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DOD News Briefing by Maj. Gen. Bolton and Marilyn Thomas from the Pentagon on the Fiscal 2013 Budget Proposal

Presenters: Air Force Major General Edward Bolton, Jr., Deputy Assistant Secretary of the Air Force for Budget; and Marilyn Thomas, Deputy for Budget, U.S. Air Force
February 13, 2012

Go to http://www.defense.gov/news/AirForce_2013_budget_slides.pdf to view briefing slides associated with this transcript.

            STAFF:  Good afternoon, and welcome to the Air Force portion of the FY '13 budget rollout.  Today we're -- have with us Major General Edward L. Bolton Jr., and he is the deputy assistant secretary for budget. [sic; the Air Force’s Deputy Assistant Secretary for Budget] And he will actually give the budget briefing. 

            At the end of the budget briefing, he will be joined at the lectern by Ms. Marilyn Thomas, the deputy for budget. 

            Without any further ado, sir. 

            GEN. EDWARD L. BOLTON, JR.:  Good afternoon, ladies and gentlemen, and welcome to the FY '13 -- Air Force's FY '13 budget briefing.  Next slide, please. 

            Today's Air Force, as is our tradition, is globally engaged in missions across a wide range of difficult and complex challenges.  In 2011, for example, we helped end the war in Iraq and reduce sectarian violence in Afghanistan.  We helped to curtail violence in Libya, supported earthquake relief in Japan and engaged in a myriad of smaller operations around the globe. 

            In addition, we provided deterrence to help underwrite global security.

            As our global security environment evolves, our fiscal environment has changed.  It is clear that we need to renew our economic strength at home.  The Budget Control Act established caps in government security spending.  The Defense Department's share of the resultant reduction is $487 billion over the next 10 years, with nearly 260 billion [dollars] of those savings required over the next five years. 

            We understand that the Air Force must do its part to reduce spending and have made the difficult choices necessary to achieve those savings.  We firmly believe this is not a choice between national security and fiscal responsibility, and this budget starts the transformation of the Air Force in support a new defense strategy constrained by limited resources. 

            Next slide, please. 

            The evolving threats we face require a new strategy and a change in how we engage across the globe.  This will require us to be able to respond quickly to deny and deter opportunistic aggressors.  This new strategy emphasizes the Asia-Pacific and Middle East regions. We'll also continue to meet our commitments in Europe and build other partnerships, but we will look for innovative ways to sustain our influence. 

            Our Air Force approach to the new strategy has required us to balance risks by making difficult choices.  We protected readiness; accepted a smaller, high-quality force; and focused our investments on key modernization programs while making more disciplined use of our dollars.  Finally, as always, we will continue to take care of our most important resource, our people. 

            Next slide, please. 

            Although the environment and our strategy have changed, the enduring contributions the Air Force has provided to the joint fight will remain.  These contributions are as you see on this slide. 

            Next slide, please. 

            Our FY '13 budget decisions reflect the difficult choices we've made to align with the new strategy.  These decisions reflect a balanced approach across five broad themes. 

            We've rebalanced our force structure to maximize our capabilities and responsiveness. 

            We've preserved readiness by protecting flying hours and weapons system sustainment.  And this will support our aging fleet of over 5,200 aircraft while continuing to reduce the cost of operations wherever possible. 

            In the area of modernization, we've continued our investments in the most promising, technologically superior systems. 

            And we've maintained the quality of life for our airmen and their families by increasing pay and allowances, and providing first-class housing and family programs. 

            The result is a flexible and versatile force that's poised to support our new national security strategy. 

            The next slide provides an overview of our FY '13 budget.  Next slide, please. 

            This chart shows the total Air Force budget by appropriations to include nonblue -- which is intelligence, special operations and defense health programs -- and overseas contingency operations, or OCO.  The Air Force blue baseline compromises funding for airmen, weapons, training, bases and all the other programs that the Air Force directly manages.  The first thing we want to highlight is the reduction from a total budget of 162.5 billion [dollars] in FY '12 to 154.3 billion [dollars] in FY '13. This is a reduction of 5 percent.  We also want to highlight that our Air Force blue baseline has declined 12 percent, adjusted for inflation, from FY '09 to the FY '13 PB request. 

            Next slide, please. 

            I'd next like to draw your attention to our Air Force blue baseline, which along with the OCO will be the focus of today's presentation.  From FY '12 to FY '13, the budget decreased 4.4 percent in nominal terms and 6.3 percent adjusted for inflation.  From an Air Force blue perspective of 110.1 billion [dollars] total, approximately 73 billion [dollars], or about 66 percent, is required for running day-to-day operations at our bases around the world.  This includes military personnel, civilian pay, flying hours and base operations support.  It also includes facility sustainment, restoration and modernization support. 

