US Army PAE Budget Brief Feb 2013_


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US Army PAE Budget Brief Feb 2013_

  1. 1. UNCLASSIFIED Army Fiscal Update AUSA Winter Symposium 20 February 2013UNCLASSIFIED
  2. 2. Agenda• FY 13 Fiscal Situation• FY14 and beyond• Way Ahead and Summary• Questions/Answer 2
  3. 3. The Uncertain Fiscal and Strategic Environment Sequestration Secretary of the Army Priorities Drawing Down the Force During Debt• Ensure a highly capable Army within Conflict Ceiling budgetary constraints• Champion Soldiers, Civilians, and Families• Enhance Army activities in Asia- Continuing Pacific region Resolution• Ensure accountability• Transform the Institutional Army Decreasing Overseas• Codify Army Total Force policy Contingency• Adequately fund Reset and Operations (OCO) modernization Funding• Strengthen information assurance and cybersecurity Conditions• Develop effective energy solutions• Finalize Arlington National Cemetery on the reforms Ground Photo by: Sgt. Richard Rzepka 3
  4. 4. Effects of FY13 Fiscal Uncertainty on Army OMA Accounts Actions Impacts • Transportation costs for the return of equipment from Afghanistan •Significantly impacts equipment and subsequent readiness ~$5-7B •Forces additional tradeoffs between wartime priorities and FY14 • Increased demand for in-theater force protection Emerging and intelligence systems maintenance readiness OCO • Cost of feeding civilian and contractor workforce in Afghanistan unrelated to the troop strength ~$18B •Reduces readiness of >78% of non-deploying •Erodes training and impacts ability to respond to ~$5.3B brigade combat teams contingencies and CONPLANs •Defers post-combat equipment repair in Active and •Must furlough which negatively impacts each employee in Sequestration Reserve units 3-4 years following redeployment our valued workforce $65B •Potentially furloughs up to 251,000 Army civilians (PB13) •Cancels 4 of 6 brigade combat team training center rotations •Sustains readiness only for OEF, next •Reduces maintenance for non-deploying units deployers, Korea Rotational Force, and ~$6B •Reduces depot maintenance workload Division Ready Brigade CR •5,000 employees released; economic impact exceeds $2B •Impacts readiness and degrades training •Stops post war repair Shortfall •Reduces unit flying hours; of 1,300 vehicles; 14,000 radios; andcrew proficiency non-deployers will not maintain air 17,000 weapons into FY14 and beyond, causing readiness shortfalls $59B •Creates training backlog for aviation and intelligence occupational specialties (CR) Current Near-term Actions to Reduce Spending •Shock to valued Civilian • Releases 1,300 temporary and term employees; implements hiring freeze Project ~90% erosion & • Reduces base operations up to 30% workforce and local communities of Current & Future Future • Reduces facility sustainment from 90% to 37%; reduces restoration and •86% of civilian workforce works and lives outside of Readiness Readiness maintenance of facilities to 0% the Washington Metro area Funds in • Cancels 3rd/4th quarter Air and Ground Depot Maintenance 4th quarter ($34B) • Reduces travel, conferences, and studies Wartime • Direct War Effort ($21.4B) • Next to deploy unit readiness ($2.7B) Spending • Critical Family Programs ($1.3B) Will not compromise ($25B) • Critical Soldier Programs ($0.08B) OCT SEP Mortgages future readiness in FY13, and enters FY14 “hollow” in Readiness.FY: Fiscal YearCR: Continuing ResolutionPB13: President’s Budget FY2013 as of 8 Feb 2013
  5. 5. Setting the Stage Federal Spending FY62: National Defense FY17: National Defense ~49% of Federal Budget ~12% of Federal Budget (estimate in PB13 Request) Net Interest Defense Net Interest 6% Net Interest 7% Discretionary 11% 12% Defense Discretionary 17% Mandatory Non-Defense Defense Non-Defense Discretionary 26% Discretionary 12% Discretionary 49% Mandatory 14% 63% Mandatory Non-Defense 65% Discretionary 18% FY62 FY13 est FY13 Request FY17FY17 est Estimate • 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 Defense spending as a portion of the Federal Budget continues to declineSource: Fiscal Year 2013 Historical Tables, Budget of theU.S. Government 5
  6. 6. 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 DoD Military Manpower DoD Total Manpower DoD Total TOA (FY13 Constant $) FY01-17 Base (FY13 Constant $)$800 B 8.0 M Height of Height of 9/11 FY13 CR Korean War Armistice (1953) Vietnam War Cold War (2001)$700 B (1968) (1985) 7.0 M Gulf War OCO Vietnam War Ends (1991) ?$600 B Ends (1973) 6.0 M Base?$500 B 5.0 M Sequestration?$400 B 4.0 M$300 B 3.0 M$200 B 2.0 M$100 B 1.0 M $B .0 M 6
  7. 7. Service Outlays as a Percentage of Defense Spending 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) Korean War Vietnam War Gulf War 9/11 Armistice (1953) Ends (1973) Ends (1991) (2001) Today $750 $700 $650 $600 26% $550 $500 27% $450 31% 27% $400 $350 29% 37% 29% $300 $250 33% $200 31% 33% 30% 32% 26% $150 $100 31% 26% 25% 29% $50 34% 15% 18% 1% 4% 9% 14% $ FY 51 FY 54 FY 57 FY 60 FY 63 FY 66 FY 69 FY 72 FY 75 FY 78 FY 81 FY 84 FY 87 FY 90 FY 93 FY 96 FY 99 FY 02 FY 05 FY 08 FY 11 FY 14 FY 17 FY 48 DEFENSE-WIDE ARMY NAVY AIR FORCE* 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) 7
