the most basic questions. why is my child, who is perfectly healthy now sick with leukemia? why does my daughter had a brain tumor at the age of ten? why is the same thing happening to my neighbor's kids? hundreds of mothers and fathers ask these questions every week. today i would like to share with you a map over here to my left that i have put together over the past six months of communities that have come to me with concerns of what they believe and they are seeing to the excess of cancer in their neighborhoods and communities. there is 534 dhaka on this map today and what makes me sad is i still have hundreds that have yet to position on the map. the statistics appear to be alarming. these are mothers reporting to

me six children on the same block with leukemia. these are mothers reporting to me 15 children within blocks of one another who have globalist. in some instances it is immerses reporting to mothers the large numbers of pediatric cancer they are seeing in certain communities. this work is being done at hawk by concerned citizens. we must gather data from the field and act. we must develop national strategies for identifying actionable information. we must take a combined arms approach if you will to the battle against disease of our own making. when i talk about this issue, i think of my son who is fighting the war in afghanistan. if i were suddenly to find myself in the field of conflict, it would not matter how credentializing was, and their mentalist, ph.d. or u.s.

senator. i would take my leave from those who have been on the ground. make no mistake, i feel as if we are in a war here at home. in this battle we look to you as our commander. on that map, those constituents, your troops, they are sending the message, but we are not listening. while the land is not scientific it does show firsthand experiences are providing us the the the the we need. they are reporting to me for help because they are concerned the pollution in their town as what is making them and their children six. i will continue to work diligently to get there for greater information and report what it is that they are seeing. this map i believe begs us all to do so. we must listen and learn from what these people and the affected communities are telling

us. we can't just sit back and the safety of the offices and our own homes and hear these stories and think that isn't possible. the reports say it can't happen. i'm here to tell you today they do happen and they are happening. in april 2010, the president's council declared that the number of cancer caused by toxic chemicals is grossly underestimated and warns that americans face grievous harm from the largely unregulated chemicals that contaminate our air and water. i was born and raised in a very simple, beautiful lifestyle in kansas. i happen to be raised by a very strong republican and military man who actually worked for industry and the united states government as an engineer. he is the very person that

taught me the value of clean water, good land, good health and respect of one another. it always amuses me when someone believes i have a certain party affiliation. i find it disturbing for those who assume the environmental activist is antibusiness. i always felt a growing up but caring for the environment and public health was a conservative thing to do. i have leader learned it is just the right thing to do. we all need to come together on this issue, republicans, democrats, independents, businesses and communities. we need a government, business and respective communities to join together as one for the betterment of the whole and begin to clean up our message. we should ask no more of ourselves and we ask of our children. we need to work together to find

solutions and learn what i believe my children and countless other children who served our country are teaching us. we must protect and nurture and defend what we loved and cherished the most. our families, our health, our land, our water, and our very environment. chair boxer and senators today, thank you for the opportunity to share this map with you and be a part of this presentation, and i do think you for your tireless efforts to help make our environment a better place to live. >> thank you so much, ms. brockovich. and this matter is really unbelievable that people called you. they didn't have another place to go. and you should feel really proud of your record in the past and that america feels comfortable in letting you know this but

that's what we are trying to work on is to make it easier for people to report these to us and therefore we can then take the whole community and bring together state, local community, individuals and get to the bottom of these clusters of these disease clusters some of which are not related to the environment, and many of them are. dr. belzer, welcome. >> thank you, chairman boxer and members present on the committees. i appreciate the opportunity to testify today. i want to make a friendly correction, chairman boxer, to your opening statement. hi, too and a california native, so there's a certain in balance on this panel. [laughter] i was raised in court in california and my bachelor's and master's degree at the office of

the california davis. a few years ago subsequently year and a master's and doctorate from harvard and i sometimes regret i was not able to go back. >> that's the thing we missed you. you left us for virginia and we can't forgive you for that. [laughter] >> my parents sometimes feel the same way. [laughter] my background is as an analyst, economist, risk analyst, and i want to point out that although my ten years spent as an economist and the office of management and budget normally would make people take a sort of green on a shade a sort of view towards someone like me. i want to point out in particular device shepherded through the omb's convoluted process, the epa national human exposure assessment survey probably almost 20 years ago now

at the time was the biggest attempt to get real world of representative data and environmental exposure, and i'm very proud to have shepherded through. at least 40 papers have been published because of this project. i'm happy to have played a small role in that. with that small introduction, i want to raise a couple of questions. am i written testimony covers a number of scientific and technical issues but i wish to focus on them right now. first, how was the term disease defined? without a clear definition of disease, almost anything could be included within that. we have experience with this problem, the term adverse health effect is used hundreds of times in the federal law. but it's defined circulate or it's not defined at all.

this creates a number of problems for us in attempting to be responsive. s 76 does not include a definition of disease either. it uses the term adverse affect but like existing law the doesn't define it. second, how is the term disease cluster defined? a scientific definition would be both sensitive and selective. sensitivity is needed to ensure that we miss very few real cases which statisticians call false negatives. selectivity is needed to minimize the number of random cases but incorrectly plus five is as part of a cluster they would call false positives. now false negatives are obviously costly. we don't want to miss. but false positives are costly, too. they create a significant year and thinks like you and me lead to the closure of parks, schools and drinking water wells.

they depress the market value of people's homes. this also creates a serious problem for scientists who are investigating, would be investigating petitions alleging the the disease cluster. the less sensitive the definition, the greater will be the proportion of investigations to come up dry because there isn't anything to find. when a scientist comes up dry, people are often more angry than relieved. the trust in government examines sometimes beyond repair. the conventional definition is the definition of s. 76 s really good sensitivity but really poor selectivity. it is very unlikely to miss a disease cluster that means it has a low rate of false negatives. however, it is very likely to misclassify a lot of random cases as disease clusters. that means it has a high rate of false positives. in my written testimony, i would

show of the conventional definition there was also the majority of random cases of disease getting misclassify as disease clusters. in my example, 27% of fixed geographical zones had greater than expected number of cases and so they would be a legislative deemed to be disease clusters. all of the data were false positives. now this doesn't help those who belong to the disease cluster. substantial resources would be spent searching for a retirement linkages that do not exist. it takes resources away to try to understand the real disease clusters. my third concern, how was the term potential cause of the cluster defined? the definition of s. 76 is in some respects narrow and others very broad. it is narrow because it focuses on anything subject to

regulation by the epa. the demand no scientific evidence. a chemical is a potential cause just by being present the required disease of interest, no evidence is required and the exposure for the chemical and no evidence is required for those response. in short, the problem is the definition doesn't follow the scientific risk assessment model. finally, i am worried about the possibility of supporting the science politics. when congress attempt to legislate science, ins is compromised. that science would be compromised if evident especially to me in the way the epa would be directed by its risk assessments and a health effective way. this is not science and it damages the credibility and integrity of risk assessments. scientists should never be told what conclusions to reach and

invited to conduct research in order to support it. to be credible, risk must be devotee the custom-made objectively. this is a core scientific value. responsible scientists will not participate in the system in which corps scientific values are compromised. thank you again for the opportunity to testify. >> thank you. and i look forward to responding to your critique. dr. gina solomon, we welcome you. >> senior scientist at the nrdc. specs before, chairman boxer and members of the committee. senator crapo, good morning. my name is gina solomon, i'm a practicing physician. i'm also a senior scientist at the national resources defense council and a and the director of the occupational and environmental medicine residency program at the university of california san francisco. most health professionals at some point in their career encounter a disease cluster.

disease cluster is a mysterious excess of one or more illnesses such as cancer, birth defects or neurological disease in a particular work place or particular community over a period of time. and the disease clusters are frightening for communities and often frustrating for scientists because at least in the past there were limited tools for understanding and solving them. but my disease clusters also hold the potential especially with the new scientific tools of today and that are emerging as we move forward. these disease clusters may unlock some of the mysteries of chronic disease including birth defects and cancer. when i was a clinical fellow harvard in the mid 1990's, i learned about the cancer cluster in nearby massachusetts. 12 children in that very small town got leukemia 03 period of just a few years and most of

them live on just one street and a certain section of town. that cluster, like many, was not discovered by a state or federal agency or scientist but was actually discovered by community members who recognize each other when they were sitting, waiting in the waiting room at the cancer institute. ultimately, this cluster was confirmed by scientists, and it provided a very key clues because the was the first time that the chemical was linked with cancer in humans, and an abundance of science since that time has multiply confirmed that plank. so that cluster provided a clue that helped science move forward. the senate committee held a hearing, a field hearing in april, 2001 in the town of

nevada where within two years, the provincial rubber blade nose with leukemia. scientists published a paper calculating that a cluster of this magnitude would occur in the united states by pure chance about once every 22,000 years. that cluster provided clues that almost 80% of community members had urinary tungsten levels above the 90th percentile of people nationwide. tungsten wasn't previously thought to be carcinogenic but it had never really been studied. the same metal band showed up at high levels in arizona. another community affected by childhood leukemia clusters. those two findings triggered a much-needed study by the national toxicology program

which is ongoing today and which may advance the science and help protect public health. although it's really difficult to conclusively proved what caused any specific disease cluster, but i want to say today to you is that we can gather invaluable clues and hence from these tragic events and those can then help us solve the mystery of chronic disease. historic we disease clusters reveal the links between cancer and asbestos between peripheral not proceed, but faintest sestak other male infertility and de bct. and between liver cancers and vinyl chloride, just to name a few examples. all of these chemicals are now well known to be dangerous to humans and one of them, the pesticide has actually been banned. all of the other chemicals i mentioned fall under the purview of the toxic substance control

act and they are actually still in widespread use today. my colleagues and i just released an issue paper documenting 42 disease clusters and 13 states that have been confirmed by investigations, buy state or federal investigations this issue paper is attached to my written testimony, and we found examples such as brain cancer children and adults that the acreage in west palm beach florida which was brought to the attention of this very committee by center bill nelson a year ago. birth defect sand in california including 20 babies born over less than two years with birth defects and for children with birth defects so severe that they've since died in a town of only 1500 people. there are numerous other good samples including the cluster of male breast cancer as well as childhood cancer and birth defects at camp lejeune north carolina where more than 60

marines the glove on the basis been diagnosed with breast cancer. this is an extraordinary alarming finding. it's almost impossible that could occur by chance alone it deserves urgent attention. some of the much needed tools to solve disease clusters are found in 76, the legislation known to many of trevor's law. this legislation would direct and fund federal agencies to swiftly assessed state and local officials to investigate community concerns about disease clusters and other causes, but it would also create consistent science based guidelines for a systematic and team approach to investigating disease clusters. these guidelines would be developed in collaboration between the epa, the center for disease control, the national institute of environmental health sciences and the national institutes of health and they

would address the issues of significance that are so often difficult in disease clusters. this would also set up local the advisory committees to improve outreach involvement of community members. this is essential to build trust within the community but also to learn from the community because it is often community members that pointed out the critical clue to unlocking these clusters. the other thing that s 76 is to increase the deployment of powerful scientific tools like toxic coach nomex, pat we screenings and even analytical chemistry techniques that can screen for hundreds or thousands of chemicals and people. so i am thinking today as a resident of all of the many dozens of communities across the country that affected by confirmed disease clusters. and the communities where the residents are self identify in

clusters and looking for help. these people suffer through illness and uncertainty for hope and loss and the fought for answers and in most cases haven't received them. but it's not too late for the communities and others like them. we now have the scientific tools and there's an opportunity to improve and systematize our approach to disease clusters so the community's get the support they need and the answers they seek. thank you. >> thank you very much. each of us will have five minutes to question, and so i would ask you to keep your answers brief so we can get to all of you. i just want to say to dr. belzer, i want to clarify, page seven of our bill, we do use the definition of how the disease is defined, and it is defined exactly the way the national institutes of health defined the disease word for word, and then we even had an

extra about the fact that it's science improves and there is a better way to do it we will do that. so i do feel comfortable, happy to work with you if you think there are ways we can make it better. the other thing is you point out that we force them to look at all of the various pollutants, but i want you to point out we don't exclude anything like genetics or anything else. we just say they have to include these, because if they don't then we will never know the answer. so i really think i appreciate your criticism and i know that you're a minority witness today that the first from trevor, but i do think the important thing is to work with us. would you be willing to do that if we could work to tighten this up the would be wonderful. okay. trevor, you have testified before that your family has had difficulties in the past with the tumor registry when asking for an investigation.

