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Army News Briefing on the FY 2014 Defense Budget Proposal from the Pentagon

Presenters: Major General Karen E. Dyson, Director Army Budget; Davis S. Welch, Deputy Director, Army Budget
April 10, 2013

Go to http://www.defense.gov/news/briefingslide.aspx?briefingslideid=365 to view briefing slides associated with this transcript.

            COLONEL JONATHAN WITHINGTON,DIRECTOR OF MEDIA RELATIONS, ARMY PUBLIC AFFAIRS:  Good afternoon.  I'm Colonel Jonathan Withington.  I'm the Director of the Media Relations Division for the Chief of Army Public Affairs.  Today we have Major General Karen Dyson, the director of the Army Budget Office, Mr. Davis Welch, the deputy director of the Army Budget Office.  We'll spend about 25 minutes giving you an overview of the Army FY 2014 budget, and then we'll open it up for questions.  We have approximately 40 minutes to complete this. 

            Ma'am, over to you. 

            MAJOR GENERAL KAREN  DYSON:  OK, thank you very much.  

            Thank you all for coming this afternoon and for giving us this opportunity to roll out our FY '14 Army budget request.  Each of you should have gotten a packet that includes our slides that we're going to be using today.  Some of the font in some of our slides is kind of small, so I hope you have the packet.  And then in that packet, there's also a budget highlights book that provides a little bit more detail about each of our appropriations. 

            Next chart, please.  

            The Army budget request is a continuation of the Army's adaptation of the 2012 defense strategy.  During this period of transition from the time that the new strategy was published last year, the Army has been very engaged in the war in Afghanistan and, in fact, in many operations around the world.  We also have soldiers and civilians who are forward-stationed in many different countries around the -- outside of the continental United States, maintaining a presence that builds partnerships, relationships, which is very important to our Army strategy.  The Army supports the Department of Defense strategic priorities, as we adapt to the future and to our contributions to the joint force.  

            Next chart, please. 

            Adapting to the 2012 defense strategy means that we are refocusing our training away from the emphasis that has been there on counterinsurgency that was so key and critical in the Iraq war and remains critical today in the war in Afghanistan, but we're refocusing our training to go towards more core competencies in combined arms maneuver and wide area security. 

            We're looking to build the capacity for decisive action when needed.  As we continue to build these adaptive capabilities in a smaller force, we're assessing the brigade combat team organization, we're adapting the force generation process, and we're revitalizing the generating force. 

            This budget envisions the capabilities that enable the global employment of Army forces in tailored, scalable, and responsive packages to meet the unique and independent requirements of the geographic combatant commanders.  At the same time, we will continue to modernize within affordability constraints and will continue to uphold our commitments to our soldiers, families, and our civilian employees. 

            Next chart, please. 

            Before I talk about FY '14 [budget], I'd like to highlight some of the challenges that we're having in FY '13.  As you know, we just received our appropriation that will take us through the rest of the year a couple of weeks ago, and we have been -- on the 1st of March, we were sequestered by about $7.5 billion from across all of our appropriations.  These reductions have triggered a lot of reductions across all of our components, and I just want you to know that the Army has conducted an Army-wide -- sort of a rehearsal concept exercise that brought all of the commanders into looking at what our Army priorities are so that we could make sure that we were only funding the Army's top priorities with the dollars that we have and then conversely that we were making decisions -- sound decisions about what would be reduced. 

            We are going to maintain our commitment to the war and to the readiness of soldiers who are deploying to the war, who are next to deploy to the war, any soldiers that are engaged in rotating forces to Korea or that are engaged in units that are part of the global response force.  But for all other units, we are having to reduce our op-tempo ground miles and our flying hours, and we are starting to see readiness slipping away from some of those units. 

            The inevitable outcome that we anticipate as we enter FY '14 is that some of our readiness for some of these units is going to be less than what we anticipated when we built this budget.  So this budget was built before sequestration was triggered on the 1st of March, and it does not include any of the dollars that might be necessary for us to recover from some of these reductions that we're seeing in FY '13. 

            Other areas of reduction include the deferment of equipment maintenance and facility maintenance, the cancellation of professional training both for our civilians and for our military, and any of these are things that you can't necessarily get right back -- get back here, but will be deferred into FY '14 and create requirements in FY '14.

