Janes Usdefensefy2013 Abridged

29 February 2012 DoD Budget Analysis – GAE - 1

U.S. DoD Budget:

Strategy / Budget / Projections

“DoD in the Crosshairs”

IHS Aerospace & Defense

Jane’s JDB / JDSF Team

29 February 2012

Guy Eastman

Senior Analyst II

Paul Burton

Senior Principal Analyst


Agenda / Analysis Approach

• The Problem / Situation / Environment

• New Defense Strategy – Key Elements

• Target Reductions

• DoD “Top Line” Budget Baseline and Military Personnel

• Budget Views

• Strategy / Impacts / Implications by Service

• Program Terminations / Divestitures

• Industrial Base Implications

• Conclusion


And More Bad News

U.S. Government National Budget

U.S. Gov't Budget Actual Actual CR Req. Est. Est. Est. Est. Est. Est. Est. Est. Est. Total Total

$B (in current $) FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY12-16 FY12-21

Receipts 2,105 2,163 2,174 2,627 3,003 3,333 3,583 3,819 4,042 4,257 4,473 4,686 4,923 16,365 38,747

Outlays 3,518 3,456 3,819 3,729 3,771 3,977 4,190 4,468 4,669 4,876 5,154 5,422 5,697 20,134 45,952

Deficit (1,413) (1,294) (1,645) (1,101) (768) (645) (607) (649) (627) (619) (681) (735) (774) (3,769) (7,205)

Gross Domestic Product 14,128 14,508 15,080 15,813 16,752 17,782 18,804 19,791 20,755 21,679 22,624 23,608 24,633 88,942 202,241

Receipts as % of GDP 14.9% 14.9% 14.4% 16.6% 17.9% 18.7% 19.1% 19.3% 19.5% 19.6% 19.8% 19.9% 20.0% 18.4% 19.2%

Outlays as % of GDP 24.9% 23.8% 25.3% 23.6% 22.5% 22.4% 22.3% 22.6% 22.5% 22.5% 22.8% 23.0% 23.1% 22.6% 22.7%

Deficit as % of GDP -10.0% -8.9% -10.9% -7.0% -4.6% -3.6% -3.2% -3.3% -3.0% -2.9% -3.0% -3.1% -3.1% -4.2% -3.6%

Defense (Base Budget)* 515.4 530.1 549.1 553.0 570.7 586.4 598.2 610.6 621.6 632.8 644.1 655.7 667.5 2,918.9 6,140.6

Defense as % of GDP 3.6% 3.7% 3.6% 3.5% 3.4% 3.3% 3.2% 3.1% 3.0% 2.9% 2.8% 2.8% 2.7% 3.3% 3.0%

FY13 Defense Base Budget on 13 Feb 2012

Defense (Base Budget)* 515.4 530.1 526.1 530.6 525.4 533.6 545.9 555.9 567.3 577.5 587.9 598.5 609.3 2,691.5 5,631.9

Defense as % of GDP 3.6% 3.7% 3.5% 3.4% 3.1% 3.0% 2.9% 2.8% 2.7% 2.7% 2.6% 2.5% 2.5% 3.0% 2.8%

* does not include OCO

“Significant Deficits as Far as the Eye Can See”


Situation / Environment

• Nation’s debt crossed $15 trillion mark on 15 November 2011

• Budget Control Act of 5 August 2011 placed caps on discretionary spending,

requiring DoD spending reductions of ~ $487 billion over 10 years

• Congress recommended and President signed DoD budget reductions of

~ $24.6B to FY12 DoD Budget

• Joint Select Committee on Deficit Reduction failed to propose a deficit

reduction solution to the Congress and the nation by 23 November 2011

• Sequestration has been “triggered,” but no consensus exists how to address

this major issue

• DoD FY13 Budget submission to President does not include the additional

reductions due to sequestration; PRESBUDG submitted 13 Feb 2012

• Additional sequestration reductions due to become effective in Jan 2013

• Another debt ceiling debate expected in spring 2013 for ~ $3 trillion increase


New Defense Strategy – Key Elements

Excerpts from 5 Jan 2012 Defense Strategy Press briefing:

• Smaller, leaner ground force … priority shift toward the Asia-Pacific region

• Counter violent extremists … counter ballistic missiles and weapons of mass destruction

• No longer sized to support large-scale, long-term stability operations

• Quickly surge or regenerate forces

• Examine active and reserve components mix … strong National Guard and Reserve

• U.S. military capable of engaging more than one enemy at a time

• Innovative, low-cost, small-footprint approaches to achieving security objectives

• Protecting investments for special operations forces, ISR, unmanned and space systems,

cyberspace capabilities, mobilization capacity

• Develop new, long-range stealth bomber for anti-access, area denial environments

• Some military programs would be scaled back, slowed or cancelled

• Others to receive more resources in the budgeting process

• Partner with military industrial base


Target Reductions – Budget Control Act

• $487 billion over ten years (by FY21) IAW Budget Control Act of 2011

• Included in the $487 billion is $259 billion over next five years (by FY17)

with targets of $131 billion in modernization, $68 billion in personnel

and $60 billion in efficiencies

• Sequestration, if implemented fully, could add an additional ~ $500

billion for a total of ~ $1 trillion over ten years

• Active duty End Strength reduction ~ 112,200 from FY11 to FY17

• Civilian positions reduction of ~ 75,000 or more

• Overall funding reduction by FY21 of 8.6% (not counting sequestration)


DoD Budget “Top Line” Baseline (as of 13 Feb 2012 PRESBUDG)

DoD FY13-17 Proposed Outyear BA Topline (in $B current $)

DoD Base Approp. Proposed Proposed Proposed Proposed Proposed Proposed CAGR %

Budget in $B FY12 FY13 FY14 FY15 FY16 FY17 FY13-17 FY12-17

FY 2012 PB 553.1 570.7 586.4 598.2 610.6 621.6 2,987.5 2.4%

FY 2013 PB 530.6 525.4 533.6 545.9 555.9 567.3 2,728.1 1.3%

Delta -22.4 -45.3 -52.8 -52.3 -54.7 -54.3 -259.3

Real Growth* -1.6% -2.5% 0.0% 0.8% 0.2% 0.2% -0.3%

*Real Growth calculated from the FY 2012 Approp. level of $530.6B

DoD Budget Summary

DoD Disc. Budget Approp. Proposed Proposed Proposed Proposed Proposed Proposed CAGR %

$B (in current $) FY12 FY13 FY14 FY15 FY16 FY17 FY13-17 FY12-17

Base Budget 530.6 525.4 533.6 545.9 555.9 567.3 2,728.1 1.3%

OCO 115.1 88.5 50.0 50.0 50.0 44.0 282.5 -17.5%

Total Disc. Budget 645.7 613.9 583.6 595.9 605.9 611.3 3,010.6 -1.1%

DoD Budget FY12-13 Delta

DoD Budget Actual Approp. Proposed Change % Change

$B (in current $) FY11 FY12 FY13 FY12-13 FY12-13

Base Budget 528.2 530.6 525.4 -5.2 -1.0%

OCO 158.8 115.1 88.5 -26.6 -23.1%

Total Disc. Budget* 687.0 645.7 613.9 -31.8 -4.9%


FY13 DoD Budget by Service

FY13

Army

Navy*

Air Force

Defense-Wide

FY13

Army

Navy*

Air Force

Defense-Wide

DoD Base Budget Proposed Proposed

$B (in current $) FY13 in %

Army 134.6 25.6%

Navy* 155.9 29.7%

Air Force 140.1 26.7%

Defense-Wide 94.9 18.1%

Total Budget 525.4 100.0%

* includes Marine Corps

DoD Total Budget Proposed Proposed


Army 184.6 30.1%

Navy* 170.1 27.7%

Air Force 154.3 25.1%

Defense-Wide 104.8 17.1%


* includes Marine Corps

Base Budget in $B Total Budget w/OCO in $B


FY13 DoD Budget by Title

Total FY13 Budget w/OCO = $613.9B

FY13

Military Personnel

Operations & Maint.