you have problems as a family into looking into this cancer cluster which is why we come senator crapo and i wrote this bill. could you describe the importance that you place on government agencies that are tall levels meaningfully involved in family and community members and the cancer clustered investigation? the importance of including the families themselves. >> thank you for your question, chair boxer. i believe the citizens and communities want to look to their government for answers, and when they have questions about what is in their surrounding environment, they would like somewhere to go to talk to where they are not told that they are statistically insignificant, which is what we were told and that even if the data we had proves correct that

our town was too small to warrant a study. and so i think that strengthening the coordination and accountability of federal state and local agencies is the key to creating that line of communication. >> of course that's what we are doing here. we are bringing together i think a more effective way to respond by including the communities of there's a frustration out there and to get the answers. ms. brockovich, your testimony emphasizes the importance of ensuring accountability and transparency when the government agencies investigate potential clusters. what are the main benefits of the people stricken with illness and other people in their community from increased transparency and accountability and as we look at these clusters? >> i think that it's important

to asked at a deep level to have the community involved as trevor has indicated in what he was just saying communities try to reach out to agencies that can be cancer registry's or local agencies, state and or federal and oftentimes they are to treat it as statistics and they aren't heard. they want to be a part of the process. i think that they are distrusting, and as a community, they want to look to agencies. they believe they are the ones that are overseeing them and then when they find out something has slid through the cracks it begins a distrust process. so for them to be a part of a process with either the companies and clearly there agencies it begins to reestablish trust because a lot of times when you don't have that, we aren't finding of the information and we need to know from them when i'm in these communities. we've got to get to know the kind of be on the ground with them and they will begin to provide you with information that will give you more answers so we can begin to find a solution.

so it's very important that they be able to work with you and they don't feel like they've been able to do that. >> how many people have contacted you for that matter that you showed us before? >> thousands. >> could somebody hold up that matt so that the senators who aren't here can get it? this is the map that ms. brockovich puts together and calls to her because she's famous and is known for going after these problems. and i would just say this is a sort of rhetorical question that it's okay. don't you think that this indicates that people are frustrated -- it's unbelievable to me they would call you, someone in the private sector, the upper and called the epa or the nih maybe they are calling them as well but doesn't this indicate a lot of frustration out there that people don't feel they are being heard? >> they don't feel they are being heard and that's why i started this map of again over

40,000 e-mails by traffic just to my website each month what happens for me about eight months ago was that i kept seeing from communities we are concerned, we're seeing too many cancers, giving it to many cancers so that becomes a flag for me when i have not one community, not five or ten but 20, 50, 100 telling me the same thing so i s.t.a.r.t. it, and they are frustrated and they want some answers and as you said earlier, not everything when we look into it will be related to an environmental issue. in some instances it could clearly be coming and we may be overseeing it because of these people don't just naturally wake up and learn of their friend with cancer and their neighbor or they get to know each other in the hospital and they don't realize their neighbor with in the same block. they are very frustrated and they are trying to find a way to reach all and they don't wake up

and go we should call cdc and report this. we should call the national institutes of health and report this and i would have to tell you 80% of the people in their e-mail to me that have created this map have said we just don't know where else to go. >> i think the boxer crapo bill is trying to address this and i hope colleagues will jump on it as co-sponsors and we get this done for the committee. senator crapo. >> thank you madam chairman. i just want to say i found your testimony incredibly informative and compelling and again, i want to thank you for making the effort to come here and be with us. one of the things he said in your testimony was you referred to your mother's experience when she went to the local cancer registry in your community to raise concerns about the potential disease cluster and she was told that basically her home was too small to warrant an analysis and your case was

statistically insignificant. could you just comment a little further about that, about what did you do next after you had that experience? >> thank you, cementer crapo -- senator crapo. we were able to take it upon ourselves to get the proper scientists to conduct studies on a personal level to find out some answers and kind of start ball rolling to see if there were indeed problems in our community. >> did you get assistance from any governmental agency whether it be the federal, the state or the local government in finding that scientist to help you? >> we did not. no. ..

you indicate that you think the atf dr had serious challenges in identifying and responding to disease clusters. could you clarify that? >> well, from experience in 20 years of being in the field that these communities and i talked

to them as they are trained to track whether there are clusters are not and we acquired them, 99% of the time they've indicated that they have found that from the community with happen. one thing i think is very important is that we think there might be some thought and how great unifying these is these registry will come in and watch the movement of where these are going many, many times if we find that we've given a contaminated community and were fortunate for doing so, we move. now we've lost track of where these people have gone. and when people come down with cancer, they reported to the state in which they reside. they don't reported to this date in which their friend. so we could potentially be missing hundreds, if not thousands of people because we can't track their move and in

the geographic location, which it think it's very important. so from experience in dealing with these, especially with atsdr agencies but track to the sky registries are not there. it's frustrating for them. and that's what they feel voices are heard. >> thank you. dr. belzer, could you comment on how we do with the statistical significant issue when you have a small-town where we recognize u.s. on others. what do you do to deal with this problem? >> drivers experience is not something i'm familiar with so i can't comment on that, but the term statistical significant should normally be used only after analysis is dirty than done, when did i party been collected. it is not something that should

be said of anything or anyone before data have been collect it. it's a not then to imagine. i do believe that the terminology, which is normal and classical statistics is deep in the offensive to a lot of people because they understand the term and significance to me they are insignificant. this problem probably could be addressed if the epidemiologists applied a different set of tools. it takes away from some of that. it's also probably superior tools and classical methods for the nature of the problem at hand. but epidemiology understands that. i think that's just a case of scientist communicated in their chart in a race don't fully understand. they could be far more sensitive about it. >> iceni time is expired.

thank you, madam chair. >> thank you. senator lost her. >> trevor, you said something in your commentary and we so much appreciate your being here. usage required to be alive. we are all glad you're alive. connecticut u.s.a. professional grandfather. i've got 10 grandchildren i know what they i want for them. they live are relatively moderate if compared to cancer. one of the things i find so disturbing us in this place of contemplation and legislation, we often hear the theme for those who are afflicted with cancer or other threatening to life diseases. but somehow or other, we

separate the heart and the mind here because we'll get into a about costs and what does it cost to save a child slave? it doesn't matter what the cost is. there isn't a family in the world who could dispose of -- wouldn't dispose of all of their asset to save the green child or child's life. and i've been fortunate enough to be involved in cancer research. dr. solomon, do you ever hear of the jimmy fund -- the massachusetts situation? >> that was jimmy andersen was one of the first children diagnosed with leukemia. he unfortunately passed away. >> do you know a physician named landrigan quacked >> yes, not >> do you know a physician named landrigan quacked >> yes, not >> do you know a physician named landrigan quacked >> yes, not. >> a good friend of mine and he

supports the legislation that i propose. and i did find out whether these chemicals being introduced in the products, you name the kind of product is a very important first step. and i appreciate the fact all of you are here to sound the alarm and let people know no one is exempt. we do a lot of this environment committee led by senator boxer to try and get conditions that will protect children's health and that includes clean-air. it includes getting it of toxins and toxic materials coming out of smokestacks and that kind of thing. but i wonder, do you see communities right cannot seem that company xyz company dump their waste here and they should

pay the price for the cleanup demands. do we ever identify the companies that say you've done it. he found the air, found the water, violated our children's health? is ever brought to the attention? second would be a good idea. i ran a business before i came here in the regulatory -- what you call your company? regulatory basic. >> regulatory check the. >> i've been fortunate enough to be able to respond to the early deaths of my father, 43.

my uncle in the same family comes 52. my grandfather 56, all from cancer. all from paterson, new jersey, an industrial city. so when the chance came along, i was able to help start a cancer research facility. you know.or holland? >> i know the name, yes. >> he did so much in childhood leukemia. there are several questions that i would like to put to you at, but in keeping sometime disciplined, it's not easy. i would ask you this, but are solomon, the investigation into initially i cancer he can new jersey language because the cancer registry was outdated

when the investigation began. looking at the bill proposed by senator boxer. wouldn't that have a good effect on the situation like this? like the contra identity and evaluate disease clusters? more quickly. we have to get out of the curve on this and i think it would be a terrific thing to do if we can move it. i've proposed a piece of legislation, which i mentioned near, that we'd like to casino chemicals that go into the product that had been circulated throughout our world identified as being safe for children's health before it goes into the product so we then don't have to look like we do with the reform

law, which said we should invest to kate chemicals and see what kind of harm they bring. we've investigated 200 chemicals out of 80,000. and it's not good to have a good idea to head epa searching for those things that are at fault as opposed to jumping on the bandwagon, getting this done before and i would plead with you. be in touch with your senators and make sure they understand the problems they've had. forever yours soldier in this battle will be to keep on fighting. thank you all very much. >> senator, thank you for pointing out that the boxer crapo bill deals with the problem after the fact. nothing in this bill is going to prevent cancer clusters. i'm just saying it one occurs, let's have a way to respond. but simply to tell her communities to the best we can

what is the probable causes? first of all -- most of all to protect other people and also to resolve their questions. but what senator platenburg is talking about is a new way to to make sure that before these chemicals are introduced, even more chemicals, that the burden changes so that the person -- the company or the person at the group that wants to introduce the chemical must prove its case before introduction. that is a very different and important move and i of course will support you 100%. but these are different approaches to the same issue, but they are complementary. thank you for being here, senator. >> thank you, madam chair. this is certainly very, very important problem. i guess it's fun because of the nature of communication being so much easier now, the ability to

perhaps keep track of things is so much easier, it is something we can address. i guess my concern is really two or three things. again, i believe very strongly that we need to deal with the problem. on the terms some of the things we have in place come in the registry program evidently is not doing a good job. and also, i guess i'm concerned that we are talking about it being under epa as opposed to i guess my question would be why not the cdc or the nih or the fda or all of these things that they're involved in a similar way. were talking a lot about cancer and cancer is a devastating disease. there's lots of neuromuscular diseases, you know, afghan fighters so scheduled for this sort of thing. i'd really like for you all to talk a little bit about that. to me there's no excuse if we've got a registry problem need to get it fixed. i think that would have a great

deal. we may be to totally revamp it. there's lots of diseases now that we need to be following that were not following three can do a much better job of that. i do have concerns also about perhaps duplication and maybe there's a better way to do this through some of the agencies that are set up really to investigate. because along with this, you have these clusters, but the cluster might be some pain that we are eating not enough software to much of what besides the environmental can do that has been raised. so i appreciate the testimony. i think it very, very helpful. your written testimony got to look at last night and i do appreciate it. again, it's something we desperately need to work on. so don't misunderstand. i'm committed to helping, but i just want to make sure they were doing this right or we don't have, you know, more duplication

and spending resources in the way we can get very, very aggressive. those accountable authority to netscape to to do a better job. does anyone want to comment quite yes, ma'am. >> i will. he got a couple of points than they just wanted to hit upon then i found interesting in dealing with all these communities and their reporting to me. there doesn't appear to be any national people's registry where they can report what more often than not if someone asking it here, but i've learned from communities and those with cancer. if their doctors or an agency that will do the porting, they do the reporting, which is why they started to bring information to me. one phenomenon in the scene happening in the facebook world we live in now is e-mails coming from people that are facebook have now found their old high school made, but they've all been dispersed throughout the

u.s. or other parts of the world. once they are stitched back together, they are learning all of them have can't or come a similar types of cancer and were able to pinpoint the mac one location. so i know there's been each of these up there that are involved, but there's one particular type reported and compiles data and then are the actual people and actual sources as this map would kind of indicate. so they need a specific place to report to come and not just cdc come this summer they can report actual cancer. not necessarily where they currently reside. and being able to possibly share of the data because i don't know what exists that cdc ordered atsdr does, but to be able to share data between local, state and agencies to have and see

what we are missing because we're not reporting it to agencies who were supposed to making the words. the information is getting lost. >> i agree. and i think again the sharing of data and as you say were in the face of a cage that does make this so much easier. ms. solomon. >> yes, your points, senator, were very important. the problems with tracking diseases in this country are quite serious. the cancer registries have gaps in many states and many diseases that are very important, especially some diseases that appear to be rising such as parkinson's disease are really not tracked at all. so that is an important and related issue. but i also want to speak about

the issue of duplication because it's a tricky issue, because in my view coordination of resources is very, very important and making sure that the approved the expertise is uploaded to address these clusters is also very important. up until now, the fact that it's really been atsdr or the states that have responded to clusters means that not all of the necessary resource is part the table, especially some of the environmental sampling approaches. in addition, when we were involved in researching report on clusters, we contact did the atsdr, which is housed in cdc, assuming that they would be tracking disease clusters simply tell us where clusters are. they told us that not only do they not track disease clusters

and have no information about where they are located, they told us furthermore that they are no longer investigating disease clusters. and so we said if that's the case, who is? they said this is the role of states and local governments. those entities don't have the knowledge skills. so that's why legislation like this will bring all those resources together. >> thank you. i don't want to kick out full time, but i think the point you make about coordination is a good one. and again, i guess i just have to look further to see if the cdc is not doing that, you know, should they be the lead agency in doing it versus the epa? you see what i'm saying? the other team, madam chair and again, this is something that were really concerned about spending money these days.

