DEPARTMENT OF DEFENSE BUDGET FOR FY 2001

Secretary of Defense William S. Cohen today released details of President Clinton's Fiscal Year (FY) 2001 defense budget. The budget requests $291.1 billion in budget authority and $277.5 billion in outlays for the Department of Defense (DoD).

Secretary Cohen stressed that the budget protects the President's commitment to preserving America's military excellence. Last year President Clinton allocated to DoD an added $112 billion for FY 2000-2005. In the new budget that commitment is reinforced by more added funding -- $4.8 billion in FY 2001, primarily for operations in Bosnia and Kosovo and for higher fuel costs. DoD budget authority real growth exceeds 1 percent in FY 2001.

The Secretary noted that the new budget continues DoD's post-Cold War transformation of the U.S. defense posture, as recommended by his 1997 Quadrennial Defense Review (QDR). In characterizing progress on that transformation, he said, "The foundation is laid, blueprints are agreed upon, and key building blocks are in place." But he cautioned that, "more hard work and tough choices are needed."

Last year's budget included the largest increase in military compensation in a generation. This year's plan calls for a base pay raise of 3.7 percent, a major boost in the Basic Allowance for Housing for military members living off-base, and several improvements in health care.

DoD leaders emphasize that the budget will sustain current high levels of readiness, and its full funding for Bosnia and Kosovo operations is key to protecting those levels.

The budget includes $60 billion for procurement in FY 2001, fulfilling a major Clinton Administration and QDR goal. Investments include both cutting-edge new systems like the F-22 fighter as well as cost-effective upgrades to existing systems.

DoD leaders stress that the budget reflects a strong focus on post-Cold War threats like terrorism. It also includes the projected funding needed to deploy a limited national missile defense system by 2005, should the President order such a deployment later this year.

People and Quality of Life

The FY 2001 budget continues the Department's emphasis on the quality of life of its military people and their families -- with special attention to pay, housing, and health care.

For military pay, the request builds on last year's substantial enhancements. Responding to emerging concerns about recruiting and retention, the President's FY 2000 budget proposed the largest increase in military compensation in a generation. He requested the highest base pay boost since 1982, improvements in military retirement pay, and changes in pay tables to enlarge raises associated with promotions. Congress approved and increased this benefits package, and now the FY 2001 budget reflects implementation of this dramatic multi-year upgrade in military compensation. The request raises military base pay 3.7 percent, which is .5 percentage points above the forecasted rate of civilian wage growth (employment cost index or ECI). It also fully funds the pay table reforms and changes in military retirement approved last year.

For housing, the new budget proposes a Basic Allowance for Housing (BAH) plan that in FY 2001 will reduce out-of-pocket costs for military members from 19 to 15 percent relative to nation-wide housing prices. The plan will completely eliminate such costs by 2005 -- so that off-base members could have no out-of-pocket housing expenses, the same as for on-base members. FY 2001-2005 funding to achieve this exceeds $3 billion. Increasing BAH should reduce the demand for on-base housing, which will help DoD eliminate some of its older, high-cost units and make better use of DoD housing funds. This, together with ongoing DoD and private sector efforts, will advance significantly our critical long-term goals -- most notably elimination of inadequate family housing units by 2010.

For health care, the FY 2001 budget continues the Department's commitment to strong funding for the Defense Health Program (DHP). Also this year major improvements are proposed, including initiatives to (1) eliminate co-payments for active duty family members enrolled in TRICARE Prime and receiving civilian care; (2) expand TRICARE Prime Remote to active duty family members living far away from military treatment facilities, which will improve their access to care and cut their costs; (3) improve contracting practices to enhance access to care, ease enrollment, and provide a more uniform benefit; and (4) optimize the utilization of military treatment facilities to bolster medical readiness and increase access to such facilities. Additionally, the Department is studying a wide range of other improvements, including options to improve health care benefits for over-65 military retirees.

Readiness

The FY 2001 budget reflects the Department's continuing emphasis on high readiness for U.S. forces. Readiness needs are funded mostly in Operation and Maintenance (O&M) accounts, which total $109.3 billion in FY 2001. The request fully funds the Military Services' O&M budgets so that their operations, training, and maintenance goals can be met. It sustains prudent readiness levels for Army tank miles, Navy steaming days per quarter, and flying hours for all the Military Services.

