Page 1
29 February 2012 DoD Budget Analysis – GAE - 1
U.S. DoD Budget:
Strategy / Budget / Projections
“DoD in the Crosshairs”
IHS Aerospace & Defense
Jane’s JDB / JDSF Team
29 February 2012
Guy Eastman
Senior Analyst II
Paul Burton
Senior Principal Analyst
Page 2
29 February 2012 DoD Budget Analysis – GAE - 2
Agenda / Analysis Approach
• The Problem / Situation / Environment
• New Defense Strategy – Key Elements
• Target Reductions
• DoD “Top Line” Budget Baseline and Military Personnel
• Budget Views
• Strategy / Impacts / Implications by Service
• Program Terminations / Divestitures
• Industrial Base Implications
• Conclusion
Page 3
29 February 2012 DoD Budget Analysis – GAE - 3
And More Bad News
U.S. Government National Budget
U.S. Gov't Budget Actual Actual CR Req. Est. Est. Est. Est. Est. Est. Est. Est. Est. Total Total
$B (in current $) FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY12-16 FY12-21
Receipts 2,105 2,163 2,174 2,627 3,003 3,333 3,583 3,819 4,042 4,257 4,473 4,686 4,923 16,365 38,747
Outlays 3,518 3,456 3,819 3,729 3,771 3,977 4,190 4,468 4,669 4,876 5,154 5,422 5,697 20,134 45,952
Deficit (1,413) (1,294) (1,645) (1,101) (768) (645) (607) (649) (627) (619) (681) (735) (774) (3,769) (7,205)
Gross Domestic Product 14,128 14,508 15,080 15,813 16,752 17,782 18,804 19,791 20,755 21,679 22,624 23,608 24,633 88,942 202,241
Receipts as % of GDP 14.9% 14.9% 14.4% 16.6% 17.9% 18.7% 19.1% 19.3% 19.5% 19.6% 19.8% 19.9% 20.0% 18.4% 19.2%
Outlays as % of GDP 24.9% 23.8% 25.3% 23.6% 22.5% 22.4% 22.3% 22.6% 22.5% 22.5% 22.8% 23.0% 23.1% 22.6% 22.7%
Deficit as % of GDP -10.0% -8.9% -10.9% -7.0% -4.6% -3.6% -3.2% -3.3% -3.0% -2.9% -3.0% -3.1% -3.1% -4.2% -3.6%
Defense (Base Budget)* 515.4 530.1 549.1 553.0 570.7 586.4 598.2 610.6 621.6 632.8 644.1 655.7 667.5 2,918.9 6,140.6
Defense as % of GDP 3.6% 3.7% 3.6% 3.5% 3.4% 3.3% 3.2% 3.1% 3.0% 2.9% 2.8% 2.8% 2.7% 3.3% 3.0%
FY13 Defense Base Budget on 13 Feb 2012
Defense (Base Budget)* 515.4 530.1 526.1 530.6 525.4 533.6 545.9 555.9 567.3 577.5 587.9 598.5 609.3 2,691.5 5,631.9
Defense as % of GDP 3.6% 3.7% 3.5% 3.4% 3.1% 3.0% 2.9% 2.8% 2.7% 2.7% 2.6% 2.5% 2.5% 3.0% 2.8%
* does not include OCO
“Significant Deficits as Far as the Eye Can See”
Page 4
29 February 2012 DoD Budget Analysis – GAE - 4
Situation / Environment
• Nation’s debt crossed $15 trillion mark on 15 November 2011
• Budget Control Act of 5 August 2011 placed caps on discretionary spending,
requiring DoD spending reductions of ~ $487 billion over 10 years
• Congress recommended and President signed DoD budget reductions of
~ $24.6B to FY12 DoD Budget
• Joint Select Committee on Deficit Reduction failed to propose a deficit
reduction solution to the Congress and the nation by 23 November 2011
• Sequestration has been “triggered,” but no consensus exists how to address
this major issue
• DoD FY13 Budget submission to President does not include the additional
reductions due to sequestration; PRESBUDG submitted 13 Feb 2012
• Additional sequestration reductions due to become effective in Jan 2013
• Another debt ceiling debate expected in spring 2013 for ~ $3 trillion increase
Page 5
29 February 2012 DoD Budget Analysis – GAE - 5
New Defense Strategy – Key Elements
Excerpts from 5 Jan 2012 Defense Strategy Press briefing:
• Smaller, leaner ground force … priority shift toward the Asia-Pacific region
• Counter violent extremists … counter ballistic missiles and weapons of mass destruction
• No longer sized to support large-scale, long-term stability operations
• Quickly surge or regenerate forces
• Examine active and reserve components mix … strong National Guard and Reserve
• U.S. military capable of engaging more than one enemy at a time
• Innovative, low-cost, small-footprint approaches to achieving security objectives
• Protecting investments for special operations forces, ISR, unmanned and space systems,
cyberspace capabilities, mobilization capacity
• Develop new, long-range stealth bomber for anti-access, area denial environments
• Some military programs would be scaled back, slowed or cancelled
• Others to receive more resources in the budgeting process
• Partner with military industrial base
Page 6
29 February 2012 DoD Budget Analysis – GAE - 6
Target Reductions – Budget Control Act
• $487 billion over ten years (by FY21) IAW Budget Control Act of 2011
• Included in the $487 billion is $259 billion over next five years (by FY17)
with targets of $131 billion in modernization, $68 billion in personnel