improving registries is getting these things under control really with david tremendous amount. that's the point we need to make. >> senator, thank you for coming. michael and i are very hopeful he'll join us in a look at this bill. i want to answer your one could treat, also mention and ask unanimous consent to put into the record this report from cancer facts and figures sent by the american cancer society. they say about 1,529,000 plus new cancer cases are diagnosed in 2010. the estimate does not include noninvasive cancer or it also doesn't include skin cancer. and later on they talk about the cost in here. and it just is mind-boggling. the nih estimates the overall

cost of cancer in 2010 of $263.8 billion. that is 102.8 billion for direct medical costs, 220 billion for and direct morbidity costs. that last part is duty. the 144 drag laws of productivity due to premature deaths. your point is so well taken. i think if our bills and we can get to the bottom as an lets say we go into a place and find there is no connection to the environment. if there's something to the soil, air or water, and now you're going to prevent a lot of these cancers from happening. i think our bill at the end of

the date is called for efficiency as we move forward. i want to talk about why epa. i think it's a fair question. it says all the agencies are going to coordinate. if they find it is an environmental issue, cpa that has ever, water and soil. they will find out what the cause is, but they can't move to fix it. so we wanted to give the agency to fix the problem if there's a problem delays so that this isn't just an exercise. it actually has to follow through. if you're concerned about this, if you want to spell that, let us work together because i've got to save face and trevor knows this and he makes the point he's both a minority witness in the maturity witness. in this days we have so much rancor. i would hope we would come together around a very simple

idea that if there's something really troubling new or bothering you and you want to work with us in a positive way, that would be fine. we want to get this out. we want to show america were not happy to see karen popovich was a private -- you're an attorney now, yes? you never did do that? she's an attorney by esme says. and that the best and an advocate for community. people are calling him because they are frustrated with their response. i would also make knowledge meant. the california epa express the u.s. epa for providing consultation as they look at causes of purtzer faxon cattleman. now the jury is out. we don't know whether this is a cancer cluster i think the epa can be very effect did and it's nice to get this comment from my

state, selected the type and the record. so i guess -- i have to say, this was written in december december 2010. so this was before jerry brandt took over. this is written by arnold schwarzenegger. it is a bipartisan thank you. trevor, i would like to give you the last comment of the day from the panel. if there's one thing you can tell senator bows and because he missed her testimony, if you could sum up why you supported the boxer crapo bill, if you could look them in the eye and tell him what it is, that would be wonderful. >> well, thank you i'm a senator for being here. i have known many children who have lost their lives and lost limbs to cancer and it's

heartbreaking to see that and i think that's why we're all here today, it should do we can as chair boxer said, if there is a problem that we address that. and i would also like to say that the medical community tumor registry come in cdc, overburdened with data and may think that this would streamline and consolidate the process. so thank you. >> thank you very much. i want to see thank you to the entire panel. all of you have just topped us enormously. >> madam chair, can i just say one thing? >> of course. >> i guess what i was thinking, the british navy had a problem and the old days because they

are sailors developing scurvy, okay. so they were able to discover that was from lack of getting vegetables when they were on board, fruits. and so, i guess what i would like is a situation where would we have a problem in a cluster, regardless of the disease, that when we go and investigate, we investigated figure out the cause, which is the epa came out and again i am not claiming to epa at all, but you tend to think in terms of your training and whatever. they established the paint on the boat was good, decking was good and there is no environmental cause in that way, then we wouldn't have discovered that people needed to be eating more fruits. so i guess that's my only concern is we were going and what agency.

>> this is what we're trying to say. well, that's the whole point of the bill. it's the entire response is coordinated. it includes the epa, the atsdr, the nih, the cdc. everybody is involved. and in addition, we pull in the state apparatus. we pull in the local city county. you're exactly right. you don't send and epa. that's not what our bill does. our bill says were going to coordinate this response, so everything you said is what we do. and it's high time we did it because i don't want to see a private citizen getting calls because of no faith in the government because we just not coordinated. so i hope you'll take a look at this. i think you like what you see. and again, if you want to make it more clear, when they get

more clear. i want to thank so much this panel. you have been excellent witnesses. i look forward to the daily pass traverse the part of the committee and bring it down to the floor. we have everyone's support and remove it through. and trevor, you know, life takes so many twists and turns and it's a mystery why. but clearly, your life took a twist and a turn in a way that is giving you the power to communicate your story and the empathy and compassion that you bring to this. and frankly your common sense site is slow. it's extraordinary. and just thank you. you know, you could have gone on with your world and put this behind you and said, well, i doubt this in my life, but i'm closing the chapter. what you are doing is so anonymously hope: we are so grateful. and your senators are so proud of you and we thank you and we stand adjourned.

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>> for more than four decades, the libyan people have been ruled by a tyrant, moammar gadhafi. we had tonight its people freedom, exploited their wealth, murdered opponents at home and abroad and terrorized innocent people around the world

>> a new report by the government accountability office finds that most of the defense department's major weapons systems cost more developed an estimated. this is the night to the gao has conducted such a study. this hearing of the senate homeland security committee is just under three hours. >> -- reform act packed into law in 2009. in addition to serving a deputy to wreck your other cost assessments and program evaluation office, dr. burke serves as deputy director for resource analysis and program

analysis division of the office of the secretary of defense and is chairman of the cost analysis improvement group in popular defense. that's a mouthful. dr. burke will spend time with us today answering questions about how we can achieve accurate cost estimates in the beginning of weapons systems like silly genetics or if cost overruns in the later stages of the systems developed. dr. burke, we thank you for being here and for her testimony. as i understand, mr. kinkel will be delivering the oral statements for both yourself and for you and both will be available for questions. we'll be watching to see if your lips move. we'll see how good you are at this. thanks for joining us today. please proceed. your entire statement will be part of the record may precede. around five minutes. if the goal of ibm and that's okay. people a lot that's not okay.

>> chairman carpenter, senator brown, distinguished members of the subcommittee and federal financial management services international security, i'm frank kandel, and first deputy under acquisition to lj logistics. i'm honored to be here today for the opportunity to discuss the dod program and tools to prevent cost overruns. the company, mr. richards said and a senior cost animals for department of defense. websites do with my opening statement instead of summarizing my written submission is to step back and address directly the reasons we've cost overruns. i'm going to address causes that will be happy to answer questions about tools later. my written statement discusses measures that are mistaking to improve controls over cost. this includes response to recent statutory direction, particularly weapons systems acquisition reform act come but also measures in the defense appropriation. i written statement also have it, secretary carter's

initiatives, which we refer to as better buying power as well as other internal measures we are taking. rather than summarizing all those measures now, i'd like to discuss the deeper issue between these asked me to address. why if cost is so endemic in the defense acquisition enterprise? a bit about what the defense department for over 45 years. 31 of which have been spent in acquisition related work from either government or defense industry. for some secretary of defense efforts of staff in the first undersecretary for acquisition disappointed. i work for the first several executives i know and have great respect for other persons who served in the position, including mr. young will testify later today. i served in several administrations and i can say this is not a partisan issue or problem. in my written statement to refer to the struggle to control acquisition cost. it's not just cost overruns. it's control costs overall. every defense acquisition executive committee principal

deputy, every service or component executive has engaged in the struggle. wyeth has been so difficult? by doing so if cost overruns? there's a number of reasons why this has been so retractable. understanding the causes has to be the first step in addressing cost control and cost overruns in dod. i'd like to say somewhat reinflated that deposition system only has two powers. planning and execution. but start with landing. planning is largely a government responsibility. it includes presetting requirements for new product. second, sending key schedule date. third, estimating total program costs. fourth, establishing budgets and evaluating plans come including bids received from industry. in each and every casecome under strong pressures on her to touche and then the people in them to be optimistic. the united states has been dominant in the world for

decades. the dominant race in march part of a superior systems we acquire for fighting them women. in order to acquire weapons, rose pushing the state-of-the-art in the requirements and to give credit where credit is due, we had to be a large part. we have are most always set up to the product that is better than anything ever built before. our appetite for innovative and beyond current state-of-the-art systems is also influenced by industry's desire to sony products. as one would expect from industry is not shy about marketing attractive new capabilities to operational communities. parking people do not emphasize technological risk in the cost risk in their products. likewise, there's always pressure in her system from the user committee and others to do things faster. independently scaled complexity and risk associated with the project. the acquisition system is frequently criticized for taking

too long and been too risk-averse here one has to ask if we are so risk-averse, why do we have so many overruns schedules? the competition for resources in the planning system provide the ideas to optimism. our budget formulation process is an ongoing effort to squeeze as much capabilities possible into a zero-sum constraint. sender creates a competitive price is to secure funding that has to be divided among a number of interest groups who are all vying for a share of the pie. i would like to obtain capabilities. people in our sister are trying to get programs into the budget and have a strong incentive to be optimistic in their assumptions. selling has given programs in our system is also linked to a total cost of the program. here again their strong incentives to optimism by the proponents. finally, industry as a strong incentive to take risk and be a stick in its bid. a defense contractor cannot stay

in business a bidding realistically or conservatively and never winning a contract. here also to play a key role, ideally by insisting it justified productions and costs installments. but again, there's tremendous pressure to accept the lowest price independent to this that's been taken. on the planning side, these are the forces to her carter and i and other executives have always had to struggle against good about the same time, doing everything we can to push the system to deliver more and better products sooner and at lower cost. execution on the other hand is largely an industry response ability. once we set the terms of an acquisition strategy, basically contracting strategy, to design its liver products? the government of the responsibility to ensure they are fair and reasonable and the quality meet standards and are justified. but the execution of productions

cost per million industry. the plan is found, it's a matter of management, engineering and production capability for more harshly, competency. the one time in my career i was at the biggest problem by far if cost overruns was failure in planning. i'm no longer certain of that. i see too many take taters that need to improve internal capacity to manage and execute programs. to the extent the observation is correct, we have a lot of work to do overtime to build or rebuild capacity and network forces, both in industry and government. the government we have direct control and are moving aggressively to reconstitute and strengthen workforce. industry must also be strengthened, but this will have to happen indirectly through incentives that we provide commercially to a contract. incentive is primarily business

incentives are primary tools for department has two influence industry's performance of a need to use it creatively and aggressively. so what is the department doing about all this? i written testimony summarizes 20 of the actions were taken to address these problems. were building on the work of all professionals who came before us such as misty on who will testify before the committee later today. we're working closely with other elements of the department or the cost assessment for evaluation organization. also the joint staff which proves requirements in control over budgets and others. we are working hard to make the entire acquisition chain of command in other people who serve in a bar fight is, to achieve better performance and cost control in general, we strengthen the consent as we provide industry. the department implements the weapon system acquisition reform act in legislation. better buying power is a set of 23 initiatives designed to control and reduce cost across all of our contracted

activities, not just major programs. with secretary gates will support we increase the size and just as importantly capacity and capability of the government acquisition workforce. despite the financial climate, we fully recognize a force multiplier and workforce has on the ultimate success of our programs. forgot to carter and me, this is all a process of continuous improvement. this will characterize their entire office. the struggle i described whenever and. it is not a short-term battle or simple policy change to solve all of our problems. if there were the case would've been solved long ago. it takes professionalism, tenacity at all levels of acquisition enterprise to make progress. we are totally committed to bringing the cost of products under control in reducing them wherever possible. the secretary gates is indicated, the alternative is unacceptable. with that, we'd be happy to answer questions.