With the new budget, U.S. forces will continue to be fully capable of executing the National Military Strategy. The readiness of first-to-fight forces remains high. The less-ready posture of some later deploying forces, personnel shortages in certain military specialties, and other concerns require continued close attention to ensure sufficient readiness in the years ahead. Among its recent remedial actions, the Department overhauled its management of force deployments to reduce the toll on units and personnel of the ongoing high intensity of operations.

The budget fully funds projected FY 2001 DoD costs for operations in Bosnia and Kosovo. To enable this full funding, the President added $2.2 billion for these operations in FY 2001. To protect readiness for the rest of this current fiscal year, the President is requesting $2 billion in supplemental appropriations to cover DoD's unbudgeted FY 2000 costs for Kosovo operations. Prompt congressional approval of this request will be critical to protecting readiness in the latter half of the fiscal year.

Modernizing U.S. Weapons and Supporting Systems

The QDR emphasized the importance of modernizing U.S. weapons and supporting systems. It also specified the capabilities needed in the post-Cold War era and reconfigured DoD modernization programs to achieve those capabilities at an ambitious but sustainable pace. The FY 2001 budget advances this modernization agenda through strong funding of Procurement and Research, Development, Test, and Evaluation (RDT&E) accounts. Procurement budget authority in FY 2001 ($60.3 billion) is fully one-third higher than in FY 1998 ($44.8 billion) and meets a critical QDR goal.

FY 2001-2005 modernization plans seek both decisive military superiority, as well as easier maintenance, reduced personnel requirements, and other ancillary benefits. The new budget has sufficient future Procurement and RDT&E funding to modernize U.S. forces at a prudent and sustainable pace. Highlights of FY 2001-2005 modernization plans include:

Aviation forces Modernization of aviation forces includes DoD's largest acquisition program: the Joint Strike Fighter (JSF). The aim is a family of aircraft, with variants configured to meet several sets of requirements. The JSF will replace the F-16 in the Air Force, F/A-18C in the Navy, and F/A-18C/D and AV-8B for the Marines.

The F-22 will replace the F-15C/D in the air superiority role and have substantial air-to-ground capability as well. It is essential to guaranteeing early U.S. air superiority in future conflicts. No other aircraft promises to do that. F-22 testing is ongoing, and the aircraft continues to meet or exceed design goals for this stage of development. DoD's F-22 acquisition strategy has been modified to reflect congressional action on the FY 2000 budget.

The Navy's F/A-18E/F will provide much greater survivability and payload over earlier F/A-18 models. Production of 42 F/A-18E/F aircraft is planned for FY 2001. For the longer term, the Navy plans to transition from F/A-18E/F procurement to the acquisition of JSF at a time based on the pace of JSF development.

Land forces FY 2001-2005 plans begin a major transformation of the Army in line with its future warfighting vision. The Army will combine ongoing digitization with accelerated development of new technologies for propulsion, protection, firepower, and logistics. Near term, the budget for FY 2001-2005 includes $4.5 billion for selection and procurement of a Medium Armored Vehicle (MAV) for redesigned combat units. Some of this funding comes from the termination or restructuring of programs geared to tank-heavy warfare.

Marine Corps modernization features the V-22 tilt-rotor aircraft, the Advanced Amphibious Assault Vehicle, and upgrades of utility and attack helicopters and AV-8B and F/A-18A aircraft. The V-22's superior range, speed, and payload will be especially critical to fulfilling the Marines Corps' vision for future sea-based power projection.

Naval forces Modernization of naval forces includes procurement of the DDG-51 destroyer, LPD-17 amphibious transport dock ship, T-ADC(X) logistics support ship, and new attack submarine. The FY 2001 budget funds the tenth and final Nimitz-class aircraft carrier (CVN-77) and supports development of the next generation carrier. The budget reflects net savings projected from several smart-ship initiatives aimed at reducing personnel requirements on existing ships.

The transformation of U.S. forces is exemplified by the Navy's new DD-21 destroyer. Its design will emphasize stealth, lower operating costs, and multi-mission use. It is planned to operate with fewer than 100 sailors vice 300 for today's destroyers. The DD-21's revolutionary electric-drive propulsion system will save space, cut noise, and economically deliver abundant power. Procurement of the DD-21 will begin in FY 2005.

