california. seeing challenges in california and the federal force, federal reserve force not able to be utilized to help the guard address those issues. the national defense act of 2012 provided that authority the. those authorities were utilized in super storm sandy. the army reserve as a command and component has the authority and i have delegated this authority down to the command team, company level for immediate authority to save life and limb. as we speak, anything happens anywhere in the homeland, a company commander, detachment commander of the army reserve has the authority given to him by me under the immediate authority for under 72 hours to launch personnel and equipment to save life and limb. beyond that we need a different authority. going back to super storm sandy, general jacoby requested forces.

the army reserve responded within 24 hours and had forces moving to the east coast. i provided dewatering units, aviation assets to help the national guard and it worked just fine. break. go to d.o.d., fema, eplows. 100% provided by the army reserve embedded in your fema regions. 50% it shall over 50% of the d.o.d. are provided by the army reserve which is utilized routinely to defend the homeland in terms of complex catastrophes to support the guard brothers and sisters. that all happened in the national defense act of 2012. >> paul, before we go to you, judd, can you talk that from a national guard angle? >>yes, sir. in addition to what general talley mentioned about authorities in place a unique aspect of the air national guard is our ability to operate under state active duty underneath the

funding and control of the governors. the response capability exists. we saw it time and again across the 54. the additional authority that general talley mentioned, i might add in terms of control and command construct as we envision and have in the past utilized both title 10 and title 32 forces is the dual status commander. whereby in consultation with the governors and the department of defense a dual status commander will be the usual and customary method of employment of the forces together. underneath one commander with authority to issue orderses to both chains of responding forces. state active duty, authorities mentioned by general talley under the usual and customary command and control of a dual status commander when the forces are operational.

>> palul, from an osd perspective. >> i think part of the question -- thanks, sir. one of the -- i think part of the question was asked also in terms of response times, if i heard that correctly. and general talley mentioned also, that we have something called the stafford act which allows an immediate response of not only now the federal reserve, but all reserve. they're based on a deliberate mobilization, timelines, with notice of sourcing, mobilization alert, and so forth. but these are policies, they're not laws.

you know, if an emergent requirement is done, is needed, then the reserve component can be mobilized very quickly, both for emergent contingencies as well as humanitarian assistance, both overseas and in konas. we initially probably will be looking to rely on volunteers, because getting them onboard is a little bit easier. but involuntary mobilizations are also possible. and this is where, for instance, the 304 alpha authority that general talley mentioned would come into play. >> an example of what paul said, it's not just alpha, but bravo, but 12304. not that long ago there was a weather event at -- significantly impacted the

philippines. so we get a call from the u.s. army pacific that we need lsbs, logistics vessels in the water. i have about 5,000 troops supporting the army in the pacific. and i needed them the same day, launched, and to support general brooks. i was the authority for that, as the cg. they left the same day. that's how fast we can respond. >> thank you. >> we have a question on the left. yes, ma'am? >> my name is audra peterson. i'm with the national guard association. one of the concerns that we have at nagos is the future of funding for training. my question is, will your fy '16 budget request include funding

for the division in unit partnering initiative that you have mentioned? >> a couple comments. one is, the partnering piece is not specifically a line item, as i understand it, in the budget. we've done this in decades gone by as well. it shouldn't cost anyone. the partner on a variety of -- if i'm running an officer, or non-commissioned officer, professional development class, and i have to be located in state x, and also in state x is the national guard division or brigade, and they have to be 15 miles away from me, then i should, from the guide, extend an invitation that national guard brigade, to say i am having an officer,

noncommissioned officer opd. and the date and time is such-and-such, and the topic is such-and-such. and any or all of your people are certainly welcome to attend. so it won't be everybody. but with those whose schedules permit, they make it. or i'm running an ts. and i've got a company commission time and space to run some of your squads, or fire teams, or perhaps even individuals to augment these company live fires that are going to occur throughout the

next six weeks. and i call up my local national guard guy, and say, it's an opportunity for you if you want to take advantage of it. we try to do it ahead of time. is it specific money to do that? no. nor does there need to be a lot of money associated with that. that's a couple of examples of how it can be in hand at low cost. and i'll flip it over to general lyons if he wants to discuss any other issues with the budget specifically related to training of the guard. in your specific interest of the guard, if you want to start reserve as well. >> both are great. >> okay. so we'll go to judd first and then jeff. >> as we look ahead, particularly, i think the question was about 16 palm is submitted. fy-15 is a tough year for the army national guard, in terms of both paying allowance and omn. it's about $1 billion less than it was in '14. as we look to '16, we hope to see that increase. and on a rise throughout that palm cycle.

we're getting ready to get into 1725 palm bill. so we want to talk about those issues. but as general milley said, i think the root of the question is, it's when you go beyond a statutory annual training period. of 15 days. and so if you're a typical ctc rotation, it's extra days, both in the rotation itself, and then there's travel. and there's costs associated with that. we have to capture those in our palm efforts, as we do war fighter exercises. so that we can allow a division commander and staff to execute training events, in conjunction with war exercises and maximize opportunities. where that increases above and beyond a statutory annual training period, i think is the crux of the issue, and how do we capture that in the process, so that we can maximize each and every one of those engagements.

and i think that's just a -- that's a function of our articulating the requirement. and then capturing it in the palm process. we certainly want to do that. >> having said that, we have scheduled right now, for the national guard specifically, two combat trainings in a row, two division war fighter exercises, six brigade and extra guard brigade war exercises, and six ctc exercises. that's 21 exercises that are going to involve the brigade or above formation. and as you well know, since january, our combat training center rotations, the echelon above the brigade logistics, were provided by csbs. over half of those rotations are guard and reserve. that's an entirely -- that's a huge formation, and a real game-changer in terms of getting us off contractual logistic support. you've got a cssb that's really flexing their muscles in an

effort that is so realistic, it's almost better than combat. the environment is at play here. it's a big, large, huge learning curve for us. tremendous exercise. >> so the short answer is, if you're looking at in the case of the army reserve, has a plus up for training dollars above the 39 training days a year, divided by two, 39 training days a year. do we have plus up on training money for the entire army reserve in the pom 16. the answer is no. or 17. the answer is no. the answer in 15. the answer is no. uh the reason is, because of the budget control to take effect. don't confuse that with us not being able to meet readiness challenges. remember, the readiness model that we use in our army to generate readiness, not every unit needs to be ready all the

time at the same level. so we have to generate the right level of readiness to meet the response. the way we do that in the army reserve, and it's painful, is i have to take money and resources dedicated for other units and push to the right to make sure i'm getting the unit out the door in the available year for a contingent or combat mission. we get it done. it would be easier if we didn't have sequestration. >> okay. we have a question on the left side of the room. >> major nick mcmadden with the army national guard. >> there you go. you a red sox fan? >> no, yankees, sir. [ applause ] >> shut his microphone off. you have got to be kidding me. >> so, sir, my question -- >> the door is right back there, ranger. >> my question, sir, relates to leader development. you mentioned that that's one of the most important components -- >> i didn't hear the question. i completely shut you off. [ laughter ] i completely shut you off. >> roger, sir. >> leader development. no leader development for you. >> sir, in line with that leader

development -- >> i have some leader development for you. [ laughter ] >> sir, in line with that leader development, are we also looking at the program for professional military through to the war college and in, co academy? i know that active officers attend resident courses absent significant national guard components. could this also provide cost savings by integrating the l courses to the active component to get cost savings for them and the training we achieve for the officers? >> did you understand the question? i didn't get the accent. did you get the accent? i didn't get the accent. >> sounded like a yankees fan. >> all right.

next question? [ laughter ] >> i'm just kidding you. go ahead. he'll take your question. >> if i understood the gist of the question, as an example, there's a dl component to it and resident component to it. your question is, should we maximize opportunities for integration, and collaboration, perhaps if we had guardsmen perhaps more attending residence and active component experience learning -- >> absolutely, sir. in all of those courses throughout our training. >> so i don't want to speak for general milley, i think there's merit to that in terms of collaboration and integration between the components.

as we all know, when you're in training together, in resident education together, you build bonds and partnerships that last a lifetime in some cases. the same thing could be true through perhaps cost savings and opportunities through dl. you also said something, though, that is something that i wanted to drill into, and that is dl itself, distance education. using captain's career course, this is a reserve component, i think a perspective on this. as we continue to partner with tradoc on what is the content -- excuse me, not the content, but the duration of those courses, captain's career course, if i'm current, right now is an 80-hour dl, distance learning phase, coupled by a two-week resident phase, followed by another 80-hour dl phase. so the net effect there is to complete that critical training in the professional development, you're taking a captain out for two years, particularly if they're a company commander or

in another leadership position in trying to provide c-2 and leadership for their unit. so it's an issue. from the army national guard, that we remain engaged on what tradoc is, how do we recognize the customer base that is participating in those courses. >> all kidding aside, great question. it's really a question for tradoc. but as chief of the army reserve, i've had this question with both the current command for tradoc and past. i've had discussion with the chief. so my opinion is, and this actually is two and a half years ago, i'm having breakfast with the general and he asked me, jeff, what did multicomponents fail? this will get to you. i said, a couple ropes. one i said the culture is the army. and the second is, it was just too hard to integrate.