             Next chart, please.

             The Army's budget themes continue to focus on taking care of our people and a commitment to continually improve support to our soldiers, families, and civilians during this time of great change and challenge.  The Army budget request enables training and operations that support the defense strategy by moving towards a regionally aligned force concept in enhancing brigade combat teams, while we continue to focus on the war as our top priority.

             The Army's equipment modernization strategy will enhance the soldier and the squad for broad joint mission support.  It will center on the network and preparedness for decisive action.  And lastly, the Army continues to invest in initiatives that transform the institutional Army, including activities needed to achieve audit readiness in the statement of budgetary resources in 2014.

             Next chart, please.

             The Army request is $129.7 billion for FY '14.  This request does not include the overseas contingency operations [OCO] request, which will be submitted later in the year.  The largest component of our budget pays for personnel primarily in the military personnel appropriation, 44 percent.  The civilian personnel comprised about 34 percent of the remaining appropriations from a dollar perspective, about 20 percent of our total force.

             The budget request includes a 1 percent pay increase for our civilian employees and for military personnel.  The research, development and acquisition accounts comprise 18 percent of our overall budget, and the military construction account reflects the post-BRAC [Base Realignment and Closure] environment.

             Next chart, please.

             The trend chart of the Army execution from 2002 to 2012 reveals that funding was needed -- reveals to you what funding was needed to grow the Army to meet the nation's warfighting demands.  The dollars that you see that lead up to FY '12 are enacted -- I'm sorry, executed dollars, and then the request for FY '13 and FY '14.

             And what you see here is that a large portion of the Army funding over these past few years of war has been received in OCO, not so much in the base.  But when you look at FY '13 and FY '14, you see the Army's budget request is starting to reduce, as we adapt to the new strategy and the new fiscal environment.  Our FY '14 request is about 10 percent less than the peak base request of $144 billion in FY 2010 and about a 4 percent decrease from the FY '13 president's budget.

             Next chart, please.

             This chart provides you the numbers that are behind the '13 and the '14 budget requests.  We did not include the appropriated amount under the recently approved consolidation appropriations and further continued appropriations act, because we're still working through how we're going to lay in the sequestration amounts in any of our accounts.

             But in the aggregate, the Congress appropriated $132.1 billion for FY '13, which really funds the Army at about 98 percent, 99 percent of the total requests that we had.  Even after sequestration, the Army is funded in the aggregate at 95 percent of our request.

             Next chart, please.

             Now, this slide begins a review of each one of our appropriations.  And so what you'll see on each one of these slides, just to orient you a little bit, is the FY '13 request numbers and then the FY '14 request numbers.  You'll notice that there is no OCO showing in the FY '14 column.  We normally have that in there.  But that's because we've not finalized the OCO budget yet.

             In the military personnel appropriation, this is the Army's largest appropriation.  The force is funded in the base budget to support over a million soldiers across all components.  You'll see the numbers of authorized strength there of 520,000 for the active component, 354,200 for the National Guard, and 205,000 for the reserve component.

             What's different about this budget, then, from last year is that part of that 520,000 active end strength will be funded in the overseas contingency operations budget request.  So this base budget request only funds 490,000 [soldiers] which corresponds to the end strength number of the drawdown that is planned so far for -- or at this point for the Army, and that was a plan that was put in place actually last year.

             For all components, the budget includes adjustments for 1 percent pay raise, 3.9 percent increase for housing allowances, and 3.4 percent for subsistence. 

             Next chart, please.

             The operation and maintenance appropriation funds the training and operations that build and sustain our readiness.  It funds family programs and support for soldiers across all components who are returning from war and the daily operations of more than 150 installations around the world.  The approximate 4 percent decrease from the FY '13 request is driven by smaller forces and refocused training at home station.

             The budget request funds 21 combat training center events, which are the key live-fire culminating training events that validate readiness at the brigade level.  The ground miles and flying hour program have been adjusted in this budget to -- in this budget request to reflect both the smaller Army and training that's been adapted toward the core competencies across full-spectrum capabilities that I spoke about earlier.

             The budget request continues to invest in assessing quality soldiers and training at the basic and special skills and investing in professional development for soldiers and for civilians.  And lastly, the Army continues to provide enterprise support in the areas of manpower management, logistics, communications, and security, with increasing accomplishments projected in the enterprise business systems fielding and achieving audit readiness in the statement of budgetary resources in FY 2014.

             Next chart, please.

             The Army modernization strategy was published last month, and it outlines the principles of enhancing the soldier and the squad capability for joint missions, of enabling the network for mission command, and ensuring capability of lethality and mobility for decisive action.  The next few charts will walk you through our procurement and investment accounts, and for those, I'm going to turn to my deputy, Mr. Davis Welch, to walk us through those charts.

             MR. DAVIS WELCH:  Thank you, and good afternoon.

             The Army's 2014 modernization objective is to maintain the technological advantage in any operational environment and to provide a credible deterrence.  The Army's modernization plan is centered, as General Dyson said, on the soldier and the squad.  We must empower them to have overmatched lethality, increased mobility and protection, and unmatched situational awareness in order to achieve that tactical dominance.

             The FY '14 president's budget reflects the constrained fiscal environment of resourcing decisions reached as we balance end strength, equipment modernization, and readiness.  Reflected in this budget are the development and procurement efforts resulting in a tailorable, affordable, sustainable, and cost-effective equipment that will prepare the total force in the complex and uncertain battlefield.

             Next chart, please.

             The upper half of the chart provides the appropriation level detail for the Army's president's budget request.  The lower half of the chart highlights requested funding for some of the major procurement programs.  Our '14 president budget request demonstrates cost-effective decisions to modernize many of our existing platforms, to maintain the technological edge over potential adversaries.

             Our approach integrates mature technologies and incremental improvements.  The current and foreseeable future fiscal environment requires smaller procurement objectives.  We cannot equip and sustain the entire force with the most advanced equipment, and where capability gaps cannot be closed through modernization of existing platforms, new ones will be procured, such as the Paladin Integrated Management artillery system.

             Next slide, please.

             Over the past decade, Army aviation achieved significant recapitalization through both new procurement and re-manufacturing.  The FY '14 request, though $830 million less than the FY '13 president's budget request, preserves that modernization strategy.  In fact, implementing multiyear procurement contracts with both the CH-47 and the UH-60 Black Hawk provides manufacturing stability for our industry partners and returns significant cost savings to the Army.

             Funding requested for the conversion of the OH-58 Kiowa Warrior from a D to F model provides cockpit and sensor upgrades.  It recapitalizes the fuselage, the cabin, and the tail boom, and provides weight reduction efforts through the integration of a new heater system, composite universal weapons pylon, and functional displays.

             You may know that there were a -- was a volunteer flight demonstration the past summer, but that flight demonstration did not provide a clear candidate for militarization of existing airframes, so this funding request with the budget provides the essential upgrades necessary to retain the Kiowa's relevancy as the Army considers the development and acquisition of a new armed aerial scout.

             The CH-47 Chinook represents the second year of a multiyear procurement.  The six new and 22 re-manufactured aircraft the Army is modernizing with common avionics, digital advanced flight controls, common missile warning systems, and these helicopters will have greater endurance and increased reliability through lower operating and support costs through the reduction -- vibration reduction within the components.

             The CH-47 multiyear provides about a 19 percent a year savings in cost, or $810 million over the life of the contract.  The UH-60 procurement we are requesting for 65 airframes, 30 of which will go to the National Guard, and this multiyear procurement returns about a 14 percent annual savings or almost $1.2 billion over the life of the contract.

             The AH-64 program is for 42 re-manufactured aircraft.  Re-manufacturing provides about a $17 million savings over a new -- a new build.  And what we're doing with the Block III Apache is providing network-centric capabilities, which is a level four unmanned aerial system control capability.  Essentially, the crew of the Apache can do everything to navigate and direct that UAS, that unmanned aerial system, except for takeoffs and landings.

             And with the aviation procurement request, we are buying the last of the Lakota light-utility helicopters.  All 10 of those will go to the National Guard.

             Next chart? 

             Air and missile defense modernization strategy is driven by a complex and changing operational environment, which requires capabilities from the tactical, as well as the strategic levels.  These funds we intend to re-capitalize current systems that offer increased counter-rocket, artillery, and mortar capabilities, improve the Patriot system.  We're going to increase Patriot, Javelin, and TOW [Tube-launched, Optically-tracked, Wire command-link guided]missile inventories.  We're going to continue the preplanned production improvements for the Patriot system through the procurement of the enhanced launcher electronic system and the digital -- or the radar digital processor.

             The ammunition request, although a little less than the FY '13 request, fully funds the critical training ammunition and provides limited war reserve stocks, principally in the Hydra rockets, the Excalibur, and precision guidance kits.  The ammunition protection modernization is about a 9.7 percent increase over last year.  And what that does is helps to correct deficiencies at government- and contractor-owned facilities.  It'll replace obsolescent equipment -- or obsolete equipment and ensure environmental compliance, as well as expand some of the production capabilities.

             Next chart.

             The FY '14 president's budget request is characterized by legacy vehicle modernization that increases protection, ensures required mobility, and allows for the integration of the network.  The request provides funds to convert flat bottom Strykers to double-V Strykers through the Stryker exchange program, and work will be split between Anniston Army Depot and Lima, Ohio.  The requested Paladin integration funds provide funds for the low rate initial production, and those systems will be going to complement the armored combat infantry -- or combat brigade teams.

             The Abrams funds will complete the fielding to the Army National Guard of the M1A2 SEPs [System Enhancement Packages], and it will -- once fielded will achieve the two variant fleet configurations that the Army has been pursuing over the last several years. 

             The requested Bradley funds begins an engineer change proposal that restores size, weight, power and cooling that was previously traded to improve the survivability and mobility from 12 years of war.  Funds also complete the Army National Guard fielding of non-infantry-fighting vehicles with M2A2 ODS Bradleys to the Army National Guard, principally cavalry, fire support, and engineer vehicles.

             The Integrated Air Burst Weapons system request funds the low-rate initial production.  This system was tested and proved successful in Afghanistan against defilade targets.  And the system provides dramatic increases in range of lethality compared to other individually fired weapons.

             Next chart.

             The network, as General Dyson mentioned, is the Army's number-one priority, and it's comprised of five programs that you see listed on the -- on the chart.  The network is critical to empowering our soldiers and leaders with the right information at the right time to make decisions essential for mission success.

             The Army is building an agile, secure, standards-based, versatile network that connects soldiers and their equipment to vital information and our joint interagency, intergovernmental, and multinational partners.  The funds requested for the warfighter information network tactical completes the fielding of increment one, supports the fielding of increment one alpha and increment two, which is the limited on-the-move capability.

             The Joint Tactical Radio System modernizes the network by providing a software to find programmable radio.  With respect to Net Warrior, the requested funding supports the procurement of tablet-like devices, enabling squad uncommon situational awareness while dismounted.

             The distribution -- or Distributed Common Ground System-Army provides enhanced intelligence, surveillance and reconnaissance capabilities.  The Distributed Common Ground System-Army cloud nodes will establish a global data storage that can be easily retrievable and provide advanced analytic capabilities.

             Also, with the FY '14 budget, the requested funds for the family of medium tactical vehicles completes the Army's acquisition objective.  This will be the last year that we'll be procuring family of medium tactical vehicles.

             Next chart.

             Science and technology funding is consistent with the FY '13 PB [President’s Budget] request.  Funding fosters invention, innovation, and demonstration of technologies, and enables the future force capabilities and exploits opportunities to transition technology into the current force.

             With respect to the warfighter information network tactical, this is to support increment three, which is a full on-the-move capability and will also provide an additional data link using airborne -- using an airborne platform.  Increment three will provide a fourfold increase in transport capability over increment two.

             The requested funds for the Network Integration Exercise will provide for two exercises in FY '14.  These exercises are critical as they integrate and validate -- the Army is fielding platforms, components, and software that are interoperable.  They provide the opportunity to evaluate industry solutions, and where capability gaps are identified, provide a test environment for integration prior to fielding.

             The mid-tier wide band network vehicular radio is one example of encouraging an industry solution for a multi-channel vehicular radio that will support the current fleet of radios and provide not only voice, data, but video communications.

             The Army has three developments -- vehicle developments within the RTD&E [Research Development Test & Evaluation] appropriation.  The requested ground combat vehicle funds, the transition from two to one contract through the technology development phase, although we are going from two contracts to one contract, it is a cost savings measure.  It will provide some additional risk in the out-years, potentially, but it is one that we had to take in the current constrained environment.

             Milestone B is planned for third quarter of FY '14, followed by a single vendor competitively-awarded contract for engineering, manufacturing, and development phase.  The requested armored multi-personnel vehicle, which is the replacement to the M113 personnel carrier, the funds requested supports the engineering manufacturing and development phase and a low-rate initial production of the armored multipurpose vehicle.

             With respect to the Joint Light Tactical Vehicle, the funds continue the engineering, manufacturing, development phase.  Bradley, Abrams and Stryker vehicles have all demonstrated their relevance on the battlefield, and they will remain in our inventory for some time.  The RTD&E funds in this budget request support improvement programs to regain lost size, weight, power and cooling capabilities, and to enable those platforms to accept the network.

             Next chart.

             This requests funds for the most critical of Army facility needs.  Though our reduction of more than $1.2 billion from FY '13 president request, it does reflect a return to the more historical spending levels. 

             Funds within this budget will replace aging facilities, almost three-quarters of a billion dollars [$750 million], to construct training ranges and facilities, reserve readiness centers, and to replace failing infrastructure.  Funds requested supporting the modular force will support the activation of the 13th Combat Aviation Brigade at Fort Carson, as well as the 16th Combat Aviation Brigade at Joint Base Lewis-McChord and Wainwright, Alaska, as well as National Guard readiness centers and aviation support facilities across five states.

             A barracks renewal program for $197 million replaces advanced individual training at the forts -- at Forts Carson, Leonard Wood, and Joint Base Langley-Eustis.  With respect to the Army family housing funds, these funds requested support over 16,000 Army-owned units, 6,400 leased, and over 85,000 privately owned -- privatized homes.  It also provides funds to construct another 85 units, family housing units.

             With respect to the Base Realignment and Closure, these funds are a consolidation of all previous appropriation BRAC funds into a single one with FY '14.  Funds are necessary for caretaker costs, as well as to do remediation and clean-up actions.  And to date, we have returned over 219,000 acres, which is about 78 percent of our original inventory, with about 60,000 acres remaining.

             Next chart.

             The Department of Defense funds pass-through through Army for execution by other responsible commands or agencies.  The only base pass-through account that we have is the chemical demilitarization and destruction and construction accounts.  If you have questions on that, I would request respectfully you address that with OSD.

             Next chart.

             MAJ. GEN. DYSON:  OK, this completes the formal part of our briefing.  Hopefully we've been able to demonstrate to you that the FY '14 base budget reflects the activities that we need to adapt our forces to a smaller Army, to a new strategy, and to a new world environment.

             COL. WITHINGTON:  OK, let's take some questions.  I'll moderate.  We'll start over here with Sydney, please.

             Q:  Hello.  Thank you.  Ma'am, last time we were sitting down at a table, we were talking about 6-6-6 [O&M funding shortfalls of $6 billion from the continuing resolution [C.R.], $6 billion due to increased OCO costs, and $6 billion from sequestration].  With the C.R., one of those sixes drops out of the picture, but I was noticing in the comptroller's slides, it still says the Army has it worst, which he was on the record as saying back then.  So what is the -- what is the ugly for 2013?  I understand you're still -- we're evaluating what Congress passed recently, but how -- how -- you know, how do we get to 2014?  What's the -- what's the ugliness on the road through FY '13 that you're dealing with?

             MAJ. GEN. DYSON:  OK, Sydney, thank you for that opportunity to clarify kind of where we are today from where we were when we last spoke.  The continuing resolution challenge that we had was taken care of with the new appropriation.  We have a $1.3 billion decrement under the new appropriation, and we have a sequestration amount against our Operations and Maintenance Army -- this is really just an OMA, Operations and Maintenance Army discussion, which is where our problem is centered. So that amount is $4.6 billion.

             So you add those two together.  That's about a $6 billion decrement that we are working through in determining where we will take our reductions.  The other challenge for the Army, though, as you'll recall is the emerging OCO shortfall.  The OCO shortfall that we're seeing is about $7.8 billion of the total that Mr. Hale talked about being in the $7 billion to $10 billion range this morning or earlier this afternoon.  And so we're really wrestling through that.

             We're hopeful that we will be able to leverage the department's reprogramming transfer authority so that we can realign funds to take care of some of that, but we don't think we'll be able to take care of the full $7.5 billion, because the entire department only has -- the entire department only has $7.5 billion in transfer authority, and our shortfall right now is estimated at about $7.8 billion.  And the other services, of course, have some challenges that they're looking to solve.

             Thank you.

             COL. WITHINGTON:  The gentleman here in front.

             Q:  Ma'am, with the aviation research and development funding, the major program over there is the JMR [Joint Multi-Role] and (inaudible) has that program been affected at all by the current budget?

             MAJ. GEN. DYSON:  Mr. Welch?

             MR. WELCH:  Under -- under the current -- under the sequestration budget you're talking about?

             Q:  (OFF-MIKE)

             MR. WELCH:  Under the current FY '13 budget? 

             Q:  Yes.

             MR. WELCH:  With -- as we apply the sequestration with fiscal year '13, every program, project or activity is cut that same salami slice of about 7.8 percent, 7.9 percent.  So to the extent that the funding was there, it's now been reduced that much.

             MAJ. GEN. DYSON:  And that's exactly what we're working through right now, to figure out how we would apply it across each individual procurement line.

             Q:  (OFF-MIKE) point going forward (OFF-MIKE) this particular budget drop, we don't really know what's going to happen with that yet, I guess?

             MAJ. GEN. DYSON:  Well, we're -- what you're asking is a question about FY '13.  In FY '14, we have programmed the dollars really that was developed before sequestration was triggered on the 1st of March.  And so those dollars would be planned as a continuation of our request of FY '13.

             COL. WITHINGTON:  Front row?

             Q:  Could you give us some insight into the math you continue to do to take sequestration, whatever option emerges, into account and how that will impact the Army?  Because there will be a new number.  How are you working to get the new number?

             MAJ. GEN. DYSON:  Right.  So for the Army right now, over all of our appropriations, we stand to lose about $7.6 billion.  That still allows us to be funded at about 95 percent.  Now, that doesn't take into account the fact that we have the OCO shortfall.

             So, I mean, the math is somewhat flexible inside of our operations and maintenance accounts.  We can make some decisions there.  But in our procurement and investment accounts, it's indiscriminately applied by which program and project line item, so we really don't have any flexibility there in determining how we apply it.  Does that answer your question?

             Thank you.

             Q:  So a couple -- one for General Dyson and one for Mr. Welch.  On furloughs for '13, what's the current thinking whether the Army can spare most of its civilian employees furloughs and find the savings elsewhere?  And going out into '14, are you looking at RIFs [reductions in force] more than furloughs?

             And for Mr. Welch, the Army over the last couple years has said they don't need anymore M1A2 SEPs.  They want to close down the plant there.  Why are you asking for more money this year?  Has that -- has the thinking changed?  Or is this just a recognition Congress is going to throw it back in?

             MR. WELCH:  This is -- this is money for fielding what has already been procured.

             Q:  OK.  So you're not asking...

             MR. WELCH:  We are not asking -- the Army is on record saying we do not require any additional M1A2s.

             Q:  OK (OFF-MIKE)

             MAJ. GEN. DYSON:  So the furlough is a huge challenge for all of us, and we certainly do not want to have to furlough, but we have planned different levels of furlough into our sequestration mitigation plans, so that would be maybe a course of action that could be followed, if the Department of Defense decides to do so.  We are embedded inside of the Department of Defense decision on this.  And so, you know, we're -- we are looking for ways that we can mitigate that, because every single one of our civilian employees is just critically important to us.

             And there are -- there are two different kinds of effects there.  You have the personal impact on each of our civilian employees, like my deputy, and then you have the productivity impact, and that productivity impact is going to stretch out across a lot of support that is provided to families and to soldiers out across all of our installations.

             So we're very concerned about both sides of that equation.  And we're trying to mitigate it as best we can, but it's a balance between readiness, between the warfight, and then how we take our sequestration reduction.

