today in the amendment amendment it hasn't within a thousand companies that manufacture of components and assistance for the use in the heavy-duty echo meant aftermarket industries. our members provide more than 734,000 direct jobs nationwide making of the motor vehicle industry the largest employment manufacturing jobs nationwide. ..

a complete copy of this that has been circulated to all the committee members. the study focused on current technologies that provide immediate safety benefits and form the pathway to a partially or fully autonomous vehicle plate that converts unlimited traffic fatalities. however, this study did find that a suite of technologies that are currently available have the potential to prevent 30% of all crashes nationwide, a total of 10,000 lives saved every year. today, however, relatively few vehicles on the road have the technology and the penetration of mark is only growing at about 5% annually. since the vast majority of accidents that he is are caused by driver error, the lack of

adoption of these technologies within the u.s. fleet is a significant missed opportunity. i'd like to take a minute and discuss what exactly what it is. it can be grouped into three broad categories. those that ate the driver, those that when the driver and those that can assist the driver in performing certain basic driving functions. eight features include visual aids such as night vision, we are mounted cameras that had the drivers revision and adaptive lighting and surrounding systems. features alert the driver of potential dangers come example clinton partisans, forward collision warning, lane departure warning which typically activate a deeper cause of the driver's seat to vibrate when a vehicle drifts out of its lane. of the warning systems include blind spot and rear cross traffic detectors and driver monitoring systems. assistant features actually engaged steering, acceleration

and braking systems doesn't need to ensure for safe operations. such features include forward collision this is, adaptive cruise control, self parking and lane keeping assist which actively returns the vehicle to its original plain when it is in danger of drifting from it. there's also pedestrian avoidance which was the driver of an impending collision with a pedestrian and some of us is the drive with steering and braking to avoid that collision. better consumer information and education as well as market incentives will increase the adoption of the cost of these technologies and mema supports the efforts of this committee to promote adas technologies and advanced product for fuel economy and greenhouse gas emissions. we do have the following comment on the committee draft. and title v section 501 the buyers must be specifically included in the advanced automotive technology advisory

committee. we believe 35% of our threshold specified privilege of the technology on the label is too high. collision avoidance systems are currently available and is there any vehicles they must be listed in the rating as part of all new vehicle labels. section 502, mema supports awarding credits for defense technologies for fuel efficiency and greenhouse gas emissions. the use of these technologies will result in better traffic flow, less fuel consumed and fewer vehicle emissions. however, there should not be a different in the credit for vehicles with a least three advanced safety technology and vehicles with one connected vehicle technology. mema thanks the committee on its foresight to provide greater consumer acceptance of adas kicked out of. were committed to work with you to establish new and innovative ways to increase the adoption of these life-saving technologies and address other critical issues. thank you to. >> that chair thanks the

witness. mr. dotson, you are right this for five minutes. >> thank you, chairman burgess, ranking member schakowsky and members of the subcommittee think the deputy to testify. i am vice president for energy policy at the center for american progress, nonprofit think tank dedicated to improving the lives of americans to progressive ideas and actions. the auto manufacturing she touches the lives of all of us. many americans rely on the cars and trucks to get to work come to do the jobs come and put the families of the. for these reasons the industry is regulated a number of important ways. to minimize the risk of accidents, our dependence on oil and to prevent pollution from choking our communities. the result is today's vehicles have attributes once believed to be incompatible. they are safer, more efficient and less polluting. today i will focus on section 502 and 503 of the discussion draft. i would like to highlight the five important reasons that these sections reflect. first, a discussion draft presents a false choice but

asking members of congress who teaches vehicle safety over pollution reduction. that is an unnecessary trade off. the fact is we need both safer vehicles and cleaner cars and trucks and there's a reason the mac and people can't have both. second, there's not a sound analytic basis for the proposal. the bill would encourage automakers to use of the second by giving them pollution credits for every car they manufacture with crash avoidance technology like automatic emergency braking or technology that helps with congestion mitigation. unfortunately there is insufficient data to support these credits. in 2012 environmental protection agency and the department of transportation examined this issue. the automaker dimer argued the agency should provide pollution credits for crash avoidance technology. the agency said credits children with technologies provide a real world and prevent the fuel economy and pollution reduction. the improvements must be verifiable.

the process by which the granite should be transferred to the agencies determined none of these factors were satisfied for technologies used for crash avoidance. consulate agencies concluded it has been crash avoidance systems is best left to knit suspects is less of its vehicle safety authority. the discussion draft would reverse this conclusion. under this proposal section 502 provides a quick of three or more grams of carbon dioxide per mile to a vehicle that is equipped with an advanced vehicle technology. the bill offers a credit of six or more grams of carbon dioxide per mile to any vehicle that is quick with connected vehicle technology. three grams may not sound like a lot but is many times more than daimler argued was wanted for this technology in 2012. although epa still in the process of determine the extent of volkswagen's violations, and all the estimates the excess pollution are noncompliant d.w. vehicle is less than three grams per mile.

effect is three grams per mile for every mile every day for every year for every car ads up to substantial pollution. third the discussion draft would allow more pollution for using technology that going to be used even without this additional incentive. for instance, just last month 10 major vehicle manufacturers publicly committed to making automatic emergency braking a standard feature in all new vehicles. it makes no sense to give these companies an incentive for something they intend to do anyway. fourth, the liberals could buy this bill could only grow bigger over time. section 503 a would authorize the secretary of transportation to select any technology and toward the technology as many pollution credits as mr. ducote incentivize its adoption. there is no upper bound limit on how many credits may be awarded under this language. i really bill pascrell we drafted would curb the role of state and innovating carbon pollution reductions at the state level.

as we've seen time and again the states are the laboratories of innovation. evidence should countless successes and there's no basis for stripping them of their important role. we should remember it was the state of california to lead the way in detecting the vwp nation's scandal. mr. chairman, ranking member schakowsky and members of the subcommittee it has not been easy for the united states to establish a regulatory structure that is transparent, data driven, technology-based and effective the i urge you to reject for new special interest loopholes and maintain our current records system. the american people expect a system that cuts pollution and increases safety. let's not sacrifice one for the other. i would be happy to take any questions you have. >> the gentleman yield back. ms. claybrook. >> thank you very much, mr. chairman and ranking member schakowsky, and members of the subcommittee. i am the consumer chair, coach

advocate for advocates for highway and auto safety and former administrator of nhtsa. i appreciate the opportunity to testify before you on such an important issue, the safety of our families and friends on our nation's roads and highways. let me show you with you some important statistics. 33,000 deaths and over 2 million horrible injuries annually in motor vehicle crashes. 801 manufacturer recalls and service campaigns of more than 63 main vehicles in 2014. 613 recalls offered in 2015 involving 40 million vehicles. for these recalls a lease 200 people innocently killed and hundreds injured as automakers sold cars they knew it safety defects. house and senate hearings, 10 over the last two years on faulty gene ignition switches and exploding airbags where i countless hours of testimony and indignation expressed by committee members. over 2 billion criminal justice,

that is department of justice and civil fines against recalls since 2010 because of the nhtsa enforcement and justice enforcement. total nhtsa safety budget a measly $130 million a year. a measly 130 million. 11,000 members sitting behind me today and millions of americans expect their legislature to enact sensible solutions for serious safety problems. one opportunity to get it right. congressional hearings, media reports deputy inspector general reports uncovered industry misconduct and nhtsa missteps put millions at risk. the outstanding problems that need legislation to address them or a chronically underfunded and understaffed agency responsible for regulating giant corporations and ensuring public safety. a lack of civil, adequate civil and criminal penalties to deter automakers from putting profits

before public safety. a predisposition by nhtsa to withhold information from consumers about vehicle safety problems. a loophole that allows consumers to drive off the lot of the rental car company or used car dealer with a vehicle under rico not repaired. and agency powerlessness to take swift action. the draft bill will set a safety agenda for the agency for the next six years. at a time when motor vehicle deaths and injuries are climbing, stronger safety cameras are needed. problems have been exposed and new challenges face the agency. what does this bill to to to advance the agency with a big financial tools fulfill its safety mission? very little. instead it seriously dilutes critical vehicle emission controls and waste taxpayer dollars by turning it into the

national highway traffic steadyy administration. the bilderberg precious government resources to conduct at least 1 16 burdensome studies any ports and with the auto industry in the driver's seat on vehicle safety at the expense of public safety. under the draft the automakers can barter and trade off field economy and safety when we know that technologies exist to build safe, fuel-efficient, and clean cars. other provisions of the lay public notification of recalls until nhtsa is in receipt of all the vehicle identification numbers subject to the recall, nhtsa is required to draft its notice of a safety defect in coordination with the manufacture, something that a regulator should not be limited to. the bill provides an exemption from motor vehicle safety standard for replicate and other vehicles intended for testing and evaluation and these give always are unnecessary because nhtsa hazard records are processed to do this in the law. furthermore the draft bill provides a breathtaking double standard for manufacturers at the expense of consumers.

