deficit? and that was the only thing that was worked out by the congress. on a bipartisan basis. >> did he put any of those cuts back into this budget? any of the cuts made, did he roll them back and say that was too much and we'll put it back in the budget? >> i don't think he could have done that without the support of the congress. >> thank you. mr. langerman? >> thank you, mr. chairman, mr. secretary general, thank you for being here today. your testimony and your tireless service to our nation. we're all grateful. i want to focus on two important areas in the budget and priorities for me. virginia class submarine and i also want to talk about cybersecurity. mr. secretary, as you know, the virginia class submarine is a model procurement program and we're only now beginning to reap the rewards of an aggressive cost management effort and a consistent two-boat per year funding level. the proposed delay of one of these subs from fy-14 to outside

could disrupt these gains and incur extra costs. how did the department come to this decision and how does the department propose to mitigate the military risks, the monetary costs and the work force challenges generated by the shift? obviously the virginia class submarine is a program that has come in on time and under budget because of the efficiencies that we gain from block buys and stability to the supply chain. i'm concerned this delay is going to cost us in these areas. i've been a staunch supporter in investments in cybersecurity, and i continue to see the escalation in cybersecurity and $18 billion in fy-2013 to fy-2017.

mr. secretary, in general, how does the proposed budget address these threats and vulnerabilities we face in the cyberarena. can you expound upon that? and in the event of a large scale cyberattack, how resilient are power grids and military bases? obviously our military bases in many ways are dependent on the political infrastructure, our electric grid owned and operated by the private sector. and if they go down, our military bases and their ability to function are vul innerable. what efforts are we doing to make them resilient and have some of their power supply back if necessary? >> i'll talk cybera and then i'l ask mr. hill to talk about submarines, is that right? we're very concerned about cyber. we talk about what's new in the world in terms of threats.

for us, it's emerging capabilities. it's special operating forces. it's cyberand it's isr. those same capabilities are also -- have become available to our adversaries. and in the case of cyber in particular, we've been acting to prepare ourselves in terms of our vigilance on our systems and our defensive mechanisms. and we've got, as you know, we've got a cyberstrategy, but we remain vulnerable. and through a series of table top exercises, conversations as well as on the senate side now notably, we're trying to determine the next steps. and there is a -- there is legislation pending, sponsored by senators lieberman, collins, rockefeller and then feinstein amendment to that that is a very good and important first step in providing the kind of

information sharing and expanding or potentially the first step in expanding protections beyond the dot-mil domain for all the reasons you suggest. but make no mistake about it, there's controversy and plenty of it around this issue because of the department of -- we're the department of defense. there's the department of homeland security, fbi. so there's authorities to be considered. we're working through all that. >> in terms of the virginia class submarine, which i think is what you're referring to. we're planning to buy nine. a year ago, we were planning to buy ten we'll buy two a year, except for fiscal '14 we'll buy one. it was an affordability decision, frankly. the submarine fits into our strategy and we'll certainly continue to buy. but we were looking frankly to comply and be consistent with

the budget control act. >> i was asked this question yesterday and, you know, if there are cost efficiencies that can be achieved here that allow us to do this with savings and in a more cost effective way, we're prepared to look at that. >> i have additional question, but my time is coming to an end. i would just reiterate the important of the virginia class submarine program. it might cost our work force if we're not careful. with that, i yield back. >> mr. wilson? >> thank you, mr. chairman. thank you for being here today. i share the concern. the american people need to know this, that what's being proposed is a reduction of 80,000

personnel in the army, 20,000 marines, 10,000 personnel of the air force. i am truly concerned at a time of war that we would have these reductions, which i think is going to put american families at risk. those serving in the military and the american public as large. it's inconceivable every day, we read of another threat to our country of instability around the world. additionally, mr. secretary, i know you're having to make tough choices. and in particular, though, i identify with veterans. i served 31 years in the army, and i'm just grateful for my service and the commitment and dedication and commitments to veterans, too, commitments from and to. but i'm very concerned that the administration is proposing cost increases on health care for military retirees.

