DOD News Briefing with Undersecretary Hale and Vice Adm. Stanley

                 Go to http://www.defense.gov/news/d2010rolloutbrief1.pdf to view briefing slides associated with this transcript.

 

                STAFF:  I think these are two gentlemen that don't need any introduction, but for other audiences that might be out there, of course this is our Undersecretary of Defense Comptroller Robert Hale, and joining him doing double duty at the podium today, again, is Vice Admiral Stanley. And they are going to take you through the nitty-gritty numbers and the programmatics here.  Okay?  And they will be followed, again, by the service briefs in succession. 

 

                So with that, let me turn it over to the comptroller.   

 

                MR. HALE:  Well, thank you.  Welcome to the hard core.  We permit other than church seating, so if any of you want to move up, you are welcome to do that. 

 

                Next slide, please.   

 

                If I pick one theme for this budget overall, it would be continuing the reform agenda.  Secretary Gates in the fiscal '10 budget set out a number of reform items.  He wanted to rebalance this military to focus more on today's wars, to reform what and how we buy. You can't make changes in the Pentagon in one year, or in the Department of Defense, so we will need this budget and a number to follow it to make all of these changes. 

 

                So that's our overall theme here, in my mind, continuing the reform agenda. 

 

                Next slide.  

 

                What I'm going to do today is give you a sense of the dollars, a quick overview and kind of how they fit into the overall federal budget just a bit, and then with Admiral Stanley's help, we'll focus on key themes and give you some examples of the major policy changes associated with each theme. 

 

                Let's turn first to the funding overview.  Next slide.   

 

                What you see here is the defense budget back to 2001 projected through 2015.  Focus first on the top of those bars.  In 2008 and '09, we spent $667 billion of discretionary budget authority on the Department of Defense.  It will go up to $693 (billion) in fiscal '10 pushed up mainly by a $33 billion supplemental request to fund the extra 30,000 troops the president has ordered to Afghanistan and then rise to $708 billion in our fiscal year '11 request. 

 

                Beyond '11, there's a placeholder for the wartime budgets, $50 billion a year in the budget, but we will have to wait and see exactly how much we need in the way of wartime funding. 

 

                I think you can get a better sense of the long-term picture of this budget if you look at the base budget; that is, excluding wartime funding.  That's the blue bars and the kind of shaded purplish bars on the right.  We got $531 billion in Fiscal Year '10 appropriated by the Congress.  We will request $549 billion in Fiscal Year '11.  If you adjust for inflation, that's 1.8 percent real growth.  It will go on up to $616 billion by fiscal '15.  If you adjust for inflation over the whole period, '10 to '15, average annual growth of about 1 percent. 

 

                We're well aware of a freeze on domestic spending, and that we will be one of a relatively small number of agencies that will get real growth in their budgets.  We feel strongly that the department needs modest real growth to train, equip and sustain a military at war. 

 

                We also want to point out that as a percentage -- if I could get the next slide -- of the total resources of the country using in defense, it's about flat, roughly 4.7 percent of our Gross Domestic Product or GDP in '10 and '11.  That's more than just before 9/11, when it was down around 2.9 percent, but less than some of our past wars, particularly Korea and Vietnam. 

 

                So just very brief on the total dollars, 1 percent annual real growth over a five-year period, and about flat as a share of the country's resources. 

 

                Next slide. 

 

                As I say, I want to turn to the themes.  These are the same themes we used to describe the Fiscal Year '10 budget.  I think that underscores my point that this is a budget that continues the reform agenda; our highest priority, taking care of people.  We need to rebalance this military to focus more on today's wars, but continue to make a substantial investment in preparing and, if necessary, prevailing in future conflicts.  We need to reform what and how we buy, and we've got to support our troops in the field.  That's the wartime or overseas contingency operations budget. 

 

                Admiral Stanley and I will talk about each one and give you a sense of some of the specifics. 

 

                Next slide. 

 

                Taking care of people is not only the secretary's highest priority, it is also the highest priority for the chairman.  I'm going to ask Admiral Stanley if he'd talk about our initiatives in this area. 

 

                ADM. STANLEY:  So just to highlight back to the QDR, you all heard the importance placed on our personnel programs.  And the way that we think about it, our personnel programs are literally the foundation upon which all capabilities are built.  Without strong personnel, personnel that aren't distracted by family problems, child care concerns, medical concerns, our capabilities are lacking.  So this budget reflects that idea.   

 

                We recognize that they are a strategic asset to our nation; also that it's an enduring commitment.  And it's not just an enduring commitment to our men and women in uniform today, it's a commitment to our wounded warriors, our fallen heroes and their families, and the families of our men and women in uniform. 