in section or 06, mandates that industry failure to follow dot politick outlined cannot be used as evidence in a civil action. our industry may use compliance with the same guidelines to show compliance with such regulations in the same civil action. the real intention of these and other provisions who are not to advance safety but to thwart nhtsa from regulating industry and to keeping, and keep the public out. album solving proposals to the problems identified by the hearings. that you've heard again and again are found in h.r. 1181 that has been introduced by ranking member frank pallone and subcommittee ranking member schakowsky. it's a comprehensive approach that includes tougher penalties, imminent hazard authority, proved transparency, pedestrian safety measures, prohibitions on drinking vehicles are selling used cars under recall, judicial review of final agency actions

on recalls, and revolving door protections and in overdue direction to the agency to address the tragedies of unattended children left behind in a vehicle in some 200 of them died a year. unless this committee asked to pass meaningful legislation that will prevent illegal and immoral behavior by the auto industry, the string of scandals will continue. firestone tires, toyota said acceleration, gm faulty switches, exploiting airbags and no cheating vw diesels. there are no credible excuses for delaying any longer the adoption of consumer protections increased penalties for corporate misbehavior, strengthening nhtsa's authority and resources and improve vehicle safety standards that can really save lives and reduce injuries and prevent fraud. thank you for the opportunity. >> the gentlelady yield specter mr. welch, your recognize for five minutes. >> mr. chairman, ranking member schakowsky, my name is peter

welch. not to be confused with anybody else. under president national automobile dealers association. n.a.b. is a nationwide trade association that represents the interest of over 16,000 franchise -- nadh -- new car and truck dealers throughout the country. the draft bill before today contains a number of provisions n.a.d.a. supports including several provisions to improve recall notification and completion rates. dealers support 100% recall completion rate and again recommend the subcommittee for its efforts help us achieve that goal. the recall system congress enacted depends on your car does to fix the millions of vehicles that are now under recall. last year alone our members performed 59 million warranty and recall repairs and, unfortunately, we are set to break that record again today with the burgeoning number of recalls that are being issued. for the owners of recall the vehicles it is their local

dealer who remedies the defect or nonconformist at no charge to the owner. when owners receive a recall notice but a recall notice by failed acme dealers initiative to contact the customers to schedule a service appointment. one of our texas dealer members found that sending bright pink postcard from an owners that their vehicles were under recall is an effective way to get those cars into the service been given fix. the overall recall completion rate is around 75% which means that lots of room for improvement. back ordered repair parts and recall notices that are disregarded by consumers or the teeming reasons that the completion rate lack. is not in use for dealer to wait 60 days or more for a back ordered repair part in some instances repair parts can be unavailable for over a given item of any dealer who isn't eager to remedy a recall vehicle and make a customer happy but they need parts to do that. inaction by consumers after receiving a recall notice also hinders completion rates. one idea n.a.d.a. suggested the

nhtsa at its april recall workshop was a nhtsa to launch a media campaign targeted to the demographic groups that are less likely to respond to recall notices. we ask the subcommittee to consider that. improving nhtsa's recall database and look up to is another way to boast the recall completion rate. the current system was designed for single vehicle lookups by consumers. it was not designed for commercial use. depending on its size and dealer can have dozens to thousands of used vehicles in its inventory. this bill should include a provision directing nhtsa to upgrade its recall database to allow dealerships to automatically check on a daily basis which used vehicles in their inventory are under open recall. a tool that is searchable, automated and can be batched multiple requests is critical to identifying open recall vehicles in a dealers inventory and getting them fixed. we support section 203 which

would provide notification by state dmv of a recall at the time of registration renewal. it's all about notification and awareness and we think this is a good idea to help increase the remedy rid. section 205 would extend the privilege cards could be recalled from 10 to 15 years with the average vehicle on the road today at 1125 years, this also makes sense. in conclusion congress must ensure any recall policy income tax is a data-driven. the most successful hybrid safety policies such as connect the primary safety belt laws and anti-drug driving measures were all based on hard data and now our proven countermeasure. we commend the subcommittee for its hard work and stand ready to work with you on strong safety measures that will protect america's driving public. thank you and i look forward to answering any questions. >> mr. wilson, you are recognized for five minutes. >> chairman burgess, ranking member schakowsky, members of the subcommittee thank you for

the opportunity to testify. i am michael wilson, ceo of the automotive recyclers association, dedicated efficient removal and reutilization of original equipment automotive parts and a proper recycling of inoperable vehicles. we represent the interests of over 4000 automotive recycling facilities who each day to sell over 500,000 recycled parts directly to consumers, mechanical shops, collision repair shops and automobile dealers. these parts are designed by automakers and built to meet the requirements for fit, finish, durability, reliability and safety. these parts are often we utilized in repair and service of vehicles and these replacement parts continue to operate as they were originally intended in terms of form, function, performance and safety. i urge congress to language to the subcommittee's draft legislation that would provide our industry access to critical original equipment parts of data

on all motor vehicles. the critical data includes part numbers, names and descriptions tied to each vehicle, specific a vehicle identification number the straightforward reason for this information is necessary is because manufacturers and dealers in the automotive industry speak to different parts limited than those in the outer recycling community. automakers and dealers utilize the original equipment part numbers while automotive recyclers have historically utilized interchangeably numbers. the interchange enables recyclers if you choose to identify and find parts they need to keep their vehicles running and in original condition. the interchange indexes millions of parts in their interchangeable equivalents from other vehicles. for example, a specific part that is in a ford f-150 is also interchangeable with the same part in a ford expedition, and mercury mountaineer or a lincoln navigator. it's only through the utilization of both original

equipment part numbers and the interchange part number that automotive manufacturers and recyclers can come together to enhance overall motor vehicle safety, help improve recall remedy rates and comply with the federal recall the remedy statute for used equipment enacted 15 years ago in the tread act. for supply to address the challenge of recyclers faced in identifying automakers non-remedied parts in the current ephedra. regrettably the tread act and rulemaking should not compel the automakers to provide the parts did making it impossible for use for replacement parts stay close to comply with the federal statute. automakers are aware the lifecycle of the parts can go beyond the initial utilization in a motor vehicle from the manufacture. this recognition was underscored in august 2014 when general motors contracted with a third party supplier to coordinate the purchase and return of certain used parts which are subject to product safety technicians which

recall from recycling facilities. and a third party knows to recycling facilities, the correspondence and not only included to make model and year of the vehicle subject to the recall, but also details the specific gene part and the ac delco service part numbers which the notice stayed are provided so they can identify the parts being recall. the notice includes the interchange number for ignition switches. clearly jim understand that a specific part number are about to correctly and efficiently locate the effect of parts. in nhtsa's current site come individuals our compass is a significant number of vehicles were parked do not have the multiple vin lookup capability necessary, to necessary information at a severely limited to objections to allowing electronic integration of important data to enhance safety. just as problematic is that data provided by the automakers for safercar.gov is many times a

recall narrative rather than actual part numbers, names or descriptions making it all but impossible to identify specific recall parts electronically. it is central to recyclers built to identify those parts associated with vin which have been recalled and the remedy before vehicles are potentially purchased at auction or a quiet from the general public. is automakers provide access to parts of data will allow the recycling committee comply under the tread act and cannot protect our nation's drivers from the manufactured defective parts. while some makers agency today for providing original equipment data for their defective parts, it is important to understand this is not enough. the number of parts in today's marketplace increasing at alarming rates. some 100 million vehicles have been recalled since the beginning of 2014. 'tis recall campaign screen multiple challenges for my members who provide safe and cory recycled parts to the market place. also consider the original

equipment parts that automotive recyclers sell today address subject to recall at some future date. if they don't have access to all the original equipment parts of data there is a specific part number to track it going forward if there's a subsequent recall on that part. most agree the private sector has developed over can develop highly effective solutions. however, these systems would only be as good as the data that countries have access to and able to provide to the affected parties. onboard laser of the data providers currently do not have access to part numbers, descriptions and other important data needed to track recall the parts and to increase recall remedy rates. automakers are accountable for the safety of all original equipment parts throughout their lifecycle and should be required to show ever parts information is necessary to identify the and locate recall defective parts within the recycled original

equipment parts population to the practice of sharing originally put a part numbers with recyclers should not be an anomaly. rabbit should be standard automotive industry practice especially in light of new safety norm. consumer demand fo for a safe ad vibrant replacement market makes it imperative that congress include language that would require automakers to remove the barriers so all parts of that is able to professional automated recycling industry. thank you. >> the chair thanks the gentleman and thank all of you for your testimony. we will move into the question and answer portion of hearing and begin data by -- >> mr. chairman, i have unanimous consent request spent the gentleman a status request. >> may i submit my question for the the record and have the witnesses respond later in writing? >> the gentleman sorely understands there's a lot of members who are asking them one address question but i'll be prepared to yield to the judgment to go first for his questions. >> you are very kind and i can

