Mr. Chairman, members of the committee, and staff, thank you for the opportunity to appear before you today to discuss the specifics of the Department's Ballistic Missile Defense (BMD) strategy. For all of our adult lives, most Americans have lived with a dark cloud hanging over our heads--the horrific threat of a nuclear war that would end our way of life and civilization as we know it. Now, with the end of the Cold War, that dark cloud is beginning to drift away. The whole world is breathing a little easier.
But that cloud is not yet gone. The world's nuclear powers still hold thousands of nuclear weapons, along with many hundreds of missiles to deliver them. And many other countries, some of them rogue nations to which the calculus of deterrence does not apply in the same way, are acquiring the means to deliver weapons of mass destruction--nuclear, biological, and chemical. Many of these nations have obtained ballistic missiles--short-range ballistic missiles--and some are in the process of acquiring longer-range ballistic missiles.
The proliferation of short-range ballistic missiles in the world today poses a direct, immediate threat to many of our allies and to some U.S. forces deployed abroad in defense of our national interests. Over time, the proliferation of longer range missiles will pose a greater threat to the U.S. itself. For these reasons, active defenses are playing a central and vital role in U.S. defense planning well into the next century. The resource-constrained environment of the nineties, together with the complex nature of the security challenges facing us, necessitate that we deploy the right capabilities at the right time for achieving the highest overall level of security for the United States.
To do so we must consider the role of missile defense within the nation's broader national security strategy. Active defenses can never be considered in and of themselves a panacea for countering the proliferation of ballistic missiles and weapons of mass destruction. We have a broader strategy encompassing a full range of tools in a national "kit" of options. Our strategy has three different components: preventing and reducing the threat; deterring the threat; and defending against the threat.
For example, we have adopted the Non-Proliferation Treaty, the Framework Agreement with North Korea, the INF Treaty, the MTCR, and export controls as ways of preventing or reducing the threat to our allies and U.S. forces deployed abroad. The threat to the United States has been reduced significantly through the START treaty, and it will be reduced even further through the START II treaty if Russia ratifies it. Additionally, we have an extensive program for actually dismantling the warheads and the missiles that had been directed against us in a Cooperative Threat Reduction (CTR) program supported by Nunn-Lugar funds. This is our first line of defense against ballistic missiles and weapons of mass destruction--preventing and reducing that threat.
The second line of defense is deterrence. In the case of the long- range missile threat to the United States, either from land based Intercontinental Ballistic Missiles (ICBMs) or submarine-launched ballistic missiles (SLBMs), our strategic nuclear forces have been a bulwark of deterrence for nearly a half-century. That will continue. We have smaller nuclear forces now than we did a decade ago, but they are still very powerful and quite capable of carrying out the strategic deterrence mission. In the case of deterring short-range missile threats, our theater nuclear forces and very powerful conventional forces provide some level of deterrence against limited nuclear attacks.
To the extent that these first two components, reducing the threat and deterring the threat, are not fully successful, we have to be prepared to defend directly against a threat. In the case of the strategic threat to the United States from rogue states or from accidental/unauthorized launch, the National Missile Defense (NMD) program is America's ultimate insurance policy. For our deployed forces, we are developing and fielding both lower-tier and upper-tier theater missile defenses to counter regionally oriented missile attacks.
The theater threat to our allies and U.S. forces deployed abroad is real and growing. We saw it demonstrated in the Gulf War. Besides Iraq, we know there are many ballistic and cruise missiles in many countries. Many thousands of short-range missiles are deployed today with hundreds of launchers in as many as 30 different countries--some of these countries are quite hostile to the United States. This threat is here and now. It is widely dispersed, and it has to be taken very seriously.
In addition to the short-range missile threat, we see a medium-range threat emerging. Some nations are developing their own medium-range missiles; in particular, North Korea is developing the No Dong missile. Other nations, some of them rogue, are buying these missiles or trying to buy them. Iran is a case in point.
In addition to missiles with conventional warheads, we have a threat today from missiles armed with chemical and biological warheads. We now know what we suspected during Desert Storm--Iraq had chemical warheads that could have been put on Scud missiles. It is still an open question as to why Iraq did not use them during that war. Our strategy for deterring the use of weapons of mass destruction appears to have worked, possibly because they feared an overwhelming response from our conventional forces, or possibly a response with nuclear weapons. Whatever the reason, we do know that that chemical threat existed and the Iraqis were deterred from using those weapons.
