>> has the president had anything to say about process of negotiations and what to do with the bill? >> at a press conference yesterday where he said i want to keep the government going, what to a funding levels adequate. the issued a veto threat to the version of the bill the house republican leadership is offering. i think he's holding back a little bit. he wants to see what the house passes in what the senate passes and i think at that point he would maybe jump into negotiations more directly. right now he is sitting back and waiting to see what each of the two chambers can pass. >> john shaw, market news international, we thank you for your time this afternoon. >> thank you. >> you can watch the debate on the continuing resolution lies in the house american pinon network, c-span. in a few moments, defense secretary robert gates testifies on capitol hill about pentagon spending for this year and next

year. ..

when i was sworn in as president i pledge to cut the deficit in half at the end of my first term. the budget i'm proposing today meets that pledge. >> defense secretary robert gates cautioned congress today to not make peepers pending cuts than those already proposed. he was joined by admiral mike mullen, chairman of the joint chiefs of staff for testimony before the house armed services committee. this portion of the hearing is a little less than two hours. [inaudible conversations]

[inaudible conversations] [inaudible conversations] >> good morning ladies and gentlemen, thank you for joining us today as we consider the presence fiscal year 2012 budget

request for the department of defense. on monday i had the opportunity to sit down the secretary gates to discuss his request. based on the information i received i'm place to say that the budget continues to support our military men and women fighting in iraq, afghanistan and elsewhere. the budget provides much-needed increases in several key areas such as military personnel and missile defense. i am also pleased that the department is taking our nation's financial position into account and has identified savings from lower priority programs and efficiencies that can be reinvested into force structure and modernization. as chairman i too am concerned that every dollar be invested in core missions of the department. now it will be up to us, the members of the armed services committee to take up his proposal and scrutinize it with a fine tooth comb. we must ensure that every dollar we spend on the right equipment, training and support needed by

our troops, their families and the nation's defense. understandably there will be winners and losers in this process. tough choices must be made, but i will not support initiatives that believe our military less capable and less ready to fight. in a request before is most concerning is the reduction of an additional $78 billion from the department's funding topline including a 13 billion-dollar cut in 2012. ultimately leading to 0% real growth in the out-years. much of the savings appears to be generated with a reduction to army and marine corps and strength and the 2015 to 2016 timeframe. the decision to reduce end strength seems premature given the uncertainty in predicting the full range of force and manpower requirements in afghanistan after 2014. furthermore while some claim the reductions are not budget driven

i know that the savings from these reductions weren't included in the future years defense plan, even before the marine corps completed its force structure review and before the army has even begun one. both services have borne the brunt of two ports for the past decade and neither has reached its objectives for active component dwell time of one to three. i cannot in good conscience ask them to do more with less. there are additional proposals that immediately warrant special scrutiny like the expeditionary fighting vehicle for which an unfulfilled requirement remains. we must understand in greater detail how the department proposes to address this capability gap before we can support abandoning a 4 billion-dollar investment we have already made. on a slightly different note i would be remiss if i did not acknowledge the new congress must finish work on defense appropriations legislation that was left unfinished in the

111th congress. i have concerns about the implications to our troops and the funding the department of defense in fiscal year 2010 funding levels in a year-long continuing resolution. therefore i'm pleased that the house has taken up a defense appropriation for fiscal year 2011 this week. while i am disappointed we are not -- funding levels i support all efforts by this congress to avoid crippling the department through a continuing resolution. i would like to conclude by welcoming our witnesses, the honorable robert m. gates secretary of defense and admiral michael g. mullen, chairman of the joint chiefs of staff. i look forward to continuing an open dialogue with you on these issues. now, i will turn to my colleague and good friend.

[inaudible] >> i want to begin by echoing the chairman's last comment about the needs to pass a 2011 defense appropriations bill. you will have done an excellent job of explaining to us just how hamstrung you wire by having to live with the cr for the last i think it has been almost five months now. the impact that has and i would urge all members here to talk with folks at the department of defense to get a full understanding of just how that undermines our ability to carry out our national security requirements and how it even reaches over into potentially impacting what our troops are doing in afghanistan and iraq. on this budget i want to congratulate secretary and department of defense again and making sure that they provide are troops with equipment and the support they need to do the missions we all have asked them to do and complements to this committee as well.

through the years they have also stepped up to that task particular the wars in iraq and afghanistan requiring much greater speed in three and meeting those needs. this budget reflects that top-rated. nature are troops get the equipment and support they need. i also feel this budget does a good job of trying to confront the budget realities that we are all aware of and i took a very hard and close look at the department of defense across the board to try to find savings. we absolutely can't do that and i think that is the most critical point i want to make. simply spending money doesn't make it safer. with to make sure that money spent well and efficiently and i don't think there is anyone who would disagree looking back for the last 15 years in the decisions that have been made with the notion we can do better and we can get more for the money than we are spending particularly when you look at the acquisition in the procurement process and again i want to complement the secretary of defense and his team for taking a hard look at some of the lessons we have learned through systems like teacher

combat systems, via the of 35 and other programs that would have been more expensive than we would have liked. i think we are moving forward and positive friction and as we look at this budget to other important factors the defense budget has grown enormously. 2001 and current dollars was $316 billion in when all the way up to 708 so we have had enormous growth and we now need to figure out how to manage that and we also need to be mindful of the fact that a strong national economy is critical also to our national security and out-of-control deficit jeopardizes that economy so we have to try make sure that we can live within our means and do the job we all have been asked to do. and i appreciate the hard work that has been done on that. i want to make one specific comment before you move forward on stability operations. and understanding our broad national security interest. i think we have learned in iraq and afghanistan that development programs can be every little bit

as important as military programs and creating a stable and secure environment that protects their interests and i know the secretary is spoken out strongly about the need not just have a strong military but also to have a strong state department and a stronghold of government approach as we go forward and try to figure out some of these stability operations i appreciate your leadership on that and believe those two will be important issues and with that i look forward to your testimony. thank you mr. chairman. >> thank you. before we begin, let me comment that we do have a full crowd here today and i've noticed there are people out in the hallway that would like to be in here, so i would request that anyone who disrupts this hearing he removed by the capitol police this includes outbursts and holding signs. this is a very important hearing and the decorum should be maintained and i would appreciate that it be held that way. we will have no -- i have a very

low tolerance level. let me mr. secretary and admirak you to begin with for your many years of service. both of you, to the country. and we all appreciate greatly the efforts and the things that you are doing. i know you are in a very, very tough job and i just want at the outset let you know how much every member of this committee appreciates your service to the nation. mr. secretary. [inaudible] >> he doesn't get to talk area much anyway. mr. chairman, mr. smith and

members of the committee i would like to start with a few words about congressman giffords who of course should be with us today were it not for the tragic and senseless attack in tucson last month. i've enjoyed working with congresswoman giffords in her capacity as a member of this committee. she is a strong supporter of the national defense and cares deeply about our troops and their families. and she has pursued oversight responsibility with dedication. our thoughts and condolences continue to be with the families of the victims of that attack. we send our best to the congresswoman's husband, navy captain mark kelly, for his upcoming space shuttle mission and as he helps mrs. giffords the recovery. we will miss representative giffords contributions today and in the weeks and months ahead, and we in the department of defense wish her a speedy and full rehabilitation. i appreciate the opportunity to appear before you to discuss the president's budget request for the department of defense or fiscal year 2012.

my fifth and final budget testimony for the department of defense before this committee. i want to thank the members of this committee for your support of men and women in uniform serving in a time of war. i know you will join me in doing everything to ensure that they have all they need to accomplish their mission and come home safely. the budget request for the department of defense today includes a base budget request of $553 billion an overseas contingency operations request of $117.8 billion. these budget decisions to lace in the context of the nearly two-year effort by this department to reduce overhead, trouble in excess programs and reagan personnel and contractor cost. all for the purpose of preserving the global reach and fighting strength of america's military in a time of fiscal stress for our country. and all these budget request enacted by the congress will

continue our efforts to reform the way that the department does business, fund modernization programs needed to prepare for future complex, reaffirm and strengthen the nation's commitment to care for the all-volunteer force and ensure that our troops and commanders on the frontlines have the resources and support they need to accomplish their mission. my submitted statement includes more details of this request, but i want to take this opportunity to address several issues i know have been a subject of debate and concern since i announced the outlines of her budget proposal last month. verse do serious damage or military will suffer by operating under a continuing resolution or receiving a significant funding cut during fiscal year 11. second the recommended determination of the extra engine for the joint strike fighter, through the projected slowing and eventual flattening of the growth of the defense budget over the next five years. fourth, the planned future reductions in the size of the ground forces and fifth, the

proposed reforms in savings of the tricare program for working age retirees. i want to start by making it clear that the department of defense will face a crisis if we end up with a long-term -- a year-long continuing resolution or a significant funding cut or 2011. the president's defense budget request for 2011 was $549 billion. a full-year continuing resolution would fund the department at about a hundred 26 billion, a cut of $23 billion. the damage done across the force from such reductions would be further magnified as they would come halfway through the fiscal year. let me be clear, operating under a year-long continuing resolution or significantly reduce funding with a severe shortfalls that entails would damage procurement and research programs causing delays, rising costs, no new program starts and serious disruptions in the production of some of our most high demand assets including

uav's. cuts in and maintenance could force parts of our aircraft fleet to be grounded in delayed needed in facilities improvement. cuts and operations would mean fewer flying hours, fewer days and cutbacks in trading for home station forces all of which directly impacts readiness. similarly some of the proposals under debate in congress contemplate reductions of up to $15 billion from the president original fy11 request. i recognize that given the current fiscal and political environment it is unlikely that the defense department will receive the full fy11 request. based on a number of factors including policy changes that lead to lower personnel costs and reduced activities forced force by the continuing revolution -- resolution i deplete the department can get by with a lower number. however it is my judgment that the department of defense needs an appropriation of at least $540 billion or fiscal year 2011 so u.s. military can properly

carry out its mission maintain readiness and prepare for the future. at this point i would like to address ongoing debate over the jf x. extra engine. as most of you know the president and guy in the previous president and his secretary of defense as well as the department of senior military leadership have consistently and firmly expressed their opposition to continuing this costly program. we considered it unnecessary and extravagant expense. particularly during a period of fiscal contraction. the congress has not spoken with one voice on this matter and the department has been operating this fiscal year under ambiguous guidance at best. under those circumstances i decided to continue funding the jf x. extra engine effort on a month-to-month basis. i did this not because we had to, but because we chose to give congress the opportunity to resolve this matter as a part of its ongoing debate of the budget. however this also means the american taxpayers are spending

$28 million a month for an excess and unjustified program that is slated for termination. the president military services and i continue to oppose this extra engine and when the current cr expires i will look at all available legal options to close down this program. it would be a waste of nearly $3 billion in a time of economic distress in the money is needed for higher priority defense efforts. which brings me to the proposed 78 billion-dollar protection in the defense budget topline over the next five years. to begin with the so-called cut is in fact to the rate of predicted growth, the size of the base defense budget still projected to increase in real inflation-adjusted dollars before eventually flattening out over the next five years. more significantly as a result of the efficiencies and reforms undertaken over the past year, we have protected programs that support military people, readiness and modernization. these efforts have made it

possible for the department to absorb lower projected growth in the defense budget without, as chairman mckeon warned last month, leaving our military less capable and less able to fight. in fact the savings identified by the services have about our military to add some $70 billion toward priority needs and new capabilities. of the $78 billion in proposed reductions for the five-year defense budget plan, about 68 alien comes from a combination of shedding excess overhead, improving business practices, reducing personnel costs and for changes to economic assumptions. so in reality only $10 billion of that five-year total is directly related to military combat capability. 4 billion of that 10 comes from restructuring the joint strike fighter program, a step driven by this program's development testing schedule that would have taken place irrespective of the budget topline. and so about $6 billion out of