talk fast. >> the gentleman is recognized. >> ms. claybrook's biggest and i will hold off all the other members. >> you are very kind. ms. claybrook ash and i were close with lois capps in michigan ask and others on rental car safety legislation. in they would introduce 2189, the rachel and jacqueline how to save rental car out of 2015 disappointed it was not good in the basic text of the safety title but it was included in to build the thing is working on. do you share in my disappointment anyone that takes up 1189 was not included as a part of the title? >> i sorely do. afterward administrator rosekind, he does, too. we believe that all cars that are subject to mr. kind whether new or used cars or rental cars should all be fixed immediately. >> why is enacting a federal

standard with regard to rental car safety so important? >> it's important because it causes death and death and injury on the highway. for unsuspecting owners or renters. that's the bottom line. safety on the highway. >> and to the best of your knowledge, do the vast majority of rental car companies support a federal rental car safety standards? >> that is my understanding, the vast majority. the public does overwhelmingly. >> does anyone on the panel that would dispute that? consumers for auto reliability and safety at the consumers union and the consumer federation of america, aaa in america rental bar association also 42189 ended called on this committee to move the bill. either on its own or as part of a larger package. do you agree or disagree? >> i completely agree. warning is not enough by the way. the car has to be fixed. >> and finally for mr. welch. thank you very much for coming.

user nofa member named peter welch from vermont. your association believes that we should focus more on fixing recalled rental cars instead of granting them. it seems to me that the rental companies have every incentive to repair a crowded vehicle and get back on the road as soon as possible. so i would think that a requirement to ground and then repaired vehicle would actually speed up the repair rate. as you know federal law already required new recalled cars to be grounded until they are fixed. do your members referred to fix these new recalled cars quickly, or simply have them to sit on the lot of? >> well of course our members but the one that performs the vast majority of recall fixes and remedies across the country. with respect to the rental car bill, we are supportive of the premise behind the bill, that

vehicles that are unsafe to drive should not be put in the hands of the public. our issue with that bill is the definition of when is it unsafe to drive the vehicle, and differentiating between recalls that would not render a vehicle unsafe to drive as determined by either nhtsa or the original equipment manufacturer of the vehicle. i think we could have discussions and hope that discussions on drawing a clear bright line on when the vehicle is unsafe to drive, to distinguish it between those types of recalls that would not affect the safety of driving the vehicle. we have a number of other issues. i can get into it if you want but in the interest of time specific provisions on that bill, for instance, it is overly broad because it paints all of these vehicles with the same brush. we think it's unfair to small

businesses. 80% of our members are small businesses. it treats our members the same. if i have five vehicles come on subject of the sentence and fined that hertz and avis is. there's a number of issues. >> you think the rental covers would have the same incentive to repair? >> of course that raises another issue, and that is the fight for parts but as i mentioned before the only thing that's holding us back from fixing any vehicle that comes onto our lot is the availability of parts. we have a, commissioned a number of research on that, and the average delay part on trading vehicles, for instance, is 60 days, and we have some concern that the rental car companies might get in a tug-of-war with the manufactures for the availability of parts. that may adversely affect our customers that come in to get their vehicles repaired. >> thank you.

>> mr. issenberg thing? it seems to me that in terms of whether the car safety.com the manufactures make that decision. windage of recall facing this is a safety issue in this car needs to be fixed. there are very few cars that are unsafe when they're not driven. it seems to me the manufacture has already made a decision and it's not up to someone else to decide, made for anybody else to decide whether not it is safe to drive the vehicle speed if i could respond to the. the manufactures and nhtsa do in fact issued stop drive notice it and it's about 6% of the recalls that they do stop the drive. understand there could be a dispute between what is up to 8% or 10% or 40% or whatever. again, we are the monkey in the middle, the car dealers. we are they're looking for parts to fix the cars but there is a big difference between, for instance, a mislabeled committed to want to be, try anyway shape

or form characterized any recall, in violation of a statute subject to vehicle to recall. but -- >> when would you fix it speak with you don't want to fix it today because it's pashtun when i going to fix it speak with maybe some of the other members speeded as soon as the part is available spirit that chairman was so kind speed i will reach all -- reclaim my time. thank you, mr. butterfield. and good luck with your meeting. i will not recognize myself for five minutes for questions, although that was an interesting exchange. let me just ask mr. bainwol about this, the gathering of data. what is the mechanism for disseminating information back then to your members or anyone else involve?

>> so the isac, again, which will be stood up in a matter of weeks, i think today an announcement went out with the board of directors, so it is a much in process. the mechanism, the board is comprised of auto companies. this is really a form for members, oems, fisher information about risk and countermeasures. and so the mechanism is the isac is something that was less of what it's been. we are augmenting the isac which by definition deals with problems after they manifest with the best practices to preempt the possibility of problems. so this is a comprehensive approach. we are going to be working with nhtsa, operating, using typos as we developed these best practices including missed -- including turn 11. down the road we will broaden

out to all suppliers spent how do you then get the word out? isn't certified mail, e-mail, carrier pigeon? what are you doing? >> the process is being established by there talking to each other. the oem community is a small went and speeded so you don't see that ha as being an obstaclr a very? >> when events happen it will be very quick, accelerate and that will not be a problem. >> mr. welch, if i can ask you a question because of course this committee and another subcommittee has been very involved on the airbag recall. and, of course, in the dallas-fort worth area that i represent come on circumvented to safety fort worth/dallas area i represent -- [laughter] the backorder come you brought up the issue of the backorder of the recall repair parts and what has been the experience with you remember dealers as far as being

able to get the parts, specifically the airbags for replacement when someone brings their vehicle in to have it fixed? >> that's been a particularly troublesome recall, as you know. there some 24 million vehicles are involved in that, and in order to produce sophisticated airbags in sufficient numbers to replace 24 million of them, are going to take time. in fact, the back orders on those, depending on the make and model, what factors are coming from, could will be over a year. the dilemma that we face day in day out because of the publicity that this recall has received, we have to do with our consumers, your constituents that come in, and we don't have the replacement part. the dilemma is that they don't affect all of the vehicles of the same, depending of what the climate is, there is a huge issue with them and whatnot. i think our partners are doing

as good a job as they can in trying to triage the availability of those portuguese into the regions of the country where they would have the largest impact with respect to it. we are just going to have to wait to that. and do the best that we can with the availability. we've got databases with people waiting, priority issues. some of them want us to just, you know, disengage the airbag which creates a whole nother dilemma, we don't think that's a good idea. then there's the debate, between the risk of the occupant having an airbag since not all of them have the defect into. so it's a very complex issue, mr. chair. >> in the hearings we've held on this, this is all made more difficult because no one knows what is and what effect is, and replacement parts that you're putting into cars, that do come in are subject to the recall to

require replacement part, no complete assurance that the replacement part is actually complied with, simply don't know what the defect was in the first place. and you brought up getting the information out to targeted demographics, that something has been the subject of a lot of discussion in the subcommittee as well because typically this is the third or fourth owner of the vehicle. i know in the market, in the dallas paper, one of the automotive manufacturers took out full-page ads in the newspaper, you know, if you have like one of our cars that is of this vintage, call the number or printed in a whatever the requirement was. is very, very difficult to get the information out to ikea and the third or fourth owner who maybe someone who reads a newspaper regularly and it is may be difficult to reach the individual. is the one of the things your

association is working on as well? how do we get people in? >> anyway we can contact our customer base. unfortunately, as the vehicles get older and age, they don't continue to bring into the franchise dealer for their ordinary maintenance. i might add that the completion rate, the remedy rates are vehicles that are five years old or newer is 85% and one of the primary reason for that is those vehicles are still coming in for warranty work. anytime a vehicle comes into our service department we are scanning the vin, running it to give it access to the database, and we are repairing then and are service-based spent my time is expired. yield to the gentleman from illinois, five minutes for questions. >> thank you. i wanted to ask a yes or no question of a couple of them, for mr. bainwol. did the alliance of automobile manufacturers ask the committee

for the provision in the bill that would give automakers a break from health-based carbon emissions requirement in exchange for adding safety features? >> we did not request it, per se. we had a conversation about the value of -- >> yes or no. do you support the provision because we do. >> and mr. bozzella, and asking the same question of the association of global automakers. did you ask the committee for the provision? >> we did not speak do you support it? >> the provision to incentivize life-saving technologies we think is very important conversation to have. >> i want all consumers to understand that, that manufacturers of automobiles support a provision that would actually increase pollution in exchange for providing, i'm not asking now, i'm talking. to improve safety of the automobiles. i think it is outrageous.