We believe that Iran, North Korea, and Libya all have extensive chemical weapon programs. In addition, we anticipate a nuclear threat being possible in the future. We know, in retrospect, that Iraq was very close to a nuclear operational capability at the time they started the Gulf War--fortunately, they were not all the way there. We know that North Korea was close last year. But their program is now stopped by the Framework Agreement. And we understand that Iran is working to achieve a nuclear weapons capability, but we believe they are many years away. We will keep a close eye on the nuclear threat from so-called rogue nations armed with theater ballistic missiles.
In the case of strategic missiles, Russia and China have a significant capability for delivering these weapons with strategic weapon delivery systems--land-based and submarine-launched missiles and long-range aircraft. We do not see these systems as posing a threat to the United States in the foreseeable future. That is, we do not see an intent that goes with the capability. Even should that situation change, we will continue to field a significant U.S. deterrent force.
We do not see a near-term ballistic missile threat to U.S. territory from the so called rogue nations, but we cannot be complacent about this assessment. However, the threat of long-range missiles from rogue nations could emerge in the future. The Intelligence Community estimates that this threat would take 15 years to develop, but could be accelerated if those nations acquired this capability from beyond their borders.
This is why our counter-proliferation programs are important and why the role of missile defense within this broader national strategy must be carefully integrated into U.S. defense planning.
Over the last year, the Department's missile defense programs have been criticized from two different directions. Some members of Congress have criticized the Department for spending too much money on missile defense; others believe we are not spending enough. Some have criticized the Department because we are moving the programs too quickly. Some think we are not moving the programs quickly enough.
The Joint Requirements Oversight Council 0ROC) criticized the Department's Ballistic Missile Defense programs from two different points of view. First, our BMD program was funded at a level too high compared to other higher-priority, pressing modernization and re- capitalization needs. Second, we were not focused sharply enough on dealing with the here-and-now threat.
With all of this criticism, some of it appropriate, the Secretary of Defense decided we needed to look intensively into the Department's whole set of missile defense programs and look for a restructuring of the program portfolio to produce a source of funds for other modernization priorities. During the past several months, we have identified what I believe is a more balanced missile defense program, one that is more affordable, and one that has better prospects for successful execution. It is also better matched to the missile threats we will be facing. This new plan makes use of all of the funds that were appropriated in fiscal year 1996 for missile defense--both the funds that were requested by the President, as well as the funds that were added by the Congress.
Our review reaffirmed the fundamental priorities in our missile defense program. The first priority is to defend against theater ballistic missiles and cruise missiles. Within the theater missile defense (TMD) mission area, the review brokesome new ground on defining the underlying sub-priorities. The first sub-priority, is to field systems to defend against the existing short-to-medium-range missiles--our lower-tier TMD systems. The next sub-priority is to proceed at a prudent pace to add wide area defenses and defenses against the longer-range theater missiles as that threat emerges--the upper-tier TMD systems.
Our second priority is to develop a capability to defend against Intercontinental Ballistic Missiles--our National Missile Defense program--and the cruise missiles which may threaten the United States in the future.
Finally, our third priority is developing a robust technology base to underlie these two programs---both the TMD program and the NMD program--to be able to develop and deploy more advanced missile defense systems over time as the threat systems they must counter become more advanced.
We dealt with our number one priority--Theater Missile Defense--by first assessing the situation in the theater today. Two systems are fielded--the Marine Corps Hawk system and the Patriot Advanced Capability (PAC) 2/Guidance Enhanced Missile (GEM) system. The Hawk capability is very limited. The PAC2/GEM system contains a guidance upgrade that significantly improves the lethality and coverage of the basic PAC-2 system used in combat during Desert Storm.
Although the PAC-2/GEM system provides a more robust capability than that which we had fielded in Desert Storm, it is still not sufficiently robust capability to deal with the threat. The program that emerged from our review and that was incorporated in the fiscal year 1997 budget request reflects the Department's commitment to put "rubber on the ramp" for these TMD systems for which the threat has already emerged.
Our first theater missile defense priority is to enhance the capability of our lower-tier systems beyond that we now have deployed. Our intent is to strengthen our effort to field a capability to defeat short-to-medium-range theater ballistic missiles as soon as possible.
