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White House & Congressional Maneuvering on Defense Funding:

McAleese & Associates, P.C.

21515 Ridgetop Circle

Suite 100

Sterling, Virginia 20166

Tel: (703) 421-0104/Fax: (703) 421-0108

[email protected]

“Beginning of the End-Game”

By: Jim McAleese, Esq.

mailto:[email protected]

Table of Contents

• Concerns of OSD Leadership. (Entitlements prevent historic “growth-to-surplus”) (Page 4)

• DoD is currently ≈ $150B above inflation-adjusted Defense Funding “Peaks”; and ≈ $300B above post-conflict Defense Funding “Troughs”. (Page 5)

• OMB Cut of -$78B from new 2012-2016 FYDP was driven by Deficit-reduction, but effectively-defers planned DoD growth by one-year across-the-Board. (Page 6)

• This results in one-year delay in planned Procurement growth as well. (Page 7)

• This will pressurize O&M, as OCO Funding continues to fall-away. (Page 8)

• Top-Line DoD Procurement is still planned to grow, while RDT&E marginally-decreases. (Page 9)

• Army Procurement drops due to decreasing OCO, then fluctuates between $22B-$25B/yr. (Page 10)

• 2012 Army Aircraft grew. Trucks, Combat Vehicles, and RDT&E fell. (Page 11)

• Navy Procurement dips slightly, but begins to steadily increase in 2013. (Page 12)

• 2012 Navy Aircraft and RDT&E grew slightly from 2011 Request, but fell from 2010 funding. Ships grew from 2010, while USMC is on steady decline. (Page 13)

• USAF Procurement dips in 2012, before beginning a steady increase in 2013. (Page 14)

• Big “Winners” were RDT&E and Classified “Other Procurement”, with cut to Aircraft Procurement. (Page 15)

• Navy, USAF and “DoD-Wide” O&M Accounts spike in 2011-2012. Army O&M remains high, but has begun a rapid decline due to OIF withdrawal. (Page 16)

• Areas of expected Growth. (Pages 17-18)2

• Areas of expected Stagnation/Contraction. (Pages 19-20)

• President’s -$4T Deficit-reduction Plan, includes -$400B cut to planned 2013-2023 “Security-Agency”/DoD Funding. (Page 21)

• Secretary Gates’ initial impromptu reaction to -$400B outyear Defense Funding Cuts. (Page 22)

• Secretary Gates’ formal structure for expedited “Roles & Missions” Review. (Pages 23-24)

• Secretary Gates is clearly forcing White House & Congress to address structural & entitlement costs, as integrated part of President’s Defense Funding reductions. (Pages 25-27)

• Secretary Gates is clearly advocating for continued DoD Resourcing, despite White House’s 2013-2023 Defense Funding cuts. (Page 28)

• At least 77% of $400B new “Security Agency” Funding cuts will come from DoD, given sheer size of DoD, and political-sensitivity of potential cuts to DoE/DHS/VA/State. (Page 29)

• President’s proposed -$400B reduction in 2013-2023 “Security” Funding, would equate to average DoD reduction of ≈$31B/year. (≈5% annually). (0)

• DepSecDef Lynn’s impact to Defense Industry from “Roles & Missions” Review. (Pages 31-32)

• HAC Chairman only provided $530B 2012 Base to HAC-D Subcommittee, not the $539B requested by President. This is preemptive Congressional reduction of -$9B (-2%) from requested 2012 Base, but it is still +$17B (+3%) over 2011 enacted funding. (Also expect OMB to reset 2013-2017 DoD funding downward as result). (Page 33)

• Last week’s HAC-D Subcommittee “mark-up” actually cut -$12.4B from 2012 RDT&E/Procurement; could be as high as -$13.7B. (Page 34)

• HAC-D’s proposed 2012 Army RDT&E, Procurement, O&M. (Pages 35-36)

• HAC-D’s proposed 2012 Navy RDT&E, Procurement, O&M. (Pages 37-38)

• HAC-D’s proposed 2012 USAF RDT&E, Procurement, O&M. (Pages 39-40) 3

Concerns of OSD Leadership:

Current Federal Deficit is Unsustainable, and long-term OMB Projections show that

US cannot grow to Surplus because of Entitlement growth.

Source: DoD Comptroller 2012 DoD Budget Briefing; Feb. 14, 2011.

4

History shows that we are currently ≈$150B above Defense Funding

“Peaks”; and ≈$300B above post-conflict Defense Funding “Troughs”.

(Total Defense BA in constant 2011 Dollars)

0

100

200

300

400

500

600

700

800

FY 50 FY 52 FY 54 FY 56 FY 58 FY 60 FY 62 FY 64 FY 66 FY 68 FY 70 FY 72 FY 74 FY 76 FY 78 FY 80 FY 82 FY 84 FY 86 FY 88 FY 90 FY 92 FY 94 FY 96 FY 98 FY 00 FY 02 FY 04 FY 06 FY 08 FY 10

Bil

lio

ns

Korea

Vietnam

Reagan

Buildup

Iraq/

Afghanistan

Source: DoD: National Defense Budget Estimates for FY2011 (Green Book) 5

$549B

$566B

$582B

$598B

$616B

$553B

$571B

$586B

$598B

$611B

$659B

$691B

$708B

$670B

$532B 2011 Actual

510

530

550

570

590

610

630

650

670

690

710

2009 2010 2011 2012 2013 2014 2015 2016

Original 2011-2015 Base/FYDP

New 2012-2016 Base/FYDP

Total Funding (Base + OCO)

Total Base/OCO Defense Funding contraction has already begun.

OMB Cut of -$78B from new 2012-2016 FYDP is driven by Deficit-reduction, but effectively-defers

planned DoD growth by one-year across-the-Board.

Before President’s recent -$400B cut to Security/DoD funding 2013-2023

White House has effectively flat-lined overall 2012 DoD Budget relative to 2011 Request, by pushing planned

2012 Base growth out into 2013, while dramatically-cutting 2012 OCO to $117B, (OCO cut of -$42B or -26%).

$528B Base, plus $130B OCO, plus $33B 2010 Supplemental[+$32B/+5%]

$513B Base, plus $146B OCO

$549B Base Request, plus $159B OCO[+$17B/+3%]

$553B Base Request, plus $117B OCO [-$38B/-5%]

[Actual]

$513B

$528B

[Actual]

[+$21B/+4%]

[Original Request]

[+$17B/+3%]

[+$16B/+3%]

[+$16B/+3%]

[+$18B/+3%]

[Cut of -$13B from 2011 Plan][+$26B/+5% over 2010][equates to $13B/year, or +2.5%/year, from 2010 to 2012]

[Cut of -$11B from 2011 Plan][+$18B/+3%]

[Cut of -$12B from 2011 Plan][+$15B/+2.6%]

[Cut of -$18B from 2011 Plan][+$12B/+2%]

[+$13B/+2%]

6

OMB delay of planned 2012 Top-line DoD growth until 2013, will effectively

result in one-year delay in planned Procurement growth as well.