 

                What you see here are various different components of this commitment, this national commitment to our people.  I'd highlight keeping the pay rates consistent there.  You see 1.4 percent, full employment cost index funding for both our military and civilian personnel; also highlight the health care, fully funded again; but also the idea this is for 9.5 million eligibles.  That's something that, you know, we don't often think of, the number of people that are actually eligible for defense health.  Our family support funding, again a critical piece of this. 

 

                And the last one I would highlight here is the DOD schools.  A number of our schools are very significantly in need of maintenance. This adds considerable funding to fund about half of them over this next five-year period.  So it's a very important program for our families and children. 

 

                MR. HALE:  So taking care of people, our highest priority.   

 

                If I could get the next slide. 

 

                A key element of the reform agenda is rebalancing this military to focus on current or today's wars, and you've heard some discussion of a number of the initiatives here.  We'll continue to increase our rotary wing capability.  We sometimes have helicopters without available crews.  So last year, we increased the funding for air crew training.  It will go up another 9 percent; that is, the training will go up -- we'll sustain the funding -- in Fiscal Year '11.  And by Fiscal Year '12, we expect to be training 1,500 crews a year, about a 20-percent increase compared to before this started.  You heard the Secretary say two Army Combat Aviation Brigades added, sustaining production of a number of helicopters and aircraft. 

 

                ISR, another key element here.  Increase in the Predator class Combat Air Patrols.  We will double the production of MQ-9 Reapers, one of our more sophisticated UAVs, from 24 in fiscal '10, will go up to 36 in Fiscal Year '11 and 48 in Fiscal Year '12 and beyond. 

 

                We'll increase electronic warfare capability, yet another key element of reforming the military, buying an additional EA-18Gs, a total of 36 in Fiscal Year '11 and '12, and using them to recapitalize four of the older 86B squadrons. 

 

                Next slide.   

 

                Continuing the same theme.  We'll continue to increase the Special Operations Command, 6 percent increase in their budget in fiscal '11, adding 2,800 people.  Between '10 and '15, we'll add 10,000 military and civilian personnel to Special Ops Command.  And you see some of the types of people that will be added on the slide.   

 

                And as the Secretary said, we will institutionalize this budget; that is a portion of it, around a little more than a third of it, right now is funded in our wartime portion of our budget.  We will move that back over the next five years so that all of it is in the base budget. 

 

                Significant changes in homeland defense.  We will fully man a Consequence Management Response Force, "C-Smurf," as it's called, and have two more of the -- command and control for two more of them, and establish the 10 homeland response forces, or HRFs, out of existing National Guard assets that will be closer to the scenes of possible disasters. 

 

                As I might add -- I have a list of favorite acronyms in the Department of Defense.  I shall add CsMRFs and HRFs to that list. (laughter)

 

                Countering weapons of mass destruction.  You've heard some of this discussion before, so I won't go into a lot of detail.  We will spend $74 million on the president's initiative to lock down vulnerable nuclear material over the next four years. And we will stand up the Cyber Command, leasing some additional space for added people and paying other standup costs. 

 

                Next slide. 

 

                We need to focus on today's wars, but as the Secretary has said, we're not very good about figuring out where we'll have to fight in the future, so we need a broad base of capability.  And we'll make investments in a variety of areas you've heard discussed.   

 

                In the tactical area, our premium program, the Joint Strike Fighter, we will restructure that program adding 13 months to its development period, buying more test aircraft so that we can proceed without increasing and will actually decrease concurrency.  We'll buy 42 aircraft in the base budget, one in our wartime budget, for a total of 43, and spend about $11 billion on this program. 

 

                We have planned a sustainable shipbuilding plan for a total of $25 billion (dollars), including $15.7 billion for shipbuilding and conversion Navy, buy 10 ships in fiscal '11, nine for the Navy, one for the Army, and 52 ships over the whole period 2011 to 2015, 50 for the Navy, two for the Army. 

 

                We'll accelerate ground-forces modernization, spending $3.2 billion on fielding some of the spinouts from the Future Combat System that was restructured last year, and also developing a new ground vehicle.  And the Army this year will end its production -- its Army production of humvees, with -- the Fiscal Year '10 buy will be the last one.   

 

                We'll expand and enhance long-range strike capacity and capability.  Again, you've heard that discussed before.  It is a portfolio approach, as Admiral Stanley told you, focused first on what -- a bomber, and what kind of bomber we need:  Is it manned?  Should it be manned?  Should it be penetrating?  Initially there will be money to sustain the industrial base and for studies there in the out years that moves to development funding.  Upgrading existing bombers, B-2s and B-52s.  Prompt Global Strike -- we've talked about before -- is in this portfolio of changes as well. 