We will do this by building on existing infrastructure and prior investments in on-going programs; expanding the capability of Patriot and Aegis/Standard Missile systems; and improving our Battle Management/Command, Control and Communications (BM/C3) capability. We are also beginning, in a cooperative program with our allies, the Project Definition/Validation phase of the Medium Extended Air Defense System (MEADS), a highly mobile system intended to provide our maneuvering forces with a 360-degree capability against both ballistic and cruise missiles.
We have two systems, the PAC-3 and the Navy Area Defense (NAD) system, in development to give us our core lower-tier capability. Neither of these programs involves a significant technology risk at this point. The risks ahead for these programs are related to program execution. Our task is to ensure that we have a robust program to proceed with both systems and to field this capability as early as possible. The mix of PAC-3 and Standard Missile-2 Block IVA interceptors eventually purchased to perform the lower-tier mission will depend on their relative prices and performance, and the threat.
The first of the advanced lower-tier systems to be fielded is the PAC- 3. It is a much more capable derivative of the PAC-2/GEM system in terms of both coverage and lethality. The PAC-3, in fact, has a new interceptor missile with a different kill mechanism--rather than having an exploding warhead, it is a hit-to-kill system. During the review, we found that the PAC-3 program had a high degree of risk for completion. There were some fact of life slips in the schedule, and the program was not funded at a level commensurate with our near term priority to field a robust capability.
Even though a major objective of the review was to reduce the missile defense budget, we added about $240 million for the PAC-3 through the Future Years Defense Program (FYDP) and established a realistic schedule to lower the program execution risk by extending the engineering and manufacturing development (EMD) phase of the program by up to ten months. System performance will be improved by rephasing the missile and radar procurements; upgrading four launchers per battery with Enhanced Launcher Electronics Systems; and extending the battery's remote launch capability.
We also looked at fielding the PAC-3 system. We had originally planned to upgrade nine missile defense battalions with the PAC-3 system. We decided, instead, to defer the upgrade of three battalions pending availability of the Medium Extended Air Defense System (MEADS). PAC-3 Low Rate Initial Production (LRIP) will begin in the first quarter of fiscal year 1998, and the First Unit Equipped (FUE) date is planned for the fourth quarter of fiscal year 1999.
The second of the lower-tier systems, the Navy Area Defense (NAD) system, consists of Standard Missile-2 Block IVA interceptors deployed aboard Aegis ships. The capability provided by this system has the advantage of being able to be brought into theater without having forces on land.
Although to a lesser degree than PAC-3, we found similar executability risks in this program. We will use the $45 million added by Congress in the fiscal year 1996 appropriation to compensate for system engineering and design efforts not fully funded in fiscal year 1995. We also added about $120 million to this program through the FYDP to make the program fully executable on a moderate risk profile. These funds will cover delays in risk reduction flights and adjusted cost estimates for test targets and lethality efforts. This will allow us to proceed expeditiously with the EMD program and LRIP missile procurement.
The program plans provide for fielding a User Operational Evaluation System (UOES) capability in fiscal year 2000 and a first unit equipage in fiscal year 2002. Thereafter, operational units will use the legacy UOES system for continued testing and as a contingency warfighting capability. This will maintain our baseline development and procurement schedules for the program.
The last of the lower-tier systems is the Medium Extended Air Defense System (MEADS), formerly the Corps SAM program. This system will provide fundamental enhancements in flexibility, mobility and deployability. For example, the PAC-3 system is oriented in a particular threat direction. MEADS provides 360 degrees of coverage. It is a highly mobile system that is designed to be deployed with our forward and maneuvering forces.
It will be transportable on C-130 aircraft. MEADS will provide advanced capabilities against theater ballistic missiles, cruise missiles, and other air-breathing threats. This system would replace Hawk, and would ultimately replace Patriot. As discussed above, we are holding equipage of three Patriot battalions in reserve pending a decision on development and deployment of this MEADS system.We are cooperating on this program with Germany, France, and Italy, who together will provide 50 percent of the funds. I soon expect to sign a Memorandum of Understanding (MOU) with our international partners to begin the next phase of this program. We added about $80 million over the FYDP to fully fund the U.S. share of the cooperative Project Definition/Validation phase. This increase brings our funding to a rate of about $30 million per year and fulfills our international commitments at this time. We will make a decision to enter development in fiscal year 1998.