consumers like myself who now have a hybrid are seeking that. i would imagine that auto dealers would find that consumers are coming in and wanting more fuel-efficient cars. and add this as an incentive to get safety, often, safety features that are readily available is completely outrageous. i want to thank you, mr. dotson, for your testimony on this matter, and i want to move onto something else this unit may we -- >> briefly spilled i'll try to be brief. >> no. you will be brief. it's my time. go ahead spitting it is your time. so the challenge here is i think to some extent we're talking past each other. you define saved as a matter of defect policy and we define safety as a totality of the problem. when you look at the issue, this chart i think makes it pretty clear. 94% of the challenge when it comes to death if not more, if not close to 99%, is a function

of driver error. the magic of this technology is that it will address the totality of the problem. >> what are you talking about? we're talking about incentives that increase auto pollution -- >> we are -- >> in exchange for getting those safety -- >> we are talking about maximizing and et cetera and the diplomat of life-saving technology. >> exactly. and doing it in a way that increases auto emissions. i'm sorry, i want to move on. it is my time. this is for ms. claybrook. over the last several years we've seen multiple scandals and, involving manufacturers and major safety defects that were internally reported but allowed to endanger people for years before the company did anything about them. nhtsa's ability to collect safety related information from car makers is critical to catching and fixing those problems. the draft we're looking at today asked me to to conduct a new

studies and report, and reports without providing any additional funding. meanwhile, it has almost nothing to improve the communication of final safety information for manufacturers to the agency's. my legislation from the vehicle safety improvement act would facilitate communication. let me ask you as former nhtsa administered you believe that more information from auto manufacturers would allow the agency to be more effective in a safety mission? [inaudible] >> user microphone. would you push the button and start over? >> i believe more information is necessary. the early warning system that was created by the 2000 law for the tread act did not give a lot of specificity about what he manufacturers had to report. they often report inconsistent information. it's difficult to understand. they fail to report information, many have been fined for that recently.

so that law needs to be upgraded and you buil don't does a good f helping to do that. i also think there needs the criminal penalties when manufacturers failed to give that information knowingly and willfully. because otherwise they're not going to stop doing it. >> do you think the current lease -- do you think the penalties are probably adequate? >> no. if you look at what the u.s. attorney fined toyota, 1.2 billion and general motors 900 nhtsa's maximum penalty of 35 million. it's clear that number has the increase or that's been no maximum. there needs to be criminal penalties because when a manufacture knows they might go to jail they will be able to fully and pay more attention to what's going on. when the general counsel of general motors said he didn't even know about settlements of lawsuits involving the ignition switch and that they were covering up information from those lawsuits, that was just incomprehensible. i think there needs to be much stronger penalty provisions. >> i appreciate that.

i yield back. >> the gentlelady yields back. the gentleman from kentucky. >> thank you for having this meeting could i appreciate the penalty. i apologize, there's another subcommittee of the committee going on so i was any other will drink your opening remarks and some might questions repeat those, i apologize. this is for mr. bainwol and and mr. bozzella. half nhtsa and the outer industry had discussions on how best to apply the nist cybersecurity risk to automobile security? >> not directly the question of nist but we've had discussion with the administered about best practices. we met with him into timber and it was his view that the pace of innovation is so rapid that it would be wise for us to move forward with best practices, that we would be in his words more nimble. as result of the conversation, as a result of discussions with

members of this committee we made the decision to move forward with best practices. this will be part of the framework that we evaluate as we move forward. >> yes. i won't just simply built on his comment by saying that the nist for and what is going to be part of our discussion as an industry, and i think it is important to recognize that although we've had ongoing conversations with nhtsa, that we can't afford to wait. it's really important that we make sure that our customers have the confidence and trust in the products so that they can take advantage of the benefits, the life-saving benefits of the technologies, and so we have moved forward. we will continue to consult not only within the industry but with a broad number of stakeholders, and certainly the nist framework would be part of those discussions. >> another question for you. how our car companies didn't with the security of aftermarket or third party devices that are typically being plugged into the

vehicle? >> this is a very really important question. as you know, congressman, the industry has voluntarily adopted a set of privacy principles that trade sensitive personally identifiable information really as sacrosanct. we care deeply about making sure our customers know that we are treating geolocation data, where the vehicle is been or other personal data, maybe biometric data is a car is able to click that type of data, or driver behavior data differently than other kinds of data. we think it is very important that we continue to work with a broad set of stakeholders to understand the implications of what might happen if an aftermarket device is plugged

into the obd port. we think also consumer education is important in this area. is different important question to understand, is the manufacture of that device -- does he have the same types of privacy policies? have established the same cyber best practices that the automakers have or are doing? that actual entrance into the vehicle sort of represents a very important question of how we think about cybersecurity. >> and i would simply add that by way of example, i have a progressive device it is actually all-state device that a plug-in for insurance purposes. that doesn't render in terms of the privacy question to the manufacturer. that's relationship with the insurance company, and i derive a guy from that because i divide the cheaper insurance and inability to understand better the driving paper of my children which is something we all i think a spider to.

so this does get complicated. the point of the example is whether it's insurance or whether it's google or apple or carriers. the relationship your that really compel us to work with suppliers and other folks that we do not trust you don't work with it on private and on cyber we're going to have to reach out and restar we start that proces. >> via the comments because i represent aftermarket manufactures and we have been working with vehicle manufacturers to create an iso standard for the can do exactly that can take a look at aftermarket products and make sure when they're plugged into the port they need some kind of standards that are known throughout the industry. >> we've talked on fuel-efficient standards and safety and i want a fuel-efficient car that is a. i think all of us want that but they are not unrelated because you going to go for more

fuel-efficient see i noticed a pretty will automotive compass will try to take with out of the car and try to keep it safe. that they get more fuel-efficient they are interrelated so if you're going to incentivize, and automotive companies are spending enormous about the money can get to the new café standards. enormous amount of investment that's a good issues and safety issues or expensive so if you can get some you can get some early than one aired to get saved and security first, i think that's important. and then you move to more fuel-efficient cars. i think that's the number one priority and are independent, not unrelated. >> in my testimony i used the phrase safety equals green. this is a change paradigm. when these technologies, accident avoidance technology gives better safety outcomes come yields more fuel-efficient cars, better in mission records and more productive economy. >> the gentleman's time has expired.

that you recognize the gentleman from massachusetts for five minutes for questions. >> thank you, mr. chairman thank you, mr. chairman. thank you to the panelist and the witnesses. wanted to touch on section 202 of the trumpet which requires nhtsa to draft recall notices in coordination with other manufactures before making recall public and notice when it be published until all vehicle identification numbers for effective vehicles are made of double to nhtsa by the auto manufacture. the first of touched on this as well. ms. claybrook, in some recent comments on recent major because we've heard concerns that the recalls were made public before any information about whether specific vehicle was included in the recall which led to some customer confusion. at the same time you noted that a delayed notice tonight to have deadly consequences. i just wanted to get you to try to expand on that dichotomy if he could. what is prompt notice so crucial

and how to navigate through that? >> first of all i think the bottom line, the public, the consumers, they are entitled to know that there's a problem with the vehicle. they can maybe do something on their own to avoid the problem while they're waiting for the recall to occur. so any delay in announcing the recall i think is disadvantageous. i would urge the administrator of nhtsa as i did when i was administered to put out a consumer alert and allow the public to be informed of what's going on. this provision in this bill suggest they could not do that, that they would be limited in the administrator would be limited in a way that they could communicate to the public and it have to wait for the manufacture to say okay. i think that that's completely back password. sorry. >> i got what you meant. [laughter] backwards.

and so the administrators and should not be type that would. >> i don't want, my words not his but i believe dr. bos kind of this morning made statements about if the government were, in fact, sitting on those notices aror the second it was a problem yet was not even get information to consumers and an exit were to take place, that's not a position any administered would want to be in. instead of delaying notice to consumers, the act would give nhtsa hazard authority to expedite the recall when the agency determines that a defect or noncompliance as i said a substantial increases the likelihood of serious injury or death, if not remedied immediately. so, ms. claybrook, do you think this authority would be beneficial to nhtsa in reducing deaths and injuries resulting from those crashes? >> absolutely. because there are occasions where the car is so hazardous that the recall caught to be handled immediately.