and these are extraordinary. for tricare prime, that a proposal for fy-13 increases enrollment fees from 30% to 78%. over five years, the enrollment fees would increase between 94 to 345%. how can we justify such increases when really commitments were made to people who have made such a difference in protecting our freedoms? >> can i take that? >> sure. >> let me answer that, if i could, congressman. you know, when we said that in order to rebalance this military of ours -- and by the way, you know, i don't want to let it pass entirely that i don't share your concern, but i will tell you, i'm responsible to this nation to do a risk assessment on the size of the force against the strategy. the budget we proposed and the fore structure is adequate to

meet the needs of the nation. if i didn't, i would tell you. in terms of compensation, the tricare enrollment fees haven't been adjusted since the mid '90s. there are an anachronism in terms of any other health care program. and i don't accept, by the way, the comparison of military benefits and civilian because of what we ask our uniformed military to do. on the other hand, we cannot any longer allow our paid compensation health care, and as you know, we're going to look at retirement at some point in the out years. we simply can't allow that to keep growing. as the chief staff of the army, i knew that if my manpower costs exceeded 245%, i would break the army, because i wouldn't have the money to invest in the other things that i have to invest in. we're close. and now is the time to act, and that's why we've taken this action. >> and my concern would be that

we should be providing more so that this is not the burden. additionally, mr. secretary, last year, the former governor of maine, john baldacci was hired to review military health care. i understand he's completed his report. could you provide the committee a copy? >> i would be happy to. >> and has his report in any way influenced the defense program budget reforms? >> i'm sure -- i believe it has, but frankly, i have not reviewed it myself. but let me get back to you on that and provide you a copy of that. >> and additionally, i would like to know the salary paid and then the supporting costs for his services. >> sure. >> and in conclusion, int to thank both of you. you've raised a great concern about sequestration, the rest of the american people.

what do you think we should do? and i'm hopeful that you would support the progressive and very positive legislation of chairman buck mckeockeon. >> i'm expressed my concerns about sequestration. i would urge you to work on a bipartisan basis to develop an approach that would pass congress that would trigger desequestration. you take another $500 billion out of this defense budget. this strategy, i would have to throw out the window. >> i've been positive about your service. i know you sincerely believe this, we've got to get the word out. just the word sequestration puts people to sleep. so please, be the paul revere i know. thank you very much. >> congressman, i forgot to thank you for your 31 years of service. thank you. >> thank you. ms. bordello.

>> thank you. i would like to welcome secretary panetta and general dempsey. i appreciate the administration's continued focus on the asia-pacific region and the dod intends to press forward with the build-up in guam. thank you, gentlemen. dod announced a changed realignment for guam. what's the rationale for changing the implementation plan with japan. what prompted these decisions? what's the benefit of the proposed realignment? to what extent did the passage of the budget control act play in these changes? and can you also elaborate on the strategic importance of keeping that reens forward deployed? how is this necessary to keep our treaty agreement with japan? secretary? >> congresswoman, first and foremost, let me indicate that no decisions have been made with regards to what exactly that

relinement will be. we're in discussions with japan. >> i understand. >> we just think it's time to get it done and try to resolve it. and japan has been very helpful and cooperative in trying to work with us in that effort. we'll continue to keep you informed because obviously it affects your home area, and we want to make sure that you know what we're thinking about before we actually make any final decisions here. it is important to try to keep that presence forward. my view is we need a marine presence that is forward, that is -- that i do not want to draw that marine presence back to this country. i think it has to be forward in the pacific. >> thank you. >> we're trying to be innovative in the way we do that. the approach we're taking in australia is an example of the kind of rotational presence we think can make sense. we're talking to the philippines

about doing the same thing. but the bottom line is we want to maintain the marine force forward presence in the pacific. that's an essential element of our strategy. >> thank you. >> another question i have is when the japanese see the updated plans from dod and identify the reduced number of marines coming. will they reduce the overall funding that they were going to supply for the build-up? will this lead to reduction in support for civilian infrastructure that's needed to support the military population on guam? if the japanese do reduce their funding commitment, how will the department ensure the infrastructure needs continue to be addressed? >> that's also one of the things we're discussing. as you know, one of the elements here is a discussing of a new air facility. a enit -- and it's an expensive process. but at the same time, they have