 

                We need to modernize some of our nuclear weapons.  Some of that money is in our budget, but much of it is in the budget of the National Nuclear Security administration, which has a 13-percent increase in its budget between fiscal '10 and '11 to modernize a variety of infrastructure -- uranium processing plant, for example, at Los Alamos; chemical metallurgy lab there; life extension program for the B-62 -- -61 bomb, and others as well.   

 

                Go on to the next slide. 

 

                As part of this overall effort to invest in a broad array of capabilities, reprioritize missile defense -- I think this has been discussed a lot -- we'll spend $9.9 billion on missile defense, $8.4 (billion) in the Missile Defense Agency's budget. 

 

                We need a new tanker.  We have for several years.  We still need a new tanker.  We envision an RFP on the street in late February, hope for an award in the summer, and have budgeted $864 million of RDT&E for that tanker program.

 

                We will restructure NPOES -- or National Polar-Orbiting Environmental Satellite system -- which for about 15 years has been a program we've done jointly with NOAA.  We will proceed our separate ways and develop separate satellites to meet our separate needs, but will continue to closely coordinate with NOAA on this program. 

 

                And I think you've heard discussions of the changes to our security assistance program.  We'll increase in particular so-called Section 1206 Global Train and Equip funds, to $500 million compared to $350 million.

 

                So we need to rebalance to focus on today's wars but also maintain a substantial capability or capacity for future conflicts. 

 

                Steve, I handed you a curve ball here.  I'd planned to stop earlier. 

 

                ADM. STANLEY:  That's all right.   

 

                You know, what I would just emphasize here -- and this gets back to the QDR -- I think one of the most significant changes in this QDR is a recognition that our department planning for capabilities has a temporal aspect to it.  It's not just focused on a single time period just beyond the FYDP where we're building capabilities to establish, you know, what we need for a given set of scenarios.  It's now this: prevail in today's war; prepare for an uncertain future for tomorrow. So it spans this whole time frame. 

 

                And what you see in the capabilities that Undersecretary Hale has just discussed is that philosophy.  It's part of it now.  Secretary Gates, you've heard him say, hey, if you don't have the capabilities you need to win today's wars, go do something about it.  Right?  Well, that's where this focus on ISR and the unmanned vehicles is coming from.  The nation invested 20-some billion dollars to buy the mine- resistant, ambush-protected vehicles.  Okay?  Those are huge investments to win today's war. 

 

                Just as -- just like that, you see investment to prepare for this uncertain future -- in a robust ship-building account, in what we're doing with the ground combat vehicles, in the Joint Strike Fighter programs.  So all of these, taken together, harken back to the direction that's in the QDR. 

 

                MR. HALE:  Next slide.  We need to reform what we buy, and how we buy it, and I think this is critical.  With a $708 billion request to the American public, they need to know we've scrubbed this budget and looked for programs that we can do without. 

 

                You've heard this list of seven discussed before.  I'll just mention a little more on the first two.  The C-17 aircraft, we have 223 of these aircraft, or have purchased 223.  That's a great plane, but we have enough for now, and really more than enough; and enough, or more than enough, for as far as we can see in the future.  We think it is time to end this program. 

 

                The JSF alternate engine will be a contentious decision, to be sure.  But we looked carefully at it, decided that there are management problems:  we'd really be managing two sole-source contracts.  There are logistics problems:  you would have to have two separate logistics support capabilities for the two engines.  And in many cases, the organizations involved don't want two engines.  The Navy, in particular, only wants one engine.  They don't to have planes with two different engines on aircraft carriers.  Probably, most of our allies will not be buying enough to want a force with two different engines.  And finally, there's costs:  it will add $2.5 billion to our five-year plan, if we were to pursue development and procurement of the alternate engine.  And even the optimistic model suggested the long-term savings would just barely break even relative to those costs.   

 

                So for all these reasons, we propose not going forward with the alternate engine.  And, as you heard Secretary Gates say, if the Congress does pursue either the C-17 or the alternate engine, he would recommend that the president veto the bill. 

 

                I think we've been through those other ones.  Let me talk a little more about the reform -- how we buy and operate; less discussion there.  Acquisition reform remains a centerpiece.  We are implementing the Weapons System Acquisition Reform Act that was passed last year, including adding about 20,000 people to our -- government civilians to our acquisition workforce, trying to get a better handle on requirements early, which is key to preventing later unanticipated cost growth, and a variety of other efforts.   

