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DOD News Briefing by Maj. Gen. Flowers and Marilyn Thomas from the Pentagon on the Fiscal 2012 Budget Proposal

Presenters: Major General Alfred Flowers, Deputy Assistant Secretary for Budget, U.S. Air Force; and Marilyn Thomas, Deputy for Budget to General Flowers, U.S. Air Force
February 14, 2011

Go to AIRFORCE.PDF to view briefing slides associated with this transcript.

                 GEN. FLOWERS:  Well, good afternoon, ladies and gentlemen, and welcome to the Air Force's fiscal year '12 budget rollout.  Like all the services -- first slide, please.  (Pause.)  Next slide. 

                 The Air Force, like all the other services, is heavily engaged around the globe.  Today we've got over 37,000 airmen deployed to contingencies and some 57,000 forward-deployed overseas.  More than 132,000 are supporting the combatant commander's requirements.  We are globally engaged, like all the other services.

                 Next slide, please. 

                 I know the purpose of this is primarily the FY '12 budget.  But before we get into the FY '12 budget, I want to take this opportunity to just reemphasize what you've heard from all the previous briefers this afternoon.  And the fact is that we're still operating without an appropriations bill in FY '11.  And that's creating some challenges for us that we had not anticipated, but we're managing.  This -- operating without an appropriations bill is limiting flexibility to respond to emerging requirements.  It restricts us from new START and production increases in investment programs. 

                 It's deferring -- causing us to defer military construction projects.  By the end of this CR period, the 4th of March, we will have deferred 36 military construction projects with scheduled award dates through the beginning of March.  If we go under a traditional CR all year, we will defer up to 75 projects, another 39.  So we are doing some things that we need to stop doing that will create some byways for us into FY '12, some things that contribute to inefficient execution in FY '11 that's driving increased costs, and that byways requirements into -- will bow wave requirements into FY '12. 

                 Next slide.

                 Our secretary and chiefs' priorities are very clear.  The guidance as we started to build this budget was to ensure that we balanced investments across core functions and focus on combat-enabling capabilities for the warfighters in the joint coalition fight.  The priorities have not changed from those of FY '11, and they are -- as you see, they are -- we continue to strengthen the nuclear enterprise.  Included in this budget is $5.2 billion towards continuing to strengthen the nuclear enterprise.  We're continuing to partner with the joint coalition team to win today's fight.

                 Develop and care for airmen and their families.  Included in this budget is $813 million for family programs. 

                 Modernize our air, space, and cyberspace inventories, organizations and training.  Recapture acquisition excellence.

                 And we are enabling these priorities by moving -- finding efficiencies in overhead and support and moving it -- shifting it to warfighting readiness programs.  And we'll talk about some of that on the next slide and subsequent slides, how we've done that.

                 Next slide, please.

                 Back in the spring of last year, the secretary of defense directed the services to identify a hundred billion dollars in efficiencies in overhead and support and move it to warfighting and readiness.  Our original target, or the Air Force's target was $28 billion.  We found $33.3 billion in efficiencies across the FYDP, but in FY '12, $3.4 billion of that $33.3 billion we've used and moved to warfighter readiness and modernization.  And we'll talk about some of that here in just a little bit.

                 In addition to our $33.3 billion that we identified, of the department-wide efficiencies that were identified by the Department of Defense, included another $7.8 billion, or $10 billion, that impacted Air Force TOA. 

                 So in total across the FYDP, 33.3 (billion dollars) were identified internally, 10 billion (dollars) defense-wide, $43.3 billion across the FYDP.  The 12-piece for the Air Force is $3.4 billion, the department-wide piece is 2.8 (billion dollars), for a total of $6.2 billion in efficiencies identified in FY '12.

                 Now some of the areas that we identified efficiencies.  We're reducing overhead.  We identified $715 million in energy efficiencies, primarily in AMC fuel efficiencies, across the FYDP, for which 136 million (dollars) of it is FY '12.  In the logistics area, in the weapon system sustainment, we've done an end-to-end review of over 5,500 requirements.  We're improving supply chain management through consolidations of purchases and more efficient purchasing.  We improved inventory management. 

