[House Hearing, 110 Congress] [From the U.S. Government Publishing Office] [H.A.S.C. No. 110-134] DEPARTMENT OF DEFENSE ENERGY POSTURE __________ HEARING BEFORE THE READINESS SUBCOMMITTEE OF THE COMMITTEE ON ARMED SERVICES HOUSE OF REPRESENTATIVES ONE HUNDRED TENTH CONGRESS SECOND SESSION __________ HEARING HELD MARCH 13, 2008 [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] U.S. GOVERNMENT PRINTING OFFICE 45-066 WASHINGTON : 2009 ----------------------------------------------------------------------- For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, Washington, DC 20402-0001 READINESS SUBCOMMITTEE SOLOMON P. ORTIZ, Texas, Chairman GENE TAYLOR, Mississippi J. RANDY FORBES, Virginia SILVESTRE REYES, Texas WALTER B. JONES, North Carolina LORETTA SANCHEZ, California MIKE ROGERS, Alabama ROBERT A. BRADY, Pennsylvania JOHN M. McHUGH, New York JIM MARSHALL, Georgia HOWARD P. ``BUCK'' McKEON, MADELEINE Z. BORDALLO, Guam California MARK E. UDALL, Colorado ROBIN HAYES, North Carolina DAN BOREN, Oklahoma FRANK A. LoBIONDO, New Jersey NANCY BOYDA, Kansas TOM COLE, Oklahoma CAROL SHEA-PORTER, New Hampshire ROB BISHOP, Utah JOE COURTNEY, Connecticut TRENT FRANKS, Arizona DAVID LOEBSACK, Iowa CATHY McMORRIS RODGERS, Washington GABRIELLE GIFFORDS, Arizona DOUG LAMBORN, Colorado ELIJAH E. CUMMINGS, Maryland ROB WITTMAN, Virginia Eryn Robinson, Professional Staff Member Lynn Williams, Professional Staff Member Megan Putnam, Staff Assistant C O N T E N T S ---------- CHRONOLOGICAL LIST OF HEARINGS 2008 Page Hearing: Thursday, March 13, 2008, Department of Defense Energy Posture... 1 Appendix: Thursday, March 13, 2008......................................... 31 ---------- THURSDAY, MARCH 13, 2008 DEPARTMENT OF DEFENSE ENERGY POSTURE STATEMENTS PRESENTED BY MEMBERS OF CONGRESS Bartlett, Hon. Roscoe G., a Representative from Maryland, Committee on Armed Services.................................... 4 Forbes, Hon. J. Randy, a Representative from Virginia, Ranking Member, Readiness Subcommittee................................. 2 Ortiz, Hon. Solomon P., a Representative from Texas, Chairman, Readiness Subcommittee......................................... 1 WITNESSES Arny, Wayne, Deputy Under Secretary of Defense, Installations and Environment, Department of Defense............................. 5 Carns, Gen. Michael P.C., USAF (Ret.), Chairman, Defense Science Board Task Force on Energy Strategy............................ 8 DiPetto, Chris, Deputy Director, Systems and Software Engineering (Developmental Test & Evaluation), Office of the Under Secretary of Defense (Acquisition and Technology).............. 7 Solis, William M., Director, Defense Capabilities and Management, U.S. Government Accountability Office.......................... 11 APPENDIX Prepared Statements: Arny, Wayne.................................................. 48 Carns, Gen. Michael P.C...................................... 72 DiPetto, Chris............................................... 58 Forbes, Hon. J. Randy........................................ 43 Ortiz, Hon. Solomon P........................................ 35 Solis, William M............................................. 81 Documents Submitted for the Record: [There were no Documents submitted for the record.] Witness Responses to Questions Asked During the Hearing: Mr. Forbes................................................... 103 Mr. Ortiz.................................................... 103 Mr. Taylor................................................... 104 Questions Submitted by Members Post Hearing: Mr. Bartlett................................................. 111 Mr. Ortiz.................................................... 109 DEPARTMENT OF DEFENSE ENERGY POSTURE ---------- House of Representatives, Committee on Armed Services, Readiness Subcommittee, Washington, DC, Thursday, March 13, 2008. The subcommittee met, pursuant to call, at 10:34 a.m., in room 2118, Rayburn House Office Building, Hon. Solomon Ortiz (chairman of the subcommittee) presiding. OPENING STATEMENT OF HON. SOLOMON P. ORTIZ, A REPRESENTATIVE FROM TEXAS, CHAIRMAN, READINESS SUBCOMMITTEE Mr. Ortiz. I understand that we might be having a vote in about 25 minutes, but we will see if we can move forward, but thank you so much for being with us today. I want to thank our distinguished witnesses. We will have a few minutes, but maybe I can get through with my opening statement. I thank our distinguished witnesses for appearing before this subcommittee today to discuss energy use and management at military installations and for military operations. Energy issues cut across all Department of Defense (DOD) organizations and functions. Managing the demand for energy is vital not only at facilities but also for fleet vehicles, surface ships and submarines, aircraft, and tactical vehicles. The Department is developing innovative energy sources for soldier power and for forward-deployed locations, while also striving to find sources of renewable energy and meet goals for energy efficiency on installations at home. Management is vital because the Department of Defense spends billions of dollars every year on energy. The Department's request for 2009 includes $3 billion more for energy than last fiscal year. This week, the price of oil topped $109 per barrel and is four times more expensive than it was in 2001. Increased fuel prices strain the military services' readiness accounts. For example, in fiscal year 2009, roughly half of the increase in the Navy's operations and maintenance budget request is due to projected increases in fuel costs. For the past several years, the Defense Energy Supply Center raised bulk fuel rates mid-year, charging the services more than they budgeted for fuel. In many ways, the Department has already assumed a leadership role in addressing energy demand challenges. For example, even before the National Defense Authorization Act for fiscal year 2007 required it, the Department of Defense already had established an internal goal of using 25 percent renewable electricity by 2025. The services are also implementing innovative energy projects. For example, at Nellis Air Force Base, the Air Force has partnered with private industry to build the largest solar panel array in the Americas. This was accomplished through an enhanced use lease which allows the installation to lease non- excess land to private entities for 50 years or more. Other plans for the use of enhanced use leases raise questions, however. The Air Force is proposing enhanced use lease agreements for a coal-to-liquid production facility at Malmstrom Air Force Base and for nuclear power plants on other Air Force installations. I am concerned that use of such long-term commitments may impede a base's primary mission and could result in another form of encroachment. I will be very interested to hear whether the Department thinks these proposals serve the overall good for installations. I also hope to address the criteria we use to evaluate choices that affect energy use. For example, what lessons are being learned from the pilot study using the fully burdened cost of fuel for mobility systems? Of course, we also are anxious to learn about recommendations by the Defense Science Board (DSB) and Government Accountability Office (GAO), as well as specific energy solutions and challenges from the Department's perspective. I look forward to thoughtful testimony from the distinguished witnesses we have invited here today on these and other issues of interest to my colleagues on the subcommittee. The chair now recognizes my good friend, the distinguished gentleman from Virginia, Mr. Forbes, for any remarks he would like to make. [The prepared statement of Mr. Ortiz can be found in the Appendix on page 35.] STATEMENT OF HON. J. RANDY FORBES, A REPRESENTATIVE FROM VIRGINIA, RANKING MEMBER, READINESS SUBCOMMITTEE Mr. Forbes. Mr. Chairman, I first want to applaud your leadership and foresight in addressing not only the issues that are impacting military readiness today, but also issues that a long-term threats to the readiness of the Department of Defense. Today's hearing on DOD's energy posture and the hearing we had this past Tuesday on inherently governmental functions addressed issues that are complex and very often ill-defined. They require a long-range strategy and commitment if we are to have an impact, yet they truly are issues that define and underpin the readiness posture of the Department. Mr. Chairman, I want to thank you for your vision and thank you for holding this hearing. I would also like to thank you for assembling this absolutely terrific panel of witnesses. Gentlemen, we thank you for taking time today to talk with us and allow us to pick your brains and get some vision and direction on this very important issue. We certainly appreciate your expertise on this matter and we value your time. Today, we have an opportunity to look at a wide variety of issues related to the energy requirements and the energy posture of the Department of Defense. The recently released Defense Science Board study on DOD's energy strategy provides a solid backdrop for our conversation. The findings and recommendations in this report are important and timely. As the chairman mentioned, with the rising price of crude oil, one might even argue that they are overdue. We are honored to have one of the study's co-chairmen with us today, General Michael Carns. General, we thank you for your work on this matter, and all the members of the task force for the work you have done in examining the Department's energy challenges. One of the goals of the hearing today is to discuss the two serious energy risk areas that are identified in your report: energy risk to our operational forces and the risk of extended loss of power at fixed installations. As you proceed with your testimony, I would ask each of you to also address what you believe needs to be done so that we can actually see real benefit from the study. I say that because we study and report on things all the time, yet it is very difficult for us as a Congress to bring about real change sometimes. Mr. Solis, you probably understand this point better than any of us, and I know the committee has kept you very busy, and we just certainly appreciate all of your efforts and your energy and all that you do to support Congress. I make this point because we cannot afford to have what I believe are very salient and very plausible recommendations to be put on a shelf and forgotten. I would like to know what needs to be done to bring your commendations to fruition so that we can take steps necessary to further strengthen DOD's energy posture and therefore strengthen our national defense. I am very interested in understanding how the DSB study will inform the strategic plans of the Department and how such strategic plan will be developed and implemented. I would also like to ask that you let us know if there are legislative changes that are needed to improve DOD's energy posture. Oftentimes, energy legislation such as the Energy Independence and Security Act of 2007 is written with a broad focus across the government. While I agree that the U.S. Government's energy policy should be just that--government- wide--the Department of Defense has unique mission sets, a unique structure, and unique operating requirements. We must take care to ensure that legislation that has all the best intentions does not have unintended consequences that unduly degrade military capability. Once again, thank you for joining us today. I look forward to your testimony and to gaining a better understanding of what we need to do to ensure military readiness through a strong energy posture. Mr. Chairman, thank you and I yield back the balance of my time. [The prepared statement of Mr. Forbes can be found in the Appendix on page 43.] Mr. Ortiz. I checked with the minority, and request unanimous consent to allow my good friend, Mr. Bartlett, to also have an opening statement. STATEMENT OF HON. ROSCOE G. BARTLETT, A REPRESENTATIVE FROM MARYLAND, COMMITTEE ON ARMED SERVICES Mr. Bartlett. Thank you very much, Chairman Ortiz, for allowing me to sit in on this subcommittee hearing. I welcome this hearing for bringing attention to the new Defense Science Board report on Department of Defense Energy Strategy: ``More Fight--Less Fuel.'' I believe that energy is the most important challenge facing the world and our country in the 21st century. Specifically, I am most concerned about the imminent prospect of global peak oil. Global peak oil is inevitable because each oil well peaks and then declines in production after it has produced about half of its reserves. Similarly, regions and countries peak. U.S. oil production peaked in 1970. My colleagues on the Energy and Environment Subcommittee of the Science Committee and I received testimony from Dr. Bob Hirsch in a field hearing held in Houston on February 29. Dr. Hirsch said ``The Royal Swedish Academy tells us that 54 of the 65 most important oil producing countries are already past their peak production.'' A 2007 GAO report that I commissioned warned that the U.S. is particularly at risk for negative consequences from peak oil. That is because we are the world's biggest user of oil, consuming 25 percent, while producing only 8 percent of world production from just 2 percent of world reserves. Recently, chief executives from the Hess, ConocoPhillips, and Shell oil companies all expressed doubts about the ability for world oil supplies to meet demand by 2015, a very short time for DOD planning horizons. Oil is over $100 a barrel and Goldman Sachs is among those estimating it could go to $150 or $200 a barrel this year. We are acutely aware as members of the Armed Services Committee that the Defense Department is the largest consumer of oil in the country. We know that mobility platforms consume the most energy used by the Department, with jet fuel representing nearly 60 percent of fuel consumed by DOD. I am really proud of the Defense Department for its national leadership role in energy efficiency, advanced energy technologies, and utilizing renewable energy. The military trains like it fights. The military needs to plan like it fights. A 2001 Defense Science Board report recommended that it is imperative to reduce vulnerability and increase warfighting capabilities by achieving greater energy efficiency and less energy intensity of operational forces and weapons platforms. It is common sense that if you don't measure it, you can't manage it. That, in essence, was the hub of the challenge concerning energy from the Defense Department when the 2001 Defense Science Board report was issued. Some may perceive that this new DSB report represents deja vu. However, it is not. There have been at least two key steps that were already underway prior to the release of this new DSB report. In August of 2006, the Vice Chairman of the Joint Chiefs of Staff issued a memorandum endorsing a Joint Requirements Oversight Council decision to establish an energy efficiency key performance parameter (KPP). This KPP was subsequently required by the chairman of the Joint Chiefs of Staff's instruction, CSI-3170(f) dated May 2007. In April of 2007, an under secretary of defense acquisition, logistics, and technology (AT&L) memorandum established that it is Department policy to use the fully-burdened cost of fuel for all acquisition trade analyses. I am looking forward to today's witnesses addressing the Defense Science Board's first recommendation for the Department to accelerate efforts to implement energy efficiency key performance parameters and to use a fully-burdened cost of fuel to inform all acquisition trades and analyses about their energy consequences. Seventy percent of the tonnage delivered to deployed forces is fuel. Fuel delivery convoys to deployed forces add costs to the logistical chain and create targets for improvised explosive devices (IEDs), the single greatest source of casualties in Iraq. Additional personnel protection measures to reduce casualties from IEDs, such as air cover or air transport substitutions for ground convoys increases costs further. I look forward to learning from our witnesses your perspective about energy management by the Defense Department. Thank you very much, Mr. Chairman. Mr. Ortiz. Today, we have a panel of distinguished witnesses representing the Department of Defense, the Defense Science Board, and the Government Accountability Office. We have with us Mr. Wayne Arny, Deputy Under Secretary of Defense for Installations and Environment. Wayne, welcome. We have Mr. Chris DiPetto, Deputy Director of Systems and Software Engineering in the Office of the Under Secretary of Defense for Acquisition and Technology. Welcome, sir. And we have General Michael P.C. Carns, United States Air Force, retired, Chairman of the Defense Science Board Task Force on Energy Strategy. General, thank you, sir. And we have Mr. William Solis, a good friend. Good to see you again, sir. He is Director of Defense Capabilities and Management, United States Government Accountability Office. Without objection, the witnesses' prepared statements will be accepted for the record. Mr. Arny, welcome. You can proceed with your opening statement, sir. STATEMENT OF WAYNE ARNY, DEPUTY UNDER SECRETARY OF DEFENSE, INSTALLATIONS AND ENVIRONMENT, DEPARTMENT OF DEFENSE Mr. Arny. Thank you, sir. Chairman Ortiz, Congressman Forbes, distinguished members of the subcommittee, I appreciate this opportunity to appear before you to discuss the Department's installation energy efficiency and conservation posture. As we mentioned before, installations are a critical component of our defense capabilities and directly affect our training, readiness, and quality of life. Besides maintaining that quality of our facilities, we believe it is imperative for the Department to exercise good stewardship of the natural resources, not only because of the environmental impact, but also because there is a sound business case for maximizing the expenditures of our resources. There are two speakers here today representing DOD. I will be speaking in the installation aspects of energy and non- tactical vehicles, and Mr. Chris DiPetto from Director, Defense Research and Engineering (DDR&E), will focus on mobility. After our presentations, I hope you will have a better understanding of our different roles. As the deputy for installations and environment, I have responsibility for the Department's installation and non- tactical vehicle energy consumptions. This represents almost 28 percent of the