors be considered for purposes of overhead reductions?
Secretary Westphal. The Department defines overhead as the
structures, personnel, and operations coded as infrastructure. The Army
has analyzed its structure, personnel, operations and regards as
overhead those Generating Force resources that do not directly
contribute to providing combat forces or services (e.g., headquarters,
information systems).
The Army considered all civilians based on functions performed and
regards as overhead those civilians who do not directly contribute to
providing combat forces or services.
The Army agrees that implementation of National Defense
Authorization Act Fiscal Year 2010 Section 803 is needed to ensure that
overhead functions performed by in-house personnel are not simply
outsourced to contractors. Section 803 implementation provides a level
of detail that helps ensure planned contractor reductions take place as
intended and do not grow in unexplained ways. The Army is using the
contractor inventory review process required by the National Defense
Authorization Act for Fiscal Year 2008 Section 807 to identify in-
sourcing mission-critical occupations in acquisition and security,
among others, most of which are closely associated with inherently
governmental functions. Projections from the Section 807 contractor
inventory are a major component required for National Defense
Authorization Act for Fiscal Year 2010 Section 803 implementation. Full
implementation of Section 803 will follow receipt of final guidance
from OSD (Comptroller).
Mr. Ortiz. Given the Secretary of Defense's May 8 speech on defense
spending, what is each Department's methodology regarding combining its
functions and realigning or reducing resources to achieve efficiencies
in overhead, support, and non-mission areas? In lieu of simply re-
categorizing functions and funds in a shell game of sorts, what staff
layers are being removed and what subordinate commands or middle
echelons are being eliminated to reduce redundancies, overlap and
overhead?
Secretary Westphal. The Army has been working for the past several
years to rebalance our forces and to reform our business practices. We
have initiated Capability Portfolio Reviews (CPR), with the initial
focus on materiel portfolios, to garner efficiencies while
simultaneously reducing redundancies. Having completed reviews of the
materiel portfolios, we are now reviewing specific non-materiel areas,
such as Workforce Composition, Training, Installations and Information
Technology. As we complete these additional CPRs, we will gain a
comprehensive and thorough picture of our Army's requirements and
priorities. These reviews will allow us to identify efficiencies and
reinvest the savings in higher priority warfighting needs and
modernization efforts that hedge against future threats. The results of
these reviews will assist us in determining where to make reductions
and how to apply those savings towards our forces and modernization
programs.
Mr. Ortiz. The House Armed Services Committee understands that it
can take as long as two years in some components between the initial
identification of a function that should be performed by civilian
employees and the documentation for the authorizations for the in-house
personnel necessary to perform that function. What are the causes for
delays in the civilian authorization process and how can such delays be
minimized? If this is a problem only for some components, why?
Secretary Westphal. It can take some time to execute the transition
from contractor to civilian performance of a function. Once a candidate
for in-sourcing is identified, mission and workload needs to be
analyzed and the new civilian position must be classified. Civilian
replacements for contractors can be hired in advance of an actual
authorization being documented.
However, in the Army, civilian authorizations are locked with each
budget submission in a centralized documentation process to ensure
dollars are linked to authorizations. We continue to evaluate options
on how to address this issue.
Mr. Ortiz. The House Armed Services Committee understands that it
can take as long as two years in some components between the initial
identification of a function that should be performed by civilian
employees and the documentation for the authorizations for the in-house
personnel necessary to perform that function. Is it the Department's
policy or the policy of the military departments to ``lock'' the
personnel authorization levels until the next budget cycle,
notwithstanding changes in workload that may occur, even if this
results in either ``over-hires'' or hiring additional contractors to
meet workload changes? What challenges does this present in terms of
efficient management of its workforce, particularly with respect to the
imperative to right-size the civilian workforce?
Secretary Westphal. In the Army, civilian authorizations are locked
with each budget submission in a centralized documentation process to
ensure dollars are linked to authorizations. Out of cycle adjustments
to requirements (not authorizations) are allowed only in the year of
execution. Civilian replacements for contractors can be hired in
advance of an actual authorization being documented. This lag in
documentation results in ``over-hires'' until the documentation is
processed in the next budget cycle. Additionally, when new requirements
are evaluated based on changes in workload and mission, civilian over-
hires may result until the documentation catches up, provided there is
available funding. Challenges remain in managing the right mix of
civilian positions when there is a change in requirements, mission or
workload outside of the normal budget cycle. We continue to evaluate
options on how to address this issue.
Mr. Ortiz. The House Armed Services Committee believes compliance
with Section 803 of the FY 2010 National Defense Authorization Act will
provide the Congress with much greater clarity on procurement of
contractor services. The failure to comply is a source of great
concern. Why has the Department (or the military departments) taken no
meaningful steps to implement Section 803 and to improve its strategic
sourcing decisions for contract services?
Secretary Work. The Department of the Navy (DON) continues to make
strategic sourcing decisions throughout the DON to balance the Total
Force while ensuring that critical ``in-house'' capabilities are
performed by government personnel where necessary. The objective is to
ensure the appropriate mix of military, civilian, and contractor
support to perform its functions; rebuild internal capabilities to
enhance control of the DON's mission and operations; and reduce
workforce costs as appropriate. The DON is also identifying
opportunities to in-source functions that can be performed more cost
effectively by government personnel. DON continues to work with the
Office of the Secretary of Defense to implement Section 803 and improve
strategic sourcing decision making.
