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Defense Budget/QDR Announcement

As Delivered by Secretary of Defense Robert M. Gates, Arlington, VA, Monday, February 01, 2010

Today, this department is submitting the Fiscal Year 2011 defense budget requests along with two important strategy documents – the 2010 Quadrennial and Ballistic Missile Defense Reviews. After my opening statement, and the chairman’s, and our questions, you will hear from the undersecretary of defense for policy, Michele Flournoy, who will discuss the QDR and BMDR in more depth. And then our comptroller, Robert Hale, will provide more detail on the three budget requests.
The three requests are:

  • The FY11 base budget request of $548.9 billion;
  • The FY11 Overseas Contingency Operations request of $159.3 billion, which will fund military operations in Afghanistan and Iraq next year; and
  • The FY10 supplemental request of $33 billion, which covers the additional estimated costs of the president’s new strategy for Afghanistan. To make sure we have the resources we need to support our troops deploying to the theater, I will be asking the Congress to enact the supplemental by spring.

For the next few minutes, I would like to place into a wider context the base budget request, which reflects the department’s institutional priorities, plus the associated strategy reviews. Last year, we began the process of reshaping America’s defense establishment and reforming this department’s priorities, procedures, and institutional culture.
The objectives were to:

  • Reaffirm our commitment to take care of the all-volunteer force; to
  • Rebalance our programs in order to institutionalize and enhance our ability to fight the wars we are in today, while at the same time providing a hedge against current and future risks and contingencies; and
  • Reform how and what we buy, meaning a fundamental overhaul of our approach to procurement, acquisition, and contracting.

To those ends, the FY10 budget increased funding for programs that directly support those fighting America’s wars and their families, and created an institutional home for the warfighter by shifting many of these programs into the base budget, so they would acquire a bureaucratic constituency and steady, long-term funding.

The FY10 budget proposal cut, curtailed, or ended a number of programs that were either performing poorly or in excess of real-world needs. These programs, had they been pursued to completion, would have cost the American taxpayer approximately $330 billion. Conversely, future-oriented programs where the U.S. was relatively underinvested were accelerated or received more funding. The FY11 request builds on the reforms begun in last year’s budget – changes that were broadened and deepened by the analysis and conclusions contained in the QDR.

These budget submissions and strategy reviews are suffused with two major themes. The first is continued reform – fundamentally changing the way this department does business: the priorities we set, the programs we fund, the weapons we buy – and how we buy them. The budget and the reviews are also shaped by a bracing dose of realism – realism with regard to risk, realism with regard to resources. We have, in a sober and clear-eyed way, assessed risk, set priorities, made tradeoffs, and identified requirements based on plausible, real-world threats, scenarios, and potential adversaries. Just one example: For years U.S. defense planning and requirements were based on preparing to fight two major conventional wars at the same time – a force-sizing construct that persisted long after it was overtaken by events. The department’s leadership now recognizes that we must prepare for a much broader range of security challenges on the horizon.

They range from the use of sophisticated new technologies to deny our forces access to the global commons of sea, air, space, and cyberspace to the threat posed by non-state groups developing more cunning and destructive means to attack and terrorize – scenarios that transcend the familiar contingencies that dominated U.S. planning after the Cold War. We have learned through painful experience that the wars we fight are seldom the wars we planned. As a result, the United States needs a broad portfolio of military capabilities with maximum versatility across the widest possible spectrum of conflict. This strategic reality shaped the QDR’s analysis and subsequent conclusions, which directly informed the program decisions contained in the budget.

The QDR concluded that the U.S. military must balance resources and risk among four major objectives:

The first is to prevail in today’s wars – the first time this objective has appeared in a QDR. Achieving our objectives in Afghanistan and Iraq has moved to the top of the institutional military’s budgeting, policy, and program priorities. We now recognize that America’s ability to deal with threats for years to come will depend importantly on our success in the current conflicts. The FY11 budget takes a number of additional steps aimed at filling persistent shortfalls that have plagued recent military efforts, especially in Afghanistan.
They include:

  • Enhancing intelligence, surveillance, and reconnaissance capacity – including a 75 percent increase over the next couple of years in the number of combat air patrols by the most advanced UAVs;
  • Increasing the availability of helicopters by procuring more aircraft – around $9 billion worth – of all kinds and adding two Army combat aviation brigades; and
  • Growing special operations systems and personnel, with nearly 2,800 people added to the U.S Special Operations Command in FY 2011.

The second major objective is to prevent and deter conflict – by better employing and integrating all elements of national power and international cooperation, and should those fail, by possessing superior military capabilities and the means and will to use them. To help prevent the conditions from arising that lead to crises or conflicts, we strongly support the increased funding for diplomacy and development provided for in the president’s international affairs budget request. And in a world where arguably the most likely and lethal threats will emanate from failed or fractured states, building the security capacity of partners has emerged as a key capability for this department – one that reduces the need for direct U.S. military intervention, with all of its attendant political, financial, and human costs. To provide more resources, predictability, and agility to this important mission, the department will seek an increase in the Global Train and Equip authority in the FY11 budget – authority that has now been extended to coalition activities. That increase will be from $350 million to $500 million. Furthermore, the department will continue to:

  • Work with allies and partners to stem the proliferation of dangerous weapons and materials; and we will
  • Maintain a reliable and credible nuclear deterrent – which will be laid out in the upcoming Nuclear Posture Review.Deterring potential adversaries requires us to prepare for a wide range of contingencies, including the disruptive high-tech capabilities being developed by other nations. To meet the potential threats to our military’s ability to project power, deter aggression, and come to the aid of allies and partners, the QDR places more focus on and investment in a new air-sea battle concept, long-range strike capabilities, space, and cyberspace. The FY11 budget requests include:
  • Nearly $11 billion for the F-35 Joint Strike Fighter, along with a strategy to stabilize its cost and schedule, and a buy of 43 aircraft – and possibly more depending on contractor performance;
  • More than $25 billion to support a realistic, sustainable ship-building program;
  • More than $3 billion to modernize ground forces by applying mature technologies to current forces quickly, including development of a new ground combat vehicle;
  • Nearly $10 billion to support the development of flexible, scalable, and adaptive missile defenses that work, are cost-effective, and address the real and growing threats to the United States and our allies; and
  • Some $4 billion over the next five fiscal years for a number of long-range strike programs, to include the development of a conventional global strike capability, and the upgrade and modernization of the bomber fleet.

Our fourth major objective is to preserve and enhance the all-volunteer force, America’s single greatest strategic asset. For programs like these that directly support the warfighters and their families – on the battlefield, at the hospital, or at home – we have continued to shift funding from war appropriations to the base budget. This will help ensure these critical programs receive an institutional home and long-term support.

Recognizing the strain that post-9/11 wars have put on so many troops and their families, the department will:

  • Spend more than $2 billion for wounded warrior initiatives – with a special focus on the signature ailments of current conflicts such as PTSD and Traumatic Brain Injury; we will
  • Sustain health benefits and enlarge the pool of medical professionals; we will
  • Broaden electronic information sharing between the Departments of Defense and Veterans Affairs for wounded warriors making the transition out of military service; we will
  • Increase time spent between deployments for our ground forces – with a goal of achieving a dwell-to-deployed ratio of two-to-one for the active component, and five-to-one for the Guard and Reserve; we will
  • Raise basic pay, revisit bonus policies, and pursue more innovative and flexible ways to retain quality personnel; and finally we will
  • Expand assistance, counseling, childcare, and education to support military families – some $8.8 billion total in the base budget and overseas contingency operations requests.

To achieve these objectives, the department must continue to reform the way it does business – from developing and buying major weapons programs, to managing our workforce. Building on the reforms in the FY10 budget – when a number of excess or poorly performing programs were cancelled – the QDR proposed additional steps reflected in the FY11 budget submission. They include:

  • Terminating the Navy EP(X) intelligence aircraft;
  • Ending the Third Generation Infrared Surveillance program;
  • Canceling the next generation CG(X) cruiser;
  • Terminating the Net Enabled Command and Control program;
  • Ending the Defense Integrated Military Human Resources System (DIMHRS) due to cost overruns and performance concerns;
  • Completing the C-17 program and closing the production line, as multiple studies in recent years show that the Air Force already has more of these aircraft than it needs; and
  • Ending the alternate engine for the F-35 Joint Strike Fighter, as whatever benefits might accrue are more than offset by excess costs, complexity, and associated risks.

I am fully aware of the political pressure to continue building the C-17 and to proceed with an alternate engine for the F-35. So let me be clear: I will strongly recommend that the president veto any legislation that sustains the unnecessary continuation of these two programs.

Reforming how and what we buy continues to be an urgent priority. As the QDR says, the department and the nation can no longer afford the “quixotic pursuit” of high-tech perfection that incurs unacceptable cost and risk. Nor can the department afford to chase requirements that shift or continue to increase throughout a program’s life cycle. Fundamentally changing these practices requires enough full-time professionals with the right skills and training. The department’s budget plan includes an increase of more than 20,000 such positions to supervise or replace contractors by 2015.

Fundamentally reforming acquisitions, above all, calls on us to foster a culture and practice of accountability. Accountability with regard to industry, and within the walls of this building as well. This is especially important when dealing with our most costly and critically important programs – programs such as the F-35 Joint Strike Fighter.

As I mentioned earlier, we have restructured the F-35 program and believe it is on track to become the backbone of U.S. air superiority for the next generation. Nonetheless, the progress and performance of the F-35 over the past two years has not been what it should – as a number of key goals and benchmarks were not met. As a result, I will withhold $614 million in performance fees from the lead contractor, since the taxpayer should not have to bear the entire burden of getting the JSF program back on track. This step is being taken with the agreement of the contractor and I appreciate their responsiveness and commitment to finding the best solution.
Accountability is not just about holding contractors responsible. The Department of Defense also bears responsibility for the JSF’s troubling performance record. Accordingly, I have directed a change in the leadership of the Joint Strike Fighter program office. In addition, given the importance of this program to the future of military aviation, I am elevating the level of the JSF program manager to that of a 3-star officer.

In summary, the cumulative effect of this and last year’s budgets, along with the recommendations of the QDR, is to make sure that this department is doing everything we can – and more – to prevail in the wars we are in, while preparing our military to confront the most likely and lethal threats of the future.

In closing, as I said last year, we must remember that every defense dollar spent on a program excess to real-world military needs is a dollar not available to take care of our people, reset the force, win the wars we are in, and improve capabilities in areas where we are underinvested and potentially vulnerable. That is a risk the president and I are not prepared to take. Making these tough decisions and trade-offs is especially important in the constrained budget environment we face today and almost certainly will face in the future.

I would like to thank the members of the department – both military and civilian – along with our interagency and international partners, for their hard work over the past year on these important documents.

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