beennd it's an expensive proces. but at the same time, they have been very generous in saying whatever moves they have to make, they'll be forward in the funds to do that. i'm very pleased with the attitude the japanese are taking. >> so you don't think there will be any reduction at this point? >> no. >> mr. secretary, deputy secretary carter certified in writing, and i know this question has been asked before i arrived by congressman bartlett. he certified in writing to congress that the global hawk system was essential to national security. global hawk was $220 million cheaper per year to operate than the u2. the decision to pull 18 global hawk block 30 global hawk out is shortsighted in my opinion. your recommendation is a complete reversal of your position. can you explain how an asset can be critical to national security and then less than one year later be terminated? and can you answer how the air

force will compensate for the loss of this capability? >> i'm going to have general dempsey speak to that. but it is -- i mean -- look, we are very committed to unmanned systems. we think that's the future. but at the same time, we've got to make judgments about which ones are most cost effective. and i think that was behind the decision here. >> this isn't about global hawk. it's about global hawk block 30. it's become too expensive in relation to other capabilities we have. >> i have one final question, if i could. the f-512 requires that dod meet five requirements in order to spend government of japan funding that's currently sitting unobligated to the u.s. treasury. this is a matter of great concern in our community. what step is dod taking to meet these five requirements?

>> it's part of the overall discussions -- >> mr. hale. >> we need to arrive at sdoosh. >> the gentlelady's time has expired. could you take that one for the record, please? >> thank you. >> secretary panetta, i want so thank foee discussed the issue of a national standard for custody rights for our service members. we asked you to confirm secretary gate's and dod's policy supporting a national standard. unbelievably across the country, there are federal law court that will take custody away from service members. this committee members has been active on this issue, every committee having endorsed the national standard. we would appreciate your support and advocacy to assist us in making that law. >> second day, i appreciate your statement on the budget control act and the issues of sequestration.

it's a thing. as we look to sequestration, i think the american public do not know the great risks that could be imperilling our military, your statements on it are important. it's one of the reasons why i voted against the budget control act so we would not have this gambling with our military security. mr. secretary, as you know, i'm the chairman of the subcommitmir my cat toir. mr. secretary, as you know, your predecessor, secretary gates aged $5.7 billion to the national nuclear security administration for specific purposes that were articulated in this document, which i ask to be included in the record that was to govern the transfer of these billions to the national nuclear security administration. i would ask if you would characterize the department of defense level of comfort with how the initial $5 billion tranche has been spent. for example, where did dod's

$1.2 billion go that it gave to nasa to begin construction on the plutonium facility and how about the funding of the warhead which is again delayed in the nasa budget this year, seemingly without regard to the navy's need for this warhead. and secondly, mr. secretary, you kindly in a correspondence in november responded to the chairman and myself, requesting that we receive briefings on the nuclear warhead -- excuse me, the nuclear war plan and you had indicated that you would agreer with our committee. they have not commenced and we a are afraid they may be stuck in the bureaucracy of of the dod. and with the proposed 80% cut to our nuclear arsenal, you know, you indicated that these were just proposals or proposals or plans that were being reviewed, and it might be premature for discussing them. but i would like your input on

the initiation of where these are coming from. because it's our understanding that the president has asked to consider an 80% cut going to a warhead inventory of somewhere around 30 administration is in fact the one that is initiating it, it's not just coming from somewhere arbitrary within the bureaucracy, that would be helpful also. mr. secretary? >> if i could comment on your last question, this was -- this was all part of a nuclear posture review that was mandated by law and that the michigan that process of going through the review. and the second step was basically how do we now implement the review that was taken place. so it kind of followed that procedure. and there are a number of options that are being discussed. and as the general has pointed out, one of those options has maintained t ed thed the status. this is part of a discussion within the national security team.

and remains there at this point. as you know, reductions that have been made, at least in this administration have only been made as part the s.t.a.r.t. process, and not outside of that process. and i would expect that would be the same in the future. with regards to your question on the funding issue, let me ask bob hale to respond to that. that's the 5.7. >> we're working closely with nnsa. i think there are concerns on our part there has been some cost growth that it sounds like you're aware of. but they are fully committed to meeting our needs. and we're trying to work with them. these are important programs, and we need to carry forward with them. i think i'll try to provide you more detail pour the record. i can tell you we have a nuclear weapons council that meets regularly with nnsa representatives as well as ours. and they're deeply engaged in these issues. >> but you do have concerns, correct? >> yes.