Procurement

RDT&E

Revolv. & Mgmt Funds

Military Construction

Family Housing

Miscellaneous

OCO

DoD Total Budget Proposed Proposed


Military Personnel 135.1 22.0%

Operations & Maint. 193.8 31.6%

Procurement 98.9 16.1%

RDT&E 83.2 13.6%

Revolv. & Mgmt Funds 1.3 0.2%

Military Construction 8.7 1.4%

Family Housing 1.7 0.3%

Miscellaneous 2.7 0.4%

OCO 88.5 14.4%


Available $B FY13 Av. in %

Procurement 94.0 95.0%

RDT&E 62.4 75.0%

Operations & Maint. 48.5 25.0%

Total Base Available 204.9 39.0%

OCO 44.3 50.0%

Total Base Available 249.1 40.6%

95% 25%

75%

50%

% Assumptions

Available to Industry


FY13 DoD Budget by Mission Category

26.6%

5.0%

12.6%

6.1%4.5%

5.7%

4.6%

28.2%

6.7%Aircraft

$47.6B

Shipbuilding &

Maritime Systems

$22.6B

Ground

Systems

$10.9BMissile

Defense

$9.0B

Space Based

Systems

$8.0B

Missiles &

Munitions

$10.2B

C4I Systems

$8.2B

Mission

Support

$50.4B

RDT&E S&T

$11.9B

FY13 Total Modernization Accounts (incl. OCO)

$178.8B

Cyber $

distributed

throughout


FYDP vs. Sequestration

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21

DoD Total

FY12 FYDP

FY13 FYDP

Sequestration

1. FY13 FYDP does not include sequestration

2. Assumes 2% growth after FY17

DoD FYDP vs. Sequestration in $M

$M


U.S. Army


569,400 active duty Army personnel Reduce by 79,400 by FY17 End strength at 490,000 in FY17

Ground Combat Vehicle development Program delayed (protest resolved) Free up resources for higher priority

Joint Light Tactical Vehicle buy Commit resources to JLTV buy More modern equipment

4 heavy brigades in Germany Redeploy 2 heavy brigades to U.S. Strengthen Reserve Component

Aging Army aviation assets Delay helo modernization 3-5 years More risk in Army aviation

45 active Brigade Combat Teams Remove at least 8 BCTs Maximum of 32 - 37 BCTs

Army Special Operations Forces Release SOF assets to COCOMs Aligning forces to support COCOMs

Army Reserve Component Only marginal Reserve reductions Capable and ready Reserve Comp.

Joint Air-to-Ground Munition (JAGM) JAGM significantly reduced Hellfire as alternative missile

JLENS Cruise Missile Defense Curtailed JLENS due to cost A risk area

Army Gray Eagle UAV Protected funding for Gray Eagle ISR / Counter-terrorism capability

Joint Tactical Radio System (JTRS) Cancel JTRS Ground Mobile Radio Search for more cost effective radio

NATO and National Guard operations Strengthen partnerships / innovation Rotational training exercises

Army Strategy

“As Is” Change Result

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Army Aircraft Procurement Army Aircraft Quantity in Units POM Total Total POM Delta TP Delta

Program FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY12-17 Program FY12-17 FY12-17

MQ-1 Gray Eagle UAS 26 29 29 19 15 15 78 107 0 -26

RQ-11 Raven SUAS 876 312 900 234 189 204 153 1,680 2,100 0 -768

UH-72A Lakota LUH 54 50 39 34 31 10 114 164 1 -181

AH-64 Apache BL IIIA Reman. 8 16 19 40 38 37 44 37 215 260 -24 -374

AH-64 Apache BL IIIB New 10 10 11 4 11 46 65 -11 8

OH-58 Kiowa Warrior WRA 9 16 25 25 25 25

UH-60 Blackhawk M MYP 81 99 72 59 57 56 65 53 362 560 -69 -1,359

CH-47F Chinook 37 49 48 44 28 30 39 27 216 383 -16 8

Total 1,082 555 1,116 456 368 363 305 128 2,736 3,664 -94 -2,667

FY13 PRESBUDG

Reduction of 94 Aircraft and $1.0B in Plan Period (- 4.1%)