and $60 billion in efficiencies
• Sequestration, if implemented fully, could add an additional ~ $500
billion for a total of ~ $1 trillion over ten years
• Active duty End Strength reduction ~ 112,200 from FY11 to FY17
• Civilian positions reduction of ~ 75,000 or more
• Overall funding reduction by FY21 of 8.6% (not counting sequestration)
Page 7
29 February 2012 DoD Budget Analysis – GAE - 7
DoD Budget “Top Line” Baseline (as of 13 Feb 2012 PRESBUDG)
DoD FY13-17 Proposed Outyear BA Topline (in $B current $)
DoD Base Approp. Proposed Proposed Proposed Proposed Proposed Proposed CAGR %
Budget in $B FY12 FY13 FY14 FY15 FY16 FY17 FY13-17 FY12-17
FY 2012 PB 553.1 570.7 586.4 598.2 610.6 621.6 2,987.5 2.4%
FY 2013 PB 530.6 525.4 533.6 545.9 555.9 567.3 2,728.1 1.3%
Delta -22.4 -45.3 -52.8 -52.3 -54.7 -54.3 -259.3
Real Growth* -1.6% -2.5% 0.0% 0.8% 0.2% 0.2% -0.3%
*Real Growth calculated from the FY 2012 Approp. level of $530.6B
DoD Budget Summary
DoD Disc. Budget Approp. Proposed Proposed Proposed Proposed Proposed Proposed CAGR %
$B (in current $) FY12 FY13 FY14 FY15 FY16 FY17 FY13-17 FY12-17
Base Budget 530.6 525.4 533.6 545.9 555.9 567.3 2,728.1 1.3%
OCO 115.1 88.5 50.0 50.0 50.0 44.0 282.5 -17.5%
Total Disc. Budget 645.7 613.9 583.6 595.9 605.9 611.3 3,010.6 -1.1%
DoD Budget FY12-13 Delta
DoD Budget Actual Approp. Proposed Change % Change
$B (in current $) FY11 FY12 FY13 FY12-13 FY12-13
Base Budget 528.2 530.6 525.4 -5.2 -1.0%
OCO 158.8 115.1 88.5 -26.6 -23.1%
Total Disc. Budget* 687.0 645.7 613.9 -31.8 -4.9%
Page 8
29 February 2012 DoD Budget Analysis – GAE - 8
FY13 DoD Budget by Service
FY13
Army
Navy*
Air Force
Defense-Wide
FY13
Army
Navy*
Air Force
Defense-Wide
DoD Base Budget Proposed Proposed
$B (in current $) FY13 in %
Army 134.6 25.6%
Navy* 155.9 29.7%
Air Force 140.1 26.7%
Defense-Wide 94.9 18.1%
Total Budget 525.4 100.0%
* includes Marine Corps
DoD Total Budget Proposed Proposed
$B (in current $) FY13 in %
Army 184.6 30.1%
Navy* 170.1 27.7%
Air Force 154.3 25.1%
Defense-Wide 104.8 17.1%
Total Budget 613.9 100.0%
* includes Marine Corps
Base Budget in $B Total Budget w/OCO in $B
Page 9
29 February 2012 DoD Budget Analysis – GAE - 9
FY13 DoD Budget by Title
Total FY13 Budget w/OCO = $613.9B
FY13
Military Personnel
Operations & Maint.
Procurement
RDT&E
Revolv. & Mgmt Funds
Military Construction
Family Housing
Miscellaneous
OCO
DoD Total Budget Proposed Proposed
$B (in current $) FY13 in %
Military Personnel 135.1 22.0%
Operations & Maint. 193.8 31.6%
Procurement 98.9 16.1%
RDT&E 83.2 13.6%
Revolv. & Mgmt Funds 1.3 0.2%
Military Construction 8.7 1.4%
Family Housing 1.7 0.3%
Miscellaneous 2.7 0.4%
OCO 88.5 14.4%
Total Budget 613.9 100.0%
Available $B FY13 Av. in %
Procurement 94.0 95.0%
RDT&E 62.4 75.0%
Operations & Maint. 48.5 25.0%
Total Base Available 204.9 39.0%
OCO 44.3 50.0%
Total Base Available 249.1 40.6%
95% 25%
75%
50%
% Assumptions
Available to Industry
Page 10
29 February 2012 DoD Budget Analysis – GAE - 10
FY13 DoD Budget by Mission Category
26.6%
5.0%
12.6%
6.1%4.5%
5.7%
4.6%
28.2%
6.7%Aircraft
$47.6B
Shipbuilding &
Maritime Systems
$22.6B
Ground
Systems
$10.9BMissile
Defense
$9.0B
Space Based
Systems
$8.0B
Missiles &
Munitions
$10.2B
C4I Systems
$8.2B
Mission
Support
$50.4B
RDT&E S&T
$11.9B
FY13 Total Modernization Accounts (incl. OCO)
$178.8B
Cyber $
distributed
throughout
Page 11
29 February 2012 DoD Budget Analysis – GAE - 11
FYDP vs. Sequestration
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21
DoD Total
FY12 FYDP
FY13 FYDP
Sequestration
1. FY13 FYDP does not include sequestration
2. Assumes 2% growth after FY17
DoD FYDP vs. Sequestration in $M
$M
Page 12
29 February 2012 DoD Budget Analysis – GAE - 12
U.S. Army
Page 13
27 February 2012 DoD Budget Analysis – GAE - 13
569,400 active duty Army personnel Reduce by 79,400 by FY17 End strength at 490,000 in FY17
Ground Combat Vehicle development Program delayed (protest resolved) Free up resources for higher priority
Joint Light Tactical Vehicle buy Commit resources to JLTV buy More modern equipment
4 heavy brigades in Germany Redeploy 2 heavy brigades to U.S. Strengthen Reserve Component
Aging Army aviation assets Delay helo modernization 3-5 years More risk in Army aviation
45 active Brigade Combat Teams Remove at least 8 BCTs Maximum of 32 - 37 BCTs
Army Special Operations Forces Release SOF assets to COCOMs Aligning forces to support COCOMs
Army Reserve Component Only marginal Reserve reductions Capable and ready Reserve Comp.