78 results from the proposed decrease in the end strength of the army in paris and starting and fy2015. just over four years ago one of my first acts as defense secretary was to increase the permanent and strength of our ground forces. the army by 65,000, for a total of 547,000 the marine corps by 27,000, to 202,000. at the time the increase was needed to relieve the severe stress on the force from the iraq war is the surge was getting underway. to support that later concept of of -- plus-up i authorized a temporary further increase in the army of some 22,000, and increased planned to end in fy13. the objective was to reduce stress on the force, limit and eventually and the practice of stop-loss and to increase troop home dwell time. as we end the u.s. presidents --

presence in iraq is you are according to our agreement with the iraqi government the overall deployment demands on our force or decreasing significantly. just three years ago we had 190,000 troops combined in iraq and afghanistan are go by the end of this calendar year we expect there to be less than 100,000 troops deployed in both of the major post-9/11 combat theaters. virtually all of those forces in afghanistan. that that is why we believe beginning in fy2015 the u.s. can with minimal risk begin reducing army active duty end strength by 27,000 the marine corps by somewhere between 15 and 20,000. these projections assume that the number of troops in afghanistan will be significantly reduced by the end of 2014 in accordance with the president and nato strategy. if our assumptions prove incorrect or world conditions change for the worse, there is plenty of time to adjust the size and schedule of this change.

it is important to remember that even after the planned reduction, the active army and strength will continue to be larger by nearly 40,000 soldiers than it was when i became defense secretary four years ago. i should also note that these reductions are supported by both the army and marine corps leadership. finally come as you know sharpie writing help -- rising health care costs are consuming the budget growing from $19 billion in 2001 to $52.5 billion in this request. among other reforms this fy12 budget includes modest increases to tricare enrollment fees, later index medicare premium increases for working age retirees, most of whom are employed while receiving full pensions. all six members of the joint chiefs of staff have strongly endorsed these and other cost-saving tricare reforms in a letter to congress. i understand that any change to these kinds of benefits,

vigorous political opposition but let us be clear, the current tricare arrangement, one in which these -- fees if not increase for 15 years is simply unsustainable and if allowed to continue the defense department risks the fate of other corporate and government bureaucracies that will ultimately cripple personnel costs in particular their retiree benefit packages. all told the punitive effect of the department savings and reforms combined with a host of new investments will make it possible to protect the military's combat power, despite the declining rate of growth and eventual flattening of the defense budget over the next five years. as a result of the savings identified in reinvested by the services our military will be able to meet unforeseen expensen equipment, buy new ships and fighters, began development of a new long-range bomber, boost our cyberwarfare capability, strength in missile defense and buy more of the most advanced uavs.

but i should know this will only be possible with the efficiencies reforms in savings are followed or follow through to completion. enclosing i want to address some corridors for deeper cuts in defense spending to address this country's fiscal challenges. i would remind them that over the last two defense budget submitted by president obama we have curtailed or canceled probe over access programs that would have cost more than $330 billion if seen through to completion. additionally total defense spending including war costs will decline further as the u.s. military withdraws from iraq. we still live in a very dangerous and very unstable world. our military must remain strong and agile enough to face a diverse range of threats from nonstate actors attempting to acquire and use weapons of mass destruction and sophisticated missiles to the more traditional threats of other states both doubling up their conventional forces in developing new capabilities that target our traditional strengths.

we shrank from our global security responsibility at our peril. entrenchment brought about by short-sighted cats could well lead to costlier and more tragic consequences later are going deep as they always have in the past. surely we should learn from our national experience since world war i that drastic reductions in the size and strength of the u.s. military make armed conflict all the more likely with an unacceptably high cost in american blood and treasure. mr. chairman i look forward to working through this next phase of the president's defense reform effort with you in the weeks and months ahead to do what is right for our armed forces and to do what is right for our country. thank you. >> thank you. mr. chairman. >> thank you mr. chairman, mr. smith and distinguished members of this committee. i'm honored to appear before you today to discuss the president's fiscal year 2012 defense budget. before i do however let me echo

secretary gates' comments about the real dangers inherent in failing to pass this year's budget. the fiscal year 2011 continuing resolution is carried forward will not only reduce our accounts by $23 billion, it would deprive us of the flexibility we need to support our troops and their families. the services have already taken disruptive and in some cases irreversible steps to live within the confines of the cr. steps that ultimately make us less effective at what we are supposed to do for the nation. the navy did not prepare as planned a second virginia class submarine by the end of last month. bar was able to buy government furnished equipment for another class destroyer. the army and marine corps have curtailed or altogether frozen civilian hiring. all the services are now prevented from issuing contracts for new major military construction projects.

some programs may take years to recover, so i urge you to pass a fiscal year 11 defense bill immediately. even at a reduced topline, will provide us the tools we need for the bulk of the missions we have been assigned. account pushing those missions in the future demands is well supported the president's fiscal year 12 proposal. as a secretary laid out this budget combined with the efficiency efforts he led provide for the well-being of our troops and families, fully fund's current operations in afghanistan and iraq and helps balance local risk through streamlined organization, smarter acquisition, and prudent modernization. the army friends and will cancel procurement of a surface-to-air missile in the non-line of sight launch system but it will continue production of the joint vehicle and spearhead the development of a whole new family of armored vehicles.

the navy will give up its second fleet headquarters, reduce its manpower are sure and increase its use of multiyear procurement for ships and aircraft. allowing it to continue to develop -- development of of the next-generation ballistic missile submarine porches seven eighteenths for liberal combat ships and another ltd 17. the marines will cancel the expeditionary fighting vehicle and like the army reducer and strength starting in 2015, but they will reinvent the savings and sustain a modernized the amphibious assault vehicle and a light armored vehicle. even as they advance in a concept of operations and restore much of their naval expeditionary skills. fear force will be held to continue development of the next tanker, a new bomber and modernized its aging fleet of f-15 fighters. all the while finding savings of more than $33 billion through

reorganization, consolidation and reduce facilities requirements. none of this balancing will come on the backs of our deployed troops. we are asking for more than $84 billion for readiness and training. nearly $5 billion for isr capabilities and more than $10 billion to recapitalize our rotary aircraft fleet. these funds plus those we are requesting to help build a partner capacity in places like afghanistan, pakistan, iraq and gammon all speak to the emphasis we are placing on giving our troops and their partners in the field everything they need to do the difficult job we have asked of them. we must also give them and their families everything they need to cope with the stress and strain of 10 years at war. that is why i'm so pleased with the funds devoted in this proposal, almost three-quarters as much as the $200 billion budgeted for operations and maintenance to personnel,

housing and health care issues. as you may know the chief and i sent a rare 24 -- this week, expressing her unqualified support for military health care program, changes included in this budget. we sought equity across all health care programs with beneficiaries and health care delivery providers having the same benefits as equivalent payment systems regardless of where they live or work. that in turn led us to propose increases in tricare enrollment fees for working age retirees. these increases are modest and manageable and leave fees well below the out-of-pocket cost set in 1995 when the current fees were established. we sincerely hope you will be fit to pass it. please know that we will continue to invest widely in critical care areas to include research, diagnosis and treatment of mental health issues and dramatic brain

injury, enhance access to health services and new battlefield technologies. we understand the changes to health care benefits cause concern among the people we serve and the communities from which we receive care, but we also understand and hold sacred our obligation to care completely for those who have borne the brunt of these wars. as well as those for whom the ward never and. i am convinced we haven't even begun to understand the toll in dollars and in dreams that war extracts from people. as the grandsons and granddaughters of world war ii veterans struggle to comprehend the full scope and so too will our grandchildren have to come to grips with the wounds unseen and the grief unspoken. unless of course we get it right i believe the investments we are making in wooded care and family readiness will pay off in that regard. but it will take time and

patience and money, three things we seem rarely to possess and this camp. that brings me back to this particular budget request. with limited resources and to wars in progress we should be prudent in defining our priorities. we should also be clear about what the joint force can and cannot do justice we should be clear about what we expect from our interagency and our international partners. our global commitment has not shrunk. if anything, they have grown. the world is a lot less predictable now than we could've ever imagined. we need to look no further than to tahrir square to see the truth in that. foolhardy would it be for us to make hasty judgments about the benefits, tangible and intangible, that are about to be derived from forging strong military relationships overseas such as the one we enjoy with egypt.

changes to those relationships can either aid or assist us, not to be considered only with abundance of caution and a thorough appreciation for the longview rather than in the flesh of public passion and the urgency to save a buck. the $1.3 billion we provide the egyptian military feature has helped them become the capable professional force they are and in that regard have 10 of incalculable value. of equal or greater value, and a request in this budget for something called the global security contingency fund, a three-year pool fund between the pentagon and state that will be used to build partners capacity, prevent conflict and prepare for emerging threats. the request is modest and initial $50 million appropriations along with a request for authority to reprogram an additional

$450 million if needed. but what it will bias is in actual and cost-effective way to better respond to one for c. needs and take advantage of emerging opportunities for partners to secure their own territory and regions. we must get more efficient yet, but we must also get more pragmatic about the world we live in. we can no longer afford bloated programs or unnecessary organizations without sacrificing fighting power and we can no longer afford to put off investments in future capabilities or relationships to preserve their power across the spectrum of conflict. i've long said we must not be exempt in the defense defense department from belt-tightening but in truth there is little discretionary about the deceit your day we provide our fellow citizens. cuts can reasonably only go so far without hollowing the force.

in my view than those proposed budget built on the balance we started to achieve last year and represents the best of both fiscal responsibility and sound national security. now i don't know what sorts of questions representative giffords would ask me if she were sitting here today but i do know she wouldn't let me leave until i blogged became incredible job of our troops overseas as they begin to turn corners and afghanistan. i know you share my pride in them and their families and i know you will keep them foremost in mind as you consider the elements of this proposal. i thank you for your continued support of our men and women in uniform and their families and i look forward to your questions. >> thank you very much. mr. secretary, mr. chairman, as i stated earlier i think everyone on this committee strongly supports your request

for an appropriation bill that will take care of the work that should have been done last year, but if it had been done last year by the congress and the administration, we wouldn't even be having this argument, this fight, the thing we are trying to resolve right now on the floor. so, i am hopeful that we can wrap this up just as quickly as possible and i know that all of the defense industry, all of the men and women who wear the uniform and all of your colleagues in the department are strongly behind act, as are all of the members on the committee. so, hopefully we can get that done quickly. the $78 billion that we are talking about as a cut, i understand that it is not a cut as we would propose something being cut this year from last year's budget. but last year when we were holding these hearings, and he projected out the budget for the

five years the $78 billion was included in it. now i commend you for what you have asked the services to do to find deficiencies and save that $100 billion dollars they will they will be old to mostly be invest into more and porton items going forward. and i guess we will continue to talk about the outgoing years in outgoing years, but we all understand we are in a tough financial situation in the country and i think we all need to work together to make sure that whatever reductions in future spending we all work together to make sure that it doesn't cut into our men and women serving in harm's way and their families. one of the concerns i have had as we have gone through the qdr and hearings last year and this

year, it seems to me that the budgets are not driven by so much defense needs or procurement and the things that we are talking about spending aren't driven by threat needs. they are driven more by budgetary concerns. and, as indicated in my opening statement reductions to the army and marine corps end strength, remember when he came mr. secretary and how hard it was to increase the size of the force and i understand that even with these reductions there still will be a larger force than when you became secretary four years ago. but, as i look around the world and see what is happening, the recent events in egypt and yemen and asia, and other threats around the world, i have great concern about cutting the end strength and so my question is resolving around that.