total energy consumed by the Department, and of that, only 1.5 percent is for non-tactical. I am happy to report that for fiscal year 2007, facilities energy utilization decreased by 10.1 percent on a British Thermal Unit (BTU)-per-square-foot basis from the 2003 baseline, with a cost savings of $80 million, despite the rising cost of energy. Our installation energy effort is guided by the Energy Policy Act of 2005 and the Executive Order 13423. These policies direct the agencies to take action in a wide variety of functional management areas. Further, the recently passed Energy Independence and Security Act of 2007 also contains a number of new requirements, as you mentioned, and we are examining them for implementation. We will get back to you on the questions you asked on that. In January 2006, the Department also joined 16 other federal agencies in signing a memorandum of understanding (MOU) for federal leadership in high-performance and sustainable buildings. We are pursuing the attainment of Leadership in Energy and Environmental Design (LEED) silver-gold for 70 percent of the fiscal year 2009 military construction projects. In addition, we are working to address the sustainability of existing facilities. Aside from construction of new facilities, we continue to invest in initiatives to approve efficiency in existing structures through the use of the energy savings performance contract that you also renewed a couple of years ago, and utility energy service contracts. These enable us to bring in more cost-effective long-term facility operations and maintenance with no up-front costs. The work, and typically account for more than half of all of our facility energy savings. They are paid for through energy savings. By 2005, we had reduced facility energy use by 28.3 percent from the 1985 baseline. We have also increased our focus on purchasing renewable energy and developing renewable resources on our installations. As you recall, we have special legislation that allows us to do that. We have also increased the use of energy conservation investment program funding for renewable projects from $5 million in fiscal year 2003 to $28.2 million planned for fiscal year 2008. We intend to increase funding for these projects to $10 million per year up to $120 million in fiscal year 2013. In geothermal, for which I said we had legislation, we are making tremendous progress. We are also working with the Office of Management and Budget (OMB) to expand this legislation so that we can exploit other forms of traditional and renewable energy on our facilities. For the geothermal as of now, we have a 270 megawatt power plant at China Lake that supplies enough energy to serve 180,000 homes annually, and the base gets a reduction in its own energy bill. We have a second power plant under construction in Fallon and three additional plants in the southwest are planned at El Centro, 29 Palms, at Chocolate Mountains, and at the Army ammo depot at--I draw a blank right now. The Navy is also working with the Army to do geothermal exploration there. We also have multiple solar facilities online, and initiatives at several locations, including California, Texas, and Arizona. The Air Force recently brought on North America's largest solar array at Nellis. That produces 14 megawatts and provides one-third of the base's electric requirement. That, again, was done with no money up front on the part of the Air Force and will provide significantly lower electric rates over time. We are also pushing into ocean and tidal wave technology, and we are working to set up small wind farms with diesel backups wherever they make sense, especially at remote locations. We have these at San Clemente, Guantanamo Bay and on the islands powering radar off of Point Mugu. One that is very interesting, we funded a small business innovative research project for an ocean thermal energy conversion program. OTEP as it is called is being tested on Diego Garcia. The project seeks to use the temperature differences between the ocean surface and deeper water to produce electricity and potable water to a location where we all know both those commodities are very expensive to produce. I will briefly mention non-tactical vehicles. The Department is required by legislation to use alternative and flexible fueled vehicles for at least 75 percent of new vehicles in metropolitan service areas, and we meet that goal. But unfortunately, we have not seen the development of the alternative fuel infrastructure that we need to fuel those vehicles. So consequently, while we have the number of vehicles, they are still using regular fuel to power because we don't have access to the alternative fuels. We are investigating ways to help do that, as you have seen at our Quarters K gas station up by the Pentagon, open to the public, our alternative fuel facilities. We are working with other exchanges. In closing, I thank you for the opportunity to highlight the Department's energy management of our installations and non-tactical vehicle fleet, and to talk about our successes and our plans for the future. Your support of the Department's energy initiatives and investments is greatly appreciated, and I look forward to continuing to work with this committee as we increase energy security and reduce operating costs for the Department. Thank you. [The prepared statement of Mr. Arny can be found in the Appendix on page 48.] Mr. Ortiz. Mr. DiPetto, whenever you are ready, sir. STATEMENT OF CHRIS DIPETTO, DEPUTY DIRECTOR, SYSTEMS AND SOFTWARE ENGINEERING (DEVELOPMENTAL TEST & EVALUATION), OFFICE OF THE UNDER SECRETARY OF DEFENSE (ACQUISITION AND TECHNOLOGY) Mr. DiPetto. Thank you. Chairman Ortiz, Congressman Forbes, distinguished members of the subcommittee, thank you for the opportunity to appear here before you today to discuss the Department of Defense's current efforts to address our energy risks and our energy governance. The past year has been quite active as the enterprise has begun to appreciate the challenges and potential opportunities related to energy. My name is Chris DiPetto and I am here representing the Deputy Under Secretary of Defense for Acquisition and Technology (A&T), Dr. James Finley. A&T has some specific responsibilities related to examining and setting policy on DOD mobile systems energy. Specifically, we were directed by the deputy secretary to mature and incorporate a concept called ``the fully burdened cost of fuel'' into DOD business processes. Incorporating this concept, we believe, will give energy, particularly the burdens of battle space-delivered fuel, proper consideration as design, develop and acquire capabilities. The DOD Energy Security Task Force is chaired by Under Secretary of Defense for Acquisition, Technology, and Logistics, the Honorable John Young. This task force was chartered in May, 2006, to delve into the unique energy challenges the Department faces and to develop management and technology solutions. This group has succeeded in raising the profile of energy within the Department and is positioned to provide senior leadership with actionable recommendations this year on how to manage these energy risks in new and innovative ways. The Office of the Director of Defense Research and Engineering provides the day-to-day leadership to the Energy Security Task Force, so I would defer to them to provide the committee a broader description of the work plan and their successes to date. However, my organization, A&T, acquisition and technology, participates actively in this group, along with other Office of the Secretary of Defense (OSD), joint staff, service and defense agency representatives. I hope to provide you with some context on the energy challenges the Department faces. Information on the work my leadership and I are doing to better understand the Department's energy risks, and to explain some of the planning and business process changes the Department is considering to better manage these risks. I provided my formal testimony for the record. So with that, I thank the subcommittee for their attention on this cross-cutting issue and I will welcome your questions. [The prepared statement of Mr. DiPetto can be found in the Appendix on page 43.] Mr. Ortiz. Thank you, sir. General Carns. STATEMENT OF GEN. MICHAEL P.C. CARNS, USAF (RET.), CHAIRMAN, DEFENSE SCIENCE BOARD TASK FORCE ON ENERGY STRATEGY General Carns. Thank you, Chairman Ortiz, Ranking Member Forbes, and other distinguished members. In May, 2006, the Under Secretary of Defense for Acquisition, Logistics and Technology commissioned the Defense Science Board Task Force on DOD Energy Security. Citing the specific energy security risks to both our Nation and to our military forces, he challenged the task force to find opportunities to reduce DOD's energy demand, to identify institutional obstacles to their implementation, and assess their potential commercial and security benefits to the Nation. The task force was co-chaired by Dr. James Schlesinger and myself. It included 77 members. We held 37 meetings, took 143 briefings, took 10 months to deliberate, and another 10 months to finalize our report. We came to an agreement about the most important energy tasks facing the Department, and a set of recommendations that if followed would allow the Department to manage those risks. Here is a copy of the report which I submit for the record, and I have also provided written testimony for the record. [The information referred to is retained in the committee files and can be viewed upon request.] General Carns. The Department of Defense is the single largest consumer of energy in the United States, using less than 1 percent of the Nation's total energy consumption and about 1.5 percent of its oil consumption. Interestingly enough, the number two user is Wal-Mart. Buildings and facilities use about one-quarter of DOD's total energy, and mobile systems consume about three-quarters. To put this in perspective, the Department uses somewhat more petroleum per year than a major international airline, not twice as much, but almost as much. We found that the Department faces two serious energy risks. One is moving fuel to our operational forces, and the other is the potential for an extended loss of commercial power to certain selected critical missions at our fixed installations. Now, a few thoughts about the risk to operational forces. Moving fuel to the deployed forces is difficult, expensive and certainly dangerous. Logistics is a vulnerable soft underbelly for us and a rich target for our enemies. The larger our logistics tail gets, the more difficult it is to protect, and as we have learned in the Iraqi conflict, more combat power gets diverted from combat operations to assure the logistics safety, the more casualties we take because of our supply trucks can never be as survivable as our combat vehicles. As Congressman Bartlett noted, both Iraq and Afghanistan have taught us that we are no longer moving logistics around in secure areas. Everything is at risk all the time. The task force identified the best way to reduce energy tasks to operational forces is to reduce the fuel demand. The best approach to doing so was developed by the Defense Science Board 2001, and I point out that Admiral Truly is present with us and he chaired that board in 2001. In my view, the first thing to do is to educate the leadership, incorporate fuel logistics and convoy protection into war games, the scenarios, the vignettes and the campaign analyses that DOD uses to identify needed capabilities, and to develop options for fielding these capabilities. Improved endurance--the amount of capability we extract from each unit of energy an operational system uses is an important capability. Second, we need to put a lot more rigor in the system. As was mentioned, this matter of establishing a key performance parameter for all new systems that create a demand for fuel. The results of the war games and the scenarios and other campaign models will provide the basis for formulating those KPPs. Again, a parenthetical note, several years ago, many of us participated in a war game up at Carlyle Barracks. During the course of that game, it actually came to a halt. That is, we were unable to execute the forces because they could not sustain the logistics trail in this particular exercise. At the time, the senior people were very critical of the control group for allowing the game to stop, saying they would be unable to fulfill their expectations of the game. We said: You just learned the most important lesson that this game can teach you. Back to the text here, my third comment would be to find ways to value fuel and incentivize innovation. Establishing the fully-burdened cost of fuel to capture costs of moving and protecting fuel, and using that value as the financial basis for investing in new technologies throughout the stages of acquisition and re-set programs is a good start. It also should be used for AoAs, or analysis of alternative studies, that are used to select among competing alternatives for new programs. The result of the war games, the scenarios, and other campaign models will also allow a more accurate estimate of the fully-burdened cost of fuel. ``Black'' programs must not be exempt from these requirements. To give you some perspective, by the time a gallon of fuel flows out of the boom of an airborne tanker, years ago the analysis showed the Air Force had spent at least $42 per gallon. I am sure that cost is considerably higher today, given the cost of operating systems as well as the basic cost of fuel. The task force also looked at current operational procedures that waste energy and financial practices that incentivize waste, and have made recommendations for operational changes and new financial incentives to reduce energy waste. Now, a few thoughts about risk to critical missions. There are critical missions at fixed installations at absolutely unacceptable risk of extended outage from loss of commercial power. If the committee is interested at a later time, we would be delighted to talk about that information which is contained in a classified annex. Neither the grid nor on-base backup power provides sufficient reliability to ensure continuity of critical national priority functions and oversight of strategic missions. We base this on a series of briefings and discussions we held with the Department of Energy, industry, and Department of Defense officials, as well as reports and other literature. While DOD has conducted vulnerability analysis and assessments of its installations, it has not yet developed an overall risk management strategy to manage those vulnerabilities. The task force has recommended that the Department form a cross-functional team to assess the risk of specific missions at specific locations. The task force also recommended the Department develop a plan as a management tool to achieve the business process changes we recommended by establishing measurable goals and clear responsibility, and most importantly, accountability. We also recommended the Department invest in energy technologies to a level commensurate to their value to the Department. This includes operational, as well as financial value. And finally, we recommended the DOD evaluate its operational procedures for energy waste and make appropriate changes. Mr. Chairman, this concludes my abbreviated remarks. Thank you. [The prepared statement of General Carns can be found in the Appendix on page 72.] Mr. Ortiz. Thank you, general, Mr. Solis. STATEMENT OF WILLIAM M. SOLIS, DIRECTOR, DEFENSE CAPABILITIES AND MANAGEMENT, U.S. GOVERNMENT ACCOUNTABILITY OFFICE Mr. Solis. Chairman Ortiz, Ranking Member Forbes, members of the subcommittee, I appreciate the opportunity to be here today to discuss DOD's efforts to manage and reduce its mobility energy demand. We refer to mobility energy as energy DOD requires to move and sustain its forces and weapons platforms for military operations. Your oversight of this issue is paramount not only to improving the management of DOD's mobility energy, but also helps ensure that we minimize the mission risks our military forces are exposed to in operations. My testimony will focus on three areas: first, energy issues that will affect DOD operations; second, some of the key departmental and military service efforts to reduce demand for mobility energy; and third, current DOD management approaches to guide and oversee these efforts. First, many of the energy issues our Nation currently faces have direct impact on DOD. Rising fuel costs, worldwide energy demands, increased U.S. demand for oil, and uncertainties about world oil supplies are just a few examples that underscore the importance of energy to the Nation and to DOD. Fuel costs for DOD are substantial. In 2007 alone, DOD reported that it consumed almost 4.8 billion gallons of mobility fuel and spent $9.5 billion. Volatility of world oil prices are likely to continue, which may require DOD to make difficult tradeoffs such as redirecting funds from ongoing programs to pay for needed fuel. Furthermore, the Department is directly and negatively affected by DOD's high fuel requirements on the battlefield. These requirements place, as has been mentioned, a significant logistics burden on our military forces. They can limit the range and pace of operations and can add to mission risk, including exposing supply convoys to attack. Given these issues, DOD must be well positioned to effectively manage energy demands for military operations. Next, I would like to acknowledge some of DOD's key mobility energy demand initiatives underway. At the department level, DOD created a task force to address energy security concerns. We recognize that the task force is a good forum for sharing ideas and monitoring progress of selected mobility energy projects across the Department. Each of the military services has its own ongoing initiatives. For example, the Army is addressing fuel consumption at four deployed locations by developing foam-insulated tents and temporary dome structures that are more efficient to heat and cool, thus reducing the need for fuel power generators. The Navy has established an energy conservation program to encourage ships to reduce energy consumption. The Air Force has developed an energy strategy and is undertaking various fuel reduction initiatives such as determining fuel-efficient flight routes and optimizing air refueling. The Marine Corps has initiated research and development efforts to develop alternative power sources and improve fuel management. Finally, although DOD has