and i would say also that this provision that is i in the bill was in earlier built about 15 years ago, and consumers were extremely upset about it and it was taken out of the bill. because a committee came to realize that he was really totally unfair, that the administered would not be able to inform the public speed and this would also eliminate a bridge of the calls come an issue the american -- the original draft bill does not address. just because a vehicle is registered in a particular region doesn't mean they vehicle only be driven in that region. all recalls would be carried out on a national basis. would also lower nhtsa to prioritize certain parts of the country when the quantity of replacement parts is limited. so once again could you explain how the elimination of the original recall aspect would improve safety? >> first of all original recalls are not in the statute. it's completely an informal

thing that the manufactures about 25 came to the agency and said we would just like to get original recall for these reasons. agencies these reasons. agency said all right entity became standard operating procedure because it's cheaper for the manufactures only to recall a small number rather than nationwide. vehicles don't stay stationary. that's a silly thing above all regional recall. they go all over the country. it just doesn't make any sense. i think the agency could prioritize. they have the discretion under the law to prioritize executed during the recall and is more likely to is more likely top in particular and because of the weather than we prefer you do it that way. >> just briefly, i have just a few seconds left bu but in your experience would eliminating those original recalls but allowing nhtsa to prioritize the allocation for replacement parts, have an effect on nhtsa's

ability to execute our recall speak was no, no pick it up so we would not. i think the experience that we have with the misbehavior of manufactures over the last five years as we've seen in coming up we calls come to lincoln for not doing them for years and years and all the rest means knits have to take a struggle and they should be the decision-makers on this. >> thank you. yield back. >> the chair recognizes the ranking member of the full committee mr. pallone five minutes for your questions. >> thank you, mr. chairman. in my questions are for mr. dotson. section 502 of the discussion that would amend the clean air act buy anything with a national program that bp and nhtsa developed to reduce greenhouse gas emissions and fuel economy for passenger cars and trucks. can you briefly explain this national program and what are its goals? >> the purpose of this program -- >> mic. >> can you hear me? the purpose of the program is

essentially to control carbon pollution from light duty vehicles. the program is remarkable successful. it will essentially have the effect of doubling fuel economy or reducing emissions of cars and trucks by half. reducing emissions by half by 2025. >> so why is it so important to establish industry greenhouse gas emission for vehicles iowa changing these commonsense requirements impact our ability to avoid or prevent the worst impacts of climate change the? >> it's now i think a consensus among scientific community, business and even if they've committee that climate change is a serious threat the glass to the incremental panel on climate change said there is, they have high confidence that unmitigated warming will lead to high to very high risk of severe and widespread and irreversible impacts globally. things like food shortages. >> you have to talk about climate change. you don't have to convince the

edge are not going to convince my colleagues on the other side. why isn't afford to establish these the standards? >> that standards are important, and they are informed because they provide industry clear direction on where they need to go over time. and the erosion of that occurs in this bill while it might sound small is actually very significant. if you are toward a three-gram credit for cars that have in dash gps or emergency auto braking, in the first year comp last year there was 16 and a half million cars sold. using those cars drive 13,000 miles a year or so. you are talking about over 700,000 tons of additional pollution in the year one. in your to get it over a million. india 300 is over 3 million tons. 3 million tons. >> our flexibility built into the program such as create credits, back in the bank or traded. there are air-conditioning improvement credits and other types of credits known as off

cycle credits. can you explain briefly what are the off cycle credit? >> the off cycle credits allow the manufactures to take credit for efficiency making that i related to the power transfer the vehicle. if a manufactures high-efficiency lighting a high-efficiency air conditioning they may be able to recognize those benefits and off cycle credits. the ep and the department of transportation look at this and found that there is quote no consistent established methods or supporting data to determine the appropriate level of the credit. that's the problem with awarding credit for these kinds of technologies. >> in other words, these credits such as air-conditioning that don't really appear to contribute to improve vehicle most reduce greenhouse gas emissions, and most of that a positive affect, right? >> those effects are demonstrated through data to the agency. if you're using for high-efficiency lighting, you

any less electricity, your car will have to generate less electricity to power those headlights. so it's a way of recognizing that even the my national into emissions testing. >> but the differences in contrast of section 502 would expand the credits to include advanced automotive technologi technologies, adaptive brake assist technology, connected vehicle technology. ..

have the technology or don't and what they found was there is no goosed claim on cars that have the technology area to therefore it's not reducing emissions and so that's one concrete example to give credit to the car although we have the data to help us understand that there are missions benefits to it. >> the chair recognizes the gentleman from california for questions please. >> to all the witnesses for your testimony today, federal law prohibits car dealers from selling new cars with recall that there is no wall to stop rental car companies from renting or selling dangerous recall the cars that have not

been fixed. since the death nearby district in 2004, the major companies cited onto the voluntary pledge do not rent out the recalled vehicles. while this is a good step forward the standards are not good enough. jewll the scoop was killed in her car running on repaired airbag exploded. as we heard from nhtsa on the first panel a change in federal law is needed and that's why i introduced 2198 with my colleagues and ms. walter jones to prohibit the rental of recall. i'm disappointed over bill was excluded and can debate could despite the rental industry and the consumer groups that already passed the senate. i remain baffled and the association actively opposed

2198. for example the alliance is concerned about the potential loss of use and other liability impacts. we have a savings clause to the billick supposedly stating nothing in the bill will impact manufacturing liability. one of the biggest members now supports 2198 honda also expressed its support for the bill. i would like a yes or no answer on this if you would. despite the general motors support for the bill. >> mr. welch, so you can't say yes or no because there is no consensus. mr. welch coming to your organization, your organization has expressed concerns about the

impact 2198 would have on the dealers with small rental or loaner car operations. my question to you is when consumers bring their recall to the dealer for repairs and they need a loan or car do you think they should be able to load vehicles with unrepaired safety recalls and again i ask you for a yes or no answer. >> of the if the vehicle has been deemed to be unsafe or by nhtsa we wouldn't put one of those cars in the hands of the consumer. you do not think they should be able to load vehicles with the safety recalls. >> i said if they were not safe to dry to the account -- to drive. if it was unsafe to drive. if it had a doorjamb sticker misprinted number -- >> that's not quite the answer but just go back to the first

panel in which nhtsa said that every recall is a safety issue. there are no frivolous recalls. it's a simple question. the vast majority of rental companies have agreed to voluntarily stop printing rental cars why can't the dealers do the same? >> again i would like to draw that distinction between a recalled vehicles for noncompliance that may not make it unsafe to drive. >> a follow-up in who is going to determine that? >> we rely on nhtsa to make that determination. >> up a okay nhtsa said every recall is a safety issue that they don't put them out unless it is a safety issue. >> they make the manufacturers issue stop stopped driving if they believe a vehicle is unsafe was unsafe to drive or the manufacturer does, they can issue the notice and we would certainly honor it but that

doesn't apply to all vehicle subject to recall. >> i didn't get an answer but my time is up. thank you. >> the chair thanks the gentle lady. i do want to offer the observation ms. schakowsky said she drove a hybrid vehicle area i want you to know the chairman drives a hybrid also. i have no problem at all if you want to make future hybrid vehicles safer if you want to warn me as i depart a lane that there is a car, motorcycle, tricycle in the other lane i would like to know that information and i will give up a couple of carbon credits to be able to have that available in the next version of the car that i buy. >> mr. chair, may i add an addendum, not a question, but i would like to enter into the record and i neglected to say that -- >> a unanimous consent request?

stack you are recognized for unanimous consent request. >> i want to enter into the record a letter from rachel and jackie's mother urging the passage of hr 2198, a letter from general motors and became the company support for hr 2198 and also a letter on behalf of my colleague who needed to leave, ms. schakowsky. >> without objection, so ordered. >> thank you. >> no further members wishing to ask questions, i would like to thank all the witnesses for being here today. before we conclude, i would like to include the following documents to be submitted for the record by unanimous consent. a written statement by the american car rental association, a letter from the auto care association, a letter from the american chemistry council, a letter from the american association of motor vehicle administrators in a report for the motor and and clement and defectors association income statement from the environmental

protection agency person into the committee rules i would remind members they have ten business days to submit additional questions for the record. i asked the witnesses to submit their responses within ten business days upon receipt of the questions and without objection, the subcommittee will stand adjourned. >> can i just ask that i make a correction to my testimony, unanimous consent to do that. >> i would be happy to hear the correction of the testimony. >> the committee stands adjourned. >> [inaudible conversations]

there was no credible actual threat known to our intelligence community. >> our coverage without commentary will air in its entirety saturday and sunday afternoon. >> earlier this week former defense secretary robert gates testified on the u.s. defense policy and strategic posture around the globe and discussed several other issues including budget challenges, sequestration and true plow [inaudible conversations]

good morning. the senate committee meets today to begin a major oversight initiative of the future of defense reform. this will be the first in a series of dozens of hearings that will proceed from a consideration of the strategic context and global challenging challenges facing the united

states to alternative defense strategies in the future of warfare to the civilian and military organizations of the department of defense as well as its acquisition, personnel and management systems, much of which is the legacy of the goldwater nichols reforms that were enacted in 1986. there is no one in my view in america that is better to help us begin this effort and our distinguished witness the former secretary former secretary of defense robert gates. we welcome him back for his first testimony to congress since leaving the department. we know that you had eagerly awaited this day with all of the anticipation of a root canal. few defense, in my view not, defense leaders can match the record as a reformer. he directed more than $100 billion in internal efficiencies in the department of defense. he dominated the dozens of

failing or unnecessary acquisition programs. he held people accountable. he even fired a few. and yet, by his own account, doctor gates left overwhelmed by the scope and scale of the problems in the defense department. this is the purpose of the oversight effort we are beginning today, to define these problems clearly and rigorously and only then to consider what reforms may be necessary. there is profound urgency to this effort. the worldwide threats confronting the nation now and in the future has never been more complex, uncertain and daunting. america will not succeed in the 21st century with anything less than the most innovative, agile and efficient and effective defense organization. i've not met a singer civilian military leader who thinks we have that today. in no way is this a criticism of the many patriotic mission focused accidents both in and out of uniform who sacrifice

every day here at home and around the world to keep us safe. to the contrary is because they have such outstanding people and we must strive to remove impediments in the defense organizations that would squander the talents of our troops and civilian and civil servants. and now some would argue that the main problems facing the department of defense come from the white house, the national security council staff and interagency, and yes the congress. you will find no argument here especially about the dysfunction of congress. we must be mindful of these bigger problems that addressing many of them is outside of this committee statistics and. americans for the military in the highest regard as we showed. at the same time our witness will explain the problems that he encountered at the defense department are real and serious. just consider chart one. in constant dollars, our nation is spending almost the same amount on defense as we were 30 years ago.