$165B

$135B

$130B$127B

$97B

$103B

$113B

$120B$124B

$132B

$137B

$104B $102B [2011 Actual]

$113B

$120B

$124B

$132B

$80B $80B

$75B $76B$73B

$70B $69B

$60

$80

$100

$120

$140

$160

2008 2009 2010 2011 2012 2013 2014 2015

Procurement (Base + OCO) 2011-2015 FYDP Base Procurement

2012-2016 FYDP Base Procurement 2012-2016 FYDP RDT&E

$80B

Bil

lions

of

Doll

ars

Source: 2008-2010 Defense Appropriations Bills for 2008-2010 Actuals. 2011 DoD “Greenbook” for 2011-2015 FYDP. OMB for 2012-2016 FYDP.

7

$272B

$200B [2011 Actual]

$212B

$221B

$231B

$240B

$204B

$216B

$222B

$230B

$234B

180

190

200

210

220

230

240

250

260

270

280

FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

Old Base O&M 2011-2015 Plan

New Base O&M 2012-2016 FYDP

Sources: 2011 “DoD Green Book” for O&M 2011-2015 FYDP; 2012 “DoD O&M Handbook” for 2012 O&M Request. OMB for planned 2013-2016 O&M FYDP.

$ i

n B

illi

ons

OMB’s -$78B Deficit-reduction heavily-impacts O&M, which will pressurize O&M as OCO

Funding continues to fall-away.

Includes 2010

Base/OCO/Supp.

8

0

20

40

60

80

100

120

140

160

FY2010 Base/OCO "HR-1473" final 2011

Base/OCO

FY2012 Base FY2013 Base FY2014 Base FY2015 Base FY2016 Base

Procurement RDT&E

RDT&E: $75.4B Base

Bill

ion

s o

f $

Fiscal Year

Source: 2012 DoD Green Book

Procurement: $117.6B Base

Top-Line DoD Procurement is still planned to grow through 2016, while RDT&E decreases.(Before President’s April 13th $4T Deficit-reduction Plan)

2010 and 2011 amounts contain both Base and OCO Funding, but 2012–2016 is Base ONLY.

$137.2B Base

$69.3B Base

9

0

5

10

15

20

25

30

35

40

45

FY2010 Base/OCO "HR-1473" final 2011

Base/OCO


Procurement RDT&E

RDT&E: $9.7B Base

Bill

ion

s o

f $

Fiscal Year



Army Procurement drops due to decreasing OCO, then fluctuates between $22B-$25B/yr.(Before President’s April 13th $4T Deficit-reduction Plan)

2010 and 2011 amounts contain both Base and OCO Funding, but 2012 – 2016 is Base ONLY.

$27.4B Base

$7.5B Base

10

0

5

10

15

20

25

FY2009 FY2010 "HR-1473" Final 2011 Base/OCO

FY2012 FY2013 FY2014 FY2015 FY2016

OPA

RDT&E

Aircraft

W&TCV

JIEDDO

Missile

Ammo

2012 Army Aircraft grew. Trucks, Combat Vehicles, and RDT&E fell.(Before President’s April 13th $4T Deficit-reduction Plan)

OPA: $11.1B Total ($9.7B Base/$1.4B OCO)

RDT&E: $9.7B Total ($9.7B Base/$8.5M OCO)

Aircraft: $7.5B Total ($7.1B Base/$423M OCO)

JIEDDO: $2.8B Total ($220M Base/$2.6B OCO)Ammo: $2.2B Total ($2.0B Base/$208M OCO)

W&TCV: $2.0B Total ($1.9B Base/$37M OCO)

Missile: $1.6B Total ($1.5B Base/$127M OCO)

Bill

ion

s o

f $

Fiscal Year

WTV: $2.4BComm. & Elec.: $6.2BOther Support Equip: $2.5B

Aircraft: $5.4BMod. of Aircraft: $1.5BSupport Equip. & Facil.: $582M

Network Attack: $1.4BJIEDDO Device Defeat: $961MForce Training: $248MStaff/Infrastructure: $221M

Other Missiles: $1.5BMod. of Missiles: $115M

Ammo: $1.8BAmmo Prod. Base Support: $408M

Tracked Combat Veh.: $1.5BWeapons/Other Combat Veh.: $351M

$216B 2012 Total Army Budget Request: [RDT&E/Procurement shown below]

Source: OMB: 2012-2016 Program-of-Record/FYDP.

11

0

10

20

30

40

50

60

FY2010 Base/OCO "HR-1473" final

2011 Base/OCO


Procurement RDT&E

RDT&E: $17.9B Base

Bill

ion

s o

f $

Fiscal Year



Navy Top-Line Procurement slightly dips, but begins to steadily increase in 2013.(Before President’s April 13th $4T Deficit-reduction Plan)


$56.2B Base

$14.9B Base

12

0

5

10

15

20

25

FY2009 FY2010 "HR-1473" Final 2011 Base/OCO

FY2012 FY2013 FY2014 FY2015 FY2016

APN

SCN

RDT&E

OPN

Weapons

USMC

Ammo

2012 Navy Aircraft and RDT&E grew slightly from 2011 Request, but fell from 2010 funding. Ships grew

from 2010, while USMC is on steady decline.

(Before President’s April 13th $4T Deficit-reduction Plan)

Bill

ion

s o

f $

Fiscal Year

APN: $19.3B Total ($18.6B Base/$731M OCO)

RDT&E: $18B Total ($18B Base/$54M OCO)

SCN: $14.9B Total ($14.9B Base/$0 OCO)

OPN: $6.6B Total ($6.3B Base/$282M OCO)

Weapons: $3.5B Total ($3.4B Base/ $41M OCO)USMC: $2.7B Total ($1.4B Base/$1.3B OCO)

Ammo: $1,037M Total ($720M Base/$317M OCO)

Combat Aircraft: $14.6BTrainer Aircraft: $267MOther Aircraft: $314MMods: $2.3BAircraft Spares: $1.4BSupport Equip./Facil.: $452M

Ships Support Equip.: $2.4BComm. & Elec. Equip.: $2.1BAviation Support Equip.: $443MOrdnance Support Equip.: $692M

Other Warships: $10.2BAmphibious Ships: $4.1BAux., Craft, and PY Prog. Costs: $699M*+MLP in “NDSF”: $426M+

Ballistic Missiles: $1.3BOther Missiles: $1.7BTorp. & Related Equip.: $214MOther Weapons: $183M

Weapons and Combat Veh.: $350MGuided Missiles/Equip.: $145MComm. & Elec.: $1.0BSupport Vehicles: $608MEng. & Other Equip.: $535M

Old Plan before F-35 Restructuring

$176B 2012 Total Navy Budget Request: [RDT&E/Procurement shown below]

Source: OMB: 2012-2016 Program-of-Record/FYDP

13

0

5

10

15

20

25

30

35

40

45

50

FY2010 Base/OCO "HR-1473" final

2011 Base/OCO


Procurement RDT&E

RDT&E: $27.9B Base

Bill

ion

s o

f $

Fiscal Year



USAF Top-Line Procurement dips in 2012, before beginning a steady increase in 2013. (Before President’s April 13th $4T Deficit-reduction Plan)


$47.3B Base

$26.5B Base

14

0

5

10

15

20

25

30

FY2009 FY2010 "HR-1473" final 2011 Base/OCO

FY2012 FY2013 FY2014 FY2015 FY2016

RDT&E

OPAF

Aircraft

Missile

Ammo

Big “Winners” were RDT&E and Classified “Other Procurement”, with cut to Aircraft Procurement.(Before President’s April 13th $4T Deficit-reduction Plan)