            Our approach is to preserve readiness by not eroding our O&M accounts, while maintaining efficiency efforts and focusing on force structure adjustments. 

            The Air Force is also committed to preserving the quality of our all- volunteer force and taking care of our airmen and their families. 

            Next we have MILCON, Base Realignment and Closure and military family housing, which, in total, decreased by 800 million [dollars] from FY '12 due to a deliberate pause in major construction projects. Procurement decreased 3 billion [dollars], and research and development funding decreases 500 million [dollars] from FY '12. 

            The Air Force carefully scrutinized our weapons systems to determine which required investment today and which can be deferred. And we made the requisite tough choices that will maximize our military effectiveness in a constrained environment. 

            Next we'll discuss our Overseas Contingency Operations request. Next slide, please. 

            First, our Overseas Contingency Operations funding decreased significantly from FY '12 for the simple reasons that military operations have ended in Iraq and we've begun to draw down in Afghanistan.  Within this appropriation, we'll provide 1.3 billion [dollars]in special pay and allowances for the approximately 26,000 airmen who are engaged in disrupting, dismantling and defeating al-Qaida and its network. 

            The  9.4 billion (dollar) Operations and Maintenance request will deliver critical command and control, persistent ISR [Intelligence, Surveillance and Reconnaissance] and firepower to U.S. and coalition forces.  It'll also support inter- and intratheater movement.  In addition, this funding provides Force Protection for operations in Afghanistan as well as base support through the Office of Security Cooperation-Iraq. 

            In Procurement, the 602 million [dollars] continues large aircraft infrared countermeasures for the C-5, C-130 and the EC and AC-130s.  It also procures advanced targeting pods, replenishes munitions -- and that includes Joint Direct Attack Munitions and general-purpose bombs -- and also replenishes Hellfire missiles. 

            Finally, our request includes 240 million [dollars] for the Working Capital fund, which includes funding for dignified returns, the transportation of our fallen heroes. 

            Next we'll take a look at our budget by appropriation, beginning with military personnel.  Next slide, please. 

            We continue to take care of our airmen with increased pay and allowances, which includes a 1.7 percent base pay increase, a 4.2 percent increase for housing, and a 3.4 percent increase in subsistence to match corresponding inflation indices.  The reduction for the medical -- Medicare-eligible retiree health fund contribution account is due to updated economic assumptions that are calculated by the DOD Board of Actuary.   

            Our Total Force end strength decreases by 9,900 authorizations from FY '12 to FY '13 and maintains a balanced active-to-Reserve Component mix.  These reductions align the force structure with the new defense strategy and within funding constraints.  This also provides a balanced and trained force that is ready and able to execute the Air Force's core capabilities. 

            Next slide, please. 

            Our Operations and Maintenance appropriations supports ongoing operations and new missions at our 79 major installations as well as our minor installations and support sites.  This budget divests portions of the combat and combat-enabler forces by retiring 227 aircraft, which is about 4 percent of the fleet.  Where possible, we attempted to retire all aircraft of a specific type, which allowed us to divest the training and logistics support for that aircraft.  Where that was not possible, we worked to retire the oldest aircraft first. This budget protects readiness by buying 1.17  million flying hours despite a nearly 20 percent increase of fuel costs, and funds weapon systems sustainment at 79 percent. 

            Our plan to reach 65 CAPs [Combat Air Patrols] by May 2014 also supports readiness, along with our operations at two spacelift ranges that will support 16 launches for DOD, national and commercial agencies in FY '13.   

            Just as we are focused on preserving the readiness of the force, the Air Force is committed to maintaining the quality of life for our airmen.  Funding is provided for a 0.5 percent raise for our civilian personnel after a two-year civilian pay freeze.  Family services, child and youth programs, and Morale, Welfare and Recreation programs are also protected.  In addition, we're also pursuing opportunities to partner with local communities to support our airmen and their families.   

            Our work to better use our resources continues from  FY '12, and we are already seeing returns on our investment.  In addition,  the Executive Order for Promoting Efficient Spending mandated reductions in administrative travel and printing costs, among others, and we comply with that guidance.  

            Finally, the Air Force is committed to achieving auditable financial statements.   

            Next slide, please. 

            Our military construction budget decreased by 900 million [dollars] from last year's president's budget request.  This one-year pause will give us time to ensure proper investment of limited resources in light of the ongoing budget reduction pressures and potential Force Structure changes.  This budget continues to support the COCOM's highest MILCON priority, the second increment of the U.S. STRATCOM Headquarters Project, while focusing on high-priority new mission beddowns , dormitories and basing efficiencies projects.   

            Our Base Realignment and cClosure appropriation is now a $125 million program focusing on environmental cleanup for 34 BRAC closures, resulting from five BRACs between 1988 and 2005.   

            Our military family housing program improves 400 units and infrastructure in Japan, and continues to maintain and oversee our 76,300 owned, leased or privatized units.  The military family housing increase is for the O&M requirement due to the delay in privatization. 

            Next slide, please. 

            Our Rresearch, Development, Test and Evaluation appropriation decreased by approximately  500 million [dollars].  However, we've taken a balanced approach to ensure our warfighters have the capabilities they need to combat threats today and tomorrow. 

            We also remain committed to modernizing our fleet.  Our FY '13 budget funds flight -- tests for the F-35 program, continues the development of the F-22 increment 3.2 software upgrades, and allocates resources that extend the life of our F-16 fleet. 

            Our focus on long-range strike efforts continue as we develop a new, long-range, nuclear-capable, optionally manned penetrating bomber.  And we also invest dollars into our B-2 defensive management system to resolve our number-one obsolescence issue in the fleet by replacing passive antennas, receivers and display processors. 

            We also provide funding for sensor upgrades and advanced technology research for space-based infrared system vehicles, and address parts obsolescence.  In FY '13 we continue to strengthen our nuclear enterprise with investments in our ICBM [InterContinental Ballistic Missile] fleet.  Funding for fuels modernization and solid-rocket motors common to both ICBMs and SLBMs [Sea-Launched Ballistic Missiles] focuses on assessing and developing propulsion and guidance capabilities for increased reliability.  These enhancements will ensure the life of the Minuteman III ICBM weapons system through 2030. 

            Next slide, please. 

            In this appropriation, we've deferred, divested or terminated some large procurements to allow focused investment in critical capabilities, to respond to program challenges as appropriate, and support the revised strategy. 

            These procurements include investing in fifth-generation aircraft, by purchasing 19 F-35As, the centerpiece of our future precision attack capability, while maintaining our current -- legacy -- systems with critical modifications to the F-22, F-15, F-16, B-2 and B-52.  We're modernizing our inter-theater airlift fleet and maintaining our intra-theater airlift fleet.  We're enhancing our Special Ops capability with four CV-22s, and continuing to recapitalize our MC-130s and AC-130s. 

            Under ammunition procurement, we procure munitions to maintain appropriate war reserve materiel munitions quantities and test and training stockpiles, with the missile account, of course, as our space procurement funding.  The reason you see a decrease in missile procurement is because we've previously purchased Wideband Global SATCOM Satellites, number eight and number 10, in FY '12. 

            Also, within this appropriation we continue our Efficient Space Procurement strategy to identify efficiencies and utilize those resources to provide an enduring capability and stability to the space industrial base. 

            The next slide provides an overview of our FY '13 major procurement quantities. 

            (To staff.)  Next slide, please. 

            First, aircraft:  We reduce Reaper  production from 48 to 24. This production quantity will keep us on track to reach 65 CAPs by 2014.  We've restructured F-35 program to allow for a more realistic ramp and to address concurrency issues.  The 19 we will procure in FY '13 is now part of a program that is fully funded to the cost estimate across the FYDP.  And we will continue to recapitalize our Special Ops C-130 fleet. 

            For space, the Air Force is continuing funding for the Efficient Space Procurement of complex space systems.  Under this concept, in FY '12 we purchased two Advanced Extremely High Frequency satellites.  In FY '13 we will procure two Space-based Infrared Systems satellites. 

            In addition, we'll purchase two GPS IIIs and four EELVs [Evolved Expendible Launch Vehicle], the same number we purchased in FY '12.    

            And for weapons, we keep weapons production on track with increases in JDAMs [Joint Direct Attack Munition], Hellfire missiles and small-diameter bombs.  This increase in weapons production both replenishes our inventories and favors preferred munitions to help us prevail in highly-contested environments. 

            Next slide, please. 

            In summary, this budget implements our new defense strategy, which prepares the Air Force for the national security challenges we see emerging and meets that objective within the necessary fiscal constraints.  This new strategy requires the Air Force to integrate our enduring capabilities into a combined campaign and retain enough current and future capacity to first deter and, when necessary, deny or defeat an opportunistic aggressor. 

            In response to the strategy, our budget ensures we retain the critical capabilities we've gained this past decade and maintains our ability to respond to global demands. 