                 In the training area, in the CAF (Combat Air Forces) fly hour program we're increasing use of simulators and we've done a bottom-up review of tasks, and we will expect to save about 5 percent efficiency in the flying-hour program in the CAF.  In acquisition, I'll talk some more about the block buying of EELVs as we talk a little bit about space in the subsequent appropriation slide brief.

                 And where did we move the efficiencies to, and what did we enhance?  Enhancements, we're modernizing -- upgrading F-15 radar through our modernization program.  We're buying EELVs more efficiently, and we'll talk some more about that.  We're maxing out the amount that General Atomics can produce in MQ-9s for the Air Force.  It's 48 a year.  We're doing some upgrades to the MC-12 as well as moving it from OCO to base to normalize it.  So we're reducing excess overhead and costs, applying savings to force structure, modernization and readiness; as we pointed out, some of those efficiencies and enhancements that we've identified in FY '12 and across the FYDP.

                 Next slide, please.

                 On this slide I want to point out three things to you, and then we'll talk about the appropriations in the blue baseline TOA that you see there, the 119 billion (dollars), as we walk through each of the appropriations.  But the pieces that I want to bring to your attention on this slide is the $170 billion -- 178.8 -- the FY '11 budget that we submitted, compared to the $166.3 billion budget that we submitted today for FY '12.  That's a reduction of $4 1/2 billion. 

                 The primary reduction that you will see from '11 to '12 is in that first gray box, the overseas contingency operations.  It's down $4.4 billion.  And basically what we have done is we have fully funded Afghanistan at the FY '11 level, and we've funded 25 percent, one-quarter of operation in Iraq, because the strategic planing guidance for our overseas contingency operations tells us that we will be out of Iraq by 31 December, so we've only funded one-quarter, or 25 percent, of Iraq operations for FY '12.

                 The next block down, the non-blue TOA, $30.4 billion in '11, $30.9 (billion) in '12, there's a $500 million increase in the non-blue.  What the non-blue support is, intelligence programs; it also supports the defense health program and SOCOM, Air Force people working in these agencies, as well as some classified intelligence programs.

                 Of that $500 million increase, about half of it is pay and allowances increases for FY '12 for Air Force people that are working in the Defense Health Program, as well as Special Operations or SOCOM.  The other half is increases in -- small increases in some of the intel programs, classified intel programs that are in this -- in this funding.

                 The -- none -- the blue piece of 119 billion (dollars), we'll talk about each of those and their appropriations that follow, starting with the military personnel account. 

                 Next slide, please.

                 What I'd like to do on this slide is just zero in for a minute on the blue -- on the Air Force blue baseline, the $119 billion, the piece that we have direct control over the execution of.  We can see there that the day-to-day ops consumes about 63 percent of this $119 billion for things such as flying hours, civilian pay, base operation support, facility sustainment restoration and modernization support, the things that are the lifeblood of day-to-day operations at our 80 major installations around the world.

                 Now, I identified and talked a little bit about the $3.4 billion in efficiencies that we've identified in FY '12.  Of that $3.4 billion in efficiencies, 1.9 billion (dollars) of that is in the O&M arena, in the area of day-to-day support commodities that I just named off.  Had we not found the -- identified the $1.9 billion in efficiencies in this O&M area and moved them to day-to-day operations in this same area, the 63 percent would be 65 percent.  So we have slowed the growth through identifying efficiencies and shifting it to day-to-day operations for things such as fuel-price increases.  The cost of fuel will go up in FY '12 to $131 a barrel, as opposed to $127 a barrel in FY '11.  That drives the bill for us at $119 million.  And we support those kinds of day-to-day cost-of-doing-business increases through the efficiency that we identified, the 1.9 billion (dollars).

                 Next slide, please.

                 Now we will start with military personnel and walk through each of the appropriations, and I will highlight some of the things in the '12 budget as it relates to these appropriations.  The military personnel account, there is small growth of about 600 in the active force end strength, and that primarily relates to increase in ISR end strength.  There is another 200 end-strength growth in the Reserves, and that's for a C-130 training squadron at Little Rock Air Force Base.  Other than the 800 end-strength growth in active duty and the Reserves, our military personnel account is flat, and it remains flat at 332,800, FY '12 and across the FYDP.