Bill

ion

s o

f $

Fiscal Year

RDT&E: $27.9B Total ($27.8B Base/$142M OCO)

OPAF: $20.8B Total ($17.6B Base/$3.2B OCO)

Aircraft: $14.6B Total ($14.1B Base/$528M OCO)

Missile: $6.1B Total ($6.1B Base/$28M OCO)

Ammo: $632M Total ($539M Base/$93M OCO/15%)

Combat Aircraft: $3.8BAirlift Aircraft: $1.5BOther Aircraft: $2.2BMod. of Inservice Aircraft: $4.4BAircraft Spares/Repair Parts: $1.0BAircraft Support Equip./Facil.: $1.7B

Ballistic Missiles: $68MOther Missiles: $718MMod. Of Inservice Missiles: $167MOther Support/Space: $5.1B

Vehicular Equip.: $207MElec. & Telecommunications Equip.: $2.0BOther Base Maint./Support Equip.: $18.6B[Classified]

Old Plan before F-35 Restructuring

$166B 2012 Total USAF Budget Request: [RDT&E/Procurement shown below]

Source: OMB: 2012-2016 Program-of-Record/FYDP

15

0

10

20

30

40

50

60

70

80

90

100

FY2009 FY2010 "HR-1473" final 2011

Base/OCO

FY2012 FY2013 FY2014 FY2015 FY2016

Army (Active Only)

USAF (Active Only)

Navy (Active Only. Does Not Include USMC)

"DoD-Wide"

Afghan Security Forces Fund (Funded within overall Army O&M Account)

Iraq Security Forces Fund (Funded within overall Army O&M Account)

Navy, USAF and “DoD-Wide” O&M Accounts spike in 2011-2012. Army O&M remains high, but has

begun a rapid decline due to OIF withdrawal. (Before President’s April 13th $4T Deficit-reduction Plan)

Source: OMB. 2009-2010 are actual funding, including Base/OCO/Supp. 2011 final funding is from “HR-1473” 2011 Def. Approps. Act. 2012 includes

both Base and OCO. 2013-2016 FYDP outyears only include Base, but not eventual OCO.

Army: $79B Total ($34.7B Base/$44.3B OCO) [-$10B (-13%) from 2011]

Operating Forces: $59.2B Total ($21.3B Base/$37.9B OCO)

Training & Recruiting: $4.9B Total ($4.9B Base/$0 OCO)

Admin & Srvwide: $14.4B Total ($8B Base/ $6.4B OCO)

USAF: $46.9B Total ($36.2B Base/$10.7B OCO)


Mobilization: $8.4B Total ($4.6B Base/$3.8B OCO)

Training & Recruiting: $3.8B Total ($3.8B Base/$34M OCO)

Admin & Srvwide: $8.2B Total $7.3B Base/ $950M OCO)

Navy: $46.1B Total ($39.3B Base/$7B OCO)


Training & Recruiting: $1.9B Total ($1.8B Base/$75M OCO)

Admin & Srvwide: $4.9B Total ($4.6B Base/ $348M OCO)

DoD-Wide: $40.2B Total ($30.9B Base/$9.3B OCO)


Admin & Srvwide: $32.2B Total ($26.2B Base/ $6B OCO)

[Primarily: $17.1B Classified; $7.3B SOCOM; $3B DoD Educ. Activity; $2.9B DSCA]

Afghan Sec. Forces: $12.8B Total ($0 Base/$12.8B OCO)

Ministry of Defense: $7.1B Total ($0 Base/$7.1B OCO)

Ministry of Interior: $5.7B Total ($0 Base/$5.7B OCO)

Iraq Sec. Forces: $0

$ i

n B

illi

on

s

16

Areas of continued GrowthO&M RDT&E/Procurement

• Flight Operations [large pool, but under pressure],

• Ship Operations (flat),

• Ship Depot Maintenance (flat),

• Weapons Maintenance/Weapons

Systems Support,

• IT/Enterprise Information, [likely to be under future pressure], and

• Servicewide Communications.

Navy

• Theater Level Assets,

• Land Forces Operations Support,

• Aviation Operations,

• Training/Force Readiness,

• Systems Readiness,

• Depot Maintenance, and

• Military Intelligence Programs/Support Programs [descending 2013-2014].

Navy

Army Army

• Navy Shipbuilding,

• Navy Aircraft,

• Navy Ship Support Equipment,

• Navy SpaWar Communications & Electronics, and

• Navy UAS [and possibly USV/UUV].

• Army Helicopters, and

• Army Communications & Electronics.

17

O&M RDT&E/Procurement

USAF USAF

• “Combat Enhancement Forces” *EW, Search & Rescue, Special Ops], and

• Tactical Intelligence [presumably UAS].

• USAF Combat Aircraft [F-35 CTOL driven],

• USAF Airlift Aircraft [Tanker driven],

• USAF ISR “Other Aircraft”,

• USAF Aircraft Modification Programs,

• USAF RDT&E [cultural priority],

• USAF “Other Procurement”/Classified $19B [Military Intelligence Programs, and presumably NRO],

• USAF “Classified” RDT&E ≈$12B, and

• Automated “Processing, Exploitation, Dissemination” (PED) for UAS. [Primarily USAF, and secondarily Navy].

Areas of continued Growth

18

Areas of expected Stagnation/Contraction

O&M RDT&E/Procurement

• Air Operations/Flight Operations (-$450M),

• Aircraft Depot Maintenance (-$250M),

• Combat Support Forces (-$812M) (Fleet Cyber Command; Integrated Logistic Support; Maintaining Systems),

• Infrastructure Sustainment (-$893M),

• Air & Ship Maintenance (-$202M),

• Aircraft Spares (-$282M).

Navy

• “Additional Activities” (Operations, Weapons Sustainment, LOGCAP for both OEF and “Operation New Dawn” (OIF). Sharp draw-down in OND/OIF funding. Some of $25B 2012 reduction was retained, but transferred to separate Theater Level Assets; Land Forces Operations Support; and Aviation Assets Accounts),

• “Reset” (-$4B from 2011. Modest portion of cut was transferred to increase Land Forces Depot Maintenance), and

• IMCOM Infrastructure.

Navy

Army Army• RDT&E Technology

Development,

• RDT&E Management Support,

• FCS/ABCTM,

• MEADS,

• SLAMRAAM,

• Select areas of Aircraft Procurement (e.g., LUH; Aircraft Modifications),

• Tracked Combat Vehicles,

• Weapons Procurement,

• Wheeled Tactical Vehicles (e.g., FMTV; FHTV; SemiTrailers & Line Haul Tractors; MMPV; ASV),

• CREW Jammers,

• SINCGARS,

• BETSS-C (in favor of PTDS/PGSS),

• JTRS GMR (relative to HMS), (Just cut from 86K to 10K)

• Thermal Weapons Sights.

• EFV,


• F-35 STOVL,

• Aircraft Modifications overall,

• DDG-51 Mods, (Offset by DDG-51 SCN fresh-production),

• Ship Commo Automation (Presumable contributor to CANES production ramp-up),

• Enterprise IT,

• Eventual JLTV Procurement (-$1.6B).

