Now, this sounds silly because everybody loves to make a political speech about how the bomber is older than the pilot, but Boeing had insisted that this plane could be retrofitted with new engines and a few other things, at a fairly modest cost considering $865 million for a B-2 and used far into the future, and that the fuel savings alone would pay for it in something like 15 to 20 years.

I asked the Pentagon for a study on that in the 1991 appropriations bill and to this day have not heard one thing. Now information I received says that the report continues to be changed because of various factors to which I am not privy, but I would like to know, could we expect to get that report over here or is the Pentagon just ignoring it?

Mr. ATWOOD. I have to, in all fairness say, I am not familiar with the law that says it, or that we are doing it, but this could be being done somewhere in the Pentagon. I will look into it for you.

Senator BUMPERS. Mr. Secretary, here is the language:

The conferees urge the Air Force to provide the Committees of Appropriations of the Senate and the House, a comprehensive overview of its plans for the B-52 bomber fleet. This overview should address requirements for B-52's, the numbers and kinds of capabilities planned for the future, militarily useful lifetime remaining, and options for upgrades, including reengining, with modern fuel efficient, high bypass ratio, turbofan jet engines, for any B-52 aircraft which remain in the active force structure beyond the year 2000.

The overview should address the affordability and cost-effectiveness of any upgrade options and examine the pace and extent of decreasing B-52 survivability, in both conventional and nuclear roles against improving threats in the future and the impact of this decreasing survivability on the cost-effectiveness of any identified upgrade options.

I would appreciate it, as a personal favor, if you would look into this and see if we cannot get that.

Boeing Corp. came up with some staggering suggestions.

Mr. ATWOOD. I will look into it, Senator, and let you know where it stands.

[The information follows:]

OVERVIEW OF Plans For B-52 BOMBER FLEET

The information Senator Bumpers requested, which was directed by the Appropriations conference committee Report 101-398, will be included in the study directed by the authorization conference Report 102-311. This latter report requires the Department of Defense to compare the B-1B and the B-52, and will provide a more comprehensive picture of the cost-effectiveness of planned modifications and upgraded combat capabilities of each aircraft.

FORT CHAFFEE

Senator BUMPERS. Mr. Chairman, a closing parochial note.

In the category of the same thing, about 3 years ago, I got mandatory language put into the appropriations bill saying that Fort Chaffee and the Defense Department would negotiate with the city of Barling, which is virtually surrounded on one side by Fort Smith, AR, and on the other side by Fort Chaffee-they have no way to expand-with their waste disposal system, their sewer system.

To this day, DOD has dragged its feet and nothing has happened. And the city of Barling is just about out of business because they cannot get anything done on this.

And I am going to ask the chairman to allow me to hold a hearing on this subject if we do not get some results on this soon. In all fairness, the colonel who was in charge of that base obviously did not like the idea and made no bones about it. He retired last Friday, and we have a new one coming in to be educated to what happened in the past.

But this is a very serious problem, and the city is willing to put up money. They are not asking for money. What they will build will also be available to any new uses of Fort Chaffee, and so on. So, I would like for you to personally look into that and drop me a note at the earliest possible time.

Mr. ATWOOD. I would be pleased to do that. You catch me unaware of the program.

Senator BUMPERS. Thank you, Mr. Chairman.

Senator INOUYE. We will make that available for the record. [The information follows:]

FORT CHAFFEE AND CITY OF BARLING, AR

The Army has been negotiating in good faith with the representative of the city of Barling for the past 3 years. The issues have been reduced to the following three: Agreement on how the rates for the city of Barling will be structured; agreement on the city of Barling paying for the study needed to include them in the Army waste treatment system; and agreement on the modifications to the treatment plant required to include the city of Barling in the treatment plant.

We have proposed a rate that is structured after the rates used by industry. The city of Barling has refused to pay for the cost of capital. This is a normal charge that all public utilities use and is recognized as a part of rates charged by State public utility commissions.

We accomplished a study to determine the requirements to connect the city of Barling to our treatment plant. The cost of this study has been included as part of the proposed rate structure. The city of Barling has stated that the cost of the study is too high. We have offered to pay one-half of the cost. The city of Barling has not responded to this offer.

The city of Barling does not agree with the work we must accomplish to connect them to our treatment facility. Our studies clearly indicate that we do not now require the installation of aeration or stabilization of the banks of our lagoon with the current load to the plant. To retain our discharge permit when the load from the city of Barling is added, we must install aeration and stabilize the banks of the la

goon.

Our last position on this negotiation was sent to the city of Barling on January 15, 1992. The city has not replied to our last position.

INDUSTRIAL BASE FOR SUBMARINES

Senator BUMPERS. I have one more question, Mr. Secretary. I would like to submit the rest, together with those of Senator Specter, Senator Domenici, and others.

