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Department of Defense Press Briefing on the President's Fiscal Year 2020 Defense Budget for the Army

March 12, 2019
Army Undersecretary Ryan McCarthy; Army Lt. Gen. Thomas Horlander, military Deputy for Budget to the Assistant Secretary of the Army for Financial Management and Comptroller

COL. KATHLEEN TURNER: OK ladies and gentlemen, the big clock in the back tells me it’s 12:50, so I don't want to lose any valuable part of the Army’s time here. So good afternoon ladies and gentlemen, I'm Colonel Kathleen Turner, the Army Media Relations Chief. I'll be moderating today's session. Undersecretary of the Army Ryan McCarthy is going to provide opening comments, followed by Lieutenant General Thomas Horlander, the Military Deputy to the Assistant Secretary of the Army for Financial Management and Comptroller.

He will provide an overview of the Army's portion of the President's Fiscal Year 2020 budget request. Following their remarks, we should have about 15 minutes for questions. I'll call on you and I'd like to keep it to one question, just because I want to make sure we get as many questions as possible.

OK, with that, Undersecretary…

RYAN MCCARTHY: Thank you. I'll talk a little bit about the key shifts undertaken in this Fiscal Year '20 effort, but when we ask you to kind of look at this – look at it in the context of what we've done in '18 and '19 and how it fits together as we kind of march across the FYDP from the choices that were made in Fiscal Year '18 and '19.

As we published the National Defense Strategy in January of 2018, there were four key pillars associated with the NDS – nuclear posture, great power competition, and enhancing warfare and partnership capacity.

Now the great power competition is an essential challenge associated with this NDS and something where the Army in particular had to make some pretty significant steps as we – as we try to modernize our force to maintain a readiness posture that we're – quite frankly, we fill over 60 percent of requirements worldwide for combatant commanders.

So when you skim this budget, you'll see that readiness is our number one priority and will remain that way until at least Fiscal Year '22, when we can get all of our brigade combat teams – about two-thirds of our brigade combat teams, to the highest level of readiness.

We're maxing out our CTC rotations, home station training and trying to fill brigade combat teams with 105 percent manning. So readiness is – will continue to be the number one priority for the Army. The choices in this budget for modernization that were truly difficult and – but challenging, but ones that the entire Army leadership stood shoulder to shoulder on and own.

The choices that were initially made in Fiscal Year '18 and '19 was where we restructured the S&T budgets and moved 80 percent of those dollars against six modernization priorities – long range precision fires, next generation combat vehicles, future vertical lift, network, integrated air and missile defense and soldier lethality, expanding all fundamentals.

We had two complimentary efforts of synthetic training environment and position, navigation and timing. So we – within those six kind of plus two priorities, there are 30 signature systems that will require substantial funding in the out years so that we can pull them through that weapons modernization knot hole.

These decisions that were made were essentially priming the pump in '18 and '19, so that budget deal in '18 and '19 not only helped us restore our readiness posture but really to prime the pump for our modernization efforts across the future.

In Fiscal Year '20, which is where we make this almost symbolic or signature step, to depart from legacy systems of our big five weapons systems that are standing in our formations today. Clearly this will take time, spanning across the FYDP and even longer to bring these new systems online and field them into our formations.

So last spring and summer, the Army leadership conducted what you've all heard as “night court,” the Army staff has a sense of humor. So we spent the spring and summer together, spanning north of 70 hours, principals only, everybody had to do their homework and to lay in these hard choices against our priorities.

In the process, we've truncated the buys of over 93 systems and terminated 93 others, found north of $30 billion across the entire budget of the fiscal – the five year futures defense plan and laying in those cuts over time to finance our ambition.

In '18 and '19 when we started this process, we were at about 80 percent legacy investments to 20 modernization. With the shift of that S&T budget, we went to about 70-30. The choice between '20 to '24, we will get to 50-50 investing against developmental systems and legacy by the end of this FYDP.

These choices were complex and they were difficult, and at times people will focus in on the folks that had, you know, winners and losers, if you will. But what we look at is the choices we had to make from a modernization standpoint to be the Army that we need by 2028.

This presents enormous opportunity and business for the commercial entities that do business with us, north of $57 billion in the out years. So if we're looking for companies in – around the country, we'll work with them, but we also want them to invest and come along with us because we have to make these choices for the future.

Will try to limit my time so we can get General Horlander to walk you through some charts, and be happy to take your questions. General Horlander…

LT. GEN. THOMAS HORLANDER: Thank you, Mr. Secretary. So good afternoon everybody, great to see everyone. So I will probably spend just a little bit of time on the first couple of charts, and I think they may have been covered by the Secretary and then previously by DOD.

But you can see – the real point I'd like to make here on this first chart is of a million man Army, at any given day, we have 180,000 soldiers still across 140 countries, OK? That's a sizable footprint, there's a lot of activity, and I will tell you the activity is only increasing as time – as time goes on.

You're familiar with the strategic environment. You're familiar with the NDS, the – the threats that are out there. I don't need to cover that in any great detail and I will tell you, so the – the strategic approach that the Secretary already covered I think pretty much speaks for itself.

You guys know the Army budget is really broken up into three components, end strength, readiness and modernization. We're on a trajectory to have modest growth in our end strength. 

We are on a trajectory, as you heard the Secretary say, to build readiness to two-thirds of our BCTs to the highest state of readiness by 2022, and we have a modernization strategy that fully – that supports the NDS to get us to an end state of 2028.

In addition to that, there are a lot of efforts to strengthen the partnerships with our allies. And I'll also tell you there has been a lot of effort put into the business reforms across the Department of the Army. 

So I took some time, and I won't go in detail on this, but if you look at this chart, this is really a simple way to look at what we have done over time in terms of an ends, ways and means framework, OK? And so I would just kind of pick up with – you are already familiar with the ends that were provided to us by the OSD and Army senior leaders, and have pretty much covered what is there in the ways. 

But the means, the good news here is, as you can see, we have enjoyed an increase in the defense top line here for the United States Army and of course the entire department for the last couple of years. And because of that we have been able to have a more balanced program, OK? 

And so the point to really be made here, we're not – when we developed this budget, when we sat there and did “night courts” in all this, one of the going in things that all of the Army senior leaders want to do is not go back to the department, not go back to Congress and ask for more money to modernize to get us to the 2028 modernization strategy. 

So as you look at the numbers there you can see we are asking for – from this current year FY19 to 2020, it's only about a 2.5 increase to our budget. The total request totals $182.3 billion. I know there has been a lot of discussion about the 9.2, 182.3 represents the Army's requirements in 2020 budget request, OK? 

And you can see how that breaks out between base and OCO. Now when I talk to you I talk apples to apples. What are my base requirements, $150.7 billion. What are my OCO for OCO requirements, 25.8. And I think most you familiar with, we have a couple of pass-through accounts for the Army Security Force Fund and the counter-terrorism equipment fund, but that represents the totality of the $182.3 billion. 

In building this budget, we employed several things. Familiar with some of those, the other things I would like to just cover on this slide for you really quick. While we are going to increase capacity, build readiness, and pursue a pretty aggressive modernization program, we also are investing in our critical infrastructure, that's both Army family housing and just buildings across the footprint there. 

Clearly we took a lot of time and dedicated some resources to supporting the Army's families and our civilians. And then, of course, I can talk to you more about the streamlining and the reforms that we implemented here and that enable us really to optimize the purchasing power of the budget that we are requesting. 

Here is – here it is broken out by OCO and base. You can see very clearly that in my base request – or in the Army's base request, sorry, of 150.7. There is a portion of that that is OCO for base, but the totality of the base request for us is 150.7. Most of those show an increase from what we got enacted in FY19. And with – as is consistent across the entire department, a pretty sizable increase in our RDT&E accounts. And we can talk more about that here as we go. 

In OCO we're funding pretty much the same operations that we funded here in FY19 with Operation Freedom Sentinel, of course, Iraq, Afghanistan, the ones that you are very familiar with, to include the funding for EDI over there in Europe. 

So in our personnel accounts, obviously this is the biggest slice of our – of the Army's budget. We are requesting over $60 billion, not inconsistent with what we have asked for in years past. This is to – this is to continue on a trajectory of growth, however a more modest trajectory than what you were familiar with in the past. That's across all three components, this also includes an increase in our soldier's pay – both for the pay, the base housing allowance and the subsistence allowance as well. 