                 The thing that's of most note in our military personnel account -- and some of you that were here last year heard us talk about our overstrength, primarily in officers -- by the end of FY '12, through some very aggressive force-management actions, we will be at our authorized end-strength level of 332,800.  We ended FY '10 2,496 over our end strength.  We will end FY '11 at 1,415 approximately over.  But by the end of '12, we will be at the authorized level.

                 Next slide, please.

                 In operations and maintenance, which is the lifeblood of day-to-day operations, this budget supports 1.2 million flying hours.  It supports the fuel-price increase that we talked about earlier of $119 million increase due to $131 a barrel versus 127 (dollars).  It builds on the progress that we've made in '11 with ISR, with the goal of reaching 65 CAPs by the end of '13.  Today, we're at 48 CAPs.  By the end of '11, we'll be at 50. 

                 Weapons systems sustainment, it supports it, defending of -- the total requirement of -- to 84 percent of the total requirement for depot maintenance aircrafts, engines and software.  That funds the civilian pay at the frozen FY '10 level for 182,000 civilian employees. 

                 And we've already talked about the savings that we've identified, primarily in Air Mobility Command, of $715 million across the FYDP, 136 million (dollars) in '12, through fuel efficiencies that we will -- we've identified and we'll realize by investing $128 million in this area to realize 715 million (dollars) across the FYDP, primarily in the Mobility Command.

                 We'veimproved the depot supply chain business processes, and we talked a little bit about that earlier, and thus improving readiness at a lower cost. 

                 We began an effort at reducing IT, the cost of communications infrastructure, by 25 percent, with a small investment in FY '12, but the efficiencies we start to realize in '13, through some consolidations of storage, network processes, network consolidations.  And we reinvest in  efficiency and savings to realize more efficiencies and more capability for the warfighter, and readiness.

                 Next.

                 In the milcon, family housing and BRAC area, this -- these appropriations grow a small amount, about $97 million total.  But there's some things that we're supporting in here that are very important. 

                 We -- we're supporting eight projects, eight new dormitory projects.  Included in this area is funding for initial beddowns for F-35 and F-22s, and some realignment beddowns for B-52s and F-16s at Holloman and the B-52s at Minot.

                 It supports the COCOM's highest priorities:  $222 million to support the COCOM's highest priorities, to include a new STRATCOM headquarters, which we are incrementally funding, and in this budget we've included the first $150 million in FY '12 in support of the new STRATCOM headquarters building.  There's 35 million (dollars) in support of a TRANSCOM air freight terminal in Guam.  There's 37 million (dollars) in support of a CENTCOM dorm complex in Qatar and 193 million (dollars) included for three joint basing dormitories at Elmendorf, Richardson, San Antonio and Langley and Eustis.

                 Our Base Realignment and Closure is now down to $125 million, which primarily supports environmental cleanup at 28 sites that were BRAC closures. 

                 Also included in this budget in this area is $85 million in support to improve 1,361 housing units in Japan and the United Kingdom.  By the second quarter of FY '12, we have fully privatized 52,500 CONUS, Hawaii and Alaska housing units, but we are still supporting some overseas housing improvements.  The last -- the last group to be privatized in the CONUS is the Northern group. 

                 Next slide, please.

                 In the research, development, test and evaluation area in this appropriation, some of the things that are supported that I'd like to highlight in this briefing is start off with someone who's already asked --- I heard when Secretary Gates briefed -- about the long-range bomber.  It includes $197 million in FY '12, $3.7 billion over the FYDP, to develop a long-range penetrating nuclear-capable optionally manned bomber with an IOC of mid-2020, approximately 80 to 70 aircraft. 

                 It continues development of four KC-X integration capability demonstration aircraft, continues the development of two Defense weather satellite systems, supports SBIRS GEO-1 orbit checkout and SBIRS GEO-2 launch and checkout. 

                 It includes $16 million in FY '12 for the advanced trainer replacement, the TX, to replace the T-38s used in the fighter bomber pilot training; protects science and technology investments; actually, it provides for about a 2 percent increase in basic research while 6-2 and 6-3 remains flat.  It starts the JTAGs (Joint Terminal Attack Controllers) training simulated development and TACP equipment modernization.

                 We're continuing R&D -- RDT&E emphasis for today's fight and future challenges.

                 Next slide, please.

                In the procurement area, I'd like to point out that we seek the Congress's support and we've included in this budget a more efficient way of buying satellites.

                 It's called the -- we identify it as the Evolution Acquisition for Space Efficiency, or EASE, as we will refer to it by acronym.  It's a block buy of satellites, multi -- using multi-year contracting and work from previous productions to stabilize production, stabilize the workforce, the labor force, and buy more efficiently.

                 Now, this is done through -- and the reason we need strong support from the Congress is because it's done through the use of three appropriations.  We use advanced procurement, we use procurement, and we use advanced appropriation is what we need to exercise this more efficient way of buying satellites.

                 With the support and approval to do so, we will buy two AEHF satellites in FY '12 for a total of about $552 million.  But that's the procurement.  That is not the complete, total buy of the satellite.  A satellite costs about a billion and a half dollars.  The $552 million in '12 starts down the buy -- on the buy of two AEHF satellites.

                 We put in advanced procurement for SBIRS, 185 million (dollars).  And there's about 555 million (dollars) for SBIRS in FY '13.  But again, this is not the complete unit cost of four satellites, the 552 (million dollars) and the 555 (million dollars).  This is only the start.

                 We support -- we start the more efficient way of procuring launch vehicles, EELVs, the Evolved Expendable Launch Vehicles, by buying in blocks also.  And we buy more efficiently.  And the way we do that is -- in the past, we've purchased these launch vehicles one at a time over time.  What we've identified and we're presenting in this budget is that the department will buy five in '12; the Air Force will buy four, the Navy one.  We will buy four in '12, four in '13.  And then the Air Force goes to five in '14 and out.

                 We maxed production of MQ-9s at 48.  And I spoke earlier about this is the maximum that General Atomics can produce for the Air Force.  We support procurement of 19 F-35s, nine Light Attack Armed Reconnaissance Aircraft, nine C-27s and 11 C-130Gs.

                 We continue upgrading the reliability enhancement program for the C-5s with 11 kits in '12, as well as an On-board Inert Gas Generating System, or OBIGS as you will hear it referred to by acronym; and the extended range fuel tanks for the C-17; as well as continuing the avionics modernization program for the C-130s.

                 In ammunition procurement, we normalized the funding of ammunition for cartridges, flares, fuses, JDAMs, general purpose and practice bombs.  In missile procurement, we already talked about two AEHF satellites, birds five and six; and SBIRS, birds five and six, using the EASE acquisition strategy that we need the support -- the strong support of the Congress in order to do so through the use of advanced procurement and advanced appropriations.

                 Innovative acquisition enables investment in critical mission areas.

                 Next slide, please.

                 This slide is a summary of our major procurement quantities.  And you can see on this slide that the Air Force plans to purchase 61 manned and 51 unmanned aircraft in the '12 budget, that we sustain the production of 48 MQ-9s.  We budget more efficiently for procurement of satellites and launch vehicles through EASE with the AEHF and SBIRS and EELV and the strategies that we've laid out in this budget.  We've adjusted weapons procurement to reflect current projected requirements, and we continue to focus on near- and long-term capabilities.  And we've listed them for you there on the summary chart.

                 Next slide, please.

                 Now as we turn to overseas contingency operations -- and you've heard a lot about OCO this afternoon.  You've asked a lot of questions.  But -- and basically we've laid it out for you.  We have fully funded overseas contingency operations in Afghanistan at the FY '11 level, and we have funded FY '12 in Iraq, one-quarter of operations following the guidance that we will be out of Iraq by 31 December of '12.

                 We're asking to replace two combat losses, one CV-22 and one HH-60 aircraft.  And we've replenished some munitions in OCO.

                 Next slide, please.  The -- this budget begins to -- the implementation of DOD's efficiencies, and I think from General Spencer and Mr. Hale's briefing, General Spencer talked about this is the beginning of the efficiencies.  We continue to strive to become more efficient, and we will continue to work efficiencies and account for efficiencies and work hard to realize all of the efficiencies that we've identified.  We shift dollars from overhead and support to readiness and modernization in warfighter areas.  We refer to it as from tail to tooth.  So if you hear those -- that terminology used, you know that we're talking about moving from overhead and support to warfighting readiness.

                 We continue our support to the joint fight with our coalition partners.  We continue to provide the best support that we possibly can for our greatest asset, the great men and women of our United States Air Force and the great civilians that work alongside of us and support us all. 

                 I cannot help and cannot end this and go to questions and answers without reiterating one more time the need for an appropriation bill in '11.  We have laid out what we've done in '12.  We've highlighted some of the major points, but a lot of this will be impacted by what happens in '11 if we continue with a continuing resolution, because a lot of the requirements in '11 that we are deferring now will byway into '12 and impact '12 execution of this budget. 

                 So this isn't just an '11 issue.  It's an '11 issue and very important, but the longer we go, the more of it becomes a '12 issue as we go along.  So it is extremely important that we have an appropriation bill soon in FY '11 so that we mitigate the impacts of what's happening in '11 that will byway then into FY '12.

                 With that, I'd like to thank you for your attention.  At this point, Ms. Thomas and I will turn to your questions and answer them.

                 Yes, sir.

                 Q:  Do you have any more detail on the bomber, as in -- you know, you said  -- do you anticipate that they're all going to be built exactly alike?  There was some criticism of the F-35 program -- they tried to do too much too quickly and that they didn't build in blocks and they signed the contract without having a test program defined.

                 So is there going to be any difference that you're aware of in the way this bomber program is going to be conducted?

                 GEN. FLOWERS:  Sir, I can tell you what has changed, and I think -- I think Amy answered that question at a previous briefing.  What has changed from the next generation bomber and from two years ago?

                 Well, let me talk a little bit about what has changed.  There has been a further review of options.  This is now being approached as a family of systems.  The bomber is the centerpiece, but there's ISR, there is -- there will be ISR, the electronic attack and communication capabilities that would be part of this family system with the bomber being the centerpiece.  And we've got more experience and more information in the leveraging of technology.  So what has changed is more reviews of options, continuing to leverage technology, and I think we've learned a lot from the last year of leveraging the technologies that's out there in the studies that we've done.

                 MS. THOMAS:  And if I could add, General Flowers.  I think the key thing as we move forward to procure this fleet of 80 to 100 long-range strike bombers is just as General Flowers said, we are relying on mature technologies so that we can produce an affordable bomber and one that by relying on these mature technologies, we will be able to mitigate a lot of risk.

                 Q:  Well, let me -- let me do a follow-up on that, though.  Is -- does that mean it's going to be a(n) open-hardware airplane that you -- that you move -- you can move ISR packages in and move them out if you want it to be an ISR airplane, you move more weapons launchers or something?  Is that -- is that the point?

                 MS. THOMAS:  I don't know that we have enough fidelity yet on the acquisitions strategy to comment on that.  So I think what we've told you today is about all we can tell you. 

                 Q:  Well, I just didn't understand the family part, though.

                 GEN. FLOWERS:  The family whom we allude -- talk about the family, we're talking about capabilities through ISR, capabilities through --

                 Q:  You're only talking about one airframe, though.

                 GEN. FLOWERS:  Right.

                 MS. THOMAS:  Well, but there -- but the family of systems consists of more than just the bomber.

                 GEN. FLOWERS:  Yes, sir.

                 Q:  On -- I just wanted to get a clarification on the concept of option-only manned.  Do you anticipate it as being a manned bomber with the possibility to be remotely operated or the other way around?  Or has that -- yet to be determined?

                 GEN. FLOWERS:  Conceptually, optionally manned; to be determined just how that will work.

                 Amy.

                 Q:  The slide deck that Mr. Hale presented had four quadrants, with each service offering up programs and efforts for the savings initiative.  And under the Air Force square it said infrared search and track program.  What is that?  Apparently you offered it up for termination?

                 MS. THOMAS:  I'm not sure.

                 GEN. FLOWERS:  I'm not either.  We'll take --

                 MS. THOMAS:  We'll have to take that for --

                 GEN. FLOWERS:  We'll take that one, Amy, and get back to you.

                [AIR FORCE STATEMENT: Infrared Search and Track program was planned to provide the only US Air Force search and targeting capability in the infrared spectrum designed specifically for air-to-air, providing air-to-air attack capability in a radar-denied environment on the F-15 C/D. The program leveraged technology from the US Navy IRST program, which is behind schedule.  The program was terminated due to technical challenges and removed RDT&E and procurement were removed in the amount of $34.9M in Fiscal 12 and $345M across the FYDP (including Fiscal 12).]