>> thanks so much. how do you do? i do well. tell us the name of the person who you succeeded a few well, mr. kendall. >> there was no enemy position. kim family was in the closest position can the secretary for acquisition and technology. >> okay, see her position was vacant? >> it didn't exist. it says it was retitled in the authorization act in 2010. >> jim's family was a witness here a year or so ago and john young was a witness here maybe two or three years ago. i think, xander stanek, it, john young held the positions, is that correct? >> that's correct. the air simply came to testify come i ask no one to defend your

position? he he told me how much he been there. it's a book and a turnover did you receive from your predecessor quite he said well, my predecessor last 18 months before i got there. and i said how many direct reports do you have? in your position, mr. fanning or is it that her family? and he said i have six and only two of them were filled when i arrived. only two. one of the questions i often ask the witnesses, particularly when we see for under $2 billion worth of cost overruns, what can we do to help? one of the things that occurs to me that we can do to help this particularly in positions that require senate confirmation as we can neither confirm people or turn them down and say administration can send us another name.

we're going through processes. my colleague said no. were going to crisis by chuck schumer, democrat from new york and lamar alexander, republican from tennessee, were retake roughly 1200 positions in the executive branch and will try to take about 400 or 450 added that the reduced by about 30% from 35% of physicians have required confirmation. that may just tell. at best my staff to look at those positions that are involved in c., arguing it does have a takeout out of the city to be confirmed? are there any in the department of defense and the acquisition area, whether it's the secretary's office for the army air force navy earnings to see what -- maybe that's another area we can help. my recollection is that when it comes to confirming secretaries for departments we do pretty well. i'm against the tacky secondaries that bad. assistant secretaries we don't do a good java.at all and

sometimes my colleagues and i., hopefully not me, will put a hold on some of them in order to get some kind of leverage for an entirely unrelated item. and the folks who suffer in the acquisition area are the taxpayers because we don't have what we need in acquisition of her watching the process of making sure contracts to the player. does any of that make any sense to me to review? >> at a daycare completely. i was thinking about things i would give u.s. a first in the congress could do and you had it. i waited 15 months after the administration started. i was on hold for several months during the confirmation process because the tanker acquisition had nothing to do is make candidacy. it's a very onerous and time-consuming process and people are often held in limbo for a while. time. it's hard to recruit people who know they have to get through the process. we use humor people coming up. i do know that there's a need to perm position on this, so it's a personal opinion.

i would do as you suggest can have more people coming in as noncareer and at the assistant secretary level that each of the acquisition and those people could easily pride and as noncareer ses and have her team on board much more quick way and have a capable team in place much more quickly. >> i will ask.or burke to respond as well, but i was just saying to senator brown, i just want to make sure we follow what they're saying. but they are saying this because this huge problem with cost overruns. the folks that are supposed to be serving acquisition jobs, we need these positions vacant for months, some cases longer and were trying to figure out what we can do on our end to better ensure the 402 billion -- we started sending the curve the other way. we may have an opportunity in

the schumer alexander legislation. there you go. that's right. my guess is that there will be. but we may want to look at the jobs that we've removed for confirmation to see how many of us have fallen. and i would ask you to come if you go for the record, just come back and recommend and confirmed positions within the acquisition department of defense that are confirmable in your adjustments should not be. that doesn't mean we'll signoff on all of those, but we be making a more informed decision geared dr. burke, your response to that is insane in response to what dr. kendall said. >> as a career member of the executive service, i have had to deal with the situation that

mr. kendall describes in which you describe, which is often there are vacancies at the policy level, policymaking levels for extended periods of time and often early in administration and its not a helpful thing for anybody involved essentially in terms of efficient operation. >> isobar questions to ask you a meal to senator brown. thanks for those responses. >> thank you, mr. chairman. so mr. kendall, secretary of defense decided to requests from congress another $8 billion is ever a friend in my earlier testimony. the program is 30 cost taxpayers 1.9 billion were over 14 years since the program. why should we continue to fill a program at the department is

characterized as number one, subject to a high degree of risk to not needed because we can utilize existing assets to provide capabilities and three, it's too costly. senator brown, if severe initial program in a number of respects. it's an international cooperative program and it's our teammates in germany and italy and the program is to say it's been going on for quite a few years. it has gotten back to departmental programs and cost development that causes us to question whether should continue. we looked at the program carefully. look at other options we have to meet the same requirements essentially decided that we should not continue into production. it was large and affordability decision, but also the actual progress on the problem. the reason there's money in the program for the next two years is neither. you shall arrange that with our partners. the memorandum of understanding

that we have with italy and germany decide if anybody withdraws, that partner is liable for all termination liability associated withdrawal. our obligation to the program is the money seized on the budget. the hundred $4 million. for basic in a position where we have a termination liability to get to or go ahead and spend money and program to get technology and components are of value to us. selected three options. we looked at stopping, which would've led to a termination liability. let taken to mean mean to the end of her agreement and putting in an additional billion dollars to meet requirements of the program and finish development, the over him. we decided the best business option for us at this point was a middle option, but want to let the program continue. >> i hate to interrupt, but who signed this contract? isn't very provision the contract to allow for

nonperformance, which would mitigate the ability a responsibility to pay that type? connectors to agreements. these agreements between the nations, which sets of terms -- >> the guys in >> is your nine. i'm not sure who signed up to the deal. >> i don't know how we managed to get taxpayers in a situation where you restart the $200 million to build an air defense system when we do it very well ourselves here and then we also send $800 million to get technology and knowledge. >> our problem is we don't have the better option. if we terminate, will pay termination liability, which would cap that amount. >> there's nothing in the contract that allows you to navigate because of failure to

deliver? >> i believe it is a costless vehicle. so essentially the termination liability as the costs associated with stopping. the cost is basically had to be born because of all the work done so far i'm at a cost to end on the program if you will. and the agreement was set up and there was a part the agreement between the nations, but the agreement was designed to make it hard for people to leave because there's a long history of cooperative programs of one or more part ours bailing out because of budget difficulties. it was set up as a way to keep everybody in and of course for the persons -- >> at the cost is roughly the same in without having assurance and italians to a mutual determination having negotiated termination costs, huckabee claimed taxpayers are taxpayers are better off they moving forward to the remaining term of the program? >> were taken us one step at a time. for currently in negotiations.

>> i hope you have good attorneys or something. i hope you have someone to give them any contingency. >> that separate between the agreement in the contract gave the contract is straightforward relatively speaking. what's the nations decided they want to proceed. >> i can't imagine other countries are too happy. so would there be the ability to work together and try to find some type of common ground so you all save some money quick >> that's exactly what were trying to do right now. in the enmity of what we have those discussions at the end of the day we make an agreement together to terminate. we may decide to go forward. it depends what the other partner say at this point. >> so i'm clear, what do taxpayers have to show for the $1.8 billion of money so far? anything? >> what is discussed now is what we can do to take components developed as far as the two

radars, missile system. >> it's nothing new, is that? there's no new technology that we are detailed past. >> these are new systems. will be an american missile developed. the raiders are new radars. >> .we are to have technology in play now? >> the kernel behind you say no, sir, two-edged testified? >> these are new design systems. they been in design for quite sometime but they been new systems. >> better new quick >> patriot has been upgraded with a comparable system. it was developed in the 70s, so it's been around a long time and it can be upgraded more. this is a much newer technology system. >> if i could just type, and maybe go to dr. burke, the weapon system reform act which became 12,000 night included a provision which required contract is to develop

prototypes and major defense acquisition programs. at the department implemented competitive prototype prior to production deployment, how much could receive do you think? >> on this program specifically? it would've been very difficult to implement that on this program because of what mr. kendall has described. >> we do that often? is this site kind of a case to the italians and germans to say let's do this deal together, it's great? the >> this is a pretty initial program. >> .do it again. we're way over minutes. so please do me a favor, don't do it again. unobvious late, i do want to be a wiseguy, but it's just -- it's crazy. and getting back to you,

mr. kendall, what program says the department implemented and were in the process has just taken place persistence acquisition or sustain? >> where have we implemented -- >> yeah, where has it been done successfully before, this prototyping? >> it was done for joint strike fighter initially. and trying to think of a more recent program. >> we been done for some municipal programs. two that come to mind by the joint air to ground missile systems. we've done up for those. it's the preferred path. >> it's the law now, isn't it to include practical? >> yes. >> do we ever ask of its practical? carrion competition as far as possible is a very good thing for the department.

it really does a lot to reduce risk in the program and cost overall. >> were canceling the second engine and talking about competition. i'm the one hand it's great and yet were not doing it. in fact, for continued with the program is the potential savings of billions -- hundreds of millions of dollars? is substantial and were not doing that. >> i think you're well up wherever conclusions here. we do not see the case for the engine development. >> i'm going to combat, mr. chairman. >> senator portman. from the queen city. >> -- for your service, leverages follow-up with some of the things senator brown was talking about with how they save money. but history has shown the only

reliable source of price reduction to the life of a programs competition between dual sources. do you agree with that? you disagree with the quadrennial review? >> competition is their most effective single told to bring down costs. i agree with that, absolutely. >> life of the programs competition between dual sources. he said in your testimony looking to create new systems constantly to create incentives. you said incentives aggressively aggressively -- he talked about accountability, competition just now confirmed a. i assume you think the competition is consistent with the 2000 legislation that was championed by senators mccain reform act. part of that bill, as you know, is to require contract errors to develop competitive or types of a major defense acquisition program. so would he say the competition is consistent with our 2000

legislation? >> yes, absolutely. .. preliminary design and then down select. if possible we would like to go further but we usually can't afford to do that. >> let's talk about how it's worked as you mentioned you used

the prototype competition with the joint strike fighter how is that going? where is the program compared to its initial forecast? >> it's not performing to its initial forecast. >> how much over is it? >> at least 100% estimates if i remember the numbers. >> the would be how many billions of dollars? >> let me get the number for you. >> 50% from the original baseline. i'm sorry at the time was 50%. >> from the original program how many billions of, over 400 billion that the chairman has on his chart is the joint strike fighter over? >> i believe it is his contributors. >> how many billions? i would hope you all would note that the number is on your --

>> i will get you the number, enter. >> okay. i have the number. i may be wrong but i would like to hear from you all. so the program is let's just stipulate billions of dollars over and behind time, and part of the program of creating the trey strike fighter would be 85% of our military fighters of the point of its completion because a would be the navy air force and marine aircraft. part of this is the engine and you said earlier you've done your analysis and it is inappropriate with the engine. as you know they've done this study that senator brown indicated earlier shows through competition you save money and they analyze the program for instance roughly ten to 20% savings and ten to 20% with their numbers it's about a