19

Areas of expected Stagnation/ContractionO&M RDT&E/Procurement

USAF• Facilities Sustainment Restoration

Modernization (FSRM) [-$309M],

• Air Operations Base Support [-$1.7B],

• Air Operations Training [-$160M],

• Fighter/Bomber Flying Hours [-$268M],

• Space Control Systems [-$195M],

• Airlift Operations [-$858M],

• Mobilization Preparedness [-$163M],

• Logistics Operations [-$135M],

• Technical Support Activities [-$164M],

• Servicewide Communications [-$178M],

• ALC Weapon System Sustainment [-$603M],

• “Knowledge-based Contracts” [-$252M].

USAF

• Test & Evaluation RDT&E Support,

• Logistics IT,


• F-35 CTOL,

• C-130J (11, down from 17 in 2011 Request),

• Global Hawk/RQ-4 (Procurement quantities reduced, but RDT&E increased),

• MC-12 Project Liberty.

• Studies (-$324M in 2011, and -$1.2B over 2012-2016),

• COCOM Joint Intelligence Operations Centers (Reduce 185 MIP billets & 125 Contractors in 2012-2014. Eliminate another 315 MIP billets & 500 Contractor support after 2014),

• Joint Staff and USD(Intel) targeting of ad hoc Intelligence entities during OEF draw-down. (2,767 Military billets; 310 Civilian FTE; and 2,002 Contractors).

“DoD-wide”/Defense Agencies “DoD-wide”/Defense Agencies

• DARPA (-5% cut to Topline because of historic annual under-obligation, -$153M),

• MDA (eliminates 1,000 Contractor Support FTE, -$225M).

20

President’s $4T Deficit-reduction Plan, which includes -$400B cut to planned 2013-2023 “Security-Agency”/DoD Funding. (April 13, 2011)

• “Even after our economy recovers, our government will still be on track to spend more money than it takes in throughout this decade and beyond … That means more of your tax dollars each year will go towards paying off the interest on all the loans that we keep taking out. By the end of this decade, the interest that we owe on our debt could rise to nearly $1 trillion.”

• “Then, as the Baby Boomers start to retire in greater numbers and health care costs continue to rise, the situation will get even worse. By 2025, the amount of taxes we currently pay will only be enough to finance our health care programs – Medicare and Medicaid -- Social Security, and the interest we owe on our debt.”

• “So today, I’m proposing a more balanced approach to achieve $4 trillion in deficit reduction over 12 years.”

• “The first step in our approach is to keep annual domestic spending low by building on the savings that both parties agreed to last week. That step alone will save us about $750 billion over 12 years.”

• “The second step in our approach is to find additional savings in our defense budget. Now, as Commander-in-Chief, I have no greater responsibility than protecting our national security,… But as the Chairman of the Joint Chiefs, Admiral Mullen, has said, the greatest long-term threat to America’s national security is America’s debt.”

• “We need to not only eliminate waste and improve efficiency and effectiveness, but we’re going to have to conduct a fundamental review of America’s missions, capabilities, and our role in a changing world … I will make specific decisions about spending after it’s complete.”

• The third step in our approach is to further reduce health care spending in our budget.”

• “I will not allow Medicare to become a voucher program that leaves seniors at the mercy of the insurance industry, with a shrinking benefit to pay for rising costs. I will not tell families with children who have disabilities that they have to fend for themselves.”

• “The fourth step in our approach is to reduce spending in the tax code, so-called tax expenditures. … *W+e cannot afford $1 trillion worth of tax cuts for every millionaire and billionaire in our society. We can’t afford it. And I refuse to renew them again.”

• “So this is my approach to reduce the deficit by $4 trillion over the next 12 years. It’s an approach that achieves about $2 trillion in spending cuts across the budget. It will lower our interest payments on the debt by $1 trillion. It calls for tax reform to cut about $1 trillion in tax expenditures.”

21

Secretary Gates’ initial impromptu reaction to -$400B outyear Defense Funding Cuts.(Q&A Comments of Secretary Gates at Camp Lejeune, NC, May 12, 2011)

• “Across-the-board cuts, as far I'm concerned, represent managerial cowardice. And what I intend to do is try and shape this going forward, before I get out of here, so that people understand the hard choices that need to be made.”

• “And we're looking at four areas of how we approach these cuts over the next 10 to 12 years, or four bins. The first is to continue the efficiencies effort that we began last summer. That has realized about $178 billion worth of savings if we can execute it. We contributed 78 (billion dollars) of that to reducing the deficit; 100 Billion (dollars) of it we allowed the services to plow back into investments in higher-priority needs.”

• “But I believe there is still infrastructure and overhead that we can cut, headquarters that can be consolidated and so on, to realize some savings. So I think we'll have to continue that effort.”

• “The second bin is marginal capabilities and marginal missions, those that we can look at through a more skeptical eye and say, okay, we probably can stop doing that, or where we have duplication of capabilities and say, okay, we don't need that kind ofduplication.”

• “The third bin is the hardest, and that is, forcing decision-makers to look at our strategy and our capabilities and where are they prepared to take risk in meeting future challenges.”

• “And I'll give you an example. And if you look at the Quadrennial Defense Review, there are a bunch of scenarios of all the different things we should be prepared to take on in the years to come. So one of those scenarios that's been characteristic fora number of years now is our ability to fight two major regional conflicts at the same time -- so let's say, just hypothetically, Iran and North Korea.”

• “The problem is, there is a risk, and the risk is that we're wrong. And the enemy always has a vote. So if we got into it with one or the other, and the other saw an opportunity because we were engaged and started something, then what are the implications? So I want to try and force decision-makers to face the risks associated with changes in force structure and force capabilities.”

• “And then the fourth bin is what I call the third-rail issues: military compensation, military health care, military retirement, base closures. Those are all tough.”

22

Secretary Gates’ formal structure for expedited “Roles & Missions” Review. (Comments of Secretary Gates and Chairman Mullen at Pentagon, May 18, 2011)

• “The QDR provides today's basis for sizing the force, focusing its missions and shaping its capabilities. But there is not a strong analytical link between the QDR and the present makeup of our forces. This review will establish that linkage, so that we can see the impact of changing QDR strategy on force structure, missions and capabilities. And only once competing strategy options are identified should the review begin to consider fiscal implications and options.”

• “To do this, the review should develop specific program options that can be categorized in four bins.”

• “The first bin is additional efficiencies, continuing the efforts we launched last year. These changes would reduce DoD costs with minimal impact on military capability. We must be even more aggressive in curtailing bureaucratic excess and overhead before considering fundamental changes in national strategy or force capabilities.”

• “*A+ second bin will involve a serious examination of established policies, programs, processes and mandates that drive the dramatic increase in defense operating costs, to include the way we deliver health care, compensate military personnel, provide retirement benefits, sustain our infrastructure and acquire goods and services.”

• “The third bin will contain options to reduce or eliminate marginal missions and marginal capabilities, specialized and costly programs that are useful in only a limited range of circumstances or contingencies. They represent missions that the department carries out today that, while of value, are not central to our core mission or are of lower priority.”