we've addressed a lot of those unintegrated processes over the last 13 years of fighting. but think about executive education. the best way to learn, and to change the culture of a large organization like the army, to make it a total force culture versus an ac centered culture is education. you need to have a one-school system where the faculty, active guard and reserve, in the student body are active guard and reserve. my opinion to the chief is, yes, we can get some operational functional commands, but the better place to put the energy is on multi-composts to tradoc. you may need to make it more distance learning friendly, which will actually save you money.

so had the same active guard and reserve, whatever it is, mos, leadership, whatever it is, go to one school, one school called the army, and everybody gets cross-pollinated. tradoc is looking at that really hard. that's one thing that they're considering in order to help change our culture, promote force policy and get to the issues that you raised. >> thank you. i appreciate it. i'll talk to you outside afterwards. >> we have a question on the right side of the room. >> another question? just kidding. i love the yankees. they're my second favorite team. >> congratulations -- or congratulations. i was thinking about the yankees. sorry. >> how about patriots? >> giants. sorry. >> that's two in a row. >> yes, sir. i'm colonel jennifer. there are nine active duty hospitals that are part of force com. as far as i know, there are 13

on the reserve side. until about the mid-2000, it was standard for combat support hospitals to do a rotation once every other year. this was the means of specifically ensuring that the combat support hospital could in fact do its protect-and-defend medal in conjunction with the medical requirements, and addressing civilians on the battlefield, et cetera. we relied on those rotations to ensure that all the combat support hospitals both on the active and reserve side were certified to do those jobs. but those went away. now having been in command of the 47th for six months, i can assure you that on the active

duty side, the protect-and-defend medal has been ignored due to the hospitals falling in on fixed bobs in iraq. and eventually in afghanistan. i personally deployed with a cache to tahiti in 1995 where we executed our own force protection. somalia was the first one to use containers to establish its perimeter. and likewise, in bosnia. so i actually, i guess i have a request, as opposed to a question, and that is that the jrtc rotation, or at a minimum some kind of ctc rotation be reestablished as a standard for combat support hospitals. we have been trying to get an ntc rotation. unfortunately we need to be requested. and the brigades going don't want to request us, because we're a space hog, and we have lots of equipment that has to be moved. so i wonder, gentlemen, if at a

minimum, you would take this issue back and -- >> let me toss it over to jeff for his immediate answer. but i noted it down. let me take a look at it. but you're going to have to swear allegiance to the patriots before -- >> sure. i will do that. >> patriots take over. say it three times real fast. how bad do you want this rotation? >> red sox, red sox, red sox. >> i'll take it on -- [ applause ] >> i will honestly take a look at that. i'll let jeff talk to you a little bit about the combat support hospitals and the reserves. go ahead. >> that's a great question. short answer is, it has nothing to do with medical service corps combat hospitals. it's an issue how do we get our enablers into the box with the ctss. this is a problem for a long time. it doesn't matter if you're in 1, 2, or 3. it's a question of not having enough bandwidth of getting all of our neighbors in the box of ctc rotations. in order to do that, we would have to expand, and increase the number of rotations, or ctcs that were conducted. we cannot currently fund that in the army based on sequestration. sequestration is going to hurt the readiness of the total army. all three components.

so what we're doing is the army reserve, and general -- first army general milley mentioned that cstc and war axis, and in those, these are not large enabling exercises, where we have combat support hospitals. and they are often connected to the ctc rotations. just work with me. you've got live virtual constructives. first army is supporting that. and you may be in the dirt in california, but plugged and played and participating with a live virtual constructive program where you're part of the ctc, even though you're not in the physical location of the ctc box. that's what we're doing now to give you that better experience. but we're trying to eventually get you into the box itself at the ctc. that won't happen likely for most of our enablers, regardless of the regiment, until we see some relief from sequestration.

not the answer you want, but that's -- >> let me also, jeff, turn to warren phipps in the crowd out there. if you could address that. warren phipps. first army west. specifically works and trains with combat. go ahead, warren. can you talk into the microphone? they're recording this. >> okay. it doesn't matter if you're active or reserve. we have an exercise for you. and just as general talley described, they replicate the battlefield from the bct boundary all the way back to the communication zone. we have a number of exercises where we can get you to those exercises, and with the ocs we provide, i have my own medical

training task force that is specifically designed specifically to help in combination with the medical readiness command in the reserves, to help evaluate the caches, and give you all the opportunity if you want to protect your cache. and evaluate the medical skills. there is opportunities out there. that's what the policy is all about. looking across the stove pipes and looking across the components, and leveraging the capabilities of all three and giving quality training to our soldiers.

>> i need to apologize. i've been through three first army cgs. sorry, mike. we've got the best, in my opinion. so sorry. >> this past summer we had two caches deployed out there simultaneously. one ac, one rc. and they had a battalion of ac op 4 against them. they gave them a company of engineers to dig into cache. it was also training for them. we will sustain that. >> got about 20, 25 minutes left. enough for ten few-minute questions or 21 few-minute questions. >> my company is admin services. i want to pick up what he said with regards to medical readiness. >> i think of him as mr. phipps as well. [ laughter ] >> part of the services that my company offers, and provides for the national guard medical readiness, i was wondering if you could expand a little bit how that fits into force protection.

>> can you say that again? >> medical readiness. how that fits into the policy you've been discussing. >> the medical readiness of the individual soldier? or units medical readiness like with the hospitals? >> for the soldiers. >> for the individual soldiers? >> the weekend event. for the battalion. >> okay. >> i can give you an army guard perspective on that. first and foremost, the army national guard is about 68% medical ready today. highest in our history. highest of all three components, just so i can get that in there. [ laughter ] yankees fan. you know, i -- >> so is lyons as well. he can join mr. phipps. >> i would offer that if i understood your question, what is the linkage between that and total force policy, the things we've been talking about. i think there's a direct linkage between the medical status of our men and women that serve, and operational employment and engagement. if you don't have one, it's difficult to have the other. so we have gotten after this

issue over 13 years. to that historic high that i just talked about. so sitting here today, if general milley needed to reach out to an army national guard unit, he can have some assurance that the soldiers in that unit are medically ready to deploy. that's operational readiness, that's part of being an operational reserve that the army national guard is for our army. it's critically important in my opinion that we continue to sustain the medical readiness in the army national guard. because the cost to rebuild that readiness when it's needed would be so much more. so i think the investment to sustain it is worth it. in terms of operational employment in the army national guard. >> jeff? >> our medical readiness is the highest it's ever been for individual soldiers in the army reserve. it's going to go down. i've got less to do less. i've got to cut the support for individual medical readiness support to our individual soldiers.

which means i'll rely more than ever on general tucker and the first army. if it's a contingent mission, i cannot take the soldier if they're not medically ready. i'll rely on general tucker to help me get them to the medical readiness. mike, i don't know if you want to add anything. >> sure. you know, we touch these types of subjects very carefully. this is a chain of command responsibility. first army is not the unit in the chain of command. we assess the -- we would get involved with medical readiness as we begin a notice of mobilization, and we begin to do what we call a joint assessment with an organization as they prepare for mobe. we would do a joint assessment

and begin analyzing their personal readiness. the unit commanders at the jas, we do two of those a year, we did 38,000 mobes this year, we'll do 21.5 next year, about 15 the following year. of course, some things may change. but specific to the point is that, we get individual medical readiness in what is called a joint assessment as a unit is mobilized. we track that with the unit commander, and his chain of command present all the way prior to mobe, and through the mobilization. >> okay. paul? >> just one point on that, as far as the individual medical readiness is concerned. and prior to, let's say a mobe alert, at which time the alert -- the alerted reserve component member would then be eligible for tri-care. prior to that, and anytime

during their membership, the reserve component can enroll in tri-care reserve select. and for $50 a month, the -- you know, you can also address your medical readiness that way. and so that's something that also needs to be considered when we're talking about individual medical readiness, is the availability to tri-care reserve select. >> the question in the front? >> doctor? >> general milley, wicked red sox fan. >> finally found one. >> my question has to do with medical readiness functionally of the u.s. themselves. i, too, was a hospital commander and brigade commander. the one intra-service workings that i saw work well were in the medical units where the boots hit the ground, as far as

surgeons doing trauma surgery, assistants learning how to assist, how to pass instruments. and years ago, not that many years ago, we had a number of initiatives with kings county in new york, with miami-dade trauma center. i presently serve as the ambassador for the joint army reserves in cumberland, massachusetts. i'm very well acquainted with a lot of the teaching institutions who have expressed interest in having our reserve component physicians, and fsp members drill, for lack of a better word, under their auspices in their trauma centers. but it seemed to have fallen into some sort of disarray. as an ambassador, i wonder if this is the type of thing that i should entertain, or is there

