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IMMEDIATE RELEASE

Release No: 044-03
February 03, 2003

FISCAL 2004 DEPARTMENT OF DEFENSE BUDGET RELEASE

President George W. Bush today released details of his fiscal year (FY) 2004 Department of Defense (DoD) budget. The budget requests $379.9 billion in discretionary budget authority -- $15.3 billion above FY 2003.

The FY 2004 DoD budget is the first to reflect fully the Bush Administration's new defense strategy, which calls for a focus on the capabilities needed to counter 21st century threats such as terrorism - rather than on specific regional dangers or requirements.

The central theme of the new budget is "Meeting today's threats while preparing for tomorrow's challenges." The budget establishes a balance between near-term and longer-term demands - in FY 2004 as well as over the 6 years covered by the FY 2004-2009 Future Years Defense Program (FYDP). The budget funds strong support for:

  • Winning the global war on terrorism
  • Sustaining high quality people and forces
  • Transforming the U.S. military and defense establishment

The DoD prepared its FY 2004 budget using a new combined program/budget review process - with greater transparency and substantial interaction between the military services and the Office of the Secretary of Defense. The Department increased support for programs to transform the capabilities available to U.S. forces - while sustaining robust funding for near-term force readiness and the capabilities needed now in the war on terrorism.

The budget reflects Secretary Rumsfeld's insistence on realistic funding for all DoD programs. By making tough, strategy-driven decisions, the Department has established a program that can be executed with the funding projected in the President's budget.

Global War on Terrorism

In his FY 2003 budget, President Bush requested $10.1 billion for the Department's baseline funding including $8.2 billion for acquisition and other requirements resulting from the Department's experience in the global war on terrorism, $1.2 billion for increased air patrols in the continental United States, and $0.7 billion for implementation of the Nuclear Posture Review. Congress appropriated only $7 billion of the $10.1 billion requested. Congress did not appropriate the additional $10 billion the President requested as a contingency for FY 2003 incremental operations costs related to the global war on terrorism.

In the FY 2004 budget, the Department continues to acquire capabilities critical to the war on terrorism. FY 2004 initiatives for force protection and combating terrorism include intrusion detection systems, blast mitigation measures, chemical and biological detection equipment, personal protection gear, waterside security enhancements, harbor patrol boats, regional command systems, mass notification systems, and initiatives to restrict access to DoD installations.

Taking Good Care of our Military People

The FY 2004 budget continues the President's commitment to take good care of our military people, which is critical to U.S. security - both near-term and long-term. The budget:

  • Funds a range of military pay increases from 2.0 percent up to 6.25 percent, targeted by rank and years of service. These differential pay increases enhance the Department's ability to retain its most experienced soldiers, sailors, airmen, and marines.
  • Reduces out-of-pocket housing costs from 7.5 percent to 3.5 percent for personnel living in private housing. These costs are scheduled to drop to zero in FY 2005.
  • Keeps the Department on track to eliminate inadequate family housing in DoD by 2007 - except for four stateside Air Force installations (complete in 2008) and overseas Air Force installations (complete in 2009).
  • Provides $15.3 billion for the Defense Health Program, $0.5 billion above FY 2003.

Force Readiness

The new budget sustains the robust Operation and Maintenance (O&M) funding of last year - so that U.S. forces are fully prepared for intensely waging the war on terrorism and meeting other commitments. FY 2004 O&M discretionary budget authority is $117 billion, in real terms about 1 percent above FY 2003.

Readiness indicators are sustained at traditionally high levels. The FY 2004 readiness goals are about the same as last year, and all are met:

  • Army tank miles: 913
  • Army flying hours: 13.1 hours/crew/month
  • Navy flying hours: 20.8 hours/crew/month
  • Navy ship operations for deployed forces: 54 underway days/quarter
  • Air Force flying hours: 16.8 hours/crew/month

Reserve Components. The budget includes about $30 billion for Reserve components in the Military Personnel, O&M, Procurement, and Military Construction accounts. This funding reflects the Department's substantial reliance on Reserve components for the global war on terrorism and other commitments. The Department also is pursuing initiatives to mitigate the concerns of reservists' civilian employers and for increased support of Reserve component families.

Transformation

Transformation is the process whereby DoD is overhauling the U.S. military and defense establishment to enable it to counter 21st century threats most effectively. Transformation is about new ways of thinking, fighting, and organizing the Department and its operations - as well as about acquiring new system capabilities. To increase military effectiveness, the Department is strengthening joint warfighting by advancing new operational concepts, command and organizational changes, and expanded joint experimentation and training.