100 billion-dollar program of the cost overruns every day so we will be about $20 billion. it there were not cost savings through competition on the engine size. what's coming on with the engine? the engine that you have apparently chosen as of last week renewed the stop order on the alternative how was the engine during? visit meeting the projections? >> the deliveries are currently scheduled to be consistent with the aircraft. there have been some overruns. >> how much? >> i have to get that number for you. >> i'd love to hear that number. i have the cost overrun. it's a much more mature design and the alternative. if a small number of hours of testing and the good deal of risk in the program and we do not see the benefit of diverting resources from other projects or the air frame to the second

engine. we do not see the benefit of that at that point in time. >> we don't see the benefits in this fiscal year or don't see the benefit over the length of the program? it's meant to be the program for the armed forces for a couple decades, right? and you don't see any benefit from competition? >> we don't think there's enough assurance to justify the risk of the resources or to the engine. >> what's the risk of diverting resources? is the second engine over cost? >> the second engine has had problems also. >> is it over cost? >> i don't have those numbers, i would have to check. >> my understanding is the first engine is over cost, 2.5 billion, the overall program is tens of billions of dollars if not hundreds over cost. i've heard different numbers. $104 billion over cost and you testified before today brilliantly about the need for competition and how you believe

in competition and certainly the legislation of the quadrennial review and a free of a study that's been done including the competition will work. these numbers are, you know, unsustainable. if we didn't have the largest deficit in the history of our country and biggest debt as a percent of our economy as the chairman said its members would never have to deal with before in fact as a percentage it's bigger than it's ever been. our deficit has been bigger one time and the was world war ii when was the same roughly 10%. so we are in a situation now where we have to do with the chairman said, which is suspend thrift, better results for less money and using competition is certainly something that you have today talked about as a way to get at this cost overrun of $400 million, and so i would hope that the department of defense instead of as it did last week putting this all border in place while congress is the middle of its appropriations process and

working with this exact program trying to find cost savings but instead you would embrace the idea of competition to save money for the taxpayers over time. my time is up and i hope to have a chance to come back and look forward to your numbers on the strike fighter overall. >> thank you. senator pryor. >> thank you mr. chairman, and we've already clarified his rank when he left the military. >> what was yours? >> it was captain. >> all right. >> i couldn't get in the army i had to stay in the navy. >> thank you for your service. let me follow if i can on the joint strike fighter, and i think you were about offered to an explanation and i understand is that one of the reasons that it is so far off budget or beyond the budget and it's so late is because there have been redesigns? >> a combination of factors that

affected joint strike fighter is increasing cost. one was estimating originally. there have been difficulties in the design phase and production where things haven't gone as well as the initial estimates made. it would be hard to get the production process is under control. one of the aircraft in particular has had problems with the design as having to have some work because of that. it's the reason we put this aircraft essentially on the paws while we sort out the problems and it and the secretary even used the word probation for two years until we get the problem sorted out. >> did you have any comments on that? i saw you nodding your head over there. >> i agree with those comments. >> to understand, chris's frustrations all politicians are squeamish when it comes to cutting defense spending. that's politically sort of a dangerous thing to do. i guess you could say, but in this budget environment we are going to have to become more efficient and stretch our

dollars and make sure that when we are spending dollars on defense they are naturally going to productive pursuits whatever those may be and that leads me to my next question. i know we have them on the books, and i want to get either of you all, which ever one would like to take this i would like to get your read on how well it's working. it goes far enough because even though it's on the books, it seems that we constantly are plagued with cost overruns, etc.. so is it -- does it need to be strengthened? does it need to go further? does it need to be changed to make sure we can get a handle on the cost overruns? >> it is a useful tool for us. it comes after the cost overrun that's already been realized. and then asks the reasonable questions you should ask in that situation. do i still need the product? are there other alternatives would be less costly getting the same capability, etc..

those are reasonable to ask and what we are doing now is asking them well before the breach has to be declared. the problem is they come after the cost overrun has occurred. we are interested right now in prevention. and making sure we start programs designed for success. >> do you feel like you are being successful in that and catching these potential overruns earlier in the process? >> that's our intent and we are having some success. a lot has to do with the planning function in setting the requirements right early. and i wanted to mention that we're as interested in the cost controls preventing the cost overruns. we have to give more product out the door for the money that we have. that is what we are fundamentally about right now. we are delivering enough for the money that we have. so we are stressing the affordability which basically early on people have to set the affordability target which we're calling a requirement but with that program will cost and then we have to design to that cost

that is a cultural change as mentioned earlier. this is a different mind set. we can't allow the operational committee to look for anything and try to build it. if you look at the programs we canceled over the last two years, the program securities canceled about two years ago, the one we just canceled in this budget. what once the car runs through them with anything else is there on affordable. efp is an example. we spent years in development chasing the requirement and a project that turned out to be unaffordable and we were forced to confront even chile that was on affordable, kind of around the time the breach would occur. that's way too late. we student be starting the programs we are stressing the beginning of the process. we are also stressing something that we are calling in general should change the culture of the work force and to change the culture of the industry getting more cost control and to everything we do. we are emphasizing something called should cost which is the idea that you don't just accept the independent estimates and one of the ways we can afford

having the cost overruns is just put a lot of money into everything or take no risk. we want to do is get as inexpensive as we can and get superior products at the same time. so what we are funding now is the cost estimate that mr. burke's shop generally generates for us, we are incentivizing our own managers and the industry to deliver below that, to get the cost down. now in the world i live in all my life we tend to overrun the independent cost estimate, but if i can just get to that one that i will prevent cost overruns we are talking about it if we get below that level we can do more products to the war fighter and that is the ultimate goal and we want to define that as a success. for too many people success is spending the money. we want people to get more value for the money. >> it's a sort of different category than the other departments and agencies and that is honestly you do have congress who is afraid sometimes to push too hard on cost

containment because it might be used in a 32nd ad that we are cutting spending or cutting, you know, some program or whatever. i think honestly at least from time to time it appears the leadership over the pentagon will spend everything we give them and try to find ways to spend it and almost sometimes it appears they aren't that interested in the cost containment although i would say secretary gates has shown a lot of courage on that and then i think the contractors they have a lot of incentive to keep going and keep going and keep producing and spending and all that. so i think the dod is different than in the other agency because of the political dynamics of trying to pressure you to cut your spending. >> it's to not continue that type of behavior. when he started the speech of about a year ago now.

>> it was impressive and appreciated. we are implementing that across-the-board and when we spend 400 billion of the 700 billion in the alleged, 2010 we are going after everything that we are contracting out. service contracts which are half of that 400 billion that we spend as well as all of our programs. the major programs are a substantial fraction above 40% overall. so we are trying to do everything we can to change the way people think about the money they're spending. that is a cultural change, that's an attitude change and we people think about what success is. on the industry side we have to have stronger incentives to the senator brown mentioned this when they don't deliver consequences most of the time we like to do that in fees and we often don't want to kill the program we want to get the program but we don't want worry about profit performance we a strengthening incentives to do that.

>> when you look the department of defense does so much contracting. it's an enormous number of contracts and amount of money involved, and there are companies out there that routinely breached the contract that don't meet the expectations and don't reform. this cost overruns in some cases they are not paying their taxes and in some cases they had problems in contacting and this agency or the other agency and for nonperformance or whatever it may be but nonetheless they still get the contract and it's just we really i need to focus and clean that up. did you have anything you wanted to add? you looked like you were going to china in a moment ago. >> thank you, senator. i was going to say that my observation is that this is a very important model, that will actually influences the military departments and you've been in the military departments and influences their behavior. we are trying to move them so that when they make decisions

about spending resources for making trade, delaying production to save money that we actually have then calculate what the percentage increase of that decision is, so 15%, if i delayed production that might cost me six of that. just off one small incremental decision and we are really they are beginning to take that seriously to try to avoid those limits so i think it is an important statute. >> thank you. >> you're welcome, your excellency. general i want to revisit a little bit of the territory senator pryor just covered and it's interesting i think when you spoke about prevention, power of prevention for the cost overrun senator brown and i have

held i think at least one of the hearings in recent months and maybe cementer prior as well focused on how do we prevent fraud in medicare cuts how we prevent fraud and medicaid and we are trying to do is improve our ability when fraud occurs or we make overpayments to be able to go out and recover after the fact to recover from those who have been overpaid or defrauded money from the medicare cost run, and one of our witnesses sitting right where you sat a couple of weeks ago said we want to move away from the call the pay at chase. we are paying the providers of front and figure out what's wrong, mistakes and chased them down to get the money back. so what we have to do this don't pay them in the first place. make sure that we are not allowing the criminal providers to get involved in the payment system in the first place so we

don't pay people to chase them down to give the taxpayers money that. we try to work on prevention with respect to health care and the health care legislation we actually provide senator ensign and i legislation that allows employers to provide discounts to their employees of up to 30% and please lose weight, bring it down and keep it down and that kind of thing that there's actually a big focus on prevention. we also did a focus on -- those who served in another three before an annual physicals usually in the birth and the military does that to save money to identify problems and they get serious and expensive, and medicare we never allow folks to get a physical but one time in their life when the chairman become eligible for medicare we've changed that so folks can now get a physical every year

and again the recent prevention is my remedy to say with a pound of cure so it's interesting that that has actually been part of several hearings that we've focused on when we are trying to rein in the growth almost calling it a cultural change. i keep coming back to the idea of a culture change. you spoke of the culture change in the department and the acquisition area and the different branches in the forces. talk about more the culture changes needed there. >> we have some incentives. i mentioned them earlier in my opening remarks. we have incentives for people to spend money and we have to reverse that. an e-mail can across my desk last summer, last fall where the comptroller was looking at obligation rates and saying to people okay if you're not spending your money fast enough i'm going to cut your budget in the current year because you sure you aren't a lot of looking

for get and i said in an back singing this is inappropriate and wrong behavior and he and i and dr. carter and a couple of others had a meeting and we discussed this and talk about how pervasive the behavior was. one of the people in the room was a fighter pilot and he talked after the meeting about at the end of every year the fighter pilots would get out and fight to burn their gas so they wouldn't have cuts in funding for operations for training in the next year. that's not the kind of behavior the taxpayers expect and that isn't what they should get. it's a cultural change. people have to stop stops about rising, getting your money obligated isn't the figure we should be looking at. it should be getting the value for the taxpayer. that is a cultural change for the institution. should the cost and trying to emphasize that to people incentivize that if they do save money he will be rewarded for that in their career. we tend to be focus on meeting

the near-term milestone as an example of success. as we go around and talk to contacting people on of the come plant leggitt and we've been visiting the applying command is people feel they are under pressure to award contracts. you do not want to be on the side of negotiations where time is not on your side. you ought to give the people time to get the best deal for the government which means you take the time. your money may expire, you may get hill that by your boss but basically want to get the best business deal we can so success is coming back with a better price for the government, better business deal not getting things on contract fast and that is a cultural change it. >> i want to add to that. let me go back to what triggers the breach. my recollection if we get a cost increase 15% more than the last time we measured the cost that

triggers and if we get a price increase its 25% above the original cost that would configure. ausley and my staff and others we are trying to look for a way to forecast the 15% trigger and look over the horizon. can you talk with us about that and maybe talk in with the r&d budget to forecast the breach? >> indolent contract to use the system of tracking progress brought to the plan where you can get pretty good early warning indicators. production contracts the pin that on the nature of the contract. their too there are things that can tell us early when things are headed in the wrong

direction and we can step in to take action. i wouldn't encourage the process for the development. development is about 10%, 20% of the total cost of the program. it's the place you want to spend money to save money leader so if we put the constraints on you have to be careful of unintended consequences. so we put constraints on development where people trend to chris and development to avoid the situation. and rick was right people try to avoid it. it's not always the beater we wanted to use to try to avoid them that they do try to avoid them. so do be careful about development. i want people to save a lot of money on production as a result of that and more importantly even though the consumer money on sustainment sweeten a good business truces and not be pretty wise and foolish. we tend to do the opposite. >> do not add anything to that? >> i would say one of the key tools to forecast overruns is in the value management and mr. kendall's written remarks he talked about the fact that in

the department we have not paid enough attention to the management tools. industry also -- >> extremely mean by that. for the purpose is what you mean by peter w.? >> you're fallujah system forces you to plan your work, breaking up into small segments and attach cost to each of the segments so easily start to execute you then report against that. so you can track whether you are budgeted work and costs are actually coming in according to plan and it's a very good leading indicator of problems and a project. it's also a an important planning tool. in my early years in the department was used extensively in the purposes. i think in the west ten or 15 years its atrophy to become much more of a bookkeeping kind of a program as opposed to management kind tool. so we are trying to get people to move in that direction and use it aggressively and reviewing it in the monthly review to see what. it doesn't apply to every