is a reduction in end strength condition based? if so, what metrics with the department used to reevaluate this decision going forward? at what point will we decide and what measurement will we use to decide if this is the correct number to decrease our strength, and when will that decision be made? what was the 2016 end strength% by the qdr during development of the national military strategy, and finally how will this reduction in end strength effect the object of the 123 dwell time for the active force? >> let me start and as the chairman to add in. i would say that first of all, i would say that it is conditions based, and as i have said in my opening statement, if our assumptions about for example the drawdown in iraq prove

incorrect, but i think we will be in a position to change this decision and add to end strength further. well before 2015 or at least find other ways to deal with the dollar so that there isn't a reduction in end strength. i would say the key metric is, and the most predictable variable isn't that the drawdown in afghanistan. the big assumption in this is that we have a very much smaller presence in afghanistan at the end of 2014 then we do now, and they think you will know as early as the end of 2012, beginning of 2013, whether that is going to happen which allows plenty of time to alter these decisions. the good thing about, the good thing about this approach is that as you don't start to cut

anything until 2015 if all you have -- you don't have to go out and recruit anybody. we have to do is find other sources of the money and as was described to me a long time ago about the out-years, the out-years or where everybody's dreams come true, and so just as an example when i took this job, the forecast, the projected budget for fy12 india and the 07 bush budget was $519 billion. our submission is for 553, so these things do change over time and there is a lot of flexibility. but i will say this about the marine corps. the marine corps actually came forward at their proposal and it was really unrelated to the budget. both the previous commandant and the current commandant believes that when the marines are out of afghanistan and the marine corps is both too large and too heavy

to fulfill its traditional missions going forward, and so they were talking about reductions in marine corps end strength a year or two ago, and so they tie that very much to their mission, and as i they say we can revisit the armies -- you can revisit the armies and strength depending on the conditions in 2013 or 14. >> mr. chairman, all of us in the leadership, and later shift positions in the military believe we live anytime of what we call persistent complex. is very difficult to know obviously what is going to happen in 2015, 2016 timeframe, but to your point and to the secretary's answer think this really is conditions-based per se. and, in addition to the metric

of certainly afghanistan and iraq, we will be in a position they are in 2015/2016 where our forces substantially reduce and to include in that the 25,000 marines are so who are there now. i would just echo what the secretary said which jim conaway who was the previous commandant and jim amos had been planning to get smaller and lighter. they are too heavy. they are the nation's second land force which is not what they want to be and they have got to get back to some degree as we move ahead to their roots which is lighter and smaller. with respect to the army in particular, we looked out to the coming -- qdr hominy group brigades will have out there and the injuries we are not sure. we plan around six 6010 or some number like that. we don't know where to look prudently at the future as the army has become much more expeditionary and that is where we are headed and i'm very

comfortable with that. each of the service chiefs, all of us, but each of the service chiefs depending on which service you are talking about, some 60 to 70% when you add civilian direct support contractors, 50 to 70% of our budget goes to people, so the secretary said in a statement, we are on a way, on our way of becoming almost immobilized by just what it cost in terms of our people. the health care piece is not an insignificant part of it but it is an example, so we tried to achieve balance. probably the metric i would use is the one that you suggested which is well-timed -- dwell time. we are now in this budget we will get to in the 15 timeframe where we are one into. i think the common i would sit here and say that is probably about where he wants to be in terms of rotating his force. i think the chief of the army would say one in three and obviously that will then depend on what they allocations will

be. but you can see now in various examples where we have our troops home a lot longer than we used to, starting to be significantly longer than they were deployed. we are just in the beginning of that. we have got to get down to one to two and in the case look at really decisions around getting two-to-one to three with respect to the army. so uncomfortable that we have time and we can look at it and certainly they would come in and change the recommendation if he will face on what i know about them if the conditions warranted it. >> thank you very much ranking member smith. >> thank you mr. chairman. actually have two sets of questions. congresswoman giffords staff has given me some questions she has and i've thank you both for your kind words on her back. they focus on department of defense energy issues, something that commerce among giffords has

worked a great deal on a basically using efficiencies and alternatives to reduce our energy consumption. she had introduced a bill, the defendant -- department of defense security act of 2010. many of those were contained in art and the aa and i wanted to follow-up on follow up on that and then specifically there is a program that the marine corps is using at a forward-operating base in afghanistan they use solar is a way to reduce their fuel consumption and i think the biggest point here to make isn't just about saving money or dealing with energy. it also does save lives in the pacific example is because they use solar they were able to reduce their fuel consumption as a understand from 20 gallons a day to 2.5 and that reduction means fewer combos that to come and go and bring fuel in which means fewer people are exposed to the ied threat. so there are very specific implications of this policy and in going forward i want to know first of all how the department

of defense is doing on implementing these programs finding efficiencies, reducing energy consumption for the use of efficiencies and alternatives and second of all what more we in congress legislatively need to do or can do to help you. if you could, and those two questions i would like you to give brief comments but submit the answers for the record to both congresswoman giffords office and to mind. i will let you take a stab at that now. that would be great. >> i can give you the example that you given the marines in afghanistan is a terrific example and it does exactly what you've just described. actually, the marines in anbar province of her years ago started that, looking at the length of their convoys and the number of people. that were put in harm's way because of logistics and transportation requirements. that is kicked in over to the army and actually cross all the services. so i think the efforts with respect to improving and

reducing energy dependency are significant. the secretary stood up a strong office to oversee this to integrate the effort, the investments are there, the air force has in my perspective led the way with respect to synthetic, use of synthetic fuels in aircraft. the navy had picked up on that, so there is a significant effort across the board. there are green investments taking place in the marine corps added twentynine palms for and since. just rate solar energy. the reductions that base are seeing are significant as well. that is also starting to be put in place and other bases around the country so we are sharing ideas. we know that we have got to reduce our dependence significantly and the leaders appropriate on that. we have seen some of the results that we have expectations they will be significantly greater in the future.

>> mr. secretary secretary go ahead. >> i just want to make two quick comments. first i think resonates degette particularly to the secretary of the navy, ray mabus because i think the navy has a really aggressive throw-gram in terms of reducing energy use. second i would just note that i read just a few days ago that the c-17 was just certified for use of synthetic fuels. >> number one, how much difference this can make. generally in the energy field you are like yeah they are talking about this and that and the other thing that one is it ever happening? it is happening and i think the military and every bayside visit and many talk about they are doing this without and the other thing on energy and how much they reduce energy consumption and i think the challenge really is to get it to scale. as all these experiments are happening so to quickly find out you are the three things that just work the best. let's get them servicewide.

and get them implemented. so i think you are making enormous progress. if you could submit more detailed to answer congressman giffords office in mind that would be great. two quick areas i want to ask about. one is a mention in my opening remarks development assistance is becoming a greater part of our national security. stabilities the goal here. our enemies now prey on on governor ungovernable spaces they find openings places and it is certain we have been in afghanistan and pakistan and yemen and to some extent to figure out how how to use debility will be critical and i know of necessity to the department of defense has taken on a lot of responsibility in this area through cerp funds, through 1206 and 12 wade and part of the problem there is these are responsibilities better done by in some cases the state department or department of agriculture other areas that know more about this but you guys have the money and you are the forward leaning folks. frankly there was not sufficient support elsewhere so you had to

do it. the question is how do we begin to transition that responsibility because it is not a core responsibility of the military in many instances. it is a core responsibility of folks and other agencies but how do you make that work? how do you make the agent -- make sure the agencies have the support they need? how do you envision that playing out? >> well we have been advocating for much greater civilian involvement in these kinds of activities not only in iraq and afghanistan but global stability operations. at least since i gave a lecture at kansas state in 2007. the biggest part of the problem quite frankly is jurisdiction here on the hill, and it is the difficulty the state department has in getting their appropriations. and getting the money they need to do their job. if you took every foreign

service officer in the state department, he would not have a large enough number to crew a single aircraft carrier. so, finding the resources for the state department because many of these areas, what we have done is worked with you and you have been very helpful to us in developing some workaround. so on 12/06 for example we had dual key arrangements. we basic we leave the initiative after the state department terms of what we should do on some of those and then we fund it and we partner with them. by rights that money should probably be in the state department start with. and so, think this is an area where legislation but especially appropriations are really important because the stability operations, and there is a military component to it because it is developing partners security capabilities so that they can take care of security in their own country so we don't have to send american troops to do it.

and you can just tell from the costs in iraq and afghanistan and and and the different shown cause between our training somebody else to do it and the state department than providing the civilian support in terms of governance and various other kinds of assistance compared with having to use u.s. troops so it is a challenge. i think we have developed over the last several years very close working relationships between state and defense and these workarounds are and these jerryrigged operations but a long-term solution is the kind of global fund that admiral mullen was talking about and so on. >> thank you and you are absolutely right. security is to be a key component of any development. if you don't have security can do that but think of the philippines of an example of where small number of our forces train the local security forces and you don't hear much about what is going on in the philippines and that is a good thing and then you look at iraq

and afghanistan and you can see the alternative is just so much more costly it is beyond imagination. one final comment. when we are trying to figure out going forward dealing with the typical budget and permit we have and trying to anticipate threats, trying to make sure we are ready for whatever comes next i just want to make sure people are aware of the fact that you cannot be ready for everything. from my earliest days on this committee one thing that struck me as every day would come and we would talk about some thread and then we would talk about how we are not doing enough to be ready for it and i get that but if you were to look at every possible threat and say the job of this committee or your job is to make sure we spend enough money to be ready for any and all contingencies the defense budget while it might not be infinite would be darn close so we have to prioritize those threats going forward with a budget and we can't walk too far down the road because if we can imagine a threat we have to spend whatever we have have to protect it.

we really have to prioritize and towards that end i think the key going forward to get the right budget is to really look at the requirements. starts with the qdr. once we decide there is a requirement, we can have to find it. we don't find that we are not giving our troops the support they need to do the job we by definition of asked him to do but i would like to think we can also go back to the start of that process, not just the end, not just the end and say gosh with the fund of the go back to the start and say is that really requirement or said something we develop 10 or 15 years ago that is no longer appropriate? getting very think we need to move in that direction. >> levy let me add two quick comments about that. first of all if you look back to every time we have engaged in a military operation since the vietnam war, we have a perfect record. six months to a year before we engaged in that operation nobody had any idea we were going to do it.

and so, the mantra for the department that i have tried to inculcate a is, in the budget environments we have to be exceptionally careful about buying niche capabilities. very expensive weapons systems that have application in only one scenario. there maybe some of those that we need that we need to be extremely judicious about those investments. but our overall approach ought to be the broadest, the most flexible range of capabilities to cover the broadest range of conflict. so that a c-17 is going to be applicable whether we are dealing with a near-peer or taking aid into pakistan. so, having capabilities that can perform many missions is where

we need to focus most of our procurement dollars for the very reason you cited. >> can i just make one comment? i think one of the ways you do protect against the unknown is to make sure that your smt and what i would call pure r&d budget are both comprehensive and broad and sometimes those become easy targets. you. unique innovation. you need the kind of investment for the capability of the future that really starts there and the secretary -- there has been a focused effort to make sure that is the same and in the totality of the budget is not a huge amount of money but long-term leverage is just almost off the charts. >> thank you mr. chairman. thanks to both witnesses. ewart doing an outstanding job. >> mr. parlor. >> thank you. mr. secretary i want to put my

comments in context. to the best of my knowledge the only interest in the engine or the f-35 in the district to have i have the honor to represent is an interest in the 135. as far as i know there is no interest in the 136. the weapon systems report in 2000 requires you ensure that the acquisition strategy for each major defense acquisition program includes measures to ensure competition or the opposite of con -- at the subcontract level of such programs throughout the lifecycle of such program as a means to improve contract form. the current f-35 acquisition strategy states and a quote, to preclude excessive reliance on a single-engine supplier single engine supplier and alternative engine program was established. the f-35 could represent up to 95% of the entire u.s. fighter fleet in the future. use of a single-engine could result in grounding of essentially all of the fighters and all of the services.

the 2010 hadley perry quadrennial defense review panel endorsed competition and i quote is the only way to control program costs. the senior pentagon procurement official cited competition as the cornerstone of defense acquisition. the pentagon's last update of the 35 alternative engine business case indicated the competitive engine is at the breakeven.in net resident value. ..

to the armed services committee. so when i was a little boy, my mother pressed on me than an intent to defeat was the same thing until i. and each of these papers are just a statement, at 136 alternate engine is three to four years behind development compared to the current engine program. and yesterday's paper said the f-136 srd three to four years behind its face. it was argued for years after the first and june. after you know the first engine is 24 months behind development, i understand the second engine is two to three months behind its development cycle. so in reality, have they both started at the same time, second engine would now be well ahead

of the first engine. sir, are you comfortable that these two missiles that have gone through the congress for the last couple of days do not constitute a violation of the statute that prohibits the pentagon from lobbying the congress? the night i am not in the latest aware of either one of those documents. the only document i am aware of is the letter that i had to representative rooney i think yesterday or the day before and i can assure you it was both signed and dated. i will just tell you -- that was your question. >> sir, these two papers are circulated. they are unsigned and undated and the office of the secretary of defense refused to respond over the last three days as to why these papers are not signed or why they were not provided.