>> finally, let me commend your leadership on the adoption issue. you know, we did have the chance to discuss it. i share the concern that you raised. i think it does need to be addressed. you've been successful at passing it on the house side. it doesn't seem to come out of the senate. and i think the one thing i indicated to you is i want to work with you to see if we can actually work to try to get something done on the issue this year. >> thank you. mr. courtney? >> thank you, mr. chairman. and thank you to the witnesses. secretary panetta, again i want to thank you for visiting the groton shipyard back in november. you had a chance to climb on board the mississippi and the north dakota which is under construction, as well as really a pretty extraordinary town hall with the workers on the pier there. we very eloquently described the value of the industrial base to our national security. in light of that, just to follow up on mr. langevin's questions, the mississippi, which was christened just a few weeks

later had come in $64 million under budget, 12 months ahead of schedule. and there is no question that the momentum of two subs a year, which took 20 years to get us up to that pace is achieving savings. that contract shift, which by the way that's the third time it's been changed, not the second time, mr. hale, there is no question that in terms of materials, management, in terms of workforce management, in terms of layoffs, which is inevitably going to flow from that shift is going to result in costs. i guess the question is did you include that in your fit-up in terms of the costs of that dip in production. which again, we're seeing real results now in terms of savings because of the higher production rate. >> so far as i know, the fit-up is fully funded. i hear your point. take $487 billion out of the budget, and we tried to do it in a way consistent with our strategy. but we had to do it. this is one of the issues raised with the navy, discussed with

them. and they would have er but it's where it is. it is a fiscal 14 decision. we'll get another chance to look at it in light of current fiscal realities. >> the strategy, of course, which was articulated at the outset today clearly focuses on asia-pacific. and you can't have an effective strategy without a strong undersea fleet. thank you for saying you're willing to continue to working on this. the long-term effects in terms of the fleet size will be decades. >> i was very impressed with what i saw in groton. i don't want to lose those skills. i don't want to lose that ability. i want to maintain that kind of an industrial base. we'll continue to do whatever we can to continue to work with you to see what we can do to reduce those costs in the future. >> thank you, mr. secretary. i also want to go back to mr. thornberry's point about the 2005 brac, which, again, i respect the fact that you have deep, profound personal experience in terms of what you went through in your time in

congress. but some of us have our own experience as well. i served on the readiness subcommittee for the last phi years. we've been following the 2005 brac like a box score in terms of its results. it costs about twice as much as was predicted, and as mr. thornberry said, the net savings is still years away. and, you know, obviously we all sort of get pinned as sort of looking at our own backyard when this issue gets discussed. but i think there is a legitimate question here, particularly with the fact that we've got a deal with the budget control caps. how you do this, in terms of not costing money in the short-term, the answers we've gotten so far from dr. carter and yourself is that it's zero in terms of projected savings for the plan that was submitted there. so zero minus zero equals zero. if we don't do it, it's annulty in terms of trying to achieve the budget control act targets.

and frankly, i think that's a very threshold question which the department has to answer before i think there is going to be any willingness to look at this at all. >> you know, i hear what you're saying, and the 2005 costs are frankly unacceptable, the way that process ultimately worked out in terms of how much it cost us. on the other hand, obviously in the long run, it will produce some savings. i guess what i would suggest to you is that we've been through three brac rounds. there are some lessons to be learned here. if we're going to do another brac round, as we have recommended, perhaps we need to do it in a way that tries to acknowledge some of the lessons learned here to make sure we achieve the savings that we have to achieve as part of the brac process. maybe that's a better way to approach this issue. >> it's my understanding that we're going to see language some time in march in terms of the

proposal. again, there is going to be a high degree of skepticism for those of us, who again have been tracking the overall results of the last round. and certainly i know you've gotten mixed comments here today. but i just want to at least share certainly for some of us. this is a real problem. i yield back. >> committee will take a five-minute break and reconvene at five minutes after. and mr. conway will be next. excuse me. it will be mr. klein.