1977. My statement today will be devoted to the more immediate problem dealing with our requirements for fiscal year 1976 and for the transition period.

The program we present for your consideration today is based on the 5-year defense plan. During staff review of the projects proposed by the Department of Defense Components, each request was individually reviewed and evaluated to verify its justification in support of DOD approved programs.

In addition, each project was subjected to a careful engineering analysis against DOD standards relating to size, cost, site location, and design criteria.

As a result of these multistep appraisals and judgments, the total authorization request for fiscal year 1976 comes to $3.9 billion.

Additionally, to accommodate the change in the start of the fiscal year from July 1 to October 1, we have included the sum of $330.6 million for that transition period.

The complete total then for the fiscal year 1976 plus the 3-month transition period is some $4,201.6 million.

A comparison is shown on page 3 of my statement.

The new authorization requested for fiscal year 1976 including the extra 3 months of the transition period is approximately $1 billion more than the $3.3 billion requested in fiscal year 1975. If, however, the amount requested for the transition period is deducted $330.6 million-to compare both budgets on a comparable 12-month period, the fiscal year 1976 request is some $593 million more than fiscal year 1975.

This increase includes some $400 million to provide for higher construction costs experienced during 1974 and anticipated in 1975 and 1976. Also, we have embarked on a major energy conservation program involving retofit of existing facilities, a health facilities modernization effort, a major improvement program to enhance security of nuclear storage, a significant increase in the amount devoted to providing shelters for U.S. aircraft committed to defense of Europe under NATO, an additional increment for the Trident support site, and increased emphasis on National Guard and Reserve facilities. Program details are addressed in the addendum to my statement. I would, however, like to touch briefly on certain important subjects which I believe will be helpful to the committee in its evaluation of our program.

EFFECT OF CONSTRUCTION COST INFLATION

The first of these is the severe and largely unanticipated rise in the rate of inflation of construction costs in fiscal year 1974. During this period, inflation ranged between 8 to 10 percent. However, the fiscal year 1974 authorization included an inflation factor of only 6 percent, consequently, many of the projects approached or exceeded the programed amount. A significant contributor to this construction cost growth was the increased prices for key construction materials.

To minimize the erosion of the buying power of our construction dollars due to inflation, we are continuing to stress the need to get all authorized projects under contract as soon as possible. We were successful in executing by December 31, 1974, almost 74 percent of the

new construction authorized in the fiscal year 1974 Military Construction Authorization Act.

The rate of inflation has continued to increase at 1 percent per month and is projected to remain the same in fiscal year 1976. We are receiving excellent competition in bidding, but the prices are not dropping; and we do not anticipate them to drop in the near future. For fiscal year 1976 we have developed the project estimates to include an allowance for cost growth to the midpoint of the construction period. This allowance is 12 percent for fiscal year 1975 and 1976 and reduces to 9.5 percent for any construction which extends into fiscal year 1977.

ENERGY CONSERVATION INVESTMENT PROGRAM

Another major element involves an ongoing effort to effect substantial reductions in energy consumption throughout our existing plant facilities. This investment program is aimed at retrofitting existing facilities as a positive means of conserving all types of energy and reducing utility cost increases to the minimum. The type of projects included in this investment program are self-amortizing in nature. A 6-year program, commencing with fiscal year 1976 has been identified at an overall cost of $1.35 billion. In fiscal year 1976 we are requesting an expenditure of $136 million. It is estimated that the fiscal year 1976 program will be amortized in 4 years. Subsequently, in the out years, these modifications will accrue substantial savings in both dollars and scarce energy resources.

HEALTH FACILITIES MODERNIZATION

Over the past 2 years we have initiated a comprehensive program for modernization of our military medical facilities. The program as originally conceived would have required 20 years to complete. However, with the elimination of the physicians draft, the need for more efficient medical facilities which could maximize utilization of scarce medical skills became critical. As a result in February 1972, the Secretary of Defense authorized an accelerated program which would shorten the program time to 5 years. The first 2 years were cut back substantially due to design leadtime problems and the impact of the recent decision to implement a Defense regional hospital program. The total program is now estimated to cost $2.9 billion. In fiscal years 1974 and 1975, we programed $137 million and $211 million respectively, and in fiscal year 1976 we are requesting $378 million.