they were provided to everybody else in the congress except he armed services committee at i understand. are you comfortable this is not constitute a violation of the pentagon cannot lobby? >> la mesa the papers and find out the background before i make a judgment. >> thank you. we will -- we would, after you have a chance to peruse those, if you would please respond to the gentleman in writing, we'd appreciate that. mr. reyes. >> thank you, mr. chairman. gentlemen, welcome. thank you for your service. let me add my concern to the

issue of the reductions and strength for both the army and marines given some of the challenges that we know we are going to have in the next few years and in the horn of africa and other areas, so i do hope we are careful with those reductions because in the final analysis, the ones that pay the price of the service men and women and their families and most recently we have learned over the last eight years that enact the meeting and using the reserve force is, a lot of unintended negative can't quinces impacted those families. so i also want to urge caution there. the other concern i have is yesterday it became a national story about a lawsuit filed by

former veteran women that are alleging he what i think is a hostile work environment, harassment and other things. i know you're probably not in a position to comment, mr. secretary, i would like to work with your office to better understand exactly the circumstances that led to this lawsuit. >> if i may, obviously what i can say is limited by the fact of the lawsuit, but let me just say a couple of things because this is a matter of grave concern. i expect everyone in the room. first of all, i have zero tolerance for sexual assault. i worked with admiral mullen and the cheap to see if we are doing all they can to prevent and

respond to sexual assault. i have had multiple meetings with the senior leadership of the department on this issue over the past four years, established for critical areas of departmental focus, reducing stigma associated with reporting , ensuring sufficient commander training and ensuring investigator training and resources and trial counsel training and resourcing. with a dozen more investigators, field and start yours and not examiners. they spent close to $2 million to train our prosecutors said they are better able to be successful. we have expanded the sexual assault response coordinator and big advocates tenfold from 300 to 3000 we know how those advocates of every base and installation in the world including iraq and afghanistan. the court martial percentages have increased from about 30% to 52%. so we are making headway.

the fact is we are and where we should be. it is a matter of grave concern and we will keep working on it. >> sir, i would certainly more than just echo what the secretary just that in terms of zero tolerance. actually over the course of the last six or seven years, it has been an issue of great focus and it is unacceptable that we haven't gotten where we need to be on this. we know this is an extraordinarily difficult issue. and i know both as a former service chief as well as knowing the service chiefs, it is an area focused -- it wasn't that long ago. it was a significant area and the combat on, and iraq. there still is enough anecdotal information coming out of both iraq and particularly in

afghanistan, certainly of concern to what the secretary said in terms of the investment in terms of improvement and focus on leadership is exactly right. but we also have, i think, you know, we still have significant work to do in the leadership is focused on that. >> thank you. i may just mention quickly to other things. first of all i represent four players who in the area of green energy is hoping to be off the grid by the 2015, 2016 timeframe. that's a huge compliment to the work that you are both supporting in terms of opportunity. the last thing i would urge you to look closely at the secretary of veterans affairs to find a way to computerize our servicemen and women about the duty into the veterans

administration jurisdiction that there be a way of doing a better job through automation. thank you very much. thank you, mr. chairman. >> thank you. mr. thornberry. >> thank you, mr. chairman. mr. secretary, i thought the sentence you head towards the close of your statement, the retrenchment brought about by shortsighted cuts could well lead to tragic to more consequences later indeed as the u.s. have in the past as a very powerful statement to me. i think it is a warning to all of us, somewhat related to the conversation you had with mr. smith. you never know what we are about to get into. and i guess it's that feeling that you express better than i could that lead me to be concerned about not just in strength, but for structure in

the future. i noticed that the independent panel of the gdr shared with steve hadley and former secretary. with all these people you know well on it expressed their concern about a growing gap between our interests and military capability to protect those interests in a complex, challenging security environment. that's along the same lines you are talking about with our diverse, complicated, difficult threats. and their conclusion was they believed the current size and courage and strength of the army and marine corps should be retained. and i heard with both of you said, that business conditions-based and we'll see how it goes than we can change our minds. the strength and force structure was not something you can switch on and off. the kind of thing you have to plan ahead for an budgets and

equipment and personal pipeline for training. so i guess i would appreciate a little more, especially as this is a little more of her thoughts about not just in strength, but the force structure moving ahead with the kinds of threats that at least we understand are on the horizon. failed states, treble in the middle east, the kind of stability operations that you all were talking about from a financial standpoint. but all that is very manpower intensive. and so, i would appreciate your thoughts about how we on this committee can best prepare us to deal with those kinds of challenges ahead, even if we don't know exactly what they are. >> first of all, as i look ahead

, i think as i say in both the chairman and i have said the industry today approved in 2007 for both services will remain in place at least until 2015 and could be -- those plans could be altered depending on circumstances. as i look around the world that we were talking about stability operations, one of the areas where we've had a significant expansion of capabilities over the last few years has been and our special operations forces and they often play the training will that mr. smith was talking about in the stability operations. one of the big moves we have made that is not the noticed very much is that this increase in staff capabilities over the last two or three years has been moved out of the supplemental senate debates budget so that those soft capabilities that we

would use in a lot of these unstable conditions that we look around the world and see will be sustained even once we start getting overseas contingent fee appropriations and so on. i will tell you the areas off for structure that worry me a lot and they areas that this committee and the years to come is going to have to address. for example, the number of our surface ships. the number of the navy ships that were built during the reagan years will basically reached the end of their planned life in the 2020s. and where the money comes from to replace those service ships or to get to 313, which is the navy's goal for the 287 we have

now i think is going to be a challenge and especially if you put it alongside for the navy, acquiring a new ballistic missile submarine. for the air force. is the air force in 2020 or 2025 going to be able to afford a new tanker, and have 35 and a new penetrating bomber? so there are some tough choices in terms of the capabilities that are coming down the road. they are not facing us right now. and what we've been able to do is to give future congresses and future presidents choices because we're making investments in things that the ssb annex, like the new bomber and so on. down the relevant procurement starts, there will be some tough decisions that have to be made. >> teeny mac. ms. sanchez. >> thank you, mr. chairman and admiral and secretary for being with us today. secretary gates, i just would

like to thank you for your service because you are obviously serving under two presidents have been really wonderful to work with anything so many of us here who have been on this committee for a long time really appreciate your candor and your desired to work with us to make things better at the pentagon. the thank you for that. you know, we find ourselves into wars and its then i don't know, maybe about eight years. and when you're in a tight before there's always the thought of for that you want to find and make sure you wind and make sure your soldiers and airmen and seamen and marines and coast guard are all taken care of when they are on the frontlines. and so i think what we've seen is really an increase in money at least over the 14 years, now 15 years that i've been on this committee, but you know, just in

january the department of defense came out with a report saying that in the past three years the pentagon had awarded $285 billion to companies that were defrauding the pentagon. 285 billion in three years. and i know when i look through your budget and top see how that you are taking expensive initiative to bring efficiency and savings to the department. and i know we set up a task force with mr. andrews on this committee through acquisition in a different manner and we've believe we will find a fraud and contract in a different way and begin to see some savings from not. but when something like 285 billion over three years occurred, it really is working against all the hard work that you and others and some on this congress have done in terms of getting rid of the waste in the

department. and that really concerns me is that senator sanders requested that investigation. if he had not, we'd have never seen a 285 billion report. so my question is, what is in place for the department of defense to catch those types of things? were they not in place? do we have new guidelines now that we've seen that that came forward? and what can you do and what can we do together to ensure that these types of companies never get a contract again from the federal government? >> i'm not familiar with the study that you cite, but i will tell you that there have been a number of changes made to the last year. so in terms of our approach to acquisition, beginning with the legislation that the congress passed on acquisition reform.

the one exception that i have made to the freeze on civilian hiring for the next five years in the department and the acquisition area and building up our professional cadre of acquisition experts. part of the reason for that is. too many instances where leading contracts to contractors instead of people with interests of the department of defense and the u.s. taxpayer at her. so professionalizing acquisition workforce is a very high priority. we have really changed a lot in the last year or so in terms of our procedures and our process. first of all, in negotiating smarter contracts. and we have seen some real benefits from not. in the example was used in another context of the liberal

combat ship. being able to get these two into a real competition at the price down far enough that we were able to actually buy warships because of that. so i think we have a bout of efforts underway. we have thousands of auditors. i have about 10,000 lawyers. and so, the key is, i think, having acquisition professionals who can discern these bad behaviors and first law prevents them from happening in the first place, and then be quicker and more effective in catching them. >> thank you. my time is over. will make sure we get the department of defense report that she can take a look at that. i have some other questions, but i'll submit them for the record because of the time. thank you, mr. secretary. >> thank you.

mr. aiken. >> thank you, mr. secretary. i want to say i really respect her decisiveness. nobody can say you are free to rate it and make the tough decisions and certainly we need that kind of leadership. i don't always appreciate the communication strategy of letting us know. he said sometimes you don't know for six months before what we'll be in a conflict. sometimes we don't know whether a program is going or not and it's about a matter of terrorist though we find out. sometimes this committee would be helpful if you are connection medications and get some of us they had up as to what you think you were going because were trying to play as a team with you, particularly in that regard, i've shifted over and i'm now on the budget committee and try to help people to understand the difference in growth of entitlement and what is happening to the defense budget as a percent of gdp. as you know, the defense budget has very much going on since 1965 and entitlements and the

600% or 70% increase, but we need to make sure to make the case which are not supposed on money to get the job done. i hope you look at a set partners and helpers. if you're going to all of a sudden, for instance, like the expeditionary fighting of which have to be in our committee, it beheld all the idea you're inking about what from false speed ahead to all stop and those will help to the heads up on it. i was interested to hear you reflect on where you are concerned about where we are overall. i was also concerned about the number of ships. at a chance to spend three hours in one of the situation rooms that was designed to give us a picture from hail britannia, rule at this he is an author history. and one of the lessons was to fight the war with bishops who have are the ones on the ways you can design a new ship and a bit until the world be over and you get there. my concern was for your type in

about a 313 ship navy. we are down to 287 as you point out when you put the ballistic missiles. the budget just up. i certainly we hope we can work on whatever were building. the other thing of the expeditionary fighting vehicle, i don't give a rip what particular platforms we have. but it seems to be nonnegotiable that marines have to get from the ocean to the land and they've got to get there quick enough and not fill the diesel fumes enough that they can fight when they get to shore. i am not convinced that we have an adequate strategy without having a vehicle or something to fill that gap. it is something we'll take a look at, but i hope it's something you will at least allow us to go through that and be flexible with this insane if we don't have a good strategy, let's make sure we have a good win because they think the braves decided they were going

to do that capability than that gotten the full filing number lost as they had planned to be about to get their bearings on the shore. so i just want to allow you to respond to my rambling here a little bit. but we want to work with the team. that's my main point with you. we need a little headset before you you make her decisiveness. thank you, sir. >> first of all, on the esb, let me just say publicly and for the record the department of defense totally support the marine corps in a firm requirement for an amphibious assault capability for the marines. we just don't want to spend $15 billion, which is virtually all of them are in coarse procurement budget for enough vehicles to take 4000 out of

202,000 marines from ship to shore. i think the commandant and there should be clear this was a recommendation from the commandant to the secretary of the navy and from them to me. and i think we should also understand the commandant does have an alternative plan in terms of first accelerating the marine personnel carrier. second, upgrading part of the existing amphibious assault vehicle fleet and third, designing a new amphibious assault vehicle, but one without expensive exquisite capabilities of the esv. so there is a commitment to this and there is money in the fy 12 budget to begin pursuing it. with respect to your first observation, i would say first of all i -- i think most members

of this committee believes that i've been pretty honest, pretty forthcoming and candid and transparent ever since taking this job. and i fully recognize the constitutional role of the congress with respect to our military forces. in fact in my first commencement address at the naval academy, who spoke to the midshipmen about that very fact of the importance of congress and for them to stay apolitical among other things. at the same time, i have to have the discipline process inside the department of defense. until a few years ago, the place leaked like a sieve and i could make a decision without it being in the newspapers or that process been in the newspapers. i have tried to instill subdiscipline in the department.