And of course this will allow us to recruit and retain the soldiers we need to – to achieve our desired end state. That end state here, and the active component is 480,000 soldiers here in FY '20. And then you can see up there on the slide, same for the Guard and the reserve. The trajectory for the Guard is an additional 500 soldiers and for the Army Reserve is 250. 

I take you to our operations and maintenance account. Total request is 52.6. Again that is for all three components of the United States Army and this will allow us to stay on our trajectory to attain or to achieve our readiness goals by 2022. 

I would mention because of the consistent funding that we've gotten at a higher level here over the last couple of years has really allowed us to make some great readiness gains, greater than 55 percent of our BCTs right now are at a higher level of readiness than what they were in previous years, so there's some good news there. And we will need to continue this level of funding to achieve those readiness goals that we've set for ourselves by 2022. 

We've also – we've also funded 32 CTC rotations, 25 of those are decisive action rotations that's consistent with last year and four of those are for the Army National Guard. You might remember several years ago the Army National Guard did not have BCT CTC rotations. 

So we feel really good about having our compo units go and do that. We're also building readiness in our combat aviation brigades, as you can see increase in the amount of money we are spending for hours, for flight crew per month and so both in the active component and in the National Guard we've extended our one station unit training for those initial entry soldiers to 22 weeks for the infantry. 

We're going to do the same for some of our other combat arms branches, so this budget gets after that as well. So funding for some of our multilateral exercises both in the Pacific and in Europe that'll help us to build those critical partnerships that we need with our allies. 

We are right now funding our installation services, we call it base operations support at 85 percent of requirement, that's an increase – that's a good news story. And then to maintain our facilities – let me correct myself, for installation services is 94 percent, I misspoke. 

For our facilities, and when I talk about maintaining facilities in the O&M account I'm talking about soldier's barracks and I'm talking about all of the existing facilities that we have out there on the Army installations. 

Right now we're funding our sustainment at 85 percent of the requirement and in this budget we are asking for an additional $600 million for the restoration and modernization of many of those facilities. 

So that is pretty much what we're asking for here in the O&M budget. So let me transition very quickly to the third big slice, if you will of the Army's budget and that is our research, development and acquisition i.e. modernization. This entire modernization effort totals $34 billion in this request, it's a bold shift as you heard the Secretary describe that – over time, it isn't all going to happen in FY '20. 

So it's a incrementally done over the next five years and then beyond that as well. But right now we're looking at quite an uptick in RDT&E, and you can see there's about a $1.1 billion increase in our RDT&E efforts, and then just a small – a small decrease in the procurement we can talk more about that here in just a minute. 

So this allows us to stay on an end-state to modernize by 2028 in accordance with the Army strategy and our modernization strategy. And as you heard the Army senior leaders architected a plan to do this through the process of “night court” and deep-dives and what have you. 

And so when I talk to you about reforms though, part of the biggest reforms that we had was the establishment of the Army's Futures Command, the establishment of the eight cross-functional teams that many of you are familiar with and of course how we align those 30 modernization signature systems underneath those eight CFTs. That is a huge reform. We see that as tantamount to being able to modernize by 2028. 

There are a number of other things that are components of this modernization strategy that played out as we built this budget, so clearly our divestiture of some of our legacy systems over time. That doesn't mean we're just totally divorcing ourselves from our legacy systems, we're still going to need those especially as we transition to the next generation capabilities that we endeavor to build. 

And then as you can see over time as the Secretary described we're going to be eliminating, or reducing, or delaying some of the systems. But that is really the crux of our RDA account and $34 billion that is represented there. Transitioning to RDT and ATR, I already covered the increase there of about $1.1 billion, that's very consistent with the modernization plan and what we're trying to do there. 

And you can see when you get in to the details of the RDA, RDT&E budget you can see in S&T about 80 percent is aligned against our modernization priorities and then when you look at the remainder of the RDT&E accounts about 60 percent of that is aligned to that. And so the second-half of that is procurement and in the procurement accounts there's about $21.8 billion request there, you can see how that plays out. 

We've enjoyed some of the – or the Army has seen some increases in procurement over the last couple of years that very much informed where we were going to request money here in '20. 