contract it's mostly development contracts. less useful than production contracts but it's a great indicator of problems if it is setup properly. >> thanks. senator brown. >> welcome, senator coburn, nice to see you. >> i apologize for not being here in the first hearings and you may have covered the questions i'm going to ask. i used to sit in that chair. labour stand what it's like. [laughter] >> i just want to have a general conversation with you as having a manufacturing background for ten years and a business background and will allow you to do is tell me where i am wrong in my thinking. what i see the last six years and the six years i was in congress is we don't have a good control on the requirement and

we actually -- the way i understand we actually incentivize the requirement creed to the tune of the fact that on our contracting there is more enumeration and more requirements that you have. so my question is how do you set this up where the decision makers can actually control the requirement because if you come to me and i may purchaser and i am not really concerned about my budget in the long run and i know have a cost to the limit contract or something like that and i know this bill and a whistle would really be good, this is cool, versus what is needed when we start out with what our needs are in defense what we actually need, and then have a parallel track of some sort of these extra things so when you go to a second iteration of it that you add in the new bills and whistles as

you go. because what we've seen too often is it isn't the guy is trying to get this original piece of ideas out the door for the major defense it's that we get the requirement creed increases with the development will cost but ultimately the unit cost when we go into production. am i wrong on that? >> weidinger right, senator coburn. the things we're doing about that, there's several things. let me start with affordability constraints. one of the things we're doing now in all of our programs, all of the new starts is requiring that there would be in an analysis of the affordability of the program of the front. it dictates the cost you are capable of paying for and a good example is combat, the army program. i use this all the time if your teenage son comes to you and says i have a requirement for a furry you have to say i have a budget that's when you're going to get. something like that. because the requirement community will attend even at the beginning to ask for everything you can conceive of

that it would like to have, and i can understand the motivation. but we don't have the budget to support that. and we have to make trade-offs. we actually -- dr. carter and i -- dr. o'neill the secretary of the army pulled back the rp on the street and said it was basically all the requirements that the user could put down and no constraint on the cost so we are going to do two things. we are going to do not cost tavist come how much can the army of four in production and we ended up with a number of $10 million per platform and we do that by looking out at the army ground combat vehicle fleet and say okay give them the budget we expect to have much to expect to be able to spend per item that you are going to buy out there and that came up to be the number. that left the army with enough upgrades on the system and it was pretty much all at least the next 20, 25 years as we got the cost cap then the army set don't look to the requirements and prioritize them and the ones that were absolutely in the top and others were treatable and

others were in that category and that is the way that they finally went out on the street so that's the sort of thing we have to do on the process. another thing we are doing it the joint staff is doing actually now is in line with the idea of tripwires the joint staff is now requiring if the cost of the program goes up by 10%, just 10%, the program has to come back in and its requirements have to be reassessed to see if any requirements can be removed to get the cost back down so that's another tool. >> what me ask you one other question. you spend a lot of money purchasing weapons right? on the developmental side of that what is wrong with having a requirement of some capital contribution by those that are going to be in the development to get the product later on? in other words, one of the things i think -- and i learned this by talking to the ceo of honeywell is it in fact the if capital at risk the efficiency

with which the development is undertaken is much greater because the of their money at risk, not our money. what are your thoughts about that? >> you make a great point. i haven't looked at that idea. generally speaking we pay people to do the r&d and then for the production so they are not taking the same kind of risks. i have to go back and take that on board to see how we could do that. those most effective for us is the profitability. because we tend to do things difficult to do most of our programs are cost less. we are not in the commercial market where there's any other customer and we're only going to buy one of something and you would gamble your entire company to build the force on the odds. the build a fighter plane on their own and we never bought that so we are not going to get that kind of investment that we can get some investments. >> that's what i'm saying.

capital exposure so you have the driver on their side saying wait a minute we are going to be a lot more efficient and is developed. >> i can see the constructor things that we have don't think we tried to do that. what we are doing is looking at the profitability of the company and one of the things you mentioned was that the requirements creep up and cost plus environment you keep adding on the bigger it is the bigger fee you get. we are trying to shift our profit on the production side of the house. in the cold war when i got into this business initially the metric was get out of development you win the development contract and probably break even on development and then get into production. we've been in the room people have been able to make money for a long time now and we need to shift that and the emphasis and the incentive systems of people get into production sooner so they can start to make money. that is a fundamental change we need. >> one area that he will have had massive cost overruns on are

the systems and radios and actually this country spend $64 billion a year on the systems and 34 billion are at risk all the time, high risk all the time a lot of that is commercially available on the application and i'm involved in all of the auditing in the new systems and everything else going on over there. i just wonder if we could emphasize maybe a little more taken off the shelf products where we can because, you know, having a son-in-law that works i get to see all this from the inside and the waste they are not really efficient organizations either and when they can see one of these contracts i mean it is big to them. >> there's a lot of potential for improvement. when i came in a year ago given the attorney to look at the

business systems and some of our review systems and communications control systems and i've been doing that we've tried to do too much sometimes. we've had too large of programs which are too difficult. they give you a sense of the fact that you can't always just bringing commercial product. i talked with one of our integrators and i said why did we get in so much trouble on a specific program as the human resources program. there were 170,000 compliance requirements unique to the government that had to be put into the software and that's where the cost is going. and that's where we tend to get into trouble. that's where you need to come to us and say how do we get a waiver on some of these compliance costs? i mean, we are in a whole new day on budgets, you all know that and so that's the kind of create the need to come back and say can we have some relief on this? you know, we could save some money. >> we will do that we can.

we are breaking up those jobs into increments that are reasonable and insisting on delivered capability, testable capability before we go on to the next phase. >> so that approach there's a standard complex software program approach that we are implementing it in our business system in the control systems were we tend to have the most difficulty. we are also using more commercial hardware. the navy had a great success with virginia but it's off the shelf, but sweeter emulating that in other places as well. >> thank you mr. chairman. >> thanks for your great work in this area. senator brown. >> thank you mr. chairman. i may have to take a break so i will just continue to march. so, i just want to sit back for a minute i'm going to get you some questions for the record because i just want to make sure we understand everything that's going on with the two engines on 35, 136 and because the numbers

i have you talk about competition, cost savings come everything but then it just doesn't make sense you have one engine that's projected 11.45 billion the others 3.7 billion before taking. i would like it in a reasonable time and will be something like what's the cost, why is it over -- why is the engine that you picked so far over budget and when is it going to be done? what is the projected cost and a detailed explanation aside from a phone call on saturday morning that we can't fire and an engine and i don't really know based on everything we see and hear why and if the competition is good and we are going to save money sometimes you have to pay money to save money and i think the competition in any business breed a better product and more aggressive, that being said

there will be forthcoming and i just wanted to touch base on and just shift gears the acquisition program managers should have increased in authority commensurate with the accountability to make responsible decisions about spending taxpayers' money. is that an accurate statement? degette increased authority to make responsible decisions of spending taxpayer money? to the of a certain amount of authority to spend or not spend? >> in the context of the question work force i'm going to shoot the acquisition work force and the acquisition program managers should have increased authority commensurate with their accountability. >> basically one of the things we are emphasizing is the acquisition chain of command needs to be responsible and accountable for what it does. so people who are indigent and

include the program officers and managers serve as acquisition executives as well. the observation i made coming back in the government is that the authority and responsibility tend to shift away from them to the staff to match and i want those people to be professionals and to be held accountable and responsible for the things they are in charge of. ischemic would if they are in place to reword the effect of program management and ensure these critical positions are filled for the duration of the program lifecycle? those are largely career related for government people. greater responsibility recognition, those sorts of things. >> as you know it responsibly should come accountability i'm presuming you would agree with that. and in the last ten years how many people have been fired for that program management of any? >> i am aware of one individual -- >> one out of how many? >> we have 100 major programs

>> so how many acquisition program managers are there total? >> at any given time 100 major programs. >> so the last ten years -- >> the last one or two years finally know of one that's been fired from its position. >> so, of all the programs running well i wish she could say so, senator, where's the accountability? >> what happens do they get bad reviews, do they not get promotions? where is the accountability and the negative of devotees getting these great promotions based on rewarding efficient and effective program management on the other side i would think that if in fact the programs are not running well that somebody would basically be held accountable and you are saying within the last ten years there's only been one person and i am assuming in the last ten years there has only been one were to. >> there may be others.

i only know what one personally. >> okay, but so i think you know what i'm saying, where is the accountability for the folks that are giving the bad program management? because they're seems to be a heck of a lot of it. >> you raise a good point. i would have to get back. >> let me make a comment about the situation we have on the government with program managers. they rotate not only are they supposed to stay in place for four years, but they actually rotate less than that. partly because we are at war and people are cycling different jobs faster. because people come and go throughout the life cycle of the program often the problems that are basically built into the program had been in a previous tenure so it's not always possible to hold a person now responsible for those before him so that's one of the problems and the longer tenure can help to do that but we do have that

problem and its kind in hand that we rotate officers in particular through these jobs. >> that's great but you're in charge -- are you in charge of all these people? >> i'm not in charge of the military system. estimate how about the acquisition program managers. are you in charge of those? >> the service components coming yes. >> is their somebody that's clinton will get these program managers and say these people aren't doing a good job we are going to take corrective action. >> i will double my number is to people. >> i'd like for the record to know in the last ten years how many program acquisition managers there are in the system and also how many in fact have been disciplined to fight or reduced in pingree or whatever based on their poor performance? because it seems a ton of it is

going on and these hearings it's over and over you just see the same thing we're going to this and that. we had the last year and a gentleman says we are going to fix it and the same thing as the other guy said 20 years earlier we are still in that cycle which is over and over and over. i expect more. i know the president expects more and the taxpayers expect more. so why would think with everything happening we are in deep trouble right now. we need to squeeze out every last piece of the things so we can provide the tools and resources to our men and women fighting and i'm not feeling it right now, mr. chairman, and i don't want to beat a dead horse, but i'm going to submit a bunch of questions for the record because i don't want to embarrass anybody to prove a point. i just want in the answers we can collectively work in a bipartisan manner like we always do to solve these problems because it's broken the way we award contracts is broken and the wheat we hold people to the letter of the contract is

broken, the way we provide bonuses is broken, the way we hold people accountable in their job performance is broken and it's just over and over again and it's unacceptable. i'm going to terminate my questioning because i'm getting a little frustrated and going to submit them for the record, okay? >> fair enough. thank you for all those questions. one thing i said at the beginning before senator brown arrived as the need to change the culture around here. we need to change the culture throughout federal government including the department of defense and change the culture for what i described for the culture of thrift. and i know my colleague thinks i sound a lot like johnny one-note, bill we are going to continue to sound the note. senator coburn is going to try to come back, and if he comes back in the next minute or so i would be happy to recognize him for an additional round of questions. but i just want to kind of reflect, if i could, on a conversation here this

afternoon, and i interested and senator brown and senator pryor, we are interested in solving problems. we are interested in solving problems, and obviously we have a problem here when we see the major references of the cost overrun rise from $42 billion in fiscal year 2000 to $402 million in fiscal 2010 we've got a problem. i think we also have discussed and identified a number of solutions. no silver bullets, but a lot of them may be a lot of silver beebees and one is the culture we talked about. another is the confirmation process, and the idea is we are going to look hard and we would ask for the record help us to identify positions in the acquisition system of the department of defense in each of our service issues. thus to identify positions where we require the president to nominate the senate to confirm where maybe we shouldn't be doing that.

and we will do is consider the discussion in the committee's jurisdiction, armed services to see if we can't find some agreement and may be amended if needed the legislation of senator schumer and senator alexandre introducing with the sponsorship of senator brown and myself and others. the other thing is in terms of cost me to change our culture here. the hold on these positions for the reasons and nothing to do with the quality of the nomination. it's hard enough to get people in the service positions and will fighting positions by you know you have to put up with a hole that might last for a year for no good reason. it's very frustrating. that's part of the culture. we talked about the requirement, and the agency -- it's a problem in the i.t. systems as well, senator coburn refer to that. we have the cost overruns in the i.t. system is because we continue to change the requirement and it's not uncommon here in the department,

so it falls may be in the area of the culture change. dr. burke raised the issue of the current value and something we used to focus on a good deal more than we do now and he suggested we began to get back to that. competition i think we had a good discussion here on competition whether or not we actually have -- are we using it enough? , but to the extent we can make work will be honestly effective. a friend of mine used to say competition is like codliver oil. first of makes you sick that makes you better. and there is a lot of truth to that. he would appreciate me saying that. and the other thing that we talked about was whether or not

there's an early indicator, some kind of early indicator [inaudible] 15% of was 25% trigger and i just want to work with you on helping to identify those. let me just close this down as part of our hearing i want each of you if you will just to make a closing statement, we always ask to make opening statements. dr. burke i would ask you to a closing statement before the second panel. i would like you to reflect on the conversation that we have had here to here we've had to say and what we've had to say. i would like to hear you make some reflections on what we are talking about here and with the idea that we want to solve this problem. we've got to do better than this. we will have $1.5 trillion deficits as far as the eye can see. we can't afford that. dr. burke, a closing thought or

two, please. >> we have covered a lot of territory today, but i would make a few observations. one of the most important things that the congress did was actually made the department conduct milestone reviews early on in the programs. i think it's very important because that is where many of the questions have come up trade between requirements and cost come together. that's going to be a change of culture in the department of defense. door trying to change a culture where requirements have been thrown over to the acquisition community, go buy something that meets these requirements, and now when you are trying to do is a engender conversation, aníbal that conversation between the people that set the requirements and what systems are going to

cost. on the cost community particularly it's challenging because we need tools and we are developing tools to inform the trade space. early on, can we treat requirements and come up with last costly systems that meet the needs in the national security environment for the department of defense. we have done in the few times. we are at the start. mr. kendall mentioned the gcc, the ground combat vehicle in his testimony. i would also refer the committee to the discussions that happened on the ohio class replacement program where some very interesting conversations happened that haven't happened in the department of defense in the past. >> briefly characterize the conversation just briefly. >> the conversations were about

essentially we know we will need a replacement submarine for the ohio class some point in the future, what can the country afford? and what will the characteristics of that submarine look like? >> those are very useful conversations and will affect these charts like the one you're showing ten to 20 years from now. so my point is is it culture change, and the conversations we had are not perfect, but i think we're actually beginning to make some progress, and i would encourage the committee to continue to support us in having forcing us essentially to have those conversations and in a transparent environment where we can see requirements and costs treating together thank you. >> mr. kendall?

>> i agree with your comments, mr. chairman and mr. burke's also. he's going to talk about people and extensively in the reports and in the industry it's their capability to do the work and the incentive systems in place to motivate them. at the end of the day this is about professionals who understand how to do very difficult jobs being given the tools and the opportunity responsible for executing those jobs. we are working hard to strengthen the acquisition work force and we have support on this. the increasing the size and working very hard to increase the capability of the work force and we need to provide incentives to industry so that it brings back the engineering strength that i once had. we do that through the motivation of the profit primarily and we reward better behavior and don't reward poor behavior. it is a long, long journey to do that. improving the culture of the work force and the capacity of the work force takes a long

time. dr. carter and i both referred to it is our number one program to do that. that is central. to come back to the point about confirmations. the senate has no responsibility here. obviously it's the time of the process that is the problem whether confirmed or not to get people into office quickly that's what makes the difference. and to make sure they are professionals, that the do know what they're doing these are not the types of jobs people can do who do not have a background that's relevant. so a technical background and a fair amount of experience in the defense system. i think that summarizes for me. >> one more quick question. each of you can take a shot at this. maybe i would ask you to repeat yourself, one or two things, again, one or two things we ought to be doing on the legislative side to make sure the members don't think we go that way and keep coming down and one or two things may be the most important thing on the executive branch particularly in

the part of defense. you talked about this, but just one or two things for us on this side. one or two things for those of you who sit on a given site. >> helping us get good people and sooner; helping reward people better. the government, as mentioned, doesn't have a good system to reward people for the performance we need. we don't have accountability, we don't have the kind of salary incentives people have, it's hard to promote people in government outside the system. it's very cumbersome and tedious. it took me forever to bring one senior executive to my staff when i was trying to hire someone with technical ability it took a year almost. giving flexibility in terms of our own people to edify the best people and bring them and would be extremely helpful. >> thanks for that. >> i think one of the most important things you can do is

actually -- and the senate has been very helpful in terms of adjusting some of the changes that were made in the weapons system acquisition report format -- there have been some changes. we've actually been trying to implement the act as a was passed. we had some suggestions on how to improve things and make it actually work. and i hope we can continue the dialogue over the course of the next few years because there were some important changes enacted into legislation even this year that help us quite a bit. >> mr. kendall? >> if i can take you back on that, we have the tools. we have to sharpen the tools and use them but it's our responsibility. the things you've done have given us the things we need and now it's up to us. >> well, in terms of who's to blame for this, and that is certainly the question senator brown had, i think none of us escape the plan, and if we are

going to turn this around all of us have a role to play and one of the rules as you know is to do consistent extensive oversight both coming and we do that religiously on the subcommittee and we will continue to do that. we are doing is constructive. we want to get our better results. gentlemen, thanks so much again for joining us today. we will have follow-up questions. how long do they have to submit -- and the next two weeks people can still submit questions and we would ask you to respond promptly. thank you so much for joining today in this dialogue. >> thank you. >> thank you very much. and with that, we will welcome our second panel.

[inaudible conversations] [inaudible conversations] >> gentlemen, welcome. john, nice to see you.

welcome. michael sullivan. is it moshe? moshe schwartz. let me provide an introduction. we are here for the entire first panel? okay. how did they do? i think they did pretty well. up on the second panel is john young, no stranger here. it's nice to see all of you again, but especially john. he served as the undersecretary defense for acquisition technology and logistics until april, 2009. now understand he's hanging his hat over the board of regents at the potomac institute for policy studies for think was the senior fellow, senior fellow and member of the board. during his career, mr. young has held numerous positions in the department of defense acquisition community including director of defense research and engineering in the office of secretary and assistant

secretary of the navy for research and development and acquisition. mr. young, again, no stranger to capitol hill having served ten years as a staff member of the defense subcommittee of the senate appropriations committee. who were the chairs the worked for? >> [inaudible] >> i worked for senator stevens and sandra inouye at different times, mr. turney. >> and sadr inouye is still with us and going strong. during your tenure at the department of defense mr. yondah oversaw among other things resistant and bush, protected vehicle program protection known as mrap and served the virginia class multi-year contract. mr. young will share the weapons system chief acquisition officer for the u.s. navy and for all of the department of defense. he is remembered finally in our subcommittee for the great work

that he did on the's modernization. i want to make sure we got the kind of value out of the c-5's, one of which sat i think 41 world records and the flight from the dover air force base to turkey last year. we just got the fourth one over and the reviews are getting quite good. thanks for that as well. the next witness is michael sullivan from the government accountability office. who was your comptroller general and what's his name? >> jean dodaro. >> when he comes to testify he doesn't use notes, just write off the top with his head all of the testimony, all of his answers. is that part of the new policy? >> i don't have quite those talents, that's why he is where he is. >> there's two people i've seen do that, one is john roberts,

chief justice of the supreme court testified before us for days and never use the note. and then gene dodaro. >> you're current leader actor for the acquisition sourcing management at the gao and worked there for 25 years, is that possible? >> yes it is. >> mr. sullivan -- anybody hear from your team? raise your hand, please. thank you. mr. sullivan's team is responsible for examining the effectiveness of the department of defense acquisition per c.a.r.e. practices and meeting of the fulfillment objectives and requirements as i think mr. sullivan the second time testified before this subcommittee on the cost overrun in 2008 testified about the gao annual weapons system to show the major weapons system cost overrun amounted to 2,095.

and mr. young was here the same hearing. so before my office mr. sullivan trevor's law analyzed the weapons system that have reached because the spiraled out of control and mr. sullivan is testimony will shed some light on these and we think you and your team for being here today and for your preparation for the hearing. last but not least, moshe schwartz. has anybody called you mosey? he's at the congressional research service and has written numerous reports for the congress on various issues relating to the defense acquisitions contacting contingency operations. before joining, mr. schwartz served as the senior analyst at the gao where he worked on a variety of acquisition issues. did you ever work together? >> [inaudible] >> sorry, excellent training. >> all right, good. mr. schwartz will outline the

first estimate weapons system cost and characteristics of the acquisition programs that can lead to growth and potential opportunities to strengthen to more effectively prevent against future cost overrun, and we appreciate what you did then and we appreciate what you're doing now. .. so please proceed.

make sure you're on. >> thank you very much, mr. chairman. it is a privilege to get to test the idea. i guess appreciate your help. i wanted to highlight a few brief principles and know several tools that are fundamental to the defense acquisition. first is a very today, people run programs. in the goldwater-nichols legislation, i believe it is signed acquisition responsibility waiting for the president and service acquisitions are critical positions and these individuals improving. i wrote a memo to secretary gates. acquisition executives must serve as the first sign of

defense with overstated requirements, understated budgets, unrealistic schedules and mature technology. every unaffordable program service cannot be adjudicated for the president. it is harmful for the defense acquisition enterprise to delay filling positions with people. second, president acquisition team must enable defense acquisition team working for him to make thousands of necessary, timely and required her decisions every day. military corporate officers in industry or can't delay seeking for legitimate reasons. but to tough job is executing the program. acquisition executives must support the managers who say no. the military promotion system will reward the requirements officer who push for more requirements than punishing military acquisition program

manager who resist making costly changes to a program. they are cautious on issues. the acquisition team to support and empower managers to make responsible decisions. people execute programs again, but on paper. it's not possible to write a universally procedure that will deliver successful results. they made hard decisions that train people make are the current volume of legislation of adding months in higher costs at a time when our adversaries are doing things faster and cheaper. we should and program managers time and energy for limited results. the defense acquisition can tell you there are many valid date

examples of people were freed from the constraints of the normal process. frequent this is in the program serena. for if we need to increase acquisition program managers commensurate the mother donna theme. people without accountability chop documents, cut budgets, increased requirement imposed new certification standards and everyone wants to know why a program manager is late and over budget. finally, there's several tools that can be used out. the department must use competitive prototyping to evaluate validity of requirements to the church technology with smaller teams of lower-cost to inform our estimates final development and assist in the refinement of how to use things and access new companies. i used to tell program managers

the cost of a program is done to date the contract is signed. the only question is whether they know the cost. it's very difficult to estimate the cost and schedule based on paper. appropriate prototyping. the dod needs prototypes to attract talented scientists and engineers to work on defense programs and inspire young people to pursue collaborative processes to make timely decisions and include all stakeholders to achieve alignment. the acquisition budget and requirements. the standard process was used in the passive programs like the f-16, low-cost fighter and institute of practice and dod. i use a similar collaborative process that should mention, mr. chairman. the dod biometrics program the

maritime aircraft and other programs. with the two joint analysis team to review portfolios of programs which cut across her face. these are difficult decisions any need to achieve consensus with multiple stakeholders. the department often use blue-ribbon panels are independent teams to assess problems. i thought to make this a regular passes to defend support teams which the two harness outside experts to review program development plans and review program progress before we have problems. est and support teams can offset the department's inability to higher government personnel to manage programs. further the congress of institute of technology which are of great value, but is no value to spend tax dollars and determine the technologies in the chair. assessments are necessary to drive investment in the maturation of those

technologies. these are just a few tools such a believer fundamental to the management of complex programs. the tools must be employed by people with adequate authority. there are programs for successfully delivered capability. the real key can with members and management support, decision-making authority, realistic requirements, adequate budgets. under these conditions, program managers are colorfully spend tax dollars and delivered capability to men and women you see the nation. i appreciate the chance to testify and look forward to your questions. >> things for the excellent testimony. >> came here today to discuss or comment on mccurdy process and other tools for acquisition outcomes. don't make a brief oral statement. i've submitted a written statement for the record. let me begin by summarizing our findings on non-mccurdy very

quickly. since 1997, there've been 74 breaches from 47 major acquisitions. 18 of those programs have had multiple breaches, more than one. seven it had three and they have had four. the department plans to engineering schedule and quantity changes and revised cost estimates as factors most frequently responsible for the breaches on the program. we have questions about the meaning and validity of some of these that are some have our own ideas about potentially better tools, which we can perhaps get into during q&a. the department has also established a tripwire process he believes will provide early morning for potential breaches and i believe he heard a little bit about that from the first panel. we believe that what they're doing but the process has merit and they should think about institutionalizing that.