Joint Air-to-Ground Munition (JAGM) JAGM significantly reduced Hellfire as alternative missile
JLENS Cruise Missile Defense Curtailed JLENS due to cost A risk area
Army Gray Eagle UAV Protected funding for Gray Eagle ISR / Counter-terrorism capability
Joint Tactical Radio System (JTRS) Cancel JTRS Ground Mobile Radio Search for more cost effective radio
NATO and National Guard operations Strengthen partnerships / innovation Rotational training exercises
Army Strategy
“As Is” Change Result
Page 14
29 February 2012 DoD Budget Analysis – GAE - 14
Army Aircraft Procurement Army Aircraft Quantity in Units POM Total Total POM Delta TP Delta
Program FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY12-17 Program FY12-17 FY12-17
MQ-1 Gray Eagle UAS 26 29 29 19 15 15 78 107 0 -26
RQ-11 Raven SUAS 876 312 900 234 189 204 153 1,680 2,100 0 -768
UH-72A Lakota LUH 54 50 39 34 31 10 114 164 1 -181
AH-64 Apache BL IIIA Reman. 8 16 19 40 38 37 44 37 215 260 -24 -374
AH-64 Apache BL IIIB New 10 10 11 4 11 46 65 -11 8
OH-58 Kiowa Warrior WRA 9 16 25 25 25 25
UH-60 Blackhawk M MYP 81 99 72 59 57 56 65 53 362 560 -69 -1,359
CH-47F Chinook 37 49 48 44 28 30 39 27 216 383 -16 8
Total 1,082 555 1,116 456 368 363 305 128 2,736 3,664 -94 -2,667
FY13 PRESBUDG
Reduction of 94 Aircraft and $1.0B in Plan Period (- 4.1%)
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
CH-47F Chinook
UH-60 Blackhawk M MYP
OH-58 Kiowa Warrior WRA
AH-64 Apache BL IIIB New
AH-64 Apache Bl IIIA Reman.
UH-72A Lakota LUH
RQ-11 Raven SUAS
MQ-1 Gray Eagle UAS
FY12 Aircraft Total
Remarks:
• Large number of
UAS being procured
• Blackhawk and
Chinook helos drive
Army aircraft plan
• Large cut in Blackhawk
helo production
$M
Page 15
29 February 2012 DoD Budget Analysis – GAE - 15
Army Procurement and R&D
Funding Drivers
General Reductions in Procurement and R&D in Plan Period
Large Reductions in:
• Family of Medium
Tactical Vehicles
• HMMWV Recap
• Guided MLRS Rockets
Large Increases in:
• Hellfire II Missiles
• WIN-T Tactical Network
• JTRS (restructure)
$M
0
2,000
4,000
6,000
8,000
10,000
12,000
FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
R&D: MQ-1 Gray Eagle UAV
R&D: Aerostat JPO (JLENS)
R&D: Joint Light Tactical Veh ED
R&D: Ground Combat Vehicle
R&D: Army Int. Air & Missile Def.
R&D: PAC-3 / MSE Missile
R&D: Patriot / MEADS CAP
R&D: WIN-T Dem / Val
JIEDDO PO Funding
WIN-T Ground Tact Network
Joint Tactical Radio System
Guided MLRS Rocket
Javelin Missile
Hellfire II Missile
Patriot PAC-3 Missile
HMMWV Recapitalization
Family of Heavy Tact Veh
Family of Medium Tact Veh
JLTV (OY) Production
Abrams Upgrade Program
Impr. Rec. Vehicle Hercules
Stryker Vehicle
Page 16
29 February 2012 DoD Budget Analysis – GAE - 16
Implications by Service – Army
• Army will become smaller and leaner, but still larger than in 2001
• Reduce at minimum 8 Brigade Combat Teams out of 45 today
• Prolonged, large-scale stability operations not anticipated
• Maintain Reserve Component for regeneration / reversibility
• Retain mid-grade NCOs and commissioned officer for experience levels
• Anticipate redeployments of overseas brigades to home station
• Modernization accounts will not be sufficient to reset all war equipment
• Delay in Army aging aviation asset modernization
• Strengthen partnerships with NATO / Allies through rotational deployments
Smaller, Leaner, More Agile
Base Budget Increase of $0.65B from FY12 to FY13
Page 17
29 February 2012 DoD Budget Analysis – GAE - 17
U.S. Navy
Page 18
27 February 2012 DoD Budget Analysis – GAE - 18
11 aircraft carriers / 10 air wings No change CVNs / Air Wings maintained
22 Aegis cruisers / 61 Aegis DDGs Retire 7 Aegis CGs early 15 Aegis CGs / building to 75 DDGs
8 + 1 LHD / LHA “big deck” amphibs No change / slip new LHA by 1 year “Big deck” amphibs / lift maintained
5 LPD 17 class + 12 LSD 41 class Retire 2 LSDs early Reduced USMC lift until more LPD 17
2 LCS ships / more in construction Reduce by 2 LCS in FYDP Minor slowdown/station in Singapore
53 attack submarines (SSNs) Slip 1 SSN 774 class outside FYDP Slowdown / risk in Virginia buildout
Virginia 12 cruise missiles per boat Increase cruise missile capacity Future SSN 774 class greater clout
14 Ohio FBM (Trident) submarines Delay SSBN(X) replacement by 2 yrs Aging Ohio-class service extension
No SSN conventional prompt strike Design prompt strike option Greater submarine power projection
