Statement of

The Honorable Rudy de Leon

Under Secretary of Defense

(Personnel and Readiness)

Before the Personnel Subcommittee

Senate Armed Services Committee

March 18, 1998

Introduction

Mr. Chairman and members of this distinguished subcommittee, it is a privilege to be here today. I would like to begin by thanking each of you for your support during, and since, my confirmation last July as Under Secretary of Defense for Personnel and Readiness.

Our national security relies on the quality and commitment of the men and women in uniform and the civilian employees who support them. I can attest to their dedication to our national defense. At any given time over the past few years, 35,000 to 40,000 members of our forces could be found in far-reaching locations carrying out diverse missions such as suppressing Saddam Hussein's aggression, supporting stabilization in Bosnia, evacuating noncombatants from west Africa and Albania, fighting Indonesian fires, and providing emergency humanitarian assistance to China. I am proud to discuss these men and women with you today.

Our nation's all-volunteer military force remains the most formidable and respected in the world. 1998 marks the 25th anniversary of America's all-volunteer force, as well as the 50th anniversary of two events that have had a tremendous impact in shaping our force_President Truman's Executive Order 9981 which mandated equal treatment for all members of our armed forces and led to racial integration in our Services, and the Women's Armed Services Act of 1948-PL 625 which permanently established women in the Regular and Reserve components of our armed forces. Our all-volunteer force could not meet its force levels or mission requirements without the integration of women and minorities in our Services: racial and ethnic minorities represent one third, and women comprise 14 percent, of our military force today.

As the Department of Defense (DoD) reflects this year on the significance of these anniversaries for America's military and the qualities that have made our military strong, our DoD FY 1999 budget begins implementation of the Quadrennial Defense Review (QDR) plan that will transform U.S. defense strategy and military forces to better meet future challenges. I have high confidence that top quality people and high readiness will remain hallmarks of America's military throughout this transformation. The QDR recommended end strengths and force levels that are only slightly below those already planned. We have made significant personnel reductions since 1987 with very few involuntary separations, due in large part to separation incentives and transitions programs that have been strongly supported by the Congress. The Department's proposed ``Department of Defense Reform Act of 1998'' provides for continuation of many of these incentives and programs through the year 2003. We urge your support of this legislation to limit the hardships of the drawdown on the departments dedicated men and women.

During my confirmation hearing last July, I outlined several priorities I planned to address during my tenure -- our military's high personnel and work tempo, the need for greater stability in the military career, and the importance of keeping the faith with our military retirees, particularly in the area of healthcare. These issues have served as a guideline in addressing what I consider to be the top three issues in personnel and readiness today:

• Improving the quality, stability and predictability of active, reserve and civilian service;

• Promoting the readiness and integration of our forces; and

• Providing a healthcare system that serves our people well in peacetime, and prepares us for war and other deployments.

Quality, Stability, Predictability

We must continue to recruit quality personnel to serve in our nation's defense. We must also provide them with rigorous and realistic training, the resources to do perform their job, predictable opportunities for career advancement and the quality of life that they and their families deserve.

RECRUITING
Each year, the Department must recruit about 200,000 young people for the active duty Armed Forces, and approximately 150,000 for the Selected Reserve. DoD closely monitors recruiting results throughout the year, reallocating manpower and resources when needed. We know that high-quality youth are more expensive to recruit, but we also know that they perform better both in training and on the job. They are also more likely to complete their terms of enlistment.

Over the past two decades, our Services have successfully attracted sufficient numbers of high-quality recruits. As we near the end of the drawdown, it is even more critical that our Services enlist sufficient recruits to develop a flow of seasoned leaders for the future. During FY 1997, 94 percent of active duty recruits held a high school diploma and 69 percent scored above average on the enlistment test. Both measures are substantially above our DoD benchmarks of 90 and 60 percent, respectively. FY 1998 recruiting, however, is proving more difficult due to a robust job market and greater interest in college.

