People are our most precious resource. We can provide the best equipment, but if we don't have the people capable of operating that, we aren't very successful. Our recruiting and retention have been at all-time highs, and we are very proud of our sailors and Marines as they go forward.

FISCAL YEAR 2004 BUDGET REQUEST

In this year's budget we have tried to look forward. We made some very difficult decisions, particularly on retiring some ships. But we are building new ships. We have dedicated $11.4 billion to construct ships, to convert some of the old SSBNs to SSGNs, two more, and also to do our cruiser conversion.

We continue to look at aircraft also, buying 100 new aircraft. As you mentioned, Mr. Chairman, we would like to buy more, but we want to make sure that what we have are well maintained and manned by capable sailors and Marines.

We are also taking a new approach to how we build ships and how we build everything in our Department and I think across the Department of Defense. Our next-generation aircraft carrier will use new techniques; it will be an electric ship, if you will. We are also looking at the DD(X) as a centerpiece as we move forward. And, as many of you know, we are working on the Littoral Combat Ship. In all of these we are looking at the hull, if you will—we call it the sea frame and then we are looking at putting equipment on board the sea frame, and then finally putting electronics at the last minute, to get electronics that is up to date. We continue to move forward on the Joint Strike Fighter, upgrading the Hawkeye. And realizing the EA-6B Prowler is our most difficult aircraft to maintain and are planned by EA-18G to replace that.

As you well know, the cost of operations and the support of the Global War on Terrorism are not part of our fiscal year 2004 budget. We have not yet sent over a supplemental. We will be working on that very closely with you as we go forward.

On behalf of all the sailors and Marines around the world, I would like to thank this Committee for equipping them and making them ready.

I would also like to say as a personal comment, that you have very strong leaders over the Navy and Marine Corps. Admiral Clark and General Hagee are dynamic leaders that our Marines and sailors follow around the world. We thank you, sir, and I look forward to answering your questions.

Mr. LEWIS. Thank you, Mr. Secretary.

[The biographical sketch and statement of Secretary Johnson fol

HONORABLE HANSFORD T. JOHNSON

SECRETARY OF THE NAVY (ACTING)

SUB-COMMITTEE ON DEFENSE

HOUSE APPROPRIATIONS COMMITTEE

Mr. Johnson was nominated on August 3, 2001 by President George W. Bush to serve as the Assistant Secretary of the Navy (Installations and Environment) and was sworn in on August 7, 2001. The President directed him to assume the duties as the Acting Secretary of the Navy on February 7, 2003.

The Secretary of the Navy leads the Department of the Navy consisting of 383,000 active duty and 88,000 Reserve Sailors; 175,000 active duty and 40,000 Reserve Marines; and 186,000 civilians. It includes 308 warships, 4,100 aircraft, and an annual budget of over $110 billion.

Prior to his nomination to serve in the Bush-Cheney administration, Mr. Johnson served as Executive Vice President and Chief Operating Officer of the Credit Union National Association (CUNA) in Madison, Wisconsin. He also served as President & CEO of EG&G Technical Service and later of EG&G when purchased by The Carlyle Group.

Previously, Mr. Johnson joined USAA Capital Corporation, part of one of the largest and most successful financial services organizations in America. He was responsible for providing non-insurance services to USAA members through the USAA Federal Savings Bank (selected as the Best Bank in America by Money Magazine), the USAA Investment Management Company, the USAA Real Estate Company, and USAA Buying Service. These companies managed $13 billion in USAA insurance portfolios, over $16 billion in mutual funds, a $10 billion bank, and $1 billion in real estate holdings. While at USAA, President George H. W. Bush appointed him to the 1993 Base Realignment and Closure Commission.

A native of Aiken, SC, he was the outstanding graduate in thermodynamics and aeronautics in the first class (1959) of the U.S. Air Force Academy. In 1989, he became the first graduate of the Air Force Academy to be promoted to General (four stars). Mr. Johnson additionally earned a Master's Degree in Aeronautics from Stanford and an MBA from Colorado. He furthered his military education at the U.S. Army Command and General Staff College, the National War College, and Advance Management Program at Dartmouth.

His early military service included a tour as a forward air controller in Viet Nam where he flew 423 combat missions followed by service as an assistant professor of Aeronautics at the Air Force Academy. After serving in Air Force Plans, he joined the Strategic Air Command and served as a Wing Commander and in SAC Plans.

From 1982 to 1985, he led the team that successfully rebalanced the Air Force programs in the $100 billion annual Air Force Budget. Following that tour, he led Strategic Air Command operations in 1985 and directed the refueling and strategic reconnaissance forces during the bombing of Libya. He then became the Vice Commander in Chief of the Pacific Air Force.

In late 1987, he became the Deputy Commander in Chief of the Central Command during EARNEST WILL, the U.S. reflagging of Kuwaiti oil tankers and escort operations in the Persian Gulf. Following his tour in Central Command, Mr. Johnson served the Chairman of the Joint Chiefs of Staff as director of the Joint Staff.