• “The final bin and the hardest category strategically -- and I would say also intellectually -- will be specific alternative modifications to the QDR strategy that translate into options for reductions in force structure or capability needed to execute the strategy.”

• “In the end, this process must be about identifying options for the President and the Congress, where the nation is willing to accept risk in exchange for reduced investment in the Department of Defense. The defense comprehensive review will be jointly led by the director of Cost Assessment and Program Evaluation, the Under Secretary of Defense for Policy, and the Chairman of the Joint Chiefs of Staff.”

23

Q&A:• Q: “Let me ask about the budget rollout that you announced here. Can you give the public a sense of what one or two

missions will definitely be reviewed? You know, COIN [Counterinsurgency], NEO [Noncombatant Evacuation Operations] operations -- what will be reviewed? ...”

SEC. GATES: “Well, let me give you an example of the hardest bin, the third bin, in terms of the strategic alternatives. … *I+t has been our strategy for many years now to be able to fight two major regional conflicts simultaneously. If you were to tell yourself the likelihood of having two such fights simultaneously is low and you could therefore plan to fight sequentially, that would have huge implications in terms of the size of force that you need to maintain. But the other side of that is the risk involved if you're wrong. And the other guys always have a vote. So that's the kind of strategy and risk that we want to surface for the President and for the Congress.”

• Q: “One of the big programs is the F-35. It overlays many of these scenarios, many of the rules and missions of the military. To what extent will the Pentagon's largest program and its 2,400 airplanes about $11 billion a year investment over the next decade -- to what extent will that quantity be reviewed to see whether the program should be scaled back accordingly?”

SEC. GATES: “Well, first of all, the country needs the F-35. We need a fifth-generation fighter, in addition to the F-22. And so we must have that. Obviously, if you're going to change strategies or missions, that has implications for the amount of equipment that you buy. And I would expect that to apply across the board, not just to the F-35.”

“But I would just make the point -- and here's where the rubber meets the road on this -- we must buy a new tanker. We must buy a fifth-generation fighter. We must replace the ballistic missile submarines toward the end of this decade. There are a number of things -- the Army must reset after Afghanistan, and Marine Corps as well, -but to a lesser extent.”

• Q: “And Mr. Secretary, going back to the budget, last time you raised the nuclear triad modernization. Would you look at eliminating one leg of the triad as a big cost savings, or is that kind of thing off the table?”

SEC. GATES: “If the political leadership of this country decides that it must reduce the investment in defense by hundreds of billions of dollars, then I don't think we can afford to have anything that's off the table.” 24

Secretary Gates is clearly forcing White House & Congress to address structural & entitlement costs, as integrated part of President’s Defense Funding reductions.

(Remarks at American Enterprise Institute, May 24, 2011)

• “It is no secret that the United States faces a serious fiscal predicament that could turn into a crisis – of credit, of confidence, of our position in the world… As part of that deficit reduction effort, [President Obama] set a goal of holding the growth in base national security spending slightly below inflation for the next 12 years, which would save about $400 billion,…”

• “*T+he defense budget, however large it may be, is not the cause of this country’s fiscal woes. However, as matter of simple arithmetic and political reality, the Department of Defense must be at least part of the solution.”

• “Absent a catastrophic international conflict or new existential threat, we are not likely to return to Cold War levels of defense expenditures, at least as a share of national wealth, anytime soon. Nor do I believe we need to.”

• “Our primary adversary then was a comparably armed super power, bristling with millions of troops, tens of thousands of tanks, and thousands of advanced combat aircraft – not to mention a vast arsenal of nuclear weapons… The threats and potential adversaries America faces today and down the road are dangerous and daunting – for their complexity, variety and unpredictability. But as a matter of national survival, they do not approach the scale of the Soviet military threat…”

• “*W+e’re not going to see a return to Cold War-level defense budgets, at least as a share of GDP, because America is different: Our economy, our demographics, and our fiscal predicament – whether measured in the size of debt and deficits, ratios of retirees to workers, or the share of the federal budget consumed by entitlements. The money and political support simply aren’t there.”

• “All told, over the past two years, more than 30 programs were cancelled or ended that, if pursued to completion, would have cost more than $300 billion. At the same time, we have made new investments in higher priorities related to the current wars and, in some cases, re-started efforts that filled a genuine military need for the future – such as a follow-on bomber for the Air Force, the Army’s Ground Combat Vehicle, and a new Marine amphibious tractor.”

• “The current inventory is getting old and worn down from Iraq and Afghanistan. Some equipment can be re-furbished with life-extension programs, but there is no getting around the fact that others must be replaced. Most of these Reagan-era platforms are still best in class relative to the rest of the world, so with the important exception of air superiority fighters and other high-end systems, pursuing costly, leap-ahead improvements in technology and capability is not necessarily required.” 25

• “*W+hen it comes to our military modernization accounts, the proverbial ‘low hanging fruit’… have not only been plucked, they have been stomped on and crushed. What remains are much-needed capabilities – relating to air superiority and mobility, long-range strike, nuclear deterrence, maritime access, space and cyber warfare, intelligence, surveillance and reconnaissance – that our nation’s civilian and military leadership deem are absolutely critical.”

• “We must build a new tanker. The ones we have are twice as old as some of the pilots who fly them”;

• “We must field a next generation strike fighter – the F-35 – and at a cost that permits large enough numbers to replace the current fighter inventory and maintain a healthy margin of superiority over the Russians and Chinese”;

• “We must build more ships – in recent years, the size of the Navy fleet has sunk to the lowest number since before World War II, and will get smaller as more Reagan-era vessels reach the end of their service life”;

• “At some point we must replace our ballistic missile submarines – a program that illustrates the modernization dilemmas we face.”

• “*U+nless our country’s political leadership envisions a dramatically diminished global security role for the United States, it is vitally important to protect the military modernization accounts – in absolute terms, and as a share of the defense budget.”

• “But sustaining this ‘tooth’ part of the budget…is increasingly difficult given the massive growth of other components of the defense budget, the ‘tail’ if you will – operations, maintenance, pay and benefits, and other forms of overhead.”

• “*S+tarting last spring, we began to take a hard look at the department’s overhead costs, in particular the massive administrative and support bureaucracies… The purpose was to carve out more budget ‘headroom’ that could be allocated to force structure and modernization…”

• “The military services, in my view, successfully leaned forward and found nearly $100 billion in efficiency savings – by closing facilities, combining headquarters, reducing energy costs, and much more…”

• “Then there was the effort to pare down the overhead costs of DoD components outside the four military services – in particular, the Office of Secretary of Defense, the Joint Staff, the defense agencies and field activities,… *K+nown internally as the ‘4th Estate’, the efficiencies experience was something akin to an Easter egg hunt. My staff and I learned that it was nearly impossible to get accurate information and answers to questions, such as ‘how much money did you spend’ and ‘how many people do you have?’”

26

• “Overall, the ‘4th Estate’ savings were disappointing – less than a billion dollars in annual projected savings, from a group of organizations that consume at least $64 billion per year… There are still too many headquarters,…employing too many high ranking personnel and contractors consuming too many resources relative to real military missions and measurable results.”

