The Navy and the California Department of Toxic substances Control recently met in an attempt to resolve differences in projected oversight requirements. A four-part agreement was reached. One part of this agreement establishes a pilot program at four BRAC bases at which a "cost recovery" type process will be used for oversight reimbursement. This process is the same process as used by industry to pay for state oversight costs. After a year, the Navy and DTSC will judge whether this process is more efficient than the DSMOA process. Considerable philosophical and procedural differences still remain between the Navy and DTSC. Both agencies have agreed to work at narrowing these differences in the coming year. Senator ROBB. Again, I am not suggesting at this point that it is not a rational distinction and a wise distribution of funding. But any time you see a number that is that big as a percentage of the total, it attracts questions and inquiries, and some clarification on that would be very useful. Mr. PIRIE. Recently we have come to negotiate an agreement with California which we believe will start rectifying this situation, Senator. We will provide you the details of that, too. We would prefer to work this out as amicably as we can. Secretary Apgar, military museums, Army museums. As you are probably aware, I am one of those who are working on a fairly comprehensive proposal in this area. I am interested in the creation of additional museums, and I understand that there is movement in that area. Would you bring us up to speed on where we are right now on the finalization of plans for units, particularly Army museums, where they are going to be located and where the process stands at this point? Mr. APGAR. Yes, sir. This week, as you may have read, Secretary Caldera responded to Governor Ridge and others in Pennsylvania that we acknowledged and appreciated their interest in an Army museum in Carlisle, for which they will provide the land and all of the funds as part of the broad Army museum system, which actually includes a large number around the country, over a hundred, all of which are locally supported. So we have acknowledged that proposal and will respond to their interest. At the same time, we are exploring plans for an Army museum in the Washington area in response to longstanding Army policy to establish such a museum in the Nation's capital. Senator ROBB. Where does that stand right now? Mr. APGAR. The plans are still in concept and are being discussed within the Department. I will be happy to respond as soon as we move any further with them as plans. Senator ROBB. But even to the extent that you are in the planning phase right now, if you could simply give me something in writing as to where your current thinking is and what you see as the development, because we are talking about several potentially interrelated or overlapping development prospects. So as not to waste resources or generate additional concerns as we have found relate to a particular siting of a particular museum near another service battle museum, I would like to get an update, if you will, and just leave it at that for right now. I am sympathetic to the con cern. Mr. APGAR. I would be happy to do that. [The information referred to follows:] DEPARTMENT OF THE ARMY, ASSISTANT SECRETARY, INSTALLATIONS AND ENVIRONMENT, Hon. CHARLES S. ROBB, DEAR SENATOR ROBB: This letter is in response to the question you posed about the Army's plans for a museum in the National Capital Region during testimony before the Readiness and Management Subcommittee of the Senate Armed Services Committee on March 10, 1999. The Army continues to pursue its long-standing objective to establish a museum in the National Capital Region, Planners led by the Army's Center of Military History have determined exhibit themes and concepts for this projected museum, but further progress depends on identifying a site. Since 1983, the Army has considered some 60 sites and actively pursued several, all unsuccessfully. At present, we have been asked by committee staff to consider the old Twin Bridges site. We are exploring this site, but no commitments have been made by the Army. Once a site is selected and approved, we expect to build the museum with contributed money, so the rate of private fundraising would determine the pace of design and construction. I appreciate your interest in this important Army goal and look forward to providing more information when our plans mature. Yours sincerely, MAHLON APGAR, IV Senator ROBB. Mr. Chairman, with that-and I will look forward to receiving that for the record. Mr. Chairman, I thank you for your consideration and I thank you for the hearing. If you will excuse me, the usual problem we have: I have got three other meetings going right now, one of which I am supposed to be testifying on. Senator INHOFE. Thank you, Senator Robb. Thank you, Senator Robb. I am going to go back to the incremental funding question, as I said that I wanted to. Secretary Apgar, I understand there is little advance notice and I cannot say how much advance notice, but very little advance notice to this concept, this change in funding concept. I would ask the question, were you consulted about this change toward