Overview

As this Administration began, the United States had been at war for over seven years. Over 170,000 troops were deployed around the globe in support of a prolonged, worldwide irregular campaign. Strategic reviews of two of the longest running military engagements in U.S. history were set to begin within days. At the same time, the new Administration applied fresh eyes to long-standing threats and emerging challenges facing the Department and the nation: from rogue states and terrorist groups seeking to acquire weapons of mass destruction; to rising powers building capabilities to narrow the United States' military options; to failed or failing states lacking the ability to police themselves; to the Department's own internal struggles to restructure defense institutions and processes for the 21st century.

These anticipated shifts in strategy, a growing consensus on the need to re-shape and re-balance the direction of the Department and an increasingly challenging security environment have had a profound impact on the first months of this Administration, but the fundamental objectives of the Department of Defense remain unchanged:

• Prioritizing support to warfighters and their families, particularly ensuring the best care for those wounded in combat;
• Prevailing in current conflicts, with an emphasis on providing troops in the field what they need to be successful; and
• Shaping the Department's strategy, resources, capabilities and processes to effectively balance the requirements of current threats and future challenges and contingencies.

The Department has pursued these objectives across the variety of fronts described in this report, including supporting the President's efforts to stimulate the economy, recommending significant reforms to defense capabilities and focus in the proposed Fiscal Year 2010 budget, offering policy initiatives in support of the broader national security agenda of the United States, and working with and through partners to achieve desired ends more effectively.

Recovery Act

A key component of providing support to American service members, their families and civilian Department of Defense personnel is to provide immediate assistance to them and their communities in this time of economic crisis. Though responsible for less than 1 percent of the total $787 billion stimulus package signed on February 17 by President Obama, the Department of Defense is uniquely positioned to address some of the economic pressures faced by American service members because of their voluntary commitment to serve this nation. Programs in the Recovery Act are also able to take advantage of the Department's national presence. Departmental funding provided by this legislation is spread across fifty states, the District of Columbia and two U.S. territories, furthering President Obama's goal of providing stimulus to the economy while helping to improve the quality of life for troops and their families. The more than 4,000 individual projects include building child care centers, upgrading medical facilities, constructing National Guard facilities, expanding housing for troops and their families and many other efforts, totaling $7.4 billion.

Highlights include:

• $1.3 billion for two new hospitals at Camp Pendleton, CA and Fort Hood, TX. These replacement hospitals will provide modern and efficient facilities with provide state-of-the-art healthcare capacity to the local troops, families and retirees, as well as provide welcome stimulus to the local economies;
• $555 million for the Homeowner's Assistance Program. This expansion provides benefits to three additional groups impacted by the mortgage and credit crisis, including Warriors In Transition and spouses of deceased servicemen; and
• $100 million for constructing warrior transition units facilities, designed to provide care to wounded warriors returning from combat and their families.

In addition to providing much-needed facility improvements and supporting care for wounded warriors, Recovery Act funds also support important energy research and conservation programs so that the Department can continue to lead the way in the national effort to achieve greater energy independence. In addition to $300 million in research funding, the Act added $120 million to the Department's Energy Conservation Investment Program and supported investments in energy-conscious facility repairs and improvements.

The full package of investments will further the Obama Administration's stated goal of stimulating the American economy, while improving the quality of life for service members, their families, and civilian workers. The Department will spend this funding with full transparency and accountability, and execute initiatives as quickly as possible.

Reform – the Proposed Fiscal Year 2010 Budget Proposal

The Department of Defense continues to build on a variety of reform initiatives designed to promote transparency, efficiency and accountability in its activities and programs. Though all crucial to supporting President Obama's goal to build a more responsible, high-performance government, none will have a greater impact on the strategic direction of the Department than the Secretary's recommendations for the Fiscal Year 2010 defense budget. In an effort to explain his priorities clearly and comprehensively with the American people, Secretary Gates took the unprecedented step of making his major budget recommendations public nearly a month in advance of the formal release of the Administration's Fiscal Year 2010 budget. As he made clear in his official statement, this is a reform budget, reflecting lessons learned in Iraq and Afghanistan, yet also addressing the range of other potential threats around the world, now and in the future.

The Fiscal Year 2010 budget proposal reflects a holistic assessment of capabilities, requirements, risks and needs for the purpose of shifting the Department toward a different strategic direction. The recommendations are directly aligned with the Department's overall objectives of taking care of the troops, prevailing in current conflicts and shaping the Department's capabilities and processes for the 21st century.