going to be first army guidance on this type of training. not just for protection, but actually doing the surgery. >> let me make sure i've got the question right. so there possibilities or potential now for reserve component physicians to train alongside their active component counterparts, et cetera? i'll let jeff take that on. i'm not as familiar with it as i probably should be. >> you're new, sir. >> yes, thank you. thank you, general oscar. >> oscar's answer is yes. contact aaron feedy, the director of the partnership initiative. we are actually doing this already. we have select army reserve units that have developed relationships with public hospitals, private hospitals, and they already do the exchange and the training by coordinating their battle assemblies and rotating various folks where

they train on the hospital, the private/public hospital and in the units. we're expanding it. >> there's a plethora of trauma centers who are always looking for help, for lack of a better term. >> but you're talking about individual training? >> i'm talking about individual training, or sending the fsts, as an example, all three fsts in new england are on the deployment roster. it would benefit everybody if they could drill as a functional entity rather than wait until we cross levels. >> we're doing it for the initiative, but from an operational perspective, the gentleman to your left, he's my 357. so he's got -- we can take those units, and we can look at how

can we plug-and-play into the existing capabilities in the boston area as a prep for their mission. >> thank you. >> thank you for volunteering your service. that's good. i like to see that. >> we have another question in the center. >> backup from asking another question about the guard reserve. does force com anticipate there will be a commission on the army structure? and do you think it would be -- >> force com -- does force com anticipate what? >> that congress will add for commission on the structure of the army overall? >> i have no idea. force com -- well, i am force com. so therefore, i do not know if congress will have a commission. >> thank you. >> but maybe there's others out there, again, i don't know. do you guys know the structure of the army? i've heard talk of it. i can't speak for congress. maybe one of you guys -- paul, anything on that from osc? have they said anything? >> boy, that would be a good idea. >> there's a bill in the house and senate.

whether the bill becomes a law, it's up to the elected leadership. i don't know whether those bills will become law or not. >> i don't know. i don't know if that's going to happen or not. people are talking about it, but i don't know. >> we have another question from the right side of the room. >> that's probably not a satisfactory answer for you, but i can't give you a better than one that. yes, sir? >> british army exchange officer. >> british army. >> currently the projections for the 2015 strength, and 2017 end

strength, and god forbid sequestration, have the active component, the national guard component and army reserve component, almost identical, around 36, and 20. could i ask the panelists if they broadly agree and endorse those percentages split between the three components? and if any of them have an opinion that there is a tipping point below which they would tend to disagree that they should stick with that percentage split? >> yeah, i mean, first of all, there's no one up here that's a nostradamus. so we can't predict if a sequestration will happen or not. what the army has done, for the total army, is establish fundamentally our options. depending on the conditions that occur. we do know that a sequestration continues. the numbers are going to not be good.

but it won't just be a numbers game. so it will be numbers, then strength, then structure. it will be a lot of other things. readiness, health of the force and so on and so forth. all of that collectively will suffer. is it a tipping point? i don't know. i hear that term all the time. i read the book. got a lot of time for concepts like that. but i don't know. the whole point of the book tipping point is you can't predict the tipping point ahead of time, you can only look at it from the history perspective. you can't figure it out ahead of time, that's part of the book. so i don't know. i can't predict if that would be a tipping point. i do know, though, in my estimate, my estimate of the situation, as senior leader, commander of force com, that sequestration would be ungood for the readiness of the united states military at large, and the readiness of the united states army in specific, and that's all components of the united states army. with respect to going forward, the numbers going forward, number x, then there's a number y, and then there's a number z, and there's numbers after that. i would almost say at this point, you're almost rolling the dice as to which one of those

numbers will become the real number. and there's a lot of room between those numbers that people are talking about. right now, at forces command, for active component, i'll use that as the example, but we're also working the national guard and the reserve component pieces as well. but we're figuring that the base case is 490. on the active component side. and then there's a possibility, significant possibility of going to 450 active component. and if sequestration continues, you could see it go lower than that. i've seen a wide variety of numbers tossed out. the proportions between guard reserve and national -- the guard reserve and active component, that's a great question. right now, the options we're looking at keep them roughly

speaking around the same. but depending on the situation, depending on conditions, depending on what's required in the world, depending on what we perceive in terms of resourcing down the road, those proportions could change, depending on what the senior leaders want to do. and there are lots of options out there. i would say that right now, it's a -- it's too early to tell, in terms of specific numbers, for those particular years, if you were to ask that same question in february, next february, i'd give you a better answer as to what direction it's going to go in. we're probably about 90 days too early in terms of giving you a specific answer to that. at least from where i sit. and i'll let judd and jeff talley take a swing at that as well. unless you want to make a comment on it as well. judd, any comments?

on the numbers for the guard? no? >> i would refer to general talley first. [ laughter ] >> they're in avoid contact mode. go ahead. >> i think the short answer is, and i've testified about this before congress a number of times. if we stick with the president's budget, the army reserve would go from 205 to 195. and that's risk that we can accept, and still meet mission requirements. if the sequestration stays the law of the land, doesn't change, i'll be driven down to an end strength of 185. that's over the next three, four, five years. at 185, that represents significant risk in terms of my ability to support the army, because the army reserve not only supports the army, i

support the total force, as i already said in all the combatant commands. general milley properly said, we don't know. we're about 90 days before we'll have some clearer visions as to what the congress and elected civilian leadership is going to do on that issue. what i would say is, it's not so much about the end strength from the army reserve, i'll stay in my lane, the army reserve, it's about the readiness of what you've got. when i have people talk to me about, well, the sky is falling, you're going to reduce your end strength in the army reserve if sequestration stays in place, that's not the real issue. it's what have i got, and is it ready to go do something to help our army and the nation. so you could keep my end strength at 205, which is what it is as of right now. end strength objective is 205 until 2015 gets approved, then it will drop to 202. even with 205, if that's not ready, the end strength becomes a moot discussion. you can't separate the end strength discussion apart from the readiness, and ready to do what. >> i think the key thing is what jeff mentioned, ready to do what.

i mentioned that in my comments this morning. readiness for what? talking specific numbers is almost an exercise in futility. unless you relate it to some sort of strategic purpose, strategic objective for which the united states is trying to achieve. those numbers might be fine for the low end of the military operation. but if you start looking at other potential things that the united states could be involved in, then you have to start asking yourself some serious questions. and i don't know if you've ever read a book by t.r. farnbach, called "this kind of war" and the subtitle is less unpreparedness. it's written about the korean war in 1950. and it talks about the 21st infantry, and there's a guy named lieutenant colonel smith, in the army of occupation in japan at the end of the war. a member of the 24th infantry division. and he was the battalion commander. so you all know the story, north korea attacks across the border

of south korea, with about 80,000 north korean soldiers, who are extremely committed to their communist cause. they come across, and the south korean military was fundamentally a little bit better, rudimentary light infantry forces. there were american advisers there, but there wasn't a significant amount of combat power there to resist the north korean attack. so the united states, very short notice, within days, president

truman decides to go ahead and commit the u.s. forces under u.n. mandate for the peninsula of south korea. so the 24th division, then under general keene, dean or keene, he goes across the straits there, and the south korean -- or the 24th division starts working its way up the road to seoul. and they get up around oson, and the 21st infantry division gets up and starts this defensive perimeter to form an engagement area to stop the north koreans coming down the western corridor. and lieutenant colonel smith is looking up, and he sees north korean tanks coming down the road. they start shooting rounds at them. the rounds start pinging off. and to make a long story short, the 21st infantry, colonel smith gets overrun. the 24th division got hammered pretty hard, where the commander ended up being a prisoner of war. and the onslaught continues, and macarthur does his left hook and one thing leads to another, and the war settles out after about six months into this hill battle, and stalemate. it ends three years later, after 38,000 americans are killed.

but there are a lot of the 38,000 killed, were killed in that war of movement at the beginning of the war. and the united states army, in 1945, was unparalleled in the world. the united states military was unparalleled. the navy, the air force, marines, of course, the army air corps. but in 1945, it was unparalleled in power. you could say the soviet military was pretty significant, and it had a lot of numbers, and they did an awful lot of damage to nazi germany. but the united states military was something to behold in the fall of 1945. after the signing of the missouri. the japanese signing on the missouri. five years later, only five years, that military of 10 million strong, 300 aircraft carriers, 50,000 b-17s, 89

combat divisions, that military in five short years went from the most powerful organization on the face of the earth to an atrophy organization that was in the army of occupation of japan. where platoons had three squads, supposed to have three squads, ended up having two. where a company commander or lieutenant instead of captains, captains instead of majors, there wasn't enough ammunition to shoot on the rifle range. they weren't doing regular pt. they were doing insillary guard. mortar ammunition wasn't up to date. and they weren't firing mortars or anti-tank weaponses and so on and so forth. and the readiness level that you just heard general talley talk about and jed lyonss talk about, dropped precipitously. the blame is at all levels. we had policy failures and so on

and so forth. but at the tactical level, the the regimental commander who were not enforcing readiness at the time. it was all share and what did it end up being? what's the cost and the message of sequestration. it doesn't take long to rip an army apart. what happens when you reduce the readiness of your force either the side and or the readiness. you pay it in blood of the american soldiers and say it's an airman and marines. the cost is paid in dead bodies. they are our dead bodies where it takes a long time to recover where you might have to take

months to retrain and regenerate a force that can counter. we have to be careful as we go forward. the other services by the way, not just him and the secretaries of the defense and services, the bells are ringing. if people are paying close attention to the secretaries saying, they are saying be careful, united states. united states people. united states congress. be careful as we go forward. they are an expensive proposition. you have to pay for it. the only thing that is more expensive than fighting and winning a war is fighting and losing a war. that you don't want to do.

lots of taking over the year or two. it's the authorities. it's a tough situation we are going into. there was a saying called no more. that was drilled into our head by then, the chief of staff for sullivan who happens to be the head of ausa. that stuck with me and where the story of smith comes from from that particular book. it's back in the day. it's a good warning even today as it was then. did you have a comment on the money piece there? >> not on the money, sir.

these numbers and the army national guard will come down and do 350,000. by the end of 17, under the current budget submission will be 335,000. should the budget control act remain the law of the land which it is, in 19 would be 315 thousand thousand for the army national guard. characterizations of risk for the guidance. csa has characterized for all 3com ponents there. particularly at the bca level. to the general's point, this is about puts and takes over the next period and it's an

uncertain world. the end in the testimony. he characterized the risk. if sequestration is, he state the state as well. and some very difficult choices made by senior civilian leadership as to what it is you are going to do and what it is you are not going to do. next question. thank you for that question. yes, ma'am? >> we are a small business. we have about 200 employees. when sequestration hit last year, before i could give my employees, i made each one write a letter to a local senator and congressman asking them to stop

sequestration because it was close to our heart in terms of our employees could get laid off because all of them worked at the bases. what else could they talk to? >> i will give members of the executive branch. what action to take or whom to lob tow do what? i say all of us are not in the business of saying stop or start sequestration. we are saying if sequestration continues, then the following other things happen in terms of risk and readiness to the force. i don't know if you remember the movie dragnet and you might be younger than that, there was a guy there named joe friday and he was the facts. we are like the facts only kind of guys.

we should not render opinions so to skpeek it would be inappropriate for any of us here to say we think you should do the following actions to generate congress to start or stop our political action. that's not our charter. we don't do that business. i appreciate the comment and the question. >> the second question, thank you again for your service and -- >> you are going to come at me again. okay. excellent. most excellent. >> i must say you look serious, but you have a great sense of humor, thank you. >> yes. when in pain it is good to have humor. >> it takes more muscles to brown than to smile. my next question, a small business does a lot of technical manuals if for the soldier in theater and locally. we have been trying to present new technologies or ipads or

doing about glasses or anything that makes it for the services. we seem to be still living in the old ages where they want to see leinart drawings. i wanted to know what your thoughts were. >> the requirement on any piece of military equipment is still to conduct the before, during, and after operating checks. if i'm driving a vehicle or offering or whatever, the problem we have is shifting to electronic stuff and we no

longer print the machineuals. the training center and our maintenance degraded as a result of not having a manual that gives you the technical checklist to go down and conduct your before, during, and after checks. the idea that we have to get electronic devices -- some soldiers are out there with iphone and that's not cool. that's not right. that's their own personal stuff. we are a forces command and we are taking a look at in order to arm the soldiers or the leaders with the capabilities to do what they are doing down here, to have the manuals and electronic checklists for something as simple as manuals & the checks

and printing smaller printing on the entire manual. there is a couple of work arounds as we transition from an industrial edged paper based military to a much more complete information-based paperless military at sometime in the distant future. we are somewhere in between and having to come to grips. the effect is real in that the equipment, you have to have a guide or a checklist to go by and i appreciate you working on it. >> the young soldiers today are challenged for the checklist or

picture that points to that bidding or linkage over the past 10 plus years when we are deployed. we haven't been deployed on the war fighting equipment and so now that they are back home and home station and we prove that at the training centers and other exercises, we are challenged to maintain readiness at a level we used to and the entire army is really, really challenged with how to maintain our equipment so that our fully missioned rates are commensurate with the total army ratings. it's a real challenge.

>> i'm not trying to suck up to you, but go red sucks. >> we have time for two or three more questions and then i will have to shut it down. do we have another question out there? over here to the right. they are exiting. they are leaving and going back to new york. other questions? sir? >> i was roading for the red sox last year. senator coates, what lessons do you have? >> you said you are a senator? >> i work for senator dan coates. >> i wanted to make sure i was not talking to a senator. what lessons learned do we have for friends and allies struggling with the same issues of total force. >> it's interesting you say that. we looked and we at forces

commander are looking at the army generation process. and the r 4 jen came into being probably about whatever it was, 7 or 8 years ago. to answer a specific need for the nation to generate brigade combat teams and more of them in order to be able to provide forces to fight the fight in afghanistan and iraq. and it was very lad based. the latest arrival date. that was a predictable model and we -- it became that we knew where we were going. either iraq or afghanistan. they were put on a conveyor belt. we as leaders took our unis and we got trained. instead of training the units, we got trained by the bigger

army. we just put on to this treadmill and we were deployed over to afghanistan and iraq. we knew where we were going. we knew the timeline. we knew well ahead of time and when we returned we had a big readiness cliff where we would drop our readiness levels and status and cycle back through the system. bring it back up and off you go again. that was what we did we are looking at how to do this differently as we go forward for across all of the components. and it's not an easy problem. one of the things we did in the forces command is looked at other armies. we asked how does the british

army force generation. how did the french army and the german army and the japanese armies do it. we looked at all the different models and the u.s. army and the u.s. navy air force and marines and special operations forces and all these models and we are in the process of analyzing it. we haven't come to a final magic solution. here is basic things that we know that we are going to have to have. characteristics. in this revised model or forced generation process as we go forward. we know that the output, the product, the force generated and the unit, we know that we will have to produce a product that is global. so you hear the chief of staff and the army say globally responsible. a global force. you hear that throughout the

regionally engaged? we have to have a force that is global and we have to have a force that is regionally capable of being regionally engaged in combat and commander phase operations. we know that. we know that the force has to bea beage -- be agile. they have to move quickly and respond to different situations. has to be agile. respond to the left and the right. the future is unknown. there a couple of other seminars about the army operating concept. one of the key fundamentals is we have to plan for the unknown. we have to look at the situation around the world and not bank on any given particular area of

operation. it could be this, that, or the other thing. we have to beage il and flexible. we have to be adaptive in our capabilities and tailor the capabilities to whatever the situation is. because we are the united states of america and we have global responsibilities, one of the key tenants that the general wants us to implement is that we tor not only partner with the reserve component, but to facilitate the tissues of the global land power network. we see officers in the room here are non-commissioned from other country's armies.

they are generally speaking friendly to us. otherwise i may not be in the room. we want to build the relationships to one of the tenants of the model. they have an understanding of other country's armies and working very, very closely. we know that if it's a no kidding war on the one hand, on the one hand of the military operations or something like responding to an ebola crisis or haiti earthquake. we know for certain the army will go multicomponent and go national guard reserve. we know we will go joint. we will go army, navy, air force and marines. we also know we are not going it alone and the stars and stripes are not going to do stuff. it doesn't make sense.

we will go to our allies and friends. my last command was in afghanistan. it's the assistance force. we had 54 nations in that. my chief of staff is british. on that staff we commanded a controlled american unit, but also italian and german and french and british and so on and so forth. all the junts that are operating. it might not be the ten or the

or it might be 154. we know that working with other countries may be fundamental and it will be adaptable and flexible to work with the militaries. that's what we may or may not have. i have time for two more three-minute questions. sir? >> thanks for being here. i'm a retired army person. this is going to put you back noisily on what you were saying. go bruins. when i was in service, we never had enoughling i wifts and officers to the point where i got pulled out for the

partnership for peace and state partnership programs. how are we doing beefing up with the foreign knowledge and the foreign experience. we are not going into embedded people or has to reach that point, but people who work and understand are allies. several times i had to pull my boss out of the meeting and say sir, you can't say that to these people. because of their yesterday. his response was we are paying for it. that's immaterial to their culture. thank you, sir. >> i don't have mary in here. they have those types of things

and i concur that we, the united states in general as a society. as a military in particular do not leverage our skills to the level we should. as mandated amongst our officers. the soldiers or the sweetish or the finish or the norwegian or wherever, you will find in the armies that they will speak multiple languages. you will find many of the asian countries will speak english as a second language. our ability with our ability to speak languages.

on the flip side, we are a nation of immigrants. we are a nation of people from every country on the face of the earth. within boundaries of the united states, we have people that speak every language of the entire earth. within the army who speaks foreign languages. it's remarkable how many people we have that are native speakers

and don't need one ounce of training. we have got them and cover ever language on earth. i would tell you that the failed program itself has been strengthened recently i believe not only through the training programs and the professionalization, but we also strengthened through the rates of promotion. they are represented. i agree with the general premises though. we have plenty of room to improve as a military ands an army specifically. specifically language training. i think we are not too bad at cultural understanding. we have gotten better at it over 13 years and we are good with working with allies. that's all we have been doing. that's all we have been doing. we have good muscle memory built up for that. language training is different.

that's very specific. it's a hard skill. it is not something that we as a society have developed to the levels we have seen. in the army at large, i will speak to the army national guard. in linguist capability. the intelligence brigade. what that offers the army is what we are doing which is the policy in action. to develop and mature the ability to bring that capability to bring a title ten status and a in a title 32 status on our normal weekend or annual training periods.

that highlights new story about tapping into that capability both in a full time status for a title ten requirement and a title 32 in support of a title 10 requirement. that's a good news story for the army. >> i'm going to cut us off there if i could. i'm respectful of your time and respectful of the panelists as well. thank you for being here today and thank all of you for being here. it's a complicated topic, but we have a great army. we have a great total army. my guidance as you may have heard was that there was nothing

we will do that's the leadership development. i will stay up here and thank you if you have a side bar. a specific question and i don't want to keep everyone later than we already are.

thank you very much. >> jessica taylor has the campaign editors to talk about the campaign elections. give us your condition of the senate and tell us what factors into that thinking. >> and they have more opportunities for defending double the number of seats that republicans were. also republicans have succeeded in expanding the battle ground and two of the closest races we are watching tonight through iowa and colorado. they have successfully made competitive. we see ernst with a slight edge and leading senator mark udall. i am watching to see whether it tips as republicans. as i think they said earlier, we are also watching to see how

maybe north care linea is and that can fore telewhether it's a good night for republicans or a great night or democrats do hold on. they are favored to pick up the six seats. >> even as you are watching the races, say north carolina goes towards kay hang in. where do you go from there? >> they talked about it and kay hang in with all the incouple bands have been able to hold on. she held her own and succeeded in separating from the environment. and it's head of a very

unpopular state. she made this a local or state election. as she hangs on, there is a chance for democrats to minimize the losses. they could hold on. it's very close. they are having a path for majority. they run smart races and people like mark pryor and arkansas is expected to lose, but he held it tight. he needs a good ground unit to help him. >> they cut a radio ad for hang in. talk about the influence and they get the voter as the people head to the polls today?

are some incumbents were this this delicate stance. they turn out if they want to win. they are doing this call for the target at specific voters and you have done the same thing in georgia. they are in a close race with them and must have the turn out to win. they are in the same with president obama. she released his ad the day before the election. there were questions whether she would appear alongside them. they had to -- they can't be seen too close to the president. they need him where he is still

popular. >> we printed at it. >> they think it could be a late surprise. senator scott brown from massachusetts, they tried to paint him as a political opportunist. people will be skeptical of him. he has a shot this is one we have to watch, but he pushed it

away early and that's a good sign for democrats going forward. >> jessica is the campaign editor. they will be watching on the phone. miss taylor, thank you. >> c-span has brought you 130 candidate debates that will determine control of the next congress. they watch the live coverage to see who wins and who loses and which party will troll the house and senate. they begin with results and analysis and see victory and concession speeches and the most closely watched races in the country throughout the night and into the morning. campaign 2014 election night coverage on c-span. >> tonight it's american history tv with discussions on strategy

at 8:00 p.m. eastern. the impact of the jazz age on modern america is at 9:45. government-issued credit cards. what is being done been the reports and agencies to identify and address the abuse of government purchasing cards. the congressman from florida chairs the government operation subcommittee. >> i would like to welcome everyone on the subcommittee to operations. this is the subcommittee of the house government oversight and reform committee for this hearing on october 14th.

and first of all thank them for the negotiation and working together to make the hearing a reality to make it a simple process. they planned to conduct the hearing at least two times before. one time we eliminated votes that the members didn't return. another time we had a schedule and this was a convenient time for this hearing. i think it's an important responsibility. first i think the ranking member for his forbearance and cooperation it involves gym

memberships, gift cards, hair salons and the purpose is examining the misuse of government-supplied credit cards. as we start this hearing, we always start the hearing. >> the right legislation and everything outside the constitution is created by law or funded by congress. early on at about 1808, the founding authors created the

forebearer of this committee and that's the government reform and oversight committee today. we had various names of that purpose, but it's one of the few governments that i know on the planet that has additional check on how money is expended for programs that are authorized by government. it is an important responsibility because the public has the right to know how their money is spent. that's our duty to see that that money is properly spent. with that little opening statement of our principals and purpose of the committee, i want to turn to the order business which will be opening statements for myself, the ranking member mr. conley and we will recognize the witnesses that we have.

we have five witnesses today. we will proceed with questions. appreciate the witnesses appearing. again, the purpose of the whole hearing is to look at the way credit cards and micropurchases, small purchases are made. we formed them 30 years back to allow the use of credit cards and the program allows a government issued credit card for small purposes. we did a hearing prior to 2012. trying to improve that process. the program gives federal departments and agencies and employees the flexibility for

the small purchases which are currently capped at $3,000. one of the key benefits of this program, the credit card program being allows the government to avoid burdensome administrative cost and a lot of paperwork. unfortunately while it does simplify the process and it does save money and have serious drawbacks, in 2008 the government accountability office published a control with agency and purchase card programs exposed the government fraud, waste, abuse and loss of assets. that's quoted from this report. and congress responded to this and other passing a bill that some of us were involved in in 2012 that was called government charge card abuse prevention act

of 2012. what has taken place and how effective it has been. this act among other things required tighter controls and also allowed departments and agencies to fire employees who engage in fraudulent use when using government card to make purchases. they engage in annual reviews of the programs. we will highlight one of those today. this does not apply to the department of defense. we had one representative of the air force to testify about how they avoid fraud in the purchase card program.

we will hear about whether they need a statute like we have with the government prevention act in 2012. we will question as to whether we think that type of law needs to be imposed on dod. today i expect to hear from some of the civilians about the effectiveness of the act and one of the reports that we are going to cover here is back in march. we had a delay in conducting this hearing. the office of inspector general at epa issued this report and

inappropriate epa that we will hear from the that regard. we will find from that report that they did not provide effective controls required by the 2012 laws. they found over half is sampled. they took a sampling, but half of those who a are that were sampled were prohibited, improper or erroneous purchases. again in that report, it is startling that 94% of the report were not in compliance. they were not in compliance with policies according to the law. we have evidence that the dhs

spent $12,000 all purchases and charges that one particular coffee shop in california, i got a little starbucks, i'm not supposed to show labels, but they bought $12,000 worth of starbucks coffee at this california location. this is a coast guard in that one starbucks. pretty heavy bill with the credit cards. we are up to $31,000 that they spent at that starbucks. they have different reports that have been filed. a recent reports suggests that the bureau of land management use government charge cards to

buy almost $800,000 in gift cards. this is another recent report and the office of the inspector general and u.s. department of the interior. we have another agency that again has gone wild with these microcharge card purchases. they are not with us today, but we spend to follow-up with them. with that agency and any others that we see abuses. another example of abuses and the department of labor, the inspector general office is with us to discuss serious abuses they found in their offices oughtitted the job core program. i will focus on this report for a moment. it's a model for how an ig should operate and interact with the department over which it has

oversight. the labor department office of inspector general received a request for an audit and a review of the job core in my home state and the city from the department of labor management. the request related to allegations that the miami office was abusing this purchase program. they conducted an audit and say they were using prepaid debbid cards for their own personal gain at that office. they found similar abuses across the u.s. specific to miami, the cards were used for nearly $100,000 worth of trips to the hair salon, clothing stores and payment of personal phone bills.

as a result of the work, and through their work, threw miami employees were terminated and referred to authorities and two others resigned. this demonstrates how it should work and we gave strong authority in that to act. the differently defense is not covered by the act, but the largest purchaser and we have done review and found serious abuses that need to be addressed. they have examined abuse of taxpayer dollars. in 2012, the transportation infrastructure held hearings on

the infamous las vegas conference. that's not took days ago, jeff neely of the now infamous gsa employer responsible for organizing the extravagant las vegas conference that caught everybody's eye, i think we have a picture of him. everybody recalls this guy, thumbing his nose at us on a hot tub. it took all that time to document and go after the falsely filed statements that mr. neal he meat. he said his travel was for official purposes and many of his purported business trips were as we saw and identified for pleasure.

the individuals in miami and mr. neely are the rare bad examples of federal workers and our federal workplace. the vast majority of federal employees are honest and hardworking, dedicated individuals. i hope today's hearing will serve as both a reminder that we need to do a better job monitoring this credit card program and also act as a potential deterrent to deter bad actors. make no mistake. congress and the inspector generals and the managers, all of us in wng will hold the offenders couldable. they send their taxpayer dollars to washington and expect and serve to have accountability and

responsible use of their tax dollars here. if the 2012 law needs additional reform, we will reform it. if agencies fail to uphold the law, we will hold them accountable. we will take the appropriate action and we hope that will achieve the goal. we will not have a political issue, but a fiscal responsibility and proper conduct and operations of our federal government and agencies. and mr. conley worked in lock step and never faltered a moment in assisting in this effort to go after again people who abuse the law. he is joining me today and sending a letter requesting an

update to the audits and investigations they have previously conducted on the credit card fraud. without objection, a copy of that letter will be made part of the record. so ordered without objection. i want to thank him for his steadfast commitment to again going after abuses where we have employees who are rewarded and recognized while this is a small quiet area today, it's important. i thank the witnesses for their participation and let me

recognize the distinguished ranking member from the nearby state of virginia. thank you, sir. and a model for how i think the broader committee and structure in congress can work. we have been able to find common ground and i appreciate your leadership and friendship. >> thank you, chairman. >> a small but important activity.

>> i was showing how lucky they were. it's brought agreement over the entired outcomes. namely dramatically reduced with the government charge cards and ensuring agencies are identifying abusers and taking appropriate enforcement actions to deter such conduct. to build trust and basketball institutions is absolutely vital for them to conduct the real and perceived risks of such waste fraught and abuse. when i served, i made it the policy of my office never to use or possess a purchase card. that not only eliminated the risk of waste, fraud, and abuse, but carried value whereby to enhancing the community's trust in the local government.

a vital characteristic that may be difficult to quantify and i think is essential. it has something to commend it. ensuring the response to the ig recommendations is a critically important facet of the oversight and i look forward to receiving a progress update this afternoon. in addition reviewing the three ig reports, i look forward to learning more about how they improve the charge card program after examining one specific of high quality commercial grade machines intended to serve thousands of service members on a daily basis. although this acquisition was not a small dollar charge card purchase, it recently garnered negative attention due to the cost alone and i hope our air

force witness can provide us with contexts to allow why the purchase was made for the machines and the cost associated with it. we must have our ownests and the bipartisan abuse prevention act of 2012 which you mentioned. prior to the passage by congress and in 2012. it's important that our committee provide context to ensure we do not throw the baby out with the bath water. to truly safeguard taxpayer dollars and evidence derived and authorizing the employees to use

credit cards to make microproblems. this achieves cost savings and cost avoidances that outstrip the cost associated with unacceptable incidents of charge card abuse. they cost them and the use of the cards generated more than $1 billion, but that's over the past decade alone. the rebates known as refunds to agencies based on the amounts changed to the cards. it is vital we not overreact in response to outrageous. isolated incidents of abuse with brought one size fits all restrictions that revert our federal procurement back to the

pre1998 era that featured burdens and more cumbersome bureaucracy as a low cost noth stream line acquisition. as the office of management noted in the memorandum, and making micropurchases, the majority of the 260,000 purchase cards in circulation are in the hands of frontline civil service to support mission delivery. to be clear, i'm not minimizing the findings of accountability. in fact, that's one of the reasons that i reported the government charge card abuse prevention act.

i further recognize while congress codified the majority of recommendations in passing that bill as the findings of dhs, dol and epa remains that much more work remains to be done. in the inking remedy if that is what is required. as the conference scandal demonstrated, the nature of misconduct results in consequences. they go far beyond the dollars wasted. for example, in my direct, constituents often and the pendulum too much in the other direction. preventing effective communication between public and private sectors inhibiting interagency coordination and perhaps having a chilling effect on the innovation that occurs from networking.

we cannot rest until we had internal reform standards to lessen the risk of waste, fraught, and abuse. the consequences are consistent and in relation to the severity of the abuse. we enhance enforcement to ensure justice is carried out and to ensure credibility on the part of the federal government and with the taxpayers. also do right for the federal employees who as you indicated are hardworking and honest civil servants. i look forward to the hearing and our testimony. thank you, mr. chairman. >> the ranking member, thank you for his statement. all members may have days to submit opening statements for the record.

now let me turn to recognize our panel. i will introduce them first. we have janet casper. she is the director of contracts and assistance agreements audits and the office of inspector general at the u.s. epa. mr. elliott lewis is the assistant inspector general at the u.s. department of labor. ann richards is the assistant inspector general at the department of homeland security. mr. john lyle is the deputy assistant secretary for contracting at the united states air force. mr. hl larry is the deputy director of air force services at the united states air force. i thank all of the witnesses and welcome them today. i don't know if you have come

before our committee or subcommittee before, but this is an investigation in the oversight commission of congress in accordance with the rules. we swear in the witnesses. if you please stay in, i will administer the oath. raise your right hand please. do you solemnly swear or affirm that the testimony you are about to give before this subcommittee of congress is the truth and nothing but the truth? all of the witnesses the record will reflect answered in the affirmative and i welcome and you thank you for coming today. of course we don't have as many members today since we are not voting. but we try to limit you to five minutes which if you have to go a little bit over, i think today would be okay. we do have copies of your statements that we are prepared

to the committee made part of the objection. so ordered. you can again try to make some major points to the panel this afternoon. we will run the clock, but again, we'll try to give you as much lee way as possible. we'll go through all of the five witnesses and then mr. conley and i will direct questions to the witnesses. so with that, first, let me recognize and for the purpose for testimony, janet casper, director of contract and assistant agreement audits at the u.s. expecter generals office of epa. welcome and you're recognized. pull the mic up too as all of you testify so we can hear you. thank you. >> good afternoon, chairman, ranking member and members of the subcommittee. thank you for inviting me to appear before you today.

the government purchase card program was established over 30 years ago to streamline the process by providing a vehicle for obtaining goods and services. the government charge card abuse prevention act of 2012, which is designed to prevent recurring waste, fraud and abuse of government purchase cards. in 2012 epa had employees assigned purchase cards. of those, more than half were active card holders who transacted $29 million in purchases. in addition, epa had 1,000 check writers. the charge card abuse prevention act of 2012 states that the inspector general is to conduct periodic assessments of the purchase card program to identify risk of illegal, improper or erroneous payments.

in march 2014 the epa issued a report on ep ara's management o purchase cards. the object object of the audit was to determine the use of purchase cards has sufficient controls to identify potentially illegal, improper and erroneous use of purchase cards. overall, we found it was not effective in improving complying with internal controls. of 152,602 in transactions we sampled, we found $79,254 of prohibited purchases. the improprieties range from missing approvals to more serious misuse of using cards for prohibited purchases. specifically, the internal control oversight issues we identify identified in one or more transactions including card holders did not verify receipt of purchase items d not obtain approval, card holders and approvers did not apply closer

scrutiny to transactions. there were some transactions that, in our opinion, were more egregious than others. policies allow for the purchase of light refreshments for a ceremony. for one transaction we reviewed, epa provided four appetizers, chicken, pasta salad, cookies, soft drinks and punch, much more than just light refreshments. the cost was $2,900. in 13 of 80 transactions, card holders did not follow requirements related to restricted transactions. for example, in three instances, card holders not acquisition professionals purchased gym memberships that had prepayment of services. two of these purchases were for family memberships, not just the epa employee.

our audit found it did not review purchase logs for 14 of the 80 transactions. one transaction the approving official incorrectly assumed that since he had preapproved the purchase he did not have to review quarterly. conseque consequently, he was unaware that the card holder amended his prior approval to purchase an additional item for $805 for personal use. in conclusion, 75 of 80 reviewed transactions were not in compliance with policies. these transactions were undefected because purchase card team improved oversight potentially saved money by reducing prohibited, improper and erroneous purchases, which would be beneficial in the current budget environment. to improve transparency, the oig published reports with laws, regulations and procedures.

as part of this effort, the oig initiated a detailed internal controls over purchase cards. we plan to make that report public very soon. mr. chairman, this concludes my prepared statement. i would like to thank the subcommittee for your continuing support for the oig's skmigs your robust mission in our work. >> thank you for your testimony, ms. casper. we'll turn to mr. elliot lewis, inspector assistant inspector general for audits. welcome and you're recognized, sir. >> good afternoon, chairman, ranking member, thank you for the opportunity to discuss our april 2014 audit that identified wasteful spending due to the misuse and mismanagement of prepaid debit cards and government travel cards in the job corps program. our audit concluded that more than $900 of government funds were wasted because job corps

lasted basic controls over prepaid debit cards and centrally billed government travel cards used to pay for student travel. the $1.7 billion job corps program provides education, training and support services to approximately 60,000 disadvantaged, at-risk youth age 16 to 24 at 125 centers nationwide. student travel costs more than $20 million annual live. it pays travel expenses for initial visits, transfers and breaks. the department referred allegations it received relating to misuse of debit cards at one of its centers. we conducted an audit to determine whether they were allowable. in may of 2009, job corps centers began issuing prepaid debit cards to students rather than cash so they could pay for charges incurred during travel. job corps expand the use of cards to pay for student meals

while in transit. during our audit, we reviewed the records for 18,000 cords with a total value of $600,000 to determine whether they complied with federal and travel rules. we found that approximately u 35% of the cards were misused to purchase consumer electronics, clothing, wireless telephone service and various online purchases. these improper purchases occurred at 98 of the 104 centers reviewed. at miami center alone, over 1800 cards were misused to make improper purchases. the operator at the miami center generally agreed with our results and terminated three employees while two others resigned. job corps and most of the other centers we reviewed acknowledged that prepaid debate cards had been used to make more than 6,000 improper purchases. however, we could not always determine who made these purchases because the centers