Our second theater missile defense priority is the upper-tier systems. These systems are necessary to defeat longer-range ballistic missiles, to defend larger areas, and to increase effectiveness against weapons of mass destruction.
The Department's plan for upper-tier systems contains the development of the Theater High-Altitude Area Defense (THAAD) system for our ground forces. In addition, our upper-tier approach moves the Navy Theater Wide (NTW) System from the status of advanced capability exploration to system assessment and demonstration.
The THAAD system will provide extended coverage for a greater diversity and dispersion of forces and the capability to protect population centers. But the principal additional capability provided by this system is the ability to deal with our longer range theater missile threats as they begin to evolve and emerge over time. THAAD also reduces the number of missiles that the lower-tier systems must engage and provides us with a shoot-look-shoot capability--the ability to engage incoming missiles more efficiently.THAAD is the most mature upper-tier system. We were funding this program at about $900 million per year going into this review. We have made a significant adjustment to this program, keeping on track our capability for early contingency deployment of the system, but making out-year adjustments to focus on the nearer term threat, reduce technical risk and lower the rate of investment.
We conducted believe it was important to keep in place the UOES concept and schedule. This provides us with the capability for a limited contingency deployment of the THAAD system in fiscal year 1998 to counter a near-term threat. This would include about 40 missiles and two radars, which would be used for user testing, but which could be maintained in the theater if required.
We made a conscious decision to keep the UOES portion of the program on track, but we restructured the rest of the program for the objective THAAD system, taking about $2 billion out of what was a $4.7 billion program through the FYDP. This restructured THAAD program is still funded at a level above the "critical mass" required to maintain a productive contractor team.
The system to be initially developed and deployed will be with the "UOES+", a better version of the UOES system, in lieu of the previously planned full capability objective system for the THAAD program. We applied our cost-as-an-independent variable (CAIV) approach to look at the enhancements for the objective system, what they cost and what they bought us. We concluded that the UOES+ will meet the most important THAAD requirements at a substantially reduced cost.
The UOES+ program will militarize the UOES design and upgrade certain components, such as the infrared seeker, the radar, and the BM/C3. This program delays the production ramp-up and first unit equipage by a little over two years. We will begin LRIP in fiscal year 2002.
The Navy Theater Wide system is projected to add the same generic kind of terminal coverage capability as the THAAD system, again providing longer range coverage and protecting a wider area. This system also offers ascent-phase intercept capability in cases where the Aegis ship can be positioned near the launch point, and between the launch point and the target area.
The Navy Theater Wide system is less mature than the THAAD system. Prior to the review, we were proposing funding this program in our fiscal year 1996 and 1997 budgets at a low level ($30 million per year) to mature the key enabling technologies. The fiscal year 1996 appropriation added $170 million to our request of $30 million.
We considered a number of approaches to the Navy Theater Wide system, ranging from the program proposed in fiscal year 1996 President's Budget, to a full commitment to a major new start with $200 million applied in fiscal year 1996. The recommended program begins technology demonstration and concept definition starting in fiscal year 1996.
This recommendation was based on the lower priority of the upper-tier, lack of maturity of the technology, and the need to further develop the system concept to enhance robustness. There is also the opportunity to apply technology being developed for national missile defense to the NTW system. Likely areas of technology synergy include advanced sensors and seeker, propulsion, stabilization, and the underlying phenomenology.
We plan to apply the $170 million added in the fiscal year 1996 appropriation over a two-year period, as well as adding about $570 million through the FYDP.
We considered several approaches for fielding a Boost-Phase Intercept (BPI) capability against theater ballistic missiles. Obviously, it is desirable, if possible, to intercept an enemy missile while it is still boosting. The fiscal year 1997 budget request funds two primary BPI approaches. The Air Force has funded an Airborne Laser demonstration at about $775 million over the FYDP and expects to conduct several key engineering tests in fiscal year 1998. In parallel, the Ballistic Missile Defense Organization (BMDO) will fund concept definition studies to refine the concept for an Unmanned Aerial Vehicle (UAV) with a kinetic energy interceptor at a rate of $10 million per year in fiscal years 1997 and 1998. This level of investment is sufficient to refine the concept and support a back-up path should problems develop with the airborne laser demonstration. A decision on the best approach to fielding a BPI capability will be made in fiscal year 1998.