the truth is by going out on january 6 with what we have in mind for the fy 12 budget, this committee and its counterpart in the senate got a six week head start in evaluating the fy 12 budget or wherever they're committee and the congress and the budget and i got the president's approval to go ahead and do that. same thing happened in the spring of 2009, when i came out. i made a lot of decisions to spring of 2009 and programs. 33 of them came up here. all the major ones. every single one of those, congress had an opportunity to evaluate and decide whether to go forward or not. right now, 32 of the 33 are in love. so i think i absolutely agree with you, we need to do this as a team, but i also have a

decision process so that i can get everybody's points of view of the people can speak up in meetings, disagree or we can work things out before making a decision. >> thank you. >> mr. andrews. >> thank you met mr. chairman. thank you gentlemen for your service. the highest complement i can say is you reflect what you lead and we appreciate all your service to your country. i apologize for not being personally present. mr. secretary, to direct your attention to page four of your written testimony of savings you are proposing. first, let me thank you for proposing them. i think too often the debate here has been trivialized by people who i think incorrectly say our military budgets too large because it looks too large

without being able to talk about needs the country has. in others who would look at any reduction is somehow a threat to national security without real and fair analysis. i can't think of a person better suited to lead us to a mature discussion of this venue and a thank you for taking a leadership role. i want to ask you a couple questions. you talk about the $11 billion over the five-year window from resetting missions, priorities, functions for defense agencies nos e. what does that mean more specifically? the mac let me answer quickly and then ask mr. hale to elaborate. what we have asked every defense agency and every part of the office of the secretary of defense to do is to do what we call rebate finder duties, to

start with a clean sheet of paper. what are you doing from what should you be doing and how many people does it take to do that? and so, this is one of the areas in which we are able to shed staff contract terms, in which we are able to reduce the number of people working in these areas for consolidating some of his art duties, eliminating other committees. and so it really has to do in the civilian side of the department. had we make the defense features these osd at cells more efficient and fine saving. and so that the basic umbrella. >> fna, this does to your premise of your earlier argument, which i understand it's been ways to make more efficient what we do with their logistical operations of the can become more effect to contractual defense activities. it's a fair summary of what you're trying to do click

>> yes, sir. the defense agencies have a lot of people and a lot of money and they've grown a lot over the last decade. and frankly, we thought it was time to take a fresh look and it's been a long time in the way we have. >> i am one who would be eager to work with you to find more savings in these and other areas. and there's parties willing to do that. >> i think there are two areas where we have not realized the opportunities that we have. after all, we came up with $170 billion worth of overhead changes, economic changes in the space of about six or eight months. i think there are two areas, for example, where we have the opportunity to say the greats of our money.

one is an acquisitions which we were just talking about, but negotiating better smarter contracts to lease a list intrusiveness on the ssb annex, on several different programs. the other is an information technology. we've got to start on this and the sufferer, but it's just complex enough that we have a cotton as far as the leg. those are two areas where we can do a lot more. >> many are eager to be your partner in an effort. i want to thank secretary hale for being very accessible and precise when we need to speak with him. let me say one thing i leave you with a no take personal responsibility and hope our colleagues would. you've a billion dollars for eliminating unnecessary studies and internal report. a lot of them emanating from us. there is a tenant even want to try to change the law to settle for while we will just put a provision that the pentagon to

do a report. as someone who has violated the rule myself, i'd be willing to try to not do that in the future or their colleagues to do the same thing. tonight we'll give you some ammunition. from now on, all reports whether internally commissioned for externally commissioned poll in the front page have what it costs to prepare the report. >> also put the name of the person who asked for it. thank you, mr. secretary. >> thank you. mr. "forbes." >> thank you, mr. chairman. i want to say how much we respect your office and i hope you won't conclude it's disrespectful as we try to get answers and safe enough to fit into the five minutes we have, but it's oftentimes difficult for many of us at least on this side to get information from the department of defense. one of the things we thought in january the 26th in your deputy secretary mr. lindh was here, he testified that the department had failed to comply with the law requiring audited

financial statements be filed annually in the years 2007, 2008, two dozen nine, 2010, all years of course that she was secretary of defense. and my first question is are any of those years, 2007, eight, nine or 10, were you unaware that the law required that dod required audited financials even? >> i certainly did not -- was not aware that we were in violation of the law. the mac so you not know you were in violation of law? in the second question. mr. lind further testified that no such statements would be filed this year, but he said it was the party of the department of defense issued in compliance and they should have a plan to do it. has that always been a priority of yours since you been secretary of defense? >> yes, it has. and i think if you go back to

testimony four years ago, the person who had the job before mr. hale had begun the planning and execution of getting us to a position where we could comply with the cfo bob. >> mr. secretary pickard, i don't know if we had an opportunity to put it on the screen, but hopefully we will end on the monitors. but if not, there's a chart right over here. it might be rdc, but you can see the screen over here. and i am wondering if you recognize the website at all. and the reason i say, just to refresh your memory, there's a copy of it here. this is your website and this is life. this is not something on the screen that we made a copy of. this is what she was seen at the testimony are talking about in 2007. or if we attended in 2008, 2009,

2010 or if anybody were to go to it today. this website is defined to provide all the information you need to understand the budget and financial management crisis of department of defense. mr. secretary, what it clearly states on their if we'd had the testimony then is that the department of defense would have been in 100% compliant and given 100% audited financial statements by the year 2010. but a point fact including by mr. lynn testified, the department was off 100%. is that not accurate in that we filed nobody to financial statements click >> we certainly have not filed clean audit. >> mr. secretary, the question i have for you is you been given by the taxpayers of the country $2.5 trillion essentially says to the record terri of defense. did you have expenditures of the

sons if you're not convinced there adequate accounting systems in place to know they were being spent? >> mr. forbes, i am confident that we have the financial processes, all of which were by the way design for budgetary planning and which the congress has relied on for a long time, that gives me confidence that we know where the money is going. can we do the kind of audit that are required by the cfo? no. but we are spending between $20,300,000,000 a year to get in compliance. we have a short-term and long-term plan to get there, which i would be happy to share with the committee. so we understand the obligation to get to this, but the reality is we have systems in place to deal with fraud, and you with other issues and provide us with the tools to do financial management. >> mr. secretary, i don't want to cut you off, but we only have 42nd life. the reality is we were 100% off and i want to be kind and i want to be respectful, but the

reality is taxpayers have entrusted your department with $2.5 trillion here's the way we repay them with the accounting. you accounting. you call a disciplined and decision-making, but we've issued gag orders to stop people from talking to members about where those dollars are. didn't get a shipbuilding plan in the year as required. didn't get the aviation plan in the year as required by law, haven't had the audited financial statements required by law. and the cuts that you get us, mr. secretary, we'll make it back up information. mr. chairman, i know my time is up and so i yield back. >> thank you, very much. mr. davis. >> thank you, mr. chairman and secretary gates and chairman mullen. i think we all applaud you for your service and i want to add my voice as well. since he said secretary gates that this is your last project i believe also chairman mullen --

is your last budget as well? >> as far as i know. >> given that, several of my colleagues have had questions that ask you to take out your note. and what is the concerns you the most, whether it's in the budget are outside the budget? and i wonder if you could speak a bit to any disconnect that you see between what the needs are and what the budget actually reflects. it's a little of the what keeps you up at night question, but i would hope that this is your final if there's anything from particular you'd like to focus our attention on it may not have been missed. >> all take a crack at it. i look at the future, there's been a discussion today about force structure in a word in the long run i think we're okay, but a word in the long run do we

align our force structure with the national security requirements we have is a country. at some point in time, with the force structure we have come or going to have to start saying there'll be some stuff we're going to need to stop doing. i worry about resetting from these wars. and it's going to take -- would it two years of time in the next two years, but we are not reset for two years as opposed to instantaneously, when that starts. and so i worry about properly resetting during the time for the challenges in the world continued to grow. and no better example than just the last couple of weeks. i think i will continue. you track crazies that over the course of the time the secretary's been here and i've been in this job they continue to grow. am comfortable with the best military we've ever had.

you just need to sure that we stay not over the long term. we'll talk a lot about equipment in these hearings. if we get it right for people and families, will be fine. if we don't it will be a real struggle. into specific areas, not that we don't have challenges as have been mentioned, but to specific areas are of great concern to me. when his face and the other is safer. those are areas that are but i would call too often niche areas. they are not anymore. their demands without andres, without rules. with international players as well as individuals, particularly on the server-side, extremely dangerous in both rounds, particularly in cyber. we've do not heavily. those are initial steps. we've got a long way to go. >> mr. secretary, did you want to respond to that?

>> i would -- since this is my last hearing, i'll be bold and tell you two things that worry me and they both have to do with the congress. one is the disconnect between the roles and missions other than given to the military by the congress and the press didn't end the discussion of the defense budget now and in the future here in the, where it is treated more often than not as a math problem. u.s. 18.9% of federal outlays, which i might add is the lowest percentage of federal outlays for defense other than the late 90s, early 2000 since before world war ii. and yet because the have a half a trillion dollars, then we must be part of the problem in terms of the nation's debt the

deficit. i would tell you on a $1.6 trillion deficit, if you cut the defense department by 10%, which operationally would be catastrophic, that's $50 billion. you haven't gotten very far towards dealing with the deficit. the second thing that i worry about is what we have found in the executive branch is that the elements of the different parts of the executive branch are increasingly integrated in the way they deal with problems. the state department and the defense department and ait. and yet the jurisdictional lines here on the hill are such that you don't get to see the overall national security picture that we see in the situation room or that the president sees that brings intelligent and the state department and defense in these different elements together and integrate those. and i think it is a challenge because this is becoming more and more the case and the

problems that nation is dealing with and national security. and yet the congress continues to have essentially a stovepipe approach to dealing with these issues. this is one reason the state department doesn't get enough money. and so, as you all think about the future, those are two things that concern me. >> thank you. thank you by mr. chairman. awesome if their questions for the record. >> thank you, we are going to turn to mr. wilson and then we're going to take a five-minute short break. mr. wilson. >> thank you, mr. chairman. admiral, mr. secretary, thank you for being here today. in particular, admiral mullen and secretary gates, i went to thank you for your service as you highlight the service of your careers in the military. i do have the same concern of

our chairman. it's a bipartisan concern. i was listening to congressman reyes and that is to draw down, with the force reduction in the army and marine corps. i'm very concerned that the effect of dwell time. i'm very concerned about these amaral. morale and service members on their families, the consequences i'm not feeling the care as to the military futures. people have been so dedicated to our country. with that in mind, and it's been stated it's going to be conditioned space. mr. secretary, what flexibility with a b. for the service chiefs in terms of the conditions? and the idea that the conditions have even changed in the last month that the instability in the middle east and the potential facing an asymmetric enemy on its routers fail that

would require more votes on the ground. >> well, i think you're concerned about an asymmetric threat is correct. i would tell you i think those who will face the asymmetric threat to the greatest extent are in fact the air force and the navy, particularly as we look at capabilities to china and others developing, the kind that unity is your radiance are engaged in, north koreans and so on. that's why we put a freeze on both the air force in the navy in 2007. we were trying down on their personnel. and we stopped that. and so there are no drawdown plans for the air force and the navy. as i said earlier, the marine corps -- this is their idea and you need to talk to general anamosa and get to thinking and logic in terms of why of why it

used to be smaller and lighter. and i would tell you the kind of ability that we've seen in the middle east now is difficult for me to imagine a circumstance in which we will send ground as in any of the situations. those are problems emanating within this country is and is primarily a diplomatic challenge for us. although i would say if you ever wanted proof of the value as the chairman said in his opening statement of the value of their militaries distanced to egypt over the past 30 years, it would have been in the behavior of the egyptian army over the past three weeks and it touched a lesson in dealing with the kinds of situations they have. a look, 2015 is a long way away. and i think the department -- and we're talking about $6 billion. so i think the service chiefs

have a lot of flexibility in terms of if they determine 23rd team, 14 there about the trying down from 547 and from 187 and in the case of the marine corps or 202,000 rather, then they can obvious he make that pitch. i would tell you though, a lot is going to depend on who is the secretary of defense is the president because there had been oppositions within the department of defense to increasing end strength when i arrived in not like it hadn't happened. the chairman of this committee had been a strong advocate of increasing end strength in many of you have been at all. but it didn't happen till you have a different secretary of defense. so that will matter to us postal service chief. >> i do want to commend the surge i think successful in

afghanistan. i'm very grateful so many of the army personnel were trained at fort jackson and represent pairs on an marines come in making a difference. also, in regard from the secretary the national guard, what is the status of our equipping of the national guard for the domestic and foreign capabilities? >> this is a real success story. this is something i'm pretty proud of. when it came to this job, the equipment on hand across the nation on a bridge for the national guard was about 40%. it's now in the mid-70s. the historical equipment on hand for the card is about 70%. so we are well above that, but more importantly than that is they are getting first line equipment. they're not kidding hand-me-downs from the act to force. they are getting the same high quality, high tech equipped and then the forces.