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17

CH-47F Chinook

UH-60 Blackhawk M MYP

OH-58 Kiowa Warrior WRA

AH-64 Apache BL IIIB New

AH-64 Apache Bl IIIA Reman.

UH-72A Lakota LUH

RQ-11 Raven SUAS

MQ-1 Gray Eagle UAS

FY12 Aircraft Total

Remarks:

• Large number of

UAS being procured

• Blackhawk and

Chinook helos drive

Army aircraft plan

• Large cut in Blackhawk

helo production

$M


Army Procurement and R&D

Funding Drivers

General Reductions in Procurement and R&D in Plan Period

Large Reductions in:

• Family of Medium

Tactical Vehicles

• HMMWV Recap

• Guided MLRS Rockets

Large Increases in:

• Hellfire II Missiles

• WIN-T Tactical Network

• JTRS (restructure)

$M

0

2,000

4,000

6,000

8,000

10,000

12,000


R&D: MQ-1 Gray Eagle UAV

R&D: Aerostat JPO (JLENS)

R&D: Joint Light Tactical Veh ED

R&D: Ground Combat Vehicle

R&D: Army Int. Air & Missile Def.

R&D: PAC-3 / MSE Missile

R&D: Patriot / MEADS CAP

R&D: WIN-T Dem / Val

JIEDDO PO Funding

WIN-T Ground Tact Network

Joint Tactical Radio System

Guided MLRS Rocket

Javelin Missile

Hellfire II Missile

Patriot PAC-3 Missile

HMMWV Recapitalization

Family of Heavy Tact Veh

Family of Medium Tact Veh

JLTV (OY) Production

Abrams Upgrade Program

Impr. Rec. Vehicle Hercules

Stryker Vehicle

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Implications by Service – Army

• Army will become smaller and leaner, but still larger than in 2001

• Reduce at minimum 8 Brigade Combat Teams out of 45 today

• Prolonged, large-scale stability operations not anticipated

• Maintain Reserve Component for regeneration / reversibility

• Retain mid-grade NCOs and commissioned officer for experience levels

• Anticipate redeployments of overseas brigades to home station

• Modernization accounts will not be sufficient to reset all war equipment

• Delay in Army aging aviation asset modernization

• Strengthen partnerships with NATO / Allies through rotational deployments

Smaller, Leaner, More Agile

Base Budget Increase of $0.65B from FY12 to FY13

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U.S. Navy


11 aircraft carriers / 10 air wings No change CVNs / Air Wings maintained

22 Aegis cruisers / 61 Aegis DDGs Retire 7 Aegis CGs early 15 Aegis CGs / building to 75 DDGs

8 + 1 LHD / LHA “big deck” amphibs No change / slip new LHA by 1 year “Big deck” amphibs / lift maintained

5 LPD 17 class + 12 LSD 41 class Retire 2 LSDs early Reduced USMC lift until more LPD 17

2 LCS ships / more in construction Reduce by 2 LCS in FYDP Minor slowdown/station in Singapore

53 attack submarines (SSNs) Slip 1 SSN 774 class outside FYDP Slowdown / risk in Virginia buildout

Virginia 12 cruise missiles per boat Increase cruise missile capacity Future SSN 774 class greater clout

14 Ohio FBM (Trident) submarines Delay SSBN(X) replacement by 2 yrs Aging Ohio-class service extension

No SSN conventional prompt strike Design prompt strike option Greater submarine power projection