As an essential corollary to this program, Congress authorized the establishment of a Uniformed Services University of the Health Sciences to train the medical personnel required to staff the military medical facilities. In last year's program we sought and Congress authorized the initial increment of facilities necessary to begin the construction of this vitally needed source of medical skills. Design of this increment is complete and construction contract award is scheduled for June of 1975. Design of increment II was started on January 15, 1975. The amount requested in fiscal year 1976 to finance the second increment of the University is $72.3 million.

TRIDENT SUPPORT FACILITIES

Construction in support of the new Trident submarine-launched ballistic missile weapons system is now well underway.

At Patrick Air Force Base, all the work to be constructed in the fiscal year 1974 authorization has been awarded. By the end of calendar year 1975, awards will have been made on all the projects authorized under the fiscal year 1974 and 1975 programs.

In the fiscal year 1976 program, we are requesting an additional $187 million for the next phase of Trident support facilities. Navy witnesses will provide full details of the construction status of this program and the request for fiscal year 1976.

AIRCRAFT PROTECTIVE SHELTERS

Another element of this year's program is a significant increase in the amount devoted to protective shelters. The potential vulnerabiilty of U.S. aircraft in Europe has been a subject of concern to the Secretary of Defense and the Supreme Allied Commander. Most recently, based on lessons learned from the recent conflict in the Middle East, we have determined to accelerate and broaden this effort. Toward that end in fiscal year 1976, we have included $175 million for aircraft shelters and related support facilities. This program will provide a significantly improved posture for our aircraft assigned or earmarked for NATO.

BASE REALINEMENT

The Congress understandably continues to express vital interest in actions relating to base realinements.

The base realinement announcement of November 1974 will result in the elimination of over 23,000 personnel positions, at an estimated annual savings of approximately $331 million. The announcement of December 1974 concerning the disestablishment of Headquarters, Pacific Air Forces in Hawaii will result in an estimated annual savings of $34 million. The resources freed by these actions will, for the most part, be allocated to increase the "teeth-to-tail" ratio.

We have in the past informed you of the actions we have taken pursuant to Executive Order 11508 (subsequently replaced by Executive Order 11724). These orders assigned responsibility to the General Services Administration (GSA) to conduct surveys of all Federal properties in order to identify unneeded and underutilized properties. In order to keep you up to date on the progress we are making in meeting the objectives of these programs, we would like you to know where we stand today.

During the period January 1970 to January 1975, the DOD agreed to 671 separate actions involving the release of over 1.3 million acres of land. The White House announced in January 1975 that 482 properties had been transferred to State and local governments in the 50 States, Pureto Rico, and Washington, D.C., as part of the "Legacy of Parks" program. Of the 482 properties, 259, or 54 percent, were formerly DOD properties representing approximately 40,000 acres, or 58 percent, of the total acreage conveyed.

OUTER CONTINENTAL SHELF OIL AND GAS LEASE SALES

The increase in the oil and gas lease sales program by the Department of the Interior on the Outer Continental Shelf creates a corresponding increase in potential conflicts with DOD activities in these coastal waters. The leasing target for 1975 of 10 million acres of seabed will require constant review of the essentiality of our missions. and a continuing dialogue with Interior to assure the operational integrity of those most essential to national security. The initial conflict began in early 1973 with the heavy industry response to "Calls for Nomination" in the Gulf of Mexico immediately south of the Eglin/ Tyndall Air Force Bases' Panama City complex. Negotiations were successfully concluded leading to the exclusion from the lease sale of tracts which could have otherwise adversely affected the operational integrity of the Navy's underseas laboratory at Panama City, Fla., and those of Eglin and Tyndall.

Similar problems were encountered in the Outer Continental Shelf offshore Southern California. As in the Gulf of Mexico situation, we were able to persuade the Department of the Interior to eliminate tracts in the central core of the range from the final tract selection. With the publication in December 1974 of the new 5-year leasing schedule, we are looking closely at our activities in the Gulf of Alaska, the South Bering Sea, and the Baltimore Canyon area along the midAtlantic Coast. Of significant import has been our most recent success in having excluded from a new Gulf of Mexico sale a 70-mile wide corridor south of Eglin Air Force Base, Fla.