The Air Force and Marine Corps are both meeting their numeric and quality goals; however, the proportion of high-quality recruits (high school diploma graduates scoring in the top half of the enlistment test) is down relative to last year for the Army. The Army has increased its College Fund and has put more money into enlistment bonuses as a result. Through the first quarter of FY 1998, the Navy has struggled with its numeric goals, as its accession mission increased by 10 percent from last year. In order to meet a higher recruiting objective, the Navy is increasing the number of field recruiters and has reallocated funds for advertising, education benefits and enlistment bonuses. DoD was successful in recruiting for the Reserve Components in FY 1997, with 89 percent of Reserve accessions holding a high school diploma, and almost two-thirds scoring above average on the enlistment test. Reserve recruiting is also expected to prove more challenging in FY 1998.

In addition, results from the most-recent Youth Attitude Tracking Survey indicate that propensity to enlist has slipped both for women and Hispanic men. Recruiting commands have asked recruiters to identify potential causes for these declines, and are reviewing surveys from DoD and academia to assess changes in Hispanic youth attitudes toward college education, entry-level work, and military service. DoD will also conduct focus groups with both women and Hispanic men over the next several months.

Consistent with guidance in the FY 1998 Defense Authorization Act, the Services are looking at how to improve recruit physical fitness during the Delayed Entry Program in order to improve training performance and lower attrition following enlistment. In addition, the Services, the General Accounting Office, and others have identified programs to reduce attrition by improving medical screening, pre-enlistment testing for substance abuse and coding of medical discharges to enhance feedback to medical screening officials, and improving management of recruiter incentives and selection.

DoD has also been reviewing the lack of early, accurate identification of individuals with arrest histories. Attrition rates for unsuitability due to unsatisfactory behavior during initial enlistments are nearly 65 percent higher among recruits with arrest records. A review of juvenile and adult arrest records in one state revealed that over 14 percent of new recruits from that state had an arrest record not previously identified through current screening methods. I urge your support of legislation the Department is proposing that will permit greater access to pre-accession offender records.

With regard to our officer accession programs, we are sustaining good balance; however, restrictions on our ability to bring foreign students to the Service academies were included in the National Defense Authorization Act for FY 1998 (section 543). Foreign participation at the academies has been an extremely valuable program over the years, benefiting both the US and foreign nations. The Department agrees that the program must be more narrowly focused and more rigorously managed. We are working hard to refine the program's criteria and hope the Committee would be willing to consider such revisions as part of the FY 1999 legislative cycle.

RETENTION AND MANAGEMENT

Our force today is better educated, more experienced and more diverse than before the drawdown. While retention patterns overall appear stable, this area is a key focal point for the Secretary of Defense and the Services. There are growing concerns for a number of officer and enlisted technical specialties, such as maintenance technicians, linguists, nuclear-trained officers and aviators. Realizing that retention is the aggregate of many factors, the Department and each of the Services are examining operational tempo, quality of life, and policy changes to address retention concerns. We continue to closely monitor aviator retention patterns by tracking cumulative continuation and resignation rates, as well as the competing opportunities on the outside that offer great incentives to our pilots. We appreciate the support of the subcommittee and Congress in strengthening aviator retention incentives by increasing the cap on Aviation Continuation Pay, authorizing more flexible contract periods, and increasing Aviation Career Incentive Pay effective January 1, 1999.

We are also continuing our efforts to improve joint officer management. We have been reviewing all joint officer positions to ensure that those meeting the full intent of law are on the joint duty assignment list. The review also prompted us to take a closer look at the lessons we have learned since enactment of the Goldwater-Nichols Act. Upon completing the review, we will forward our findings for your consideration. We have also been developing policy guidance for education and personnel management of Reserve component officers who serve in joint billets. To the extent practicable, this guidance will be similar to policies governing the Active component.

With regard to civilian personnel management, the Military Departments and Defense Agencies are consolidating functions from their installation Civilian Personnel Management Offices into 22 regional centers in order to improve productivity and customer service, while also reducing costs. Sixteen regional centers are currently operational. The Department is also developing a single, standard DoD civilian personnel information system that will enable immediate access and on-line updating.

TRAINING

High-quality, rigorous and realistic instruction is the foundation of personnel readiness_an essential ingredient in building and maintaining a ready force. Service members must be trained to carry out their assigned jobs and to perform as integral members of the military units to which they are assigned. With this in mind, on June 27, 1997, Secretary of Defense Cohen appointed an independent committee of private citizens to review gender-integrated training and related issues in the military Services. The committee was asked to assess current training programs and policies of the armed services, and to provide advice and recommendations to the Secretary for any changes or improvements necessary to assure the readiness and effectiveness of the all-volunteer force. The committee forwarded its findings and recommendations to the Secretary on December 16, 1997. The Services and Joint Chiefs of Staff are assessing the manpower and personnel implications of the recommendations and the costs associated with their implementation. These assessments were due to Secretary Cohen on March 16.