Mobility forces The FY 2001 budget advances the QDR-stressed capability of projecting military power to distant regions. Procurement of 120 C-17 aircraft will be completed by FY 2003, and further purchases are planned after that. The C-5 transport and KC-135 tanker will receive major avionics upgrades and other enhancements. FY 2001 Procurement funds two Air Force C-130J aircraft and two Marine Corps KC-130J tankers.

Reshaping U.S. Forces and Adapting to New Threats and Opportunities

The QDR called for a fundamental reshaping of U.S. forces to capitalize on the emerging Revolution in Military Affairs (RMA), which emphasizes superior information capabilities and other advanced technologies. To guide the reshaping, the QDR endorsed Joint Vision 2010, a conceptual template for how U.S. forces will fight and achieve dominance across the full spectrum of military operations.

This reshaping, as well as an intensified focus on post-Cold War threats, is reflected in the plans and programs supported by the FY 2001 budget. The substantial progress of the U.S. military in adapting to post-Cold War threats and opportunities continues to be demonstrated in its superlative performance in diverse and difficult challenges around the globe, and was vividly evident in last year's Kosovo operation.

Kosovo-related lessons For FY 1999-2005, the FY 2001 budget includes about $3.6 billion in spending that addresses lessons learned from last year's Kosovo operations. (This total includes FY 1999 supplemental appropriations.) The funding is primarily for munitions plus improved ISR (intelligence, surveillance and reconnaissance) and electronic warfare capabilities. It includes funding for an additional squadron of EA-6B electronic warfare aircraft and accelerated acquisition of the Global Hawk Unmanned Aerial Vehicle (UAV). The budget also includes other initiatives that are complementary to Kosovo-specific actions. Most notable are general enhancements for the EA-6B force, more communications upgrades, and continued development of follow-on cruise and standoff missiles such as Tactical Tomahawk and Joint Air to Surface Standoff Missile (JASSM).

Warfighting concepts The Army's recently announced plans for future warfighting draws attention to the conceptual reshaping that is ongoing in all the Military Services. The aim for all the Services is to make U.S. forces faster, more agile, more versatile, more precise, more lethal, better protected, more rapidly deployable, and more easily sustained once deployed. Progress is being driven substantially by vigorous experimentation to validate needed changes to warfighting concepts or technologies and weapons. To complement Service efforts, the new U.S. Joint Forces Command is conducting joint concept development and experimentation to improve our ability to carry out decisive multi-service operations in future conflicts.

Combating chemical-biological threats The FY 2001 budget includes $836 million (Procurement and RDT&E) to continue to improve protection of DoD forces and activities from terrorist or adversary use of chemical-biological agents. Improvements are being made in agent detection, warning, protection, and medical treatment. These investments are key to DoD's overall program for combating terrorism and new threats.

Information Assurance Reflecting a key QDR recommendation, the Information Assurance program is improving DoD's ability to counter cyber threats and protect its information systems, a capability that will be increasingly critical to the U.S. defense posture. FY 2001 funding (O&M, Procurement, and RDT&E) totals well over $1 billion. One significant enhancement is for Public Key Infrastructure (PKI), which will ensure that DoD information systems are open only to authorized users and that communications reach only intended recipients.

Ballistic Missile Defense

The FY 2001 budget continues the marshalling of the technology and funding needed to deploy a National Missile Defense (NMD) system to defend all 50 states against a limited ballistic missile attack. Later this year the President will decide whether to deploy such a system based on four criteria: threat, cost, technical feasibility, and overall security implications including arms control. The budget for FY 2001-2005 includes sufficient NMD funding to achieve a 2005 initial capability if deployment is ordered. FY 2001-2005 NMD funding totals $10.4 billion -- reflecting the addition of $2.3 billion since last year's request. The budget will allow DoD to upgrade early warning radar facilities, build a radar complex in Alaska, provide 100 ground based interceptors, and fund additional systems testing.

Also a top DoD priority is a strong theater air and missile defense program -- aimed at meeting current regional threats. The budget continues to advance the goal of deploying systems that can protect forward-deployed U.S. forces, as well as allies and friends. To defeat shorter-range missiles, key lower-tier programs currently are the Patriot Advanced Capability-3 (PAC-3) and Navy Area Defense systems. Key upper-tier programs are the Theater High Altitude Area Defense (THAAD) and Navy Theater Wide systems. To defeat theater-range missiles during their boost phase, development of the Airborne Laser and Space-Based Laser is continuing

Reserve Components

The FY 2001 budget continues the reshaping of its reserve components to give them greater capabilities for use across a wide spectrum of operations and to advance the critically important integration of the active and reserve components. It includes $23.9 billion for reserve component personnel, O&M, procurement, and military construction accounts.