F-35C (CV) JSF testing / LRIP prod. Slowed procurement / more testing Minor reduction in JSF POR number
Current JHSV plan for 18 ships Reduce FYDP JHSV build by 8 ships JHSV buildout truncated to 10 ships
MRMUAS program development Program cancelled / R&D saved MQ-8C FireScout solution possible
328,700 active duty Naval personnel Reduce by 9,200 personnel by FY17 End strength at 319,500 in FY17
Navy Strategy
“As Is” Change Result
Page 19
29 February 2012 DoD Budget Analysis – GAE - 19
Navy & NDSF FY13 Shipbuilding Plan
10 Ships of 5 Types Funded in FY13; 47 Ships in FYDP
Pink shade indicates change from FY12 plan
• Low point of Navy SCN plan is FY14 with only 6 ships funded for a total of $12.9 billion
• Aegis Modernization of cruisers and destroyers taking place in plan period, but funded with OPN and O&M,N
• 10 ships taken out of plan since FY12 USN Budget (6 are JHSV)
• In National Defense Sealift Fund, 0 ships funded in FY13, but 5 ships funded in the FYDP
New Construction Ships in Units POM Total Total POM Delta TP Delta
Program FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY12-17 Program FY12-17 FY12-17
CVN Replacement 1 1 3 0 0
Virginia SSN 1 2 2 2 1 2 2 2 11 30 -1 0
DDG 51 1 2 1 2 1 2 2 2 10 75 0 0
LCS 2 2 4 4 4 4 2 2 20 55 -3 0
LPD 17 1 1 11 0 0
LHA 6 1 1 1 3 0 0
JHSV 1 1 2 1 0 0 0 0 3 6 -6 -12
New Construction 5 8 10 10 6 8 6 7 47 183 -10 -12
CVN Refueling OH 1 1 2 0
AGOR & Other 1 1 1 1 3 1
Service Craft 2 2 1 0 3 3 5 5 17 52 3
LCAC SLEP 3 4 4 2 4 4 4 4 22 -1
Modernization 5 7 6 3 7 8 10 10 44 52 3
NDSF:
T-ATF(X) 2 2 2 1 1
MLP / AFSB 2 1 1 2 4 0 1
T-AO(X) 1 1 1 1 1
T-AKE 2 0 14 0 0
NDSF Funded: 2 2 1 0 1 0 3 0 5 21 2 3
FY13 PRESBUDG
Page 20
29 February 2012 DoD Budget Analysis – GAE - 20
Navy SCN Funding Plan
• USS Gerald R. Ford (CVN 78) under construction
• USS George Washington (CVN 73) RCOH
• Continue Virginia-class SSN build out to 30 boats
• Zumwalt-class (DDG 1000) under construction
• Continue Arleigh Burke Aegis DDG build out to 75
• Continuing LCS build out to POR of 55 ships
• Last ship of San Antonio-class (LPD 17)
• Building America-class LHA “big deck” amphibs
• Current JHSV plan for 6 ships; 6 cut from plan
• 3 LCSs taken out of plan
• A total of 10 ships taken out of FY13 plan
Plan Elements (FY12 – FY17)$M
$6.23B (6.3%) Taken out of SCN 0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
Other Ship Programs
JHSV
LHA 6
LPD 17
LCS
DDG 51
DDG 1000
Virginia SSN
CVN Refueling OH
CVN Replacement
FY12 SCN Plan
Page 21
29 February 2012 DoD Budget Analysis – GAE - 21
Navy FY13 Aircraft Procurement Plan(Only APN BA 1-4 new aircraft)
191 Aircraft / UAVs Funded in FY13; 974 A/C / UAVs in FYDP
Pink shade indicates change from FY12 plan
• Low point of Navy APN plan is FY17 with 111 aircraft / UAVs funded for a total of $12.1 billion
• 117 aircraft / UAVs taken out of plan since FY12 USN Budget, including 79 F-35 JSF aircraft
• Table includes USMC “Blue dollars” to procure USMC aircraft and UAVs (see red arrows)
Aircraft Procurement Quantity in Units POM Total Total POM Delta
Program FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY12-17 Program FY12-17
EA-18G Growler 22 12 12 12 24 114 0
F/A-18E/F Super Hornet 18 31 28 26 13 67 565 0
F-35C Lightning II (CV) 20 7 7 4 4 6 9 14 44 321 -54
F-35B Lightning II (STOVL) 3 6 6 6 6 9 14 47 290 -25
V-22 Osprey (MYP) 30 30 30 17 18 19 19 18 121 408 -24
UH-1Y / AH-1Z Helos 27 31 25 27 26 27 26 31 162 348 1
MH-60S (MYP) Helo 18 18 18 18 18 8 62 275 0
MH-60R (MYP) MM Helo 24 24 24 19 19 31 38 131 289 -9
P-8A Poseidon MMA 6 7 11 13 17 20 20 13 94 107 -10
E-2D Adv. Hawkeye 3 5 5 5 5 7 6 7 35 113 -10
T-6 Texan II JPATS 36 33 31 100 100 40
KC-130J Hercules 1 2 2 2 2 9 104 -7
RQ-4 BAMS UAS Adv. Proc. 3 4 4 5 16 65 16
MQ-8 Fire Scout UAV 12 3 12 6 7 7 8 6 46 168 -24
STUAS (Lite) 60 5 5 5 15 75 -5
Other Aircraft 6 1 0 0 0 0 0 1 1 19 -6
Total 186 232 215 191 174 142 141 111 974 3,361 -117
FY13 PRESBUDG
Page 22
29 February 2012 DoD Budget Analysis – GAE - 22
• 54 F-35C (CV) taken out of FY13 plan
• 25 F-35B (STOVL) taken out of FY13 plan
• Navy reduced F-35C total requirement by 48 A/C
• USMC reduced F-35B total requirement by 21 A/C
• 24 USMC V-22 Osprey taken out of plan
• 9 MH-60R helos taken out of plan and req’t
• 10 P-8A Poseidon MMA A/C taken out of plan / req’t
• 10 E-2D Adv. Hawkeye taken out of plan
• Added 40 T-6 JPATS but cut req’t by 195 aircraft