The FY 2004 budget reflects ongoing major changes to the Department's Combatant Commands - aimed at strengthening warfighting preparation and execution. Improvements include:

  • Establishing of Northern Command to consolidate homeland defense missions
  • Creating a strategic plan for transforming DoD training to meet combatant commander requirements to link readiness reporting to create a joint national training capability
  • Enhancing roles for the Joint Forces Command to improve joint operations and training
  • Merger of Space Command and U.S. Strategic Command
  • Expanding the planning and warfighting role of the Special Operations Command (SOCOM), increasing funding for Special Operations Forces (SOF) by $1.5 billion to $4.5 billion in FY 2004 (not including military personnel costs), and transferring 1,890 manpower billets to SOCOM

Transforming Military Capabilities

In DoD budgets, military transformation is reflected primarily in investment programs - i.e., in programs funded in the appropriations titles of Research, Development, Test, and Evaluation (RDT&E) and Procurement. Through such funding, new military systems are being developed and fielded - to achieve a new portfolio of military capabilities to decisively combat the full spectrum of threats to U.S. security. A key objective for this new portfolio of capabilities is to provide alternative means for meeting near-term needs and to encourage competition for fulfilling future missions.

Highlights of FY 2004 investment funding for key programs supportive of transformation:

Missile Defense. $7.7 billion for the Missile Defense Agency to continue research, development and testing of an evolutionary missile defense program focusing on fielding an initial capability in 2004 and 2005, and expanding that capability over time through additional measures and technology infusion. The plan is--over the next 2 years - to deploy a limited defense against ballistic missiles:

  • In FY 2004: Includes 10 ground-based interceptors. This would provide initial modest capability against North Korean missiles.
  • In FY 2005: Includes 10 additional ground-based interceptors; up to 20 sea-based interceptors; land, sea and space sensors; and command and control upgrades. This would add modest capability against Middle East threats.

The FY 2004 budget also includes $739 million for Patriot Advanced Capability-3 program, including procurement of 108 PAC-3 systems to protect against cruise missile and tactical ballistic missile attack.

CVN-21. $1.5 billion for the planned 2007 aircraft carrier, which has been upgraded to the CVN-21 design -- whose innovations include an enhanced flight deck, a new nuclear power plant, allowance for future technologies, and reduced manning. Some of these capabilities previously were not going into a new carrier until 2011. This is an example that fulfills President Bush's goal of skipping a generation of systems or technologies.

New ship classes/technologies. $1.2 billion to continue development of technologies to be applied to the whole family of 21st century surface combatants including DDX destroyer, littoral combat ship, and CG(X) cruiser.

SSGN Conversion. $1.2 billion to continue to convert four Trident ballistic missile submarines to submarines each capable of carrying more than 150 Tomahawk cruise missiles and a contingent of special operations forces.

Transformational Satellite Communications. $453 million to further develop a new system based on laser communications and greatly enhanced radio-frequency capability, which would free users from current bandwidth constraints and provide greatly enhanced interoperability and connectivity to support net-centric operations.vvvvvv

Advanced Extremely High Frequency (EHF) Capability. $778 million to continue development of a new satellite constellation to provide much greater protected communications capabilities than the current MilStar satellite communications system.

Space Based Radar (SBR). $299 million to continue development of a new space-based capability to detect and track global targets.

Cryptologic Modernization. $416 million to improve protection of DoD networks.

Army Transformation.

  • $1.7 billion to continue development of Future Combat Systems - a family of fighting vehicles that constitute the centerpiece of Army transformation. The budget maintains the accelerated Initial Operational Capability (IOC) date of 2010. The FCS program includes $456 million to continue development of new indirect fire systems to replace the Crusader artillery system cancelled last year.
  • $955 million to procure 301 Stryker armored wheeled combat vehicles and $46 million to continue development. The FY 2004-2009 budget supports the conversion of six Army brigades to Stryker Brigade Combat Teams, although the fifth and sixth brigades will continue to be reviewed
  • $1.1 billion to continue development of Comanche - a low-observable, next-generation helicopter for reconnaissance and light-attack missions.

Unmanned Aerial Vehicles (UAV).

  • Global Hawk unmanned aerial vehicle (UAV): $610 million including $250 million to procure upgraded capabilities and four more high-endurance, long-range UAVs -- which provide persistent intelligence on opposition forces.
  • Predator UAV: $250 million: $40 million for continued development and $210 million to procure upgraded capabilities, spares, ground stations, and 14 more vehicles, 4 of which are the B model.
  • Unmanned combat aerial vehicles (UCAVs): $275 million to continue development of this important new asset for attack and other military missions.
  • Unmanned undersea vehicles (UUVs): $81 million to continue development of the Long-term Mine Reconnaissance System and more advanced multi-mission UUVs.