taken some positive steps to address mobility energy, it lacks key elements of an organizational arching framework to guide and oversee these efforts. First, DOD's current approach lacks high-level leadership necessary to advocate and coordinate mobility energy issues across the Department. Without effective leadership, the Department has been unable to comprehensively address the development of a mobility energy strategic plan and improve coordination among DOD stakeholders. DOD's current approach to mobility energy is to centralize. Responsibilities are diffused among several DOD and military service offices and working groups without a single focal point who is accountable for mobility energy across the Department. As I stated, the establishment of the task force is a positive step. However, this task force has been unable to develop policy, provide for guidance for oversight, and be the advocate for mobility energy Department-wide. For example, it does not have a seat at the table in executive-level Department discussions such as the Joint Requirements Oversight Council or the Defense Acquisition Board. Moreover, the individuals that lead the task force do so as an extra responsibility outside their normal work duties. It is also relevant to point out that DOD has established a focal point for facility energy, which accounts for about one- quarter of DOD's total energy consumption. Mobility energy accounts, as has been mentioned, accounts for about three- quarters of the total energy consumption, yet there is no equivalent focal point to lead, advocate, and coordinate for these issues. Second, there is not a strategic plan for dealing with mobility issues. Key elements of this plan would include DOD- wide goals, priorities, resource requirements, timeframes for implementation, and performance metrics to evaluate progress. While we are not recommending specific goals for the Department, we note that back in 2002, the Commandant of the Marine Corps established the goal to reduce fossil fuel consumption by 10 percent in the year 2010. In closing, we issued a report today that recommends that DOD establish an over-arching organizational framework for mobility energy. To establish such a framework, DOD should designate an executive-level official who is accountable for mobility energy matters, develop a comprehensive Department- side strategic plan, and improve business processes to incorporate energy efficiency considerations. In addition, we recommend that the military services designate an executive-level person to establish effective communication and coordination among DOD and military services on Department-wide mobility reduction efforts, as well as to provide leadership and accountability for their own efforts. With a mobility energy organizational framework in place, DOD would be better positioned to reduce its significant reliance on petroleum-based fuel and address energy challenges for the 21st century. This concludes my prepared remarks. I will be happy to answer any questions. [The prepared statement of Mr. Solis can be found in the Appendix on page 81.] Mr. Ortiz. Thank you, Mr. Solis. Before we go into the phase of questioning, I would like unanimous consent to allow members of the House Armed Services Committee to participate in the subcommittee hearing. After consultation with the minority, I ask unanimous consent that Mr. Bartlett and Mr. Davis, members of the House Armed Services Committee, be allowed to participate in today's readiness hearing and be authorized to ask questions from the witnesses. Mr. Bartlett and Mr. Davis will be recognized at the conclusion of questioning by the members of the Readiness Subcommittee. Hearing no objection, so ordered. We thank you so much for your testimony this morning. I think we can learn a lot from you. This is something that all of us need to work together to be able to bring the savings that we need to. I know it is harder on my family to be paying close to $4 a gallon. Mr. DiPetto, based on your experience with the fully- burdened cost of fuel pilot programs, what do you see as the biggest challenge to implementing a fully-burdened cost of fuel mentality? Do any of these challenges cause you to reconsider whether this is a good idea to do that? Mr. DiPetto. Let me answer the latter part of the question first. No, none of the challenges we have experienced so far in executing the pilot programs would cause us to re-think whether this is a good idea or not. Clearly, there are some challenges. We are nearing the conclusion, hopefully this summer, of the pilot programs. We have learned quite a number of lessons in executing these. One of the biggest lessons we have learned to date, it has become quite apparent that the acquisition trade space is significantly constrained by decisions in the force planning and requirements business processes that precede it. So without applying fuel considerations and the value of fuel delivered to the battle space very early in DOD's corporate processes, there is a limit to what we can do in the acquisition trade space. So I would probably highlight that as our biggest initial observation in the pilot program. Again, nothing that we have learned so far would question the initial assumption that this makes good sense and is something the Department should do. Mr. Ortiz. So you think we have taken the right steps? Mr. DiPetto. Absolutely. We are still maturing the methodology and the analytical approach. We still have a lot of work to do to incorporate it, even in the acquisition business processes. But yes, I think we are on the right path. Mr. Ortiz. Mr. Arny, DOD's installations are required to meet many energy goals. Could you more or less enlighten us or elaborate on DOD's plans to achieve these goals with an emphasis on the two that DOD and the services have at their disposal? Also, in your written testimony, you identify some concerns about meeting some of the new requirements. Could you elaborate on these concerns? I know I am asking too many questions, but maybe you can respond. Does the Department need any legislative assistance to meet these goals? Can you give us an idea? Mr. Arny. We have a number of tools. Again, as I mentioned in oral testimony, you all had reauthorized some of the Energy Savings Performance Contracts (ESPC) that we have, so we are able to proceed forward. Let me give you an example of where we were able to use it was at the carrier pier in Ukuskit. We have a power plant. We are about to put in a large military construction (MILCON) project to upgrade that for when we bring in the nuclear carrier. We were able to do that with no money up front through ESPC by bringing in a developer who could develop the power plant, charge us the same amount of money. Instead of one kind of electricity, we get both 60- and 50- cycle power, as well as the level of pure water that we need to work with the carriers. So we have a number of those in place. Part of our problem I see, we are analyzing the latest legislation to see how that affects us, so I have to get back to you on the answer to that. But we do have tools in place. We do think we can meet the goals. It is harder because in the directives we are asked to go on a steeper slope, but working with all the services, we believe we can meet those targets. [The information referred to can be found in the Appendix beginning on page 103.] Mr. Ortiz. I would like to allow my good friend Mr. Forbes to introduce a new member from the minority who is with us. Mr. Forbes. Thank you, Mr. Chairman. We are delighted to have with us today our newest member of the Armed Services Committee and also the Readiness Subcommittee, Mr. Rob Wittman, from the First District of Virginia. He likes to refer to it as the first district of America, but we are certainly excited to have him with us, Mr. Chairman. Thank you for that opportunity. We are delighted to have him and looking forward to great things from him. Mr. Ortiz. Welcome. They told me you would be the one that would be able to solve the energy crisis. [Laughter.] Let me yield to my good friend, Mr. Forbes, for any questions that he might have. In a few minutes, we might have to recess. I don't know how many votes we have, but when I look at those lights--but is it two votes now? So let me go ahead and yield to my good friend, Mr. Forbes, for any questions that he might have. Mr. Forbes. Mr. Chairman, thank you so much. Again, I want to thank you for your leadership in holding this. We have had a couple of really important hearings this week, and we thank you for your vision on doing that, and for your patience in the number of questions that I think all of us would have. Mr. DiPetto, first of all, I would like to ask you, in your written statement you make a brief comment regarding your limited ability to perform analysis, for example through modelings and simulation, war-gaming, and other accepted tools in order to determine what it is worth to the larger force to invest in fuel efficiency technology. I am a firm believer in modeling and simulation, and the dollars it saves us and the forecasting abilities it gives us. What needs to be done to ensure the Department has the modeling and simulation tools it needs to aid in making these value judgments? One of the challenges in implementing change is that you have to get buy-in at the lowest levels. Do you believe that having appropriate modeling and simulation tools would increase warfighter awareness and advocacy of energy efficiency in the Department? Mr. DiPetto. In one of my other hats, I sit on DOD's modeling and simulation (M&S) steering committee, Congressman Forbes, so I, too, agree on the value of modeling and simulation. In my written statement, I was referring to the lack of those tools up front in the business processes to let us actually see the consequences of the fuel demand in the battle space. One of our hopes is that as we sort through the Department's vision on energy posture and develop our strategic plan going ahead, some of those priorities will be reflected and realized as we execute the strategic plan going forward. What we are talking about there is specifically the tools to let the warfighters, both in campaign analysis and in variety of analytical agendas, actually see the utility of reducing fuel in the battle space and how the burden of fuel detracts from combat capability. So I would be a firm supporter, and I think we will push going forward in that area. It is a little out of my lane. I am an acquisition guy, but we see the need, as I mentioned in answering the chairman's question, to poke earlier in the corporate processes the value of fuel, and M&S would be a big enabler to that. Mr. Forbes. If you determine that there are any specific things that we can do, if you would submit them to us for the record so that we can work to try to do that, we certainly want to make sure those tools are available and we are moving forward with them. Mr. DiPetto. Yes, sir. [The information referred to can be found in the Appendix beginning on page 103.] Mr. Forbes. I have two other questions. One of them is a little bit larger, then General Carns, one for you that if we have time for you to answer, if not, maybe you could submit it for the record. The big concern I have is, I am aware that section 526 of the Energy Independence Security Act of 2007 prohibits any federal agency from contracting for an alternative or synthetic fuel, including the fuel produced from nonconventional petroleum sources unless the contract specifies that the life-cycle greenhouse gas emissions be less than or equal to the emissions from conventional fuel. My question for any of our witnesses, if you can comment on the impact of this legislation to the DOD and to the U.S. economy and security. Is it likely that this legislation will only make us more dependent on Middle East oil because we cannot rely on sources such as Canadian tar sands to meet our Nation's petroleum requirements? Mr. Arny. Sir, I wanted to mention that earlier. The problem we have with that is we are trying to figure out exactly what it says. Many of the provisions are ill-defined, and we are just not sure how it will affect us. We have the same concerns you do, and we would like to work with you to see if we can't, with the subcommittee, refine that. The goals seem laudable, but we are just not sure of the effect, and we have some of the same concerns as you do. Mr. Forbes. Well, if you could get back with us when you get that information, I think this is a very costly thing for us and could be one of those things where we have some unintended consequences that could be rather devastating. So anything you could submit for the record. [The information referred to can be found in the Appendix beginning on page 103.] Mr. Forbes. General, I know we have to run for a vote, but one of the things--you made a comment that I think is very appropriate. I just want to quote it again, if I can, but you said, ``Logistics is a vulnerable soft underbelly for us and a target-rich environment for our enemies. The larger our logistics tail gets, the more difficult it is to protect and more combat power we must divert from combat operations to assure its safety, and the more casualties we take because our supply trucks can never be as survivable as our combat vehicles.'' I have always been interested in logistics because Fort Lee is in my district and we like to refer to them as the logistics capital of the Nation, sometimes the world. It is not sexy what they do, but it is so vital to the operations we have. If we implemented all the DSB recommendations today, it would still be years before we began to see the full effect. My question today is, what, if anything, can be done today to reduce the risk to our forces that are currently engaged in the global war on terror? As you answer that, let me just point out for those listening today, we are now transporting in just fuel alone into Iraq on a daily basis about 1.5 million gallons of gas a day, with 200,000 gallons coming in per day from the north; about 500,000 gallons coming in from Jordan; and about 800,000 gallons coming in from Kuwait. The lines--we have pictures--are sometimes as long as 32 miles long. I mean, that is a very real risk that we have, a very difficult logistical problem. General, what can we do as quickly as possible to protect those forces that are there? General Carns. Mr. Congressman, I would first say our near- term alternatives are always limited because we have already capitalized the systems. The Congress has been most generous in funding such efforts as the Joint Improvised Explosive Device Defeat Organization (JIEDDO), which has made a material difference in reducing casualties, as well as the more-armored vehicles. But so far as what we can do near term, there are very limited options. In the medium and long term, there are a number of suggestions in the report that emphasize if we can make the systems more efficient, we need less fuel, and of course we get more fight. In that respect, it is that we have to get very serious about innovative research and competitive prototyping, rather than trying to just put appliques on existing systems. In that respect, a program like Reset, which the Army is committed to and is on the order of an $85 billion program, in my estimation puts us too much back to the future, rather than in the future, in the sense that we are going to refurbish what we have, rather than forcing technologies to give us new capabilities which are so desperately needed. When we designed the systems we now have, our expectation was that we would have a safe rear area. We are now in a situation where we do not have that luxury. We have to adapt and build new innovative ways to make sure we can reliably operate in this hostile environment and supply the forces with the logistics they need. Mr. Forbes. Thank you, general. Mr. Chairman, I yield back the balance of my time. Mr. Ortiz. Thank you. We are going to recess hopefully for 10 minutes, and we will be coming back. The next member to ask questions when we return is going to be Mr. Hayes. So we are going to be recessing for about 10 or 15 minutes, and I hope there is no other vote to adjourn. Thank you. [Recess.] Mr. Ortiz. Okay, our hearing will resume. Mr. Hayes will be the first gentleman who has some questions, right? Mr. Hayes. Thank you, Mr. Chairman. Gentlemen, thank you. As you may know, I represent Fort Bragg and Pope Air Force Base. We appreciate the efforts that the military and you in particular are making to develop alternative sources of energy which is critically important. I mentioned to you on the way out that I would like for you to comment on how the Germans were able in the last two years of World War II to operate their military on synthetic fuel, and relate that to what we are doing now. Also, if you would talk a little bit more about what is being done at Fort Bragg and in the Air Force in developing alternative fuel sources. As you are commenting, I would appreciate your comments on us not losing sight of the bigger energy picture, whereby exploration, nuclear power, gasification of our most abundant resource, coal, and how all those things play in. If anybody would like to start, please do so. Mr. DiPetto. I could start. Sir, it is my understanding historically that the Germans used or actually developed a process for liquefaction of coal when they were denied the ability to use conventional petroleum resources to fuel their air force. The process is called Fischer-Tropsch, which I think the South Africans are still doing to this day. It is called liquefaction process. That is about as deep as I go on that issue. Regarding the Air Force efforts on alternative energy, they are in fact proceeding down a path to test the use of synthetic fuels in their major mobility aircraft and some of their combat aircraft as well. So they are on a path to test and certify those fuels to give them the ability to use the fuel. I think that is about as deep as I can go. The other issues, I am going to hand over to Wayne. I think the nuclear---- Mr. Arny. I do know that the Air Force, as far as installation, the Air Force is looking at, as the lead agency for us, looking particularly at is it feasible to do nuclear power on some basis. We are all interested in what are the parameters of that and what are the pluses and minuses. That will be examined by the Department. As far as other forms of installation energy, we have geothermal plants in the west. We are putting more solar. We are using the energy