            In sum, in this budget, we made the difficult decisions necessary to appropriately balance resources between force structure, readiness, modernization and our people.  At end, this budget ensures we'll meet our obligation to the American people to remain the finest Air Force in the world in the years and decades to come.   

            I would like to thank you for your time and attention.  This concludes my presentation.  Ms. Thomas will join me, and we will turn to your questions. 

            Sir, you were the first. 

            Q:  Thank you.  You're going to cut the Reaper purchases but increase CAPs.  You're not going to buy any small UASes [Unmanned Aerial Systems] for the next couple years. 

            And the major system upgrades that you've been talking about for reducing aircraft are for manned systems. 

            Should we view this budget and this FYDP as basically emphasizing manned over unmanned? 

            GEN. BOLTON:  You should not. 

            Q:  Can you explain why? 

            GEN. BOLTON:  That wasn't part of our -- as we -- I mean, this budget really is a manifestation of the strategy that was laid out by Secretary Panetta on the 26th of January, and so our real challenge within this budget was to -- first to determine how could we build a budget that would implement that strategy, and then secondly, how could we do that with the necessary physical constraints as based upon the guidance from the Budget Control Act passed to us through OMB?  And so those were our -- kind of the two major muscle movements that we -- that we had.  And so it's really a focus on that.   

            Go back to your 48 to 24 question, which is a good question.  It turned out, when the JROC [Joint Requirements Oversight Council] established this past year the requirement of 65 CAPs, we determined we could meet that with this -- with this production rate.   

            And let's -- ma'am, please. 

            Q:  The Air Force at one point was looking at a next-generation UAV called NQX.  Has that been eliminated from the budget, and why? 

            GEN. BOLTON:  NQX? 

            Q:  Yeah, like a follow-on to the Reaper, I believe. 

            GEN. BOLTON:  Yeah, I'm not aware of --  

            STAFF:  (Off mic.) 

            GEN. BOLTON:  Yeah. 

            MARILYN THOMAS:  I think we need to take that one. 

            GEN. BOLTON:  We'll take that -- we'll take that one for record. I mean, we'll take that for record. 

            And then, sir, you were -- and then you're next, ma'am. 

            Q:  Yeah, just a quick follow-up on the funding for long-range strike.  It looks like you set outside 219 million [dollars] for this fiscal year to kind of look at proven technologies, to kind of get the program started.  Over the FYDP -- I mean, I understand you're focusing on sort of the proven tech, but obviously there's going to be some needed new developments.  So over the FYDP, has does that ramp -- how do you see that ramp sort of playing out?  (Inaudible.) 

            GEN. BOLTON:  Are you looking for the funding, or are you looking for an understanding of the plane -- 

            Q:  Well, the -- and also the understanding of what this money for this fiscal year is going to buy you. 

            GEN. BOLTON:  All right.  All right.  You can turn to that for the actual dollars. 

            MS. THOMAS:  Well, OK, thank you.  Well, this year, as we had talked previously, we are investing in study and analysis of proven technologies.  The program does ramp up through the FYDP, totaling about 6.3 billion in total across the FYDP in development dollars.  I can't speak to the specific FYDP numbers by year, but it's roughly about 6.3 billion [dollars], with some initial operating capability procurement coming in in the mid-2020s. 

            STAFF:  Ma'am. 

            Q:  I wanted to ask you about something that's not on these documents, and then a couple of follow-ups to the materials we were given.  T-X [Training aircraft replacement] didn't show up in these documents.  Has the Air Force decided to punt on that?  And if so, to when? 

            And then I'd like to ask you to expand a little bit on how the number came up in the OSD budget materials of $550 million procurement unit cost for the bomber.  Where did that come from?  What went into that analysis? 

            And it also mentions the KC-46 [Tanker] restructuring, if you could add a little meat to the bones on how the KC-46 was  restructured. 

            GEN. BOLTON:  That's a lot.  (Laughs.)  The T-X -- the T-X [ program is still on -- is still in the program baseline, I believe. And give me the actual dates -- is it '14 that it moved out? 

            MS. THOMAS:  Well, we've got development starting within the FYDP, and I think procurement in roughly the '17 time frame.  So you don't see a lot of funding for it near-term, but there is program funding out there for it. 

            In terms of your question about the tanker restructure, there has not been a restructure of the tanker program.  The contract award occurred later than we had originally expected, so the funding profile has been rephased some.  But the program has not been restructured. 

            Q:  OK, and then if I could -- 

            GEN. BOLTON:  Yeah, so that -- let me just -- let me just add to that.  And I think that contract was awarded February 24th of last year, and so we still have -- on that contract, that's 17 -- the program of record is still 179. 