>> thank you very much. >> the committee will take a five-minute recess and reconvene at 10 minute to 12. [inaudible conversations] [inaudible conversations] [inaudible conversations] >> defense secretary gates and joint chiefs chairman mullen will be back on capitol hill tomorrow morning to testify before the armed services committee. live coverage on c-span 3 at 9:30 a.m. eastern.

>> the nation's top intelligence leaders testified before the senate intelligence committee today on security threats from abroad. witnesses included national intelligence director, james, leon panetta and fbi are, robert mueller.

>> good morning, everyone. this hearing will come to order. this committee meets today in open session to hear testimony from the leaders of the intelligence community on the threats facing the united states. the committee has been holding worldwide threat hearings since 1994 as a way to focus the committee and the senate on the national security challenges and opportunities that we face as a nation and to allow the american public a view into the assessment of the united states intelligence agencies about the dangerous world -- a world in which we live. yesterday, the senate passed overwhelmingly, at least a temporary extension to the end of may of three very vital sections of the united states patriot act. and i've been surprised about how much misunderstanding they have caused. i've also been surprised at how

short memories are. explosives today are much more sophisticated. they are under attack to blow. just a very short time ago in dubai, printer cartridges were found with an undetectable explosive and none. and if it hadn't been for good intelligence that brought the inspectors back a second time and said you've got to open these things have been locked, two bombs would've left dubai, headed for the united states, theoretically to chicago. i don't know whether this is fact, but to a synagogue in chicago and likely would've exploded either over canada or part of the united states. this to me is eloquent testimony to provide the opportunities.

it does still remain in jeopardy. secretary as well as secretary napolitano about the level of your, threats and potential. these tools are important and i am always surprised that the opposition because i would've thought somebody of data problem would've called me and said look, this is being done wrong. please take a look at it because previously from time to time the judiciary committee does just that by providing the intelligence community with the tools they need, with proper due process and we do have such a thing as a foreign intelligence surveillance court that needs 24/7, that gives what is essentially like a warrant.

so the roving wiretap is all done in a legal way and the only difference is that the individual is the target, not the specific telephone because they change telephone so quickly. so the technology that improves also means that intelligent techniques have to improve. i'm going to skip most of those, but let me just say that it is my hope in the coming month that we will be able to prepare the american public that the public media and set expect haitians that make clear in the event of an attack we hope qualcomm that lives with those who commit

those acts, not with those who go to work every day to prevent these attacks. i think for those of us that read the intelligence on a regular basis, we know there is jeopardy out they are and we know that if something were to happen in this country, that everyone getting a table would be asked, why didn't she know? and they have to have the tools to find out. and we have to see that the two processes provided in that process. so, i think we've come a very long way since 9/11. i truly believe our country is much safer than it was prior to 9/11 and a great deal of it really is due to the people testifying here today and to the agencies that face that will

run. i deeply believe that. and so let me introduce the witnesses. they are the director of national intelligence, james clapper who will deliver the opening day that following the chairman country and comments of the chairman. and leon panetta. director of the defense intelligence agency, general robert or just. the director of the federal bureau of investigation, also whom i've known for a long time, bob mueller and direction director of the national program, leiter and philip goldberg. so, i would like to note that this will be director mueller's final appearance at a worldwide threat hearings as he is now nine and a half years into his 10 year term as fbi for. but we have another half-year with you, director mueller, so i

don't want to engage in goodbyes at this time. who knows, maybe there is a way that won't happen. now if imac, i'd like to turn to the distinguished vice chairman of the committee with whom it is a pleasure for me to work, senator chambliss. >> well, tanks mounted chairman and again it's a privilege for me to have a chance to work with you on this particular issue that is of such vital importance and maybe we have to start that chant, 10 more years. i'd be in favor of that. gentlemen, this is an impressive lineup we have this morning. thanks for being here. thanks for your willingness to serve our country of what each of you do. to get the represent the men and women of the intelligence community who work often in dangerous locations to ensure nations safety. and our thanks goes out to each and every one of those folks that work with you and put their

life in harm's way every single day and we appreciate that very much. recent events in the middle east and north africa remind us how rapidly the world can change. the internet and social network media play a key role in this evolving the cape and can complicate our ability to understand and keep pace with the unfolding events. ..

>> an essential authority, and we must make sure they remain in force. obviously the senate acted last night on a short-term extension of these, and we hope that we are able to get a more lengthy extension in the very near future and again to of babel general clapper and director mahler and general alexander who is not here, thank you for coming over the other night and buzzing with our folks and providing some valuable answers to questions. another area where congress must help is an interrogation and detention policy. two years after the president's executive orders on interrogations and detention we still did not have an adequate system in place for detaining captured terrorists, collecting

intelligence from them, and holding them until they can no longer do us harm. we cannot keep letting dangerous detainee's go free. it is time for congress to provide a framework for detention and interrogation wherever detainees captured. congress can and must help in these and other areas. in these difficult economic times resources are certainly a challenge. resources are not infinite and must be prioritized. i caution the ic to not spread itself too thin and respond to every potential national security issue without an honest assessment of your capabilities to add value. in my opinion assessments produced in the past year such as the technology on the fresh water availability in 2014 and the devil in the corner, cookstoves and the developing world have no place in the icy. this is more true at a time when

you are facing severe budget constraints and priorities like terrorism, detainee recidivism, the proliferation of weapons of mass destruction, the cyber threat, to wars, and unstable countries throughout the middle east. the most focused on the greatest threats and the issues that have the intelligence value or that can be better analyzed elsewhere to others in the government were more importantly the private sector. today is your opportunity to tell us how you have rank the biggest threats we face and where you take resources should be focused. it is imperative the $55 billion in taxpayer money you have requested will be spent wisely. again, i think you for your service to our country. thank you for being here today. madame chair, i look forward to their testimony. >> and you very much, mr. vice chairman. before turning to director clapper, the rounds will be five minutes, and we will use the early bird rule.

the director clapper, welcome. >> thank you, madam chairman. the distinguished members of the committee for inviting us to present the 2011 world wide threat assessment. i'm pleased and proud to be joined by my intelligence community colleagues. the intelligence community is indeed a team. one i'm very proud to be associated with. representatives, at the witness tables today are hundreds of years and experience and dedicated public service. i would like to especially command director bob miller for his superb service as you have recognized him as the fbi director for nearly a decade. an outstanding participant, a partner, and leader in the intelligence community. my good friend, cia director panetta his years of public service and wisdom have been helpful to me. the two organizations they head are the crown jewels of the intelligence community. they and the nation are

fortunate to have such magnificent leaders. i want to express my appreciation to this committee. first to publicly acknowledge your unanimous vote in support of the president's nominee as my principal deputy. my game, leon's loss. stephanie of sullivan. as was shown by this vote to get our team in place, your support and partnership are essential. secondly and more broadly, the intelligence community needs your oversight. as i know you understand, it's not possible to cover the full scope of worldwide threats. i would like to take this the opportunity to highlight four areas of significant concern to the intelligence community. at submitted a longer statement for the record that reflects the collective and sides of the extraordinary men and women of this community. first and foremost, terrorism. counter-terrorism as our top priority because job one for the intelligence community is to keep americans safe and homeland

secure. many potentially devastating attacks been thwarted. one of the most recent was a cargo bomb plot that you alluded to this past october. we have printed many bad actors throughout the world and greatly weakened much of of qaeda core capabilities including operations, training, and propaganda. we are especially focused on how can is resolved to recruit americans and spawned affiliate groups, most notably this chapter in the red in peninsula. we also see disturbing instances of self radicalization among our citizens, homegrown terrorists are numerically a small part of the global threat. they have a disproportionate impact. they understand our homeland has connections and have an easier access to u.s. facilities. counter-terrorism is central to our overseas operations, notably afghanistan. while progress in our efforts to disrupt, dismantle, and defeat our qaeda is number one, we have seen and will continue to see success that will erode the

willingness of the afghan people to support the taliban and their outside allies. how the u.s. combat operations have come to an official close and iraq bombings by terrorists, specifically a qaeda in that they work to help solidify security gains was maine and thus far remains a high priority. at a major concern is proliferation of weapons of mass destruction. the proliferation threat environment is a fluid, brittle caterina that reflects the broader global reality of an increasingly free movement of people, goods, an information. while this environment is critical for peaceful, scientific and economic events is it allows materials, technologies, and importantly know-how related to chemical, biological, radiological, and nuclear weapons to be shared with ease and speed. peron is a key challenge. in the months following the 2009 iranian elections lisa a popular

movement to challenge the authority of its government. we also saw the iranian government crackdown with harsher authoritarian control. today we are seeing similar unrest, although so far on a much smaller scale than was the case in 2009. a similarly harsh crackdown by the regime. the look forward to discussing a ron further with you in closed session, particularly its nuclear posture. suffice it to say here we see a disturbing confluence of events. a run that is increasingly rigid, autocratic, depending upon conversion to remain control and defiant toward the west. and one that continues to advance its at uranium enrichment capability is allied to be with what appears to be the scientific and technical capacity to produce nuclear weapons. north korea's nuclear weapons and missile programs also pose a serious threat both regionally and beyond. signal a willingness to be engage in dialogue, but also created international

recognition as a nuclear weapons power. has shown troubling willingness to sell nuclear technology. third, i would want to highlight another major challenge, the reality that we live in an interconnected into dependent world where instability can the rise and spread quickly beyond borders. of course vivid examples of this include the sudden fall of the regime in tunisia and the contagious mass uprisings in egypt which led to the departure of foreign president mubarak and demonstrations elsewhere. the intelligence community is following these fast-moving events closely him. i would like to take a moment to add your address some reason questions that have been raised. the answer i believe insure is yes. for some time the intelligence community has been assessing the political and socio-economic drivers of instability in the region including analyses of historical transitions of power to understand future risk through regime stability.

specific triggers for how and when instability would lead to the collapse of various regimes cannot always be known or predicted. intelligence can reduce but certainly not completely eliminate answered before decisionmakers whether the white house, congress, and the sea, where the fox whole as we did in this instance. we are not clairvoyant. intelligence committees provide critical intelligence for four and throughout the crisis and have been reporting on unrest demographic changes, economic uncertainty and a lack of political expression for these frustrations. in addition to our classified sources on analysis for mid december to mid february we have produced some 15,000 open source products of the region providing insights from traditional local media ) and electronic to include social media to read in this regard we want to clarify a less than precise turn a phrase i used last week where i characterize the muslim brotherhood has largely secular.