The proposed budget recommendations add $13 billion to the base budget in support of troops and their families, ending the use of ad-hoc programs and supplemental funding to support America's greatest strategic national asset. Specific recommendations included:

• Properly funding the growth in military end strength in the base budget;
• Continuing the steady growth in medical research and development by requesting $400 million more than last year;
• Recognizing the critical and permanent nature of wounded, ill and injured, traumatic brain injury, and psychological health programs;
• Increasing funding by $200 million for improvements in child care, spousal support, lodging, and education.

Second, the proposed budget recommendations seek to institutionalize the capabilities required to fight the wars the nation are in today while at the same time providing a hedge against other risks and contingencies in the future. Implementation would provide wartime needs with steady long-term funding and a bureaucratic constituency similar to conventional modernization plans. Highlights from this area include:

• Increasing intelligence, surveillance and reconnaissance support for the warfighter in the base budget by $2 billion;
• Enhancing the capacity to field, sustain and man helicopters—increasingly needed in Afghanistan--by adding $500 million to the base budget;
• Adding 2,800 special operations personnel, supported by growth in related lift, mobility and refueling aircraft; and
• Stopping growth of Army Brigade Combat Teams at 45 versus 48 while maintaining the planned increase in end strength of 547,400 to ensure the Department has better-manned units ready to deploy and help end routine use of stop-loss.

The Secretary likewise recommended moving away from over-insuring against remote or diminishing risks while still investing in programs necessary to deter aggression, project power when necessary, and protect interests and allies around the globe. Recommendations include:

• Increasing the buy of the F-35 Joint Strike Fighter from the 14 aircraft bought in FY 2009 to 30 in FY 2010 and ending production the F-22 fighter at 187;
• Fielding more of the most capable theater missile defense systems, as well as converting six additional Aegis ships to provide ballistic missile defense capabilities;
• Slowing production of several major surface combatants and other maritime programs, including the Navy CG-X next generation cruiser program, the Landing Platform Dock ship and Mobile Landing Platform ship; and
• Completing production of the C-17 airlifter program at 205 aircraft.

Third, the budget proposals would take a major step toward reforming the acquisition and procurement culture at the Department. The Secretary's recommendations cancel several programs with execution challenges and take a number of steps to institute much-needed acquisition and procurement reform. These include:

• Terminating the VH-71 Presidential Helicopter program, the Air Force Combat Search and Rescue X (CSAR-X) helicopter program, and the $26 billion Transformational Satellite (TSAT) program;
• Refocusing the missile defense program on the rogue state and theater missile threat, terminating programs with significant affordability and technical problems and overall reducing the program by $1.4 billion;
• Restructuring the Army Future Combat System, to include canceling the current overly complex manned ground vehicle component and re-launching a new vehicle modernization program after an evaluation of requirements, technology, and acquisition strategy; and
• Reducing the number of support service contractors from 39 percent of the workforce to the pre-2001 level of 26 percent and replacing them with full-time government employees.

This budget proposes to separate those things that are desirable in a perfect world from those things that are truly needed in light of the threats America faces and the missions the Department is likely to undertake in the years ahead. If approved, its impact will significantly change the direction of the Department and improve how it does business.

Policy Initiatives

Several priority initiatives in support of the President's national security agenda have been implemented in recent months. Each reflects the Secretary's commitment to supporting the warfighter, prevailing in current conflicts and successfully shaping the Department's capabilities and resources; highlights in each category are described below.

Focus on People

In addition to the major programs within the proposed Fiscal Year 2010 budget (fully funding end-strength in the base budget, increasing the defense acquisition workforce, increasing funding for the wounded, ill and injured by $300 million), the Department enacted several policy initiatives to support the military, their families and civilian personnel.

Stop Loss

In March, the Department of Defense announced a comprehensive plan to eliminate the current use of the practice of "Stop Loss" before January 2010. As part of this effort, the Department has launched a number of retroactive incentive programs to encourage soldiers to voluntarily extend their enlistments. The plan is an important step in reducing the hardship stop-loss has posed to troops and their families and establishing predictability in deployments, one of the President's highest priorities for the Department of Defense.