did not maintain adequate control over the cards. our audit also found that even if the debate cards were properly used, they were not cost effective. we found job corps paid more than $100,000 in merchant fees for the prepaid debit cards purchase purchased by centers from december of '09 to march of 2013. in addition completely unused cards could be returned for a refund, but partially used cards could not. we identified about 4,000 cards with partially remaining balances totally almost $30,000. job corps and its center operators like basic internal controls over these cards. job corps did not place emphasis on establishing processes for centers to distribute and monitor the cards nor the use to ensure charges were allowable, necessary and reasonable. we also review job corps center use of travel cards to pay for

student travel. centers were required to use a government travel card for contracted air fares. we found many instances where cards were cancelled or suspended because job corps had not ensure that the card accounts were paid. when centers were unable to use their government travel cards, they were forced to purchase commercial air fares often 50% or more above the government fare. travel cards suspensions for the boston region cost over $400,000. the cost savings lost from paying commercial air fares. as a result of our audit, we made several recommendations for job corps to improve processes and oversight. we also recommended they take corrective action to make sure cards are not suspended or cancelled. the department responded and has taken steps to address these issu issues. department stated it has eliminated the use of the prepaid debit cards. in conclusion, mr. chairman,

it's important that job corps ensure that all of its funds are spent efficiently and effecti effectively in support of the program. although travel is not the largest of job corps's cost, the results demonstrate it can do more to ensure travel funds are spent wisely. as with all our reports, we'll follow up on the department's actions in response to our recommendations. thank you for the opportunity to testify today. i would be pleased to answer any questions that you or any members of the subcommittee may have. >> thank you, mr. lewis. we'll hold questions. we'll now turn to ann richards, the assistant inspector general for audits at the office of inspector general at the u.s. department of homeland security. welcome and you're recognized. >> thank you. good afternoon, chairman, ranking member, thank you pr inviting me to discuss our work related to dhs's purchase card program. my testimony today will focus on our efforts to assess the

program and recommend ways to decrease the inherent risk of purchase card use as well as the. progress in implementing those recommendatio recommendations. in 2013 dhs purchase card holders spent millions of dollars in 925 million purchase card transactions placing the department among the top users in the federal government. when used properly, purchase cards decrease administrative costs, increase efficiency and provide an audit trail. that eliminates the need for paper purchase orders and expedites of vender payments. the inherent or natural risk of purchase card misuse is greater because of the number of r card holders and the low dollar actions subject to fewer reviews and controls. but this increased risk was purposely accepted to reap the benefits of a simplified process.

that is less cost and quicker response. over the last decade, the dhs and goa conducted several investigations addressing the use of purchase cards. we have reported that a weak control environment and breakdowns in key controls exposed dhs to purchase card fraud and puz. in short, purchase card guidance was inconsistent and inadequate staffing, insufficient training and monitoring also contributed to the weak control environment. dhs has agreed with our recommendations and taken actions to improve its control environment. to this end, dhs has taken actions to ensure card holders and officials have required training. card holders do not exceed purchase limits or monthly limits without justification. and the card holders comply with documentation requirements and approvals before making purchases. dhs has also taken steps to

improve its audit process to include targeted reviews of potentially questionable transactions. such as those transactions at retail stores, atms or restaurants. in our audit, we also identified numerous examples of potentially fraudulent and abusive or questionable transactions. those were individually reviewed and appropriate corrective actions were taken when necessary. in january of this year, we reported that dhs had an internal control framework to manage its program, but the department needed to continue improving its compliance with regulations and implementing its internal controls. in other words, the internal control design is strong, but more vig ross adherence is still needed. additionally, new controls are in place based on the government charge card act of 2012 including the periodic risk assessments to be conducted by our office and annual reporting

requirement on the state of charge card internal controls and the status of outstanding audit recommendations. pursuant to that legislation, and the results of our 2013 risk assessment, we are currently conduct i conducting a purchase card audit to determine whether the department has made progress in improving its implementation of internal controls. this audit includes evaluating a sample of transactions to determine if the controls are working as designed. we plan to publish a report on this audit in early 2015. consistent application of controls, vigilant oversight by management minimized fraudulent abusive or questionable purchase card usage, but the risks cannot be eliminated. nevertheless it gives the government flexibility in making purchases and saves money on processing. the department's actions provide reasonable assurance that potential fraud, waste and abuse are minimized while the value and benefit of simplified

procurements have been maximized. mr. chairman, this concludes my prepared statement. >> thank you, ms. richards. we will get back to you with questions and turn to our next witness, he's the deputy assistant secretary for contracting at the u.s. air force. welcome, sir u and you are recognized. >> thank you, sir, and good afternoon chairman and ranking member for the opportunity to testify this opportunity. because i have submitted my complete testimony for the record, i and based on your request, i will provide a brief summary of my testimony. first and foremost, we in the air force are committed towards proper spending controls and are used in the purchase card program referred to as gpc. in summary when used in place of written purchase orders, it all allows us to apreer bli reduce

interest charges, save $70 per transaction in administrative costs and to execute the mission. in fiscal year 2013, air force units saved $105 million on 1.5 million transactions and received $14.7 million in rebates on total expenditures of 1.2 billion. through a a variety of tried and true controls, we are confidently able to monitor the activities over 26,000 card holders spread across ten air force major commands, four field operating agencies and three direct reporting units, both domestic and overseas. in accomplishing this, we strongly endeavor to work with the office of secretary of defenses, office of defense procurement policy and our industry partners at u.s. bank and visa to augment the field's ability to protect taxpayer

dollars against fraud, waste, abuse and misuse. the air force leads the department of defense with 96% of card holders registered and the purchase card online system. it's an automated tool that aud ilts 100% of all gpc transactions. it flags 3% of the high risk transactions for manual audit. since 2002 the air force audit agency has conducted eight audits on the program. with two of the most recent occurring in 2012 and 2013. these audits used in conjunction with other internal control measures like data mining reports,ed a hawk inspections and a host of checks and balances that separate the rolls and functions have proven invaluable in the stewardship of the program. mr. chairman and ranking member, thank you again for the opportunity to testify today, and i look forward to your questions. >> mr. chairman? >> yes.

>> could i just ask where he is from? >> i'm from maine originally and spent a lot of time in massachusetts. >> yep. you're pretty good with the r's but charge and card. i'm from boston. thank you, mr. chairman. >> we don't have to bring in an interpreter fortunately. you're accompanied by mr. larry and he is deputy director of air force services. did you have an opening statement, sir? >> brief comments. >> then you're recognized, thank y you. >> good afternoon. thank you, chairman and ranking member for the opportunity today as i respond to your questions rega regarding the questions about accessories for the air base in japan. we appreciate the leadership and support this subcommittee continues to provide on matters

affecting the readiness and quality of life for our airmen and their families. we remain vigilant to the need to continuously exercise tight fiscal stewardship of our scarce resources. resource management and air force services is somewhat unique because we are responsible for funds appropriated by the congress as well as nonappropriated funds. they are generated by recreational activities through sales and fees charged such as the purchase of goods and services at our bowling centers and our air force services share of the army and air force exchange service dividends. in 2007 air force services not appropriated programs migrated from the government purchase card to the now purchase card to gain further man power

efficiencies and increased rebates. the purchase card is used to make authorized purchases for supplies and equipment. in regard to the inquiry into the purchase of express so machines and accessories for the air base in japan, four express so machines along with accompanying accessories were sourced using nonappropriated funds and installed at two activities, a base coffee shop and the base club. this purchase was authorized and approved by the appropriate installation officials and executed by local service contracting office with proce procedures. determine fair and reasonable based on requirements and competition. we will continue to manage and monitor the use of nonappropriated funds generated

throughout the air force and ensure these funds are properly used for all airmen and their families to enjoy. we look forward to your continued partnership in delivering the best quality of life to our airmen and their families. again, thank you for the opportunity to be here today. i look forward to working with you and the fellow subcommittee members, and i welcome any questions you may u have. thank you. >> thank you, we'll get right into the questions since you brought the subject up about the air force base. i guess it was in japan where they purchased these three espresso machines for $8,000 a piece. this was nonappropriated funds, that's what you're saying? >> that is correct, sir. >> okay, because there was a account. we get the accounts. some are anecdotal and it raised everyone's eyebrows. that was at one location, but it was not taxpayer money. we want to make that clear.

it was a card used and then paid back or how did that work? >> yes, sir, from the nonappropriated fund side, we had specialists at the installations and they have certain dollar thresholds. in this case when you combine all four of the machines as a purchase, it exceeded so we turned to our partners who executed half. >> again, the press reports we get them and right now there are millions of americans out there working hard trying to pay their bills, put their u kids through school, pay their taxes and we right now are trying to separate fact from fiction when it comes to some of the credit card going wild stories that are out there. so yours is an example of where there was a a legitimate expenditure. the press account was not correct, as i understand it. is that right? >> that is correct, sir.

