us army pae budget brief feb 2013_
DESCRIPTION
Winter AUSATRANSCRIPT
Army Fiscal Update
AUSA Winter Symposium
20 February 2013
UNCLASSIFIED
UNCLASSIFIED
2
Agenda
• FY 13 Fiscal Situation
• FY14 and beyond
• Way Ahead and Summary
• Questions/Answer
The Uncertain Fiscal and Strategic Environment
Conditions
on the
Ground Photo by:
Sgt. Richard Rzepka
Continuing
Resolution
Debt
Ceiling
Secretary of the Army Priorities
• Ensure a highly capable Army within
budgetary constraints
• Champion Soldiers, Civilians, and
Families
• Enhance Army activities in Asia-
Pacific region
• Ensure accountability
• Transform the Institutional Army
• Codify Army Total Force policy
• Adequately fund Reset and
modernization
• Strengthen information assurance
and cybersecurity
• Develop effective energy solutions
• Finalize Arlington National Cemetery
reforms
3
Decreasing Overseas
Contingency
Operations (OCO)
Funding
Sequestration
Drawing Down the
Force During
Conflict
Effects of FY13 Fiscal Uncertainty on Army OMA Accounts
Mortgages future readiness in FY13, and enters FY14 “hollow” in Readiness. OCT SEP
• Direct War Effort ($21.4B) • Next to deploy unit readiness ($2.7B) • Critical Family Programs ($1.3B) • Critical Soldier Programs ($0.08B)
Wartime Spending
($25B)
Current &
Future Readiness
($34B)
~$6B CR
Shortfall
~$5.3B Sequestration
~$5-7B Emerging
OCO
$59B (CR) Near-term Actions to Reduce Spending
• Releases 1,300 temporary and term employees; implements hiring freeze • Reduces base operations up to 30% • Reduces facility sustainment from 90% to 37%; reduces restoration and
maintenance of facilities to 0% • Cancels 3rd/4th quarter Air and Ground Depot Maintenance • Reduces travel, conferences, and studies
Actions Impacts
•Cancels 4 of 6 brigade combat team training center rotations •Reduces maintenance for non-deploying units •Reduces depot maintenance workload
•5,000 employees released; economic impact exceeds $2B •Stops post war repair of 1,300 vehicles; 14,000 radios; and 17,000 weapons
•Reduces unit flying hours; non-deployers will not maintain air crew proficiency •Creates training backlog for aviation and intelligence occupational specialties
•Reduces readiness of >78% of non-deploying brigade combat teams
•Defers post-combat equipment repair in Active and Reserve units 3-4 years following redeployment
•Potentially furloughs up to 251,000 Army civilians
•Transportation costs for the return of equipment from Afghanistan
• Increased demand for in-theater force protection and intelligence systems maintenance
•Cost of feeding civilian and contractor workforce in Afghanistan unrelated to the troop strength
•Significantly impacts equipment and subsequent readiness •Forces additional tradeoffs between wartime priorities and FY14 readiness
•Erodes training and impacts ability to respond to contingencies and CONPLANs
•Must furlough which negatively impacts each employee in our valued workforce
•Sustains readiness only for OEF, next deployers, Korea Rotational Force, and Division Ready Brigade
•Impacts readiness and degrades training into FY14 and beyond, causing readiness shortfalls
•Shock to valued Civilian workforce and local communities
•86% of civilian workforce works and lives outside of the Washington Metro area
Will not compromise
$65B (PB13)
Project ~90% erosion of Current &
Future Readiness Funds in
4th quarter
~$18B
FY: Fiscal Year CR: Continuing Resolution PB13: President’s Budget FY2013 as of 8 Feb 2013
5
Setting the Stage Federal Spending
Defense Discretionary
49%
Non-Defense Discretionary
18%
Mandatory
26%
Net Interest
7%
Source: Fiscal Year 2013 Historical Tables, Budget of the
U.S. Government
FY62: National Defense
~49% of Federal Budget
FY17: National Defense
~12% of Federal Budget (estimate in PB13 Request)
Defense Discretionary
17%
Non-Defense Discretionary
14%Mandatory63%
Net Interest6%
FY13 est
Defense Discretionary
12%
Non-Defense Discretionary
12%
Mandatory65%
Net Interest11%
FY17 estFY62 FY13 Request FY17 Estimate
Defense spending as a portion of the Federal Budget continues to decline
• The percentage of federal spending devoted to Discretionary Spending has shrunk considerably over the
years, and may likely continue to shrink
• On a percentage basis, Defense Discretionary spending has shrunk faster than Non-Defense Discretionary
spending
• Given these trends, the Army’s trade space will likely become even more limited; the trade space will be
reduced much further if our budget remains highly concentrated in manpower costs
6
.0 M
1.0 M
2.0 M
3.0 M
4.0 M
5.0 M
6.0 M
7.0 M
8.0 M
$ B
$100 B
$200 B
$300 B
$400 B
$500 B
$600 B
$700 B
$800 BDoD Military Manpower DoD Total Manpower DoD Total TOA (FY13 Constant $) FY01-17 Base (FY13 Constant $)
Korean War
Armistice (1953)
Vietnam War
Ends (1973)
Height of
Vietnam War
(1968)
Gulf War
Ends (1991)
Height of
Cold War
(1985)
9/11
(2001)
The Defense Budget Over Time
• Discretionary spending is ~30% total federal budget…Defense budget is ~50% discretionary spending (PB2013 Request)
• Increasing emphasis on reducing spending/deficit
• Historically, funding levels have decreased as military demand decreases
OCO
?