before this money today, we are getting 35% fewer combat brigades, 53% fewer dealerships, 63% fewer combat air squadrons and significantly more overhead. how much is difficult to establish because the department of defense does not even have complete and reliable data as the gal has repeatedly found. of course the armed forces are capable now than 30 years ago but our adversaries are also more capable. some exponentially so. at the same time, many of the weapons in the arsenal to be our aircraft ships, tanks and fighting vehicles, rifles and missiles into strategic forces of the products of the military modernization in the 1980s greed and no matter how much more capable troops and weapons are today, they are not capable of being in two places at once. or declining combat capacity cannot be divorced from the problems in our defense acquisition system, which one high-level study summed up as

follows. the defense acquisition system hence system has the sick problems that must be corrected. he's problems are deeply entrenched and have developed over several decades from an increasingly bureaucratic and overregulated process. as a result all too many of the weapons systems cost too much to take too long to develop and by the time they are fielded, inc. obsolete technology. sounds right. that was the packard commission to ten in 1986. since then, since 1986 as the chart shows cost overruns and schedule delays on major defense acquisitions have only gotten worse. defense programs are now at least 50% over budget and on average over two years delayed. it's telling that perhaps most significant defense success story which he himself led was produced by going around the

acquisition system, not through it. the rising cost of defense personnel system is also part of the problem. as chart three shows over the past 30 years the average burden cost per service member, all of the page and a lifetime pays and lifetime benefits for military service now in tales has increased 270%. he and get all too often come at the department of defense has sought to control the personnel costs by cutting operating forces while civilian and military headquarters staff have not changed and have even grown. the joint force has decreased by 38% but the percentage of the four-star officers in that force has increased by 65%. these reductions have occurred while at the department had exploded.

nearly 1.1 million personnel now perform overhead activities in the defense agencies. the military departments and service staff in washington headquarters services and an ounce by mckinsey & co. found that less than one quarter of active-duty troops were in combat roles in the majority instead of performing overhead activities recent studies by the defense business board and others confirmed that little has changed in this regard. the u.s. ratio was well below the global average including such countries as russia, india and brazil. for years, decades in some cases, they've identified some of the major management and administrative functions of the department of defense as being at high risk of waste fraud and abuse interpretation of effort. perhaps none of this should be surprising when you consider the judgment of the lead lead staffer on the staff of the committee during the defense reorganization efforts three decades ago. the remedies applied by

goldwater nichols to defense management and the administration that have largely been ineffective they were never a priority for the acts. codirectors and patrolling trends remain. the pentagon is talking about is the data he wrote for 14 years ago, and the problem has only gotten worse. ultimately we must ask whether they were seeking the execution of the strategy and plans. the joint staff and combatant commands are all bigger than ever. that is the quality of civilian oversight and control of the military better? has the quality of military advice to civilian leaders and groups? are the joint duty assignments to military officers must perform producing a more uniform fighting force in short is the department of defense more successful at planning for the war in winning the war? goldwater nichols was perhaps the most sequential defense

reform since the creation of the department of defense and while the world has changed profoundly since 1986, the basic organization in the department of defense as well as the role in the additions of its major civilian and military actors has not changed all that much since goldwater nichols act must be asked is a 30-year-old defense defense organization = present and future national security challenges? i want to be clear this is a forward-looking effort. our task is to determine whether the department of defense and our armed forces are set up to be maximally successful in our current and future national security challenges. we will be guided in this effort by the same principles that inspired past defense reform efforts including goldwater nichols enhancing civilian control of the military, improving military advice, operational effectiveness and joint office of management and providing for a better use of

defense resources. this oversight initiative is not a set of solutions in search of problems. we will neither jump to conclusions nor have the symptoms of problems. we will take the time to look deeply for the incentive and the root causes that drive the behavior and we will always be guided by that all-important principle. first, do no harm. this must and will be a bipartisan endeavor. the defense reform is not a republican or democratic issue. these are vital national security issues if we must seek to build a consensus on how to improve the organization in the operation of the department of defense that can and will be advanced by whoever wins next year's elections. that is in keeping with the best traditions of the committee and that is how doctor gates has always approached this important work across the administrations of both parties.

we thank him for his decades of work to the nation, for generously offering us the benefit of the insight and experiences today and i would like to apologize for the statement that i believe that this hearing must set the predicate for a number of future hearings that we will be having in order to carry out and achieve the objectives that i just outlined. welcome back to the senate armed services committee. let me thank you for your willingness to testify today. and also to underscore how awful and how appropriate attributes remarks are with respect to the need for the careful bipartisan review of the policy and change in the defense department. i must also apologize as i told you before, i have business

leaders i must inform all day long today so i won't be here for the whole hearing. it's no accident the churn and has asked you to testify today is the fourth witness in a major effort to look at the department of defense. you have more than 105,000 days in the roles that range of the national security council central intelligence agency and then of course the department of defense and your experience with dod and the interagency process especially in the post-september 11 can't asked will be important to the committee's study of the issues as we go forward and while you were secretary of defense you were an outspoken critic of your own department and its ability to manage critical competing priorities such as funding the military modernization and ensuring that the requirements are deployed forces are being supported appropriately and as before the american press institute is at the department

is in your words a semi-feudal system and an amalgam without centralized mechanisms to allocate resources contract expenditures and measure the results relative to the overall priorities. as a policymaker in the what to say to branch this kind of assessment from the most senior official in the department is deeply concerning but also helpful in giving us a direction. i look forward to hearing your ideas of thinking about the changes you recommend to us for addressing these issues. the congress try to help address some of the problems problems at problems that he was noted in creating the deputy chief management officer that one person is not enough to create a composes to make change in the largest organization on earth. during the tenure you created to add off the sharon agenda to address rapidly to address issues to the troops for the ambush in the task force and the intelligence surveillance reconnaissance task force. both of these endeavors were very successful but they are

just an indication of the kind of more holistic and comprehensive change that we needed to undertake in the department of defense. also in the american enterprise institute speech he made a critical point since 2001 we have seen a near doubling of the pentagon's modernization account that has resulted in relatively modest schemes and military capabilities into this should be of a concern to all of us and we would welcome your right conditions on how to bring changes necessary to ensure that we are getting what we are paying for and not getting morally opening for the buck. also about the need to be stable and predictable and the importance for the will of congress and chewing the stability is provided. the former comptroller served in the pentagon and wrote recently about the budget and the experience during his tenure including sequestration to the government shutdown and continuing resolutions. specifically this budget turmoil and post a high price on the dod

therefore the nation serves. the price isn't measured in dollars. beauty certainly didn't get any extra funding to become funding. rather the price is ineffective in the department's mission and we are still confronting those issues today. finally, during the attendance you were strong not only for the military but also funding the soft power for the state cracked diplomacy, developmental efforts and our ability to communicate our goals and values to the rest of the world, and as we consider the steps making dod more effective i would also be interested in your thoughts and the importance of national security enhancing our civilian elements of the national power. and also the impact we have on these elements. again, thank you for your service and i look forward to your testimony. >> doctor gates. >> chairman and senator reid, probably the least sincere sentence in english language is

mr. chairman is a pleasure to be here with you today. [laughter] frankly short of a subpoena i never expected it to be in a congressional hearing again and given some of the things i wrote i'm rather surprised to be invited back. so thank you for your kind introductory remarks in for the invitation to address the important topic of defense reform. i also commend you for attempting to transcend the dalia headlines and the crises of the moment to focus this committee and hopefully the rest of the congress on its institutional challenges facing the defense establishment. while i stayed in touch with my successors periodically, and have followed the developments from afar, my testimony today is based on my experience that the defense secretary between september, 2006 and july, 2011 and being engaged in the two wars every single day during the period. so, my comments this morning may