Interoperability in BM/C3 is essential for successful TMD operations. A capable, joint, interoperable BM/C3 underlies the three pillars of TMD, improving the effectiveness of active defense, passive defense, and attack operations.
We are actively pursuing three avenues to ensure effective BM/C3. These are: improving early warning and dissemination, ensuring communications interoperability, and upgrading command and control centers for TMD functions. From the joint perspective, the BMDO oversees the various independent weapon system developments and provides guidance, standards, equipment and system integration and analysis to integrate the multitude of sensors, interceptors, and tactical command centers into a joint, theater-wide TMD architecture. The BMDO also conducts tests and demonstrations with the Commanders- in-Chiefs (CINCs) to verify this architecture meets the requirements and supports the warfighters'needs.
These BM/C3 initiatives provide several benefits to active defense. Effective BM/C3 conserves the number of interceptors required by improving weapon system fire distribution and coordination and through sensor fusion. It provides multiple information paths between sensors, shooters, and control locations to combat sensor outages and jamming. BM/C3 weapon cueing information also increases battlespace and depth of fire, improves defense against long-range threats, and increases the defended area. For attack operations, BM/C3 helps locate the threat and improve probability to shooting the shooter first. BM/C3 also supports passive defense measures by providing greater early warning and faster reaction times.
This integrated BM/C3 architecture also sets a foundation for other BM/C3 intensive initiatives, such as cruise missile defense. Finally, the improvements to the architecture, procedures, and interoperability pay direct dividends in all warfighting areas.
The Department plans to spend about $200 million per year on enhancements to the battle management/command, control and communications (BM/C3) capabilities of our theater missile defense forces. This amount includes "embedded funding" in the Patriot and Aegis programs. It also covers the amount required for the Department's TMD C3 core programs, such as the ADA Brigade Upgrades; JTIDS procurement and TBM platform integration; datalink standards; Combat Information Center (CIC) upgrades; and TIBS/TDDS integration.
The Department's second overall missile defense priority is National Missile Defense. Our intended program is to position the United States to respond to a strategic missile threat as it emerges. Because there is no threat that warrants it, we have made a decision not to commit to deploy a NMD system today. But we are shifting our national missile defense emphasis from a technology readiness program to a deployment readiness program.
Secretary Perry in his testimony last year described a "three plus three" program under consideration by the Department at that time. By moving from a technology to a deployment readiness posture, we have made the decision to proceed with the first three years of the "three plus three" program that Secretary Perry described. Under this approach, we plan to develop and begin testing elements of an initial NMD system and preserve thereafter a capability to deploy within three years. If after three years we encounter a threat situation that warrants a deployment, then an initial operational capability (IOC) for a NMD system could be achieved in another three years, by 2003.
To implement this approach, the Department plans to spend the additional $375 million added by the Congress in the fiscal year 1996 appropriation over two years to initiate the NMD deployment readiness program. As a result, we will be spending more on NMD early in the 1996-2001 FYDP and less later. We have increased our budget in NMD by about $100 million per year in both 1997 and 1998. We plan to reduce our funding for NMD by a commensurate amount in the out years of the FYDP--so the net change for NMD funding over the 1997-2001 FYDP ends up being about zero. Once the NMD technology base is built up over the next three years, the NMD deployment readiness posture can be sustained at a reduced funding level.
This approach enhances the technological foundation of our NMD program in two ways: (1) the performance of the National Missile Defense we would deploy will be considerably improved over time; and (2) the timeliness of response to field an operational capability to counter an emerging threat will be shortened from six years to three years. If the decision is made to deploy an NMD system in the near term, then the system we could field in 2003 would provide a very limited capability. If we can avoid deploying a system in the near term, we will continue to enhance the technology base and the commensurate capability of the NMD system that could be fielded on a later deployment schedule.
The issue here is to be in a posture to be three years away from deployment, so that we can respond to the emergence of a threat. It does not make sense to make a deployment decision in advance of the threat, because we would be making investments prematurely, resulting in a system that would be less capable when it is really needed. In the absence of a threat, it is more sensible to continue to enhance the capability of the system that could be deployed when it is needed. This approach fields the most cost effective capability that is available at the time the threat emerges.