The FY 2001 budget advances plans for reserve component support to civil authorities for response to domestic incidents involving weapons of mass destruction (WMD). With congressional approval, the FY 2001 budget will enable the Department to support a total of 27 WMD Civil Support (CS) Teams -- formerly called RAID teams. Additionally, the budget funds continuation of the Department's Civil Military Programs, including the National Guard ChalleNGe program; renewed support for the DoD STARBASE Program; and the Innovative Readiness Training Program, which provides military training opportunities while simultaneously benefiting America's civilian communities

Achieving a 21st Century Defense Infrastructure

The QDR emphasized that a transformed U.S. defense posture requires a transformed DoD infrastructure. The Department has to become leaner and more efficient in order to serve the warfighter faster, better, and cheaper. The QDR also recognized that high priorities like weapons modernization could be fulfilled only with a large influx of infrastructure savings.

Secretary Cohen's Defense Reform Initiative (DRI) continues to spearhead DoD's comprehensive campaign to streamline and reform DoD support activities. Processes and systems (e.g., financial management and travel) are being overhauled. Scores of successful private sector practices are being implemented. Competition/reengineering of DoD positions and functions are ensuring that they get performed by the most efficient organization -- public or private. Expanded use of the purchase card is reaping savings and boosting customer service. By the end of this year, the Department will have put into place the most important building blocks of an historic overhaul of how it does business.

The post-Cold War transformation of America's defense posture will not be complete until excess military bases and facilities are cut. To that end the FY 2001 budget includes funding to implement two more rounds of base closure and realignment (BRAC) in 2003 and 2005. Once fully implemented these rounds are projected to save about $3 billion per year. Congressional approval of these new BRAC rounds is urgently needed in order to shift scarce defense dollars from excess infrastructure to genuine military requirements.

Projected Funding Allocations

(Some columns may not add correctly due to rounding)

National Defense Topline (Function 050) - FY 2001 President's Budget ($ Billions)

	FY 99	FY 00	FY 01	FY 02	FY 03	FY 04	FY 05

Budget Authority

DoD Military (051)	278.4		279.9		291.1		294.8		300.9		308.3		316.4
DoE and Other		13.7		13.4		14.3		14.4		14.7		15.1		15.3
National Defense (050)	292.1		293.3		305.4		309.2		315.6		323.4		331.7

Outlays

DoD Military (051)	261.4		277.5		277.5		284.3		293.0		301.9		315.8
DoE and Other		13.5		13.1		13.7		14.1		14.4		14.6		14.9
National Defense (050)	274.9		290.6		291.2		298.4		307.4		316.5		330.7

DoD Budget Authority by Title - FY 2001 President's Budget ($ Billions)

	FY 99				FY 00					FY 01					FY 02					FY 03					FY 04					FY 05
Military Personnel			70.7				73.7					75.8					78.4					80.4					83.1					85.6
Operation & Maintenance		105.0				104.9					109.3					107.5					109.1					112.2					114.8
Procurement			50.9				54.2					60.3					63.0					66.7					67.7					70.9
RDT&E			38.3				38.4					37.9					38.4					37.6					37.5					36.4
Military Construction				5.4				4.8					4.5					4.3					3.8					4.6					5.4
Family Housing				3.6				3.6					3.5					3.7					3.9					4.0					4.1
Funds, Receipts, & Other				4.6					.4					-.2					-.5					-.5					-.7					-.7
Total DoD (051)		278.4				279.9					291.1					294.8					300.9					308.3					316.4

DoD Budget Authority by Component - FY 2001 President's Budget ($ Billions)

	FY 99			FY 00			FY 01			FY 02			FY 03			FY 04			FY 05
Army			68.4			69.5			70.6			74.4			76.1			78.0			79.9
Navy/Marine Corps			83.8			87.2			91.7			90.8			94.1			96.4			98.7
Air Force			81.9			81.2			85.3			88.3			89.3			90.9			93.3
Defensewide			44.3			41.9			43.5			41.4			41.5			43.1			44.5
Total DoD (051)		278.4			279.9			291.1			294.8			300.9			308.3			316.4

Copies of Department of Defense budget documents are available at the following Internet address: http://www.dod.mil/comptroller/defbudget/fy2001/