• Added RQ-4 BAMS Adv. Procurement
• A total of 117 aircraft / UAVs taken out of FY13 plan
Plan Elements (FY12 – FY17)$M
$12.1B (13.3%) Taken out of APN 0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
FY10FY11FY12FY13FY14FY15FY16FY17
Other Aircraft
STUAS (Lite)
MQ-8 Fire Scout UAV
RQ-4 BAMS UAS Adv. Proc.KC-130J Hercules
T-6 Texan II JPATS
E-2D Adv. Hawkeye
P-8A Poseidon MMA
MH-60R (MYP) MM HeloMH-60S (MYP) Helo
UH-1Y / AH-1Z Helos
V-22 Osprey (MYP)
F-35B Lightning II (STOVL)F-35C Lightning II (CV)
F/A-18E/F Super Hornet
EA-18G Growler
FY12 APN 1-4 Plan
Navy APN Funding Plan(Only APN BA 1-4 new aircraft)
Page 23
29 February 2012 DoD Budget Analysis – GAE - 23
Implications by Service – Navy
• 11 CVNs and 10 Air Wings maintained for power projection in contested anti-access / area denial (A2/AD) environments
• Early surface ship retirements, shipbuilding program delays and cost increases push out date for 313 ship Navy
• Rebalancing to Asia-Pacific means renewed emphasis on air and naval forces
• Strategy includes forward basing ships in Japan, Rota, Singapore, Bahrain
• F-35C JSF (CV) procurement slowdown means 54 less aircraft in near-term
• Aegis Ballistic Missile Defense needed for robust homeland defense
• Two-year SSBN(X) development delay puts strain on Ohio-class FBM SSBNs
• Increased emphasis on SOF (SEALS) for COCOM support
• A robust shipbuilding industrial base is critical to the success of the Navy
313 Ship Navy Still over the Horizon
DoN Base Budget Reduction of $0.91B from FY12 to FY13
Page 24
29 February 2012 DoD Budget Analysis – GAE - 24
U.S. Air Force
Page 25
27 February 2012 DoD Budget Analysis – GAE - 25
Current bomber fleet Minor change, reduce B-1B by 6 A/C Maintained bomber fleet for AA/AD
No new bomber Increase funding for new bomber Protect power projection forces
ICBM inventory Fewer silos / reduce inventory Maintain ICBM deterrent with less
F-35 JSF testing / LRIP production Slowed procurement / more testing Committed to long-term JSF POR
A-10 / F-15 / F-16 squadrons Retire 5 A-10, 1 F-15, 1 F-16 squadrons ~ 135 less tactical aircraft (102 A-10)
Aging C-5A airlifter fleet Retire 27 aging C-5A Galaxy A/C 52 C-5Ms and 222 C-17 aircraft
Aging C-130 fleet Retire 65 of oldest C-130 Hercules 318 C-130 aircraft
38 C-27J Joint Cargo Aircraft Divest current and planned C-27J Employ C-130 aircraft in mission
RQ-4 Global Hawk fleet Cancel Global Hawk Block 30 A/C Other RQ-4 blocks / extend U-2
MQ-1/9 Predator / Reaper fleet Sustain 65 MQ-1/9 CAPs 65 CAPs with surge to 85
Existing space satellites Protected $ for SBIRS, AEHF, GPS Maintain ISR, comm, navigation
Defense Weather Satellite System Terminate DWSS program Program premature to need
332,200 active Air Force personnel Reduce by 3,600 personnel by FY17 End strength at 328,600 in FY17
Air Force Strategy
“As Is” Change Result
Page 26
29 February 2012 DoD Budget Analysis – GAE - 26
USAF FY13 Aircraft Procurement Plan(Only APAF BA 1-4 new aircraft)
74 Aircraft / UAVs Funded in FY13; 642 A/C / UAVs in FYDP
Pink shade indicates change from FY12 plan
• Low point of USAF APF plan is FY13 with 74 aircraft / UAVs funded for a total of $5.3 billion
• 135 aircraft / UAVs taken out of plan since FY12 USN Budget, including 99 F-35A JSF aircraft
Aircraft Procurement Quantity in Units POM Total Total POM Delta
Program FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY12-17 Program FY12-17
F-35A Lightning II 10 25 18 19 19 32 48 48 184 1,763 -99
F-22 Raptor 0 179 0
C-17A Globemaster (MYP) 10 1 1 224 1
C-130J Hercules 4 8 1 12 10 7 30 134 -3
HC-130 Recapitalization 4 3 1 3 2 4 2 15 37 -1
MC-130 Recapitalization 5 6 4 7 2 5 5 29 69 3
HC/MC-130 Recap 2 0 15 0
AC-130 Recapitalization 1 2 5 8 16 -8
C-27J JCA 8 8 9 9 25 0
C-12A 5 0 42 0
C-40 3 0 6 0
C-37 1 2 3 3 7 0
Light Mobility Aircraft 15 0 15 0
USAFA Powered Flight 13 12 0 25 0
T-6 Texan 0 452 0
Common Vert. Lift Sppt. 2 2 2 -26
CV-22 Osprey 5 6 5 4 3 12 49 -1
HH-60M Operational Loss Repl. 4 16 4 4 24 0
Light Attack Armed Recon A/C 6 6 6 -9
RQ-11 Raven B 50 0 50 0
RQ-4 Global Hawk 4 4 3 3 45 -10
MQ-9 Reaper 24 48 48 24 24 24 24 24 168 401 -72
STUASL0 33 25 22 22 80 22
Target Drones 9 15 18 20 25 25 103 112 25
Civil Air Patrol 5 18 5 5 5 5 5 43 76 43
Interim Gateway 1 0 1 0
Total 127 242 150 74 96 95 118 109 642 3,855 -135
FY13 PRESBUDG
Page 27
29 February 2012 DoD Budget Analysis – GAE - 27