Civilian educational and professional development programs were addressed in the ``revolution'' of business practices mandated by the Quadrennial Defense Review. In that regard, the Defense Reform Initiative proposed creating a Chancellor for Education and Professional Development in order to raise the quality of DoD civilian education and professional development to world-class standards. This past year, DoD launched the Defense Leadership and Management Program (DLAMP) in order to better meet the need to systematically develop senior civilians with organizational and occupational breadth and depth, leadership skills and a shared sense of mission with the military.

DoD has several initiatives under way in the areas of embedded training and joint simulations. With embedded training, the Services can conduct more training at the operational unit rather than sending personnel to centralized training in the classroom or in field exercises. Joint simulation, using simulation and communications technologies to train joint and combined battle staffs, will be critical to our ability to conduct joint, interagency and coalition operations in the future. Through a common DOD-wide architecture and infrastructure, these initiatives will support training in all phases of military operations and assist in reducing the tempo of operations and resources required to train our personnel.

DoD is also working in concert with other government agencies and private sector participants to develop a common technical framework for delivering interactive education and training. This next-generation technology, called the Advanced Distributed Learning Initiative, is expected to significantly reduce costs by allowing widespread interactive sharing of courses and course content among participating public and private organizations.

QUALITY OF LIFE

The defense drawdown brought with it many changes, installation closures, job realignments, relocations, and uncertainty with a career in DoD_whether in uniform or as a civilian. With the help of Congress, the Department has made great strides in improving the quality of life of those who serve our nation. Specific improvements have been made in the areas of personnel tempo, pay and compensation, living environments, and community support programs.

PERSONNEL TEMPO: The time service members spend away from home for training and operations have surfaced as a readiness problem in certain skill groups and units. The greatest impact of post-Cold War Personnel Tempo (PERSTEMPO) has been on the Army and Air Force, which have seen increases in length and number of deployments. As the Navy and Marines are historically structured for deployment, the change in their deployment patterns has been less significant.

We have been working with the Services to more closely address and measure PERSTEMPO concerns. We began implementation of the Global Military Force Policy in 1996. Under this policy, the Services identify which units are ``high demand/low density'' units and declare, as a threshold, the rate at which these units can be deployed over a sustained period without causing PERSTEMPO problems. If requests by the CINCs for these units exceed the threshold, the Services and CINCs refine the requirements in order to avoid excessive demand. We are working to reduce the number of days associated with Joint Exercises by 25 percent by the end of Fiscal Year 2000, and are encouraging commanders at all levels to reduce unnecessary burdens where possible.

Our Reserve components are covering the entire spectrum of operations, from domestic emergencies to military operations in Bosnia. While indicators such as readiness, attrition, end strength, and employer relations show no short-term adverse impacts, we are closely monitoring these indicators as we rely on Reserve components more frequently to meet mission requirements.

COMPENSATION: The armed forces must provide a standard of living competitive with the private sector. DoD is committed to a system of compensation and benefits that ensures competitive pay as well as stability of benefits and retirement income. Our FY 1999 budget calls for a military pay raise of 3.1 percent, and we have continued to program for the full raises provided under law through the out-years of the Future Years Defense Program. Retired pay remains a top concern among our military personnel and has become a key retention issue. The predictability of an immediate annuity, as well as associated cost of living allowances (COLAs), for military members and the confidence that these entitlements will be maintained is essential to our ability to retain highly trained and seasoned mid-career personnel given the uncertainties and sacrifices inherent in military service.

Our 1998 legislative program included major changes to refine both housing and subsistence allowances, both of which were included in the FY 1998 National Defense Authorization Act. Congress also approved increases in hazardous duty incentive pay, aviation and nuclear officer bonuses and special pays, and the family separation allowance_all of which improve quality of life and boost retention. We appreciate Congressional action on these issues and in development of a hardship duty pay for service under arduous conditions. This, along with legislation that protects a member's pay from being reduced when he or she is deployed, will help mitigate some of the negative impacts of high operating tempo.