And so as we are transitioning I will tell you, this really represents a balance more so than what we've been able to do in the past. Not only a balance that allows us to pursue the modernization strategy but really a balance that allows us to have a greater balance between end-strength modernization and current readiness. So we can get in to the details of some of the systems that we're looking at here. 

So here in FY '20 there are increased funding levels for the Black Hawk, for the Stryker Double V-Hull, we have pretty much maxed production on many of our missiles and munitions ATACMs, Hellfire, GIMLRs are all seeing a max production rate in this request. We are continuing on the same glide path for Abrahams upgrades and the Paladin still doing the same amount of Apache remans as we did here in FY '19. 

The Secretary mentioned there's a couple of systems here that are going to start to see a decline in the funding levels the Bradley, the JLTV and the AMPV and other than that I would tell you this is probably a really good balanced procurement program based upon everything we're trying to do over time. As you look at this and you look at this across the continum. 

A couple of other accounts, we’re asking for $300 million more in MILCON and you can see that that totaled about 35 different projects. And then in our Army family housing, Army family housing is both construction and the operations of Army family housing. 

I am specifically talking about what the United States Army is responsible for managing, what we own OK. And so well there's about $500 million request here. Some of that is to construct three new housing projects and some of that, of course, is to operate and maintain the housing that we do have. 

We were also able to this year to do this divest ourselves in some pricey leases overseas. So that – that helped us save some money in that account as well. There's a couple of other base accounts in there, I don't need to cover those in great detail Army – Arlington National Cemetery; then chem de-mil and at Pueblo. And I just got a small little picture there on the OCO request. 

And so you can see there it's 31.6. Again, funding those same – those same operations as we've done in the past. And a little over 5 billion of that are pass-through accounts. So just to – just to kind of wrap up here, $182.3 billion is the Army's budget request, allows us to stand the trajectory to achieve our readiness goals. 

It absolutely focused on the NDS modest interest growth. And in terms of readiness, of course, you know you heard about the one station unit training we're able to invest in home station training that makes the CTC rotation so much more valuable and very – it’s got a very healthy reform agenda going on here as well. 

And of course strengthening the partnerships. Wanted to cover that and do that kind of quickly so that we could afford you as much time as possible to ask some questions.

COL. TURNER: So first we're going to start with Lita and then we're going to hit Sidney next. So Lita.

Q: Hi, Lita Baldor. I have a – I'm still a little bit confused on the MILCON issue. So I'm wondering if you can help explain in the DOD budget, they talk about 3.6 – to $3.6 billion, right? $3.6 billion for new border wall funding and $3.6 billion to repay what will be spent this year if the emergency funding is used for other MILCON. I'm wondering is this in the Army budget? Where is it in the Army budget? And is the $3.6 billion in its own separate fund for the border or is it in projects that you think you might have to take away from because of the emergency? I'm just confused of how that's going to work. 

LT. GEN. HORLANDER: So it is 3.6 and 3.6 and 2 billion right that adds up to $9.2. Three points – it's all in the military construction Army OCO account. OK. And while they have – the Department has asked us to leave the answers to these questions to them. I can just – I can just sketch it out for you really quick, $3.6 could be for new construction for emergency purposes. Three point ...

Q: New construction barrier or new construction ...

LT. GEN. HORLANDER: Just emergency construction is how we called that. Another 3.6 would be in the event that we would need to restore some funding in some of the MILCON projects that funding was otherwise redirected to a different purpose and then $2 billion would be for hazard remediation or hurricane remediation.

Q: But just to clarify, $3.6 billion for new construction in Army OCO. Does it –l is it new construction for the border or is it just one big pot of $3.6 billion that can be used for any emergency the Army deems appropriate?.

LT. GEN. HORLANDER: So we call this emergency for emergency purposes. So any – any details ma'am, I'm sorry I’d ask you to talk to OSD ...

COL. TURNER: We'll get with you offline to see if we can get more answers to that question. So we'll hit Sydney first and we'll go back to Ryan.

Q: All right. Not asking you to recite all 30 priority programs or all 93 cut programs or seeing reductions but you know, can you give us some prominent examples? I mean, I look through this budget. I see a small decrease in some of the AFH mod, new construction. Those CH 47 mods still seems to be going strong. You know I'm not seeing any big heads on the wall or any small things – things with emerging that were negligible suddenly getting big. So of all those, the 30 things that go up in and the 186 things that go down, what are some prominent examples that particularly – you're particularly proud of, particularly were painful to achieve but still necessary. Give us some highlights from that sir.

MR. MCCARTHY: So Sydney, the choices of how these programs will be divested happen across the FYDP, towards the end of the FYDP and you're synchronizing them with the investment portfolios, next generation combat vehicle or future vertical lift.

So when you – you've kind of gotten through the – the prototyping experimentation phase and then you're – you're getting in a low RIP – excuse me – Low-Rate Initial Production tranches of capability and then you'll – that – look at like a sand chart, you'll see them start to divest the assets and bring the new ones on. 

So it's starting the signal – if the funding lays in overtime and you get through the modernization process, ultimately they synchronize towards the back end of this FYDP.

Q: So that $30 odd billion that's moving, we're not going to see very much – much of it this year. Most of its back loaded into the FYDP which we don't have?

MR. MCCARTHY: It's another step because you kind of look the pipes start to open. The funding increase year over year as the maturity of systems come online. 

COL. TURNER: OK. So go to Ryan.

Q: Sir, Ryan Brown, CNN, I just wanted to ask a little bit about some of the money that was used, operations for the southwest border mission. Obviously that was an emerging requirement. But is there any money that's to replenish some of those O&M funds that were used to kind of pay for that this year or is there any project that that operation will continue and how much money is allocated to that operation.

HOLDANDER: So in the FY ‘20 budget they're – we are not requesting funds to conduct missions on the southwest boarder. As you're well aware, we do have some soldiers down there right now performing missions in support of the Department of Homeland Security. But right in the ‘20 budget, no, we don't have – we're not requesting funds for that purpose.

Q: And can you say what fund is being used to support that current operation or?

HOLANDER: So right now the Army's using some of its O&M to – to fund that. It's not staggering to the point where, you know, it's – it's hurting our readiness, but it could.

Q: Thank you.

COL. TURNER: Marcus.

Q: Hi. Marcus Weisgerber with Defense One. Yesterday the Pentagon said it would be getting, I believe, a quote on fabrication activities on non-INF compliant cruise missile systems. Is any of that in the Army budget? Is that the ATACMS plus that is in that? 

MR. MCCARTHY: We are in the process of developing the precision strike missile, which is an ATACMS replacement program as it's a greater lethality, two in the tube, same platform essentially. 

What the industry had indicated to us is that if indeed the United States were to, you know, to part from the INF Treaty that it's software updating of the development of that system and you could extend the range beyond the INF limitations how – you know to the extent that you would go north of that number, but we'd have to spiral in capability later to get even greater ranges, but the capability exists today.

Q: I have a very quick follow up, JLTV I noticed went down a little bit. Is there any changes to the program of record there or what's to account for the decline?

MR. MCCARTHY: So looking hard at the requirements associated, just how many JLTVs that we need in the program. You know, our vehicle fleet today has I think – I’d have to be correct, but between Humvee, JLTV and (inaudible) vehicle, we have well north of 100,000 vehicles in our vehicle fleet.

And so we're trying to hone in on the exact number of requirements of vehicles, and it's – that's why the buy will be truncated over time.

Q: Hi, Tara Copp with Military Times. If you compare the administration's FY '19 request to the FY '20 request for Army end strength total, reserve and active. It looks like the growth is actually slowing up. It was projected to be at an end strength of about 25,000 more than you will be in 2023. So I'm wondering that – is that just a reflection of maybe either recruiting challenges or just this right-sizing for what the previous person said, that you know, our next fight won't be a Desert – Desert Storm fight?

MR. MCCARTHY: No, we – we do need to grow, we need the growth. The issue there is it's two variables associated with the decision. One is financially, obviously, and then the second, from a standpoint of we wanted to make sure that we could have modest, steady growth, maintain quality standards, and then, you know, there are difficult challenges that are presented, of 3.9 percent unemployment.

We're – we're looking – we changed our strategy in the Department of the Army, focused on 22 key cities in the United States. I'm looking at the changes within our Army marketing organization, how we message the country.