Mr. Ortiz. The House Armed Services Committee believes compliance
with Section 803 of the FY 2010 National Defense Authorization Act will
provide the Congress with much greater clarity on procurement of
contractor services. The failure to comply is a source of great
concern. How can the Department and the military departments exercise
appropriate stewardship over its service contractor dollars (which have
more than doubled, if not tripled, since 2000) if it does not make
strategic sourcing decisions through the program and budget process?
Secretary Work. Strategic sourcing decisions are being made
throughout the Department of the Navy (DON) to balance the Total Force
while ensuring that critical ``in-house'' capabilities are performed by
government personnel where necessary. The DON's goal is to ensure the
appropriate mix of military, civilian, and contractor support to
perform its functions; rebuild internal capabilities to enhance control
of the DON's mission and operations; and reduce workforce costs as
appropriate. Operational risk will be reduced by in-sourcing functions
that are closely associated with the performance of inherently
governmental functions and critical to the readiness and workforce
management needs of the DON. Additionally, the DON is looking for
opportunities to in-source functions that can be performed more cost
effectively by government personnel.
Mr. Ortiz. For purposes of the Defense Secretary's overhead
reductions, how do the Department and each military department define
``overhead''? Does it include all civilian employees, including those
who work in depots, arsenals, and installations? Does it include
contractors? If not, will reductions in overhead simply lead to more
contracting out? Without Section 803 being implemented, how can
contractors be considered for purposes of overhead reductions?
Secretary Work. The Department of the Navy is closely working with
the Department of Defense staff to ensure all understand a common
definition of ``overhead'' and what functions/employees should be
included. This will be clearly articulated in our FY 2012 President's
Budget submission.
Mr. Ortiz. Given the Secretary of Defense's May 8 speech on defense
spending, what is each Department's methodology regarding combining its
functions and realigning or reducing resources to achieve efficiencies
in overhead, support, and non-mission areas? In lieu of simply re-
categorizing functions and funds in a shell game of sorts, what staff
layers are being removed and what subordinate commands or middle
echelons are being eliminated to reduce redundancies, overlap and
overhead?
Secretary Work. The Department of the Navy is closely working with
the Department of Defense staff to ensure we have properly combined/
realigned functions and can achieve efficiencies. This will be clearly
articulated in our FY 2012 President's Budget submission.
Mr. Ortiz. The House Armed Services Committee understands that it
can take as long as two years in some components between the initial
identification of a function that should be performed by civilian
employees and the documentation for the authorizations for the in-house
personnel necessary to perform that function. What are the causes for
delays in the civilian authorization process and how can such delays be
minimized? If this is a problem only for some components, why?
Secretary Work. There are a number of reasons why Department of
Navy (DoN) civilian manpower requirements may not be authorized for
fill, including funding shortfalls and temporary impediments to
acquiring DoN civilians. DoN activities are funded, and positions
filled, consistent with mission priorities, budget constraints, and
Congressional direction. This is consistent with 10 U.S.C. Sec. 129,
which states that the civilian personnel of the DoD shall be managed
solely on the basis of and consistent with (1) the workload required to
carry out the function and (2) the funds made available to the
department for that fiscal year. Delays in filling positions can occur
for a variety of reasons such as the volume of staffing requests in the
queue, the time it takes hiring managers to make selections, the lack
of sufficient qualified candidates available, the level of security
clearances required, and similar administrative impediments. These
types of delays could be experienced by any of the DoN activities.
Mr. Ortiz. The House Armed Services Committee understands that it
can take as long as two years in some components between the initial
identification of a function that should be performed by civilian
employees and the documentation for the authorizations for the in-house
personnel necessary to perform that function. Is it the Department's
policy or the policy of the military departments to ``lock'' the
personnel authorization levels until the next budget cycle,
notwithstanding changes in workload that may occur, even if this
results in either ``over-hires'' or hiring additional contractors to
meet workload changes? What challenges does this present in terms of
efficient management of its workforce, particularly with respect to the
imperative to right-size the civilian workforce?
Secretary Work. Consistent with 10 U.S.C. Sec. 129(a), the DoN is
required to manage the civilian workforce solely on the basis of and
consistent with (1) the workload required to carry out the function for
a fiscal year and (2) the funds made available to the department for
that fiscal year. In addition, 10 U.S.C. 129(d) requires the Department
of Defense to ensure that civilians are employed in the numbers
necessary to carry out the functions within the budget activity for
which the funds are provided for that fiscal year. Accordingly, DoN
does not ``lock'' personnel databases at the end of the budget process.
This flexibility is evidenced in our Departmental experience in the
most recent fiscal year. The budget request for FY 2009 projected a
full time equivalent level of 190K. For various reasons, local
activities executed to a level of 197K for that year.
Mr. Ortiz. The House Armed Services Committee believes compliance
with Section 803 of the FY 2010 National Defense Authorization Act will
provide the Congress with much greater clarity on procurement of
contractor services. The failure to comply is a source of great
concern. Why has the Department (or the military departments) taken no
meaningful steps to implement Section 803 and to improve its strategic
sourcing decisions for contract services?
Secretary Conaton. The Air Force is working closely with the Office
of the Secretary of Defense (OSD) Comptroller to develop the
appropriate mechanisms to meet the requirements of FY10 National
Defense Authorization Act Section 803. We are complying with Title 10,
Sec 2330a and developing an annual inventory of contracts for services
that we will use as the baseline for our strategic sourcing decisions.
Our Air Force functional managers and commanders in the field will use
this to identify where we are using contract services. OSD has
established directives, that when taken in concert with this inventory,
will result in a proper mix of organic military, civilian, and
contractor resources needed to complete our missions--within
Congressional, OSD, and Air Force guidelines.
Mr. Ortiz. The House Armed Services Committee believes compliance
with Section 803 of the FY 2010 National Defense Authorization Act will
provide the Congress with much greater clarity on procurement of
contractor services. The failure to comply is a source of great
concern. How can the Department and the military departments exercise
appropriate stewardship over its service contractor dollars (which have
more than doubled, if not tripled, since 2000) if it does not make
strategic sourcing decisions through the program and budget process?
Secretary Conaton. The Air Force built its FY12 Program Objective
Memorandum (POM) based on our current and projected service contract
expenditures, taking into account the programmed in-sourcing
conversions needed to complete our mission and comply with appropriate
Congressional, Office of the Secretary of Defense (OSD), and Air Force
guidelines. The Air Force POM is built meeting the intent of Title 10
Section 235 and we will work with our counterparts in OSD to ensure
that we comply with service contract reporting requirements as mandated
for the President's Budget submission.
Mr. Ortiz. For purposes of the Defense Secretary's overhead
reductions, how do the Department and each military department define
``overhead''? Does it include all civilian employees, including those
who work in depots, arsenals, and installations? Does it include
contractors? If not, will reductions in overhead simply lead to more
contracting out? Without Section 803 being implemented, how can
contractors be considered for purposes of overhead reductions?
Secretary Conaton. We use the term ``overhead'' to refer to those
functions that are not directly involved in delivery of mission tasks.
Maintenance specialists on the flight line or a contractor we have
engaged to write software code for a system are clear examples of
activities that are not ``overhead.'' Administrative specialists at
major headquarters (e.g. administrative assistants to senior staff) and
management support staffs within program offices are examples of
``overhead.'' In this discussion, overhead manpower includes military,
government civilians, and contractor personnel, so the issue embraces
consideration of the entire workforce. We look at total manpower and
cost associated with the overhead work (military, civilian and
contractor) to identify opportunities for efficiencies and to shift
resources from overhead to direct support of Air Force core functions
and work. We are looking to eliminate unnecessary or duplicative
overhead activities that will allow us to realign the associated
resources and personnel (whether government or contract) to readiness
and force structure priorities. Finally, it is clear that some amount
of overhead is necessary to allow the organization to operate; the
question is how much is enough.
The Air Force reviewed the full spectrum of operations, from base-
level to headquarters functions, to identify efficiencies and reduce
overhead costs. As indicated above, this includes total force support
(military, civilian, and contractors). As part of the Air Force's plan
to meet the Secretary of Defense's guidance on improving Department of
Defense operations, the Air Force is identifying headquarters and
manpower efficiency initiatives to right size organizational
structures, optimize the civilian workforce, re-purpose military
manpower for higher priority needs, and reduce contractor support where
appropriate.
Within our Air Force acquisition programs, we are reviewing
contractor overhead (i.e., charges associated with weapon systems
development other than direct labor on the project) to bring those
costs to more reasonable levels. We are addressing these acquisition-
system contract overhead charges in concert with the Office of the
Secretary of Defense and other Services, as well as addressing these
charges in program-specific contract negotiations.
Per our other reply on Section 803, we are working with the Office
of Secretary of Defense Comptroller on the mechanisms for reporting
contractor services. This reporting will help our efforts to baseline
contract services and aid us in identifying contract services as part
of our overall effort to identify efficiencies and reduce overhead
costs.
Our objective is to increase the buying power of our Air Force
dollar. Better tracking of our expenditures and costs is a key element
of making this effort successful.
Mr. Ortiz. Given the Secretary of Defense's May 8 speech on defense
spending, what is each Department's methodology regarding combining its
functions and realigning or reducing resources to achieve efficiencies
in overhead, support, and non-mission areas? In lieu of simply re-
categorizing functions and funds in a shell game of sorts, what staff
layers are being removed and what subordinate commands or middle
echelons are being eliminated to reduce redundancies, overlap and
overhead?
Secretary Conaton. We have looked across the Air Force to identify
practices and mission areas that could and should be streamlined, to
include installation support activities, general services, strategic
sourcing and identification of redundant management at all levels of
the organization. We are applying business process re-engineering
approaches (such as lean and six sigma) to review these activities to
ensure we correctly identify the areas to change. For any efficiency
area, we are assigning a senior Air Force leader, by name, to direct
the activity and be accountable for outcomes. We are setting in place
audit functions to ensure that we track the movement of resources and
personnel from the targeted efficiency areas to the areas of new
investment: readiness and direct mission support. Progress on the
efficiency work and the results of audit outcomes will be reviewed
quarterly by the Vice Chief of Staff and me and we will be accountable
to the Secretary and Chief of Staff for results.
Accepting the Secretary of the Defense's efficiency challenge, the
Air Force examined its full spectrum of operations with the goal to
preserve combat capability and full support to combatant commanders,
joint operations and Airmen, while operating more efficiently. The Air
Force has identified areas for improved performance at less cost. The
areas we focused on are those infrastructure and management activities/
costs that support Air Force core functions. The recommendations
provided to the Department of Defense (DoD) are pre-decisional and have
not yet been reviewed and approved by the Office of the Secretary of
Defense based on the FY12 Program Budget Review. The Air Force review
has included areas covered in the public comments made by Secretary
Gates in the submission provided to DoD such as reducing the number of
General Officers and their supporting staffs as well as the number of
Senior Executive Service (SES) positions. The Air Force looks forward
to discussing the specific recommendations once approved and submitted
as part of the FY12 President's Budget.
Mr. Ortiz. The House Armed Services Committee understands that it
can take as long as two years in some components between the initial
identification of a function that should be performed by civilian
employees and the documentation for the authorizations for the in-house
personnel necessary to perform that function. What are the causes for
delays in the civilian authorization process and how can such delays be
minimized? If this is a problem only for some components, why?
Secretary Conaton. When the Air Force determines that work
currently being performed by contractors ``should be performed by Air
Force civilian employees'' for an inherently governmental reason, the
Air Force uses the flexibilities granted in the Authorization and
Appropriation Acts to make corrections as quickly as possible. For
larger actions that cannot be accommodated within the flexibilities
granted in the Authorization and Appropriation Acts, the Air Force
programs and budgets for the workforce change in the next Presidential
Budget submission to Congress. The prime example of a large action
requiring program and budget adjustments via the Presidential Budget
submission was conversion of the Air Force Expeditionary Center
training support contract at Joint Base McGuire-Dix-Lakehurst and Scott
AFB when we moved from a contractor workforce to Air Force civilian
employees based on Business Case Analysis showing the Air Force
civilian workforce was more economical. Currently, once we are
authorized a civilian position and we identify the vacancy, depending
on the type of job and location it takes an average of 120 days or less
to complete the hiring action.
Mr. Ortiz. The House Armed Services Committee understands that it
can take as long as two years in some components between the initial
identification of a function that should be performed by civilian
employees and the documentation for the authorizations for the in-house
personnel necessary to perform that function. Is it the Department's
policy or the policy of the military departments to ``lock'' the
personnel authorization levels until the next budget cycle,
notwithstanding changes in workload that may occur, even if this
results in either ``over-hires'' or hiring additional contractors to
meet workload changes? What challenges does this present in terms of
efficient management of its workforce, particularly with respect to the
imperative to right-size the civilian workforce?
Secretary Conaton. The Air Force does not lock the installation
level manpower books. We maintain a dynamic manpower document that
Commanders can propose changes to in real time consistent with
available manpower resources in order to right size the force
consistent with the dynamic mission environment. This allows a more
effective and efficient use of the Manpower resource consistent with
the flexibilities provided to the Air Force in the Authorization and
Appropriation Acts.
______
QUESTIONS SUBMITTED BY MR. MILLER
Mr. Miller. Mr. Westphal, as you know in-sourcing has been a topic
of interest for the Services, this committee, and our constituents back
home. Giving credence to this concern of ours, we passed amendments to
the FY11 NDAA requesting greater scrutiny of in-sourcing jobs within
DoD. Do you believe that DoD has the proper system in place which
ensures that DoD is not summarily replacing jobs based on arbitrary
goals? Please explain.
Secretary Westphal. The FY11 National Defense Authorization Act
(NDAA) language specifically requires the Department to comply with
statutes regarding in-sourcing that were enacted since 2008 and that
prohibit arbitrary budgetary quotas favoring or disfavoring in-
sourcing. I believe that the Army has the proper system in place to
ensure we are not summarily replacing jobs based on arbitrary goals.
Within the Army, we have taken significant steps (via the Panel for
Documenting Contractors) to implement the contractor inventory review
process required by the FY08 NDAA Section 807. This review identifies
appropriate functions to in-source, focusing on functions that might be
inherently governmental or are unauthorized personal services. The Army
has taken steps to implement the FY10 NDAA Section 803 to ensure that
initiatives to in-source, or increase or decrease contract services
through the budget process, are appropriately justified. Our decisions
are based on statutory criteria limiting contract work to bona fide
commercial functions, and government performance to bona fide functions
that are inherently governmental in nature.
Mr. Miller. Mr. Work, you mentioned in-sourcing in your statement
and its importance in the need to promote efficiency and verify mission
requirements. What methodology and/or standards is the Navy using to
make its decisions on the jobs it decides to in-source?
Secretary Work. The Department of Navy's (DON) overarching approach
for in-sourcing focuses on shaping the workforce to: 1) strengthen core
workforce capabilities and create personnel and career pipelines; 2)
improve contract technical requirements and oversight; and 3) balance
our entry/journey/senior workforce. This calls for a careful analysis
of the current capability of our total force along with immediate and
future mission requirements. The DON in-sourcing initiative requires a
review of existing contracted services in order to make appropriate,
timely, and well-reasoned in-sourcing decisions. In-sourcing must not
be approached from the standpoint of a one-for-one replacement of the
functions currently performed by contractors. Rather, in-sourcing
requires a thoughtful assessment of current and future mission
requirements and the right workforce capabilities to carry out the
mission. In-sourcing is a tool to shape our workforce.
Mr. Miller. Additionally, in your statement you stated ``Our
objective is to in-source services, not the individuals performing the
services.'' This concerns me because it seems like an admission that
part of the in-sourcing effort relates not to ensuring cost efficiency
to the taxpayer, but rather an effort to grow the size of the Federal
Government. Is this assessment of mine incorrect? If so, please explain
why.
Secretary Work. The Department of the Navy (DON) is not in-sourcing
for the sake of in-sourcing; nor are we in-sourcing to grow the size of
the Federal Government. In-sourcing is being used to rebalance the
Total Force and restore critical ``in-house'' capabilities where
necessary. The DON's goal is to ensure the appropriate mix of military,
civilian, and contractor support to perform its functions; rebuild
internal capabilities to enhance control of the DON's mission and
operations; and reduce workforce costs as appropriate. Thus, we will
reduce operational risk by in-sourcing functions that are closely
associated with the performance of inherently governmental functions
and critical to the readiness and workforce management needs of the
DON. Additionally, the DON is looking for opportunities to in-source
functions that can be performed more cost effectively by government
personnel.
Mr. Miller. In 2009 SecDef Gates announced that 35,000 high skill
workers would be hired over the next several years, half of which would
come from in-sourcing currently contracted work. A recent Washington
Post article (Soloway, 19 July 2010) noted that about two-thirds of the
positions identified to date for in-sourcing at DoD fall outside of the
skills Secretary Gates identified. The article goes onto state that
this well-intended initiative is ``evolving into a quota-driven numbers
game.'' Is this true? If so, how much do we ensure that we are making
legitimate cost saving in-sourcing decisions? If not, please explain.
Secretary Conaton. The Air Force views in-sourcing as an effective
tool for determining the best workforce mix to accomplish our missions.
In-sourcing guidance developed by the Office of the Under Secretary of
Defense for Personnel and Readiness was issued on May 28, 2009. This
guidance outlines a systematic, well-reasoned, and strategic approach
to ensure in-sourcing decisions are analytically based and fiscally
informed. If contract workload is found to be inherently governmental,
experiencing contract administration problems, providing unauthorized
personnel services, or otherwise exempt from contracting under
Department of Defense (DoD) Instruction 1100.22, Guidance for
Determining Workforce Mix, the function must be in-sourced regardless
of cost. If the function does not fit one of the above mentioned
criteria, a cost analysis is required to determine the most cost
effective means of performing the function. This cost analysis is
conducted in accordance with the Office of the Secretary of Defense
(OSD) Directive Type Memorandum (DTM) 09-007, issued January 29, 2010.
______
QUESTIONS SUBMITTED BY MR. TURNER
Mr. Turner. Ms. McGrath, I noted in your testimony the longstanding
goal and recent renewed emphasis on streamlining the departments
acquisition processes relative to IT investments. I have also noted in
your testimony and that of others testifying here today, there are a
number of programs aimed at dramatically improving efficiencies, yet I
remain very concerned that in our zeal to provide oversight, the line
has been crossed and critical programs that might reduce wasteful
inventory build ups or dramatically improve efficiencies are being
substantially delayed. Specifically what can DoD do to enable these
important programs to get fielded sooner so the Department can begin
realizing these savings?
Ms. McGrath. The Department is working to improve the speed of
developing and fielding IT systems through creation of alternative
acquisition approaches for IT that include governance structures and
oversight procedures appropriately tailored to the unique requirements
of IT programs. The Deputy Secretary of Defense created an IT task
force as part of the Department's response to Section 804 of the Fiscal
Year 2010 National Defense Authorization Act to address this issue.
Given the unique nature of IT implementations, we anticipate the new IT
acquisition process will differ significantly from the traditional
weapons system acquisition process. As the IT task force concludes its
work, existing laws may need to change to ensure success of the new
process and we will work with Congress as necessary to ensure success.
Within the Business Mission Area, a major initiative to rapidly deliver
capability and integrate governance is the Business Capability
Lifecycle (BCL). BCL is a framework tailored to rapidly deliver
business IT capabilities within the Department, by consolidating
oversight requirements (i.e., funding, requirements and acquisition
oversight) into one structure while streamlining documentation
requirements.
Mr. Turner. Secretary Conaton, you mentioned the role of ECSS in
the AF's transformation of its Information Technology and Business
Processes in support of enterprise goals and outcomes of eLog 21. I
support your overall strategy with regard to eLog 21, the
transformation of end to end logistics and programs like ECSS as well,
but I am very concerned about the AF and DoD's ability to execute or
field these systems. What are we doing, both at senior levels in the AF
and DoD to field these systems as quickly as possible to begin
realizing the savings goals outlined by Secretary Gates?