To ensure a robust military force in the future and maintain faith with our people, we may need to consider additional measures. We are exploring a payroll savings plan for service members and looking at whether or not using the employment cost index (ECI) minus one half percent is still an appropriate measure for setting the military pay raise.

While our focus this year will be mainly on implementing the new initiatives mentioned above, we have several important new legislative proposals in the area of military compensation. These include a provision to give the President the same authority to designate a ``qualified hazardous duty area,'' as he now has for combat zones and a provision to expand the authority of the Secretary of Defense to authorize commercial transportation for rest and recuperation travel.

COMMUNITY AND FAMILY SUPPORT PROGRAMS: Community and Family Support programs are essential to a healthy military community, particularly during times of high operational tempo and frequent deployments. The Department provides numerous community and family support, recreation, and education programs wherever service members and their families are stationed. In addition, recreation, voluntary education and social programs, and exchange outlets are located where our service members are deployed worldwide. DoD has integrated whenever possible Joint and Reserve Family Programs to provide better support for remotely located military personnel and those assigned where active component installations are not available.
Recent or upcoming highlights of some of our community and family support programs follow:

• CHILD DEVELOPMENT PROGRAM -- The FY 1999 budget provides a $21.9 million increase over the FY 1998 budget after inflation. We have established a DoD clearinghouse to share our training materials and are developing an Internet site to share lessons learned and program material with other Federal agencies and the private sector. The Carnegie Corporation recently singled out the DoD childcare program as an example of how to raise the quality of childcare in the country.

• FINANCIAL MANAGEMENT -- The Department is in the final stages of preparing an interactive CD-ROM financial management course targeted to junior enlisted members. DoD-sponsored research on member financial debt has been published and will be used as we establish policy to reduce member debt and command time spent counseling members on indebtedness issues.

• MORALE, WELFARE, AND RECREATION (MWR) -- The FY 1999 budget includes an increase after inflation of $40 million, and reflects program improvements for physical fitness and library programs in particular. MWR equipment and programs have supported contingency operations with fitness and aerobic equipment, recreation equipment and entertainment programs. In addition, the Army and Air Force Exchange Service has established retail operations at each deployment location.

• COMMISSARIES -- It is an important contributor to quality of life and retention. The commissary is ranked by military personnel as one of their most valued benefits. We recognize that operating efficiency is essential to preserving the level of benefits we provide, and have instituted a number of management reforms for commissaries to achieve greater efficiencies. DoD has designated the commissary agency as a performance-based organization. In addition, the Defense Reform Initiative recommended moving operational management of the commissaries closer to the user in order to be more responsive to patrons. Under this arrangement, the Services will assume day-to-day oversight responsibility for the funding and operation of DeCA. We believe this arrangement best positions commissaries for efficient and effective operations that are more responsible to the needs of military personnel, retirees, and their families. The Department and DeCA will also complete a study in 1998 to determine the impact of changing commissary access for Reserve component members.
  • EXCHANGES -- Our practice of using exchange earnings to support MWR programs is well established. In 1997, the three exchange systems provided over $300 million in support of recreational facilities and programs. Using a ``due diligence'' methodology, the Secretaries of the Military Departments are seeking to further improve operating efficiencies with the Service exchange systems in order to provide good customer service, ensure competitive pricing, and continue support for morale, welfare, and recreation. While we are reviewing the benefits of restructuring and consolidations as called for by the Office of Management and Budget and the Congressional Budget Office, any proposal for change would be reviewed by the newly-chartered Defense Management Council and submitted to the Congress for review.
  • DEPARTMENT OF DEFENSE EDUCATION (DODEA) -- Specific program improvements include $28.2 million for operation and maintenance and construction support for schools in Guam and $10 million to continue support for the President's Technology Initiative. In September 1997, DoD began operating three schools on Guam to improve educational opportunities for military dependents stationed there.

  EQUAL OPPORTUNITY

  It is the policy of the Department of Defense to provide an environment that is free from unlawful discrimination and sexual harassment for military members and civilian employees. This year, which marks the 50th anniversary of President Truman's Executive Order 9981 which led to the desegregation of the Armed Forces, serves as a milestone to measure our progress. In a June 1997 speech on the status of race relations in America, President Clinton said, ``But the best example of affirmative action is in our military. Our armed forces are diverse from top to bottom - perhaps the most integrated institution in our society and certainly the most integrated military in the world. And, more important, no one questions that they are the best in the world. So much for the argument that excellence and diversity do not go hand in hand.''