Other Investment Programs

Highlighted below are other investment programs essential to achieving the transformation and modernization of U.S. forces. Funding shown is for FY 2004 Procurement and RDT&E.

Shipbuilding. $12.2 billion for procurement of seven ships - up sharply from $9.5 billion and five ships in FY 2003.

F/A-22. $5.2 billion to support procurement of 22 F-22s in FY 2004, to continue the development of the aircraft, and to improve its ground attack systems. This aircraft has been redesignated the F/A-22 to recognize its future ground attack capability.

F/A-18E/F. $3.5 billion to support procurement of 42 aircraft.

Joint Strike Fighter (JSF). $4.4 billion to continue system development and demonstration.

C-17. $3.7 billion to support procurement of 11 aircraft.

V-22. $1.8 billion to support the development program and procurement of nine MV-22 (Marine Corps variant) and two CV-22 (Air Force variant).

Chemical-Biological Defense Program. $1.1 billion for the total program, with a $200 million increase to extend near-maximum chemical-biological protection to 200 installations, increase Army biological detection capabilities, and combat new chemical agent threats. Restructured Programs

To implement Secretary Rumsfeld's guidance stemming from the 2001 Quadrennial Defense Review, the Military Services have shifted billions of dollars from their older multi-year budget plans to new ones -- as they have terminated and restructured programs and systems. For FY 2004-2009, the Military Services estimate that they have shifted over $80 billion to help them transform their warfighting capabilities and support activities.

Transforming the Business of Defense

New 21st century threats and realities demand new ways of thinking and operating for the Department of Defense. The Department made significant progress doing this the past 2 years, but problems persist. Some actions can and will be taken by the Department itself - such as further changes to internal processes and management. But other needed actions require congressional approval. To that end, the Bush Administration is considering DoD proposals to achieve greater flexibility in adapting civilian and military personnel management systems to mission needs, in managing its budget, overhauling acquisition processes, and other initiatives.

Fiscal 2004 President's Budget

Projected Funding Allocations

(Some columns may not add correctly due to rounding)

National Defense Topline (Function 050)

(Discretionary budget authority $ in billions)

Fiscal 03 Fiscal 04 Fiscal 05 Fiscal 06 Fiscal 07 Fiscal 08 Fiscal 09
DoD Military (051) 364.6 379.9 399.8 419.8 440.5 461.8 483.6
DoEnergy and Other 17.6 19.3 19.8 19.9 19.5 18.6 19.0
National Defense (050) 382.2 399.1 419.6 439.7 460.0 480.4 502.7

Department of Defense Budget by Title

(Discretionary budget authority $ in billions)

Fiscal 03 Fiscal 04 Fiscal 05 Fiscal 06 Fiscal 07 Fiscal 08 Fiscal 09
Military Personnel 93.4 98.6 102.7 107.0 110.6 114.2 117.7
Operation & Maintenance 113.6 117.0 121.7 126.2 129.8 135.7 139.7
Procurement 70.0 72.7 77.2 84.3 94.7 104.0 112.2
RDT&E 56.8 61.8 67.1 64.3 64.6 67.0 69.4
Military Construction 6.3 5.0 6.1 10.4 13.2 12.2 11.5
Family Housing 4.2 4.0 4.8 5.1 4.8 3.8 4.2
Revolving & Mgmt Funds 3.2 2.8 1.4 2.2 1.1 2.0 4.8
Other DoD Programs* 17.3 17.9 18.8 20.3 21.7 22.9 24.2
Receipts & Other -.1 - - - - - -
Total DoD (051) 364.6 379.9 399.8 419.8 440.5 461.8 483.6

* New Appropriation Title that includes: Defense Health Program, Inspector General, and Drug Interdiction-previously in the O&M Title; and Chemical Agents & Munitions Destruction, Army, which was previously in Procurement.

DoD Budget by Component

(Discretionary budget authority $ in billions)

Fiscal 03 Fiscal 04 Fiscal 05 Fiscal 06 Fiscal 07 Fiscal 08 Fiscal 09
Army 90.7 93.7 98.2 103.5 108.8 114.3 116.9
Navy/ Marine Corps 111.1 114.6 119.0 125.3 129.8 137.2 148.5
Air Force 108.0 113.7 120.5 127.5 131.7 137.9 141.3
Defense-wide* 54.9 57.9 62.1 63.5 70.2 72.4 77.0
Total DoD (051)* 364.6 379.9 399.8 419.8 440.5 461.8 483.6

* Includes Defense Health Program

Copies of Department of Defense budget documents are available at the following Internet address: http://www.dod.mil/comptroller/defbudget/fy2004/.

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