legislation we have now to modernize. We have a lot of old power plants. We are either privatizing them or trying to modernize them. Just by putting in new equipment, we get better efficiency out of it. So there are a number of things we are doing in terms of, for instance, very simple things. We never metered the homes or any of the buildings that we had on our bases. Energy was just a cost we paid. We are now beginning to meter all of our homes whether they are privatized or whether we own them, and incentivizing the residents to conserve energy. In the old family housing when I was a junior officer, you could have the air conditioning running with the windows open. It didn't matter because you didn't pay for it. Now, we are incentivizing the members to conserve energy as well. So we are trying to do as much as we can using every aspect that we can get to. As I said, we are doing more and more exploration for geothermal using the profits that we get from the existing plant. We are also looking to extend that to exploit potential energy sources that are under our bases which we really don't have the incentive to do right now. So there are a number of things we are trying to do. General Carns. Congressman Hayes, if I could comment very briefly. The Germans thought up those ideas for the same reason we need to do so. Namely, they were in a crisis. There was not another alternative and so innovation bloomed very quickly. The price of oil is driving us obviously to be more innovative, and if there is a criticism it would be that we are not moving fast enough. In that respect, you mentioned nuclear. I would offer the following operational perspective. As mentioned earlier, we have notionally identified a number of capabilities at installations which are essential for maintaining situational awareness and being able to execute the forces in support of national security objectives. In that respect, nuclear provides an interesting opportunity in that were we to put nuclear capability, nuclear power generation capability in selected locations, we have the opportunity to put it in a secure environment on an installation, and we have a way to not only provide power to the base, but if there were a major interruption in an area or a region, these facilities could probably provide considerable power for the surrounding area. It will not work to have a large power outage where we crank the generators on the base and light up only the installation, while the civilians who live within 10, 20, or 50 miles live in darkness for days or weeks or more. So nuclear is one of the alternatives that may be a very interesting option and it provides a secure federal facility to put it. Mr. Hayes. I appreciate those comments. To wrap up, Mr. Chairman, I think if people were to go back and look at the so- called nuclear accidents--and Mr. Bartlett is much more of an expert than I am--the things that were left out of the construction of the plant in Chernobyl and the other things that happened, if you have some real skeptics, it means that with modern techniques and proper supervision, nuclear is extremely safe. Last but not least, if the oil speculators who are holding us up for foreign oil were to see us get more actively involved in additional exploration, nuclear and others, that would be a good backstop against the marketplace. Thank you, Mr. Chairman. Mr. Ortiz. Thank you. My good friend from Mississippi yields to our friend, Mr. Courtney. Mr. Courtney. Thank you, Mr. Ortiz. Thank you, Mr. Taylor. I actually just have a quick question, which maybe I can start with Secretary Arny. There was in the last defense budget some funding toward Specialized Technology Resources (STR) Technology in Connecticut. They make the fabric for solar panels which are going to be incorporated into pop-up tents and actually backpacks to power radio equipment. Again, this is a firm that is doing lots of work for the German effort to promote renewable energy. Again, it was exciting to go to this facility where they are probably looking at adding about 100 new production jobs based on this contract from the Department of Defense. When you think of solar, you always think of stationary panels that are installed in buildings. Again, is it the Pentagon's intention to really try and use it in other more nontraditional manners? Mr. DiPetto. I can take that question, congressman. I am not familiar with that specific effort, but in general if one looks at the cost of delivering the fuel to run generators, for example, in the battle space, renewable power, onsite generation has a huge advantage in terms of reducing the logistics flow of fuel to theater if you can generate power organically right there. Certainly, solar is one aspect of getting at that demand reduction, but on the supply side, onsite generation from something like wind or solar organically, or even for the combat warrior on foot, re-charging batteries. So there is a terrific application in-theater for that type of technology. I am not familiar with that specific effort, but---- Mr. Arny. Is this technology just man-carried, or is it for facilities as well? Mr. Courtney. Again, the specific contract was for man- carried. Again, obviously, we have people deployed in parts of the world where there is lots of sunlight, so it would seem like a pretty smart direction Mr. Arny. Absolutely. I will take a look at it. Also, I know for our buildings, again as one of the members mentioned, this is all driven by cost and having to save. One of the things that we are doing, a lot of our buildings, as you have seen, have flat roofs on them, and we tend to paint them black. We are now looking at--not just us, but the private sector as well--at embedding solar panels in the roof just to keep bringing electricity. And the solar technology is getting better and better. As the technology goes, as the price of fuel goes up, it becomes more efficient. In the early days, we were having to subsidize our solar. To me, it was a little bizarre being basically a private sector guy, that out in San Diego we put solar panels in a parking area, you know, with nice sunlight, and we subsidized it with our geothermal revenue, but we also had state subsidies in there. I thought that was a little strange that, okay, the Federal Government is getting subsidies from the state. But anyway, it worked. But now it is becoming more efficient. In particular, the 14 megawatt plant at Nellis, they have a long-term energy contract to buy electricity from that cheaper than they would have with the price of electricity they were getting. Ten years ago, you couldn't have done that. Mr. Courtney. I would like to again follow up with you in terms of this project, which again, it is very exciting. Again, you are right. The photovoltaic technology is just improving and becoming more efficient so that you actually can squeeze more out of every square foot. So thank you, Mr. Chairman. Mr. Arny. You know, in hangars, we are even putting in huge fans. If you think about it, put giant fans in the top of aircraft hangars just to keep the air moving to keep it running more efficiently. There are lots of new technologies. Mr. Ortiz. Mr. Wittman. Mr. Wittman. Thank you, Mr. Chairman. It is great to be part of this committee and it is great to be learning about these readiness issues. I appreciate the opportunity. The U.S. Air Force has articulated ambitious goals with respect to the development and use of domestically produced synthetic fuels. Those things include accelerating the development and use of alternative fuels, increasing the use of synthetic fuels to 100 million gallons in the next 2 years, and certifying the entire fleet on Fischer-Tropsch (FT) fuel by 2011, and having 50 percent of the U.S. Air Force fuel being synthetic fuels by the year 2016. Just a couple of questions within that particular framework. What steps are being taken to ensure that the U.S. Air Force will be able to achieve these goals that they have put forth? And what steps are being taken to ensure that section 526 of the Energy Independence and Security Act of 2007 will not interfere with the U.S. Air Force goals? Mr. DiPetto. I am going to try and answer that one as best I can. I am not a fuels guy. I am an acquisition demand-side guy. I might have to defer you for specifics to the Air Force. The Department's position on alternative fuels recognizes that DOD, because we are such a small percentage of the fuels market, will never be a market-driver. However that said, we very well might be a market participant down the future. So the Air Force efforts in certifying and testing probably go along those lines to becoming a potential market participant. That said, the under secretary--and I believe he speaks for the deputy secretary--recommends we take a very cautious approach to alternative fuels across the board. One recognition is that supply-side solutions don't particularly solve our most pressing problems, which is the cost of delivery of fuel into the battle space. We feel and various Defense Science Board studies have recognized that as DOD's most pressing challenge. But some of these type of issues, the recommendations of the various recent studies, the Air Force efforts will be sorted out as we develop the Department's energy strategic plan debriefed up to the Deputy Secretary in the coming months. Mr. Arny. Let me, if I could, I will add to that. I know that the Air Force has stated publicly that they are looking for--I won't say cost-equal, but it must be cost-effective and have no larger footprint than they can get under conventional fuels. As I said earlier, the Department is examining the effect of section 526 on all our aspects, and we intend to come back to the Congress with the answer on that. Mr. Wittman. Thank you. Yes, I know that those goals are very aggressive and we just wanted to try to gauge where the effort is. Mr. Arny. If I recall, I was with Mr. Anderson yesterday when he was talking about it, they are targets, rather than goals. That is what they would like. If they don't get there, it is an effort to break new ground. So if they don't make the targets, but they make progress, that is also progress. Mr. Wittman. I know they are looking across the board as far as synthetic fuels. One of the efforts I know they are pushing to undertake is coal to liquid fuel, and I know that is an aggressive part of the process I just wanted to gauge. Is that still continuing to be part of the strategy that they are pursuing in this transition to increasing synthetic fuel use? Mr. Arny. I believe so. We will get you a specific answer on that. Mr. Wittman. One additional question, in DOD's response to GAO's report, DOD stated that it plans to address the issue of military service governments and oversight of energy matters once it completes its strategic plan in May, 2008. However, the military services have various mobility energy reduction efforts currently underway. In the absence of executive-level military service focal points for mobility energy, how are the services prioritizing their own efforts and ensuring effective information-sharing with each other and with the Department? Mr. DiPetto. Again, I cannot speak for the services, congressman. However, we have some visibility in our acquisition role in overseeing major defense acquisition programs and the acquisition of tactical systems. So we have some visibility into how the services are addressing mobility fuel. They have been participating with us on the fully- burdened cost of fuel pilot programs to shake out the methodology to move that forward hopefully next year. We are working three pilot programs with each of the service. But in terms of service priorities on mobility fuel, I would have to defer to the services on that. I don't have any insight on that. Mr. Arny. But we do bring it together at OSD, and we are trying to do a better job. Obviously, energy has become much bigger since I have been here. I know Al Shaffer chairs the Energy Security Task Force, which has participation by all the services at senior levels. We are doing more and more of that, because we do need to prioritize all these efforts and bring them together and make sure they all make sense across the Department. Mr. Ortiz. Thank you. Mrs. Boyda. Mrs. Boyda. Thank you very much, Mr. Chairman. Energy is such an incredibly important topic. When I talk about energy back at home, I talk about it from a national security standpoint, so having you guys here today really is that intersection of national security, from whether you are driving in Kansas or trying to fight terrorism. I apologize. I have had to be kind of in and out, so I may be going over plowed ground already. But so many of us have talked about this go-to-the-moon with National Aeronautics and Space Administration (NASA), when John Kennedy said in eight years or before the end of the decade, we are going to go to the moon. We have all said that we need a comprehensive energy policy and somebody who really has firm hands on that steering wheel and is guiding this. We haven't had that. We haven't even gotten close to it. Is there any vision or is there any possibility that-- again, if we have already been talking about this, I apologize--but is this task force or is there a possibility that the United States military will be able to bring together the research that is needed, the brains that are needed? You have a huge laboratory. It is called the United States Air Force, Army, Marines, nuclear submarines. Are we envisioning any of that? Mr. Solis. I will just take a quick stab at that. I think the military does have the ability to do it, but I think in the current organizational structure and lack of overall leadership, particularly on the mobility side, I think it is going to be a real challenge to bring all that to bear. The question was just asked about do we have oversight of what the military services are doing and is everybody going in the same direction in terms of goals and objectives, and are we on the same wavelength. You know, there has been a lot of discussion today about individual initiatives, and those are all great and good, but the question is, how are they achieving the goal of reducing, say, energy fuel demands in a forward- deployed operation? What are we doing? I mentioned the Marine Corps commandant to you. Several years ago, he put a goal out there to reduce by 10 percent. You know, those are the kinds of things when you have to look across and say, are we positioned to do this. Mrs. Boyda. We had something called NASA. We didn't get to the moon because we had a few task forces here and there. We got to the moon because somebody took some leadership. You have not been given that mission, clearly. But if you were, and I know today we wouldn't have the capability, but if you were, what would you think about it being, is it even a reasonable mission to assign not to one branch of the military, but to our DOD? Mr. Arny. Chris had mentioned it, and in my testimony I talked that while we do consume, and we are the single largest consumer of energy, we are still between one percent and two percent. We do rely on the private sector. I believe we do have leadership in this field. When it comes to mobility vehicles, as far back as 20 or 30 years ago, I know in the destroyers and cruisers, the guys working--everybody works on a weapons system. I flew F-4s. We all know how to conserve fuel and when we have to. I could stay airborne in my F-4 for three hours. It was a boring flight because I wasn't doing much. On the other hand, I could come back empty in 10 or 15 minutes with the same load of gas because I was on a combat mission. Mrs. Boyda. What I am looking for is not so much applications to the military. I am looking for applications on the civilian side. Mr. Arny. I am not sure that it is the mission of the Defense Department to lead that. We have our own problems, again within installations in my field, within mobility, that we all wrestle with. Every operator wrestles with that. We rely on the private sector to bring that to us. A lot of the things we are doing in installations is not stuff that is new to us. It is exploiting what the civilian industry is doing. Mrs. Boyda. What do you see is the leadership role? Mr. Hayes was speaking about it, but I have been one to say we should not start digging tomorrow. We are not going to start digging tomorrow, but why we are not really aggressively bringing nuclear into the overall discussion. We are paying for that decision every day that we let it go by. Certainly, I would think that we have a lot of good nuclear. The Air Force is building some small nuclear---- Mr. Arny. No, they are not building. They have gone out with an RFI--request for information--on what is available. You and Congress, and I know we have seen people will come to your door and say, I can do X for you. And you peel away the skins of the onion and you find there is nothing there. So the Air Force has gone out with RFIs and said, okay, what can you do for us, in what timeframe, at what cost. And we will get that information back and look at it from the Air Force as a department, and then sit down and say, does this make sense. If we put this power plant on a particular base, does it make sense economically. Because let's face it, people are trying to buy weapons systems and personnel costs and medical costs, so we have to compete for dollars to do things with other things. So can this be done economically for us, and our economics may be different than the private sector so it may work that way, but then also does that plant encroach on the base? Is there enough excess space on that base for something like that? What are the aspects? How do you tie it into the grid? There are all sorts of things that we will look at. I think, frankly, like it or not, we are in the lead on that. Mrs. Boyda. It works for me. Mr. Arny. That is why we have to be careful about it. Mrs. Boyda. Thank you. Mr. Ortiz. Mr. Taylor. Mr. Taylor. Thank you, gentlemen, for being here. You have certainly raised some interesting thoughts. I am not so sure I am hearing any answers. Number one, if 75 percent of our fuel is mobility, and if the Navy is a significant portion of that, we really don't have an option on planes just yet. We really don't have an option on Humvees just yet. We do have an option on the propulsion of naval ships. We were going toward an all-nuclear surface fleet, then we got fat and lazy when oil was cheap. I haven't heard you guys talk about the importance of doing that. We have another