In your new acquisition proposal, among other things, you have terminated the SSN-21 Seawolf program. At the same time, you are requesting funds to carry out studies to determine whether the industrial base, the nuclear program-submarine program—will survive.

We are being told now that in your budget submission studies were not made to determine the impact this budget will have on the industrial base of the United States.

Do you not think it would make better sense if the study had been made before you decided whether you should close up these activities? Because, once it is closed, all you have is a piece of paper to study.

Mr. ATWOOD. There are two aspects to it, Senator. One is that we continue, and we have under construction, under contract now, I think, 14 of the 688 submarines the predecessor to it, if I am not mistaken, 14 of them still are being and will be produced for a number of years. We have six Tridents, Mr. O'Keefe mentioned to me as well.

So as far as nuclear submarines are concerned, there is a base of business which extends for some period of time. Canceling the SSN-21 right now does not bring a sudden halt to those activities. What I have asked the Chairman and the Under Secretary for Defense for Acquisition to do is to analyze that industry to determine those critical processes and technologies that we would need to fund to continue it if and when there is a gap in the production of nuclear submarines.

It is not quite a gap, completely, because we will be continuing to upgrade. But there will be a gap, or there could well be a gap in the production of them out several years from now.

But this is not the end of it because we have canceled the SSN21. The Tridents that are being built, and the 688 submarines that are being built, will continue for some period.

Senator INOUYE. Would it be safe to assume that a follow-on program is a thing of the past on the submarine?

Mr. ATWOOD. No; for two reasons. One is, we still continue the design effort and will continue the design effort for an upgraded nuclear attack submarine. And that could be what we are looking for. Something cheaper; something less expensive; something that is simpler to work and a more advanced version of the SSN-21. Those design and development efforts will continue.

No. 2, I believe we will always need attack submarines for any potential threat we see in the future. Therefore, if one goes out 10 or 20 years from now and said there is a level of attack submarines we need, they have a given life.

Let me just give you an example. Let us say that we needed 30 attack submarines, and that they have a life expectancy, with overhaul, of 30 years. Then it says that some time in that period, we should be building one a year. I have given you two hypotheses to go on.

SSN-21 TERMINATION COSTS

Senator INOUYE. What is the anticipated cost of termination of this program?

Mr. ATWOOD. Sean?

Mr. O'KEEFE. We are currently in the process of preparing all the estimates that go along with that.

As it stands there is, I think, a total of about $3.4 billion that is proposed as part of the next rescission package which will come along, which is a combination of 1991 and 1992 funds associated with this.

The concern that we are breaking down now to arrive at that answer is, How much is true termination liability versus the cost that you will incur otherwise because of a change in the workload base, or whatever else?

And so, we are trying to narrow down that first one, which is how much is the legal liability we really have to incur, versus what the financial impact will be. These are two severable issues.

Right now the answer is, on the first phase, not more than $400 million is the current question. And as far as the larger financial impact, that is the longer term issue that Secretary Atwood referred to what the impact of the decision is.

Because for every dime you spend to keep either nuclear vendors producing at whatever rate is an impact, but it is not necessarily a termination liability expense, per se.

Senator INOUYE. In other words, the termination cost is not part of this budget proposal?

Mr. O'Keefe: Yes, sir; it is. It is part of what you see-it will be coming as part of the rescission package-will discount the value of what is legally termination liability that we anticipate will be incurring. And that number is again being run to ground now. And the rescission package should be up here shortly.

Senator INOUYE. Although you are not certain of the cost, you made it part of it.

Mr. O'KEEFE. Yes, sir; we expect it to be not more than $400 million, as legal termination liability expense. And that is the value projected as a piece of this budget.

Senator INOUYE. I suppose when you terminate the 21, the Tridents will cost more and the other submarines will cost more.

Mr. O'KEEFE. It could. There is an argument, certainly, to be made that the current contracts for both the Trident and the 688's have a target-to-ceiling share line of a percentage break. They are different between the two contracts, I am advised.

But to speculate that absolutely every one of those will go from target to ceiling between now and fiscal year 1997, which is the last date of delivery of the last Trident submarine is highly speculative.

Senator INOUYE. Well, Mr. Secretary, Mr. O'Keefe, we thank you very much for your testimony today, and I appreciate your responses to our questions and concerns.

We would like to continue working with you as we move toward the final figure. We want to make certain that our decisions are prudent and cost-effective.

As I indicated earlier, we will be submitting questions for your consideration.

ADDITIONAL COMMITTEE QUESTIONS

[CLERK'S NOTE.-Additional questions submitted by subcommittee members, together with the Department's responses, will appear in the appendix portion of the hearings.]

SUBCOMMITTEE RECESS

Senator INOUYE. This subcommittee will stand in recess until 1:30 p.m. this Thursday. We will then receive testimony, in closed session, from the Chairman of the Joint Chiefs of Staff, General Powell. It will be in room SD-116.