Wounded Warrior

Improving the outpatient care and transition experience for troops that have been wounded in combat is among the highest priorities of the Department of Defense. The Department has made significant investments in this area over the past few years, and is dedicated to making them a permanent commitment within the Department. The Department has taken several important strides in this area, including:

• Establishing a new 24-hour outreach center at the Defense Centers of Excellence for Psychological Health and Traumatic Brain Injury that provides information and referrals to military service members, veterans, their families and others with questions about psychological health and traumatic brain injury;
• Expanding efforts to work with stakeholders to standardize common data elements for research and surveillance and to develop a strategy for implementing a PTSD registry;
• Establishing an expedited process for service members seriously wounded in combat to quickly transition to veteran status, resulting in significantly earlier receipt of benefits;
• Expanding the Disability Evaluation System Pilot program, designed to eliminate the duplicative and time consuming elements of the current standard disability processes at DoD and VA, to six additional installations;
• Achieving significant breakthroughs in the Revolutionizing Prosthetics research program, focused on producing neurally controlled prosthetics for Wounded Warriors.

Support to Families

The Department has also boosted support in a number of ways to recognize the crucial role families play in supporting service members deployed worldwide. Accomplishments include:

• Including $240M for military child care center construction in the Recovery Act;
• Continuing to implement the new Military Spouse Career Advancement Account Program, providing resources and assistance for spouses of active duty service members, Guard and Reserve with a spouse on orders for one year--over 2,000 spouses per month have applied;
• Conducting "Financial Readiness" road shows at 23 installations;
• Supporting the PBS special, "Coming Home: Military Families Cope With Change." The program focuses on how families address and adjust to the impact of combat injuries; and

Outreach campaigns

In addition to the above efforts, the Office of the Secretary of Defense and the Military Services have launched new and built on a variety of existing outreach campaigns to educate service members, their families and civilian workers on issues impacting their health, safety and well-being. These include:

• Launching a research-based sexual assault prevention campaign, designed to educate and model effective reporting and active bystander intervention behaviors;
• Expanding suicide prevention outreach efforts to senior Department and military leaders to assist all Service members and DoD civilian personnel to 1) recognize the warning signs, 2) effectively respond to those who may be contemplating suicide, and 3) assure they receive the help they need; and
• Continuing to implement healthy lifestyles campaigns for responsible alcohol consumption; tobacco cessation; and the Childhood Obesity Campaign.

New Dover Port Mortuary policy

After an eighteen year ban, the Secretary has revised the Department's policy regarding media coverage of the return of fallen soldiers, sailors, airmen and Marines at Dover Port Mortuary. The Department has now established a policy giving determination over the presence of media to the primary next-of-kin of those returning. The Department will also facilitate and fund the travel of family members (primary next-of-kin plus two additional family members) wishing to be present at Dover if it all possible.

Prevail in Current Conflicts

The Secretary has repeatedly stated his goal of shifting the primary efforts and resources of the Department to responsibly achieving its objectives in current conflicts. In addition to its own extensive internal efforts in this area, the Department has also contributed to several U.S. government initiatives shaping U.S. strategies in key areas, with particular emphasis on Iraq, Afghanistan and Pakistan, and U.S. detention policy.

Iraq drawdown

With the input of the Secretary of Defense, the Joint Chiefs of Staff and commanders in theater, in February, President Obama announced a new strategy to withdraw responsibly from Iraq. Based on a thorough review initiated at the beginning of the Administration, the President directed U.S. forces in Iraq will change mission by August 31, 2010 and effect complete withdrawal by the end of 2011. The new mission will complete the transition from combat and counterinsurgency activities to a more limited set of tasks: training and assisting the Iraqi Security Forces, providing force protection for U.S. military and civilian personnel and facilities, and conducting targeted counterterrorism operations. Following an initial drawdown period, U.S. forces will remain at a robust level until immediately after Iraq's national elections in late 2009/early 2010 in order to provide maximum security and support during this sensitive period. In support of the President's strategy, the Department has begun drawdown planning efforts that take into account the many complex factors that impact the orderly withdrawal of forces, equipment and materiel over the next two years, with the highest priority given to the safety and security of U.S. forces.

Afghanistan-Pakistan Strategy Review

In March, the Administration completed a comprehensive review of U.S. policy toward Afghanistan and Pakistan, co-chaired by the Department of Defense in consultation with Allies and partners, as well as with the Governments of Afghanistan and Pakistan. In addition to clearly stating the goal of disrupting, dismantling and defeating al Qaeda in Pakistan and Afghanistan, the President announced several key shifts in strategy the Department is moving quickly to support.