not necessarily account for all the changes that have taken place over the last four years. i joined the cia to do my bit in the defense of the country 50 years ago next year. i served eight presidents. with the advantage of that half-century perspective, i would like to open with too broad plains. two broad points. first, while it is tempting and conventional wisdom to assert challenges facing the united states internationally have never been more numerous or complex, the reality is the turbulent unstable and unpredictable times have returned to the challenge u.s. leaders regularly since world war ii. the immediate postwar period period that saw the soviets tightened their grip on eastern europe and surprised western leaders and intelligence agencies by decimating the first atomic device to frequent crises during the 50s including the korean war regular confrontations with china the pressures from the joint chiefs of staff to help by using nuclear weapons in indochina

with the middle east uprising in eastern europe and the revolution in cuba. during the 60s the poor and the anonymous or arab-israeli war and confrontations with the soviets from berlin to cuba. in the 70s the soviet assertiveness in africa and invasion of afghanistan and get another arab-israeli war and oil embargoes. the 80s brought a number of conflicts in places like afghanistan and an attack on libya. crises in lebanon and the intervention in panama area in the '90s, we have the first gulf war military action in the balkans, somalia, 80, missile attacks on iraq and in the first al qaeda attacks on the united states. the point of recounting these historical examples is that americans including all too often our leaders regard international crises in military conflict as operations when in fact and sad to say, they are the norm. convinced time and again that

the new tranquility is at hand especially after major conflicts, presidency and congress tend to believe they have a choice given the national security and correspondingly cut significantly reduce the resources provided to the defense, state department and cia. in the short term at least until the next crisis arises, they do have a choice into the budget cuts and deficit hawks have their way. but in the longer term, it really is no choice. while we may not be interested in the aggressors commit terrorist and an expansionist type of roadway, they alternately are always interested in us or in our interests or our allies and friends. and we always discover then that we went too far in cutting the need to be armed. the cost in treasure and in a lot of the young men and women is always for hire them if we had remained strong and prepared all along. the primary question right now before the congress and the

president is by priority you give to the defense, which roughly 15% of the federal expenditures on the list percentage of the federal budget since before world war ii. without proper and predictable funding, no amount of reform were clever reorganization will provide america with a military capable of and accomplishing of the missions assigned to it created a second related point i think highly germane to that of the patient is that our record since vietnam predicting where we will use three fourths next come even a few months out is perfect. we have never once gotten it right. just think about it. in grenada, lebanon, libya, iraq, now three times on afghanistan, the balkans, panama, somalia, haiti and most recently west africa to combat. because we cannot predict the nature of the future military engagement we must provide a premium on acquiring the commend

and providing training to give the force is the most versatile capabilities across the broadest possible spectrum of conflict. these two lessons on funding and flexibility must underpin any defense reform effort. whether the focus is on bureaucratic organization, command structures come acquisitions and budgets. all that said, it is completely legitimate to ask whether the defense structures and processes are giving us the best possible return on the taxpayer dollars m. on our military created the answer into many cases is no. in this context, the questions of the committee are considering or in my view the correct ones. namely whether the countries institutions in the national defense are organized command come equipped and managed in ways that can deal with the security challenges in the 21st century and that efficiently and effectively spend the defense dollars. mr. chairman over the next 15 minutes or so i will make

observations about goldwater nichols acquisition policy of the interagency process and the budget. if we can then delve into these and other matters as the committee sees fit. first, goldwater-nichols whether it's been fulfilled with additional legislation of similar magnitude. my perspectives on the current structure of the defense department is shaped primarily by my experience as the secretary overseeing the military fighting two wars. i discovered early on and i led at the department decided to plan for the war but not to wage the war at least for the long-term. the swift victory in the 1991 persian gulf conflict seemed to ballot it all the post-vietnam changes to the military including the landmark 1986 legislation. but the pentagon clearly was not organized to deal with protracted conflicts like iraq and afghanistan which contrary

to the wishes of most americans, most assuredly will not be the last sustained ground campaign waged by the military. in this respect, goldwater-nichols succeeded all too well by turning the services into the force and equipment providers walled off from operational responsibilities. now the exclusive domain of the combatant commanders. this became especially problematic in unconventional conflicts requiring capabilities usually immediately that were significantly different from what was in the prewar procurement pipeline. just one illustrative example. while there was and is a joint process to deal with the ongoing needs of the battlefield commanders, there is left up to the designated military service to reprioritize its budget to find the funding for those needs. it will come as no surprise to you that with some regularity the designated service decided about urging the battlefield

need did not have as high a priority for the funding as its long-term programs that record. these were mostly advanced weapons systems designed for future conflicts and had near sacrosanct status within the military services making it difficult to generate much enthusiasm for other near-term initiatives that might compete for funds. i soon learned that the only way that i could get significant new were additionally clinic to the commanders in the field and the weeks or months, not years was to take control of the problem myself through special task forces and processes. this would be the case with the vehicles, additional intelligence surveillance and reconnaissance capabilities, shorthand times, counter ied equipment, and even the care of wounded warriors. i learned that if the secretary made it a personal priority, sit tight deadlines and held people accountable, it was actually possible to get a lot done even

quickly come even in a massive bureaucracy like the pentagon. that satisfying critical operational and battlefield needs cannot depend solely on the intense personal involvement of the secretary. that is not sustainable. the challenge is how to institutionalize a culture and an incentive structure that encourages wartime urgency simultaneous with long-term planning and acquisition as a matter of course. a final thought relative to the defense organizations, through my tenure i was privileged to work with two superb chairman of the joint chiefs of staff who were both true partners while providing independent occasionally dissenting professional military advice. the chairman is the one senior military officer with a stake in both current needs and future requirements. one of the great achievements was strengthening the position

of the operational commanders and the chairman relative to the service chiefs. i'd be needed as i belief that as a general principle, this must be sustained. service chiefs have a tenure of four years. combatant commanders nominally three years. yet the chairman and vice-chairman of vice chairman of the joint chiefs of staff have two year renewable terms. i believe the position is both a service chiefs in the combatant commanders would be strengthened by also giving them four year terms. this would not diminish in the least of their accountability to the president of, the defense secretary or the congress. second, a subject that has for years been a focus of this committee cut the acquisition process. not only has goldwater-nichols hit a 30 year mark, so too has the office of the secretary defense for acquisition technology and logistics. atl was established because the service driven acquisition system was yielding to many overdesigned into over budgeted

in overscheduled programs. the theory was by giving acquisition responsibility for major programs to the senior official removed from service interest, why is and more disciplined decisions would ensue. so what can we say 30 years we have succeeded in building a new layer of bureaucracy with thousands of more employees and new processes to feed it. but when it comes to the output, the results have been quite mixed. as the secretary, i found that despite all of the joint oversight mechanisms, far too many major weapons into government programs were ridiculously overdue, over cost or to no longer relevant to the defense needs. to the chagrin of many in the pentagon and probably even more here on the hill i canceled or capped more than 30 major programs in 2009 that built a fully what it would cost

taxpayers $330 billion. where does that leave us today as congress considers reforms for the future? problems with the service running acquisition led to greater central position in oversight. but that lead to another set of problems in the form of sizable central bureaucracies that add a delay and related costs without discernible benefit. so now there's pressure pressure into the decision to return significantly more acquisition authority back to the services. my sense is the right answer lies with finding a better balance between centralization and decentralization than we now have. but a strong word of caution. you must not weaken the authority of the secretary defense and his ultimate decision-making power. i cannot imagine a service chief or secretary able to overcome intense internal pressures and voluntarily do away with for example programs like the army future combat system, the

airborne laser, the zoom wall destroyer or dozens of other troubled and needlessly exquisite systems that have built up a service constituency. the simple fact is that such are not just programmatic the political indonesia secretary of secretary of defense with the strongest support of the president handles the clout and the power inside the pentagon with industry and here on the hill to make such decisions and make them stick. a couple of other observations seem obvious as you and into the secretary defense addressed this issue. nothing will work without rigorously applied accountability within the services i atl and the secretary. and then there's the importance of basic blocking and tackling on the acquisition process to a high high-level requirements and limiting changes beyond a certain point competitive prototyping wherever possible before putting initiation were

realistic cost estimates and revising the contract incentives to better reward success and penalize failure. also promise also promise for the site of efforts mr. chairman and those of the chairman in the house to streamline the acquisition process and encourage more use of commercial products and pricing and attract more nontraditional vendors to the defense markets. with that said, at the end of the day redraw in the organization chart or an acting new acquisition laws and rules will matter less than the leaders skilled enough to execute programs effectively willing to take tough choices and established strong measures of accountability. and willing to get rid of those not performing well for other people or programs. in terms of being better stewards of taxpayer dollars more broadly, the effort i began

in 2010 to reduce overhead costs and continued by my successors must be renewed and sustained. it was telling that in just four months we found some $180 billion over a multiyear period we could cut in overheads. there is a river of money flowing under the pentagon. barely funded through the catchall operations and maintenance accounts. there is no line item in the defense budget. so getting the unnecessary overhead spending without harming the important functions is extremely hard work. it's like a huge easter egg hunt but it can and must be done. a brief word here on resisting the usual approach of reducing budgets with across-the-board cuts. i have seen countless washington reform efforts over the years resulted in mindless salami slicing programs and organizations. that is not reform.