                 Q:  Thank you.  (Chuckles.)

                 GEN. FLOWERS:  Yes, sir.

                 Q:  David -- (inaudible) -- Defense News.  Just a follow-up on the bomber thing again.  How far along have you guys gotten in nailing down the specifications for the aircraft?

                 GEN. FLOWERS:  That's to be determined.  Right now we're in the technology-leveraging phase, continuing.

                 Yes, ma'am.

                 Q:  The savings and efficiencies, does that assume that the Air Force will be insourcing depot maintenance more than it has in the past?  And can you quantify how much savings you're looking in terms of depot maintenance insourcing?

                 MS. THOMAS:  That's certainly something we're looking at.  I mean, even before the efficiencies initiative, we were involved in some studies looking at source of repair and whether leveraging organic capability in some cases was more efficient and cost-effective than contracting the workload. 

                 So that's part of an evaluation of every weapons system and how we support it.  And we are looking at some of those that are very CLS-intensive to see if we can bring some of that workload in-house.  And where it makes sense from an efficiency standpoint, we're certainly looking at that.

                 Q:  But you haven't counted any savings towards this budget.

                 MS. THOMAS:  Well, there are some depot maintenance and logistics savings assumed in our efficiency target, and that is certainly an area we're going to look at to try to meet that efficiency target.

                 GEN. FLOWERS:  Yes, ma'am.

                 Q:  One clarification on the bombers -- (off mic) -- and then I've got a real question.  On the bomber, you mentioned in your remarks that it has an IOC of, I think you said, mid-2020.

                 GEN. FLOWERS:  Mid-2020s.

                 Q:  Mid-2020s, so you know -- (off mic).

                 GEN. FLOWERS:  Right.

                 Q:  Okay.  Thank you.  And on the future -- (off mic) -- modernize the ICBM, I understand there's some money in the budget for that, to look at that, to study that.  Can you tell me how much that is?  And what general time frame or even specific time frame are you looking at a new start there and potential IOC?

                 GEN. FLOWERS:  Let me tell you, what we've got in the nuclear enterprise included some of the things that are included in the $5.2 billion to continue strengthening the nuclear enterprise.  Because there's about $460 million for B-2 defensive management system, 241 million (dollars) for a B-52 IT backbone system, $333 million for Minuteman III extensions to 2030; and some funding for B-61 tails.

                 Q:  Okay.  I didn't hear the future ICBM study in there.

                 MS. THOMAS:  There -- to my knowledge, there's no funding in '12 for a future ICBM.

                 Q:  (Off mic) -- might sort of even up the study.

                 GEN. FLOWERS:  (Inaudible.)

                 MS. THOMAS:  No -- (inaudible).

                 Q:  Okay.  And so therefore it's too early to say when it would be a new start program.  Just too far out right now?

                 MS. THOMAS:  Well, we can take that for a follow-up.

                 GEN. FLOWERS:  We'll take that for a follow-up.

                 Q:  Okay.  Thanks.

                    [AIR FORCE STATEMENT: The Air Force is executing a service life extension for the Minuteman III program, extending the service life to 2030.  There is currently no program of record to develop a Minuteman III follow-on. ] 

                  GEN. FLOWERS:  Yes, sir.

                 Q:  Has the Air Force canceled its space-based -- space surveillance program?

                 GEN. FLOWERS:  Canceled the space surveillance program?  No, not to my knowledge.

                 Q:  The follow-up procurement program?

                 MS. THOMAS:  Not to my knowledge.

                 STAFF:  We have made some adjustments in -- (off mic) -- future satellite program, but let's take that for -- (off mic).

                 GEN. FLOWERS:  Okay.

                  [AIR FORCE STATEMENT: Fiscal 12 SBSS Block 10 follow-on effort funding was reduced to $12.6 million pending an OSD directed study.  This study of alternative capabilities and costs will inform POM Fiscal 2013 for a future space-based situational awareness program.]

                 Tony.

                 Q:  A couple clarifications and a question on efficiencies.  Is it 180 to 100 bombers?  Because I think --

                 MS. THOMAS:  Yes.  Yes.