>> we want the whole truth and nothing but the truth, and again, the proper expenditure of taxpayer dollars. as long as we're on coffee, and we did express so machines, you saw the starbucks. actually i buy, just for the record, i u buy mcdonald's. i try to get the senior coffee when it's on sale. this is more expensive. i'm not promoting any product. >> i'd like to do that too, but i'm too young. >> you get free refills too at mcdonald's. that aside, again, we are absolutely startled when we saw at one starbucks in california $12,000 worth of purchases. are you aware that those purchases took place on the government credit cards? >> mr. chairman, your staff shared the list of purchases that you had with us.

we have begun to make preliminary inquiries. we're going to include those transactions as a separate test -- >> but -- again, we have from that one starbucks credit card purchases of $12,000. and i don't begrudge coast guard people of where it's legitimate business and possibly buying some coffee for meetings, official meetings -- >> the coast guard has provided initial information for us on their look at those purchases. >> we don't dispute what we have? >> no. >> the other thing too is looking at other dhs entities, there was $31,000 we found in starbucks across the other entities. that just jumps out at you, $12,000 in one california starbucks location. >> the majority of those purchases were to furnish coffee for the dining pantries on board

cutters for when they were operating at sea. >> there may be a very legitimate purchase requirement, but for the rest of dhs, it's $31,000 that we have been able to identify. so again, if you can document that if it's justified, we don't begrudge sglsh and as i said, some of the purchases seem to be legitimate use of the card to supply the kitchens or gallies on board ships. we will be looking at owl of the purchases that you provided to us and as part of our audit, we will be looking for those types of purchases where the venders name, such as this coffee shop, would jump out as something to look at. >> again, that jumped out, $12,000 at one location.

and we have, again, a wide variety of coast guard stations. in fact, my wife even had one of the coast guard cutters, the small ones named after her. we're very proud of the coast guard and their service, but that kind of catches your eye. you did testify that we had $439 million in credit card purchases. is that dhs wide? >> that's dhs wide, sir. >> okay, we have three inspector general reports here. march for epa of this year, that was ms. casper. mr. lewis was department of labor. dhs is january, earlier this year, that are part of what we're reviewing here today. the other two -- well in the epa report, ms. casper you testified -- we calculated about half of the sample purchases,

over half there was something wrong, misuse, abuse or noncompliance. and mr. lewis in your testimony, you just testified -- you found about 35% of the purchases with the credit card were abusive or noncompliant. >> that was just with the prepaid debit cards. >> okay. would you estimate on credit cards? that was debit cards. >> well, the issues with the travel cards themselves were actually cases where they should have been using the cards and were not so we lost government air fare. we lost $400,000. >> so you lost money there. so what i'm trying to do is we have 50% abuse. even with a new law, epa use of credit cards, debit cards or credit cards, at least 35% in

your review. you have $439 million, almost half a billion in dhs. you did not speak to what you found as like a percentage of abuse. is it possible to calculate that or of what you reviewed? >> in 2013 we did a risk assessment because it was a follow up from work we had published earlier. so we didn't test individual transactions in that audit, so i cannot, at this time, estimate any numbers of purchases that would have been inappropriate based on that work. >> well, again, we're sorting through some of those figures and it's almost a half a billion dollars. you said you had how many credit cards issued? >> the department currently has about 9,700 purchase card users.

>> there's poor management, poor control, some of that was identified, is that correct? >> yes, sir. >> so again, we'd have to assume that a significant number of those purchases were noncompliant. and i think you spoke about actually the lack of compliance or lack of training or -- actually it sounds like a lack of management or administrative oversight. is that what you found? >> we have done a number of audits of this topic over the years. both my office and my office of oversight and we have found over the audits that we have done that there have been a lack of controls and a lack of oversight. we have also seen the department take our recommendations and

implement them, so they are working hard to improve their internal control environment and internal controls in oversight. that's why we did a risk assessment last year and we're in the process. >> have you published a manual set of guidelines? what have you done? meetings you conduct on training? >> we have published a number of reports prior to -- you're looking at our latest report from january. we have published a number of reports. >> i have a copy of your report, but your report talks about some of the problems, an overview of what's going on. is there a simple guideline that you publish wsh. >> we don't publish a guideline. we provided recommendations on what they should include in the guidelines. >> have they published that to

your satisfaction? >> yes, they have. . >> again, we have some noncompliance at significant levels. let me see. mr. lyle, you testified that we save -- that the department of defense or at least the air force, you're speaking for air force, you calculate that you save about $70 per transaction by using the credit card or i don't know if you use debit cards, but you don't have the paperwork or the administrative costs and all of that. is that how you calculate that savings? >> yes, as opposed to traditional government contracting. >> i just talked to one of my dod contractors from my district who didn't have very kind words about federal defense

contracting. is probably one of the most difficult to proceed with. so that's where you calculate $70 per transaction. and you have $1.2 billion worth of purchases with credit cards just in the air force? >> just in the air force. >> it has to be huge dollars. we have gone from $12,000 worth of starbucks purchases to $1.2. and you said 26,000 credit cards at the air force? >> 26,000 card holders, yes. >> whooi couldn't dod and the air force be subject to the same provisions of the 2012 law? >> well, i can't speak for the entire department of defense, but i know for the air force, we're very proud of our accomplishments in that system

that i talked about during my brief summary that's also included in my testimony. the purchase cut online program. that system audits 100% of all transactions. and then 3% of the high risk items that might have items like gym memberships or hair salons, things like that in the card code if they pop up in this report, they will flag a risk item and require a manual insight or someone from either the card holder's supervisor or the agency and the program coordinator will go in and look at each one of those transactions. >> do you conduct that -- do you have a system that you have set up internally or are you using a credit card company that does it for you? >> that system has been established in the department of defense. the director of procurement and acquisition policy, that administers the system across the department.

>> is that with a private contractor that operates it? >> sir, i have to take that question. >> i believe the private contractor established that system and rides along with that program. u.s. bank provided that. >> i do know some of the credit card folks are incredible. ive had several instance where is i gave my credit card and american express to buy sandwiches for staff. i don't spring that often, but somebody picked up the credit card number and that was atd lunchtime. by 7:00 i was called -- this happened to be american express and they said we have examined your purchases and your wife doesn't usually spend $5,000 at

nordstro nordstroms. and they had contacted me. they cancelled the card immediately because someone had gotten the number and was charging things. so you have that type of system that can kick out. >> yes, sir, what you're talking about though is potential fraud abuse that someone unauthorized gets the card. >> that's a little different, but you're using the same principles. if the credit card has some aberration that kicks out. do we have anything like that in ghs? you're a huge -- >> i don't know we have a specific program e designed, but we do have the data and they do data analytics to identify those kinds of anomalies. >> maybe we can ask the staff to pursue that. it might be -- i don't know if your model is that good. we should check that out, mr.

lyle. but again, we need as many assurances that the cards aren't being abused, that they are properly used. and if there's so dramatic aberration in the use and you have a system that kick it is out that would be good that we mirror that in other agencies. she's not quite caught up with air force, but half a billion -- and again, if you have 20 or 30% of it. >> if i could make an addition. of the 96% that are registered, the 4% is turnover. one person leaves, another person coming in so we'll never achieve 100% in the system, but we're very confident that we're doing very well. in fact, about six months earlier this year, we were down to about 91%. we put a big push because this is our best way to guard against fraud, waste and abuse and our

commanders took this on and elevated our registration back up to 96% leading dod. >> we have some examples of dod. my question was originally would you have a prb if we put you under similar provisions. we may have to revise some of them and look at additional safeguards, but is there any reason that air force or dod should be exempt? >> right, and to answer your question by saying because of the internal controls that we do have already with the 30-day audits by the assessing officials as well as by the agency and program coordinators, that's been working very well. about .45% of all of our transactions, we had, i believe, and i'll refresh my memory, 1.5 million transactions. but of those transactions, .45% we had some potential risk

violations. that's a total of about 1,910. each one of those was reviewed and we found that 26 resulted in ucmj or civilian personnel actions that we'll have to take. >> so you actually kicked those. you investigate every one of them. >> every single one of them. >> that still doesn't answer my question as to whether you would object. >> i can't speak for the policy for the entire department of defense. i would have to take that for the record and ask the director of procurement acquisition and policy. from an air force perspective, i can see how the act that you passed is definitely something that's viable and worthwhile and we'd look at it and see how it might -- >> it's had some successes. we heard the department of labor, but we still have

obvious -- i don't want to say rampant abuse, but significant abuse and we don't have credit cards gone while tamed. with that, i have more questions but led me yield to mr. conley, who has been waiting. >> thank you, mr. chairman. mr. larry, i want to make sure i followed your answer to the question of the $25,000 express so machines. you said that they were purchased with unappropriated funds. is that correct? >> correct, sir. >> what are unappropriated funds? >> sir, we call them nonappropriated funds. these are the funds you run a golf course, a bowling center. when you buy a hamburger, play a round of golf shs the dollars that that family member takes out of her or his pocket, those are nonappropriated funds dollars. >> generated by those tiftds.

>> were purchase cards or debit cards used for that acquisition? >> no, sir. >> okay. that's what i wanted to know. let me ask our i.g.s. is it ever permissible to use a purchase card for a hair salon session, gym membership or personal gift cards? >> hair salons we didn't have in our transactions, but we did research on gym memberships and there's a decision that says in some circumstances, it is permissible to purchase gym memberships if it's part of some health and welfare program. >> authorized by your employer? >> right. >> let's put that