• “What’s being proposed by the President is nothing close to the dramatic cuts of the past. For example, defense spending in constant dollars declined by roughly a third between 1985 and 1998. What’s being considered today, assuming all $400 billion comes from DoD over 12 years, corresponds to a projected reduction of about 5 percent in constant dollars – or slightly less than keeping pace with inflation.”

• “*I+ launched a comprehensive review last week to ensure that future spending decisions are focused on priorities, strategy and risks, and are not simply a math and accounting exercise. … Taking on some of these issues could entail:

• Re-examining military compensation levels in light of the fact that – apart from the U.S. Army during the worst years of Iraq – all the services have consistently exceeded their recruiting and retention goals;

• It could mean taking a look at the rigid, one-size-fits-all approach to retirement, pay and pensions... A more tiered and targeted system…could bring down costs, while attracting and retaining the high quality personnel we need; and

• It will require doing something about spiraling health care costs – and in particular the health insurance benefit for working age retirees whose fees are one-tenth those of federal civil servants, and have not been raised since 1995.”

• “Above all, if we are to avoid a hollowing effect, this process will need to address force structure… The overarching goal will be to preserve a U.S. military capable of meeting crucial national security priorities even if fiscal pressure requires reductions in that force’s size. I’ve said repeatedly that I’d rather have a smaller, but superbly capable military, than a larger, hollow, less capable one.”

• “However, we need to be honest with the President, with the Congress, with the American People,…a smaller military, no matter how superb, will be able to go fewer places and be able to do fewer things.”

• “For example, the assumption behind most of our military planning ever since the end of the Cold War has been that the U.S. must be able to fight two major regional wars at the same time. One might conclude the odds of that contingency are sufficiently low, or that any eruption of conflicts would happen one after the other, not simultaneously. … But the enemy always has a vote.”

• “*T+he tough choices ahead are really about the kind of role the American people – accustomed to unquestioned military dominance for the past two decades – want their country to play in the world.”

27

Secretary Gates is clearly advocating for continued DoD Resourcing, despite White House’s 2013-2023 Defense Funding cuts.

(Comments by Secretary Gates at “Reagan Centennial Dinner”, May 24th, same day as “Roles & Missions” Press Conference.)

• “As most of you here remember, when Ronald Reagan took office, there was little to joke about, or smile about for that matter. In the previous decade we’d seen:

• A collapse in Vietnam, and the deaths of millions across Southeast Asia; • Stagflation; • Two energy crises; • The Soviet invasion of Afghanistan; • Revolution in Iran, an embassy taken hostage, a failed rescue mission; • Tens of thousands of Cuban soldiers in Angola and Ethiopia; • Nicaragua was fast moving into Cuba's orbit and there were Cuban supported insurgencies in El Salvador and elsewhere…; • And by late 1980, a Soviet invasion of Poland was a real possibility.”

• “When Reagan became President, the Soviet Union seemed ascendant and we were reeling.”

• “*H+e understood that erasing the impression of U.S. political and military weakness would ultimately reap major diplomatic rewards and strategic breakthroughs. As president, his first priority was to restore America’s military strength, given that nearly 15 years of Soviet modernization, and cuts in our own defense spending had narrowed, and in some areas erased, America's strategic edge over the USSR.”

• “Reagan never hesitated to use our military power when necessary.”

• “President Reagan always had the courage and strength of conviction to call the Soviets out militarily and morally. But he also had the insight, the sense of the historical moment, to know when it was time to sheathe the sword, soften the tone, and re-engage, even with our most implacable and dangerous enemy.”

• “Reagan’s statecraft was a subtle two-step: diplomatic, economic, and military pressure, combined with a willingness to parlay with his Soviet counterpart.”

• “Another lesson is the importance of sustaining American military power. As President Reagan once observed, ‘of the four wars in my lifetime, none came about because the United States was too strong.’”

• “Our current weariness with conflict – after a decade of war – is understandable and even to be expected. Yet, it is a sad reality that in our time and in the future, as throughout recorded history, there will be those who seek to dominate and intimidate others through violence. We saw this on 9/11. We see it today in Afghanistan, where more perseverance, more sacrifice, and more patience will be required to prevent the terrorists who attacked us from doing so again…”

• “But we must not let weariness cause us to withdraw from the world, or diminish our ability to deal with the threats and challenges of tomorrow.” 28

$682.8

$714.0 $719.4 $741.3

$761.4 $778.2

$795.6 $811.3

$827.6 $844.3

$861.1 $878.6

$701.3 $721.4

$738.2 $755.6

$771.3 $787.6

$804.3 $821.1

$838.6

$530.1 $549.1 $553.0

$570.7 $586.4 $598.2

$610.6 $621.6 $632.8 $644.1 $655.7 $667.5

$152.6 $164.9 $166.4 $170.6 $174.2 $180.1 $185.0 $189.9 $194.8 $200.2 $205.4 $211.1

$-

$100.0

$200.0

$300.0

$400.0

$500.0

$600.0

$700.0

$800.0

$900.0

$1,000.0

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

In B

illio

ns

YearPlanned 2012-2021 "Security Agency" Base Funding, from 2012 Budget Request.

$400B White House-announced "Security Agency" Cuts, from April 13, 2011.

Planned 2012-2021 DoD Base Funding, from 2012 Budget Request.

All Other planned 2012-2021 "Security Agency" Funding, (DOE/NNSA; DHS; VA; State), from 2012 Budget Request.

At least 77% of $400B new “Security Agency” Funding cuts will come from DoD, given sheer size of DoD, and political-sensitivity of potential cuts to DoE/DHS/VA/State.

29

$530.1 $531.0

$553.0 $570.7

$586.4 $598.2

$610.6 $621.6

$632.8 $644.1

$655.7 $667.5

$539.9 $555.6

$567.4 $579.8

$590.8 $602.0

$613.3 $624.9

$636.7

$300.0

$400.0

$500.0

$600.0

$700.0

$800.0

$900.0

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Planned 2012-2021 DoD Base Funding, from 2012 Budget Request.

$400B White House-announced DoD cuts, from April 13, 2011. (Arbitrary straight-line allocation).

Assume DoD will receive minimum cuts of ≈$31B/year, from overall $400B 2013-2023 “Security Agency” Funding cuts, because DoD comprises ≈77% of 2012 Base “Security Agency” Funding.

Arbitrary allocation of ≈$31B reduction in planned outyear DoD Base funding would equate to ≈5% of annual Base Funding. McAleese has arbitrarilyshown -$30.8B annual cut to DoD Base for 2013-2023.

OMB will presumably execute proposed -$400B funding reduction through three mechanisms:

1) Defer majority of +$18B (+3.2%) planned growth in 2013 Base, and push into 2014,

2) Reduce annual Base funding growth to ≈1-2% per year, so that real-growthbecomes negative under ≈2.5% annual inflation,

3) Begin to actually contract DoD Base funding downward in≈2015-2017, once Afghanistan deployment is effectively-complete in 2014.