FAMILY HOUSING

Our family housing program for fiscal year 1976 requires authorization of $1.6 billion, including $0.3 billion for the 3-month transition period. Excluding the transition period and on a comparable 12month basis, 1976 estimates are about $13 million less than the fiscal year 1975 request.

Since we no longer have large programable deficits of new family housing units, Department of Defense has reduced the number of new housing units requested from 10,462 units in fiscal year 1975 to 3,444 units in fiscal year 1976 and placed greater emphasis on improving the present housing inventory. About 130,000 housing units, or about onethird of our present inventory, are either over 25 years old or do not meet today's standards for size, amenities, et cetera, to a significant degree. We plan to remedy this situation with this larger, more comprehensive improvement program.

Included in the fiscal year 1976 improvement program is $23.2 million for energy conservation investment projects which are expected to amortize their cost in about 5 years.

Increases in operating costs have caused the redistribution of funds from maintenance, services, and procurement to meet day-to-day utility and fuel bills. We have requested a supplemental fiscal year 1975 authorization for the appropriation of $10.2 million to cover salary and wage increases already incurred. This is a small offset for unbudgeted cost increases in fiscal year 1975, now estimated at between $85 and $95 million. Maintenance of housing is the only significant

source of funds to meet exigent utility and fuel bills. The impact is to increase deferred maintenance, thus adding to the demands on scarce future funding.

This completes my presentation, Mr. Chairman. I would like to express appreciation for the interest and support which this committee has extended to our program over past years.

Members of my staff are present and together we will attempt to provide answers to any questions which the committee may have. Thank you.

[Statement referred to follows:]

Mr. Chairman and members of the committee, I am indeed pleased for the opportunity to again appear before this committee and introduce the Fiscal Year 1976 Department of Defense Military Construction Authorization Program contained in S-1247.

This program differs substantially from past years requests in that it reflects a 27-month authorization program rather than the normal 12-month fiscal year. This is partly in response to the changes mandated in the Congressional Budget and Impoundment Control Act of 1974 (Public Law 93-344) which established new dates for the start and end of the fiscal year beginning with Fiscal Year 1977 and partly to comply with the desire of both the Congress and the Administration to seek two fiscal year authorizations in Fiscal Year 1976 for those continuing programs which in the past have normally required annual author. ization.

As a result, the bill before the Committee may be considered in two parts. The first part contained in titles I through VII addresses that authorization requested for Fiscal Year 1976, beginning July 1, 1975, and interim authorization required to continue essential activities of the program for the transition period from the end of Fiscal Year 1976 on June 30, 1976, through Septe' iber 30, 1976. The second part is contained in title VIII of the bill and this title reflects aggregate authorizations for each Military Department and Defense Agency anticipated to be required for the Fiscal Year 1977, beginning October 1, 1976. However, because of uncertainty as to how the Congress may wish to address the request for Fiscal Year 1977 authorizations, my statement today will be devoted to the more immediate problem dealing with our requirements for Fiscal Year 1976 and for the transition period to September 30, 1976.

The program we present for your consideration today is based on the Five Year Defense Plan and derives from a careful selection of facilities required in support of projected missions, weapon systems and forces envisaged in that plan. During staff review of the projects proposed by the Department of Defense Components, each request was individually reviewed and evaluated to verify its justification in support of DoD approved programs and to make sure that its need could not be met through use of existing assets and resources. In addition each project was subjected to a careful engineering analysis against DoD standards relating to size, cost, site location and design criteria to assure that its construction represented the most cost effective solution to the demonstrated need.

As a result of these multi-step appraisals and judgments, we finally arrived at a program containing approximately 585 projects at 270 named installations and totaling some $2.6 billion. When coupled with the amount requested for military family housing to finance debt payment, operations and maintenance, improvements, leasing and other costs including planning, the total authorization request for Fiscal Year 1976 comes to $3.9 billion.

Additionally, as a one time reconciliation to accommodate the change in the start of the fiscal year from July 1 to October 1, we have included the sum of $310.6 million for that transition period to provide for continuation of necessary debt payment and support of family housing and $20 million for meeting our commitments under the NATO Infrastructure Program. The complete total then for the Fiscal Year 1976 plus the three month transition period is some $4,201.6 million.

A comparison of the Fiscal Year 1976 proposed authorization including the three month transition period with that requested and enacted in Fiscal Year 1975 follows: