PENTAGON BRIEFING ON BUDGET PART TWO - ARMY & NAVY
PENTAGON BRIEFING ON THE BUDGET PART TWO - Briefing by Maj. Gen. McGhee and Barbara Bonessa from the Pentagon on the ARMY Fiscal 2012 Budget Proposal. Briefing by Rear Adm. Mulloy from the Pentagon on the NAVY Fiscal 2012 Budget Proposal
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DOD News Briefing by Maj. Gen. McGhee and Barbara Bonessa from the Pentagon on the Fiscal 2012 Budget Proposal
STAFF: Ladies and gentlemen, Major General Phillip McGhee, director of the Army budget; Ms. Barbara Bonessa, deputy director of the Army budget.
Would you please hold your questions until after the presentation.
GEN. MCGHEE: Well, thank you.
Ladies and gentlemen, welcome to the Army's rollout presentation of our FY '12 budget. The agenda we're going to follow includes our budget priorities, an overview of our base and overseas contingency operations request, some detail of all of our appropriations. We are going to touch on Army efficiencies, and then have a few comments on the impact of a continuing resolution, and then take questions.
Now, before we go into the details of the budget itself, I'd like to begin with the Army's FY '12 budget priorities. And the priorities that you see in this chart are synched with and fully support the Army themes and our four imperatives of sustain, repair, reset and transform. The Army's leadership's highest priority is caring for our people -- that is, our soldiers, our families and our civilian workforce -- all with the goal of restoring balance across the Army; continuing to build resiliency to sustain our all-volunteer force. We're obviously continuing to focus on maintaining our combat edge by training and equipping soldiers and units for the current fight; but at the same time, reconstituting and modernizing the force for the next contingency.
And you're going to see throughout the budget request the resources to continue the transformation of the generating force, maintaining our facilities and our installations, and development of new and advanced technologies; all while trying to find efficiencies to make use of our dollars.
We'll go ahead to the next chart, and we'll dive straight into the budget.
The Army's FY '12 budget is represented by these two pie charts. The top one is the base request of $144.9 billion, and the bottom, smaller pie chart is for the overseas contingency operations, or OCO, of about $71.1 billion. Our base budget request is only slightly larger than the FY '11 request, which was 143.2 (billion dollars). And that's basically factoring in inflation. There's also a 30-percent decrease in the FY '12 OCO request of 71.1 billion (dollars), as compared to our FY '11 request of 102.1 billion (dollars). And this decrease is the result of the termination of Operation New Dawn in Iraq at the end of December 2011. And so all the following charts you're going to see outline the appropriations that make up the base budget and the OCO request itself.
As I mentioned earlier, our base budget request is 144.9 (billion dollars), and outlined here is a summary of the appropriations that make up that request. As you can see, the military personnel account is the largest component of the Army budget, at $60.5 billion; followed by operations and maintenance, at $45.2 billion. Our resource development and acquisition, and our military construction and our family housing appropriations make up the other 31.8 billion (dollars) and the 4.9 billion (dollars), respectively.
You're going to see some of these pass-through accounts, including chem demil and a Joint Improvised Explosive Device Defeat Fund, that are executed by other than Army organizations, but they're accounted for by the Army.
So what we'll do now is just review the individual appropriations that comprise the Army's budget. Our first appropriation, the military personnel appropriation, comprises the largest portion of the Army budget. In fact, it accounts for 42 percent of the base budget request. Caring for soldiers and sustaining the quality of our all-volunteer force are the top priorities of the Army leadership. So in addition to caring for our soldiers, the military personnel budget of $60.6 billion also achieves our manning objectives. The budget request fully funds a total end strength of 1.1 million soldiers across all three components. And within our OCO request, we're going to discuss additional funding for 22,000 temporary end strength increases, or TESI account. The growth in the military personnel appropriation is primarily due to the increases in military basic pay, allowances for housing and subsistence.
We'll go ahead and move on to the operations and maintenance overview. The operations and maintenance appropriation provides for the day-to-day operations of our units and our installations, the training of our personnel, maintenance of all of our equipment and the Army-wide support services. So for FY '12, the Army's O&M request of 45 billion (dollars) is approximately a billion dollars more than it was for FY '11. And that's due primarily to more forces at a home station and are available for training.
Within O&M, there's $900 million for recruiting, advertising and initial training for the all-volunteer force. And the budget also funds the Army readiness to include a revised combined arms training strategy that focuses and shifts training from major combat operations to full-spectrum operations. So funding will support 24 rotations to the combined arms training centers for all of our brigade combat teams and 33 war-fighting exercises for our multi-functional and our functional support brigades.
Within our force structure, O&M provides the funding for 73 brigade combat teams, 98 multi-functional support brigades such as your fire brigades and your sustainment brigades, and 133 functional support brigades such as your military police and your signal brigades.
Funding for weapons of mass destruction civil support teams and the homeland response force units that support the FEMA regions are included in the Army National Guard request. In addition, the Army Reserve request continues to rebalance the force structure itself.
We are sustaining the force through the Army family programs, and we fund those at $1.7 billion in FY '12. We continue to fund these programs that will build resilience and mitigate stress for both our soldiers and our families, including the Comprehensive Soldier Fitness program and the campaign for health promotion, risk reduction and suicide prevention.
We also fund facilities and infrastructure maintenance and have included increases for municipal services to support a larger force that's now at home station.
Enabling the force -- the Enterprise Network initiative is another priority of the Army, focused on standardized information technologies and an enterprise approach for financial and logistics systems across the Army. That includes the general fund enterprise business system, a global combat support system and a logistics modernization program.
Next, we'll go ahead and move into our investment appropriations. Our FY '12 procurement program will emphasize capabilities that will network the force, deter and defeat hybrid threats, and protect and empower soldiers. And our equipment modernization is along four lines of effort: modernization, sustainment, mitigation and fielding.
Overall in procurement, you'll see a modest increase in our request for FY '11, FY '12. And this $800 million increase is primarily reflected in our aviation nonprocurement appropriation.
So we'll now look at each appropriation -- procurement appropriation separately. And we will start with the aircraft.
You'll note that our FY '12 aircraft procurement request is probably approximately a billion dollars higher than the FY '11 request. And this is mainly due to program ramp-ups in Gray Eagle, the Apache, and the Enhanced Medium-Altitude Reconnaissance and Surveillance System programs.
Our FY '12 request continues to modernize and provide new capabilities to our utility, our cargo and our attack helicopter fleets. We also provide funding for the procurement of 36 MQ-1 Gray Eagle UAVs, which will provide us with a dedicated reconnaissance, surveillance and target acquisition unmanned aerial platform.
Additionally, the budget request provides for the procurement of 18 Enhanced Medium-Altitude Reconnaissance Surveillance Systems, or the EMARSS, which will provide our BCTs with a multi-sensor intelligence-collection capability. It also provides funding for 39 of our UH-72 Lakota light utility aircraft, which will provide organic general aviation support to both our active and our reserve formations.
Now, with the termination of the armed reconnaissance helicopter program, we're now going to keep the Kiowa Warrior in the fleet longer. And as such, we are filling some upgrades to address both the safety and obsolescence issues. And we are procuring long-lead components for both the cockpit and the sensor update program.
Our next category is our missile and ammunition procurement. Our FY '12 request is lower than our FY '11 request due to the termination of the Surface-Launched Advanced Medium-Range Air-to-Air missile, SLAMRAAM, and a Non-Line-of-Sight Launch System, NLOS-LS programs.
Once again, the majority of our missile procurement is dedicated to our Patriot PAC 3 program. And in FY '12, we're going to procure 88 missiles. Additionally, we're going to begin initial production facilitation for the missile segment enhancement. And that's the PAC 3 follow-on.
Now, with the decision to cancel the SLAMRAAM system, it has become necessary for a Service-Life Extension Program, or SLEP, and upgrade to the Stinger missile. And this program replaces the aging components of the Stinger and the upgrade to enhance lethality in the range. On the tactical side, we continue to procure the Javelin, the TOW and the Hellfire missiles and the guided-missile launch rocket systems to maintain or establish war reserve requirements.
In our ammunition accounts, our appropriations, we continue to fully fund our critical training ammunition requirements. There are some limited quantities of select war reserve ammunition, and we do modernize our protection-based facilities.
In our weapons and tracked combat vehicles, our request represents a modest increase of about 200 million over the FY '11 request. Our focus in the weapons and in the track combat vehicles is on achieving a two-variant standard Abrams tank as well as a two-variant Bradley Fighting Vehicle that, combined with the Stryker will round out the Army's dominant heavy combat maneuver platforms.
We are buying 100 Stryker NBC reconnaissance vehicles and funding improvement of survivability by providing the slat armor protection, Common Ballistics Shield, Blue Force Tracking and driver enhancements and mine protection kits.
We will upgrade 21 of our older Abrams tanks to the M1A2 SEP Version 2 configuration, and we are going to continue to provide engine improvements and systems training devices to the M1A1. This budget request will also keep the essential capability of the armor facility at a sustainable level.
And finally, we're going to procure 108 Bradley situational awareness kits required for the modulation BCT, and these kits will improve lethalities, survivability and sustainment of the M2 fleet.
We'll go ahead and move now to other procurement, starting with our tactical wheeled vehicles, our major modernization program, and the request includes procuring almost 2,400 truck and trailer variants in the family of medium tactical vehicles, and almost 8,000 multiple truck and trailer variants in the family of heavy tactical vehicles.
Our in-service modification program will convert 481 MRAPs to the route clearance configuration and by upgrading the fuel tanks with ballistic protection and sensor activity fire suppressant. This request also provides $162 million to recapitalize up-armored humvees coming out of theater.
In our support equipment category, we're going to continue to fund the tactical bridging systems, the nonstandard training devices and our net warrior. In our communications and digitalization, our major effort is to integrate our systems to provide our warfighters timely and more relevant information. Our goal is the seamless connectivity regardless of the echelon, the location or their mission, and to achieve it, the Army's going to build upon the current baseline of network architecture.
So we're going to start with the Warfighter Information Network-Tactical, or WIN-T, which is the backbone for the Army's information modernization program. It's going to be fielded in three increments. Increment 1, networking at-the-halt, is almost complete and fielded to our BCTs, and it will provide the reach-back capabilities for all of our battle command posts. Increment 2, on-the-move, will be fielded next, and Increment 3 is still in development.
Within the Joint Tactical Radio program, we are producing or procuring 471 ground mobile radios that will provide us with a scalable, on-the-move network architecture that connects the soldier to the network.
We're also going to fund the tactical surveillance equipment, which includes three variants of the night vision thermal weapons sites, a multifunctional line of sight target acquisition common sensor suite, which will provide our warfighters with real-time target detection, recognition and identification capability 24 hours a day in all weather conditions.
The Research, Development, Test and Evaluation lines is -- in our strategy is twofold. First, we're going to continue development in support of the current force, and then we're going to pursue technologies to enable the future force. Our FY '12 budget request is about 600 million (dollars) less than our FY '11 request of 10.3 billion (dollars), but that is primarily due to the cancellation of the unmanned ground sensors and the NLOS-LS.
In the area of development, our budget provides funding for the combat vehicle modernization program, which will include the ground combat vehicles, the Stryker, the army multipurpose vehicle, our Bradleys and our Abrams. In this program, we're going to emphasize space, weight and power shortfalls, and we will focus on soldier protection, soldier capacity and full-spectrum operation support.
We're also looking at improvements to our networks, specifically Warfighter Information Network Tactical and key aviation and intelligence and air defense programs, including the Joint Land Attack Cruise Missile Defense Evaluated Net Sensor System, or JLENS, and the Army Integrated Air and Missile Defense System.
In FY '12, the Army is requesting more than $2.3 billion for science and technology programs, with the two largest investments in the areas of force protection and base -- basic research.
Our other major investment is in the area of facilities. The FY '12 military construction request supports facility needs for both the active, the Guard and our reserve forces. The 1-billion (dollar) decrease in the FY '12 request as compared to the FY '11 request is primarily due down -- due to the ramp-down from growing the Army. We are almost complete.
Supporting the Army family's covenant, the Army family housing program provides a quality living experience for Army families. So our request includes construction funding for some new housing, renovation of existing housing, the maintenance of our Army-owned housing and the oversight of over 88,000 homes that we've privatized through the residential communities initiative.
The Army is on track to meet the BRAC law by the 15th of September 2011. And the FY '12 will be the first year we submit a budget request for post-implementation BRAC 2005 activities. So the FY '12 request at 300 million (dollars) will provide for caretaker operations and environmental-restoration functions at all the remaining BRAC properties.
Now, this concludes our base program appropriations overview. But before I turn it over to Ms. Bonessa to cover down on the overseas contingency operation request, I would like to briefly discuss our efficiency efforts in FY '12.
Our DOD efficiency initiatives are enabling the Army to maintain our forces and our force structure in FY '12, able to sustain an Army at war. It does build soldier and family resiliency, and it does help build our full-spectrum readiness and strategic flexibility.
As you know, there was a $29.3-billion -- identified as efficiencies for the Army from FY '12 through FY '16. Two-point-seven billion (dollars) of that was laid into the FY '12 program. So the first efficiencies we found were in the reorganization and better business practices, including the reduction of a number of installation-management commands, regional headquarters from six to four, and the consolidation of our e-mail infrastructure and our data centers Army-wide.
The second areas involve program reductions and terminations that include several redundant programs, most notably NLOS-LS, our SLAMRAAM and our Scorpion land mine.
And the final area included is deferring some low-priority MILCON projects, mainly some ranges in a few of our smaller facilities. The Army did reinvest the savings from these programs in order to enhance current readiness and capabilities including our -- upgrading our combat vehicles, accelerating the procurement of the Gray Eagle unmanned aerial system to a maximum production rate. We also developed future capabilities by investing in the unmanned ground vehicle, and we are accelerating the fielding of the Joint Tactical Radial system.
So at this point I'll turn it over to Ms. Bonessa, and we'll go ahead and walk through the OCO request.
MS. BONESSA: Okay. Thank you, General McGhee.
Ladies and gentlemen, as you know, this is the third year since 2010 that we have submitted the overseas contingency operations request concurrent with the president's budget rather than as a follow-on supplemental appropriations request later in the fiscal year. That creates some significant challenges with regard to trying to project our requirements into the future. So what you see -- what we're about to present to you is our best estimates of what we will require for fiscal year '12, based on guidance provided by the Joint Staff and by the Office of the Secretary of Defense.
Of the $117 almost 118 billion requested by DOD, 71 billion (dollars), or 61 percent of that is for the Army. That's for the accounts that we manage within the Army, our appropriations, as well as those for which we're the financial management executive agent. That would be the Afghanistan infrastructure fund, a new account, the Afghanistan security forces fund, and the joint IED defeat fund.
As General McGhee mentioned, this request is 30 percent lower than our $102-billion request of last year, which is due primarily to the planned drawdown from Iraq to be completed at the end of this fiscal year.
For the MILPERS and O&M accounts especially, the single major cost driver is the size of the deployed force. And the assumptions that we have built this -- and I would mention that they are budgetary force-planning assumptions -- that we have built this estimate on include 64,000 in Afghanistan at a steady state, as described by Mr. Hale during the OSD press conference, 64(,000) of the 98(,000) in theater; an average, because of the rapid drawdown, in -- over a three-month period in Iraq, it's an average of only 3,500, and then we have about 13,000 that are in surrounding countries providing support. That's primarily in Kuwait, of course.
I would also add that for many areas to include some common logistics, base-camp support, we're the executive agent to provide support for all U.S. deployed forces. So we actually support all 98,000 in Afghanistan, again, for general common functions such as base camp support.
If you turn to the military personnel request, this account, this request is also down by 30 percent from FY '11. It provides for those incremental requirements in the military pay area. First off, the active component temporary end strength increase of 22,000 that you're familiar with, that is the strength that we are at right now. We will decline to an end strength of about 14,600 at the end of this fiscal year, beginning in March of 2012. And we will expect to completely off-ramp the temporary end strength increase by the end of '13.
The bulk of this request, almost $5 billion, supports those incremental pay requirements for full-time pay and allowances for approximately 50,000 Reserve component personnel on active duty. You can see the Guard and Reserve split on the chart. About $1.2 billion for subsistence-in-kind for all military forces in theater. And there's about $700 million for additional training days while still in Reserve component status for our National Guard and USAR soldiers who are working to complete certification of as many possible pre-deployment tasks as possible before they go into their 12-month mobilization.
Turning to the O&M accounts this, by far, is the major portion of our request; it's almost 90 percent and it covers the full range of operational and support requirements for an army -- a force at war, everything from pre-deployment training, transportation to, from and within theater, force protection in theater, equipment maintenance, logistics, and as I mentioned earlier, base camp support for all deployed U.S. forces.
There is $500 million in this account for the training and operational tempo portion of the Guard and Reserve requirements in advance of mobilization. And then, finally, there's about $4 billion in this account for reset of our equipment returning from Iraq and from Afghanistan.
In the RDA account, of the total $2.2 billion request, about half, $1.1 billion of dollars -- $1.1 billion of that request is for force protection, including battle command and ISR capabilities, counter-fire and counter-mortar radars and individual soldier protection equipment as well. Most of the balance of this account is to replace equipment that is either lost or beyond economic repair and also to replenish munitions that were expended in theater.
In the interest of time, the next two charts provide the systems and the quantities that are included in those requests, the first three appropriations, aircraft, missiles and ammunition. Just give you a moment to look at those. And I will certainly be happy to take any of your questions later on.
And the second chart in this section includes our weapons and tracked combat vehicles, other procurement Army and research development and test and evaluation requirements.
I would mention that of the other procurement, the significant investment of over 800 million (dollars) in electronic equipment reflects our significant investment in the ISR capabilities to include persistent surveillance that Mr. Hale referred to earlier as being so key and such an insatiable demand from our theater commanders.
As we close out this portion of our briefing, I would make only brief comments on the continuing resolution; it would be very hard to top what Secretary Gates and Secretary Hale said. We are also extremely concerned about moving into almost halfway through the fiscal year without our full appropriations. We are cautiously encouraged by the bill that was referred to the rules committee by the House on Friday evening. While there are still some dollar challenges there, one of the most important things that can happen is the certainty of having our money in hand and being able to move out on our execution without the constraints of operating under the uncertainty of a continuing resolution, as well as the work that lies ahead to prepare for fiscal year '12.
In closing, the FY '12 base budget request supports the priorities of taking care of people and investing in our transformation, our modernization of the force and our OCO request provides for the operational and first-protection requirements of a deployed force.
With that, we both thank you for being here today. We welcome your questions. And we do have the -- and the Army leadership team from Army Budget is all here to help us respond to any of your questions.
STAFF: Ladies and gentlemen, we have about 10 minutes for your questions. Please.
Q: Yes. Two quick questions.
Does this budget anticipate that the two brigades in Europe will be brought back to the United States?
MS. BONESSA: I can take that.
MS. BONESSA: In accordance with SecDef guidance, the force structure for Europe is still being assessed at the Defense level. And we will -- we will await the outcome of that.
Q: And in layman's terms, the -- there's a big increase in spending for communications.
That goes -- how -- can you say in layman's terms how that will affect the soldiers deployed?
MS. BONESSA: In the OCO -- in the OCO request?
Q: No, in the budget request.
MS. BONESSA: In the base request. So it's soldiers' deploying maybe.
GEN. MCGHEE: Well, and this is about networking the force. This is about networking the soldier to the -- to his equipment, to his -- to his vehicles, to his -- to his aircraft. It is -- when a soldier's on the ground, everything and no matter where he is at or she is at, they are networked and they can see; so they have situational awareness of everything that's going around them to the left and the right of them. And so this is about networking that soldier.
Q: (Off mic) -- the Army is still buying a joint high-speed vessel in FY '12. Does this mean that the talks with the Navy about transferring ships are off the table, or is the Army still thinking about transferring its fleets to the Navy?
MS. BONESSA: I'll take that one. The dialogue between the chief of Naval Operations, the chief of staff of the Army and obviously the secretary of Defense leadership are still ongoing with regard to potential transfer of the - what would be two joint high-speed vessels.
Q: So is the Army still buying one?
MS. BONESSA: It's still in our budget. Yes. We know when we'll buy it.
STAFF: Would you please announce your name and your organization for the record, please?
Q: John Doyle with Combat Systems. Can you give us some specifics on procurement for unmanned ground systems, particularly unmanned ground vehicles, EOD and IED disposal?
MS. BONESSA: David -- I want to ask if our director of investment, who I'm hopeful is -- (inaudible) -- do you have a list of the key systems involved?
STAFF: I can get a list..(Off mic).
MS. BONESSA: Okay.
And we'll get that to you very shortly if you'll just --
STAFF: In the back.
Q: Thank you. Sandra Erwin with National Defense.
General, you said one of the initiatives for efficiency reinvestment is to accelerate Joint Tactical Radio. Can you say what is the request for '12 for joint -- for the entire Joint Tactical Radio System program? And when are you going to start -- (off mic) -- plan?
GEN. MCGHEE: (Inaudible) -- numbers, specific numbers.
STAFF: The requester amount for JTRS is almost three-quarters of a billion dollars.
Q: And the schedule?
STAFF: I can get you the schedule. I don't -- I don't have the schedule handy.
Q: But it's being accelerated by how much time?
Q: Thank you.
Q: Tony Capaccio with Bloomberg News. On efficiencies, you've got $2.7 billion in 0 -- '12 of your $29 billion total. Can one of your colleagues sort of give us the numbers for the Futures Years Defense Plan? And how confident are you, as you go beyond '12, that these numbers will withstand scrutiny and are not totally smoke and mirrors at this point?
GEN. MCGHEE: Well, we have laid in the $29.3 billion across the -- across the FYDP. We have -- in conjunction with OSC, we have walked through each and every one of those programs. It is to ensure that we can execute it; to ensure that we are not going to break anything within the Army; that we will cause no harm to the Army. So the 29.3 billion (dollars) that we found in efficiencies we -- for the most part we took out of the -- out of the generating force and we moved it into the operating force. So we bought back readiness; we bought back capability in those -- in those particular areas. So this is a fully executable program for us.
Q: (Off mic.) Do you have the dollar figures for those, can you get those -- (off mic)?
GEN. MCGHEE: Absolutely.
Q: It'll be helpful to know the stream of dollars. Thank you.
Q: (Off mic) -- the Army. Considering that the GCV is not considered a new START program, is the Army willing -- is it a high priority enough for the Army to keep its schedule in tact in the face of a CR?
MS. BONESSA: In the event of a full-year CR, because the dollars are sort of right in RDA, but they're in all the wrong places, be it at base or OCO misalignment, or in a cross-appropriations misalignment, we would have to simply sequence everything by priority and make that decision.
There are, I believe, three technology development contracts that are pending for this spring. So we are cautiously optimistic that with a bill, we will be able to move out with those on a timely basis. Failure to do so could delay the first production vehicle.
STAFF: (Off mic.)
Q: Kate Brannen again, Defense News. Could you talk a little bit about the OSD's decision to end the MEADS program in 2013 and what this means for the Army's budget in the out years? How much savings does it free up? And in the decision it said that more money could therefore be directed to counter-rocket and -mortar systems. Is that based on what the Army sees as -- sees as a growing threat? If you could comment, thanks.
GEN. MCGHEE: Well, I will try -- answer all three at the -- and at one, it's -- one, we fully support the OSD's decision to cancel the -- to cancel the program. We do have dollars in the FY '12 program for the -- for that system. It would be our intent at some point that we would use dollars to go ahead and upgrade our current missile systems, to include the Patriot, this -- the Stinger, as I talked about earlier, so just to go and upgrade the systems that we currently have and provide more capability and capacity for them.
STAFF: We have time to take one more question.
Q: Sir, you mentioned -- you singled out JLENS as you were talking about the R&D. Is there any change in that program, or is that program going ahead as planned?
MS. BONESSA: No change.
GEN. MCGHEE: No change. No change in that program.
STAFF: Ladies and gentlemen, we're going to wrap it up now, the Army presentation. Thank you for coming.
MS. BONESSA: Thank you all.
GEN. MCGHEE: Thank you.
Briefing by Rear Adm. Mulloy from the Pentagon on the Fiscal 2012 Budget Proposal
LT. COURTNEY HOLSEN: Good afternoon. I'm Lieutenant Courtney Holsen, public affairs officer for Rear Admiral Joe Mulloy, deputy assistant secretary of the Navy for budget. He will be briefing the fiscal year 2012 budget for the Department of the Navy. Following the briefing, if you have any questions, please let me know.
With that, I'd like to introduce Rear Admiral Joe Mulloy.
ADM. MULLOY: Thank you, Courtney.
Good afternoon, ladies and gentlemen. And it's good to see you all again. It's amazing how fast the year goes by when you're having fun as the Department of Navy budget officer.
Today I'm here to talk about how we mesh within the strategy Secretary Gates and Hale laid out for the FY '12 and the five-year expense plan after that. You heard in great detail about how they view the emphasis from the secretary and the president on focus. And I want to relay that into how the Marine Corps, Navy and the Secretariat see that.
In addition to the leadership points, the secretary of the Navy has given us four imperatives as we develop this budget and support our joint force and global forces. The first one was to take care of our sailors, Marines, our civilians and their families. First -- or secondly was to treat energy as a strategic national resource. Third was to create acquisition excellence. And I think you see -- I think you'll see a lot of that, as we talked about efficiencies in our investment programs. And last is to heat-optimize our unmanned systems. And once again, a significant investment made in unmanned systems across the board. And you can see in the pictures, a snapshot around our Navy-Marine Corps chain.
So where is your Navy and Marine Corps today? They're out and about. We are engaged in winning our current wars we're in. We're currently involved in maintaining peace and involved in peacekeeping and training around the world. And we are currently enabling commerce to the tune of -- the domestic product of the United States greatly depends upon commerce around the world; your Navy and Marine Corps team ensures safety and security of that around the world.
There are over 50,000 Navy personnel deployed or forward-based, and over 30,000 Marines. We currently have eight aircraft carriers -- and I -- I'll correct that with eight; as of yesterday, the George Washington pulled in. But to put that in context. There's only 10 aircraft carriers currently in the Navy. Two are in major maintenance. One is in a three-year refueling overhaul. One we are -- one we are dry-docking. And all other eight were underway. So this idea of our ships are busy and underway, training, and many of them were forward-deployed; others were getting ready to go or come back from deployments.
So we currently have, once again, 57 percent of our ships underway from homeport and 40 percent deployed. So maintain the same op tempo with those 50,000 sailors that we have since 2001.
Our Marines also are actively engaged, with over 24,000 -- correction: 22,000 in Afghanistan. That number fluctuates subtly up and down. But we maintain that presence through up into approximately 2014. And I'll factor that later on for some discussion of our Marine Corps manpower. And the Marines are also further engaged around the world.
And the two snapshots you see are F-18s operating in the Arabian Sea and then the Marines are launching in the Gulf of Thailand, once again focusing where Secretary of Defense said the Marines maintain key amphibious capabilities using the equipment and the techniques developed with our Navy as they launch from the USS Denver off the -- in the Gulf of Thailand.
A budget brief wouldn't be complete without a bar graph in dollars. FY '12 is $161.4 billion, and there's $15 billion of OCO [overseas contingency operations] on top of that. You heard the discussion about what is this budget and what do the numbers mean. And for the Navy, this has surely been a time where we have been able to purchase more than what we had last year with dollars that are the same. This is actually a .9-percent decrease in real terms from '11 to '12 and the Navy stays flatter with the FYDP, it is a negative-point-one percent real over the FYDP.
So we have been able to churn through our $35 billion in efficiencies and find the things we need and do our part to be able to maintain the Department of Defense's part within this whole architecture you heard about, savings for the country.
The other thing I'd like to highlight before I move on to the other slides is the continuing resolution. You heard about the impact of the department. This slide is the build. We'll show you where we stand in the Navy. We're down $5.7 billion. The largest single piece of that is in Navy operation and maintenance, at 4.6 (billion dollars). But significant impacts on our procurement, both Navy and Marine Corps accounts.
I'll have individual slides in the major areas of budget, but to step you around to the big parts and what we call our moneybags slide, these five sections: first is multi-personnel in the upper left. And I'll rotate counter-clockwise. This account continues to support the 325,000 Navy, 202,000 Marines. There's a 1.6-percent pay raise. We'll appropriate adjustments of 3.6 percent for BAH, or housing allowances for the Navy, and 4.2 percent for the Marine Corps, in addition to the funds of retirement accrual with an increase of 4.9 percent.
Matter of fact, this is 2.7 percent growth after adjusting for -- I'll talk about in OCO -- or our individual account moved in. So this is the second year at the lowest it's been in over 6 years in terms of growth. We are, you know, working with the group to try to maintain and pay our people appropriately; at the same time, try to realize we have to use every dollar wisely.
O&M is $37.9 billion. I'll have a detailed slide. That fully funds the operations of the Navy and Marine Corps, our maintenance and our bases.
Infrastructure, a significant drop. You'll see two factors -- we talked about that -- is grow the force, which is the Marine Corps buildup on to -- not only for the 20,000-troop growth, but also the infrastructure age in the Marine Corps is rapidly dropping back down to levels where the Marines are maintaining future development of forces. And there's also a rephasing of Guam for about $3(00) or $400 million. And I'll talk more about that later.
There's research and development. This account is actually up. Last year was a nadir for us in the Navy. Two -- once again, two countervailing positions. We have growth of research and development in new areas, and I'll talk about that in terms of U-class and some other areas. We also have transitional procurement. But this has really been a slight increase from last year, based upon these new things coming.
And last is procurement. This is down from last year about $800 million. Really two factors. A significant one is modifications in aircraft, with the Joint Strike Fighter, and the other one our savings from the efficiencies. You will actually see with aircraft, except for the Joint Strike Fighter, and even total number of (inaudible) in the Marine Corps go up in '12, number of ships go up, but our dollars spent go down. And it's really basing upon price and saving in a number of areas and then also the reduction to the Joint Strike Fighter.
So how did we get here? The Navy in this process, which was started back in May with a speech from the secretary of Defense in 8 May -- in 8 May out in the Eisenhower Library. He then came and gave leadership briefs on 24 May, and 4 June there was a letter to the services: "You will find efficiencies." So as many realize, we were already well into the program budgeting. But as the secretary of Defense and Secretary Hale indicated, we were already on a second year of trying to find efficiencies, trying to use wisely. He just more focused us on that.
So we had already done a lot of programming to find plans to be able to purchase the things you wanted to buy. The understanding of keeping that 50 ships, perhaps grow more, keep airplanes -- this was even greater just to go across the board.
In both services the secretariat teams were established. And internally, the Navy generated over 1,600 individual efficiencies; some as small as $200,000 for cutting contract in one area, some as large as $2.9 billion in LCS pricing. So across the board, we're 1,600 issues in over 2,000 lines in the Navy budget.
And then we -- as we plotted them and assembled them through leadership meetings throughout June into July as we developed the budget, we would put them in what we call the -- (inaudible) -- process lines of operation. So first it was buying smarter. Those were areas where we saved money. Clearly, the F-18 multiyear was $852 million. Once again, procurement comes down, but the reason is we're not paying as much for the same airplanes.
E-2D. With the permission of Congress, we're going to have a multiyear starting out in '13 to -- as we ramp into production of that important electronic aircraft.
The DDG-51s. Once we get up to two a year, we're planning in '13 for a multiyear.
We have reduced total ownership cost through strategic sourcing. Many Navy people buy around. By sourcing through Admiral Mike Lyden at Navy Supply Command, what we're able to find is if people can find a better price locally they can, but there's a step to go all-Navy general purchasing. We think we can save over $257 million with strategic sourcing.
Marine Corps looked at Marine Corps equipment and saved over $900 million with various efficiencies.
So the bottom line, buying smarter is dollars -- to terminate some items, but largely buy smarter.
Streamlining organization, there's been a lot of discussion of that. That gets to the emotional part of, hey, we eliminated Submarine Squadron 8 in Norfolk, but we're keeping the submarines there; we eliminated Second Fleet, but we're merging half of the personnel and the leadership team within FF -- the Fleet Forces Command down there. Taking a little bit of a risk in how we manage training day to day, but realizing it's a different world out there in the post-Cold world era for that.
Other areas we're smaller on. But a couple other bigger ones in there. A significant one for Navy and Marine Corps team was reorganizing our maritime pre-positioned squadrons. Currently we have three pre-position squadrons: Guam, Diego Garcia and the Mediterranean. We pay full operating status to the tune of hundreds of millions of dollars a year to have these ships ready to go. They were developed to have equipment ready for Marines to meet up back in the period of the Cold War.
We have made modifications over time to them for use and use them some for theater -- pardon me, theater security cooperation, but we'd never actually studied a true business case of what supports our combatant commanders and what could actually go forward in supporting war. Well, we're going to shift it to two full operating squadrons, but we're also merging with three of the Bob Hope LMRS, large, medium-speed roll-on/roll-off ships as a center point beyond the TAKRs. We'll have two full operating squadrons and one in what's called reduced operating status back in the United States. That last squadron will be ready to be broken out for exercises or for wartime needs. So we have demonstrated, working with TRANSCOM and the Joint Staff, that we can get all the equipment forward in the time necessary for all the time-phased deployments -- the TPFFDs -- but we can still save over $300 million over the FYDP once again by our streamlining organizations and operations.
And last is energy. As you know, Secretary Mabus is leading the charge for the secretary of Defense on energy, and the Navy's out and about. I'll show you where we saved over $2.3 billion and reinvesting it. Once again, it's a key strategic point for us, and through a number of areas we found savings.
Military personnel. The Navy is just about done with its drawdown. We've drawn down over 60,000 personnel since 2001, and we're finally hitting a position now at about 325(,000) plus or minus a thousand personnel, and the Navy will stay stabilized.
The Marine Corps is finishing and continuing out (inaudible). And I think it's pretty clear that on a conditions-based plan, that if the drawdown in Afghanistan stays on track, the Marines will commence a drawdown and to a recently just-announced number of 186,800. That is the planned end strength under their future -- the Future Force Structure Review Group plan. Now, that still has to be greatly delineated with all the equipment and other portions, but there's been a discussion about that. The plan number, once again, conditions-based.
Civilian personnel. The secretary asked us to take a hard look to freeze growth, and we have complied with that. However, on follow-up, he has agreed with certain areas where the Navy and the Marine Corps have some necessary growth.
Forces in our acquisition workforce: Working carefully with Dr. [Ashton] Carter [Under Secretary of Defense for AT&L], numbers are delineated to where we could actually have the people. Once again, these are all co-dependent. The buying smarter, all those multi-years, all those savings are dependent upon some of this. We need to use our various insourcing tools. The Department of the Navy throughout various rounds of efficiencies have reduced contractor savings to about $3 billion. There are some cases that we've shown where we need to insource some people to make that happen.
We are staffing our revolving funds to maintain equipment. Joint basing looks like a growth to the Navy of 479 people, but in reality it's transfers from the Army and the Air Force. We pick up a number of large bases. That was authorized by the secretary. And lastly was our cyber initiatives for 10th Fleet and NextGen when the Navy and the Marine Corps take ownership of our computer system. So each one of those ended up being a very slight growth. About 2 1/2 percent on our total civilian personnel.
Readiness -- talk about O&M. This is a key operation for us. Once again, it is leverage between our OCO, as we talked about operations, and then our base dollars. On the top, we're operating at 4520. This'll be the last year at 4520. Next year, the Navy and the base will be 5124. That was part of an '11 OCO-to-base decision. This is the last year 4520, but this brings us up to 5824 to support the full level of operations around the world. Flying hours: We're 2520 in the base, and then we're 2320 with flying hours forward. There is a slight reduction in here in terms of -- you'll see some efficiencies later on in terms of operations, and also the OCO is down with fewer Marine hours actually estimated flying forward.
Marine Corps once again is a little down OCO. The level of troops are the same, but the amount of shipping going on -- because largely they've completed their shipments to Afghanistan, now we're rotating people. The Marines continue to maintain most of their equipment forward, and very little comes back. That's how they do it to save money and keep the troops engaged. There's also a reflected drawdown in -- slightly for Iraq, because they're largely out.
Ship depot maintenance, aircraft and base support, we've maintained with a balance at a risk down there: ship maintenance at 94 percent; aircraft, 94 (percent); and the base models are split between Navy and Marine Corps.
Okay, shipbuilding. This is a good-news story. Last year, when we rolled out 50 ships in 10 years, people said very good. The secretary, the commandant and the CNO went to the appropriations committees, both of them, and they were both told -- all three were told: We're very impressed with this, but the proof is in keeping it maintained for another year, as I was sitting there behind them. And I'll come back and say is, given the efficiencies and then what the CNO did with that money and what the secretary did was enhancement to the ships.
We've bought a total of five more ships across that could have made some structurally important changes. We've slowly embraced and did -- dual-bought buying the LCS, and I told you we generate significant savings from that. We also brought the MLP in '15 up to be able to balance the workload and complete one MLP for each of the (inaudible). We then also then brought forward a TAGOS ship, which is important for antisubmarine warfare, for the secretary of the Navy, Defense and Pacific Area Commander. We filled in another DDG, which is important for BMD and fleet operations. We then also brought forward the TOX from '17, brought it forward, put in research and development money, and can commence on recapitalizing our fleet. Two purposes: One of them is we're aging; and two is, it'll also double bottom construction, which gets us going on -- compliant with long-term maritime laws. So, across the board, an impressive change for our shipbuilding command.
Aviation. Aviation is a series of pluses and minus. The big change, obviously, is Joint Strike Fighter. The Marine variant was put on a two-year probation period. The Navy variant -- or actually, that was Naval variant, the Charlie, only was affected by two aircraft, and that was more by the sequencing at the plant, to maintain the build rate that Dr. Carter, secretary of Defense and Admiral Venlet had laid out. So a total change of 67 aircraft to the Charlie; 65 of the B variant. However, we laid in 41 more F-18s, to be able to continue to fill those important carrier decks. We also added an E-2D and we added two more P-8s at the beginning and seven more at the end of the FYDP and another -- other aircraft.
Significant changes were also made in the unmanned areas. We added 26 of the VTUAV Fire Scout and Fire Scout Plus, an enhanced version of it, as we once again try to embrace -- or continue to embrace the unmanned vehicles.
Weapons. This overall continues to be a balanced investment of Navy and Marine Corps weapons. All the weapons are being bought at MSR or achieve MSR by the end of the future year defense plan. Big change in the standard missile. SM-2 was terminated as an efficiency. We had what we needed there. We wanted to focus on the SM-6, which is built in a similar part of the Raytheon plant. There was a rephasing due to completing where we stood in contracting, the money in the program as -- and also as reviewed by Defense Acquisition Board and validated. We're now on a ramp to complete the SM-6 and we'll quickly get above -- we don't have an MSR yet, but we'll quickly buy up and rate. And this is an important step ahead for us.
The rolling airframe missile, the quantities drop, but that really reflects us shifting a little bit of money to RDT&E and then procuring the Block II which is a significant upgrade for us.
The other changes are all just adjustment for price -- slight adjustment for price and maintained, similar to some of the earlier one where I had the Marine Corps helicopters as buying to budget on some of these. But largely across the board, we've added weapons or just trimmed minor amounts.
Marine Corps procurement. This is a new slide for all of you from in the past. The real purpose of developing this with the Marines was to focus on PMC, procurement Marine Corps is not just wheeled and tracked vehicles. And in fact, a significant part of the money as in many other areas and a significant part of the enhancement that the Marines bought with their efficiency money was in this -- two things. One, their dwell home station equipment, the portions that maintain better -- for their radars, better computer gear. Some of the logistics and maintenance and some of the transport of equipment, some of the gear that you lose to onload and offload, not particularly sexy, but really important. The Marines spend an incredible amount of time developing very detailed budgets for small items because they're experts at detailed planning and pulling this together.
But I really want to highlight there's a lot more to this budget. And the big thing is electronics and their distributed operation, they're investing a significant amount to be able to maintain the same ability they have forward as they engage -- as they come out of Iraq and Afghanistan, to be able to maintain that ability for a young company captain, you know, a young officer to be able to run 138 people. He's gone from several radios and a truck to 242 radios and computers and two trucks, to be able to have a span that jumps from his one mile, if his battalion leads three miles, to now 70 miles on the 210 miles that a battalion commander leads the Marine Corps.
To be able to do that, he's got to be able to connect all those platoons together. Significant change, and you can see the kind of money the Marine Corps is putting into that, to be able to emphasize their world and their importance as that middleweight fighter the secretary of Defense and the commandant and the SECNAV want out there.
R&D. Modified this slide also to kind of break things and turn it around. You can see the drop, I said '07 -- '11 was the low year. It appears even lower based upon '10 has a large amount of congressional adds, '11 is the PB '11 so there aren't any. And very likely we'll see where '11 goes. Once again, I'll talk more on the CR as we get the closure. But in '12, we actually start a slight growth and what's happening here is joint strike fighter's flat. We have investments in the NextGen jammer and the 53 going up; we have P8 coming down.
In the shipbuilding, Ohio replacement ramps up dramatically as we start to close in on that ship, and I think it was an earlier question. It's a little over $1 billion, stepping up over 400 million (dollars) from 600 million (dollars) in '11. LCS, we're maintaining RDT&E to continue testing. DDG-1000 will continue some dollars for testing and development software. And then the Virginia class is also maintained there.
Unmanned -- significant step. We have the BAMs (ph) continues to be building aircraft and supporting development of that. And UCAS is out flying. That was at 47, that picture we had, took off a week and a half ago and that ramps up, though, into UCLASS. And so you can see the first dollars for that. That was a POM '13 when I spoke last year. Navy with efficiency went from '13 and put $120 million in efficiency dollars into '12 so we can get to a squadron or on a carrier by '18 and actually be deploying with a squadron of the follow-on UCLASS.
And then all our other miscellaneous projects right here, you can see, as once again we're stepping up in various areas.
Military construction of family housing. Significant changes here as we've completed -- largely, we'll complete BRAC this year. The Navy's on - Navy and Marine Corps are on track to complete our BRAC portion of it. What is really see here is a drop of about a -- 1 billion, $100 million in grow the force for the Marine Corps as we complete a large amount of that, and about a $300 million rephasing to later in the FYDP. As we continue analyzing, as the State Department and the Department of Defense work with the government of Japan, we really see is that the money we have invested already appropriated for Guam and the Japanese dollars are required -- not dollars now, but a phasing later in the FYDP as we finalize what will happen as we move through EIS and completion, what will the plans be.
So it's not really a walking away from Guam so much as phasing the dollars away to where we think we really need it later.
Family housing. We have completed extensive PPV. There are no PPV projects in this budget, but we include 110 -- $1 million for overseas improvements to houses and the family housing operations budget maintains 15,000 quarters for Navy and Marines around the world.
Energy investment. Once again, the secretary of the Navy has made this a hallmark for the second year and we've now invested another $2 1/2 billion to bring over $4 billion from when we started this path last year in this budget.
Significant steps ahead as we've tested and operated various vehicles. What you have there is the Green Hornet. You have a -- an NECC combat vessel driving 40 -- greater than 40 knots on an algae fuel basis. The Marine Corps at Twentynine Palms down here, basically, making the base almost self-sufficient and Makin Island, which is a gas turbine electropulsion-sailing ship.
But that's just simple -- those are simple examples of the things going on across the board in terms of advanced metering, better steam plants, cleaning engines, larger propulsion designs, stern flaps on ships.
We invested 2.3 million -- billion (dollars). We've already taken out 2.3 billion (dollars). Typically, you have to wait years to get dollars back. In this case, we're already aggressively taking the savings out from that. And those -- these are minimal, based upon the price of fuel. Everyone knows fuel's going up at potentially 3 to 6 percent in the last six months. So these savings really understate what we think we may get. But you know, that's the point we have for the fuel we took right now.
Overseas contingency. This is down to $15 billion for a number of reasons. It still supports our troops forward. We're very happy with this ability to support the Marines and Navy forward. It does reflect over $700 million of OCO to base. So it looks -- we asked for less in there, so it's OCO to base.
We have about $400 million in terms of shipment, that we no longer have to ship quite as much, because not as much people are in Iraq. We have 4,000 Navy, 98 Marines.
We have less in terms of combat support in Iraq. About $600 million of Marine Corps surge that was done, necessary for moving to Iraq, is gone. There's $300 million less in ammo use, in terms of actual expenditure. We're still flying and supporting. And there's about $200 million less in Marine Corps flying.
So across the board, we are still supporting forward. It's just the actual cost this year reflects a little bit less across the board in all those areas.
Continuing resolution. As Mr. Hale said, it's a crisis on the secretary's doorstep, and it's a crisis for the Navy, really in two parts.
I mentioned $4.6 billion in operation and maintenance. A number of you have seen we've have already gone out with letters from our fleet commanders to cancel five ship evals if we don't have the money. We're cancelling up to -- through into April 19 base projects. We've already cancelled nine mil con projects for the Navy or Marine Corps, and that number will be 14 by the end of February. By -- it'll be up to 19 by 4 March, at the end of the CR. So across the board, we're cancelling items.
The O&M is significant for us. It's a significant chunk of money.
The procurement accounts -- it looks like it's less of an impact, but in reality, the difficulties are -- one example is ship construction, Navy. We're down by $1.8 billion. I can't buy everything. But since ship construction is all line item-controlled, I'm really $6 billion out of aligned. I have money to buy an LPD I'm not going to buy. I don't have authority or money to buy other ships. I'm capped off on paying for the refueling of an aircraft carrier. I'm capped off on buying the final installment of the CVN, you know, -78.
So there's a number of items. The Marine Corps in procurement -- they have $536 million short, but they're really almost $900 million out of line items to buy the right items. So a significant issue -- if this continues, the problems I have in O&M are tremendous, and pain and pressure on sailors, family and Marines. The pressure on my investment accounts will become almost mind-boggling in terms of putting the money in the right holes. That will continue to then swamp us in terms of the workload of -- we're going to try to have to get by in O&M, and then we're going to have to -- to move the pieces around will be amazing. That's really where I'm at on that one.
And lastly, I said in mil con, we can't do anything. It's all an authority-based item. It's in a different part of the law. There's 89 projects. None of them will start until we get some kind of relief from Congress.
So I'll be moving to questions in a moment, but I have some -- three key take-aways I want you take from this is that we have four imperatives the secretary of the Navy has charged us with, and we feel we've embraced all them in terms of our sailors, our energy, our acquisition excellence, and our unmanned systems.
Your maritime forces, your Navy/Marine Corps team, are out and about, as I indicated, at incredible levels, not just in the combat zone, around the world.
And then in reform, the Navy came up with $35 billion, the single largest chunk, in terms of efficiency, so the Department of Defense were able to invest most of that money to buy the things you saw here.
So for further information, I'll have the site here, but I'd like to go ahead and open up to questions.
Yes, sir, right here, in the blue shirt.
Q: What is -- what is the JSF STOVL program going to have to do to get off probation, exactly?
ADM. MULLOY: You know, I don't -- I -- there has not been an established set of metrics. It's going to have to produce and test, and we're already seeing is -- that it's flying at Pax River. So I'm going to have to go back to Admiral Venlet, probably, and his public affairs office, to get you a criteria. We've been told -- is that it's going to have to demonstrate the producibility and the operability to be able to finish the ones you're building, test-fly them and get back on a test plan. So that's really the structure of it. Any --
Q: One follow-up. (Off mic) -- involved? I mean, does it have to lower the cost of --
ADM. MULLOY: There are no other price changes. The budget supports the number of aircraft we bought. The assumption, I guess, in that would be -- is, if it kept going up, that would be a negative. We have laid in the best estimated cost, and those are the adjustments in terms of the Navy losing aircraft in '11 and then in '10 adjustments. I told you the '12 was a significant part with the Joint Strike Fighter. So the money's gone. They're not getting like $500 million an airplane to build them. They've been brought down to what the expected buy rate is. But I anticipate there's bound to be a -- there's bound to be a weight issue, a price issue and a performance issue, and the actual criteria I don't have.
Yes, ma'am, in the back.
Q: Yes. Can you explain the different shipbuilding procurement amounts that we see in different charts? We have 15.5 in one chart, 14.1 in another chart, and the DOD press release has 19.9 billion (dollars) for shipbuilding. So can you explain why there's -- what are you counting under those three different charts?
ADM. MULLOY: Okay. On my slide number 10, this is the actual shipbuilding account. So that's what I'm talking about. There are components that have --
Q: (Off mic) -- says 15.5 for ships.
ADM. MULLOY: Well, that's the actual total. What's above -- this is shipbuilding, and then we have what's called below the line, which pays for refueling and oceanographic ships. And then there's also an Army ship that they may be clumping in there. I believe OSD has a different number because they clump other items, either maintenance or other things we're doing. I'm just talking total shipbuilding account.
Q: Then the DOD release is not accurate, 19.9 billion (dollars) for ships.
ADM. MULLOY: Well, OSD has got different numbers, and we'll have to go back and try to figure that one out. I'm looking at my actual SCN account, which is, in '12, is 15.516 billion (dollars). And that's made of two parts: 14.1, which we call above the line, which is warfighting ships; and then below the line, you have -- I pay for the LCACs, the Marines that drive ashore in the little turbo-lift ship. We pay for outfitting and delivery. We're paying for ship-to-shore connectors, buying new ones, oceanographic ships and refueling overhauls. So that's the difference between 14.1 and 15.5. The Navy shipbuilding is $15 billion, $516 million -- $516 million.
Q: Thank you.
ADM. MULLOY: Yes, sir.
Q: Next Generation Jammer. Are you actually putting more money into Next Generation Jammer, or is that just because you move into the procurement phase and --
ADM. MULLOY: We're actually in R&D throughout most of the FYDP. It ramps down to procurement at the end. We actually moved money to do it. We're into, I believe, four AMD contracts. So we actually move money into that as part of the efficiency enhancements to accelerate it forward in the FYDP, to go from four to two to one by the end of the FYDP.
Q: Alright now, does the fact of the -- either the EA-18 and F/A-18 purchases going up or the F-35 purchases going down affect NGJ?
ADM. MULLOY: No, because the Next -- well, first off, the F-18s -- the Gs did not change. We're procuring Gs for the 10 airwings plus the four ground squadrons. So the number of Gs that will get the replacement for the ALQ-99 are just there. And the EA-6Bs that have them now, the F-18s who carry ALQ-99s, they'll be replaced by jammers. So there's no change. And right now the F-35 is proposed as possibly a jamming variant, but that has not been developed. So they're really on two different tracks. The jammer is just you produce something for the Navy's Gs and for the EA-86Bs that are left by the time it gets produced. Because remember, the Marines operate EA-6Bs (out till '19 ?).
Yes, sir. Yes, ma'am.
Q: Two questions. One is on the Navy piece of Conventional Prompt Global Strike. I'm wondering at what level CTM is funded -- (off mic) -- if you have a request for that piece of it FY '12. And then on a different program, SSBN(X) the Ohio class replacement - is that program now in Milestone A, and if so, when we will hear about -- (off mic)?
ADM. MULLOY: Oh, for the SSBN(X)? Okay.
First off, your first question was on CTM?
ADM. MULLOY: Yeah. There's zero dollars in the '12 budget. It was 10 in '11, and it was just marked in the recent House version of the bill that came out that was on Friday night, they marked the 10 million (dollars) out. So there's zero in '12 and out for conventional Trident.
There is one 1 billion -- I think it was 16 million -- for SSBN(X). It went through a DAB in December. It is authorized to proceed on in -- I guess it was pre-Milestone-A activities. So I'm not sure when the next DAB is for a while, but it is now authorized to start spending up to that.
The initial plan is for -- as indicated, was for 16 tubes, a new design reactor plant, similar antennas and design to the Trident and the Virginia class submarine, same -- no advanced torpedo room. Basically it would be an SSBN version improved, using Virginia-class technology, but -- (inaudible) -- improve in terms of stealth.
So I think you'll see more of it coming out, but the bottom line is we're going to rapidly develop on three lines here also, is you have the naval reactors portion develop the engine room, you'll have the weapons position under SP, where they're already starting to build tubes out in -- I was out in California about a month ago at the Northrop Grumman plant, and there was one of the four tubes.
There -- four contractors are building tubes that will be shipped to Electric Boat and assembled into a tube pack. They will not go on the first submarine, but the idea is how do you build and weld, because it's a different design submarine. We're not going to -- to save money to build the construction of it -- remember, the idea is -- the -- there's actually $50 million for design affordability in this budget starting in '12, '13, '14 to be able to -- (inaudible) -- Virginia.
So this submarine will not have -- build the missile compartment, cut holes and drop tubes in. You're going to build tubes in four-packs that are fitted to hull pieces that will then be added into the cylinders that are assembled.
So the idea is I can assemble in pieces and build -- once again, there's -- it's -- Electric Boat, I think it's 821 or -- they have a place where they save money in Quonset versus the yard, versus in the water. It's a -- dramatic savings happen when you build at Quonset. And then there's even more savings on land level. This ship will have the same idea but even more so than a Virginia class to take that correction.
So these dollars now are building all these places for the future plant, the future thing. And then the last one is what we call HME, Hull Mechanical Electrical. There will be money over in PO Subs to finish out the design in terms of how to be wired, how to be designed, what option generators. There's a lot of things like that that have not actually come in. We know general specs. It must be able to take care of a crew and have oxygen, but the specifics of the power and weight and layout of all that will now happen as a result of this money being in the '12 budget. We can rapidly move down that path.
Q: Just a follow up on PTM -- are you saying the PTM is dead, that that is not part of -- (inaudible) -- right now or --
ADM. MULLOY: It is -- it is not funded in this budget.
Q: That's --
ADM. MULLOY: That's all -- that's all I'll say right now.
ADM. MULLOY: You'll have to talk to OSD policy about any future plans for it.
Q: Thank you.
ADM. MULLOY: Sir, in the middle right there.
Q: Yeah, the terminations cost -- I'm not -- don't find any money for the new amphibious vehicle, R&D -- anything in this?
ADM. MULLOY: Yeah, this budget has over the FYDP $508 million for the new amphibious vehicle. And a little over a billion dollars of the savings was put in to maintain the double AVs.
Termination costs are expected to come out of the FY '11 money, estimated right now, I think, at about $185 million, but I could follow up -- you know, around $185 million right now. The specifics are still being laid out between the Marine Corps and the company and the land -- the Land Systems. So I really defer you to talk to the PO at Land Systems. But that will be funded out of '11. There is no money in -- (inaudible) - '12 and out. It's all invested in other areas.
Q: (Off mic) -- R&D, there's a contract issued for doing research on the Long Range Anti-Ship Missile. I don't find any R&D money in here.
ADM. MULLOY: Long Range Anti-Ship Missile -- LRASM, you mean?
ADM. MULLOY: There is -- there is some small money in a program, but there is not actually -- that is still in final testing. There is not a separate program element created for that. But there is money between the Navy and ONR. And I believe -- is DARPA in that? I'm not sure. I'll have to get back to you on that one.
But there is -- there was a LRASM A and B still being studied. But that's more a small amount of money now. But it's not actually crafted over. We still maintain Tomahawk right now as a long-range land attack through the FYDP. But we have not converted to either a ship or a land version yet for a replacement for those.
Yes, sir, in the front.
Q: So much of your future year's defense planning here depends on the efficiency savings coming to fruition.
ADM. MULLOY: Right.
Q: Of the $35 billion, how -- forgive me if you've already said this -- but how much is in '12 versus down the line? Can you give a readout?
ADM. MULLOY: Yeah, let me see here.
Q: And how do you know this is -- and I asked this of the Army -- how do you know this isn't blue smoke and mirrors, really squishy, and it's going to come to fruition?
ADM. MULLOY: Well, part of this is -- I'll try to be a little more -- because I -- Mr. Hale, I think, mentioned earlier was, ask the services. I feel pretty comfortable, having absorbed this process through June, July and the debates back and forth that the Navy and Marine Corps has really wrung out a lot of these items.
Now, as I said, there's 1,600 -- 60 or 79 items in the budget. So we will -- and I was at a meeting with the DCMO for the Navy how between the FM and DCMO we're going to track each one of these, how do they convert over. Some are terminations and cuts. They're fairly straightforward. You asked about what it is. In the Navy budget, our overheard cuts were 4,302,000,000 (dollars) in '12.
Q: (Off mic.)
ADM. MULLOY: Four point three billion dollars in Navy and Marine Corps efficiencies in '12. And additionally, there was another -- some of these also were booked by OSD, which brings us up to 5.2 billion (dollars) efficiencies in the Navy. But some of those were booked by OSD to pay their bills and stuff.
So there's a difference -- why I show what Navy and OSD has, but it's all Navy -- (inaudible). So what does that mean is there are a lot of these I can -- (inaudible) -- on. We know we're going to take the ships out. We already have a plan. These ships -- the TKR, the -- you know, SGT Button is in Guam and will come back. And it will either be -- come in overhaul -- (inaudible) -- or it's going to be one of the guys that's going to be in San Diego.
So a lot of these are pre-positioned and planned and thought through. Now, strategic savings -- a best estimate of our model. But some of these came up -- and I'll give you a good example that was rejected: voice over IP.
That was proposed in June. We're going to save hundreds of millions of dollars doing voice over IP. You hear about it all around the world. Navy's already doing that. I currently speak in voice over IP. If you call me -- I talked to a couple of you on the phone the other day -- it was on VOIP.
So there was an estimate that in San Diego if we did computers and we did it to a thousand people, then therefore we'd save x dollars. So if we did it to 500,000 people in the Navy, therefore we'd save 500 times that thousand, right? Well, it turned out when they calculated the savings it exceeded the entire phone bill for the Department of the Navy.
So needless to say, I didn't book VOIP. So for the 1,600 lines in there, there's hundreds that were either put away as, hey, we'll study it in the future, we can't quantify it. Because a lot of people said, if I can save money on that --
And we said, how would you do it? I don't know, but there's money there. Well, we have to book it now. But some will be, you know, under evaluation. But we have a team set up to go back and do it.
LT. HOLSEN: We have time for one more question.
Q: (Off mic) -- I mean, 3.5 -- 4 point --
ADM. MULLOY: Well, the largest year is '16. I mean, remember, the goals set by the secretary of defense were 2, 3, 5, 8, 10. So there's a -- and a feeling of, as anyone imagines, when you start to ramp something, you have to take longer to get there. But end of the FYDP is 9.8 billion (dollars) for the Navy in '16, 9.8 billion (dollars).
Yes, sir, in the red tie.
Q: How soon do you think you can get the new amphibious vehicle? The Marines have talked about doing it in much -- a much faster time frame than eight to 10 years. What's realistic?
ADM. MULLOY: As a budget officer, I have to tell you, I don't know, because I'm not an expert. I do know that they have spent, you know, 14 years so far developing it. So I expect there would be an -- a real acceleration on that.
I'll ask Carol is there any date right now expected from the Marine Corps?
ADM. MULLOY: Okay. I (inaudible) 2024 from the financial director from the Marine Corps, and I think that's what you'll have to go with. Now, that's in IOC. I expect they'll have vehicles much sooner than that.
you know, example: the EFV has been in development a long time. The last few versions, we just saw testing. We're actually operating pretty well. But it really ends up being -- the total cost of the program was just too much. The $3 billion is a sunk cost. The secretary of defense understands that. It's econ 101. It doesn't matter what you spent in the past; it's what you're going to spend in the future. And $12 billion was too much money. So I think they're going to find a way there. But there's an awful lot of lessons learned that will be informed for this new vehicle. So I feel confident they can take it and convert much faster to a vehicle they want.
Think we got one more over here. Sir.
Q: I've got a quick question with the energy investment savings. I'm wondering how you can project so far down the road if so much of it would be dependent on the cost of -- (inaudible) --
ADM. MULLOY: Well, what you do is you have to -- (inaudible) -- because there's a -- it's somewhat of an -- (inaudible) -- process. We get a fuel price set by OSD and DLA, and so that's one item. And so all I have is, I base it on that fuel price. So I would save a little bit less if it went down -- I'd save a lot more.
So these are -- these -- I view as minimal. So what they're really based on is 3 percent savings on LPDs because they have stern flaps; 5 percent because I fly more simulator hours. On the bases, I just know on energy use, some cases, compliance with the law, if I have advanced metering, I know what I'm going to get. So it's the price of a kilowatt estimated at that year.
Q: Cost of fuel or alternative fuel is not factored into these?
ADM. MULLOY: Right, well, it's not. But right now none of these depend upon the -- you know, shifts -- none of these depend upon shifting everyone to a cheaper alternative fuel. It is all based upon fuel.
And one of the -- I know there was a RAND study recently, and I'm not going to go into a lot of specifics, but the idea was, alternative fuels are very, very expensive now. But when you looked at where they could be, they could be lower. We'll still operate on the best estimate for the -- for the price of fuel in that year, set by OSD, whatever the mix may be. But we're not paying -- this is not -- budget's not based upon some astronomical amount for alternative fuel. It's really upon getting there.
So these energy ones, I feel very comfortable that those are laid in based upon earmarks of kilowatts we're going to save and fuel savings that we'll achieve through actual quantifiable changes, and for the best estimate of fuel that year.
Yes, ma'am. I think I've got like one more minute.
Q: I have a quick question -- I have a question about the auditing. I know during a recent HASC hearing, committee members were very upset that DOD isn't auditable yet and questioned how you could go forward with efficiencies in the budget. I was wondering, is -- DOD -- is the Navy and Marine Corps going to be audited by 2011? And what sort of funding have you put into the budget to enable you guys to reach that milestone?
ADM. MULLOY: There is FYDP dollars in the tune of -- Mary Kay, what is the FYDP money? It's a couple million dollars a year?
Yeah, about two or three million dollars a year for auditability.
The Marines actually just went through an audit, detailed process, tremendous number of lessons learned. The Navy's going forward. Our E-2D program is an example for ERP , for Secretary Hale, that every part of the E-2D, because it'll be from -- it's currently operating, it just landed on an aircraft carrier. So we're going to do that from AP -- from RDT&E through O&M for an audit and show that we can do it.
I'd really say that there's two different things here. One is to book efficiencies and understand how much we -- we save in what we do. The auditability goes back to being -- is an accountant checking on the receipts. I mean, we really do know -- report back to Treasury what we're spending. There's a different level here that I think we can do the efficiencies independent of that.
But we are supportive. The vice chief of Navy and the FM just sent out a memo to every Navy budget-submitting officer, all our three- and four-stars, on supporting the FYDP program. You know, we are achieving that. The Navy will not be in an auditable shape in FY '11, but the Navy's making steps down that path to proceed there, and we're taking tremendous lessons learned from the Marines who just completed their audit.
Q: (Off mic) -- money next year than you would have in FY '11 to -- (inaudible) -- audit ready?
ADM. MULLOY: No. We are -- we are keeping that program. That was independent of the efficiencies enhancements. We didn't take any money out, so there wasn't a tremendous amount added to it. Because it's really -- it doesn't generate -- it will, hopefully, in the end, make it clearer for decision making. But we couldn't -- that's one of the ones like VOIP. I could trace giving Admiral -- Mr. Dennis Taitano an (inaudible) of a dollar and a savings for that. So we didn't cut it. And we're going to support it as we go ahead. But I couldn't go ahead and put more money in and then take money out. And that's really what we're looking for inclusive.
Q: There were -- there were two 30-year plans that have been sent to Congress in conjunction with the budget, the 30-year shipbuilding plan and, more recently, the 30-year aviation plan.
Do you -- what is the status of those two plans? Are -- is there any report that's being --
ADM. MULLOY: For the 30-year aviation plan, the Department of the Air Force and Navy provide input. OSD will send that to the Hill. There is no 30-year shipbuilding plan, as required into a law that was committed with the QDR. But it -- so there isn't one this year. All I can say is we added five ships more than we had last year. So it's got to be moving along, and a few just came forward. But there is no 30-year plan or won't be one this year.
I appreciate you all very much. Thank you all very much.