 

                We're continuing our in-sourcing initiative that we established in the fiscal '10, hiring more government civilians and replacing contractors.  And one not up here:  We will ask the Congress not to do what it's done for the last several years, which is add a half a percent to the military pay raise this year.  Military deserves generous pay; they're under a great deal of stress.  But when the Congress does that, it adds about $500 million (dollars) to our budget in each year, and it's cumulative, because it goes into the base.  And we need that money to train and equip this force.  So we urge them to enact the full 1.4-percent raise, which will keep military pay up to speed or keep it at pace with increases in the private sector, but not to add to that increase.  Reforming what and how we buy is a key element of continuing the reform agenda.   

 

                Next slide. 

 

                Last one I want to talk about is supporting our troops in the field.  This brings us to wartime or overseas contingency operations, and it's critically dependent on the deployment of forces, because that's what we're costing out.  So let me ask Admiral Stanley to say a few words. 

 

                ADM. STANLEY:  So what I would talk about here is the Iraq security situation, which continues to show positive outcomes.  Maybe even more importantly is the idea that the Iraq security forces are showing their readiness to deal with the situation in Iraq.  That's very positive.  It allows us to actually see that we're going to be able to continue this responsible drawdown. 

 

                One of the key enablers that's in this overseas contingency operations request for Iraq is the reestablishment of the Iraq security fund, which will provide $1 billion (dollars) in FY '10 and $2 billion (dollars) in FY '11 to allow for the continued equipping and establishment of the security posture that we believe will allow our forces to continue to leave. 

 

                It's also -- connecting to the drawdown in Iraq -- allows us to shift forces over to Afghanistan.  Our forces are moving quickly into Afghanistan in support of the 30,000 troop increase that the president talked about.  Five thousand of those have already flown.   

 

                We intend to have all 30,000 in by late -- in August.  So this, the FY '10 supplemental request, supports that flow.  And again it's very important to us.   

 

                Both Generals McChrystal and Petraeus are talking about what they're doing in Afghanistan as a counterinsurgency strategy.  What's critical to that strategy?  Well, one of the pieces of that strategy is a strong Afghan security force.  And this request adds the resources necessary to grow the size of the Afghan National Security Force (ANSF), both the army and the police.   

 

                It establishes CERP funding for counterinsurgency operations. You heard the chairman earlier today talk about junior officers sometimes quoted as saying that CERP is more important than bullets in this type of operation.  And it also funds the counter-IED efforts both in JIEDDO, the Joint IED Defeat Organization, and in our MRAP and M-ATV program.   

 

                So all important to this initiative.   

 

                MR. HALE:  Next slide, please.   

 

                I think you discussed most of these, Admiral Stanley.  I'll just add one more point here.  This budget supports the president's decision on closing Guantanamo.   

 

                There is no funding in fiscal '10 for closing Guantanamo or opening a new correctional facility at Thomson, Illinois.  We want to focus the fiscal '10 supplemental on Afghanistan.   

 

                But in fiscal year '11, there is a transfer fund that could be used, for all aspects of detainee operations, $350 million.  It would permit us to transfer funds to places where we need to close or transition Guantanamo.   

 

                It would permit us to transfer funds to accounts that would let us open the Thomson, Illinois, site.  And it would provide for operation of detainee facilities at either location.   

 

                Next slide.   

 

                Let me just say one more word about OCO funding, wartime funding, before I leave.  This is the total dollars we're spending on OCO.  And it's pretty flat in the last couple of years.  And people say, well, what's going on?  I mean, you're getting out of Iraq.  Why is this not coming down?   

 

                In fact, Iraq is coming down.  It's the brown -- gray bars, I guess, at the top there -- $94 billion in fiscal year 2009, it will be down to $46 billion (dollars) in 2011.  Not always coming down proportionately -- the troops -- sometimes there's a lag.   

 

                For example, we tend to close large forward-operating bases last. They have a fixed cost that won't go until we are fully out of Iraq. But it's definitely coming down.   

 

                Afghanistan is going up, partly because we're putting more troops there, but also partly because it's a very expensive place to operate and fight.  Transportation is particularly expensive; you'd have to fly in everything or truck it in over a long, dangerous and expensive route.  And as you heard us say before, we're investing heavily in enablers like the Afghan National Security Force which is pushing up our Afghanistan costs. 

 

                Last slide.  Let me just summarize for you and leave you a few key points, and then we'll turn to questions. 

 

                We believe DOD needs modest growth to train, equip and sustain a military at war.  We've got to focus that growth, in the dollars and our budget, on today's wars – fighting the irregular wars in Afghanistan and Iraq.  Continuing the reform agenda means making hard decisions and enforcing them, and we've gone through the C-17 and alternate engine and others.  And finally, we need the Congress to help us with timely enactment of the supplemental by spring so that we can meet all the needs of the troops. 

 

                Overall, this is an effort to continue the reform agenda.  And with that, Admiral Stanley and I will stop and be glad to answer your questions. 

 

                Q     Last year, the department along with the VA had proposed changes in concurrent receipt for veterans who left service with disabilities.  Is there any similar proposal this year, or have you -- because you didn't get the funding last year, have you decided not to pursue it? 

 

                MR. HALE:  No, actually, it's the Office of Management and Budget that submits that and, yes, they have submitted it again.  It's called the mandatory portion of the budget.  It is an entitlement.  And we tend to focus -- we really manage the discretionary portion; it's probably more than you want to know about the "budget-ese" of this. 

 

                But yes, it has been submitted again in its same form.  I think we'll have some of the same issues.  It is subject to the so-called PAYGO limits; there would have to be offsets in other entitlements or taxes.  So no offsets were proposed.  So I think it'll be a struggle on the Hill, but it has been -- has been sent up. 

 

                Yes. 

 

                Q     In terms of your increased focus strategically on securing weapons of mass destruction, is there a budget increase associated with that or is really just a difference in focus? 

 

                MR. HALE:  Well, overall, there's a program called cooperative threat reduction, which does go up, about $100 million between fiscal '10 and fiscal '11.  And there are a number of -- there's a lot of different programs in there, and I don't know them all, but I mentioned the $74 million directed to the president's lockdown of vulnerable nuclear weapons.  So, yes, there is some increase. 

 

                Yes, ma'am. 

 

                Q     The money in fiscal '11 for a next-gen bomber, it's supposedly sort of just to sustain the industrial base.  What are you buying with that money?  What do you get?  And then I have a follow-up as well. 

 

                MR. HALE:  We'll use it for studies and analyses of what the bomber should be, including preliminary engineering studies.  And you've probably gone about to the depth of my knowledge here and the specifics; Ash Carter would probably do better.  

 

                Do you have other thoughts on this one? 

 

                ADM. STANLEY:  It's the industrial base -- a lot of it is the industrial base involved with stealth.  We want to sustain that. 

 

                Q     Okay.  And then I just had a follow-up really quickly.  How many gunships do you plan to procure?  (Off mike) -- bullet points. 

 

                MR. HALE:  Well, there's 16 in the -- going into the SOCOM, MC- 130Js, but that is not a net increase because at least some of those C-130s are coming out of the Air Force 

 

                ADM. STANLEY:  It's 33. 

 

                MR. HALE:  Three additional -- okay.  There's some reallocation going on here. 

 

                ADM. STANLEY:  The size of the force grows from 25 to 33 over the FYDP, so we're shifting 16 and retiring eight. 

 

                Q     Yes, sir, I had a question about the FA-18 procurement from the Navy side.  The request this year was for 22 airframes, which was more than double the Navy's initial request from last year.  What's the takeaway from that?  I mean, does that anything to do with sort of the problems that's been going on with JSF production?  Or -- 

 

                MR. HALE:  No, the 22, I mean -- we'll buy 34 total FA-18s in fiscal '11, which 22 are EA-18Gs.  That reflects a focus on electronic warfare.  And the other ones that are EFs.  The 22 reflects a focus on -- if I could -- 

 

                Q     I was talking about specifically about the Super Hornets. Yes, sir. 

 

                MR. HALE:  Oh, yes.  So there's 34 total.  You know, I've got -- is it -- 

 

                ADM. STANLEY:  34. 

 

                MR. HALE:  34 total.  It's 24 EFs and 12 Gs.  I had – 22 and 12, all right. 

 

                So -- and the -- I wouldn't say it represents a change, but a realization that we have some shortfalls in Navy tac-air, and we need to keep this line open to move to augment our capability there, and we'll keep the line open through 2013.  I think that's the plan. 

 

                Do you want to add to that? 

 

                ADM. STANLEY:  Yeah.  So from a warfighting capability, the capability that we emphasized was the electronic attack, the Growler mission.  We actually shift -- we added Growlers, 26 as Undersecretary Hale has already discussed, to continue to not decommission the four EA-6B squadrons that Navy had planned. 

 

                So we extended the EA-6Bs.  We added the Growlers to continue the four squadrons.  And we pushed the Growlers to the left, so some of the EFs slid to the right actually.  The line actually goes through FY '13 now. 