So we thought that a slower, more modest – modest growth was effective, but we will still be on track to pursue about 488,000 end strength by the end of this FYDP.

COL. Turner: I'm going to move to this side of the room, Jen and then Ashley and then the middle Jen.

Q: Hi, Jen Judson with Defense News. I wanted to ask about some of the missile increases that we're seeing in the budget. It looks like Hellfire, you're planning to buy 5,112. GMLRS also has an increase. Was that planned? You know, why this sudden increase in FY '20, especially when, you know, you cleared JAGM, Hellfire's replacement for production?

MR. MCCARTHY: Yeah. The – the – a lot of this was the replenishment of the existing stocks and get to that tamer, which is the – you know, the – the worldwide requirement for munitions. So I –we had the – we had the opportunity with the '18, '19 budget deal to really get back to that, and I think will be restored by '21, '22?

So we're at max capacity. It's about the middle of the FYDP where we'll hit the – the – the total requirement, so we're – we're – you know, we're very blessed with the '18, '19 deal and it really helps us get back to restore the health of those stocks.

Q: But just to follow up though, is – was that planned – the Hellfire increase specifically, was that planned last year or is this kind of a new decision that was made because you still haven't met what you need to?

MR. MCCARTHY: Well much of it was also, you know, we had an – an extensive utilization in the Middle East and were – the burn rates were pretty high, so we had to make an adjustment to restore those stocks.

Q: Thank you.

COL. TURNER: Let’s go to Ashley.

Q: It came up in the last briefing, I think, that the DOD might make the FYDP confidential or not – show the FYDP numbers. Does the Army plan to release its FYDP in full?

MR. MCCARTHY: We use that – we usually call it for official use. We keep it sensitive. The numbers change a lot. You know, so as you make adjustments, so that's usually why we don't publish them, because we want to be consistent on how we communicate externally.

Q: Just a – since that was a short one, there was a major increase in RDT&E for BA4 under that line, also called Advanced Component Development and Prototypes. What was the discussion or rationale behind that decision, and then what risk are you taking by cutting the basic research S&T?

MR. MCCARTHY: Well it's a – very simple, we want to fly it before we buy it. We have to see – to learn from these experiments so that we can get the best solutions possible and – and you know, if we're going to fail, we're going to do it early and cheap, so a – much more of an aggressive posture with prototyping these capabilities.

COL. TURNER: Okay so, we’re going to the center to Matthew.

Q: So I’me – just looking out at the RDT&E chart, and so I was just wondering the ranking out of the modernization priorities, long range precision fires is on top but here in the chart, it says next (range ?) combat vehicle has almost $500 million more for RDT&E, so I was just wondering – two long range precision fires just below $1 billion, so I was just wondering how that kind of faired out.

MR. MCCARTHY: Yeah, so just on sheer volume, you're correct. You know, the – you have to also keep – take into account the hardware costs associated with those priorities. We fill them in order, so if the requirement is X, you're going to get the money first.

But with respect to like combat vehicle and helicopters, the hardware and the software is just very expensive from those assets.

Q: Two questions on – first on the southwest border. The $3.6 and the $3.6, is that going through your – what you called the pass through accounts in your OCO or is that a different thing?

LT. GEN. HORLANDER: So that is just – right – right now, placed in the Army's OCO MILCON account, and so I would ask you sir, again, let's – let's defer these questions to OSD who can provide you a greater level of detail.

Q: Also on the OCO, earlier we were told that the amount of money that had been shifted into OCO this year for base purposes has been done in the past. Is that your recollection as well, for those of you – that you mount the money that are being shifted in there, what are – what are some of the things that have been shifted into your Army OCO that seem to be new?

LT. GEN. HORLANDER: So there has been over the – I'd say the last five to six years, there have been wedges of OCO for base purposes, as I like to call it. 

Not – not to the size that you see here, but that really just depended upon how much hedge space we had in – in – in the base top line and what the base requirements were, so there was a little bit of a delta there. And – and you know, that was – that was agreed upon and – and honored by Congress for the most part when we submitted our budget.

Q: So – so to the Secretary, do you anticipate any congressional issues then with a much larger OCO account this time around?

MR. MCCARTHY: I think we'll have substantial discussion when we – when we testify.