  The Secretary of Defense has demonstrated the Department's resolve to employ the talents of America's diverse population. He established a Department-wide goal to increase our employment of people with severe disabilities from 1.2 percent to 2.0 percent of our civilian workforce. The Workforce Recruitment Program for College Students with Disabilities, cosponsored by DoD and the President's Committee on Employment of People with Disabilities, provided a vital pipeline to help achieve that goal. In the summer of 1997, DoD employed over 120 students through that program at activities nationwide. Starting next year, funds are available to increase the total and purchase adaptive technology and services for individuals employed.

  In addition, the Department has supported the President's Initiative on Race by conducting a series of One America conversations with a variety of citizen groups, and by unveiling plans to dedicate a permanent exhibit in the Pentagon honoring all African American Flag and General officers. Further, the Department has moved to support the President's initiative to reinvigorate the enforcement of Title IX of the Higher Education Act of 1972 by cooperating with the Department of Justice in the development of a common rule to Enforce Title IX.

  READINESS AND INTEGRATION OF OUR FORCES

  Our challenge in today's international security environment is to maintain the appropriate balance among the competing priorities of current readiness, ongoing mission requirements, and modernization. Increased reliance on Guard and Reserve forces to meet critical operational requirements requires a corresponding commitment to improve the integration of active and Reserve forces.

  READINESS

  The high state of readiness and quality of America's armed forces are evident everywhere they are deployed or training. You can see it every day as they perform their jobs with excellence. As for an overall assessment, I defer to General Shelton, our Chairman of the Joint Chiefs of Staff in his testimony before this Committee. On February 5, he said before the House National Security Committee, ``it is my assessment as the Chairman that today we are within an acceptable band of both readiness and risk. And in the context of the national military strategy of two major theater wars, we are ready to execute that strategy.'' Our goal is to ensure that we keep our forces within this band of acceptability.

  As you know, we face challenges as we continue to achieve this goal. The following are some of the readiness issues we have identified and the corresponding actions we have initiated to monitor and address them:

  • Issue-High levels of PERSTEMPO. Action -- New Service TEMPO management systems.

  • Issue -- Biological warfare threats. Action -- New anthrax vaccination program and other medical force protection measures.
  • Issue -- Pilot retention. Action -- Service initiatives, including better TEMPO management for aircrews, bonuses, increased pilot production, and better aircrew readiness reporting.
  • Issue -- Recruiting and retention shortfalls. Action -- Service initiatives for increased incentives where needed and close monitoring.
  • Issue -- Declining aircraft mission capable rates. Action -- Service initiatives to increase spares funding, improve engine reliability and increase flying hours.
  • Issue -- Sufficiency of O&M funding for FY 1998. Action -- Emergency Supplemental Request to cover contingency operations in Bosnia and Southwest Asia, plus Service initiatives to cover potential O&M shortfalls.
  The Department has complied with the direction to expand the Quarterly Readiness Report to Congress with key indicators of force readiness. We have also been working with each of the Services to develop a more comprehensive readiness picture. We have expanded the scope of the Senior Readiness Oversight Council (SROC) to examine emerging readiness issues at the most senior level. For example, the SROC has been addressing specific readiness issues such as personnel tempo, recruiting and retention and aviation readiness indicators and trends.

  The Committee's support for readiness has been solid, and is greatly appreciated by the Department and the troops in the field. Realizing this Committee alone cannot control the timing of congressional consideration, I urge your swift consideration of the Emergency Supplemental to cover the unbudgeted costs of our operations in the Persian Gulf region and Bosnia. Delays of any significance in moving forward with, and approving, the Emergency Supplemental will result in major `` likely unprecedented_drops in readiness as we progress toward the end of the fiscal year.