incremental funding prior to the time that the decision was made? Mr. APGAR. No, sir, but I understand its rationale and we are supportive of the program and are doing everything we can to respond. We believe that we can work within the guidelines and constraints. Senator INHOFE. So you were not in on that decision to do that? Mr. APGAR. No. Senator INHOFE. How about you, Secretary Pirie? Mr. PIRIE. No, I was not consulted in advance, Mr. Chairman. Senator INHOFE. Secretary DeMesme? MS. DEMESME. No, I was not. Senator ROBB. Excuse me. Just one question I did not ask. Senator ROBB. I apologize. It has to do with, in this case it is at SPACECOM, with individual service or service-related headquarters. We keep trying to combine and we are talking about reducing infrastructure, and we have a situation where two headquarters are being located and the Navy is looking-or space is Reserved for a Navy headquarters in the same location. Is this consistent with our desire to go purple, appropriately colored in in purple in this particular page I have from the manual, in an attempt to reduce infrastructure, to build three separate headquarters at an area where we are having joint commands? Would anybody like to comment on that or, if not, do so for the record? I will leave it at that. Ms. DEMESME. We have a consolidated effort to build one management headquarters. That is to prevent having to lease various facilities throughout town. This is a CINCPAC, actually, decision. General LUPIA. Space. MS. DEMESME. Space, a Space decision, that we need to get everybody together so they can work more efficiently. It will save money by not leasing several different buildings, and I think it would ultimately improve the ability to work together in partnering efforts. Senator ROBB. It looks to me like we are building two separate headquarters and with future naval space Reserved for a third. For the record, if you could give me a more detailed response to that question. I would be interested in whether the Navy is interested in exercising their option to have its own headquarters in this same complex. Senator INHOFE. The Army. Senator ROBB. The Army, that is right. So that we get the answer for the record MS. DEMESME. We will answer for the record. [The information referred to follows:] While the Navy does have a small detachment (less than 35 people) at the U.S. Space Command in Colorado Springs, our primary operational component of the Naval Space Command (380 personnel) is at Naval Surface Weapons Center, Dahlgren, VA. The Navy has no plans to move the operational component from Dalhgren. Senator ROBB. Thank you. Again, I thank you, Mr. Chairman. Senator INHOFE. Thank you, Senator Robb. Secretary Apgar, I understand you have a background in development and construction; is that correct? Mr. APGAR. Yes, sir, I do. Senator INHOFE. Do you want to tell me a little bit about it? Mr. APGAR. For about 35 years I have been both a consultant and a principal involved in large-scale complex real estate development and construction programs, starting with apprenticeship to Jim Rouse, who is probably the master builder of the twentieth century. I have been involved in a large number of projects both here and abroad. Senator INHOFE. Well, we share that background, although mine were not that large projects. Would you not agree, even though you state that you supported this incremental funding, that this does pose-take off your Secretary hat and put on your contractor hat-a new, an additional risk if you are proposing to participate in these projects? Mr. APGAR. Yes, it does, sir. Building on your earlier questions and comments from my colleagues, I think the key issue of cost is both the scale and complexity of the project. Incremental funding of large contracts is certainly not ideal, but it is also not uncommon in the private sector, particularly with major corporations. In contracts of that scale and complexity, one can work with incremental funding to minimize the risk, minimize the cost. The real problem is in smaller contracts, where the contractor cannot absorb the risks that he or she certainly perceives and where higher bids are almost surely likely. It is those smaller contracts that we need to carve out, if you will, and address separately. The cookie-cutter approach will not fit all. Senator INHOFE. What I would like to have you do for the record and I think you are uniquely equipped to do it is just from your perspective give us an idea of this, of the additional cost for this type of funding, and submit that for the record if you would do that for me. Mr. APGAR. Yes, sir. [The information referred to follows:] INCREMENTAL FUNDING The Army's Fiscal Year 2000 budget request includes provisions to mitigate any significant impact on the contracting community for the incremental funding approach. The budget requests full authorization of Fiscal Year 2000 projects, so we can award contracts for the full scope of each one, even though most of the funding will not be available until fiscal year 2001. This budget also requests Fiscal Year 2000 appropriations of the amount we have historically expended in the first year of the program. To ensure funding will be available on October 1, 2000, the budget