In Afghanistan, military efforts will focus on two priorities:

• Securing Afghanistan against a return of al Qaeda and its allies with the deployment of the additional U.S. troops that President Obama approved earlier this year, which will help provide a space for the Afghan government to establish effective government control; and;
• Fully resourcing efforts to train and mentor the Afghan National Army and Afghan National Police, including the deployment of a brigade whose mission focus will be to develop the Afghan National Security Forces.

The Department will also ensure military efforts reinforce U.S. policy goals and are fully integrated with broader diplomatic and development efforts.

In Pakistan, the new policy will strengthen efforts to both develop and operationally enable Pakistani security forces so they are capable of succeeding in sustained counterterrorism and counterinsurgency operations. The United States will also seek a more strategic partnership with Pakistan that will encourage and enable it to shift its strategic focus to better address this burgeoning internal threat.

Guantanamo

Following President Obama's early announcement of a comprehensive new detainee policy, the Department contributed to four senior-level interagency reviews on the Detention Operations Policy, Ensuring Lawful Interrogations, Disposition of Individuals Detained at the Guantanamo Bay Naval Base and the Closure of the Detention Facilities at Guantanamo Bay Naval Base. The Department is working closely with interagency partners to assess recommendations and prepare to implement President's decisions as he pursues changes consistent with the national security interests of the United States and the interests of justice.

Shape the Force

In many statements and actions, the Secretary has committed to shaping the Department's strategy, resources, capabilities and processes to effectively balance the requirements of current threats and future challenges and contingencies. In addition to the Fiscal Year 2010 budget proposal, the Department is pursuing extensive reviews and reforms to acquisition policy and processes, as well as major defense strategy reviews in support of this objective.

Acquisition and Procurement Reform

Foremost among institutional challenges facing the Department is acquisitions – how it acquires goods and services and manages the taxpayers' money. The continuing economic crisis is an acute reminder that resources are not unlimited and acquisition strategy needs to reflect the actual threats and risks faced by the United States. The President and the Secretary have made it clear that the Department's acquisition processes must reflect a dedication to accountability and oversight, in addition to being able to agilely and responsibly meet to needs of wartime. Within the Department and with partners across the federal government and in Congress, the Department is taking decisive steps to meet these standards, including:

• In the FY 2010 budget proposal, demonstrating the commitment to stop programs that significantly exceed their budgets or which spend limited tax dollars to buy more capability than the nation needs, as well as substantially increasing civilian acquisition workforce personnel;
• Issuing the first substantive change to acquisition policy in over 5 years, reflecting the Department's determination to improve the discipline and effectiveness of its enterprise-wide acquisition business processes;
• Taking proactive approaches to ensure fully budgeted programs by directing full funding to independent cost estimates in Acquisition Decision Memorandums, questioning excessive requirements and requirements creep during Configuration Steering Board forums, validating the maturity of technology at milestones, demanding stricter contract terms and conditions, and seeking more joint solutions;
• Implementing new Departmental guidelines to ensure informed decisions at program initiation on requirements, budget, systems engineering and developmental plans;
• Working with Congress in their efforts to improve the federal acquisition process, including the House Armed Services Panel on Acquisition Reform, as well as the Weapon Systems Acquisition Reform Act of 2009 proposed by Senators Carl Levin and John McCain;
• Partnering with the Office of Management and Budget and other government agencies to develop new government contracting guidelines as outlined in the President's Memorandum for the Heads of Executive Departments and Agencies.

Defense Strategy Reviews

As part of the Department's efforts to shape defense strategy, capabilities, and resources, the Department is dedicating significant resources to the series of defense reviews mandated at the beginning of each Administration. Though previous reviews were criticized for their lack of actual impact on the strategic direction of the Department, senior defense leaders are taking decisive steps to ensure these efforts are fully integrated into relevant Departmental decision-making processes. The reviews are an opportunity to instill the Administration's national security priorities and values into the long-term core efforts of the Department of Defense, as well as an opportunity to reassess the capabilities required to meet the security challenges facing the nation. They include the:

• Quadrennial Defense Review, which will set a long-term course for the Department to follow and will provide a strategic framework for its annual program, force development, force management, and corporate support mechanisms;
• Nuclear Posture Review, a Department-led interagency effort designed to clarify U.S. nuclear deterrence policy for the near term;
• Ballistic Missile Defense Policy and Strategy Review; and
• Space Policy Review.