Secretary Conaton. Our objective is to field these systems as
quickly as possible to achieve the needed business benefits and
savings. To meet this challenge we have undertaken a major
restructuring of both the management oversight and structure of the
Expeditionary Combat Support System (ECSS) program. Specifically, since
June 2009, the Chief of Staff of the Air Force conducts quarterly
reviews of this program. In my role as the Chief Management Officer I
have taken on greater responsibility to provide more oversight in
conjunction with the Chief Information Officer and the Service
Acquisition Executive. This expanded oversight is intended to keep the
program flowing, and to instill accountability in the acquisition and
functional sponsors. To complement this expanded senior level oversight
the Air Force also elevated the Program Manager to a General Officer
and assigned a dedicated Program Executive Officer to ensure a truly
streamlined acquisition oversight and reporting chain so that issues
and roadblocks are raised sooner and dealt with quickly.
At the program level we have done a number of things to reduce
risk, accelerate the program, and improve the probability of success.
We have restructured the program schedule and contracts to focus on
implementing pilots which allow us to field them more quickly with less
overall risk. Delivering smaller chunks of content more rapidly is
consistent with best commercial practices. In fact this approach has
already proven successful with the fielding in July 2010 of the first
pilot at Hanscom AFB. We have also implemented improved program
metrics, schedule tracking, risk management, and internal controls to
better align and manage risk. These are consistent with the practices
that the Government Accounting Office (GAO) has been recommending to
the Department of Defense (DoD). In addition, we have also increased
both the overall size and the skills of the Air Force team managing the
program. We have recruited personnel with commercial Enterprise
Resources Planning experience to improve the competency of the team and
conducted a number of independent expert reviews to ensure that we are
not repeating the mistakes made on other programs both inside and
outside the DoD. All of these and other changes have been put into
place to ensure that we are moving forward as fast as prudently
possible to field ECSS. All of these improvements will be discussed in
more detail as we prepare and submit a Section 804 report to Congress
later this year.
Mr. Turner. Secretary Conaton, you mentioned the role of ECSS in
the AF's transformation of its Information Technology and Business
processes in support of enterprise goals and outcomes of eLog 21. Most
believe this transformation is similar to the industry best practices
of investment in a single Enterprise Resource Planning software. A
single IT footprint and associated infrastructure is more cost
effective and efficient rather than being victimized by outdated and
disconnected legacy systems which have become expensive and unreliable.
I agree with your testimony that the program will indeed aid the AF in
reducing wasteful inventory build ups, and thus has the potential to
save billions. Please describe the potential benefits of ECSS as a
fulcrum for eLog 21 and discuss its other merits?
Secretary Conaton. Once fully implemented, the Expeditionary Combat
Support System (ECSS) will transform and standardize Air Force
logistics and financial processes using commercial best practices. It
will standardize business processes through an integrated software
suite, new personnel roles and enterprise visibility of resources and
assets. It will retire approximately 240 legacy data systems and will
strengthen financial transparency/accountability. ECSS will provide 100
percent asset visibility and accountability by utilizing streamlined
inventory management processes, prioritized maintenance processes,
leveraging capacity and increasing equipment availability. ECSS will
simplify expeditionary force deployment and operations and radically
improve warfighter supply chain support.
By adopting an enterprise mentality, ECSS enables the Air Force to
have greater effectiveness via improved supply chain planning and
leveraging assets and capability across the total force. Greater
visibility in the transportation pipeline will enable the Air Force to
maintain 100 percent total asset visibility of supplies and equipment
to support worldwide mission requirements. ECSS in partnership with the
Defense Enterprise Accounting and Management System (DEAMS) is a vital,
initial step toward delivering required capability to achieve Chief
Financial Officer (CFO) Act compliance. Additionally the predictive
maintenance capability will help the Air Force depots prioritize
workload allowing personnel to focus on key maintenance activities and
also reduce long lead ordering for material, and improve the overall
weapon system maintenance throughput.
Mr. Turner. The application of technology and education in
developing our future Air Force leaders has been crucial in ensuring
our technological edge against attackers, aggressors, and adversaries
and future dominance in the air, space, and cyberspace--how does the
DoD ensure that short-sighted cuts in R&D and education don't have
long-term consequences which cripple our future military capabilities
and compromise our national defense?
Secretary Conaton. The Air Force will maintain our total dollars
invested in Science and Technology (S&T) and education programs,
including Science, Technology, Engineering and Mathematics (STEM)
programs. Within our programs, we will eliminate unnecessary work and
overhead to shift more resources into S&T program content and improved
delivery of training and education to our Airmen.
We use our Air Force Corporate Structure and other Air Force
organizations--including the Scientific Advisory Board (SAB), the Chief
Scientist, and his Technology Horizons study--to achieve a balanced S&T
program that evaluates near-term requirements with long-term
investments. We have also established an S&T strategic planning
division and a special study Tiger Team to define governance and
prioritization of important technology demonstrations in support of Air
Force strategic priorities. We have submitted to the Office of the
Secretary of Defense the Air Force FY12 budget, and we look forward to
future discussions with members of the House Armed Services Committee
after the FY12 President's Budget is submitted.
Mr. Turner. The House IMPROVE ACT, (H.R. 5013) which I supported
and House approved this April may result in savings up to $135B,
included the Turner Amendment, which was unanimously adopted, and
directed that best practices in Acquisition processes be
institutionalized via education and curriculum. How important is the
role of education in reducing costs in Acquisitions programs and what
are some future initiatives which would help in the financial
management of acquisition lifecycles?