  FORCE INTEGRATION

  In addition to serving in their traditional wartime roles and providing a rotational base to ease operating and personnel tempo for the active component, the Reserve components (RCs) are taking on new duties such as assisting lead agency and civil authorities during all phases of a Weapon of Mass Destruction terrorist incident. In a September 4, 1997, Total Force policy memorandum, Secretary Cohen outlined his vision for furthering integration, and offered the following set of principles toward making seamless integration a reality:

  • Clearly understood responsibility for and ownership of the Total Force by senior leaders;
  • Clear and mutual understanding on the mission for each unit -- Active, Guard, and Reserve -- in service and joint/combined operations, during peace and war;
  • Commitment to providing the resources needed to accomplish assigned missions; and
  • Leadership by senior commanders -- Active, Guard, and Reserve -- to ensure the readiness of the Total Force
  .

  I believe we are on the right course today in carrying out these principles. Each of the Services is pursuing additional initiatives to build the Reserve and active components into a ``seamless total force.'' The RC is also better represented in the Department's management structure than ever before. Secretary Cohen recently directed that the Deputy Director of the Army's Director of Military Support (DOMS) office be a National Guard general officer. The DOMS is DoD's command center for responding to disasters and emergencies in the United States. Up to half the staff in the operations center will be from the Reserve components. Secretary Cohen also formally brought the RC Chiefs into the major budget-making committees in DoD -- a practice that has resulted in recent increases to Guard procurement and readiness accounts. In January, the Secretary announced that RC support to the Chairman of the Joint Chief of Staff would be enhanced with the addition of two, full-time two-star RC advisors. Finally, we recently announced a move toward an integrated green military universal identification (ID) card for all members of our Total Force. The transition to the new ID card will take effect in June 1998, and will be phased in over the next five years as ID cards are renewed.

  HEALTH

  Health care is a major quality of life factor, and an important component of military readiness. We continue to improve access to quality, cost-effective medical care for our military members, retirees and their beneficiaries. The Department has also made significant strides in achieving healthy life styles: we are showing declining trends in alcohol consumption, cigarette smoking and use of illicit drugs.

  FORCE HEALTH PROTECTION

  Force heath protection is a force multiplier that improves medical readiness by projecting medically hardened forces, protecting our deployed forces from environmental and combat threats, and reducing disease and non-battle injury. Three components comprise force health protection: promoting a healthy and fit force, casualty prevention, and casualty care and management.

  In August 1997, the Deputy Secretary and I signed DoD policies requiring more proactive health surveillance initiatives. These initiatives, tested during Operation Joint Endeavor in Bosnia, include comprehensive health screening, collection and storage of serum samples from deploying service members, and extensive education to highlight health risks and preventive measures. On November 18, 1997, the Secretary of Defense announced the first Reserve Health Care Summit in order to improve the medical readiness of the RC, and to ensure those who become ill or are injured as a result of military service receive appropriate health care and medical benefits. In general, medical record keeping and documentation, particularly during deployments, must be improved. A promising technology under development is the medical Personnel Information Carrier (PIC), a small tag-like device that stores an individual's medical status and history. DoD will conduct operational testing of this device during 1998, with deployment planned for FY 1999.

  The Department's anthrax vaccination program is an integral component of force health protection. It is an excellent example of the force health protection measures that the Department is implementing to protect our men and women in uniform from the environmental, occupational, and endemic disease and nuclear, biological, and chemical warfare threats that they may encounter during deployments. The anthrax vaccine is a licensed vaccine, approved by the U.S. Food and Drug Administration since 1970. The vaccine has been routinely administered in the United States to veterinarians, laboratory workers, and livestock handlers for more than 25 years and has an excellent safety record. An integral part of our Preventive Health Care System is immunization tracking, an interim version of which is now being deployed by the Services to support the anthrax program. DoD remains committed to providing care to veterans of the Gulf War, and to understanding health effects arising from service during that conflict. DoD's Comprehensive Clinical Evaluation Program, begun in 1994, has provided health evaluations to over 31,000 Gulf War veterans, including members of the National Guard and Reserve. We continue to sponsor a comprehensive research program in this area with the Departments of Veterans' Affairs and Health and Human Services.