Base?
FY13 CR
Sequestration?
7
$
$50
$100
$150
$200
$250
$300
$350
$400
$450
$500
$550
$600
$650
$700
$750
FY 4
8
FY 5
1
FY 5
4
FY 5
7
FY 6
0
FY 6
3
FY 6
6
FY 6
9
FY 7
2
FY 7
5
FY 7
8
FY 8
1
FY 8
4
FY 8
7
FY 9
0
FY 9
3
FY 9
6
FY 9
9
FY 0
2
FY 0
5
FY 0
8
FY 1
1
FY 1
4
FY 1
7
DEFENSE-WIDE ARMY NAVY AIR FORCE
Today
Korean War
Armistice (1953)
33%
31%
34% 1%
37%
30%
29%
4%
31%
33%
26%
9%
29%
31%
25%
14%
26%
27%
32%
15%
27%
29%
26%
18%
Defense-Wide spending continues to consume greater portions of DoD’s funding and is projected to consume on average 18% of DoD’s budget into the future (up from 1% in the 1950s)
* Includes all enacted war and supplemental funding, as well as FY2013 requested OCO funding (in FY13 constant dollars)
Percentages reflect averages within the periods: (P-WWII: FY48-53, P-Korea: FY54-73, P-Vietnam: FY74-91, P-Gulf: FY92-01, P-9/11: FY01-12, Future: FY13-17)
Source : National Defense Budget Estimate for FY2013 , OUSD (Comptroller) , March 2012 (aka: OSD (C) Green Book)
Service Outlays as a Percentage of Defense Spending
Vietnam War
Ends (1973)
Gulf War
Ends (1991)
9/11
(2001)
8
$0B
$50B
$100B
$150B
$200B
$250B
$300B
FY
48
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
FY
12
FY
14
FY
16
OCO Funding
Base Funding
Army Funding FY48 to FY17 in Constant FY13 Dollars
Source: OSD Comptroller Green book for FY13 These dollars include all enacted war and supplemental funding, as well as FY 2013
requested OCO funding.
Today Korean War
Armistice (1953) Vietnam War
Ends (1973)
Gulf War
Ends (1991)
9/11
(2001)
‘52 $230B
‘60 $102B
-56% TOA ‘68 $181B
‘75 $99B
-45% TOA ‘91 $160B
‘98 $95B
-41% TOA
‘08 $275B
‘16 $129B
-53% TOA
9
$135.3 $134.6 $134.3 $134.7 $135.5 $138.0
$144.9$151.6 $152.6 $151.3 $153.2
$156.5
$50B
$65B
$80B
$95B
$110B
$125B
$140B
$155B
$170B
FY12 FY13 FY14 FY15 FY16 FY17
PB13 PB12
Sequestration - Potential Impact to Army Funding
Sequestration
• President’s FY13 Budget (PB13) introduced the first half of reductions directed in the
Budget Control Act (BCA) of 2011
• Reductions in PB13 led to Army’s decision to reduce to 490K AC, 350K ARNG, and 205K
USAR end strength
• Sequestration, if it occurs, would represent the second half of the BCA
• Reductions in FY13 are prescriptive-down to the plan, project, appropriation (PPA) level
• Reductions in FY14 and out are up to discretion of DoD
FY21
Initial Reductions of the BCA (PB13)
10
Why this Downturn is so Hard
• This downturn largely follows the ~20 year defense spending cycle, but
this one is different because…
– Reductions are taking place while we are still engaged in conflict (OEF)
– No foreseeable “peace dividend” on the horizon, world remains dangerous
– Scope – we are already a smaller force than we have been at the end of
previous conflicts
– Not preceded by major modernization across the Services
– Today’s budget realities – unprecedented multiple pressures
• History teaches us that it is practically impossible to prevent a hollowing
of the force during the beginning of funding downturns (historically 2-6
years)
In the past, post-conflict reductions to the Force and budgets
have occurred after contingency operations have ended.