USAF FY13 APAF Funding Plan(Only APAF BA 1-4 new aircraft)
• 99 F-35A (CTOL) taken out of FY13 plan
• Last F-22 Raptor delivered (179)
• C-17A Globemaster production essentially done
• Buying 30 C-130J Hercules in plan
• Investing in HC/MC/AC-130 recapitalization – 52 A/C
• Divested C-27J Spartan JCA
• Ordered 12 CV-22 Osprey in plan
• Cancelled RQ-4 Global Hawk Block 30 airframe
• Took 72 MQ-9 Reaper UAV out of plan
• A total of 135 aircraft / UAVs taken out of FY13 plan
• A 27.7% reduction in FY13 alone
Plan Elements (FY12 – FY17)$M
$12.5B (22.7%) Taken out of APAF 0
2,000
4,000
6,000
8,000
10,000
12,000
FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
Other Aircraft
Target Drones
STUASL0
MQ-9 Reaper
RQ-4 Global Hawk
RQ-11 Raven B
Light Atk Armed Rec.
HH-60M Oper. Loss
CV-22 Osprey
Common Vert. Lift
Light Mobility Aircraft
C-37
C-27J JCA
AC-130 Recap.
MC-130 Recap.
HC-130 Recap.
C-130J Hercules
C-17A Globemaster
F-22 Raptor
F-35A Lightning II
FY12 APF 1-4 Plan
Page 28
29 February 2012 DoD Budget Analysis – GAE - 28
USAF FY13 Missiles & Space
Procurement Plan
USAF Scaling Back Its Missile Procurement
• USAF procuring 919 fewer Missiles in FY13 Plan and requirement dropped by 507 Missiles
• USAF procuring 1 additional satellite in FY13 Plan, but requirement increased by 18 satellites (i.e., GPS III)
Missiles & Space OPF Budget in Qty POM Total Total POM Delta TP Delta
Program FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY12-17 Program FY12-17 FY12-17
Missiles:
JASSM 0 171 142 157 163 204 360 360 1,386 4,900 54 0AIM-9X Sidewinder 219 178 125 164 150 248 153 153 993 5,030 -447 0
AGM-114 Hellfire 1,175 938 678 693 412 419 419 419 3,040 9,889 223 -11
AMRAAM 170 246 138 113 195 211 230 229 1,116 11,778 -749 -496
Total Missiles 1,564 1,533 1,083 1,127 920 1,082 1,162 1,161 6,535 31,597 -919 -507
Space:
Advanced EHF 1 2 2 4 -2 -2
Wideband Gapfiller Satellites 1 2 2 8 1 1
GPS III Space Segment 2 2 2 2 2 3 13 30 2 19
Evolved Expend. Launch Veh. (EELV)3 3 4 4 5 5 5 5 28 150 0 0
SBIRS High (Space) 1 1 2 2 6 0 0
Total Space 5 5 10 8 7 7 7 8 47 198 1 18
FY13 PRESBUDG
Page 29
29 February 2012 DoD Budget Analysis – GAE - 29
USAF FY13 Missiles & Space
Procurement Plan
USAF Spending More on Satellite Procurement
0
200
400
600
800
1,000
1,200
FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
AMRAAM
AGM-114 Hellfire
AIM-9X Sidewinder
JASSM
FY12 Missiles
0
1,000
2,000
3,000
4,000
5,000
FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
SBIRS High (Space)
Evolved Expend. Launch Veh. (EELV)
GPS III Space Segment
Wideband Gapfiller Satellites
Advanced EHF
Missiles:919 fewer missiles;
$608M less funding
in plan period;
JASSM & AMRAAM
are drivers
Satellites:1 add’l satellite;
$1,800M more
funding in plan period;
GPS III up to 30 as
requirement;
EELV is driver
$M
$M
Page 30
29 February 2012 DoD Budget Analysis – GAE - 30
Implications by Service – Air Force
• Rebalancing to Asia-Pacific means renewed emphasis on air and naval
forces for power projection in contested A2/AD environments
• Current bomber force maintained and new generation bomber funded
• Maintain ICBM deterrent with fewer missiles
• F-35A JSF procurement slowdown means 99 less aircraft in near-term
• Buying only 54 new aircraft in FY13 – the low point of procurement
• Retirement of one F-15, one F-16 and five A-10 squadrons plus 27 C-5A,
65 C-130 and 38 C-27J airlifters means ~ 227 less tactical aircraft
• KC-46A tanker a critical development effort over next 10 years
• Aging aircraft will get older before replacement
Fly, Fight and Win in Air, Space and Cyberspace
Base Budget Reduction of $4.8B from FY12 to FY13
Page 31
29 February 2012 DoD Budget Analysis – GAE - 31
U.S. Marine Corps
Page 32
27 February 2012 DoD Budget Analysis – GAE - 32
USMC force structure in Pacific AOR Maintain force structure in Pacific Maintain presence in contested areas
USMC force structure in Middle East Maintain persistent presence in ME Return to afloat posture
MARSOC / SOF forces Increase emphasis on MARSOC Increase personnel in SOCOM
F-35B JSF STOVL testing Continue testing / start LRIP prod. Slowed F-35B procurement
MV-22 Osprey fleet Continue 408 MV-22 MYP build Improved afloat lift capabilities
Expeditionary Fighting Vehicle (EFV) Previously cancelled EFV program Search for modern afloat assault veh.
Aging HMMWV fleet Upgrades deemphasized Focus on JLTV development / buy