managerial and political cowardice. true reform requires making trades and choices and tough decisions. recognizing some activities are more important than others. it's hard to do that essential if you are to reshape any organization into a more effective and efficient enterprise. further the congress must contain its own bad behavior such as insisting on continuing to be unneeded programs because of parochial interests. preventing the closure of roughly one quarter of all defense facilities deemed excess. burdening the department of excessive id frequently expensive it frequently expensive rules and reporting requirements and more. my third abroad plaintiff revert to the interagency process from time to time the idea of rises to reorganize the u.s. national security apparatus put together in 1947 to better integrate the defense diplomacy and development. the goldwater-nichols for the interagency if you will.

goldwater-nichols has mostly worked with the defense department because when push comes to shove as it often does, everyone in and out of uniform ultimately works for one person, the secretary of defense and he or she can tell everyone to get in line. when multiple cabinets to prevent are involved however there is only one person with that kind of authority, the president. the national security council were created to provide the president of organizational with organizational mechanism to coordinate and integrate their efforts. how well that works depends entirely on the personal relationships among the principles and the talents principals and the talents and skills of the national security adviser. even this structure headquartered just on the hall from the oval office works poorly as the secretary of state and secretary defense can stand one another as was the case for a good part of my time in government. or if the national security advisor is not an honest broker.

how well the planning activities and efforts of state, defense and others are coordinated and integrated is the responsibility of one person can the president and there's nothing anybody else including the congress can do about it. i will conclude with three other reasons the nation is paying more for defense in real dollars today than 30 years ago and getting less and less. one is that the men and women in uniform today drive, fly or sail platforms which are vastly more capable and technologically advanced than a generation ago. about technology and capability comes with a heavy price tag. a second reason for the higher cost is the exploding personnel cost of the department. a very real problem on which i know this committee and others are at least beginning to make inroads after years of futility. but the third factor contributing to the increased cost and one of the most important is the role of

congress itself. hearing talking about the year-long budgetary impasse on the hill and between the congress and the president. the department of defense has had an enacted appropriations bill to start the fiscal year only twice in the last ten years. the last seven years all began under a continuing resolution. during the first six fiscal years of the obama administration defense department has operated under continuing resolutions for a third of the time. cumulative total of two years. department leaders also have had to deal with the threat and one year the imposition of sequestration, a completely mindless and cowardly mechanism for budget-cutting. because of the inability of the congress and presidents to find a budget compromise in 2013 the defense spending was reduced midyear by $37 billion. all those cuts applied equally in percentage terms to 2500 line items of the defense budget and

requiring precise management of each cuts to comply with the anti-deficiency act with its criminal penalties for violations. sequestration effectively cut about 30% of the day-to-day operating funds in the second half of fy 13. but then added to this the fact that the department, probably the largest organization on the planet in recent years has had to plan for five different potential government shutdowns. in the fall of 2013 with sequestration still ongoing, the pentagon actually have to implement one of the shutdowns for 16 days affecting 640,000 employees or 85% were 85% of the civilian workforce. it's hard to quantify the cost of the turmoil of the past five years. the cuts come at a continuing resolutions, sequestration, gimmicks, furloughs, shutdowns and the unpredictability and more.

during the continuing resolutions in particular, the inability to execute programs on schedule when it's being able to ramp up the production or start new programs or take full advantage of savings offered by multiyear purchases. the time-consuming and unpredictable process and reprogramming even small amounts of money to higher priority projects that all these imposed tremendous costs on the defense department and the taxpayer and this doesn't even begin to account for the cost involved in hundreds of thousands of man-hours required to try to cope with this externally imposed leadership and managerial nightmare. moreover, the reimposition of the full-scale sequestration looms in january absent a bipartisan budget agreement. given the horror of all this hard all this politically driven madness inflicts on the u.s. military, the rhetoric coming from the members of congress about looking out for our men and women in uniform rings very hollow to me. further, this legislative dysfunction is embarrassing in

the eyes of the world at the time when allies and friends are looking to us for leadership in reassurance. all this all the smarty-pants reforms you can come up with will be of little use of the military is not able to plan, to set priorities and manage its resources in a sensible and strategic way. the failure of the congress in recent years because of the partisan divide test timely and predictable defense budgets and its continuing parochialism when it comes to failing programs and unneeded facilities has not only greatly increased the cost of defense, it's contributed to weakening the military capabilities into has broken faith with our men and women in uniform. this committee with its counterpart in the house has long supported on a bipartisan basis a strong defense protecting those in uniform. as you consider needed reforms in the pentagon i fervently hope that you will also he will also urge our colleagues in congress to break with the recent past

and place the national interest and our national security ahead of ideological purity or achieving partisan advantage. and as you know as well as i come our system of government has designed by the founders who wrote the negotiated provisions in the constitution is dependent on compromise to do so is not selling out, it's called governing. thank you. >> those are very strong words and i wish all 535 members of congress could hear your closing remarks. i will quote them quite often and quite literally. it is an accurate indictment of our failure to the men and women

in the military, the 300 million americans and the security of the nation. we are also looking at a depth limit and we all know they have to be raised because of spending practices, yet we now have a substantial number of members of congress that we are not going to vote increased debt limit and anybody that does is of course a traitor and doesn't care about fiscal responsibility. as we are looking at the sequestration and the debt limit and also a president and secretary of defense of becoming a bill that is not a money bill is a policy. that's what defense authorization is all about.

so, the president is threatening to veto because of the issue of not increasing the nondefense spending when there is nothing but that this committee nor the authorizing process can do to change that. i'm sorry to say that members of this committee will be voting to sustain a presidential veto on an issue that we have nothing we can change. could i ask again on sequestration i also ask a specific question. in your remarks it was interesting to me that you didn't make a single comment about the service secretaries and their role. you think we ought to do away with the service secretaries?

>> i thought about that thanks to your staff providing me with some of the issues that you all might want to discuss today and i think that i would say no to that question and i would say it primarily because i think that having a civilian service secretaries does strengthen the civilian leadership and the dominance of the military and if they are able to do so on a day-to-day basis and decision-making that a single person like the secretary of defense could not do. the secretary can sort of reiterate that and make it clear in his actions that the civilian control is important but i think that the symbolism to the members of the services that

there is a civilian at the head of their own service is responsible for them and accountable for them i think is important. >> let me go back over this relationship between the secretary defends come and command you cited a couple of cases where by going around the entire process you mentioned in other cases go for the benefit of the committee where is the balance we are trying to in this legislation give more authority and responsibility to the service chiefs who right now as i understand have not ended yet at the same time as you said not return to much to the service chiefs because of their advocacy

in into their view of sacrosanct long-term programs they believe are important to the services. i don't quite get that balance. >> and i wish i could give you a precise and very specific answer. it seems to me that the irony is when it came to the ms although i made a decision that was in fact atl that executed those programs and signed the contracts and they were actually implemented them via the marine corps had the responsibility because they had originated, it was originally their idea and it was their success that led me to expand it but the problem that i ran into in the defense department is that any problem

whether it is an acquisition or anything else affects multiple parts of the departments monitor which can tell the other what to do. so if the conch whereas a problem, he can tell them what to do. if the cost assessment and program evaluation has a problem, they can't tell anybody else what to do. they only report to me or to the secretary, and so the reason i found myself cheering these meetings was because there were enough different parts of the department who were involved in almost any decision that no one below the secretary could actually get everybody in the room and say this is what you have to do. so, how you fix that fixed that institutionally and i will tell you when he was the

undersecretary particularly my last six or eight months we talked all the time how do we institutionalize this elderly meet these needs along with a long-range the long-range kind of planning and acquisition that we have? and frankly, when i left we haven't solved that problem. but it has to -- the services do have authority in the procurement and acquisition authority and they do have senior people in those positions and frankly my sense is that there are a couple that i don't do does seem to me to be quite capable. about how you read and realign the role of atl and the service procurement or acquisition officers, i don't have an easy solution for you.

all i can suggest is that there would be a dialogue between this committee and secretary carter and the services. in terms of how you adjust the balance, it is clear to me that the balance has shifted too far and so therefore there needs to be some strengthening. but central to that is forcing the service leaders the chief of staff and the secretary to hold people accountable and to hold those two people accountable for the service. i know marquis appear testify in and said give me the authority and if i don't do it right, fire me. well that's kind of extreme but at a certain point, the accountability is a big piece of this and i don't have for you in

line drawing or even a paragraph where i could tell you here is where you redraw the balance because i'm not sure] line goes. >> thank you mr. chairman for the extraordinarily insightful testimony. and not only giving us advice but also pointing out the questions. ..