Secretary Conaton. Education and training are vital to reducing
costs in acquisition programs as well as revitalizing our acquisition
workforce--a key element is our Acquisition Improvement Plan (AIP). The
AIP builds on lessons learned from past shortfalls in our procurement
processes; but more importantly, it establishes five initiatives--
revitalizing our acquisition workforce; improving the requirements
generation process; instilling budget and financial discipline;
improving major systems source selections; and establishing clear lines
of authority and accountability within acquisition organizations. In
completing these initiatives to ensure rigor, reliability, and
transparency across the Air Force acquisition enterprise, we realize
one thing is certain: a highly competent workforce is essential to
achieving acquisition excellence. Therefore, developing a capable
workforce requires finding the right people with the right attitude and
then arming them with the education and training to ensure they are
competent to perform their jobs. One of the areas we are currently
focusing on is giving Program Managers the training and tools needed to
effectively manage their program's schedule and baseline. Ultimately,
these acquisition professionals will be able to build incremental
acquisition strategies that have a stronger probability of delivering
warfighting systems sooner, on planned schedules and within predicted
budgets.
Because our workforce is so important, we are synchronizing their
education and training with the most efficient processes, in effective
organizational constructs and through tailored career paths. Our senior
financial management professionals are fully engaged in the Office of
the Secretary of Defense Business--Cost Estimating and Financial
Management Functional Integrated Process Team (FIPT); bringing an Air
Force perspective to these FIPTs which focus on certification standards
and associated training curriculum requirements. We are establishing
ways to improve the delivery and quality of courses and pursuing an
opportunity to leverage a distance cost estimating master's degree
program. Tiger teams are also in place reviewing financial management
and acquisition roles, responsibilities, organizational alignments,
etc. to enhance acquisition program performance.
______
QUESTIONS SUBMITTED BY MR. LARSEN
Mr. Larsen. Do you believe that using Item Unique Identification
(IUID) technology will help the Department of Defense do a better job
managing its supply chain, which has been placed on the high-risk list
by the Government Accountability Office?
Ms. McGrath. Item Unique Identification (IUID) is one piece of the
Department's overall effort to achieve improvement in the area of
Supply Chain Management. IUID can provide a standard approach to
Serialized Item Management for the Department's most critical and
sensitive items and use a standard machine-readable mark for all IUID-
eligible items procured by DoD.
Mr. Larsen. Has your office prepared a business case analysis on
the benefits of IUID for both new and legacy items? If so, what were
the key findings of these analyses?
Ms. McGrath. The Office of the Deputy Chief Management Officer has
not prepared a business case analysis on the benefits of IUID for new
and legacy items. However, a cost benefit analysis published by the
Under Secretary of Defense for Acquisition, Technology and Logistics in
March 2005 discussed an array of industry experiences with item marking
technologies and potential sources of savings, but did not attempt to
determine a precise return on investment due to the lack of data on the
costs of existing processes.
Mr. Larsen. What goals have you set for the Department regarding
the use of IUID technology, and what steps will you take to achieve
those goals?
Ms. McGrath. The Office of the Deputy Chief Management Officer has
not set specific goals for the Department regarding the use of IUID
technology. However, the Department is driving implementation of IUID
technology through our defense business system investment management
governance framework. As relevant defense business systems move through
the Investment Review Board/Defense Business Systems Management
Committee process for certification and approval of their funding,
conditions are levied against them to achieve technology capability
with IUID. To date, 46 systems have had these conditions levied against
them, including both Enterprise Resource Planning Systems and other
defense business systems.
Mr. Larsen. What efforts are being made at the Department of
Defense and Defense Contract Management Agency to assist defense
suppliers and the Services in meeting IUID policy adoption and
implementation goals?
Ms. McGrath. Under the leadership of the Under Secretary of Defense
for Acquisition, Technology and Logistics, DoD has undertaken a wide
variety of Web-based and face-to-face training efforts, as well as
dissemination of informational newsletters, videos and an IUID quality
assurance guide. Many of these efforts, developed and administered by a
combination of the Defense Acquisition University, Defense Contract
Management Agency, and Defense Procurement Acquisition Policy, included
a broad user base of both DoD employees, DoD suppliers and other
representatives from industry. DoD also participates in a standing
industry liaison group sponsored by the Aerospace Industries
Association.
Mr. Larsen. Does DoD contract writing software automatically
include IUID clause language on items being procured and meeting IUID
policy threshold requirements?
Ms. McGrath. For the Standard Procurement System, the clause is
mandatory and requires contracting officer override to remove. For
other contract writing systems, DoD measures compliance with IUID
policy through sampling and review of contract language.
______
QUESTIONS SUBMITTED BY MR. KISSELL
Mr. Kissell. Question for the Honorable Elizabeth McGrath, Deputy
Chief Management Officer Department of Defense, the Honorable Joseph
Westfall, Under Secretary of the Army, the Honorable Robert O. Work,
Under Secretary of the Navy, the Honorable Erin Conaton, Under
Secretary of the Air Force: ``During the hearing each of the witnesses
spoke about their Service's efforts to adhere to the Secretary's quest
to find efficiencies within the Department of Defense and to provide
the savings to the soldiers, sailors, airmen, and marines. Who will
decide how the money saved with a more efficient process is spent?''