generation of cruisers coming along. This Congress has passed legislation that says that next generation of cruisers is going to be nuclear powered. We are getting some pushback from the Navy. And quite frankly, if it made sense when we did the study a year ago at $70-a-barrel fuel, you guys ought to be all over it at $110 fuel. I haven't heard a word on that, and the need to take other plants where applicable and make them nuclear powered. The second thing, even on a smaller scale, I am just curious. I consider myself kind of a mechanical nut. I am amazed when I go to visit the troops in the field and see those diesel-powered generators. In any base you go to in Iraq or Afghanistan, there is just the deafening sound of those generators. Those generators are powering electric water heaters, electric heaters in barracks. Although on commercial boats and even recreational boats, it has been common for years to have the heat exchanger, the heat coming off that engine going through a heat exchanger to warm the water on the boat, to warm the people on the boat through something like your car heater. I have yet to have seen that on a military installation. Now, that is two commonsense approaches that I can buy today from Hamilton Marine catalog that I haven't seen on a single military installation. Why not? As a matter of fact, I have both of those things on my boat. So why isn't the DOD doing it? And why aren't you guys recommending it? I take the engine, the heat. The hot water coming off my engine heats my boat in the winter and heats the water that I use in the shower. And yet I have never seen it on a DOD installation. Mr. Arny. On an installation or on a---- Mr. Taylor. A base where you are using a generator. And again, those generators, you made us aware of what is well over one million gallons a day we are trucking into Iraq and Afghanistan. Mr. Arny. I believe on our domestic---- Mr. Taylor. And believe me, I want the kids to take a hot shower during the winter. I want the kids to be warm in their barracks, but again, those are commonsense approaches that are available through the private sector that I have yet to see on a military installation. Why not? Mr. Arny. I will have to get back to you on that. For deployed forces especially, I don't know the answer. For the stateside installations, obviously the diesel generators are used for backup. [The information referred to can be found in the Appendix beginning on page 104.] Mr. Taylor. I understand. But let's talk about deployed, particularly deployed. Mr. Arny. I can't answer that for you. Mr. Taylor. One of the last visions I have of going to Kuwait is seeing a 300-truck convoy forming up, and knowing that every inch that those guys are traveling could be the inch that is mined, and that is going on every day, the days whether I am there or not. They are performing a very important function, and quite frankly if I was an enemy of the United States, the first thing I would do is go after our fuel supply. Mr. DiPetto. Congressman, in terms of the deployed use of energy, forward operating bases, the Department recognizes the problem delivering fuel to the battle space in those vulnerable supply convoys. We have a group called the rapid equipping force which is actually working in-theater right now to tackle the problems you are raising. They are looking at it on both the demand and the supply side. The demand side is looking at more efficient generators in whatever capacity. I can't speak specifically to the systems that you referenced, but clearly more generating efficiency would reduce that need for fuel in- theater. They are also looking strongly on the demand side. Insulating tents, for instance, has brought down the need for fuel to run those generators incredibly. Some renewable power solutions are also being looked at, but the Department recognizes the severe burden by inefficient generators, as you mentioned, in-theater. Mr. Taylor. No, you are not making use of the incredible amount of heat that is available just in the water that is cooling those generators. By using the heat exchanger, you would have more than enough hot water for all the showers. By using the heat exchanger--again, it is not going to work if the tent is two miles from the generator, but if the tent is 200 yards from the generator, that ought to be very simple. Mr. DiPetto. I will take that back, sir. We are looking at all solutions. The magnitude of the problem---- [The information referred to can be found in the Appendix beginning on page 104.] Mr. Taylor. Well, apparently you are not. If I can figure this out, then you are not doing your job. Sorry. Again, without a word on nuclear, which is something that Admiral Rickover was exactly right about 30 or 50 years ago. Again, I would think that your boards ought to be the ones saying to a reluctant Navy, guys, this is the only way to go; accept the future. And we are going to have to change some things, but this is the way we have to go. I would welcome your comments on either one of those. We don't exactly have a big crowd in here, and I think the chairman would waive the five-minute rule for a minute or two. Mr. Ortiz. Sure. Go ahead. And I was just wondering, you don't come to testify on the research that you are doing. Do you have any limitations as to what you can look at? Mr. DiPetto. I am sorry, sir. Limitations to research? Mr. Ortiz. Yes. Mr. DiPetto. The major limitation is that everything needs to compete in the budget year with other priorities we have. That is typically the limitation. And it also has to compete on an economic basis, so business cases certainly get looked at. I cannot speak specifically to the congressman's concern about nuclear power in cruisers, but I know the Navy is extremely motivated to do the analysis properly. Particularly, I don't have any specifics on it. I could take that back for the record and find out a little bit more about their specific analysis for service ships, for example. It is a little bit out of my lane, but we are happy to take that back. [The information referred to can be found in the Appendix beginning on page 103.] Mr. Taylor. If I may, Mr. Chairman. A year ago, we had a study which said for the cruiser it made sense at $70-a-barrel fuel to go nuclear. At the time, the Landing Platform Dock (LPD) was right on, to use a carpenter's analogy, right on the bubble. That was at $70 fuel. What is amazing is that now that it is at $110, I don't hear anyone from the Navy who ought to be proposing this, saying, you know what? It is time for a nuclear-powered LPD and large-deck amphibs. I would think someone within the DOD would be taking the lead on this. Now, I don't mind doing it, and Congressman Bartlett certainly doesn't mind doing it, but that really ought to be coming from the uniformed services. And ought to be willingly accepted by the uniformed services, rather than something we literally seem like we are forcing it down their throats. So how would you change that, sir? I would think that is what your panel is all about. Mr. Arny. Mr. Taylor. Mr. Taylor. Yes, sir. Mr. Arny. I agree. We need to take a look at it. I don't know the study referred to, but if it was effective at $70 a barrel, it ought to be more so at $110 a barrel. There may be some other supply, tonnage, weight, redesign of a ship into it, but we definitely from the OSD perspective should push that analysis to make sure, because there are definite advantages. I flew off nuclear-powered aircraft carriers. I also flew off conventionally powered carriers. There is definitely an advantage to nuclear power, especially in the aircraft carrier business. So we will push that with the service, the Navy, to make sure that that analysis is complete, and then get back to you. [The information referred to can be found in the Appendix beginning on page 104.] Mr. Taylor. Thank you, Mr. Chairman. Mr. Ortiz. I think Mr. Taylor has had some good recommendations. It is the small little inventions that can grow into something big. I hope that when you guys study it, maybe give us some answers that we can work with. I am sorry. Go ahead. Mr. Arny. You can see the efficiency as we have in nuclear power. The Enterprise, which is still out there, had I think eight generators on it, and now we do it with two on a carrier, on modern carriers. So the plants are more efficient as design propels itself. Back then, it was definitely not cost that was driving it. If it had been cost, we would have not put nuclear power on those ships because it did cost more in the end. As a matter of fact, you remember the great debate over the JFK that was supposed to have been nuclear, then it was conventional, and it ended up being conventional. But today, with the price of fuel, you are right. That analysis could swing it and the plants are far more efficient than they were 30 or 40 years ago. Mr. Ortiz. Mr. Bartlett. Mr. Bartlett. Thank you very much. And thank you again, Mr. Chairman, for letting me sit in on your hearing. My good friend, Mr. Taylor, mentioned Hyman Rickover. We fortunately listened to him about nuclear for submarines, but we didn't listen to him when he gave what I think will shortly be recognized as the most insightful speech given in the last century. Hyman Rickover gave a speech--it will be 51 years ago, on the 14th day of this May--to a group of physicians in St. Paul, Minnesota. It is the most insightful, prophetic speech that I have read relative to the problems that we are discussing today, that is energy. He noted that we were about 100 years into the age of oil, and that out of 8,000 years of recorded history, there would be a brief age of oil. He didn't know how long it would be. Now we know pretty certainly how long the age of oil will be. We are 150 years into the age of oil, and in another 150 years we will be through the age of oil. Hyman Rickover knew that would happen. He said that how long it lasted was important in only one regard: that the longer it lasted, the more time did we have to plan the necessary transition from fossil fuels to renewables. Now, we have done absolutely nothing to plan for that, with no more responsibility than the kids who found a cookie jar or the hog who found the feed room door open. We have just been pigging out on fossil fuels. And they are a finite resource. General Carns, you very wisely suggested that we ought to have nuclear electric generation at our military facilities. You are exactly right, sir, we need to be able to island those facilities because the grid is on the edge. When that power goes down, we will not be able to fight if we can't island ourselves, and nuclear is a great way. I would suggest, sir, that the first place we ought to do that is in Guam. There, the only electricity I think comes from diesel fuel, which is hauled in boats to the island. It is our most western landmass, very strategically located. We own about a third of the island? And there, your suggestion that we ought to be giving electricity use to the surrounding population would work perfectly. I talked to the commanders there and they understand that. I would hope that you could use your good influences to push and act in that direction. And I would hope, sir, that when we do that, following Mr. Taylor's suggestion, we really ought to be using what we call ``district heat.'' I think we are probably the only country in the world that stupidly places our power plants outside the cities and then uses evaporated drinking water to dissipate the heat. Everywhere else in the world they locate them near population centers. And they use the heat that Mr. Taylor mentioned to heat your buildings, and so forth, in the wintertime, and cool yourself with the ammonia cycle refrigeration in the summertime with this excess heat. So I would hope that we would do that. By the way, we are talking about energy here as if it were fungible. Energy is really not all that fungible. I am pretty sanguine about our electricity future. With more nuclear, I think there could and should be a lot more nuclear with wind and with solar and with micro-hydro, we can, I think, meet our electricity needs. I am nowhere near as sanguine about our liquid fuels. There is just no silver bullet there. There is nothing out there in the near future that comes even close to providing the quantity and quality of the 88 million barrels of oil that we pump a day--22 million of those we use in our country. I really want to commend the military. You are the victims, and you are planning now. You are the victims of the fact that our country, in spite of signals that have been there for a very long time, that we would be here today talking about this issue with $110 oil was absolutely inevitable. It had to happen. Oil is finite. Hyman Rickover 51 years ago knew that we would be here today. It is inexcusable that our government has had no energy policy. And you in the military, thank you very much. You are doing more than any other entity in our country. You know, the evidences that we would be here are incontrovertible. Our country peaked in oil production in 1970, in spite of drilling more oil wells than all the rest of the world put together; in spite of finding a lot of oil in Alaska and the Gulf of Mexico; and in spite of being really good at enhanced oil recovery. In fact, we are getting now eight percent of the world's oil from two percent of the world's reserves. We now are producing half the oil that we did in 1970. The same person that correctly predicted that 19 years before it happened said that about today the world would be peaking in oil production. Mr. Chairman, just one closing statement. Of the two great entities in the world that follow oil production, the IEA and the EIA, the International Energy Agency and the Energy Information Administration, have both been tracking the production and consumption, which are the same thing. We don't have any stockpile anywhere. We just consume it as we produce it. That has been flat for the last three years. In those last 3 years, the cost of oil has gone up from $55 a barrel to $110 a barrel. That is because production is flat, demand is increasing, and the probability is that without some really dramatic thing happening, the production for the world is going to do what it did for the United States in 1970. It is going to drop off. We now have blown 28 years as a country and as a world, because we knew darn well in 1980 that M. King Hubbert was right about the United States peaking in 1970. We are 10 years down the other side of Hubbert's peak. We have done absolutely nothing in spite of four studies, one of them by the military-- a great study by the military, a great study by GAO--saying that peaking of oil is either present or imminent, with potentially devastating consequences. Still, our country has done nothing. We desperately need leadership in this area. Thank you very much, DOD and military, for providing leadership from your quarter. Thank you, Mr. Chairman. Mr. Ortiz. Thank you so much. You know, sometimes we are so big that we fail to look at the little things that might be able to give us some answers as to how we can solve this problem. Before I close this subcommittee hearing, I would like to yield again to Mr. Taylor and see if he has any other questions or any recommendations. I think his recommendations are well taken. I think it makes a lot of sense. Mr. Taylor. Could I say just for the record, I am going to get you those examples of what I was talking about on the heat exchangers for the hot water heater, the heat exchangers for the actual cabin heat. Quite frankly, I don't see very much use of that on our naval vessels at all, and I will contrast that with a couple of years ago, the Marines purchased a Ukrainian vessel. They added a mid-body extension to it, by the name of the Roy Wheat that is now part of our prepositioned fleet. One of the things that the Russians had done pretty well was take just the heat coming off the exhaust, used it to super-heat water that actually turned an auxiliary turbine to get a few extra knots off the ship. It was a fairly complicated process. I am sure it had some labor associations with it. But again, they were doing a better job of making use of that waste heat than we do as a rule. Back when fuel was cheap and plentiful, maybe we didn't have to do stuff like that, but certainly the circumstances are there now where we have to. I would encourage you to do so. In fact, if I am not mistaken on the Roy Wheat, they actually disconnected the entire system as part of the transformation from a Ukrainian vessel to an American naval ship. Maybe it is time to look at it and reconnect it. Thank you, Mr. Chairman. Mr. Ortiz. Thank you so much. As we go on this journey, there just seems to be no place where we can find oil, and if we need it, we need to go to war. And we don't want to do that. So I know that we can work together and we can come up with some ideas. At least I have learned a lot today. I want to thank you for being with us today, for testifying before our panel. Randy, do you have any other comments to make? If not, thank you so much for testifying before our committee. This hearing stands adjourned. [Whereupon, at 12:34 p.m., the subcommittee was adjourned.] ? ======================================================================= A P P E N D I X March 13, 2008 ======================================================================= PREPARED STATEMENTS SUBMITTED FOR THE RECORD March 13, 2008 ======================================================================= [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] ======================================================================= WITNESS RESPONSES TO QUESTIONS ASKED DURING THE HEARING March 13, 2008 ======================================================================= RESPONSES TO QUESTIONS SUBMITTED BY MR. ORTIZ Mr. Arny. The Energy Independence and Security Act (EISA) of 2007 comprises 16 titles, each covering a substantive area of energy policy. The sections of this Act regarding assignment of energy managers to each facility impacted by the Act, establishing a web-based tracking system, conducting audits on 25 percent of affected facilities annually, and the requirement to design facilities to reduce fossil fuel use by 55 percent in 2010, increasing to 100 percent by 2030 will cause implementation problems for DoD. These issues are currently being discussed with the Department of Energy (DoE) to develop implementation guidance for federal agencies. The Department is concerned that initial DoE guidance would