Cut from 2012 Plan [-$30.8B/-6%]

Cut from 2012 Plan [-$30.8B/-6%]

Cut from 2012 Plan [-$30.8/-5%]

Cut from 2012 Plan [-$30.8B/-5%]

Cut from 2012 Plan [-$30.8B/-5%]

Cut from 2012 Plan [-$30.8B/-5%]

Cut from 2012 Plan [-$30.8B/-5%]

Cut from 2012 Plan [-$30.8B/-5%]

Cut from 2012 Plan[-$30.8B/-5%]

2012 Request2011 Actual

(HR-1473)2010 Actual

President’s proposed -$400B reduction in 2013-2023 “Security” Funding, would equate to average DoD reduction of ≈$31B/year. (≈5% annually)

In B

illio

ns

of

Do

llars

30

DepSecDef Lynn’s impact to Defense Industry from “Roles & Missions” Review.(Royal Bank of Canada Speech, NYC, May 11, 2011)

• “I would draw four broad lessons from prior drawdowns.”

• “The first is to make hard decisions early. Things are not going to get better. In a drawdown, there will be less money than we anticipate in the future, not more. … The bottom line is that if we cannot afford it now, we will certainly not be able to afford it in the future.”

• “The second lesson from prior drawdowns is that it is impossible to generate the needed savings through pure efficiencies alone. … The ‘nice to haves’ must go. We must pare back to our essential missions.”

• “The third lesson is that reductions must be done in a balanced way. Reductions focused on a single area, like operational accounts, hollow out the force by depriving it of needed training and maintenance. … Similarly, reductions that single out investment accounts, which are easy to target, effectively force a procurement holiday, causing a modernization bulge to develop. … To avoid this from coming to pass, we need to balance reductions across force structure, operating, and investment accounts.”

• “The final lesson from prior drawdowns is not to cut too much, too fast, especially from core mission areas. Rebuilding capabilities five, ten, or fifteen years later comes with a cost multiplier.”

• “Already, three themes are emerging about how to maintain a vibrant industrial base.”

• “The first is the importance of preserving competition.”

• “The value we derive from competition means there will be no second last supper. We are not looking for further consolidation in the top tier of the defense industrial base. Fewer major defense suppliers would not strengthen industry, nor would it benefit the government.”

31

• “This does not mean that we oppose all or even most future industry consolidations. … We should not reflexively oppose this market reaction. But we will be scrutinizing any proposal that comes forward to ensure the government’s interests are protected. … We are seeking to promote strong, well financed businesses that avoid the dangers of over-leveraging and poor balance sheets.”

• “The defense market is different in three further ways: its complexity creates higher barriers to entry; the government pays for the majority of firms’ research and development costs; and the Department provides its suppliers with greater insight into future needs and requirements.”

• “We are in this for the long-haul, and need industrial partners and financial backers who think and act likewise. In this respect, our viewpoint is similar to long-term investors, not short-term speculators. Think Warren Buffet, not Gordon Gekko.”

• “The second theme emerging from our study of the industrial base is the contribution international sales make in stabilizing our defense industry when U.S. defense spending slows.”

• “The third theme emerging from our study of the industrial base is the importance of targeted research and development spending even as budgets decline. … Examples of key technologies we must work with industry to continue incubating today include long range strike systems, unmanned aerial vehicles (UAVs), and cyber defensecapabilities.”

• “As part of his deficit reduction plan, President Obama called for $400 billion in reductions to the defense budget over the next 12 years. The President also called for a fundamental evaluation of American’s missions, capabilities, and role in a changing world.”

• “What missions are we doing today that we will not do tomorrow? What are the implications for our force structure and overseas deployments? What capabilities will be essential to meeting future national security threats? How will we balance the threat from near-peer competitors against that posed by low-end actors?”

• “In the end, this process must identify options for the President, the Department, and the Congress about where the nation is willing to accept risk in exchange for reduced investment in Department of Defense operations.”

• “The best outcome would be for contractors to earn fair profits for superior performance, the Department to get quality products for an affordable price, and the taxpayer to underwrite our security at an acceptable cost.”

32

* The bills will also include OCO funding of: $119B for DoD; $258M for Homeland Security; and $7.6B for State, Foreign Operations.

Subcommittee FY2011 Enacted

2012 Pres. Budget

Request

HAC Draft 2012

Allocation

HAC Allocation vs.

FY2011

HAC Allocation vs.

Presidents Budget

Agriculture, FDA $19B $22B $17B -$3B (-13%) -$5B(-22%)

Commerce, Justice, Science $53B $58B $50B -$3B (-6%) -$7B(-13%)

Defense* $513B $539B $530B +$17B(+3%) -$9B(-2%)

Energy and Water $32B $37B $31B -$1B(-3%) -$6B(-16%)

Financial Services $22B $26B $20B -$2B(-9%) -$6B(-23%)

Homeland Security* $42B $44B $41B -$1B(-3%) -$3B(-7%)

Interior, Environment $30B $31B $27B -$2B(-7%) -$4B(-12%)

Labor, HHS, Education $157B $181B $139B -$18B(-11%) -$42B(-23%)

Legislative Branch $5B $5B $4B -$227M(-5%) -$541M(-11%)

Military Construction, VA $73B $74B $73B -$615K(-1%) -$1B(-2%)

State, Foreign Operations* $48B $51B $40B -$9B(-18%) -$11B(-22%)

Transportation, Housing $55B $75B $48B -$8B(-14%) -$27B(-36%)

Total $1.05T $1.14T $1.019T -$30B(-3%) -$121B(-11%)

HAC Chairman only provides $530B 2012 Base to HAC-D Subcommittee, not the $539B

requested by President. This is preemptive Congressional reduction of -$9B (-2%) from

requested 2012 Base, but it is still +$17B (+3%) over 2011 enacted funding.

• DoD’s $553B 2012 Base would be funded $539B under HAC-D, plus $14B under HAC Milcon/VA Subcommittee.

• HAC-D’s +$17B (+3%) 2012 Base funding allocation, is the only increase among the 12 HAC Subcommittees.

• Most other Federal Agencies receive downward funding cuts of -6% to -14% from actual 2011 enacted Appropriations,

(Range of -13% to -36% reduction from 2012 Request).

33

Proposed DoD FY12 Request HAC-D Recommendation Difference ($) Difference (%)

Base $539.4B $530.5B -$8.9B -2%

OCO $117.8B $118.7B +$842M +1%

Total $657.3B $649.2B -$8.1B -1%

Last Week’s HAC-D Subcommittee “mark-up” cut -$12.4B from

RDT&E/Procurement; and could be as high as $13.7B

[-$12B 2012 Base RDT&E; -$6.8B 2012 Base Procurement; -$1.6B 2012 OCO Procurement -$1.7B prior-year Rescissions ; and

-$1.3B “Revised Economic Assumptions”.]

•Proposed 2012 DoD Appropriations

•Proposed 2012 RDT&E HAC-D cuts -$2.3B (-3%) from $75.7B Request.

Proposed RDT&E FY12 Request HAC-D Recommendation Difference ($) Difference (%)

Base $75.3B $73B -$2.3B -3%

OCO $396.7M $436.7M +$40M +10%

Total $75.7B $73.4B -$2.3B -3%

•Proposed 2012 Procurement HAC-D cuts -$7B(-6%) from $129.4B Request.

Proposed Procurement FY12 Request HAC-D Recommendation Difference ($) Difference (%)

Base $114.4B $107.6B -$6.8B -6%

OCO $15B $13.4B -$1.6B -11%

Total $129.4B $121B -$8.4B -6%

•Proposed 2012 O&M (Does not include Defense Health Program, funded in “DoD-Wide” O&M.)HAC-D fully funds $259.8B Request.