11
$ B
$10 B
$20 B
$30 B
$40 B
$50 B
$60 B
$70 B
Equipping Installation Manning Organizing Sustaining Training
2000
2013
2000
2013
Delta
Why FY2000 Levels of Funding are Not Sufficient
TOA Change:
FY00: $98.8B
FY13: $134.6B
Delta:+$35.8B
Graph Values in constant FY13 dollars
Manpower
Accounts for
60.9% of
Growth
Equipping Installation Manning Organizing Sustaining Training
$21.5 B $15.1 B $40.3 B $2.5 B $4.5 B $15.0 B
$27.0 B $18.6 B $62.1 B $3.4 B $6.1 B $16.8 B
$5.6 B $3.5 B $21.8 B $1.0 B $1.6 B $1.8 B
Today’s Army is very different from the Army of 2000
• Manning – 502K vs. 482K
- Base Pay has increased by over 50%**
- Basic Allowance for Housing has increased by over 300%**
- Retired Pay Accrual increased by over 65%**
• Organization - Modular Brigade Combat Teams vs.
Division Based Force
• Training Focus – Decisive Action Operations vs.
Combat Operations Only
• Equipment – Fully equipped with highly modernized
organizations vs. Insufficient Investment
• Installations – Highly Modernized Facilities with
Sustainment Investment vs. Underfunded Base
Operations & Facility Sustainment
• Total Force – Reliance on the RC vs. Minimal Reliance
on the RC
** Entitlement Comparisons between 2000 and 2012 in then year dollars (based on Specialist, E-4)
12
Army Resource Framework President’s FY13 Budget
Box size shows relative
size of the program
EE
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Con
ting
enci
es
Non - G8 FD Managed
Items
Experim
entation
Prote
ction
Electronic Warfare/Info
rmation Operations Acquisition
and
Production
Support
Combat
Develop
ment
War &
Operat
ional
Ammo
CSS
(Sustai
nment)
Intellige
nce
Mobility &
Counter-
Mobility
Test
&
Evalua
tion
Training
Ammo
CSS
(Tactical
Wheeled
Vehicles)
Basic &
Applied
Research Soldier
Chemical
Demilitari
zation
Advanced &
Manufacturi
ng
Technology
Fires
Air &
Missile
Defense
Maneuver
(Combat
Vehicles)
Mission
Command
(Network) Aviation
II
RC Manpower
Training Support
Operations Non - G8 FD Managed Items
Cyber -
Network
Operations
Base
Realignment
and Closure
(BRAC)
Army
Construction
Tails
Non-Discretionary
Obligations
Enterprise IT
Services
Family
Housing Enterprise IT
Transport
Family & Community
Services
Army
Construction Facility
Operations
Sustainment,
Restoration,
Modernization
(SRM)
Installation
Services TT
Enterprise IT
Transport Sustainment, Restoration,
Modernization (SRM)
Civilian Training Education and Development
Joint Operations and Activities
Cyber - Network Operations
Installation
Services Training
Support
Operations
Flying Hour Program
Support to Commands
Training Enablers
Institutional Training
OPTEMPO Ground
Contingencies SS
Installation
Support Programs
Chemical
Demilitarizat
ion
Ammo
Demilitarizat
ion
Ammunition
Readiness
Sustainment
Systems Tech
Support (SSTS) Second
Destination
Transportatio
n (SDT)
Strategic
Wartime
Equipment
(APS)
Core Logistics
Sustainment
DEPOT
Maintenance
OO
Directed Programs
Contingen
cies
Programs
Focused on
Functions
Enterprise IT
Transport
Programs Focused
on Organizations
Enterprise IT
Services Support to
Commands
Non-Discretionary
Obligations
Joint Operations
and Activities
MM
Support to
Commands
Programs Focused on
Individuals
Directed
Programs
Training Support
Operations
Education and
Development Human
Resource
Management
Recruiting &
Retention
Health Care RC Manpower RC Full Time Support
(FTS)
AC Manpower
Manning Equipping
Installations Training Sustaining
Organizing
13
Guiding Principles / Way Ahead
• Army buying power is going down
– Sequestration will very quickly reduce Army buying power
– Even without sequestration, the Army’s buying power will continue to diminish
• Fundamental changes, largely in non-discretionary accounts, preclude
returning a similarly sized Army to pre-war levels of funding
• Army Senior Leaders are “all-in” and actively engaging DoD and other
National Leaders