require a significant increase of personnel and funding resources that are not programmed and would not compete well against other DoD priorities. As such, we continue to discuss other means to achieve EISA requirements through the use of regional or pooling of assets. The Department does not believe legislative relief will be necessary, but if we do, we will seek the Congress's assistance. DoD believes there are not sufficient energy efficiency measures to achieve the 55 percent and 100 percent targets for some building types (such as medical facilities, laboratories, and industrial facilities) mandated in EISA. This requirement will also be more challenging due to the loss of renewable tax credits. The loss of tax credits for renewable energy investment and production have already begun to hamper efforts to continue development of renewable resources. As part of its implementation planning, the Department will determine if legislation reauthorizing the tax credits should be included within our tool kit. [See page 14.] Mr. DiPetto. The decision whether nuclear power propulsion will be incorporated in future surface combatants will be based on a thorough examination in compliance with statute. The analysis of alternatives (AoA) for the Maritime Air and Missile Defense of Joint Forces (MAMDJF) capability, which includes an assessment of CG(X) alternatives, examines both fuel efficient conventional power plants and nuclear power alternatives. The Office of the Under Secretary of Defense (OUSD(AT&L)) is learning from the experience of the CG(X) as well as the Air Force Next Generation Long Range Strike program, and the Army- Marine Corps Joint Light Tactical Vehicle program, to develop methods and DoD guidance to more accurately factor operational fuel demand (and logistics force structure requirements) into the acquisition tradespace. This concept is called the Fully Burdened Cost of Fuel (FBCF), and joint planning estimates will be factored into all major programs in the future. This work will allow the Department to make more useful estimates for evaluating the fiscal cost of various propulsion options, hull forms, power requirements, construction materials, etc. The MAMDJF Analysis of Alternatives used a FBCF methodology in the analysis of alternative CG(X) power systems that addressed both conventionally fueled and nuclear options. The OUSD(AT&L) is reviewing the approach taken to inform the development of a Department-wide methodology that will be applicable to all types of systems and unit types. This FBCF construct will help the Department and industry to evaluate technological and design options to best manage the energy supply and energy demand options to best meet operational requirements and strategic sustainability requirements for future naval ships and other platforms. [See page 26.] ______ RESPONSES TO QUESTIONS SUBMITTED BY MR. FORBES Mr. DiPetto. The Defense Science Board task force reports, both in 2001 and 2008, discussed the need for DoD force planning models to play realistically the risks to missions resulting from the risk to fuel logistics and lines of communication in operations. They asserted that the DoD force planning process today tends to examine fuel and other ``logistics'' issues as a dependent variable, not as an independent variable, when using models and other such analytic tools. While it appears that some modifications would be necessary to examine this fuel logistics risk more realistically, that is relatively simple to do from a programming and design standpoint. However, models are only changed when there is a clear demand from higher commands (typically Service staff force planners or warfighting commands), along with funding, for new modules to support new analyses. Hence, we have concentrated our work on developing an appreciation of this risk factor among those planners, such that the demand signal and resources flow to the modeling and analysis organizations within the Services. This work is on-going. The DoD Energy Security Strategic Plan, which is in draft, will include an annex with specific proposed tasks that will address the modeling issues related to analyzing DoD energy risks. [See page 15.] Mr. Arny. In a January 30, 2008, letter (attached), Senators Henry Waxman and Tom Davis requested information on how the Department was complying with this legislation. The Department's response (attached) to that request stated that a plan was being developed to identify which fuels are covered and what standards will be used to measure compliance. This plan is being developed in conjunction with the Environmental Protection Agency and other federal agencies. The Department can not make a rational judgment on the impact of the legislation until this plan is completed. [The information referred to was not available at the time of printing.] The Department is concerned that the provision could have far- reaching implications, including some forms of ethanol and bio-diesel, as well as synthetic fuels and petroleum derived from less traditional sources such as tar sands and oil-shale. Additionally, given that fuels, including conventional petroleum, are produced from numerous sources and often mixed together. Current standards for determining emissions of fuels from various origins are determined on averages. However, section 526 requires an analysis of individual fuel purchases for lifecycle greenhouse gas emissions. Therefore, determining the emissions footprint for any batch of fuel may be impossible. For example, conventional fuel derived from oil produced in Venezuela or Nigeria is more likely to have a larger footprint than domestic oil because of the energy used transporting the oil to the United States. Foreign and domestic oil may be mixed together at a refinery. Once foreign and domestic oils are mixed together, the oils cannot be differentiated from one another. Therefore, the footprint of the resulting fuel cannot be determined accurately under section 526. Finally, Section 526 applies worldwide, not just to purchases within the United States. There are no means to determine the lifecycle greenhouse gas emissions from non-domestically produced fuels. For example, our military aircraft used over 6 million gallons of Canadian jet fuel in 2007 while exercising with the Canadian Armed Forces, conducting joint operations along the Defense Early Warning line, and refueling at Canadian commercial airports. Canadian fuels include fuel produced from tar sands crude. If tar sands-derived fuels were subject to section 526, our military aircraft may be required to stop refueling in Canada, potentially affecting our national security. [See page 16.] ______ RESPONSES TO QUESTIONS SUBMITTED BY MR. TAYLOR Mr. Arny. The Department of Defense, largely through the Office of the Secretary of Defense's (OSD's) Energy Security Task Force, the Army's Rapid Equipping Force and the Army Program Manager-Mobile Electric Power, is assessing a range of alternatives to reduce the operational energy demands of our deployed forces. A wide variety of technical and procedural solutions have been identified and are being fielded today. Initial efforts are focused on immediately executable, high return on investment and risk mitigation solutions. One of the most publicized solutions involves the introduction of spray foam- insulated tents. This initiative is providing a high return on investment while reducing risk to supply convoys and the force protection demands they drive. The Joint Contracting Command in Iraq just recently awarded a $95 million competitive contract to insulate 9 million additional square feet of tents. It is projected that this work will reduce fuel demand in theater by 77,000 gallons a day, which translates to roughly thirteen to fifteen tanker trucks taken off the roads a day. When including the resulting reduced demand for force protection for those tankers, this effort will provide a significant operational capability benefit to commanders. While this is a positive step, more technically complicated or location-specific efforts are also being considered, to include the use of heat exchangers, as requests are received from the field or as they mature through traditional acquisition programs. Research and fielding of foam insulation, tactical micro-grids and heat exchangers are in planning. The Army currently has a heat co-generation Program of Record requirement in their budget starting in FY 2012. [See page 24.] Mr. DiPetto. The Department of Defense, largely through the Office of the Secretary of Defense's (OSD's) Energy Security Task Force, the Army's Rapid Equipping Force and the Army Program Manager-Mobile Electric Power, is assessing a range of alternatives to reduce the operational energy demands of our deployed forces. A wide variety of technical and procedural solutions have been identified and are being fielded today. Initial efforts are focused on immediately executable, high return on investment and risk mitigation solutions. One of the most publicized solutions involves the introduction of spray foam- insulated tents. This initiative is providing a high return on investment while reducing risk to supply convoys and the force protection demands they drive. The Joint Contracting Command in Iraq just recently awarded a $95 million competitive contract to insulate 9 million additional square feet of tents. It is projected that this work will reduce fuel demand in theater by 77,000 gallons a day, which translates to roughly thirteen to fifteen tanker trucks taken off the roads a day. When including the resulting reduced demand for force protection for those tankers, this effort will provide a significant operational capability benefit to commanders. While this is a positive step, more technically complicated or location-specific efforts are also being considered, to include the use of heat exchangers, as requests are received from the field or as they mature through traditional acquisition programs. Research and fielding of foam insulation, tactical micro-grids and heat exchangers are in planning. The Army currently has a heat co-generation Program of Record requirement in their budget starting in FY 2012. [See page 25.] Mr. Arny. The decision whether nuclear power propulsion will be incorporated in future surface combatants will be based on a thorough examination. The analysis of alternatives (AoA) for the Maritime Air and Missile Defense of Joint Forces (MAMDJF) capability, which included an assessment of CG(X) alternatives, examined both fuel efficient conventional power plants and nuclear power alternatives. The MAMDJF AoA used a Fully-Burdened Cost of Fuel methodology in the analysis of alternative CG(X) power systems. Navy leadership is reviewing the AoA results. The Navy will select a Service preferred alternative for CG(X) and then provide a recommendation to the Office of Secretary of Defense at a Milestone A Defense Acquisition Board (DAB). The Navy's FY 2006 Report to Congress on Alternative Propulsion Methods for Surface Combatants and Amphibious Warfare Ships indicated an upfront nuclear acquisition cost premium of $600-$700 million, in FY 2007 dollars, per ship for a medium surface combatant. This premium is over and above the acquisition cost of a fossil fueled ship. While the nuclear power variant includes a higher upfront acquisition cost than the fossil fuel variant, it should be offset over the life cycle by lower operations and support costs completely or to some degree depending on the ships' Operating Tempo, energy demands, and fuel prices. [See page 26.] ? ======================================================================= QUESTIONS SUBMITTED BY MEMBERS POST HEARING March 13, 2008 ======================================================================= QUESTIONS SUBMITTED BY MR. ORTIZ Mr. Ortiz. What is your assessment of the military value of domestic coal-to-liquid fuel production facilities that are being considered for construction on military installations such as Malmstrom Air Force Base? Please compare the relative military utility of domestic fuel production facilities with that of energy production technologies that can be used by warfighters outside CONUS. Where should the Department of Defense focus its efforts and resources to develop operational energy technologies? General Carns. The Department has developed a draft Energy Security Strategic Plan which provides the framework for focusing energy efforts across DoD. There are numerous projects ongoing that support our energy posture for platforms, and fixed and tactical installations. We are focusing efforts on a broad set of solutions to meet operational needs of the warfighters. Within the draft Strategic Plan, Goal #2 is to ``Increase energy security through strategic resilience by increasing the availability and use of alternative or assured energy sources.'' The Department's work on synthetic fuels, as well as on other technological energy solutions, is grounded in this goal. DoD procures large volumes of military specification fuel for storage and distribution in support of the Department's mobility fuel requirements (i.e., ships and aircraft). Our goal is to be able to use fuel derived from any source or process with an emphasis on using assured sources where possible. Synthetic fuels, such as produced from coal to liquids, offer a promise of an assured fuel source, and we are focused on testing and certifying various fuels to ensure they can be used in our systems. Within the U.S., we are considering the use of domestically sourced synthetic fuel as an alternative to traditional petroleum, thereby reducing our dependence on non-assured sources of oil, with the desire of positively impacting the U.S. economy by initiating a domestic market for synthetic fuels and strengthening our energy security. The Air Force is allowing private companies to use underutilized land to build various energy facilities, for which the Air Force would receive compensation, called an Enhanced Use Lease. Malmstrom is one such facility that could help the Department reduce its dependence on non-assured sources of oil. Mr. Ortiz. What role does DoD play relative to the Department of Energy in the development to alternative energies? How is DOD positioned to participate in national-level energy discussions with the Department of Energy and other agency partners? What needs to be done to cultivate these relationships? Mr. DiPetto. The Department of Defense and the Department of Energy (DOE) collaborate on numerous interagency efforts. The most formally established are the Interagency Working Group on Alternative Fuels and the Unconventional Fuels Task Force, which examine the feasibility of using various disparate feedstocks to create fuel that is capable of being used in conventional engines. We also collaborate in the monthly Energy Conversation, which meets with the goal of focusing on how energy issues impact programs and increasing visibility across the DoD, DOE and other Federal agencies. An ``Energy Yellow Pages'' is being developed throughout approximately 27 federal entities, to include DoD and DOE, that will enable partnerships across programs. We also are identifying specific programs where we may collaborate, such as the National Energy Technology Lab's work in algae-based fuels. Mr. Ortiz. What process does each military service follow to determine its priorities for funding alternative energies? Mr. DiPetto. Each Military Department has established or is establishing organizational processes for integrating energy efforts and issues. The Army Energy Security Task Force (AESTF) was recently stood up to develop the necessary strategic/action plans to satisfy emerging issues identified in Defense Science Board and Government Accountability Office (GAO) reports, Executive Order 13423, and other associated drivers. Additionally, the AESTF was charged with the development of a governance framework for all Army energy security efforts. The Navy is setting up a Navy Energy Task Force to provide a comprehensive Navy energy governance structure. For several years, the Air Force has had a well-defined structure, led by the Assistant Secretary of the Air Force for Installations, Environment, and Logistics, with several technical panels underneath. The Army's energy strategy is to create a culture of energy accountability, reduce energy consumption, and increase efficiency to enhance operational capabilities, increase the use of new/alternative energy sources, establish benchmarks, and champion investment strategies. The Navy-Marine Corps investment strategy for alternative energy programs uses a number of criteria depending on the application and the maturity of the technology; however, the potential benefit versus cost criterion is always a factor. Investment criteria are tailored to assess the specific factors relevant to the evaluation and potential adoption or implementation of a specific technology. Technology investment criteria include factors such as the range of applicability (single versus multiple target application), operational need criticality (limited application range but critical to operational need), estimated cost of development, estimated non-recurring cost, and potential fossil fuel displacement. The Air Force strategy is to minimize the use of tax-payer dollars to develop alternative energies. As a consumer we are working with private, alternative energy companies to provide alternative energy for our consumption. Using this strategy, we were able to accomplish the Nellis AFB solar project and we are attempting to duplicate this model at other bases. Mr. Ortiz. The Department of Defense and the military services independently fund numerous research and development projects for energy storage technologies such as fuel cells and batteries. What steps are being taken by DOD to coordinate the energy storage technology requirements and efforts of the services and to streamline investments? Mr. DiPetto. The Director of Defense Research and Engineering (DDR&E) initiated the Energy and Power Technology Initiative (EPTI) in 2002 as a Department-wide effort to explore and develop advanced capability-enabling power technologies. EPTI's mandate is to identify technical objectives, quantified technical barriers, and enabling technologies associated with development of advanced energy and power components and systems. There are five major focus areas: Power Generation, Electromechanical Conversion, Energy Storage, Thermal Transport and Control, and Power Control and Distribution. Each focus area has identified