Simulation & Training structure Continue S&T emphasis Better trained Marines for COCOMs
Remotely Piloted Vehicle (RPV) fleet 4 initiatives underway * Ensure persistent ISR capability
202,100 active duty USMC personnel Reduce by 20,000 by FY17 End strength at 182,100 by FY17
Marine Corps Reserve at 39,600 Unchanged Maintain USMC Reserve as is
* MCTUAS, CRUAS, STUAS, & SUAS
Marine Corps Strategy
“As Is” Change Result
Page 33
29 February 2012 DoD Budget Analysis – GAE - 33
Marine Corps Procurement
USMC PMC “Green Dollars”
PMC Driven by EOD, LAV PIP and Radar Systems
• PMC account drivers: Explosive Ordnance Disposal, Light Armored Vehicle Product Improvement, Radar systems
• USMC procuring 869 fewer Medium Tactical Vehicle Replacement for motor transport
• USMC procuring an additional 146 Heavy Tactical Logistics Vehicles
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
Other PMC Programs
EOD Systems
Logistics Veh. Sys. Repl.
Med. Tactical Vehicle Rep.
Radio Systems
Command Post Systems
Common Computer Res.
Intelligence Support Equip.
Radar Systems
Air Ops C2 System
SMAW Follow-On Rocket
HIMARS
155mm LW Towed HowitzerExp. Fire Support System
LAV PIP
FY12 PMC
$M
Page 34
29 February 2012 DoD Budget Analysis – GAE - 34
Implications by Service – Marine Corps
• Marine Corps will become smaller by 20,000, but still larger than in 2001
• Retire 6 of 41 Battalion Landing Teams and 4 of 20 tactical air squadrons
• Marine Corps force structure in Asia-Pacific AOR maintained
• Marine Corps to return to afloat / amphibious operations mission
• F-35B JSF STOVL procurement slowdown means 25 less aircraft in near-term
• MV-22 Osprey procurement providing needed lift capability for amphibious ops
• Expect an increase in SOF (MARSOC) forces and funding
• Investment in Joint Light Tactical Vehicle (JLTV) development expected
• Expect continued investment in Simulation and Training of Marines
Smaller, But Still Mission Focused
DoN Base Budget Reduction of $0.91B from FY12 to FY13
Page 35
29 February 2012 DoD Budget Analysis – GAE - 35
Defense-Wide
Page 36
27 February 2012 DoD Budget Analysis – GAE - 36
Ballistic Missile Defense programs Protected homeland defense / EPAA Reduced regional defense / Allies
AN/TPY-2 BMD radar build Reduction in procurement quantity Less regional missile defense
THAAD missile production Reduction in procurement quantity Rely on Allies missile defense
Cyber capabilities Increase investment in cyber ops Improved defensive / offensive ops
Special Operations Forces assets Release to COCOMs / other regions Maintain / improve SOF
Counter weapon of mass destruction Protected investment Expanded to biological weapons
ISR capabilities New unmanned advanced systems Combat counter-terrorism
Science & Technology (S&T) base Largely protected Maintain competitive edge
Military pay Full pay raises in FY13 & FY14 Limited pay raises starting in FY15
DoD civilian end strength Reduce civilian staffing / pay freeze Reorganizations / consolidations
Existing health care benefits Increase TRICARE fees / copays Better cost control
Wounded Warriors, families, veterans Sustain & enhance support programs Respond to troops / families’ needs
Military retirement benefits Special commission review benefits Only future recruits to be affected
Defense-Wide and Across the Board
Strategies
“As Is” Change Result
Page 37
29 February 2012 DoD Budget Analysis – GAE - 37
Defense-Wide BMD Procurement
BMD Missile Procurement Slowed, Especially THAAD “Regional” Defense
BMD Procurement, DW in Quantity POM Total Total POM Delta TP Delta
Program FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY12-17 Program FY12-17 FY12-17
THAAD Missile 26 22 42 36 36 36 36 36 222 453 -112 0
Aegis BMD SM-3 Missile 18 26 46 29 69 82 77 72 375 450 -46 10
BMDS AN/TPY-2 Radar 1 2 1 3 4 -7 -7
SubTotal 45 48 90 66 105 118 113 108 600 907 -165 3
FY13 PRESBUDG
0
500
1,000
1,500
2,000
2,500
FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
BMDS AN/TPY-2 Radar
Aegis BMD
THAAD
FY12 Missiles / Radar
BMD Funding Scaled Back, in THAAD and in Radar Assets
$M
Page 38
29 February 2012 DoD Budget Analysis – GAE - 38
Defense-Wide BMD RDT&E
BMD Program RDT&E Funds Slowed, Especially Test and Targets
BMD R&D Funding Scaled Back $1.7B (- 4.2%)
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
FY13 PRESBUDG
All Other MDA R&D Programs
Next Generation Aegis Missile
Aegis SM-3 Block IIA Co-develop.