in my attempt to short hand my description my message was lost, and that is regrettable. the moslem brotherhood is obviously not secular. what i hoped to convey and would like to clearly state is that the muslim brotherhood tries to work for a political system that has been largely secular in its orientation. the moslem brotherhood is a large heterogeneous global organization whose agenda is the impact differs from country to country. egypt has gained much of its support through both grass roots out rich and non religious functions like providing health clinics and day care centers. it also has different factions including a conservative wing his interpretation of islam runs counter to broad electoral participation. a younger, more liberal wing more inclined to work through a secular political process to read in any event i expect the muslim brotherhood will likely be a part of the political process in egypt as will other opposition groups. what we saw in egypt was far more broad than the muslim

brotherhood and included people of different faiths, ages, and walks of life. what is happening in the mideast is another manifestation of the fact that economic challenges have become paramount in our interdependent world and cannot be underestimated from increasing debt to fluctuating growth to china's economic rise. another example of such independent challenges are several threats, and the impact the national security and economic prosperity. this threat is increasing in scope and scale. industry estimates that production of melissa for his reese its highest level yet with an average of 60,000 the programs are variations identified every day. moreover we're seeing a rise in intellectual property theft, industry estimated the loss of intellectual property worldwide to cyber crime continues to increase with the most recent 2008 annual figures approaching $1 trillion in losses if. costs surged in a difficult to standpoint. we believe this trend is getting

worse. last year some of the largest information technology companies discovered throughout much of 2009 that had been the targets of systematic efforts to penetrate the networks and acquired thank teradata. the intrusions attempted to gain access to repositories of source code, the underlying software that composes the intellectual secret sauce of most of these companies. along with current cyber threats the intelligence committee has analyzed the interconnected implications of security drug-trafficking, at the emergency, diseases, climate change, humanitarian disasters, and other global issues. in the face of these challenges we in the intelligence community must always remain attentive to developments in all parts of the government and ministers of activity. that's why i consider it imperative that we must sustain a robust balanced a ray of intelligence did millions. counterintelligence is another area of great concern. we face a wide range of foreign

intelligence trends to economic, political, and the interests of home and abroad in addition, other threats tide of foreign intelligence committees with class of government information also pose a substantial challenges. perhaps the most prominent example recently is the unauthorized downloading of classified documents subsequently released by wikileaks. from an intelligent perspective these disclosures have been very damaging. want to assure the committee as part of a broader government effort we in the intelligence community are working to better protect our networks by improving control, increasing our ability to detect and deter threats and expanding awareness of foreign intelligence threats across the government. i believe we can and will respond to the problems of intrusions and leaks, but must do so without creating a sense of intelligence integration. in some the intelligence community is better able to understand the vast array of interlocking concerns and

trends, participate developments as they had of adversaries precisely because we operate as an integrated community. our presence here today, i like to think, is a manifestation of that. this is a safe way for me to say a few words about the size of the office of directive of national intelligence which has been the subject of debate. a thorough review of the organization and the contents of the intelligence reform law and other statutes in executive orders and what they direct the deal and i to do. i decided we can reduce or eliminate some functions not required by law that are not core missions. i also identified elements that should transfer out of dod and i to another agency that would carry out the services of concern on behalf of the the and i. we don't have to do everything. based on this efficiency's review the office is being reduced in size and budget. i look forward to presenting our

plans in detail to the committee. i think the value added by the zero d in i is the integration of intelligence efforts and communities. who want to assure the community is acquiring the best possible intelligence on the difficult issues that the nation faces. i thank you and the distinguished members of the committee for your support to the intelligence community, your dedication to the security of the nation. my colleagues and i look forward to your questions and our discussion. >> and yours is the only statements? all right. i'll begin the questions. how wanted to ask you a couple of questions about the muslim brotherhood. how committed is it to the egyptian and israeli peace agreement? >> that is our question to answer, madam chairman, because

of the factors i have lined about the heterogeneous of the muslim brotherhood. but would assess that they are probably not in favor of the treaty. that, i think, will be one voice in the emerging political mill you in egypt since they have indicated that they want to form a political party. that will be one voice. i think it is also worthy to note that the staff, the supreme council of the armed forces has reaffirmed its commitment -- actually all treaty commitments and in particular the egypt israel pastry. >> what to the best of the intelligence community's knowledge is the position of the muslim brotherhood on stopping weapons smuggling into gaza.

>> again, i don't know that there is as stated position of the moslem brotherhood on this issue. i would surmise there are probably supportive. again, it's hard to at this .. to a specific agenda of the muslim brotherhood as a group. >> what is its position with respect or relationship with respect to ron? >> that, too, remains to be seen. i think a ron, of course, would like to exploit the situation. not only in egypt, but elsewhere undergoing some upheavals. i think what batboy relationship will turn out to be remains to be seen, but we will certainly

watch for that. >> the reason i ask these questions is because, you know, and the various television coverage there has been a lot of commentary to the fact that the muslim brotherhood really only represents about a third of the people. well, when you don't have a wide spectrum of political parties one-third of the people is a lot of people. any of us can tell you that. you really take seriously any opponent that represents one-third of the constituency. i think it has been passed off as, well, it's secular and it wants a secular government. i think from an intelligence perspective it is critical that we know what that position is and what is apt to happen. egypt is the key country in the middle east.

i worry about that. >> we share your concern, madam chairman. this is obviously something that we will watch. we will have to step up our observation. hurd going to have to see how the constitutional reform effort unfolds. one -- at least one of the members of the constitutional reform committee does represent the muslim brotherhood. there will be participating in that process. as that unfolds, obviously we will be watching very carefully to determine just what the agenda will be. >> one other question. in the week leading up to the major protests in egypt on january 205th after tenacious protests were in full force how many warning products of to the i see right on aged? >> the key event, at least from my vantage battle was the sudden

snap decision made by president ben ali in tunisia about the 14th or 15th january. i am convinced that they drove to work and was not planning on doing that. that was a very quick decision on his part. when that happened we, i think, up to our game on describing the general conditions elsewhere in the region and what the potential would be for the contagion to use the now popular term as that might affect egypt. so retract that very carefully. i can certainly provide you an accounting of specifically the fact that -- >> you have, and i have been through it. >> stephanie sullivan did, her follow-up to a question that came up during her hearing. >> i believe that most of it

came from senate, where there was some as opposed to the icy. the reason i bring that up is at think that is a lacking on our part, really not to include this kind of open source. i mean, i'm not a big computer person, but i look at facebook. i'm not a member. you can get right in and see everything about hedblom. all of the comments. it seems to me that this ought to be watched very carefully to be able to give our policymakers and our some advanced notice. at think we were at fault in that regard. >> we can always do better. there is always room for improvement, but the open source center which i think has done some marvelous work and might be worth a separate session on their observation of the media

and all of these countries, the classical print media, electronic to include radio and television and social media and the analysis that they have done and were doing on that. as you have seen and as you have observed correctly so this is a huge area that we need to watch. i have to also say that social media does not represent a command and control network. so the fact that there is a lot of activity as an indicator, but does not necessarily give you the specific time and circumstance of the events that occur in tunisia and egypt. >> mr. panetta, you wanted to respond. >> if i could just add to that. since we have been watching this, 2007 looking at social networks irresponsibility

because of the tremendous growth in information. just to give you an idea, 600 million facebook accounts out there. something like 190 million twitter accounts. 35,000 hours of youtube that is upgraded every day. so there is a massive amount of data out there. the real challenges out to be able to a, you know, going through the diversity of languages, different sites that are out there, how do we look at the relevant web sites to be able to draw from them the kind of information that will help us? this involves a tremendous amount of analysis. the open source center has done tremendous work at trying to monitor these areas. the fact that you are on a website or social network is not

necessarily predictive of what will take place. having said that, it's really important for us to monitor these areas and tried to get the best sense of what networks and web sites are having the largest impact. >> thank you. mr. vice chairman. >> no problem. director clapper, it is unfortunate that the press tended to misconstrue what you had to say with respect to the muslim brotherhood. those of us that know you and know the community knew exactly what he meant. i just have one of the follow-up on that particular issue. director panetta, if you have any comment on this also i appreciate it. do you consider the muslim brotherhood and extremist islamic organization? is it an islamic organization that certainly has some members who may be extremist? >> i would probably go for the

latter characterization. there are clearly other places. there are extremists, no question about it. has at varying agendas from country to country. there is an umbrella organization, an international organization which really doesn't specifically direct the individual chapters or franchises. >> director panetta, any comment? >> i think as the director of the and i says, it is important to make the point that this is not a monolithic organization. is one that goes back to the 1920's, and it varies from area to area. he looked at different countries and different versions of the muslim brotherhood. they have different characteristics, different approaches. there are groups of extremists that are part of some of these areas. there are lawyers and professionals that are part of the muslim brotherhood. for example, in egypt.

so it is very difficult to say, okay, they are extremists. it is clear that within the moslem brotherhood there are extremist elements that we have to pay attention to. that is something we watch very closely to make sure that they are not able to exert they're influence on the directions of governments in that region. >> director mueller, i talk in my opening statement about the extension of the three patriot act provisions on a lone wolf, wiretaps, and access to business records. there has been a lot of misinformation put out in the media over the last several days with respect to these provisions. i would like you to address those three provisions and particularly to address these four questions. one, why are they important and necessary authorities to back to

you support making those three provisions permanent? what are the operational problems caused by sun setting those provisions? and do you have the authority and do these provisions currently in law to access information without a court order to back. >> sir, let me start with the three provisions as you pointed out. that is stuck with business records provision which allows us to go to the fis the court and obtained an order to reduce records that may be relevant to a foreign intelligence investigation relating to somebody that is trying to steal our secrets or a terrorist upon a showing of that the records relevant to this particular investigation, the specific showing, the court would issue an order allowing us to get those records. it being used over 380 times

since 2001. it provides us the ability to get records of the then telephone toll records which i can get through another provision of the statute. it allows us to get records such as fedex and ups records. something along the lines of what a chair person indicated, the recent attacks or records relating to the purses of hydrogen peroxide or license records, records that we would get automatically with a grand jury subpoena. if we did not have that capability we would be exceptionally limited to the records that we can get and the foundation for the continuation of an investigation where we may want to get a wire intercept. under cut by our inability to get the base records necessary to pursue the investigation. one point i'll make with each of

these three provisions is that we have to go and make a showing to the fis accord in order to get the order directing the production of those records to read the second provision, the roaming wiretap provision which enables us when we make a showing that the target of our surveillance is attempting to thwart that surveillance. when we make that showing to the court the court will issue an order allowing us to focus on that individual as opposed to each particular telephone that individual may be using. if we go and make a showing that an intelligence officer from some of the country is changing his telephone number daily or weekly rather than having to go back to the court each time he changes that number the court order allows us to stay on that individual regardless of the change the telephone number having made a showing that he is trying to thwart surveillance.

again, this goes through the fis a court. if we did not have that provision that would make it is exceptionally difficult and situations where there are some many means of communication. this particular order enables us to focus on the person without going back daily, weekly to get a change in order. the last provision is call the loan will provision. it indicates that the and individual non u.s. citizen whom we have reason to believe will be involved with terrorists, we can use the fis a authority by going to the court and showing this individual is involved in terrorist activities but does not have to make the additional sign that he is an associate of a particularized terrorist group. ..

>> yes, i recommend doing it permanently. i believe that the procedures in place with the size of court, the due process required and every time they come up to a day in which it is going to lapse or send that. a degree of uncertainty as to what is going to happen.

thousands of investigations to look out what impact the lapsing of these vaccines will have in our ability to pursue investigations down the road and what rules we might have to further those investigations. so each time it comes up, if for any period of uncertainty, until it is reauthorized for a particular period of time and quite honestly i would be -- i suggest that given the threat we face, the provisions of these particular rules that it would be appropriate to permanently reauthorize these three provisions. >> thank you, mr. vice chairman. senator wyden. >> thank you, madam chairman. thank you two of you for the service you are rendering. gentlemen, i don't take a backseat to anyone when it comes to detecting intelligent source is, up rations and not this. that is absolutely crucial to

the security and well-being of our country. i will tell you, i am increasingly troubled about the intelligence community's reliance on secret law. and this is the legal interpretation of key laws in instances where government agencies are relying on this secret interpretation of what the law says without telling the public what the interpretations are. if there is a gap between what the public believes the law is and what the government secretly thinks the law is, i think we've got a problem on our hands. i will start with you, direct or clapper because that's obviously what we will have to deal with in the days ahead. dr., do you believe that members of the american public now have enough access and key

information to figure out how our government is interpreting the patriot act? >> i do believe there is a wealth of information there. i deferred to the department of fbi webpages on the subject is a source of public information. there is, in the case of the patriot act, potentially what i think is a fairly small item in the bad, which is the great, for much of the reason you outlined. that's why these dvds are overseen by a court and a slow overseen by the intelligence committees on behalf of the american public. i think their object is to make it says transparent and explainable to the american public is possible and minimize as much as we can that which is

secret. >> no, i think what i would say is i do believe that the legal opinions of the department of justice are made available appropriately. that is not to say that in an opinion that it's classified, that is widely distributed, but i know that there is a distribution discussion with congress even in those areas which are classification. it can come i'd have to defer to the office of legal counsel and justice and determine how the process unfolded. >> i'm talking more about the american people. and i believe the american people would be absolutely stunned. i think members of congress, many would be stunned if they knew how the patriot act has been interpreted and applied in practice. i looked at last night a short-term extension. i'd rather deal with it now and

permanently rather than kicking the can down the road. i am going to insist on significant reform in this area. we are not talking about operations. those that got to be protected for the security of the public, but there is a huge gap today between how you all are interpreting the patriot act and what the american people think the patriot act is all about and needs to be revolved. let me follow up with a second question for you, mr. clapper in this regard. in this building your authority of action is taken up arms in a native states. a year ago your predecessor said we take direct action against terrorists and the intelligence community if we think the direct action will involve killing an american. we give specific permission to do that. that is obviously a statement with great consequence and certainly raises a lot of important issues.