            Q:  OK. 

            GEN. BOLTON:  We have -- we'll have four systems that'll go into development, so this -- it's just a matter of the contract, you know, being awarded  a little bit later.  It's not really a change to the program.  And then we'll follow up with the B and C. 

            Q:  OK.  And then if you could, on the analysis that went in $550 million on the per-unit cost of the bomber -- where did that come from? 

            GEN. BOLTON:  I don't -- I have not seen that number.  Ma'am, have you seen that? 

            MS. THOMAS:  Well, I know right now it is a planning number.  And based on what we know about the technologies and what we know about the program, that is an estimate.  And we are going to work very, very hard on cost control of this program, to make sure that we bring the weapon system in -- 

            Q:  That’s a fly away, number right? (Off mic.) 

            Q:  It was a -- it's an -- (inaudible) -- 

            (Cross talk.) 

            GEN. BOLTON:  Sir? 

            Q:  The budget documents state that the service is extending DMSP [Defense Meteorological Satellite Program]with the cancellation of DWSS [Defense Weather Satellite System]  What exactly does that mean? 

            GEN. BOLTON:  That means that -- well, we already have DMSP 18 and 19 built.  They're on the ground.  They'll require a little bit of work and they'll be -- then they'll be launched.  And so that gives you more time with the current systems that you have.  We have $2 million [dollars]in this year's budget to do -- and that's a -- to do an AOA [Analysis of Alternatives]. 

            Of course, we had a Congressional add last year of about 123 (million dollars), 125 million [dollars] last year.  And so we'll take the congressional add.  We'll take $2 million for some -- do some AOA to determine what the follow-on would be.  But you have the two -- you know, satellites have been lasting longer, you know, across -- across the fleet.  And so this just gives us enough time to take our time and do another development, and so it will be a new start. 

            Q:  Is that a change?  Because it was my understanding that you were already going to launch those.  Are you -- I mean, what does the word extend mean?  Are you pushing out the launch dates, or what's the change? 

            GEN. BOLTON:  No.  I think that the fact that the satellites have lasted longer than anticipated has kept these satellites on the ground longer.  And so you'll do some things to make sure there aren't obsolescence issues.  That gives you more time. 

            Q:  And you mentioned a hundred -- about 125 million [dollars] in FY '12.  Can you describe what that money will be used for?   

            GEN. BOLTON:  Well, that was a Congressional add.  

            MS. THOMAS:  Well, yeah, that was the Congressional add that General Bolton referred to.  And the intent of that add, and of course what the Air Force is going to follow through with, is some additional development work and study work to try to flush out, follow-on plans for the WSS. 

            STAFF:  Let's see, who hasn't had a question?  Have you had a question?  Yes, sir. 

            Q:  Global Hawk? Can you flesh out the future of this -- question one, the three that you have money for in '12, what happens to those three?  Are those in the NATO AGS?  And what's the plan for the 18 Block 30s you do -- you bought?  Are you going to waste tax dollars and mothball those?  Or do -- what are you going to do with them? 

            GEN. BOLTON:  Well, for the three within the same category as the 18, we're not going to -- we're not going to use that system.  We're going to use the U-2 instead, because when you compare the costs, it turns out the operation cost for the U-2 system is slightly less.  And then, the development cost it would take to get the Global Hawk to that same level of capability is significant.  So the U-2 is the stronger system, and we're going to go with the U-2.  

            Q:  Well, what -- OK, as a budgeter -- a budgeteer -- you're sensitive to waste and misuse-of-funds issues.  You're going to basically mothball 18-year-old drones.  Doesn't that bother you as a -- as the top money manager for the Air Force?  And we'll -- why should the taxpayer not be upset with that, or should the taxpayer be upset?  

            GEN. BOLTON:  Well, we still haven't determined exactly what we're going to do with the systems that we are divesting.  I mean, you take the CV-27, for example; it's another system.  And so as the Chief  [Air Force Chief of Staff] briefed when he talked -- and I think some people asked some of these same questions --  

            Q:  Yes. 

            GEN. BOLTON:  -- was, we don't know if it's going to go into Type-1000 storage or Type-2000 storage.  But it's not going to NATO.  We are divesting the system.  The final disposition is still TBD. 

            Q:  OK. 

            GEN. BOLTON:  OK.  Yes, ma'am. 

            Q:  Thank you.  A couple questions.  One is on the future ICBM. Do you-all still plan to begin the AOA on that in FY '13?  And if so, how much is budgeted for that?   