The development program that will be executed over the next three years will be a Treaty compliant program. The system components that are ultimately fielded, should a deployment decision be made after three years, might comply with the current treaty, or might require modification of the Treaty, depending on what the threat situation required. At this point, it is important to underscore that there is no commitment today to deploy an NMD capability. The funds to deploy an NMD system are not in the Department's 1997-2001 FYDP.
The Department plans to test a Ground-Based Interceptor (GBI) Exoatmospheric Kill Vehicle (EKV) in fiscal year 1998 and conduct the first integrated system flight test of a ground-based interceptor, prototype ground-based radar (GBR), upgraded early warning radars, and improved BM/C3 in fiscal year 1999. In addition, the Air Force is funding and developing the Space and Missile Tracking System (SMTS) as part of the Space-based Infrared System (SBIRS) program. A low earth orbit SMTS would provide 360-degree over the horizon sensing throughout the trajectory of an enemy missile.
Many TMD sensors, BM/C3, and weapons also have an effective capability to counter the growing land-attack cruise missile threat. In particular, the lower-tier PAC-3, Navy Area Defense, and MEADS systems operate in the same battlespace and will have capability against the cruise missile threat. In addition, the NMD BM/C3 architecture will be designed to promote interoperability and evolution to a common BM/C3 system for ballistic and cruise missile defense.
The Department also has a number of initiatives outside the BMD program to improve the ability of U.S. forces to detect and defeat cruise missiles "in theater" or launched against the United States. These initiatives include advanced technology sensors to detect low observable cruise missiles; upgrades to existing airborne platforms to improve beyond the horizon detection capability against cruise missiles; an Advanced Concept Technology Demonstration (ACTD) of a new aerostat sensor platform; and upgrades to existing missile interceptor systems.
The last element of the Department's Ballistic Missile Defense program is the technology base. This program underpins both the TMD and the NMD programs by continuing to advance our capability to counter future and possibly more difficult threats. The BMD technology base allows us to provide block upgrades to our baseline systems, to perform technology demonstrations for reducing risk and providing a path to speed technology insertion, and to advance some of our basic underlying technologies to provide a hedge against future threats-- including research into advanced concepts, such as directed energy systems capable of global coverage.
In summary, the Department is committed to protecting the United States, including U.S. forces deployed abroad, and our allies against ballistic missile, cruise missile, and weapons of mass destruction threats. We have a comprehensive national security strategy for countering such threats, including preventing and reducing the threat; deterring the threat; and defending against it. Active defense against ballistic missile attack is an important component of that strategy.
Our BMD priorities remain as they were in the past and are reflected in the new budget that includes $2.8 billion in fiscal year 1997. Across fiscal years 1997 through 2001, the Department has budgeted $13.5 billion for Ballistic Missile Defense. This represents about a $3 billion reduction from the baseline established by the President's fiscal year 1996 budget request, in order to support even higher- priority needs in other parts of the Defense budget. Our first priority, Theater Missile Defense, deals with the threat that exists today. The second priority is National Missile Defense. And the third is to support the underlying technology base.
I believe the changes adopted by the Department during the BMD review respond to the threats, to the priorities expressed by the Joint Staff, and also to fact-of life changes in the program status. The TMD program fully supports deployment of early operational capabilities for the high-priority lower-tier systems, and provides the ability to deploy upper-tier systems in response to the threat and the availability of funding for those systems.
Our NMD program shifts from a technology readiness posture to a deployment readiness posture. The initial development portion of the program will comply with the Anti-Ballistic Missile Treaty and enable the United States to develop within three years, elements of an initial NMD system that could be deployed within three years of a deployment decision. This approach would preserve thereafter a capability to deploy within three years, while allowing the United States to continue the advancement of technology, add new elements to the system, and reduce deployment time lines.
The NMD system would have the purpose of defending against rogue and accidental/unauthorized threats. It would not be capable of defending against a heavy deliberate attack. Decisions about the treaty compliance of potential NMD systems would be made by the Department of Defense (on advice of the Compliance Review Group). The current program is proceeding, however, in the expectation that a deployment of 100 GBI and one GBR at Grand Forks, North Dakota, would be treaty compliant.
The last element of the Ballistic Missile Defense program is the technology base program. The Department will continue to advance the critical technologies to deal with future threats as they develop.
Mr. Chairman, I thank you for this opportunity to appear before the Committee and shall be happy to answer any questions you may have.