 

                MR. HALE:  Ma'am. 

 

                Q     A quick follow-up on the F-18s.  Are you going to enter into any kind of multi-year agreement with Boeing?   

 

                MR. HALE:  The Navy is looking at whether or not to request a multi-year -- the budget prices them out in terms of single year procurement,  But sometime over the next month, the Navy may decide to request multi-year and I urge you to ask that question to them.   

 

                Q     And another quick question, there's $33 billion (dollars) in the supplemental for 2010.  You said that has to be approved by spring.  When do you need that money exactly? 

 

                MR. HALE:  Well, it's never -- you know, there's never an easy answer.  I mean at some point there's an easy answer when you actually run out of money.  But I describe it -- and you get to the point where it's kind of like driving at 60 miles an hour toward a brick wall -- that brick wall's called an anti-efficiency act violation.  And so you've really got to trust your brakes at some point.  And we need this by Memorial Day to have high confidence.  We may be able to go somewhat beyond that.  We'll have to see what our spend rates are as we get closer to that time.   

 

                Any questions?  Yes, ma'am. 

 

                Q     The OCO funding.  You have a significant amount of procurement into the -- in the '11 funding, though, the administration had indicated they were not going to do that, they were going to put all the procurement funding into the base budget. So what's changed? 

 

                MR. HALE:  Well, there are a series of rules that we've agreed to with the Office of Management and Budget.  They do allow some kinds of procurement funding.  For example, we're allowed to replace combat losses and we're allowed to replace weapons systems that are fully worn out rather than trying to rehab them if it doesn't make any sense to do that.  And so I think that we are in full compliance with these new guidelines, I think actually Secretary Gates referred to with regard to procurement. 

 

                Q     Secretary Gates in May told Congress that the Department needed 2 percent real growth across the program in order to justify the program that existed then.  You've gotten 1 percent.  Where have you had to take risk in order to squeeze everything into --  

 

                MR. HALE:  Well, first, I think what we would say is that we can accommodate 1 percent annual growth in the short-term and still maintain the current forces, and we're doing it, frankly, to try to be mindful of a serious economic problem and make our contribution to that by holding down our growth.   

 

                In terms of risk, I would describe risk broadly, although I think we're finding ways to mitigate it.  One of the risks that we face and you heard him speak of it is whether we've gone far enough with emphasizing today's wars.  I think we're moving in the right direction; more money we could do more.  And there's certainly some risk with the overall stress on the force.  With more funding, we might be able to do more, but I think we are moving in the right direction to mitigate it there. 

 

                So I think he would say and I would say, we can absorb or handle 1 percent real growth and accommodate -- keep current forces in and meet the needs for the short-term.  In the longer run, I think we'll have to look at it again. 

 

                Q     So did you or did you not have to squeeze anything out of the budget --  

 

                MR. HALE:  Well, you always squeeze things out of a budget, I mean, there's a continuum here.  I'm sorry. 

 

                Q     -- as a result of not getting that additional --  

 

                MR. HALE:  I mean, sure, had we had 2 percent growth, there would have been more things in.  But I think we have a balanced program that provides a reasonable level of -- meets our national security needs and recognizes the serious economic problems the president has spoken of. 

 

                Q     Question for Admiral Stanley.  This summer, the Quadrennial Defense Review had recommended the services make investments at about $50 or $60 billion worth of new capabilities.  Does the final QDR reflect those recommendations?  Did they stick to the services -- by those packages of capabilities? 

 

                ADM. STANLEY:  The simple answer is yes, generally.  I mean there are specifics that weren't -- that was guidance, guidance is never perfect up front as the services evaluated the guidance and looked at it.  There were things that they picked up and came in with.  There's other things that fell out of it. 

 

                Q     How would you quantify the shift in investments associated with the QDR?

 

                ADM. STANLEY:  I actually say that most of that is actually in, but it's not all there.  I'd say most of it. 

 

                Q     Last year, the Secretary said that the spigot of defense spending turned down after 9/11 is turned off.  Last year, you had a growth of about 2.1 percent real growth, this year is 1.8 percent that you're projecting and you're projecting 1 percent out. 

 

                Is the spigot turned off now?  And I mean, what's your -- give us some context. 

 

                MR. HALE:  Well, it's not off.  And we have modest real growth. And I think there are a handful of agencies that can say that, but many cannot, so I don't think it's off.  But I think what he said is, it's closing.  And I believe that's still the case.  I mean, it is closing.  And at some point, if the security situation changes, maybe it will be closed entirely.  I think if we're involved in active wars, it will be difficult to sustain current forces without some continued real growth. 