            And then just a quick clarification.  In your opening comments, General, you mentioned that the Air Force has worked to reduce sectarian violence in Afghanistan.  Could you be more specific about what activities you are referring to there? 

            GEN. BOLTON:  Let me take the second one -- the first one first. On the -- on the ICBM question, yes, we are doing an AOA.   

            Sectarian violence -- the Air Force has always had a role in air- to-ground.  I think that's the biggest role we've had.  And of course, ISR, Communications capabilities and space as well. 

            Q:  And the figure for the -- 

            MS. THOMAS:  $11.7 million for the AOA. 

            Q:  In FY '13? 

            MS. THOMAS:  In FY '13. 

            Q:  And do you have a figure for FY '14 as well? 

            MS. THOMAS:  No, I don't. 

            GEN. BOLTON:  We don't.   

            Ma'am, you haven't had -- yes. 

            Q:  The FY '13 request has changed the name from the space strategy outlined last year, EASE [Evolutionary Acquisition for Space Efficiency] to the Efficient Space Procurement. Is that just a name change?  What's the reason for that?  And how does that change the strategy -- (off mic)? 

            GEN. BOLTON:  There's no difference in the concept.  I mean, essentially it's doing a block buy, so rather than, you know, buying a satellite, building up a factory, getting a bunch of non-recurring engineering done and then coming back with another contractor next year and trying to rehire those folks, this does a block buy and does two satellites -- buys two satellites at the same time so you only do the non-recurring engineering once.  And so we did two of one type in '12, and we'll do two of another type in '13.  But again, it's more of a name change versus an actual concept change. 

            Q:  Could you elaborate, then, on the reasoning behind the ORS restriction? 

            GEN. BOLTON:  Operationally Responsive Space. 

            MS. THOMAS:  Well, really, the driving strategy behind that was to take the concepts that Operationally Responsive Space really brought and institutionalize those across the Air Force space programs.  So a lot of those key tenets -- responsiveness, agility and those kinds of things -- are now factored into and we'll be -- we'll be working to factor into the strategies and architectures of our existing space program. 

            GEN. BOLTON:  Yeah, I guess I didn't understand the question. But you said, what's being done with the ORS program?  I mean, essentially, you know -- you know, we'll -- we're going to take some money, and that money will be provided to the SMC, Space and Missile Systems Center.  And so some of the concepts that have come out of ORS will be -- will be divided across programs.  And so rather than having kind of niche capabilities, you'll take those concepts and technologies and have that available to a wider audience at SMC by really giving it to the technology teams, the planners at Space and Missile Systems Center.  So it's a better utilization. 

            Sir, I don't believe you have a question yet. 

            Q:  Yeah, I -- two clarifications of the earlier one, and then my question.  The clarifications are:  Of the Reaper reduction from 48 to 24, is that a delay, or are you simply not purchasing those 24 Reapers?  Or will you do it in other years down the line?  Two, how many Global Hawks are you mothballing here?  I was a little bit unclear.  And the last question is on the -- there's been a lot of discussion about the A-10, reductions of those.  How is -- is Close Air Support still a core priority of the Air Force, and how are you going to replace that? 

            GEN. BOLTON:  OK, A-10.  Let's do Global Hawk, then do A-10.  I mean, Global Hawk -- I mean, we essentially are -- we are going to divest that entire line of dash -- of dash 30s.  Again, that's just the -- that's just the Block 30 Global Hawks, and we're divesting that line. 

            For the A-10s -- 

            Q:  But how many -- what's the number of that? 

            Q:   Is it 12 -- did Tony say 12? 

            MS. THOMAS:  Eighteen. 

            GEN. BOLTON:  It's the 18.  It's 18. 

            Q:  (Off mic) -- 18 plus three -- (off mic). 

            MS. THOMAS:  Well, the quantity -- the quantity is still TBD. We're still working through the contractual details of that. 

            GEN. BOLTON:  And then as -- as for the A-10, you talked about getting out of this, and if you're -- we're still going to have a large number of A-10s.  I mean, we're going -- we're reducing by 102; we'll still over 240 A-10s.  

            And if you look back at our strategy, you know, we have been engaged in detailed, long, enduring stability operations in support of large -- large ground wars for 10 years and we've been doing two. This new -- under this new strategy, we'll not be sized to do the Close Air Support for two major land wars.  That's just a fact of this strategy.   

            And so if you take a look at what we're going to be required to do with the new strategy, we will have the sufficient amount of A-10s to be able to -- to be able to do that. 

            Q:  -- What about the Reaper question?--? 