  QUALITY OF HEALTH CARE

  Over the past year, the quality of medical care for military beneficiaries and provider professional qualifications came under criticism. While we believe our healthcare system is quite good overall, we are closely reviewing our programs. While all military providers must have a valid, unrestricted and current license in accordance with our policy since 1988, we found tracking compliance to be weak. We have since identified the few providers who were not appropriately tracked. In order to improve beneficiary confidence in our healthcare system, we are establishing consumer committees at each facility, providing a directory/patient handbook of providers serving each facility, improving feedback from surveys, increasing communication and educational efforts at all levels, and reestablishing annual Quality Management Reports. Finally, we have initiated a process to eliminate the backlog of pending malpractice and adverse action cases, and are requiring complete reports to the National Practitioner Data Bank where required.

  TRICARE

  TRICARE is an effective regional integrated health care delivery system that is enabling DoD to provide better access to high-quality care for more beneficiaries in a more cost-effective manner than previous health care delivery modalities available in the Military Health System. All seven Managed Care Support (MCS) contracts have been awarded and, with the exception of Regions 1, 2, and 5, MCS contractors have begun health care delivery. The contract awards for Regions 1,2, and 5 were challenged by unsuccessful bidders, and the protests were sustained by the General Accounting Office (GAO). DoD has filed a request for reconsideration of the protest decisions and the Department is awaiting GAO's decision. In the meantime, the contract awardees will proceed with transition activities under their contracts with DoD. Startup of health care delivery is slated for May 1, 1998 for Regions 2 and 5, and June 1, 1998 for Region 1.

  This past February, the Defense Reform Initiative directed establishment of the TRICARE Management Activity (TMA) to strengthen oversight and performance of the TRICARE program. Working closely with the Surgeons Generals, the TMA will monitor system performance through the TRICARE Lead Agents and specific performance metrics associated with quality, health care outcomes and cost.

  For Reservists, the TRICARE Selected Reserve Dental program became available on October 1, 1997, with the goal of enhancing the dental readiness of reservists. The program is entirely voluntary, with no deductible requirement. Enrolled reservists will pay 40 percent of the total monthly premium, and the government will pay the remaining 60 percent.

  CARE FOR THE OVER-65 POPULATION

  TRICARE provides health care coverage to active duty personnel and their families, and to retirees, survivors, and their eligible family members until they reach age 65. At that point, when DoD beneficiaries become eligible for Medicare, they lose their eligibility to use civilian health care providers under the TRICARE program. Medicare-eligible DoD beneficiaries, however, may continue to use the services of military treatment facilities on a space-available basis. The Department spends about $1.4 billion per year on care for DoD beneficiaries over age 65 in military treatment facilities.

  We are very conscious of the importance of providing stability, predictability and access to quality health care for our military retirees, including our retirees who are eligible for Medicare. On February 12, Secretary Cohen joined with Health and Human Services Secretary Donna Shalala in announcing a TRICARE Senior demonstration project that will allow Medicare-eligible military retirees to receive comprehensive health care services through military health care facilities. This demonstration project will be conducted at six sites, and will enable the Department to enroll its Medicare-eligible retirees in the TRICARE Prime program and receive Medicare reimbursement. This ``Medicare subvention'' project is a significant step forward in our efforts to care for all our military beneficiaries. By working closely with the Medicare program, we believe we can develop alternatives for offering comprehensive health care to our older beneficiaries. I want to thank the Congress, particularly members of this committee, for enacting the legislation authorizing this demonstration project. The project will help the Department find cost-effective means of expanding health care options for military retirees who have selflessly risked their lives for our nation.

  In another development, in February of this year more than 4.2 million eligible retirees, their family members and surviving spouses of deceased military retirees were able to enroll and receive services in the new dental plan for retirees.

  JOINT EFFORTS WITH THE DEPARTMENT OF VETERANS AFFAIRS

  As was discussing in your hearing on March 11 on Defense Health Programs, DoD and the Department of Veterans Affairs are continuing a high-level program of cooperation. Several key initiatives include a Veterans Health Coordinating Board; pilot programs for Centers of Excellence within each Department to make the most efficient use of existing VA/DoD capabilities; standardized disability discharge physicals for both Departments; evaluation of programs in which the two agencies can collaborate; and creation and publication of jointly used clinical practice guidelines for disease treatment.

  CONCLUSION

  The members of this subcommittee understand both the importance and the challenge of maintaining top-quality personnel and high readiness in our armed forces. I look forward to working with you to accomplish both, and I thank you for your continued support of the exceptional men and women_military and civilian_who serve in the Department of Defense.