COL. TURNER: Let's try to get some more questions.

Q: Hi, Jack Detsch from Al-Monitor. I'm just curious about the Iron Dome interim purchase. I didn't see anything about it in the budget documents that you released today, so are you still on track for September 2020 with that requirement? What's the cost going to look like? And then specifically, since that's just been designed for rockets, artillery, that kind of thing, how is it going to work to defend against cruise missiles in the interim?

MR. MCCARTHY: We have – so I'll just do this, we are on track for the procurement, but what I would ask you to do is – we'll get you the – the experts to talk you through the mechanics of that.

Q: Hi, so first I wanted to follow up on (inaudible) question. So I noticed this year that OCO says that it does not include that $9.2 billion in emergency funding. So can you just explain, just clarify for me where exactly – does all of that 9.2 billion for the emergency funding, is that all coming out of the Army's budget and where is it exactly?

LT. GEN. HORLANDER: So just the clarify, the Army budget, for budget – for the Army is 182.3. In addition to that, there has been a 9.2 billion wedge placed in there by OSD for emergency purposes and when we talk, when we lay our budget out and we talk to everybody about this to ensure consistency from year to year, we articulated that way. 

So right our OCO request, not including the $9 billion is 31.6, okay? So I would tell you that 9.2 needs to be discussed independent. Right now it's just incorporated into the Army's budget so that OSD can carry forward to Congress as part of the defense request.

Q: So that’s not actually coming from the Army budget?

LT. GEN. HORLANDER: It’s right now placed for defense emergency purposes in the Army's budget but it's the Department of Defense who needs to represent that requirement.

QUESITON: And then, sorry, also just a follow-up to Ashley's question on the FYDP being classified. The FYDP has not been classified in previous years. So -

MR. MCCARTHY: I don't believe that it is. I don't believe it's official – it's official use for – we – so we're – it's a sensitive, but not classified.

Q: Is it usually up on the Comptroller website like for public release?

LT. GEN. HORLANDER: Yeah P&R forms show them.

Q: So we’ll have to follow up with OSD?


COL. TURNER: Because I want to do one more question just to wrap it up. I know Mandy has one -

Q: Hi. Amanda from CNBC. I understand that you're doing some balance sheet management and reinvesting across your priorities, but I'm wondering, are you expecting industry articulate any concerns as you sort of move away from some of these legacy platforms?

MR. MCCARTHY: So we have – we have tried everything imaginable to signal our intent and where we're going. But the 18 and 19 excuse me FY18, ATR, we moved $194 million against our six signature priorities. The 30 weapons systems underneath those six priorities. We published a modernization strategy that we gave to Congress and to industry.

Every Monday night we have a CEO dinner that we are consistently telegraphing to commercial industry where we're going. Now that is not to say that there will not be challenges associated with this. There are some transition points in the out years where we're going to be departing from legacy systems. But there will be others that will – you know on the front end of this process that may be affected. 

We're working with them, we're trying to communicate as transparently as possible. But we're going to do what we must to finance this ambition.

COL. TURNER: Okay, So wrap it up. I just want) some closing remarks, either you or General Horlander sir.

MR. MCCARTHY: I'll go – do you want to go first?

LT. GEN. HORLANDER: No, just thanks, everybody. Appreciate that. I know there’ll be follow-on questions and we'll accommodate you and do our best to answer all your questions in a timely manner.

MR. MCCARTHY: Yes, we're going to make ourselves available with – to see as much of you and as many of you as possible, who's interested. It is a long process, but we're making a lot of challenging decisions to finance our ambition no matter if the Budget Control Act other issues were to arise in the out years. We recognize that – the physical climate. We could face flat or declining budgets and we're trying to make the decisions that were necessary to make the transformation of the Army in the out year. 

So very grateful for the time and I am sure we will see all of you here very soon. Thank you.

COL. TURNER: OK, ladies and gentlemen, thanks everybody for coming in and asking questions between myself, Wayne Hall and Lt. Col. Beth Smith, I know we get some follow-ups. I wrote down some notes that we owe you. We just want to make sure we get a transition time between the next service that’s got to get up and brief. But we’ll hang back, us three, to do some follow-ups with you OK? Thank you, everybody.