            GEN. BOLTON:  The Reaper question was, was it going to be deferred -- 

            Q:  (Off mic) -- delay? -- (off mic) --  

            GEN. BOLTON:  It's a -- it's a reduction.  And again, it's a reduction in how many we're going to buy, but how many we're going to buy this year.  And that's to adjust to really the lim factor (ph) on -- is -- first of all, the requirement has changed -- 

            Q:  What was that word, the "lim" factor? 

            GEN. BOLTON:  The lim factor -- 

            MS. THOMAS:  (Off mic) -- 

            GEN. BOLTON:  Limit -- limiting -- the limiting factor is not the production or the number of systems; it is the amount of crews that we have available.  And so with the -- with the change in CAPs being down to 65, we can meet that with the 24. 

            Q:  But do I assume from that that, in 2014, you're going to buy 24 more or is that undecided?  (Off mic) -- 

            MS. THOMAS:  Well, the FY '14 budget is still of  course, pre- decisional -- but the -- yes, the concept here is we're actually stretching the production to sync it up better with our ability to produce crews.  It didn't make sense to have the production out that far ahead of our ability to actually do the processing and exploitation and dissemination function. 

            GEN. BOLTON:  Okay.  Sir, please. 

            Q:  Yes.  NASA recently ended the space shuttle program.  Can you give me in terms of dollars how much this has cost you more or saved you money in terms of the Air Force conducting its space mission? 

            GEN. BOLTON:  NASA's ending of the space program? 

            Q:  Space shuttle program. 

            GEN. BOLTON:  The space shuttle program.  I'd have to give you an exact number.  I know that at Patrick, NASA's about a third of our business.  And so you'd have to see what percent of those launches were actually -- were actually shuttle.   

            But it's not clear that NASA's ending the shuttle program would necessarily be a savings.  Let me -- let me take that for the record and see if there's anything we can add to that.   

            Ma'am? 

            Q:  I just wanted to ask you a question on F-35.  Do you have built -into your either R&D or procurement some margin or some amount of money set aside for concurrency, estimating that it will occur, and if so, how are you estimating that?   

            And secondly, I am curious on EELV.  There's a new entrant launch strategy out there now; you've got four cores, it looks like, in the budget.  I had thought you were wanting to ramp up the cores to really get those economies of scale.  What happened there? 

            GEN. BOLTON:  Well, let's go with the -- well, give me the first question again? 

            Q:  I'm sorry. 

            GEN. BOLTON:  (Laughs.) 

            Q:  I'm sorry, F-35 concurrency.  How are you budgeting for that, if at all, or is that something you reprogram later when it happens? 

            GEN. BOLTON:  Well, the -- the bottom line is, the amount of money we have for the F-35 program, it is what it is.  So if they cost less, we'll buy more.  If they cost more, we'll buy less.  And so this  -- the goal here was to reduce -- first of all, to reduce the ramp  rate.  So it was 24, now it's going to be 19. 

            But the total numbers in the program hasn't changed.  It's still 1673 [sic; 1763]  is the total number in the -- in the program.  The number in the FYDP has changed, reduced by 98.  But again, they end up -- the amount of money we have is the amount of money we have to spend, and it costs what it costs. 

            And we don't really know -- we're still kind of sorting out the details of this program, what concurrency costs are.  I mean, we've had contracts proposed that concurrency would be about 2 (million dollars) to 4 million [dollars].  And we've had -- heard some numbers from OSD that it could be four or five times that amount. 

            So we're in the -- we're still in the process of kind of sorting out this program.  And so this just gave us more time, given the amount of money that we have, to be able to stretch this program out. 

            Q:  OK.  And then on the EELV cores you're -- it looks like you're flat at four.  I had thought that you guys wanted to ramp up and try to get the economies of scale  . 

            GEN. BOLTON:  Well, the economies of scale on EELVs, you know -- as you -- as you know -- you know, we're buying four.  The Navy has one that they're buying.  NASA has one.  And so if you look -- if you look at the total EELV buy, it's typically around eight -- it's a little bit more accurate. 

            And there was a should cost  that was done that said, what was the -- what was the right number?  And so, you know, as long as you were over the four, it was seen that the -- you could get the economies of scale starting at production of four. 

            And who -- sir, you haven't asked a question, I don't believe. I want to get anyone -- please. 

            Q:  About the Global Hawk, I believe that on the Andersen Air Force Base in Guam, all of -- their) -- Global Hawks are Block 30. So when they are gone, and what is going to be the replacement?  Or is there going to be a vacuum there? 

            GEN. BOLTON:  I -- in early March -- I think March 6th -- we're going to talk a little bit about mitigations and force structure and those type of things as part of a force structure rollout.  So it's really premature to kind of talk about that at that [sic; this] time. 