goals, objectives, challenges, approaches, and programs; and provides a macro view of priorities, descriptions of integrating demonstrations, and how they overlay onto specific component technologies. EPTI is also engaged with the Interagency Advanced Power Group, which is a federal organization that facilitates exchange of information in Advanced Power, with specific emphasis on high-energy batteries, fuel cells, and other portable and mobile power sources. Mr. Ortiz. What is your assessment of the military value of domestic coal-to-liquid fuel production facilities that are being considered for construction on military installations such as Malmstrom Air Force Base? Please compare the relative military utility of domestic fuel production facilities with that of energy production technologies that can be used by warfighters outside CONUS. Where should the Department of Defense focus its efforts and resources to develop operational energy technologies? Mr. DiPetto. The Department has developed a draft Energy Security Strategic Plan which provides the framework for focusing energy efforts across DoD. There are numerous projects ongoing that support our energy posture for platforms, and fixed and tactical installations. We are focusing efforts on a broad set of solutions to meet operational needs of the warfighters. Within the draft Strategic Plan, Goal #2 is to ``Increase energy security through strategic resilience by increasing the availability and use of alternative or assured energy sources.'' The Department's work on synthetic fuels, as well as on other technological energy solutions, is grounded in this goal. DoD procures large volumes of military specification fuel for storage and distribution in support of the Department's mobility fuel requirements (i.e., ships and aircraft). Our goal is to be able to use fuel derived from any source or process with an emphasis on using assured sources where possible. Synthetic fuels, such as produced from coal to liquids, offer a promise of an assured fuel source, and we are focused on testing and certifying various fuels to ensure they can be used in our systems. Within the U.S., we are considering the use of domestically sourced synthetic fuel as an alternative to traditional petroleum, thereby reducing our dependence on non-assured sources of oil, with the desire of positively impacting the U.S. economy by initiating a domestic market for synthetic fuels and strengthening our energy security. The Air Force is allowing private companies to use underutilized land to build various energy facilities, for which the Air Force would receive compensation, called an Enhanced Use Lease. Malmstrom is one such facility that could help the Department reduce its dependence on non-assured sources of oil. ______ QUESTIONS SUBMITTED BY MR. BARTLETT Mr. Bartlett. Do you agree with the DSB Task Force report's general finding, and specifically its classified appendix that lists critical missions performed at DoD installations and non-DoD facilities that are at risk of prolonged electricity outage due to the vulnerability of the national grid and inadequate on-site backup power? If so, please provide the HASC with an appropriately classified report or briefing with your plans or recommendations to ensure continuity of electricity for these missions. Mr. Arny. The Department is fully aware of the broad spectrum of vulnerabilities to the national power grid (and other U.S. infrastructure issues) that could impact DoD installations. DoD generally agrees with the findings of the Defense Science Board Task Force on Energy Security's Report. The Department, however, is not aware of an authoritative threat analysis or system assessment report describing the possibility of long-term power outages that could impact DoD installations and their missions. Critical missions at DoD installations generally have adequate back-up power generation, and, in some cases, have uninterruptible power supplies to ensure national security is sustained in the event of short-term outages. These systems are tested to ensure they can carry the requisite loads and are constantly re-fueled to sustain operations for power outages that could last hours/days/weeks in length. The potential hazards of a prolonged electricity outage necessitate a serious planning effort that continues to be developed, recognized, and exercised for preparedness in the Department of Energy, Department of Homeland Security, and DoD. Mr. Bartlett. Do you agree that requiring a plan to assess and prioritize critical missions at U.S. installations, incorporation of the concept or resilience in strategy and planning documents, identification of risk management options and identification of barriers outside the control of the department to implementing these options would reduce the risk from loss of power to within acceptable levels? If not, please provide the HASC recommendations for specific measures that would reduce the risk from loss of power to within acceptable levels? Mr. Arny. The Department agrees that a plan to identify missions, required capabilities, and critical assets is needed. We have worked diligently to establish a robust and disciplined approach to identify, prioritize, and assess the risk to those assets the Department deems critical to executing the National Defense Strategy. Such a plan would help the Department minimize the risk and manage consequences to within acceptable levels resulting from loss of power. The Department released the Strategy for Defense Critical Infrastructure (DCI), which articulates the approach required for ensuring the availability of assets deemed essential to the successful completion of DoD missions in an all-threat and all-hazard environment. This strategy recognizes that although safeguarding the reliability of the nation's critical infrastructure will require a national effort, executing the strategy will provide defense stakeholders with a better understanding of what DoD must do to ensure the availability and resiliency of DCI. Ownership of assets critical to the functioning of the DoD rests not only within the Department and other government agencies, but also throughout the private sector as well. The Department is cognizant of and accounts for the need to coordinate the assessment of risk and implementation of follow-on risk management activities with a myriad of organizations internal and external to the DoD, the Federal government, and private industry. The Department recognizes Departmental equities must be addressed across the interagency in order to execute the National Defense Strategy and will use the framework established by the Department of Homeland Security (DHS) under the National Infrastructure Protection Plan to coordinate cross-sector, interdepartmental, and public-private requirements. The Department also agrees that a detailed Energy strategy is needed, and efforts are underway to develop this strategy which we anticipate completion by the end of the year. Underpinning this strategy is the requirement and responsibility of the electric power industry to ensure resilient systems servicing critical loads, such as emergency services public sector as well as DoD installations supporting national security, are provided. The Department, working with the Department of Energy (DOE), Federal Energy Regulatory Commission (FERC), and DHS can also help the electric sector understand the threat as well as structure appropriate war games to assess consequences management. The Department is also working with the Idaho National Laboratories on specific protection techniques for certain cyberattack modes. Finally, the Department is committed to implementing Section 433 of the Energy Independence and Security Act of 2007, specifically to ensure new DoD facilities have a net zero energy impact on the national grid by 2030. Mr. Bartlett. Do you agree that biomass, waste-to-power, geothermal power generation systems, bio-based ground transportation fuels, and other potential sources, such as nuclear, ocean thermal energy conversion (OTEC) and space-based solar power should be included in an update of the department's 2004 renewable energy assessment? Mr. Arny. Providing an update to the renewable energy assessment is no small endeavor. There are currently many renewable resource assessment tools available to installations in planning for energy security. The National Renewable Energy Lab (NREL) provides maps and charts identifying renewable resources throughout the country. DoD believes these tools should be used as the starting point for developing additional renewable energy. NREL can also provide a detailed analysis of the most cost-effective mix of energy sources for a particular location. Assessing needs on an installation-by- installation basis would be a more cost-effective method than a whole scale update of the previous study. Mr. Bartlett. To what extent can renewable resources be used to meet the demands of critical mission loads? Mr. Arny. When compared to the Nation-at-large, a considerable portion of the Department's energy needs are met by renewable energy resources. In Fiscal Year 2007, the Department produced or procured renewable energy equivalent to 11.9 percent of electrical consumption and that value will rise in the future. Considering the cost of redundant infrastructure for reliability, critical missions are sometimes not located in close proximity to life-cycle cost-effective renewable energy sources, thereby making it a challenge to focus renewable resources to meet the demands of critical mission loads. The Department is committed to providing the appropriate level of energy security for all missions, including critical missions, and will continue to evaluate renewable resource availability and economic feasibility to accomplish our missions. Mr. Bartlett. Do you agree with the DSB Task Force report's recommendations to ``island'' critical classified missions and installations from the grid when necessary? Mr. Arny. In general, I agree with the concept of having the ability to ``island'' critical infrastructure from the grid when necessary. This capability must be built over time and one step toward this capability is compliance with Section 433 of the Energy Independence and Security Act of 2007, which essentially requires Net Zero buildings for the future. The Department is also developing a Net Zero Energy Installation planning guide, which will help ensure entire installations, not just specific buildings, have ``islanding'' capabilities. Still, we must be careful in developing these plans to ensure that installations do not become islands unto themselves while surrounding communities suffer in darkness. We believe it is at least as important to solve vulnerability issues on the national level as it is to have ``islanding'' capabilities. Mr. Bartlett. Do you agree that a cross-agency and department and intergovernmental working group is necessary in order to ``island'' critical classified missions and installations from the grid when necessary? Would Presidential Leadership and authority be necessary to support implementation of islanding of critical classified missions and installation from the grid when necessary? Mr. Arny. HSPD-7 (Critical Infrastructure Identification, Prioritization and Protection) already directs the Department to work with other Federal departments and agencies to ``prevent, deter, and mitigate the effects of deliberate efforts to destroy, incapacitate, or exploit'' critical infrastructure and key resources. The National Infrastructure Protection Plan (2006) provides the framework for addressing the entire national effort to execute coherent identification, prioritization, and protection activities, across all critical sectors, levels of government, and among private and public entities. Additionally, a committee of the National Science and Technology Council recently recommended that a subcommittee be established to examine the Science & Technology issues/opportunities associated with this issue. DoD, along with the Department of Energy, Department of Homeland Security, Federal Energy Regulatory Commission, Environmental Protection Agency and other agencies will be engaged in this new effort. Internally, the Department is working to identify critical infrastructure and ensure a capability to sustain military missions, under the auspices of the Energy Security Task Force. Due to the intensity of ongoing efforts, we do not feel additional authority is necessary to accomplish the Department's goals. Mr. Bartlett. Would the inclusion of energy demand, energy logistics, energy protection requirements, and endurance of combat forces into any models, simulations, and wargames and all other analytical tools be used by the department improve the ability of the department to calculate the fully burdened cost of fuel? Mr. DiPetto. The purpose of the ``fully burdened cost of fuel'' is to include a quantitative, financial value within the acquisition tradespace to represent the logistics and force protection effort it will take to ensure delivery of the needed volume of fuel to an operational system. To develop a defendable number that will aid decision-making between cost, schedule and performance trades, the Department must consider all of those fuel delivery forces, and their protection, employed within a given set of operational and non- operational (e.g. training) scenarios. This is a natural extension of the DoD scenario-based force planning and requirements generation processes. Hence, to do this work, a variety of fuel-related factors need to be actively played in models, simulations, wargames and in the Defense Planning Scenarios. The findings from these activities must then be carried into the requirements development process, similar to variables concerning lethality, survivability and maintainability, among others. The weighting of these capability variables against each other, to include energy demand, will be reflected in the Joint Requirements Oversight Council (JROC)-validated capability direction for the force, and potentially, the Key Performance Parameters chosen to guide the development of individual systems and acquisition platforms. The Department has begun to play these energy delivery risk variables in a major Air Force wargame and in several Defense Planning Scenario-related sessions (with interagency involvement). This preliminary work is focused on building an appreciation of fuel as an operational risk factor. Along with other guidance, this will lead to the modification of key models, and to the analysis they support, to treat fuel-related risks much like other capability variables. The Office of the Under Secretary of Defense (Acquisition, Technology and Logistics) is leading the development of a DoD Energy Security Strategic Plan, as well as changes to key Directives and guidance documents, to ensure these variables are considered appropriately when designing and developing our future forces. This work will directly inform how the ``fully burdened cost of fuel'' is determined and applied for each acquisition system. Mr. Bartlett. Has the integration of energy demand, energy logistics, energy protection requirements, and endurance of combat forces into any models, simulations, wargames, and any other analytical tools be used by the department been mandated under the April 2007 USD(AT&L) memorandum requiring the inclusion of the fully burdened cost of fuel for all acquisition trade analyses? Mr. DiPetto. As directed in the April 2007 memorandum from the Under Secretary of Defense (Acquisition, Technology and Logistics), the Department reviewed three acquisition programs to understand how fuel risk variables were considered in their cost, schedule and performance tradespace. The lessons learned here, along with the assessment of the Defense Science Board Task Force on Energy Security in 2008, are being used to write guidance for the acquisition community on how and when to consider the fully burdened cost of fuel (FBCF) in the course of a Major Defense Acquisition Program. Both DoD Directive 5000.02 and the Defense Acquisition Guidebook are being revised this year to incorporate these guidance changes. The integration of the energy variables will be addressed in the DoD Energy Security Strategic Plan. The Strategic Plan is currently in review by DoD senior leadership. Therefore, it is premature to comment. Mr. Bartlett. Has the fully burdened cost of fuel been included as a factor in any models and simulations used in DoD's Analytical Baseline and vignettes used as the basis for Analyses of Alternatives (AoA) and Evaluation of Alternatives studies since the issuance of the April 2007 USD (AT&) memorandum requiring the inclusion of the fully burdened cost of fuel acquisition trade analyses? Mr. DiPetto. The Fully Burdened Cost of Fuel (FBCF) is a newly devised factor for inclusion in DoD life-cycle cost estimating, specifically for use in deciding between alternative designs and technologies in the acquisition and science & technology investment areas. Because FBCF is only an estimation of financial cost, it does not inform DoD processes that evaluate capabilities gaps, such as the modeling, simulations, wargames, and scenario-based planning that go on in the DoD Joint Strategic Planning Process (which includes the Defense Planning Scenarios and the Analytic Agenda). Rather, FBCF is informed by the scenario-based force planning analysis work. This analysis helps determine how much fuel is required as well as the types and scale of fuel logistics forces that are required, to execute notional future operations. The predicted costs of the fuel and fuel logistics forces are then added up and are attributed proportionally to the alternative platform designs to generate the FBCF. Analyses of Alternatives or Evaluations of Alternatives (AoA/EoA) are performed at the juncture of the DoD requirements process, Joint Capabilities Integration and Development System (JCIDS), and the acquisition process to help determine how the Department will fill an identified future capability gap with a materiel (equipment) solution. The AoA/EoA is unique because it is the only point in the decision process where both the capability of the alternative systems and their respective costs are explicitly varied and compared as core decision factors. To date, no AoA/EoA has included a calculation of the Fully Burdened Cost of Fuel. This is because the Department is still working on an agreed methodology for how such cost estimates are to be developed. The Office of Under Secretary of