Land-Based SM-3
Aegis BMD
BMD Sensors
BMD Test and Targets
BMD Terminal Defense (THAAD)
BMD Mid-Course (GMD)
FY12 BMD RDT&E
• MDA scaled back RDT&E funds in BMD Tests & Targets, THAAD and Next Generation Aegis Missile
• MDA plussed up Aegis SM-3 Block IIA Co-development with Japan and Mid-Course GMD
$M
Page 39
29 February 2012 DoD Budget Analysis – GAE - 39
F-35 JSF Budget Projections
F-35 JSF Program Slowed by 179 A/C and $15.1B in Next 5 Years
F-35 JSF Procurement Quantities
F-35 JSF Procurement Funding in $M
Qty
$M
0
20
40
60
80
100
120
140
FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
USMC F-35B STOVL
USN F-35C CV
USAF F-35A CTOL
FY12 F-35 JSF
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
USMC F-35B STOVL
USN F-35C CV
USAF F-35A CTOL
FY12 F-35 JSF
0 -8 -1 -13 -33 -37 -42 -53 = -179 Total Reduction
0 -$1.7B -$0.3B -$1.5B -$2.9B -$3.3B -$3.5B -$3.7B = -$15.1B Total Reduction
Page 40
29 February 2012 DoD Budget Analysis – GAE - 40
Army Navy – Marine Corps
JTRS – Ground Mobile Radio (GMR)
Joint Air-to-Ground Munition (JAGM)
Ground Combat Vehicle (GCV) (protest delay)
EMARSS Reconnaissance / Surveillance aircraft
HMMWV Medium Expanded Capacity Vehicle
Family of Medium Tactical Vehicles (FMTV)(FY14)
Joint Precision Approach and Landing System
(JPALS)
Joint Land Attack Cruise Missile Defense
Elevated Netted Sensor System (JLENS)
Mounted Soldier System (MSS)
Joint Air-to-Ground Munition (JAGM)
Medium Range Maritime Unmanned Aerial
System (MRMUAS)
Expeditionary Fighting Vehicle (EFV) (USMC)
Air Force Defense-Wide
Global Hawk Block 30
Defense Weather Satellite System (DWSS)
Divest C-27J Joint Cargo Aircraft (JCA)
Divest 227 tactical aircraft
Defund C-130 Aviation Modernization Program
Light Mobility Airlifter (LiMA)
Light Attack Armed Reconnaissance (LAAR)
Airborne Laser (ABL) retired (MDA)
Sea-Based X-Band (SBX) Radar retired?
Program Terminations / Divestitures
Page 41
29 February 2012 DoD Budget Analysis – GAE - 41
Industrial Base Implications
• Concentrate on affordability and PERFORM, PERFORM, PERFORM
• Know your core competencies and apply them to the markets
• Utilize procurement Multi-Year Plans (MYPs) for savings, wherever possible
• Pursue growth in niche areas of cyber, ISR, SOF, RPVs and missile defense
• Control unit price increases as procurement base decreases
• Consolidate manufacturing where overcapacity exists
• Maintain innovation / advanced technology as Gov’t R&D funds will decrease
• Employ smart partnering / alliances to buy down risk and distribute investment
• Solidify supply base through teaming / distributing risk
• Pursue Simulation and Training opportunities where they exist
• Attend to your people – morale, training, listening, daily communications
Strategize, Understand Customers and Markets, Invest Wisely
Reduction of $487B through FY21 is an 8.6% reduction
Page 42
29 February 2012 DoD Budget Analysis – GAE - 42
Conclusion
• Build down underway for smaller, leaner, more affordable defense posture
• Need to protect the All Volunteer Force through this period
• Defend the homeland / support missile defense capability
• Rebalance force structure to emphasize Asia-Pacific region
• Manage a smaller nuclear deterrent profile
• Maintain innovation / cutting edge technology for competitive edge
• Manage decrease in Modernization accounts
• Monitor / protect military industrial base as much as possible
• Manage inherent risks of this build down
Yet … Remain the Strongest Military Force in the World
Reduction of $259B from FY13 to FY17; $487B through FY21