mike's areas you don't see as a government official, making a statement like that without an expensive of legal analysis. i asked what that legal analysis. nothing has been handed over yet, which again drives home the point that when we're talking about operations not it, absolutely we have to protect men and women in the field. but we are two of legal interpretations and i like to know your answer to my question in this regard with respect to getting on interpretation in our hands. >> well, i speak for all of those and we are committed to ensuring that the congress understands the legal basis for intelligence activities -- any intelligence activities. in fact, this is a requirement for the intelligence organization -- intelligence authorization act. and his minders in it that members of the committee and other authorities think the issue that she can do at the

root of the earlier question is what director mueller alluded to, which is the actual permission of the office of legal counsel opinions of the department of justice and whether or not they in their entirety can be provided congress, which is not my call to make, but i will assure you i am committed to ensuring congress understands the legal basis for any and all terrorist activities. >> right now with respect to the executive rangers official interpretation of what the law means, we are not getting it. i think that's an issue where we can continue to. i want to see us, but they are partisan set of reforms for the patriot act. we are not there yet another over to continuing conversation, madam chair. >> thank you very much.

senator udall, you are up next. >> thank you. good morning, gentlemen. maybe i could turn to savor. i serve on the armed services committee as well as intelligence committee and this is an increasing interest in both ears. could you all respond to how much our security posture has improved and how do you measure such progress? intrusion rates, are they dropping for .mil or.says some and how they force advertisers to change tack ticks and the feel of their game to penetrate our networks. i'm not quite sure who to start with, but would welcome. maybe general -- the mac well, in this setting, i can say that certainly the threat has

increased and i've tried to outline some manifestations in the opening statement. i also think we are making progress in defending our savor, particularly police and the government military round. and i would ask your forbearance in going into specifics of what is in the closed session. >> thank you for the appropriate response. other members of the panel? .panetta. >> senator, i said this the other day and i repeat it, but i think the cyberarea is the battleground of the future, that we are talking about increasing capabilities, increasing imaginative uses of cyberthat i think holds the potential for basically being able to paralyze

and cripple a country if it used to bring down a great system for the financial system and government systems of the country. so it concerns us a great deal. we are seeing more attacks out there. i think we have successfully defended against many of those attacks, but at the same time we've got to be aggressive at making sure we understand how those attacks are coming. >> yes, sir, i think all of us believe that each of our entities has got to grow substantially over the forthcoming years to address cyberattacks and all of the iterations. one of the problems we have is that the outside of an attack on the do not know whether it is foreign country foreign government, somebody affiliated with the foreign government. a group of hackers with a high school student across the way. and we are all blind in our

particular specialties counterintelligence if it is a foreign government criminal or somebody who is intruding for criminal is. one of the entities they've established, which is hope for is called national cyberinvestigative joint task force for representatives of all of us fit together so that if they are is an intrusion, we have all areas of expertise including nsa to try to identify the intrusion and determine how we best follow and track an intrusion. and so i think all of us who decreed that cyberthreat are increasing dramatically, daily, monthly, weekly, we understand we have to work very closely together to attribute those attacks and pursue and deter those attacks in the future. >> others who wish to comment on the panel?

i would note the chairman led a delegation of senders to china last year and we had a series of conversations about working together in this area. it strikes me that nation states, multinational corporations, institutions of all types have an interest in working together and maybe more insurgent kinds of groups that are the threat here. we currently know more about how to go offense and play defense. but i appreciate the attention all of you are paying to this important area and i know the committee will learn more close briefings and worked hard to see if we can understand better. thanks again for your service has been here today. >> thank you, senator udall. senator coats. >> thank you, madam chairwoman.

first of all, i'd like to thank everyone -- first of all, i want to thank everyone who is here. your job is immensely complex and the multiplicity of threat that you have to deal with it such that you are on call 24/7. so i hope we can provide you a copy sometime during this hearing. but i just appreciate the hard work all of you are putting in and trying to provide security for country and a really, really complex difficult time. director clapper, i also appreciate clarification is your statement. all of us understand that some have given a chance on traffic and a chance would've elaborated or not said anything. was it will rogers who never said never pass up an opportunity to shut up. i faced that situation a number times he should've used used his

advice. i want to ask you about another statement she made on page for your statement. i think you even mention in your opening statement. we continue to assess keeping the option open to develop nuclear weapons in part by developing various nuclear capabilities and better position it to produce such weapons should it choose to do so. we do not know however if iran will eventually decide to build nuclear weapons. i've got three things that bother me or concern me about that statement. number one, if we look at what has happened over the past several years with iran's extravagant and continuing efforts to defy u.n. security council resolutions, ever look at its abrogation of safeguards agreement, the regimes toleration of brought international condemnation, the other ratcheting sanctions that we are imposing against it, to

me it's hard to -- even in the face of domestic unrest, the defiant to the extraordinarily strong and unremitting and it's hard to conclude, i think, that iran is pursuing. they are playing quite a game of love. the second night, i'm concerned that such a statement might undermine the resolve to go forward and apply it even stronger sanction. i think that's been suggested by some of the administration that even the current level of administration doesn't have the desired effect. the facts, hopefully better, but there is some serious on leaders of the administration, and even this is not an affinity to do more. and thirdly, my concern that the statement is that even if they

have not taken the enriched uranium to the point of constructing a nuclear weapon, isn't it just a short matter of time that delay between having the capabilities all in place and actually developing the web in? i am just concerned about waking up some morning. he would've woken up at 3:00 a.m. and i turn on cnn. i'm wondering if you want to elaborate on the statement because of the reason i suggested. >> it's obviously a great question. as he may have just heard or seen, we have completed what is called a memorandum to holders, which is an update of the 2007 national intelligence mentalist on this very issue, which was scheduled to the staff this

afternoon and scheduled to be briefed to members on the 14th of march. i have the national intelligence officer who led that update present here today. i think the direct and wholesome answers to your very relevant and pertinent questions will be addressed and a closed session. >> all right. i'll assume -- up to you what i'll do. i'll set aside my reaction to your statement, assuming that perhaps there's more to be learned about his to better clarify that statement. >> s. thomas are, the statement represents what we can say publicly. there obviously is much more detail in that statement.

>> madam chairman, i don't think i should go further down this road. >> you look at everything you need. i understand. i just want to clarify your current to get on the public statement. i think the chairman. >> thank you pray much, senator. senator conrad max. >> thank you, madam chairman. i am new to the intelligence committee and i just want to say how impressed i am by your leadership and by the way you and the ranking member work together on this committee. this is the way it should read and i'm delighted by what i've seen already. i also want to say to the gentlemen here test signing how deeply impressed i have been by what i've learned about the operations you have underway, things that we cannot talk about. i have been so struck a criticisms in the press, directed at you, that you can't respond to. but the american people should

know that what i've learned here tells me you have had remarkable success. i am so impressed by information that was provided specifically in egypt, truly it some point in the history they will be a chance for this tories to be told of what she's done and it's really remarked wolf. i want to go back to the question of saper. because as i look across a broad front of the this country, i think it's a place that's getting too little attention. senator whitehouse who served on the committee with very involved in these issues had a chance to brief me and talk about the very good work, senator mikulski and senator snowe have done with him on a major report on the cyberthreats. general clapper, i picked up on

your statement about a trillion dollars in costs of cyberattacks here can you clarify, is that a cumulate total clicks is that private or losses? can you give us some sense? >> at the cumulative total based on private-sector estimate of what they believe has been lost because the cyberintrusions, primarily from criminals, hackers and the like. >> if we put that in dave, that is a staggering come staggering number. a trillion dollars in losses because of cyberattacks. and if we look at 2010, we had google reporting their announcement on penetration of their symptoms. we have disclosure of classified dod networks. we had the virus discovery. we have the report on nasdaq

systems being attacked. i'm not certain that there is a public recognition of how significant these cyberattacks are and the threat they pose to our country. i would ask this because i know it's very difficult in this open session for us to have a full conversation, but i'd like to hear from you how you would care to read witnesses who are here today characterize their efforts on the cyberfront. >> well, like many things we do good, but could be better. i think there is realization that at least among myself and my colleagues here with the threat is they think leon carried arises a very well. and there is more to be done.

obviously the congress is very involved in this. there are multiple legislative proposals that have been made on how to do this. we await the outcome of that. what do you alluded to, senator conrad, which i think is right on the money in senator whitehouse, former member of this committee spoke to this as senator mikulski commended the need and the responsibility here to do better in attempting to educate the public at large about the magnitude of the threat. and our former capacity as undersecretary for defense in dod, i was party to a number of industry forums that the department led first by gordon england when he was deputy secretary carried on by bill lind, the deputy secretary who has been a tremendous proponent for doing this, just focusing on the defense industrial site to

your. and i believe there is a growing awareness, certainly among the principal -- the leaders of the print all industries affect did of what needs to be done and there is an emerging partnership. got better and better. but i think the point that you alluded to, which i think is right on the money and that is the need for us to be more forthcoming with the magnitude of the threat, with obvious to deferent to security in sources and methods. >> you know, one thing i've noticed in the dirt is they are very well what did to have any publicity about success will attacks on them. and so, that the public is not fully aware of how successful some of these attacks have been. and my time has expired a month am very interested in following

up in terms of what we can do on this committee and more broadly in congress to help respond to what i think is a growing threat that's extremely serious and the national security. i think the chair. >> and i thank you, senator conrad. senator warner is not here. senator lott, you are up. senator snowe. >> thank you, madam chair. director clapper, i want to follow up on some of the issues that were raised by my colleague, senator kent conrad about the issue of cybersecurity because there are multiple facets to this issue that exposes our vulnerability and it's obvious whenever rater threats and that's why i've been working on this initiative was

senator whitehouse along with senator rockefeller and under makowski. on one dimension of that that i think is an attention this week and i wanted to ask you about it. i noticed you mention your testimony in your path the degree to which we are seeing more malicious neighbor judy targeting u.s. companies that almost two thirds of u.s. firms had reported they benefit them of information breaches, which is more than tripled from 2009, according to which you've indicated. you are a member in the united states and as i understand it, his 50th informed they should divest themselves of three systems which is the california-based server company. they have project that and i gather they are waiting as to whether or not the president would make a determination, take any action. his 15 days to do it. i would like to get your comment

on this company, but it does present a serious problem because obviously a lot of american come to are going to be purchasing this type elegy. they had no payments, no understanding. we obviously the policy understand degree to which they can penetrate our systems, you know, we understand the serious vulnerabilities involved in the death involved. and so, this is a good of one of the problems that we are facing in this country. in addition to that of the u.s.-china economic and security review commission issued a report in january that talks about powwow way maintains a cooperative agreement worth $30 billion. and as you know it has been subject of numerous questions in terms of the association that back to its management and the chinese military, not to mention the billions of dollars of

potential subsidies that makes our company vulnerable here in the united states to that as well. can you comment on your views on that and where do we go from here? >> well, i probably shouldn't get into the specifics since this is a matter of some litigation within the government. i would say though that what this highlights is the importance of understanding supply chains. and this is one of two this sort of globalization has spent the interdependence of the industries and particularly the telecommunications business where there has been a collapsing of these large companies as they've merged. and so the whole issue of rather than singling out while way, one example, there are others of

ensuring that our industry is aware of in a very specific way the supply-chain implications with the potential security threats that are opposed when we depend on foreign concerns in any of our telecommunications work. >> well, at the end of the report, the commission not only identified it, but also another company ntt e. obviously these are major global manufacturers. so they obviously have enormous implications. now there is a company in maine, for example that director mode with the fbi with respect to their virtues of equipment and with that not to use that equipment. so this is the problem here as it goes on down the line for