Proposed O&M FY12 Request HAC-D Recommendation Difference ($) Difference (%)

Base $170.8B $170B -$800M -.5%

OCO $89B $89.8B +$800M +1%

Total $259.8B $259.8B $0 0%

34

HAC-D’s proposed 2012 Army RDT&E, Procurement, O&M

Army RDT&E FY12 Request HAC-D Recommendation Difference ($) Difference (%)

Base $9.7B $9.4B -$300M -3%

OCO $8.5M $8.5M $0 0%

Total $9.7B $9.4B -$300M -3%

•Proposed 2012 Army RDT&E

•Proposed 2012 Army Procurement

Army Aircraft Procurement

Army Aircraft Proc. FY12 Request HAC-D Recommendation Difference ($) Difference (%)

Base $7.1B $6.5B -$600M -8%

OCO $423.4M $387.9M -$35.5M -8%

Total Aircraft Proc. $7.5B $6.9B -$635M -8%

Army Missile Procurement

Army Missile Proc. FY12 Request HAC-D Recommendation Difference ($) Difference (%)

Base $1.5B $1.5B $0 0%

OCO $126.5M $118.4M -$8.1M -6%

Total Missile Proc. $1.6B $1.6B -$8.1M -1%

Army W&TCV Procurement

Army W&TCV Proc. FY12 Request HAC-D Recommendation Difference ($) Difference (%)

Base $1.9B $2.2B +$300M +16%

OCO $37.1M $37.1M $0 0%

Total W&TCV Proc. $1.9B $2.2B +$300M +16%

35

Army Ammo Procurement

Army Ammo Proc. FY12 Request HAC-D Recommendation Difference ($) Difference (%)

Base $2B $1.9B -$100M -5%

OCO $208M $208.4M +$400K +.2%

Total Ammo Proc. $2.2B $2.1B -$100M -4%

Army Other Procurement

OPA FY12 Request HAC-D Recommendation Difference ($) Difference (%)

Base $9.7B $9.4B -$300M -3%

OCO $1.4B $1.4B $0 0%

Total OPA $11.1B $10.8B -$300M -3%

•Proposed 2012 Active Army O&M (Does not include Reserves or National Guard)

Army O&M FY12 Request HAC-D Recommendation Difference ($) Difference (%)

Base $34.7B $34.6B -$100M -.3%

OCO $44.3B $39.2B -$5.1B -12%

Total $79B $73.8B -$5.2B -6%

36

HAC-D’s proposed 2012 Navy RDT&E, Procurement, O&M

•Proposed 2012 Navy RDT&E

•Proposed 2012 Navy Procurement

Navy Aircraft Procurement

Navy Weapons Procurement

Navy Ammo Procurement

Navy RDT&E FY12 Request HAC-D Recommendation Difference ($) Difference (%)

Base $17.9B $17.8B -$100M -1%

OCO $53.9M $53.9M $0 $0

Total $17.9B $17.8B -$100M -1%

Navy Aircraft Proc. FY12 Request HAC-D Recommendation Difference ($) Difference (%)

Base $18.6B $17.8B -$800M -4%

OCO $731M $492.1M -$238.9M -33%

Total Aircraft Proc. $19.3B $18.3B -$1B -5%

Navy Weapons Proc. FY12 Request HAC-D Recommendation Difference ($) Difference (%)

Base $3.4B $3B -$400M -12%

OCO $41.1M $41.1M $0 0%

Total Weapons Proc. $3.4B $3B -$400M -12%

Navy Ammo Proc. FY12 Request HAC-D Recommendation Difference ($) Difference (%)

Base $719.9M $633M -$86.9M -12%

OCO $317.1M $317.1M $0 0%

Total Weapons Proc. $1B $950.1M -$86.9M -9%

37

Navy Shipbuilding & Conversion (SCN)

Navy Other Procurement

SCN FY12 Request HAC-D Recommendation Difference ($) Difference (%)

Base $14.9B $14.7B -$200M -1%

OCO $0 $0 $0 0%

Total (SCN) $14.9B $14.7B -$200M -1%

OPN FY12 Request HAC-D Recommendation Difference ($) Difference (%)

Base $6.3B $6B -$300M -5%

OCO $282M $249.5M -$32.5M -11%

Total (OPN) $6.6B $6.2B -$332.5M -5%

USMC Procurement

USMC Procurement FY12 Request HAC-D Recommendation Difference ($) Difference (%)

Base $1.4B $1.4B $0 0%

OCO $1.3B $1.2B -$100M -8%

Total (USMC) $2.7B $2.6B -$100M -4%

•Proposed 2012 Active Navy O&M (Does not include Reserves or USMC)

Navy O&M FY12 Request HAC-D Recommendation Difference ($) Difference (%)

Base $39.4B $39.4B $0 0%

OCO $7B $6.7B -$300M -4%

Total $46.4B $46.1B -$300M -1%

•Proposed 2012 Active USMC O&M (Does not include Reserves)

USMC O&M FY12 Request HAC-D Recommendation Difference ($) Difference (%)

Base $6B $6B $0 0%

OCO $3.6B $3.6B $0 0%

Total $9.6B $9.6B $0 0%

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HAC-D’s proposed 2012 USAF RDT&E, Procurement, O&M

•Proposed 2012 USAF RDT&E

•Proposed 2012 USAF ProcurementUSAF Aircraft Procurement

USAF Missile Procurement

USAF Ammo Procurement

USAF RDT&E FY12 Request HAC-D Recommendation Difference ($) Difference (%)

Base $27.7B $29.3B +$1.6B +6%

OCO $142M $182M +$40M +28%

Total $27.9B $29.5B +$1.6B +6%

USAF Aircraft Proc. FY12 Request HAC-D Recommendation Difference ($) Difference (%)

Base $14.1B $14B -$100M -1%

OCO $527.9M $440.3M -$87.6M -17%

Total Aircraft Proc. $14.6B $14.4B -$187.6M -1%

USAF Missile Proc. FY12 Request HAC-D Recommendation Difference ($) Difference (%)

Base $6.1B $5.7B -$400M -6%

OCO $28.4M $46.9M +$18.5M +65%

Total Missile Proc. $6.1B $5.7B -$381.5M -6%

USAF Ammo Proc. FY12 Request HAC-D Recommendation Difference ($) Difference (%)

Base $539.1M $523M -$16.1M -3%

OCO $92.5M $139.5M +$47M +51%

Total Missile Proc. $631.6M $662.5M +$30.9M +5%

39

USAF “Other Procurement”

USAF Other Proc. FY12 Request HAC-D Recommendation Difference ($) Difference (%)

Base $17.6B $17.3B -$300M -2%

OCO $3.2B $3.2B $0 0%

Total Other Proc. $20.8B $20.5B -$300M -1%

•Proposed 2012 Active USAF O&M (Does not include Reserves or National Guard)

USAF O&M FY12 Request HAC-D Recommendation Difference ($) Difference (%)

Base $36.2B $36.1B -$100M -.3%

OCO $10.7B $10.7B $0 0%

Total $46.9B $46.8B -$100M -.2%

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white house & congressional maneuvering on defense funding ... · white house &...

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