As Commander in Chief of the U.S. Transportation and the Military Airlift Commands, Mr. Johnson worked directly for Secretary of Defense. Dick Cheney and Chairman of the Joint Chiefs, Colin Powell in leading all transportation components of the U.S. military. His Air Force command provided all airlift and special operations forces for the extremely effective JUST CAUSE invasion of Panama. From 1990 to 1991, his commands led all military and commercial aspects of the DESERT SHIELD/STORM movement of troops, equipment, and supplies to and from the Persian Gulf - the most concentrated movement in American military history.

Mr. Johnson remains active in community and church activities and he and his wife of 43 years, Linda, live in McLean, Virginia.

Navy-Marine Corps Team:

National Seapower... Around the World, Around the Clock

I. Introduction

The Navy - Marine Corps Team continues to provide extraordinary service and value to our Nation. Throughout the past year our Naval Forces have distinguished themselves around the globe, and our Sailors and Marines operating in the air, on and under the sea, and on the ground -- including our space cadre -- remain at the leading edge of the Global War on Terrorism. They have demonstrated the full effect of their lethal power, from the blue water to the littorals and well beyond, engaging and destroying the enemy in areas that previously would have been considered sanctuaries from sea-based forces. At a time of great consequence for our Nation, our Navy and Marine Corps not only have "answered the call," but have done so while improving our combat readiness and retaining our Sailors and Marines at historic rates.

Our successes in the Global War on Terrorism, while significant, have not been achieved in isolation. We have worked alongside, in partnership, with our sister Services to realize the true potential of joint, interoperable forces in the new environment of 21" Century warfare. The superior operational and personnel readiness levels we have been able to sustain are directly reflective of the strong, sustained support of the Congress. In Fiscal Year (FY) 2004, we seek your support for the President's budget request to sustain the gains made to date, improve those areas where shortfalls remain, and continue transforming the Navy and Marine Corps for the 21st Century.

In the balance of this statement we will describe the significant accomplishments the Navy and Marine Corps have realized during the past year, the improvements in our warfighting readiness and capabilities that are supported by the President's FY 2004 budget request, and some details of our plans to transform and prepare for the challenges of the future. In assessing our request, it is important to note that our focus is on improving our ability to operate as an agile, lethal and effective member of a broader, networked joint warfighting force. To that end, we have given priority to the following overarching goals:

• Successfully prosecuting the Global War on Terrorism while sustaining our current readiness;

• Recapitalizing, modernizing and transforming our Navy and Marine Corps to meet the challenges of the future;

• Fully networking our forces at sea and ashore to operate seamlessly in a joint and coalition environment;

• Continuing to invest in our Sailors and Marines; and

Sustaining the quality of our operational training.

In pursuing these principal objectives, we had to make some difficult tradeoffs within our proposed program. However, our FY 2004 budget request is the best balance possible among important, but often competing priorities.

II. Context for the FY 2004 Budget Request:

Succeeding in a Time of Great Consequence

Last year, our Navy and Marine Corps forces built on the historic response of our Sailors and Marines following the September 11, 2001 attacks on our Nation. Today, our forces continue leading the way on the front lines of the Global War on Terrorism. More than half of our Navy operating forces and over sixty percent of the Marine Corps operating forces are currently deployed around the globe. Since the beginning of Operation ENDURING FREEDOM more than 90,000 Sailors and Marines and 100 Navy ships have deployed in support of ongoing operations. Nine of our 12 aircraft carriers and half of our 12 Amphibious Ready Groups have seen action in this worldwide conflict. Additionally, over 5,000 members of the Naval Reserve and 15,000 members of the Marine Corps Reserve have been activated in support of these operations.

Even after the effective defeat of the Taliban and the liberation of Afghanistan, our Naval Forces, whether sea-based or on the ground, continue their missions. For example, Marines from the 4th Marine Expeditionary Brigade (Anti-Terrorism) provide support and security for the U.S. State Department and the U.S. Embassy in Kabul, while others serve in Tactical Air Operations Detachments in support of air and Naval Special Warfare operations in Afghanistan.

While the Global War on Terrorism remains our principal focus, the Navy-Marine Corps team still operates extensively, as in the past, representing U.S. interests throughout the world. In Southwest Asia, we maintained continuous carrier presence, conducting combat operations over Iraq in support of Operation SOUTHERN WATCH. At the same time, naval task forces continued Maritime and Leadership Interdiction Operations supporting United Nations economic sanctions against Iraq for the eleventh straight year. In addition to these operational commitments, over 2,000 Marines participated in EAGER MACE 2002, an amphibious assault exercise in Kuwait in late September 2002.

During May through August 2002, over 1400 Sailors, Marines, and Coast Guardsmen participated in the eighth annual Cooperation Afloat Readiness and Training (CARAT) exercise with countries including the Philippines, Thailand, Singapore, Indonesia, Malaysia and Brunei. Marines from the Third Marine Expeditionary Force participated with all CARAT nations in landing force operations as well as providing a Marine Security Element to advise and assist the armed forces of the Philippines in their efforts against global terrorism.

In the Mediterranean, Navy ships, including surface combatants, submarines and patrol craft operated with friends and allies in over 60 exercises with NATO and Western European nations to enforce United Nations sanctions in the Federal Republic of Yugoslavia. Marines from the 24th Marine Expeditionary Unit (Special Operations Capable) demonstrated their capability to offload and move inland to reinforce Kosovo Forces' security requirements.