  8. 8. Army Funding FY48 to FY17 in Constant FY13 Dollars$300B ‘08 $275B OCO Funding ‘16 $129B Base Funding -53% TOA Today Korean War Vietnam War Gulf War 9/11$250B Armistice (1953) Ends (1973) Ends (1991) (2001) ‘52 $230B ‘60 $102B$200B -56% TOA ‘68 $181B ‘75 $99B ‘91 $160B -45% TOA ‘98 $95B -41% TOA$150B$100B $50B $0B FY50 FY54 FY60 FY64 FY68 FY74 FY78 FY82 FY88 FY92 FY96 FY02 FY06 FY10 FY16 FY48 FY52 FY56 FY58 FY62 FY66 FY70 FY72 FY76 FY80 FY84 FY86 FY90 FY94 FY98 FY00 FY04 FY08 FY12 FY14 These dollars include all enacted war and supplemental funding, as well as FY 2013 Source: OSD Comptroller Green book for FY13 requested OCO funding. 8
  9. 9. Sequestration - Potential Impact to Army Funding $170B $156.5 $151.6 $152.6 $151.3 $153.2 $155B $144.9 $140B Initial Reductions of the BCA (PB13) $134.7 $135.5 $138.0 $135.3 $134.6 $134.3 $125B FY21 $110B Sequestration $95B $80B $65B $50B FY12 FY13 FY14 FY15 FY16 FY17 PB13 PB12• President’s FY13 Budget (PB13) introduced the first half of reductions directed in theBudget Control Act (BCA) of 2011• Reductions in PB13 led to Army’s decision to reduce to 490K AC, 350K ARNG, and 205KUSAR 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 9
  10. 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. 10
  11. 11. Why FY2000 Levels of Funding are Not Sufficient Today’s Army is very different from the Army of 2000$70 B Manpower 2000 • Manning – 502K vs. 482K Accounts for 60.9% of - Base Pay has increased by over 50%** 2013 - Basic Allowance for Housing has increased by over 300%**$60 B Growth - Retired Pay Accrual increased by over 65%** • Organization - Modular Brigade Combat Teams vs. TOA Change: Division Based Force$50 B FY00: $98.8B • Training Focus – Decisive Action Operations vs. FY13: $134.6B Combat Operations Only$40 B Delta:+$35.8B • Equipment – Fully equipped with highly modernized organizations vs. Insufficient Investment Graph Values in constant FY13 dollars • Installations – Highly Modernized Facilities with$30 B Sustainment Investment vs. Underfunded Base Operations & Facility Sustainment$20 B • Total Force – Reliance on the RC vs. Minimal Reliance on the RC$10 B $B Equipping Equipping Installation Installation Manning Manning Organizing Organizing Sustaining Sustaining Training Training2000 $21.5 B $15.1 B $40.3 B $2.5 B $4.5 B $15.0 B2013 $27.0 B $18.6 B $62.1 B $3.4 B $6.1 B $16.8 BDelta $5.6 B $3.5 B $21.8 B $1.0 B $1.6 B $1.8 B ** Entitlement Comparisons between 2000 and 2012 in then year dollars (based on Specialist, E-4) 11
  12. 12. Army Resource Framework Box size shows relative President’s FY13 Budget size of the programManning Equipping Mission Aviation Command AC Manpower (Network) MM Basic & Soldier Applied Maneuver Fires EE Research (Combat Test CSS Vehicles) (Tactical Training & Advanced & Wheeled Ammo Evalua Vehicles) Manufacturi tion Recruiting & ng War & Mobility & CSSRC Full Time Support Retention Technology Counter- (Sustai Operat RC Manpower Health Care Air & Mobility nment) ional (FTS) Education and Directed Programs Missile Chemical Ammo Defense Demilitari Intellige Electronic Prote Human Development Warfare/Info rmation ction Combat Acquisition Operations Resource Programs Focused on Individuals Develop and Production zation nce Experim Management Training Support ment Support entation Con Support to AC Operations Non - G8 FD Commands Managed Items ting Man enci pow es er Sustainment, SustainingTraining Installations Restoration, Core Logistics OPTEMPO Ground DEPOT Installation Modernization SS Sustainment Contingencies (SRM) Maintenance Services II Sustainment Strategic Second Systems Tech Ammo Demilitarizat Wartime Destination Support (SSTS) TT ion Equipment Transportatio Ammunition Chemical Army n (SDT) Enterprise IT Family (APS) Readiness Demilitarizat ion Installation Transport Housing Support Programs Training Enablers Flying Hour Program Facility Construction Army Joint Operations and Activities Non-Discretionary ObligationsInstitutional Training Enterprise IT Training Installation Services Operations Services Construction Tails OO OrganizingEnterprise IT Enterprise IT Transport Support Family & Community Base Support to Services Support to Commands Cyber - Network Joint Operations and Cyber - Programs Operations Activities Realignment Contingen Non-Discretionary Network Commands Focused on Services and Closure cies Enterprise Operations Programs Focused Functions Operations Civilian Training IT (BRAC) Education and Development Sustainment, Restoration, Transport Obligations Non - G8 FD Managed Items Training Support Operations on Organizations Directed Programs Modernization 12 RC Manpower (SRM)
  13. 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 13