the department also plans to propose new legislation that would reduce some statutory requirements that were added in 2009 for cases where there is evidence that feature in one breach was caused by quantity changes and not necessarily by poor performance. we believe this proposal deserves further study as well. >> poor performance by the contractor? >> by the government in the contract your. cost schedule performance. the night mr. chairman, let me conclude with a few words about the current process, what we believe the key tools are and how we think the department is doing with its implementation of reform up until now. the current nunn-mccurdy process is an oversight tool and not particularly designed for cost management because it is a report on what is already gone wrong. and i believe you've got a little bit of that from the first panel as well.

the department currently uses its annual selected acquisition reports to track, program, cost, schedule and performance. the supports ip traceroute crosses at the breaches that they stated above. most of the causes we believe are poorly analyzed or mis- categorized. for example, selected acquisition report typically sites main fact is that i responsible for breaches. at least two of those come and schedule issues and revised estimates are not causal in nature. the usually depend on some other root cause taking place before they get out of whack. they reflect the impact of other factors. in addition, when it's generally recognized that requirement changes have been frequently during the program in earnest in estimate of the cost control. i'm talking about requirements. the department shows this fact or has six, of the nine factors in terms of frequency of

problems. we believe there are other key tools for improving outcomes and they continue to be things that we've heard a lot about from the first panel. i think mr. young referred to some. we look at them as robust systems, engineering analysis, early in the program and often clear and well-defined requirements, cost estimates based on systems engineering knowledge, a robust science and technology base to the church technologies before they get to an acquisition program in an incremental knowledge-based approach to delivering weapons were quickly. in other words, perhaps a shorter development time. her time seko managers can shoot for. our written statement has a picture of the current process and that where we think those tools would fit into about and i'd be happy to walk you through it during. may. the department has been working to implement any tools you

mentioned above us and implements its own revised policies and the statutory criteria that was mandated under the weapon system acquisition reform act and some other legislation passed in the last couple of years. it has made some progress. as you know, our annual assessment of major weapons systems was issued today and i believe the $402 billion number there was reported and not. in that report, we do make quite a few observations about the progress the department has made moving towards a more knowledge-based process and trying to get more efficiencies into the programs. however it remains clear that a lot more must be done to achieve a reasonable level of cost efficiency. for example, due to budgetary constraints, department is struggling to build a robust systems engineering and developmental task work for us because pressure will remain on

budgets for the foreseeable future. the department must remain diligent in trying to establish work for us. if you spoke eloquently about that in the congress must remain social and in trying to control these costs. mr. chairman, that concludes my statement and i'd be happy to answer questions. >> thanks very much are your work that preceded that, too. mr. schwartz, please. >> thank you, mr. chairman for the opportunity to discuss oppositions. over the years for major defense programs haven't played by a number of people here are pretty. o-oscar the presence of systemic and widespread the time and again the department of defense has resorted to terminating or substantially curtailing many programs in which billions of dollars that are even invested. in the 1980s, number of weapons systems have germanic kosovars but the defense budget millions of dollars.

the last humans in 1,981,547,000,000,000 increase to 47 major weapons systems. it is again the fax.at the nunn-mccurdy act was it. under nunn-mccurdy, as has been discussed, dod must notify congress of cost growth exceeds a threshold. the act was intended to inform congress as to whether or not the acquisition process is working effectively. it was also intended to publicly expose cost overruns in the belief that such exposure would compel a dod to oscar. despite nunn-mccurdy and other reform efforts, cost growth continues to plague many programs. some of the work affects my reflected. in response, congress has amended nunn-mccurdy numerous times, transforming it from the merely reporting systems into more of a robust information gathering and management. these changes were fueled in

part by concerns that programs with chronic cost growth and schedule delays were not being terminated and congress was not receiving useful information on causes of cost overruns. many experts have pointed -- many experts have pointed to poor cost estimating that the primary cause of cost growth and that is, the number times already. program advocates have strong incentives to underestimate the program will cost. contractors use low estimates to win contracts. program representatives often these lowest estimate to argue for their system over competing systems. once established, unrealistically low estimates make future cost growth almost inevitable. in the early 70s, congress and dod tried number of initiatives to improve cost growth and overoptimistic cost estimates. most recently in 2009, the office of the director of cost assessment and program evaluation was established in the weapons acquisition reform

act to help develop more accurate and cost estimates. given how recently the new office of cost assessment was established, only time will tell whether the director of cost assessment and program evaluation will be more effective than past efforts to make you the cost estimates for real estate. they include unstable funding and the acquisition progress, requirements and poorer contract management. analysts have argued that it simply takes too long to develop and field weapons systems. 10 to 20 or programs indicate the program is seeking a design capabilities are pursuing technologies not yet achievable. as a result, some have suggested that limits the cinema time it takes to develop and field systems. nunn-mccurdy does not apply to operation support costs, which

often account for two thirds or more of the system's total lifecycle cost because many decisions that determine operation and support costs are made early in the development process. before the costs are incurred, operation support costs don't always receive opposition paths. requiring dod to report cost growth in opposition and support might give congress a better understanding of the long-term cost of weapons systems. another option for congress could be to consider shortening the time dod has to notify congress of cost growth and certified programs. condensing reporting requirements could give congress more of an opportunity to win earlier in the future of troubled programs. when nunn-mccurdy was first enacted, no more than 97 days passed in the end of the quarter in which it occurred to any program to certify to congress. today could take more than 195 days. congress took an approach similar to this in the intelligence authorization act

for fist year 2010, which applied a nunn-mccurdy require me to intelligence acquisition programs but in fact shorten the time required to certify program to congress. mr. chairman, when weapons systems in the costing far more than originally anticipated, and the scramble to put budget shortfalls undermine long-term strategic landing. systemic cost growth jeopardizes the ability of the united states to execute a long-term coherent and stable strategy that will give u.s. armed forces weapons they need to meet teacher threats. concludes my testimony. thank you for the opportunity to appear and i will respond to any questions. >> thank you. i think i want to return to a theme that we have touched upon in a number of previous hearings involving different government programs. and the theme is that of

realigning our incentives. and all use an example. we held hearings here for the last month or so in something called the tuition assistance program for active duty military personnel, where they can be reimbursed for a portion of their postsecondary education for active duty. and we have a situation where active-duty personnel at dover air force base can go to wifely college rather schools in the area. and take postsecondary courses. they can take courses on debates. some universities come to the base or they can use distance learning and remotely take courses. and some of the for-profits, some of the nonprofit universities do a great job.

they do a great job with the taxpayers money. in many cases, pell grants with its shiite, tuition assistance payment do a terrific job. some of them do not. one of the things that has become apparent to us, at least in that program, for me to realign incentives so we are incentivizing the university, whether it's for profit, whether it's nonprofit, whether it's private, we need to realign the way of rewarding for quality, not quantity every word students who complete their coursework or college universities that help students complete coursework. we reward colleges for making sure that students complete certificate requirements and actually get policemen and jumps or they can pay off the loans were going to the reductive

ways. we're focused they are and how to realign. talk with us here today about how we've been trained to better align incentives and the acquisition field. maybe some changes we have maybe you're aware of additional changes we might be to make in order to arrive at the kind of behavior taxpayers need and deserve. >> had welcomed the chance to comment on that. during my tenure, i talked a lot about changing the profit they you heard about in the earlier panel that are worthy to be object given set of subjective and i'll tie that to something i said. program managers need tend to focus on programs that i think we would all like to see, as secretary kendall noted in a family that that could be

applied because the work is focused. within the system i want the program manager responsible and accountable to taxpayers to decide which pieces of work or on the critical path and when a company sees and execute piece of work at least the milestone. you pay them. these are bigger pieces of money, said thursday's decision. instead, a lot of cases have a lot of view christ's & co. tell very good stories and they have done good work. but that's not a good basis for deciding whether to give somebody a beat% or 90% or 95%, results in the critical path to success is what is needed. backend loading fees so that you have a lot of work accomplished. but to do some joint strike fighter. this is a tough decision with

industry. that's why secretary gates has a pool of fee on the back end of the program to use to incentivize programs. i feel strongly we should move away from subjective fees and more to objective-c, designating fee against event for a better program planning, and it's up to better earned value management. >> mr. sullivan. >> i would first comment right now the incentives as we've discussed here today or pummels backwards, when you think about vibrant competitive markets outside of the defendant industrial base, we have world-class firms that are in some ways outpacing the defense industry in terms of innovation and bringing things to market very quickly. they are very, very incentivize. and when incentivizes them if they don't make their money and to make it into production. so the one set of incentives

would have to do with how can you establish when asked do with defining requirements that they are doable and they can kind of, you know, encourage competition. so how can you establish development programs were fixed-price development contracts are necessarily good idea. but how do you incentivize a contract to to be allowed to develop a high-quality product as quickly as possible so that they can get to production to make their money. and competition has a lot to do with that. so i think there would be, how can you compete development more? have you do prototyping? a lot of the discussion on the joint strike fighter engine i believe the lcs navy ship is another one where they'd try to induce competition. i know that on the -- i believe it's the joint light tactical

vehicle, which i think mr. young had a lot to do with infusing a lot more competition into that program, and they're going to be kind of aircraft it program. and you know, the html stop them and said no, go back out and do prototyping and let's get some petition going. so the competition is very important. just quickly, i would say, you know, shorter programs -- really shorter development programs, when he started programs and let's say take 15 years to develop the f-22 or joint pain strader of the next generation. i think he set up a program manager that is a recipe for cost and schedule growth. so shorter programs really, but we do that is give more incremental, much as the private sector does. the private sector may put a

clean sheet of paper. you can take a lot of things and put out a product that the requirements are established and doable within understand you continue to improve that, but she deliver quickly the basic product. finally, i think a more vibrant base for the government and we've argued in the past that the smt budget could probably be increased. >> i'm sorry, do what? >> the science and technology. for the department of defense. i'm sorry. we've tried to analyze it a little bit and it seems to us that for every dollar you would put into developing more technology, which right now is probably maybe 3% of the defense budget. you'd probably save a lot of money and product development because you'd have new technologies that were more

mature as they have product development. so a favorite type raises something that would enterprise a lot of contractors in the defense industry. >> all right, thanks. mr. schwartz, realigning things. we aligning incentives. >> guest: my colleague spoke a lot about incentivizing. >> sometimes repetition is a good thing. >> we definitely echoes similar sentiments as far as timing certain developments or how long it takes to field the flag raised also the quadrennial defense review which recommended five to seven years for certain development to include development and initial deployment for that reason. i also want to talk about incentivizing the workforce within the government as well and mr. young testified before an mention goldwater-nichols.

goldwater-nichols is an excellent example of how the congress helped incentivize the department of defense department of defense by incentivizing joint assignment as a useful tool for promotion at the department of defense and that was one example. when you have a program like to be 22, which has approximately 20 years development cycle, you've had five, possibly 10 program managers on that. you're different people people to set requirements and different people who do cost estimating. who is responsible? the people that do the requirements? people that do a cost estimate for the five to 10 program managers that you have. it's hard to incentivize when he don't know who to incentivize or how lengthier there. i'll just give another example. the joint strike fighter is a joint program as a result of the stack between services every two years, which can result in a different program manager every two years and possibly different acquisition roles depending on the service. two of the questions are who

were you incentivizing and how do you do that? that may be another issue to look at as far as infantilization. >> i'm going to ask the panel a question. i think i know the answers. i'll be very brief. economic questions on weapons system cost overruns growing? as a follow-up to department of defense acquisition becomes more or less efficient? center, recommitting more for acquisition cost him them their marseille five years ago? those three questions. weapon systems caused, dod's acquisition system becoming more or less efficient? america mean more to acquisition costs over five years ago? mr. schwartz, do you want to leave a soft? >> sure.