The DOD Responds to President Obama’s Budget Proposal http://ow.ly/3WVsa

Remarks from the Secretary of Defense

Secretary of Defense Robert Gates conducted a briefing today to discuss President Barack Obama’s fiscal 2012 budget proposal to Congress. Secretary Gates prefaced his remarks by highlighting two major concerns: the strain on the Department of Defense of operating under a continuing resolution for five months; and the Joint Strike Fighter engine, which, because he is being forced to fund it on a month-to-month basis during the continuing resolution, is costing the taxpayers $28 million per month.

At the end of the continuing resolution, Gates said he will look at all the legal options to stop the alternative engine program. Gates also explained that if the government continues to operate under the continuing resolution for the full year, DOD would only receive $526 billion out of $550 billion, which would be a major crisis for both the agency and for government contractors.

Secretary of Defense Robert Gates. Dept. of Defense Photo / R.D. Ward

Secretary Gates’ general budget remarks were as follows:

• The budget reflects a two-year effort to reduce costs.
• We need to preserve fighting strength during rough fiscal times.
• We need a more agile organization to fund modernization efforts.
• The $113 billion procurement budget is basically same as last year. However, he cautioned against comparing top line figures. While some programs were been cut, some programs saw new investment, including:
  • A new strategic bomber for the Air Force
  • Five new Navy ships
  • Modernized ground vehicles
  • Half a billion to DARPA for modernization
• Around $100 billion of efficiencies savings were re-invested into modernization.

Remarks from the Undersecretary of Defense and the DOD Director Joint Staff

Robert Hale, the Undersecretary of Defense (Comptroller) and Chief Financial Officer, and Lt. Gen. Larry Spencer, Director, Force Structure, Resources and Assessment, Joint Staff provided an overview briefing on the defense budget proposal. [See the full transcript of their remarks and presentation slides (PDF).]

Lt. Gen. Spencer remarked that making sure the military is ready when called upon is the highest priority. Hale explained that the continuing resolution did affect the 2012 budget request. He clarified that the $553 billion base budget will grow modestly over the years, but the total budget is down in real terms. Hale agreed with Secretary Gates that a year-long continuing resolution would be bad for the DOD. Under such circumstances, there would be no flexibility and no increase in procurements. They would be forced to use short contracts spanning only one to two months, which are very inefficient.

He explained that continuing resolution has already had real effects in the DOD, including: no procurement for a second Virginia-class submarine; and a delay in many construction projects.. Hale called it the most serious situation he’s seen at the DOD in the last 20 to 30 years. If programs are not ramped up this year as scheduled, they will be affected down the road. Under the continuing resolution, DOD cannot do start-up programs or change rates. The stoppage and slowdown of programs has created a backlog for contractors. This makes contractors less effective and has a huge ripple effect on the industry in general.

The budget has four main priorities:

1. Taking care of people – the highest priority. Military will get a 1.6 percent pay raise, as well as $52.5 billion for military health care.
2. Focus on current war – $84 billion earmarked for direct combat readiness in training, as well as spending in intelligence, surveillance and reconnaissance, and $2.3 billion toward cyber capabilities.
3. Modernize for future conflicts – $9.4 billion for the Joint Strike Fighter program, and putting the Marine Corps’ version on a two-year probation. To help fill the shortfall in JSF procurement, they will order 91 F-18s from fiscal year 2012-14, with 40 in FY2012. Also, the KC-X tanker contract should be awarded in next month or so.
4. Support deployed troops – Spencer says they are fully funded, with $117.8 billion going to Overseas Contingency Operations (OCO) supporting efforts in Iraq and Afghanistan.

[Find the full article on GovWin]