 

                Q     I have a question, too, on that.  There's going to be a lot of focus on your budget in light of the three-year freeze on discretionary domestic spending. 

 

                MR. HALE:  Yes. 

 

                Q     Just so everybody -- you know, the same sheet of music, is it roughly about 42 cents on the dollar that the base budget is, when you look at the -- 

 

                MR. HALE:  I think that's right.  Sounds like you've done the calculation.  I tried to do it while -- (chuckles) -- while Admiral Stanley was speaking, but I think you're right.  I think that it would go up to about 55 cents out of discretionary spending if you included the wartime spending. 

 

                Q     So it's about 42 cents out of -- 

 

                MR. HALE:  I think that's about right. 

 

                Q     Okay, thank you. 

 

                MR. HALE:  Yes, ma'am. 

 

                Q     A question on Cyber Command.  Could you talk a little bit about some of the specifics of how that funding is going to work?  And are you combining some funding from other pots now to set up the command? 

 

                MR. HALE:  Well, we'll use a lot of existing resources that are already being devoted to cyber warfare.  We'll add some lease funding, and there'll be some additional people, although I think they'll be reallocated from other areas. 

 

                You have more on this one? 

 

                ADM. STANLEY:  No, that's pretty much it.  We're leasing the facilities, we're moving them in -- right now, the intention is to put them in NSA, to align with that mission there.  There are people at it.  Military personnel have been accelerated into this mission.  We're buying additional civilian personnel for the mission, so -- 

 

                Q     Do you have a ball park -- do you have funding totals, ball park or anything? 

 

                ADM. STANLEY:  I don't know off the top of my head. 

 

                MR. HALE:  I think it's in the $100 to $200 million (dollars) added range, but -- 

 

                STAFF:  $104 (million) 

 

                MR. HALE:  $104 (million)? 

 

                Q     That means added?

 

                MR. HALE:  A $104 (million) added? 

 

                STAFF:  Yes. 

 

                MR. HALE:  Yeah, for this. 

 

                Well, you know, this is all part of the operation and maintenance budget, and it's, you know, relative to where we were before we made the decision on Cyber Command.  It's mainly leasing space, frankly.  And that's a thing we can isolate.  And there's some reallocations of personnel from other activities that will focus more on cyber warfare. 

 

                Q     So that when you add the $104 (million), you get to what amount total? 

 

                MR. HALE:  You know, I would -- I would say -- I can't give you a simple base, because I don't know how to define that base.  I would say we're adding it to the funding prior to the decision on Cyber Command, and I think it's primarily lease costs, which we can -- again, we can identify as being added. 

 

                Yeah? 

 

                Q     You've got -- you're adding two combat aviation brigades, 2,800 special operations forces, the folks from Cyber Command, the task force on weapons of mass destruction, and then there was -- the Air Force talked about plussing-up the nuclear forces last year. 

 

                Where are those folks coming from?  Are you asking for a permanent increase -- that 22,000, for example, with the Army? 

 

                MR. HALE:  Well, the 22,000 is not permanent.  That's an Army end strength.  It's actually funded in the wartime budget, along with 4,400 Navy augmentees that are not permanent.  There is, as I recall, a modest increase in military end strength, but it's small.  I think it's about 7,000 people.  And it's harder to separate out.   

 

                There are large increases in government civilians, but most of them are associated with the in-sourcing initiative.  So there may be some minor added people.  And we are looking wherever we can to reallocate resources to higher-priority areas. 

 

                Ma'am? 

 

                Q     (Off mike) -- total cost associated with standing up the two combat aviation brigades?  And roughly how many new aircraft does -- do those require? 

 

                MR. HALE:  Well, I can tell you, the first brigade was actually financed last year in the RMD, so it's coming out of existing resources.  The second one is $5.5 billion over the five-year period.  And I'm not going to be able to give you the number of aircraft.   

 

                Do you know? 

 

                ADM. STANLEY:  No. 

 

                MR. HALE:  Sorry. 

 

                Yeah. 

 

                Q     For the health-care costs, do you have a projection of the annual rate of increase? 

 

                MR. HALE:  For the whole military health system -- that is, the $50.7 (billion dollars) -- it's 4 to 5 percent a year over the FYDP.  For the TRICARE portion of it, the private sector, it's more like 6.  So it's -- 

 

                Q     So if the budget's only going up 1 percent and health is going up 5 percent, I mean, eventually what's going to happen? 