                 GEN. FLOWERS:  Eighty to a hundred bombers.

                 Q:  You said 80 to seven.  I think you --

                 GEN. FLOWERS:  No, 80 to 100.

                 MS. THOMAS:  Yes, sir.

                 Q:  On efficiencies, I've asked the other services, what year do you have your maximum efficiencies in?  How confident are you in the out years you're going to be able to achieve these and, again, that's not -- these aren't smoke and mirrors?  You have a -- up front you've got -- in '12 you got -- they're doable, but you know, you're both not going to be here through the FYDP.

                 GEN. FLOWERS:  That's true.  (Laughter.)

                 Q:  At some point you're going to take off.  How do you know -- for good reasons, I'm sure.  (Laughter.)  But how do you know these are going to materialize?  Because a lot's depending on them.  And what's your maximum year of savings, if you have that?

                 MS. THOMAS:  Want me to talk governance?  Want me to talk to --

                 GEN. FLOWERS:  Sure, talk to governance.

                 MS. THOMAS:  The efficiencies targets do increase throughout the FYDP --

                 Q:  Right.

                 MS. THOMAS:  -- because they are cumulative.  And I think as Secretary Hale or maybe it was Mr. Roth alluded to, we will continue to try to strive to achieve more efficiencies.  This is not a one-time deal where we achieve them in '12 and we're done.  So every year the goal -- the bar raises.

                 And internal to the Air Force, we have put in place a pretty rigorous governance process to make sure that each of the targeted efficiencies has a priority owner, and that person is responsible for tracking and making sure the plans are in place to achieve those efficiencies.

                 Now, certainly as we go further into the out years, some of the fidelity and detail behind those efficiencies is less than in the near years.  But we will continue to work through each subsequent POM build and budget build to put more fidelity behind those and hold people accountable for achieving the efficiencies.

                 Q:  Okay, the Global Hawk.  You truncated the program at the Block 40.  Can you explain a little bit why?  And you went to 11 aircraft from 22.

                 GEN. FLOWERS:  Sure.  The --

                 Q:  Was it because of cost and testing?

                 GEN. FLOWERS:  The Block 40 program was truncated at 11.  It will be truncated at 11 aircraft.  And we're using the resources, the savings from truncating the Block 40 at 11 aircraft, to improve -- make capability improvements in the Block 30 in the areas of EO and IR.

                 Q:  Why did you truncate the program?

                 MS. THOMAS:  Well, 11 was what we needed.  It provides us two caps, GMTI capability, in addition to the Joint Stars we have.  We determined that was sufficient to meet our requirements.

                 Q:  There's cost increase issues.  Was that part of it?

                 MS. THOMAS:  That was part of it, yes.

                 GEN. FLOWERS:  Yes.

                 MS. THOMAS:  And performance of the program.

                 Q:  Thank you.

                 STAFF:  We have time for one more question.

                 GEN. FLOWERS:  Yes, sir.

                 Q:  Can you talk about what alternative fuels investment is found in the budget and how that's allocated?

                 GEN. FLOWERS:  Let us -- let us take that one and get back to you.  I know that we've got some alternative fuels investments and we're doing some work with alternative fuels, but I need to get you the details on it.  We'll provide that to you.

                  [AIR FORCE STATEMENT: Fiscal 11 was the last year of funding for alternative fuels.  It completes all planed certifications.  No R&D alternative fuel certifications are planned for Fiscal 12.]

                  Q:  Given that --

                 GEN. FLOWERS:  Young lady back here in the red sweater.  She hasn't had a turn.

                 Q:  (Inaudible) -- the total aircraft procurement to add up to 61 for manned aircraft.  Are you counting the replacement and the lease purchase options in there?  And also, the slide says you're purchasing one C-130J in FY '12, but I believe you said 11.

                  MS. THOMAS:  Right.  I can -- I can address the C-130J.  That includes the C-130Js we're procuring for the AC, the HC and the MC variants as well.

                 Q:  So it is 11?

                 MS. THOMAS:  Yes, it is.

                 STAFF:  That's all the time we have.

                 GEN. FLOWERS:  Okay, that's all the time we have.  Thank you very much.

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