            And so who else has not asked a question? 

            Q:  He hasn't. 

            GEN. BOLTON:  He hasn't?  Yes sir, please. 

            Q:  Hi.  Well, I noticed that -- thank you, Tony. 

            I noticed that with airlift aircraft, the spending is going down from about 1.8 billion [dollars] to 600 million [dollars].  Now I'm just wondering if you could talk about that briefly. 

            Conversely, spending on munitions is going up $100 million [dollars]. I'm just wondering if you could tell we what those two -- what that reduction, that increase means. 

            GEN. BOLTON:  Well, again, the amount of airlift we use is going to be based upon the analysis that we did to try to see how we will conform to the strategy.  And so, you know, right now the ceiling for airlift -- strategic airlift is 301 planes .  (Regular ?) -- we -- with the cuts we're going to have here, we'll go to 275 planes .  We're going to need some support from Congress to be able to adjust to that. 

            So basically, it's really more -- everything centers back to how do we align ourselves with the strategy. 

            Q:  But munitions and small arms is going up a lot.  Do you anticipate another contingency? 

            GEN. BOLTON:  Well, it's good to be prepared for another contingency, but I think the -- we're trying to replenish what we've used, but then also try to, you know -- we're starting the small- diameter bomb, for the 144 of those, and we're trying to evolve towards the kind of munitions that allow us to penetrate and work in a contested environment.  And so there's just the emphasis on those -- on those -- 

            Q:  But this is $22 million [dollars] for small arms.  So -- 

            GEN. BOLTON:  (Inaudible) -- Maybe I’m not hearing your question yet. 

            Q:  This is 22 million [dollars] and -- this is an increase in 22 million [dollars] for small arms. 

            GEN. BOLTON:  For small arms.  OK.  I didn't hear that correctly. 

            Q:  So they're -- I mean, why do you need that many, considering that that's not the primary weapon of the Air Force? 

            GEN. BOLTON:  Right.  Right -- (inaudible) -- right, right, right.  

            STAFF:  We have time for two more questions.   

            GEN. BOLTON:  Right.  I'll get --  

            MS. THOMAS:  I think that's one we probably need to take for record and get back to you. 

            GEN. BOLTON:  We'll get -- we'll take for record -- and is there anyone who hasn't asked -- ma'am, have you asked a question? 

            Q:  Not yet. 

            GEN. BOLTON:  Thanks. 

            Q:  In fiscal year 2012 the Air Force projected that it would need about $365 million for Global Hawk and NATO AGS combined.  This year you guys have an $81 million jump on that.  I was wondering why that is, and is it related to some issues that were listed in the DOT&E [Director, Operational Test and Evaluation ] -- report on the Global Hawk Block 40  ?

            GEN. BOLTON:  On Global Hawk, (can you ?) -- 

            MS. THOMAS:  Let's take that one -- 

            GEN. BOLTON:  Take that one for the record. 

            MS. THOMAS:  -- for the record as well and get back to you with details on that. 

            GEN. BOLTON:  Plus we’re having a hard time hearing you.  Sir, please. 

            Q:  How do you square the reduction in transport aircraft with the strategic guidance that you have to be more expeditionary, to have a reduced force, but you have to get them over a much wider area -- the Asia-Pacific?  They seem to be in conflict with each other.  How do you explain that -- the less, the less number of aircraft? 

            GEN. BOLTON:  Well, again, part of our -- part of our transportation is within theater, and so we will not be involved in two major land endeavors.  And so that is a great deal of our -- of our in-theater requirement.  And so the plan isn't to be involved in long-term stability ops, you know, if at all necessary, and to be able to focus -- again, our focus is the F-35, so we can do penetration, and long-range global strike, so we can do penetration activities. 

            MS. THOMAS:  And if I could add to that, sir.  The strategic lift piece of this is really driven by the new defense strategy.  And when we went back and looked at that, based on the revised strategy there was a scenario tied to the MCRS-16 [Mobility Capabilities and Requirements Study-16] study that was done some time ago, which more closely mirrored what we saw as the requirement to support the new defense strategy.  And that allowed us to revise our projected number of aircraft down to 275 from the 301. 

            So in looking at that, we've got the C-17 program of record of 223.  And then with the C-5Ms of 52, that was really sufficient to meet the 275 strategic airlift requirement, which allows us to then look to retire the older C-5As.  And that will enable us or allow us then to have a common configuration of C-5s that we're sustaining and maintaining. 

            MS. CASSIDY:  I think that's all we have time for.  Thank you. 

            GEN. BOLTON:  Thank you all very much.