Partnerships

As the Secretary made clear in the June 2008 National Defense Strategy, to succeed in any efforts the Department must harness and integrate all aspects of national power and work closely with a wide range of allies, friends and partners. The Department's recent accomplishments are no exception; interagency and international partners, with the support of Congress and the American people, are key to furthering the Department of Defense's goals.

Interagency Partners

In addition to the collaborative reviews of Iraq and Afghanistan/Pakistan Strategy described above, the Department of Defense has initiated several successful cross-government efforts in the first months of this Administration. Notable examples include:

• Partnering with Veterans Affairs on a variety of efforts to ease the transition of service members to veteran's status, including
• Taking initial steps to create a Joint Virtual Lifetime Health Record to allow for streamlined transition of healthcare records between the Department and Veterans Affairs;
• Implementing a program allowing service members with catastrophic injuries to waive the Disability Evaluation process. Establishing this policy better allows service members and their families focus on the essentials of recovery, reintegration, employment and independent living, with the combined assistance from DoD and VA;
• Coordinating with the National Institute of Mental Health on a groundbreaking, long-term study of mental health issues across the Army;
• Launching a review of the National Security Personnel System in partnership with the Office of Personnel Management to assess the fairness, transparency and effectiveness of the program; and
• Working with the State Department to enable a more integrated, comprehensive civilian-military approach in Afghanistan and Pakistan, as a variety of efforts are pursued to increase civilian expertise and assistance in the region.

International Partners

The Department made continuing contributions to the goal of working with and through partner nations to shape opportunities in the international environment to enhance security and avert conflict. Highlights of these efforts include:

• Reinvigorating NATO relationships by making an effort to ensure NATO can meet current challenges, particularly with regard to Afghanistan. Recent engagement, particularly the President's recent participation in the NATO summit, resulted in a new, positive tone among NATO Allies, positive first steps on NATO-Russia coordination, and increased contributions to Afghanistan.
• Accelerating the timetable to support the President's goal to negotiate and achieve a new strategic arms treaty with the Russian Federation before the Strategic Arms Reduction Treaty expires in December 2009.
• Building on several initiatives to increase global partnership capacity, including
• With the Department of State, identifying an initial tranche of Section 1206 programs designed to build partner capacity to conduct counterterrorism operations and ensure stability. The proposal would include $182 million in projects spanning 15 partner states;
• Laying critical groundwork for the Defense Institution Reform initiative to assist partner countries in reforming and building professional defense institutions and better employing forces and capabilities;
• Through the Warsaw Initiative Fund, conducting bilateral and multilateral activities with 16 developing NATO Partnership for Peace nations to support defense reform and strengthening partner interoperability;
• Increasing funding of global partnerships efforts by $500 million in the Fiscal Year 2010 base budget proposal, to support training and equipping foreign militaries to undertake counter terrorism and stability operations.
• Obtaining permission from several partners in the Caucasus and Central Asia to transport non-lethal cargo via commercial means through their territory. These permissions opened the final critical legs in a network of air and ground transportation routes into Afghanistan from the North, will help mitigate the risks of overreliance on ground routes through Pakistan, and will increase the Department's ability to supply higher U.S. force levels in Afghanistan.

The American People

Finally, the Department of Defense recognizes that its success is dependent on the strength of the American people, whether partners at universities, non-profit organizations, or the private sector. In addition to working with U.S. government partners to seek ways to bring the expertise of private citizens to national security problems, the Department continues to share its resources across dozens of efforts to spur innovation and learning, including:

• Awarding $52.5 Million to Universities for research equipment, designed to fill a critical need of scholars by purchasing state-of-the-art equipment that augments current university capabilities or develops new capabilities to perform cutting edge defense research.
• Giving 37 grants totaling $17.4 million as part of the fiscal 2008 Historically Black Colleges and Universities and Minority Institutions program to enhance education programs and research capabilities at the 30 recipient institutions in scientific disciplines critical to national security and the DoD;
• Announcing 12 new Defense Acquisition Challenge projects enabling domestic industries, especially those that are not major defense contractors, the opportunity to "challenge" current acquisition programs by offering innovative and cost-saving technologies; and
• Publishing close to 100 grants, awards, and fellowship opportunities on www.grants.gov.