Defense (AT&L) is collaborating with a variety of DoD organizations to develop this base methodology and the rules for how the Components must apply it. Great care is being taken to ensure the first application of the approach is methodologically sound, and that fuel-related variables carry an appropriate, not disproportionate, weight in the tradespace related to capability and affordability. Mr. Bartlett. Will the department please provide the HASC information about any analyses and the outcome of those analyses that have incorporated the fully burdened cost of fuel? Mr. DiPetto. In April 2007, the Under Secretary of Defense (Acquisition, Technology and Logistics) issued a policy memo directing the use of the fully burdened cost of fuel (FBCF) concept in the DoD acquisition process. To implement the FBCF, the AT&L policy memo called for the initiation of a pilot program to develop the best business practices to incorporate FBCF into DoD Acquisition. To date, the pilot program is nearing conclusion and lessons learned are only now being formally incorporated into DoD Acquisition instructions and guidance. Consequently, as analyses are completed in response to formal instruction and guidance requirements, the Department will provide the House Armed Services Committee information as requested. Mr. Bartlett. Would the inclusion of an energy efficiency Key Performance Parameter (KPP) as required by the Chairman of the Joint Chiefs of Staff Instruction CJCSI3170F dated may 2007 improve the department's ability to manage energy use and costs in acquisition trade analyses? Mr. DiPetto. CJCSI 3170.01F outlines the policies and procedures of the DoD Joint Capabilities Integration and Development System (JCIDS), which is the Departments process to validate and prioritize war fighting requirements. Within JCIDS, KPPs serve to define those system attributes or characteristics that are deemed critical to fill an identified capability gap with a materiel (equipment) solution. Inclusion of an energy efficiency KPP could improve the Departments ability to manage energy and fuel-related costs, if it is underpinned by a flexible analytical methodology that can be applied to the full range of air, ground and maritime environments. However, the analytical tools and supporting methodology to make comparisons and to set targets and minimum thresholds have yet to be developed. Some of this methodological work has been initiated by the acquisition community for the purpose of calculating the Fully Burdened Cost of Fuel. Once the methodology is agreed to, and the modeling tools are developed and applied by the force planning community, the KPP would inform the acquirers of how the fuel demand of the system and the size of the fuel delivery force structure it will require should be addressed against other performance and cost factors. Mr. Bartlett. What other measures would improve the department's ability to manage energy use and costs? Mr. DiPetto. The Department is finalizing an over-arching Energy Security Strategic Plan that will provide a framework for understanding and addressing energy challenges at all levels and activities across the Department. The strategic plan identifies four goals and prescribes actionable tasks for the Department to pursue in addressing these challenges, thereby enhancing our energy security posture. The strategic goals are: 1. Maintain or enhance operational effectiveness while reducing total force energy demands - REDUCE DEMAND 2. Increase energy security through strategic resilience (e.g. alternatives/renewables and reducing dependence on non-assured sources) - ASSURE SUPPLY 3. Enhance operational and business effectiveness by institutionalizing energy solutions in DoD planning and business processes - IMPROVE PROCESSES 4. Establish and monitor Department-wide metrics - IMPROVE PROCESSES The strategic plan is currently in coordination within the Department with an anticipated release later this year. We have also initiated several demonstrations and other projects to reduce energy consumption and increase alternatives for installations, both fixed and tactical, and platforms, with anticipated savings ranging from 5% to 25%. Together, these efforts will reduce costs and enable sustained, uninterrupted operations for the Department. Efforts at tactical installations will have the additional effect of reducing fuel convoys, thereby putting fewer soldiers, sailors, airmen and marines in harms way. Mr. Bartlett. Would mandating the inclusion of energy demand, energy logistics, energy protection requirements, and endurance of combat forces into any models, simulations, wargames, and tactical exercises or other planning tools used by the department and the services provide more accurate calculations of the fully burdened cost of fuel (FBCF)? If not, what measures would improve the accuracy of calculations of the fully burdened cost of fuel? General Carns. Yes, the inclusion of energy demand, energy logistics, energy protection requirements, and endurance of combat forces models, simulations, wargames, and tactical exercises or other planning tools used by the department and the services would allow for a more accurate calculation of the fully burdened cost of fuel (FBCF). Accordingly, the Task Force recommended that DoD accelerate the following three tasks: 1. Build fuel logistics into campaign analyses and other analytical models and simulations to inform the requirements process of the operational, force structure and cost consequences of varying battlespace fuel demand; 2. Establish outcome-based energy Key Performance Parameters (KPPs); and 3. Use FBCF as a factor in all Analyses of Alternatives/ Evaluation of Alternatives (EoAs) and throughout all acquisition trades.\1\ --------------------------------------------------------------------------- \1\ http://www.acq.osd.mil/dsb/reports/2008-02-ESTF.pdf; Page 5 DSB Energy Strategy Task Force found that current modeling and simulation conducted during Joint Capability Integration and Development System (JCIDS) and the Service pre-JCIDS planning functions lack the capability to quantify the contribution of system efficiency to battlespace outcome or force structure requirements. Force-on-force models and simulations used to explore new concepts and test new systems do not explicitly include logistics; this is a serious shortcoming. The Task Force recognizes that the models make simplifying assumptions for the sake of looking at battlefield effects and outcomes under certain constraints and limitations, but it strongly recommends that analysts not turn a blind eye to the need to account for logistics in the capability documents. Lessons learned and military judgment sometimes get applied as sanity checks and programmatic goals, but in the absence of explicit modeling it becomes easy to minimize what is inherently inconvenient. Such explicit modeling of logistics assets would better reflect reality, and would have significant impacts on concepts and the way required capabilities are developed. If the requirements process does not understand energy efficiency in terms it values--operational capability, combat vulnerability, and force structure balance--it will have no reason for making efficiency a requirement. If the acquisition process does not understand the total ownership cost of buying, moving and protecting fuel to systems in combat (fully burdened cost of fuel), then its business case analyses will use only the commodity price for fuel. This distorts the results to make high return investments in efficiency look much worse than they really are.\2\ --------------------------------------------------------------------------- \2\ http://www.acq.osd.mil/dsb/reports/2008-02-ESTP.pdf; Pages 26- 27 --------------------------------------------------------------------------- Mr. Bartlett. Would mandating the inclusion of energy demand, energy logistics, energy protection requirements, and endurance of combat forces into any models, simulations, wargames, and tactical exercises or other planning tools used by the department and the services provide more accurate calculations of the fully burdened cost of fuel (FBCF)? If not, what measures would improve the accuracy of calculations of the fully burdened cost of fuel? General Carns. Yes, the inclusion of energy demand, energy logistics, energy protection requirements, and endurance of combat forces models, simulations, wargames, and tactical exercises or other planning tools used by the department and the services would allow for a more accurate calculation of the fully burdened cost of fuel (FBCF). Accordingly, the Task Force recommended that DoD accelerate the following three tasks: 1. Build fuel logistics into campaign analyses and other analytical models and simulations to inform the requirements process of the operational, force structure and cost consequences of varying battlespace fuel demand; 2. Establish outcome-based energy Key Performance Parameters (KPPs); and 3. Use FBCF as a factor in all Analyses of Alternatives/ Evaluation of Alternatives (EoAs) and throughout all acquisition trades.\3\ --------------------------------------------------------------------------- \3\ http://www.acq.osd.mil/dsb/reports/2008-02-ESTF.pdf; Page 5 DSB Energy Strategy Task Force found that current modeling and simulation conducted during Joint Capability Integration and Development System (JCIDS) and the Service pre-JCIDS planning functions lack the capability to quantify the contribution of system efficiency to battlespace outcome or force structure requirements. Force-on-force models and simulations used to explore new concepts and test new systems do not explicitly include logistics; this is a serious shortcoming. The Task Force recognizes that the models make simplifying assumptions for the sake of looking at battlefield effects and outcomes under certain constraints and limitations, but it strongly recommends that analysts not turn a blind eye to the need to account for logistics in the capability documents. Lessons learned and military judgment sometimes get applied as sanity checks and programmatic goals, but in the absence of explicit modeling it becomes easy to minimize what is inherently inconvenient. Such explicit modeling of logistics assets would better reflect reality, and would have significant impacts on concepts and the way required capabilities are developed. If the requirements process does not understand energy efficiency in terms it values--operational capability, combat vulnerability, and force structure balance--it will have no reason for making efficiency a requirement. If the acquisition process does not understand the total ownership cost of buying, moving and protecting fuel to systems in combat (fully burdened cost of fuel), then its business case analyses will use only the commodity price for fuel. This distorts the results to make high return investments in efficiency look much worse than they really are.\4\ --------------------------------------------------------------------------- \4\ http://www.acq.osd.mil/dsb/reports/2008-02-ESTF.pdf; Pages 26- 27 --------------------------------------------------------------------------- Mr. Bartlett. Do you agree that a cross-agency and department and intergovernmental working group will be necessary in order to implement ``islanding'' of critical classified missions and installations from the grid when necessary? Furthermore, would Presidential leadership and authority be necessary to support implementation of islanding of critical classified missions and installations from the grid when necessary? General Carns. Yes, DSB Energy Strategy Task Force recommends that DoD collaborate closely in these endeavors with other agencies, especially the Department of Energy (DoE) and its national laboratories, whose mission is energy research and technology deployment. DoE national laboratories have historical energy advisory relationships with the Services that can accelerate results. Completely isolating all installations from the grid is not practical, and islanding with distributed generation of local electricity sources can mitigate the risks. DoDI 1470.11 Sec. 5.2.3 states it is DoD policy to use onsite, self-contained power for critical functions, DoD-facilities-based microgrids, and netted area microgrids for extended strategic islanding, coupled with end-use energy efficiency measures. The Renewable Electricity Purchasing and On-Base Development Plan developed in 2004 by the Renewables Assessment Working Group was designed to quickly improve energy reliability and security at installations by working in deregulated states where no utility cooperation is required to make them less vulnerable through islanding, as recommended by the National Research Council. Thus, policy and plans are in place to move towards islanding for critical mission purposes. However, the Task Force could find no evidence that DoD has taken tangible steps to implement this policy or plans beyond a very small number of high profile projects. This is so, even though renewable energy sources such as solar, wind and geothermal are often economically advantageous and resilient, reducing the risk of mission interruption. Buying renewable energy credits, while an admirable step toward reducing carbon footprint, accomplishes nothing toward mitigating risks from power loss to critical missions. At specific locations where remedies within DoD's ability to implement are not technically or economically feasible, it may be necessary to engage local utility companies, regulatory agencies, and possibly State governments or the Congress to improve the reliability of the grid. In principal this might be done through regulatory or legislative action. However, it would require building redundancy at key nodes, redundant substations or buying spare equipment. Where DoD is the sole requesting party, it will probably have to fund these improvements. ``Decoupling'' is a recent regulatory trend enacted in a number of states that has the potential to reduce stress on the grid. Historically, utility regulators have set electric and gas rates based on projected sales volume. Since this also sets a utility's revenues, it is a disincentive for them to promote efficiency or to make it easy for customers to install on-site generation. ``Decoupling'' breaks the linkage between the amount of electricity or gas a utility sells and its ability to generate profits. This approach has the potential to enable utilities to remain profitable while investing in improved efficiency and reliability. Some states let utilities keep a small part of what they save for their customers as extra profit. This fully aligns utilities with customers' incentives and can strongly motivate utilities to help customers use electricity more efficiently. DoD may wish to include supporting such legislation as a possible approach to reducing risk at high-risk locations.\5\ --------------------------------------------------------------------------- \5\ http://www.acq.osd.mil/dsb/reports/2008-02-ESTF.pdf; Pages 59- 60 --------------------------------------------------------------------------- Mr. Bartlett. Please make specific recommendations to HASC concerning changes in the organization and composition of personnel within the services and the department that would improve the management of energy demand by operational forces. General Carns. Defense Science Board (DSB) Task Force on DoD Energy Strategy \6\ recommended that DoD establish a Department-wide strategic plan that establishes measurable goals, achieves the business process changes recommended by the 2001 DSB report \7\ and establishes clear responsibility and accountability. Currently, energy demand is an unplanned consequence of poorly informed decisions. Analytical tools are needed to develop meaningful and achievable energy goals, and business process changes are needed to enable new information to be considered when making key decisions that affect energy use. Success will require a plan that is horizontally and vertically integrated throughout the Department, with participation by all functional areas that make decisions affecting energy use with sustained oversight at the Deputy Secretary of Defense level. --------------------------------------------------------------------------- \6\ http://www.acq.osd.mil/dsb/reports/2008-02-ESTF.pdf \7\ http://www.acq.osd.mil/dsb/reports/fuel.pdf --------------------------------------------------------------------------- Specifically, the Task Force recommended: 1. By June 2008, establish a senior energy official responsible for development of policies and procedures and oversight of their implementation. This official should have a voice at the key decision bodies throughout the requirements, acquisition, and funding processes to ensure energy considerations have been accurately factored into key decisions that affect DoD's energy demand patterns and risks from disruptions in commercial energy supplies. 2. By June 2008, USD(P) incorporate the concepts of resilience and endurance of combat forces as tactically and strategically important metrics to be included in future strategy and planning documents. While the names of these documents change frequently (e.g., Quadrennial Defense Review, National Military Strategy, Strategic Planning Guidance (being renamed Guidance for Development of the Force/Guidance for Employment of the Force)), these concepts should guide the formulation of Department goals and strategy for managing energy. 3. By July 2008, USD(AT&L) direct the establishment of partnerships with the Director, Defense Research and Engineering (DDR&E) and Department of Energy office of Energy Efficiency and Renewable Energy (DoE/EERE) to identify technologies with the potential to contribute to endurance metrics by reducing battlespace fuel demand by deployed forces and at forward operating bases. 4. By October 2008, develop and implement a Department-wide plan to integrate energy into appropriate education and training programs, to include professional military education, to include Senior Service Schools, Capstone and Apex; and specialty-specific education, such as acquisition corps and engineering. Curricula should include risk to mission, cost and force structure aspects of energy as addressed in this report and appropriate to the course.\8\ --------------------------------------------------------------------------- \8\ 2008 DSB Energy Strategy Task Force Report, Recommendation 3, pages 68-69 ---------------------------------------------------------------------------