 

                MR. HALE:  Yeah, so you're mixing apples and oranges a little. The budget in nominal terms is going up about 3 percent a year; it's 1 percent in real terms.  So 3 (percent) compares to 4 (percent) to 5 (percent) for health care.  It's not the right trend; we need to look for ways to continue to provide high-quality care but hold down the growth in health-care costs.  And it -- but it's hard to do.  Some of this is being driven by trends in the country as a whole. 

 

                Q     The rise in allowances, does that offset the pay-raise decrease to 1.4 (percent) so that you have a net from the previous two years? 

 

                MR. HALE:  You're looking at basic allowance for housing and subsistence?  So for military personnel, yeah, it'd be a little bit -- for those that are drawing those allowances, yes, it would be -- it would add to the 1.4 (percent) -- 

 

                Q     (Off mike) -- in effect, making it -- raising the pay raise back to 2.9 (percent) or 2.5 (percent)? 

 

                MR. HALE:  Oh, no, it wouldn't go that far.  First off, I mean, the 1.4 (percent), as Admiral Stanley said, fully matches the increase in the employment cost index over the last year.  It will keep military and civilian personnel -- their wages will stay apace with those in the private sector.    

 

                So those getting BH and BAS will get a little more of a total raise, but it wouldn't be 2.9 (percent).   

 

                Sir. 

 

                Q     Sir, you spoke about increasing the number of Predator- class UAVs, and I was wondering if there's any comparable increase plan for other classes, both the larger Global Hawk and the smaller ones. 

 

                MR. HALE:  There are some increases in the smaller Army ones, and I don't know them off-hand.  Can you address that question to the Army -- I think the -- and the other services?  I think you'll do better. 

 

                Who haven't I called on?   

 

                Ma'am. 

 

                Q     Yes.  Thank you.  Tam Mehuron (sp?) with Air Force Magazine.  One of your items, the last one, says terminate NSPS, the new personnel system.  How much will that be?  And is that going to be carried out totally within this fiscal year, or is that a phased-in -- 

 

                MR. HALE:  We hope to have everybody out of NSPS.  We did this, of course, as you know, in response to congressional direction.  We hope to have them all out by the end of this year.   

 

                It is a sizable undertaking.  It's about $260 million of added cost in fiscal year '11; most of that, all but about $23 million (dollars), is higher pay, because as we move people back into the GS, one of the tenets is, nobody loses pay.  So if you're between two steps, you'll go to the higher step.  And that's driving most of those cost increases. 

 

                Q     (Off mike) -- that there will be some funds in this budget for START treaty implementation?  I'm imagining that's the START follow-on treaty that you're referring to.  How much are you allocating, and what will it be for? 

 

                MR. HALE:  Yeah, I wouldn't -- I don't know that I'd say directly for START.  What we do have is strongly supporting the adds to the budget of the National Nuclear Security Administration, which will improve nuclear infrastructure in a variety of ways.  And we think that is an important step towards START ratification.  But I wouldn't put a price tag on START, per se.   

 

                Does that sound right? 

 

                ADM. STANLEY:  It does.  We -- and we're doing something with DOD budgeting, too, for nuclear weapons. 

 

                MR. HALE:  Yes. 

 

                ADM. STANLEY:  So there's several increases -- small --

 

                 MR. HALE:  Smaller things? -- new tail kits on the B-61. 

 

                ADM. STANLEY:  Right.  

 

                MR. HALE:  I mean, there are a lot of smaller programs.  And of course, we're sustaining our triad.  I mean, that's the basic notion, sustaining the sense of continuing to operate it, modest modernization. 

 

                Q     If the U.S. gets a treaty and the treaty is ratified, will there be funding that you need to come back to Congress for in FY '11 to implement? 

 

                MR. HALE:  You know, I'd like -- I'd like to hold off.  I don't think I have a good answer for that one.  Until we see the treaty itself and any protocols, et cetera, I think I'd rather not try to estimate. 

 

                ADM. STANLEY:  Last question. 

 

                MR. HALE:  All right, got one more question.  Anybody I haven't called on?  Let me be fair, here.  I called on you, Tony!   (Laughter)

 

                Yes, ma'am.

 

                Q     (Off mike) -- new ground combat vehicle, how much money are you allocating this year for it?  And --  

 

                MR. HALE:  There's $3.2 billion for all ground forces modernization.  Part of that's the vehicle.  I recall it being around a billion (dollars) of that.  But there are a whole series of other initiatives, mainly to field sensors and other -- and other spin-outs that came from the Future Combat System. 

 

                Q     So the ground -- (off mike) -- alone is $1 billion (dollars)? 

 

                MR. HALE:  I think so.  You remember?  I know it's in there.  Take the billion and double check with the Army, how about that?

 

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