requests advance appropriations of the fiscal year 2001 funds. This will avoid any disruption of funding to the construction contracts. Finally, we are seeking revisions to the reprogramming base to allow movement of fiscal year 2000 funds to the contracts that progress the fastest. With the special authorities requested in the budget and intensive management by our execution agents, we can execute the fiscal year 2000 program with little or no impact on the construction contracting community. If the budget is not approved as requested, the contracting community will see greater risk on the incrementally funded projects, especially on small projects less than $10,000,000. If advance appropriations and revisions to the reprogramming base are not approved, each solicitation will identify the limit of funds that the government can commit to the contract in fiscal year 2000. Contractors will see significant risk that their work may be slowed or even stopped due to lack of funds, and this risk will be reflected in higher bids. We can mitigate this risk by carefully timing awards in fiscal year 2000, in order to ensure funds are available to bridge the gap between the 2 fiscal years, and we anticipate most projects would be awarded in the fourth quarter of fiscal year 2000. Senator INHOFE. Secretary Demesme, let us assume that you get started on these projects that you are concerned with and are dealing with. If for some reason the Appropriation Committee did not come for the-what would happen to you if you were not able to secure the remaining funding after you had started? What position would that put you in? Ms. DEMESME. It would be very difficult. I think the costs would go up and there would be some projects we could not complete. But I am going to let General Lupia give you a little bit of in-depth analysis of what would happen. Senator INHOFE. Sure. General LUPIA. Sir, the very short answer is we would turn to our design construction agency, the Navy or the Army, and they would be forced to pay a termination cost. In this amount of appropriation that we ask for we have actually factored in a percentage for termination costs. Senator INHOFE. How about you, Secretary Pirie? The same situation; how would that affect you? Then of course Secretary Apgar. Mr. PIRIE. If I understand the question properly, it is if we get started on this year's set and then next year's appropriations do not come in to cover it. Senator INHOFE. That is correct. Mr. PIRIE. Well, we would be in the same boat. We would have to terminate a number of projects and pay those costs. Senator INHOFE. Secretary Apgar? The boat is getting kind of crowded. Go ahead. Would you be in that boat, too? Mr. APGAR. Yes, we would. Senator INHOFE. What about, approximately what percentage of the cost would a termination fee involve? General LUPIA. I believe in our formula we built in 5 percent. General LUPIA. We use 5 percent in our formula. Senator INHOFE. 5 percent? General LUPIA. Yes, sir. Mr. PIRIE. That is about what we used. Admiral SMITH. Yes, sir. But again, it would vary with the individual project. Senator INHOFE. Mr. Yim, a criticism that I have heard of the Department's implementation of housing privatization initiatives is that many communities feel that they are kind of outside, that they incur the additional strain on their system and yet the compensation is not there within the tax structure. How do you handle that situation? How is the Department responding to these concerns? Mr. YIM. As we pursue housing privatization as a goal, we're working with, my boss, the Under Secretary for Acquisition and Technology, has coordinated with Secretary de Leon, Personnel and Readiness, to assure that the basic family allowance that's paid to a soldier is sufficient to meet the housing requirements, to fund the housing requirements. That has been the longstanding OSD policies, is to look first to the private sector to meet the housing requirements, and only if it is inadequate to build our own. So, we are hopeful that with that continued cooperation between our departments, that the structure of how we pay our soldiers is sufficient to fund the income, to meet the income stream to fund these types of housing privatization that we hope to occur. Senator INHOFE. Secretary DeMesme, how does the Air Force involve the community in these ventures to ensure that they do not end up carrying the additional burdens without getting tax revenues? MS. DEMESME. Sir, we are in the process of building a master housing plan. We have had teams of people go out to different communities and work directly with the locals in terms of what impacts the housing would have on the local communities. It has been a partnering venture. Each one, of course, is different because, depending on the location and capability in the cities, we would seek to minimize impact to that local community, whether it be goods. and services or whether it be running someone out of the housing market. At the same time, we try to keep costs neutral so that our members do not have to pay extra out of their pocket in order to live in these. But we will have our master housing plan complete within the next 6 months or so. We are taking this measured approach be |