Ms. McGrath. Ultimately, Congress will decide how the Department's
savings will be applied to the Department of Defense and the Federal
Government after the President submits the budget request for Fiscal
Year 2012. To develop budget request recommendations to the President,
each of the Defense Agencies, Military Departments and Field Activities
received guidance from the Secretary consistent with his speech on May
8th. The Secretary has urged the Components to seek efficiency in their
headquarters and administrative functions, support activities and other
overhead and apply those savings to the warfighter. That is, he asked
the Components to transfer savings from bureaucratic ``tail'' to
warfighting ``tooth.''
______
QUESTIONS SUBMITTED BY MR. OWENS
Mr. Owens. Earlier this year, Congress passed the IMPROVE Act, a
bill to overhaul defense acquisition spending with the hopes of saving
upwards of $135 billion in taxpayer funding. Do you see this effort as
also having a positive effect on the Department's efforts to address
DOD specific items on the GAO's high-risk list, such as Weapon Systems
Acquisition or Financial Management?
Ms. McGrath. The GAO High Risk Area of Weapon Systems Acquisition
highlights that DoD is not receiving expected returns on its
investments in weapon systems; programs continue to take longer, cost
more and deliver fewer quantities and capabilities than originally
planned; and processes for identifying warfighter needs, allocating
resources and developing and procuring weapon systems are fragmented
and broken. The IMPROVE Act's sections on the performance of the
defense acquisition system and workforce directly address these issues
and help to strengthen many efforts already underway within the
Department. As the Department's Deputy Chief Management Officer, I
would highlight the IMPROVE Act's focus on performance management as
extremely important. It is my view that when performance measures are
appropriate and well defined, progress is made and people can be held
accountable for results. They will also enable the Department's
acquisition leaders to make better informed decisions with more
complete information.
With regard to the GAO High Risk Area of Financial Management, the
IMPROVE Act introduced new tools into the Department's toolbox to help
incentivize achievement of auditability by 2017. The Department agrees
with the intent of the legislation emphasizing that accountability is a
key aspect of achieving auditability. Prior to the IMPROVE Act the
Department had a number of tools to incentivize behavior. While it is
still too early to say exactly how the Department will utilize these
new tools, I believe the Department's current approach of focusing
first on improving quality, accuracy and reliability of the financial
and asset information used every day to manage the Department is a good
approach that lays the foundation for achieving auditability with clear
interim goals over the near and mid-term.
Mr. Owens. Are you satisfied with the progress that has been made
in achieving full auditability so far? What barriers remain to
achieving this goal, and is it possible the Department could hit its
mark in advance of the 2017 deadline?
Ms. McGrath. Achieving auditability is not an easy task for the
Department. However, as the Deputy Chief Management Officer, I believe
the current approach put in place by the Under Secretary of Defense
(Comptroller) is a sound one. The Department is focusing first on
improving the quality, accuracy and reliability of the financial and
asset information used every day to manage the Department with clear
near and mid-term goals. This approach lays the foundation for
achieving auditability in the most cost effective way, while
simultaneously improving day-to-day management of our financial
enterprise. The Department also created a strong governance framework
to manage its audit readiness efforts and dedicated the necessary
resources to the effort to achieve success.
However, achieving auditability is also dependent on a number of
factors--such as successful implementation of many defense business
systems, including Enterprise Resource Planning Systems--that make it
unlikely the Department will meet its objective in advance of the 2017
deadline.
______
QUESTIONS SUBMITTED BY MR. CRITZ
Mr. Critz. Do all service branches and the Department currently
have the necessary financial and personnel resources to perform the
analysis to identify the $7 billion in savings called for in FY12 by
Sec. Gates? Will any of the work to identify these savings need to be
performed by contractors?
Ms. McGrath. The Defense Agencies and Military Departments have the
necessary financial and personnel resources to develop their planning,
programming and budgeting efforts for submission of the President's
budget request for Fiscal Year 2012. These submissions will reflect the
savings called for by the Secretary. While inherently governmental work
is performed by government employees, contractor involvement in the
planning, programming and budgeting process varies by Component.
Mr. Critz. What is the plan for the services to identify savings
within their branches? Will it be a top-down approach with the
comptrollers or Chief Management Officers (CMO) identifying areas to
cut back? Or, will it be a bottom-up approach with each agency and unit
tasked with finding savings? If it is a bottom-up approach, how will
the CMO's ensure cooperation throughout the service?
Ms. McGrath. The Secretary of Defense provided savings and
efficiency goals to each of the Defense Agencies, Military Departments
and Combatant Commanders, but he allowed them broad discretion on how
to reach these goals. The Secretary particularly urged Components to
seek efficiency in their headquarters and administrative functions,
support activities and other overhead and apply those savings to the
warfighter. That is, he asked Components to transfer savings from
bureaucratic ``tail'' to warfighting ``tooth.'' Apart from the
Secretary's broad guidance, Components developed their own methodology
to achieve these goals. Component efforts to meet the Secretary's goals
and follow his guidance will be scrutinized as part of the annual
Department of Defense budget build, i.e. the program review for
President's Budget 2012.
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