             Q:  Would you say that over the last three weeks, you're more sanguine that you'll have to -- you won't have to furlough as many civilian employees as you might have thought a month ago?  Or is that still to be determined?

             MAJ. GEN. DYSON:  Well, I think you might be aware that the Department of Defense has changed the equation from 22 days of furlough to 14, and we are certainly in sync with that.  So, yes, it is less than it was about a month ago.

             Yes?

             Q:  Just a quick follow-up on the M1A2 question.  If you don't need any more of the tanks, what's the $178 million for?  And is that split between work at Lima and somewhere else, such as Anniston, for engine upgrades?

             MR. WELCH:  I appreciate the question.  For clarification -- and maybe I wasn't clear before -- the request within the budget for the M1A2 SEPs is for fielding.  The items have already been procured.  The PM [program manager] goes out.  He fields, does newcomer training, and -- and sets up that unit with that piece of equipment, so when he walks away, they are trained and ready and know how to operate the equipment.

             Q:  So there's no -- no...

             (CROSSTALK)

             MR. WELCH:  That is not -- that is not building new tanks.  The -- part of the money also for the tanks -- and I did not explain -- is they are -- we are buying some additional armor protection to keep the special armor facility open, so part of that money has rolled into that, but it's not -- it is not to procure tanks.

             Q:  And just a very quick follow-on to that.  As you know, Congress continues to add money, close to $500 million over the last two years, to this account.  What kind of problems does that cause for you when they continue to push money into a program where you said enough's enough, we don't need anymore?

             MR. WELCH:  Well, we -- we have a two-vehicle variant fleet.  And should Congress continue to procure additional tanks, we will field the newer version and replace the older version tank.

             WITHINGTON:  I think we have time for one more, so...

             Q:  A question on the GCV [Ground Combat Vehicle].  Eighteen months was added to the development cycle of that program, I believe.  Was that made -- is that a cost decision?  Was there -- you know, was it to buy more time in the development phase?  What was the reasoning behind that?

             MR. WELCH:  To extend the technical development phase?  I don't know clearly the answer for it.  I owe you that answer.

             Q:  Do you have a set of figures for the ground vehicle (inaudible) you know, how much of the FYDP [Future Years Defense Program] has been allocated toward...

             MR. WELCH:  I don't have that with me.

             Q:  You don't?

             MR. WELCH:  No.

             Q:  Was the money you saved from the GCV, the changes, was that redistributed back into the other parts of the combat vehicle fleet?  Is that why we see numbers like 382 for DVH [Double-V-Hull] and 174 for Abrams...

             MR. WELCH:  The large portion of -- of the money that was saved from going from a two vendor to one was -- was put back into the combat vehicle fleet, yeah.

             Q:  Can you tell us how much you were able to save, just so it wasn't a net loss for the Army?

             MR. WELCH:  It was not a net loss for the Army.

             COL. WITHINGTON:  OK.  We have -- do have time for one more, back over here.  Ma'am?

             Q:  Could you -- could you speak to how the budget request would impact ongoing energy and water conservation efforts the Army has?

             MAJ. GEN. DYSON:  You want to take that or...

             (CROSSTALK)

             MR. WELCH:  I'm sorry.  Would you ask the question again?

             Q:  How the request would impact ongoing energy and water conservation efforts the Army is undergoing at installations?

             MAJ. GEN. DYSON:  Well, I think what I would say to that is that we continue to invest in energy initiatives in our installations.  And so even though our overall budget request has come down, there are some places that we have protected or our funding is level, and that is a measure of success inside this budget environment, I would think, and that certainly continues to be a priority for the Army, because we do see the benefits -- the long-term benefits of achieving success in those areas. 

            And there are some other places in our budget that have also sustained funding in the -- in the era of the declining budget, and that has to do with some of our readiness items, some of our operations.  Nobody asked about, you know, shifting to the Pacific, but we are looking at making sure that we're funding exercises and a presence in the Pacific.  And those are areas that you won't see large changes in our budget, but inside of a declining budget, where you see, you know, strength and continuing the funding is -- is a message in and of itself. 

            So I really thank you all for your attention this afternoon.  I really appreciate it.  And I hope that you've been able to see that we really are trying to adapt to our new strategy, our new environment, and our new force structure as we move ahead.  And I thank you very much.