F-35C (CV) JSF testing / LRIP prod. Slowed procurement / more testing Minor reduction in JSF POR number

Current JHSV plan for 18 ships Reduce FYDP JHSV build by 8 ships JHSV buildout truncated to 10 ships

MRMUAS program development Program cancelled / R&D saved MQ-8C FireScout solution possible

328,700 active duty Naval personnel Reduce by 9,200 personnel by FY17 End strength at 319,500 in FY17

Navy Strategy



Navy & NDSF FY13 Shipbuilding Plan

10 Ships of 5 Types Funded in FY13; 47 Ships in FYDP

Pink shade indicates change from FY12 plan

• Low point of Navy SCN plan is FY14 with only 6 ships funded for a total of $12.9 billion

• Aegis Modernization of cruisers and destroyers taking place in plan period, but funded with OPN and O&M,N

• 10 ships taken out of plan since FY12 USN Budget (6 are JHSV)

• In National Defense Sealift Fund, 0 ships funded in FY13, but 5 ships funded in the FYDP

New Construction Ships in Units POM Total Total POM Delta TP Delta


CVN Replacement 1 1 3 0 0

Virginia SSN 1 2 2 2 1 2 2 2 11 30 -1 0

DDG 51 1 2 1 2 1 2 2 2 10 75 0 0

LCS 2 2 4 4 4 4 2 2 20 55 -3 0

LPD 17 1 1 11 0 0

LHA 6 1 1 1 3 0 0

JHSV 1 1 2 1 0 0 0 0 3 6 -6 -12

New Construction 5 8 10 10 6 8 6 7 47 183 -10 -12

CVN Refueling OH 1 1 2 0

AGOR & Other 1 1 1 1 3 1

Service Craft 2 2 1 0 3 3 5 5 17 52 3

LCAC SLEP 3 4 4 2 4 4 4 4 22 -1

Modernization 5 7 6 3 7 8 10 10 44 52 3

NDSF:

T-ATF(X) 2 2 2 1 1

MLP / AFSB 2 1 1 2 4 0 1

T-AO(X) 1 1 1 1 1

T-AKE 2 0 14 0 0

NDSF Funded: 2 2 1 0 1 0 3 0 5 21 2 3

FY13 PRESBUDG


Navy SCN Funding Plan

• USS Gerald R. Ford (CVN 78) under construction

• USS George Washington (CVN 73) RCOH

• Continue Virginia-class SSN build out to 30 boats

• Zumwalt-class (DDG 1000) under construction

• Continue Arleigh Burke Aegis DDG build out to 75

• Continuing LCS build out to POR of 55 ships

• Last ship of San Antonio-class (LPD 17)

• Building America-class LHA “big deck” amphibs

• Current JHSV plan for 6 ships; 6 cut from plan

• 3 LCSs taken out of plan

• A total of 10 ships taken out of FY13 plan

Plan Elements (FY12 – FY17)$M

$6.23B (6.3%) Taken out of SCN 0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000


Other Ship Programs

JHSV

LHA 6

LPD 17

LCS

DDG 51

DDG 1000

Virginia SSN

CVN Refueling OH

CVN Replacement

FY12 SCN Plan


Navy FY13 Aircraft Procurement Plan(Only APN BA 1-4 new aircraft)

191 Aircraft / UAVs Funded in FY13; 974 A/C / UAVs in FYDP


• Low point of Navy APN plan is FY17 with 111 aircraft / UAVs funded for a total of $12.1 billion

• 117 aircraft / UAVs taken out of plan since FY12 USN Budget, including 79 F-35 JSF aircraft

• Table includes USMC “Blue dollars” to procure USMC aircraft and UAVs (see red arrows)

Aircraft Procurement Quantity in Units POM Total Total POM Delta

Program FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY12-17 Program FY12-17

EA-18G Growler 22 12 12 12 24 114 0

F/A-18E/F Super Hornet 18 31 28 26 13 67 565 0

F-35C Lightning II (CV) 20 7 7 4 4 6 9 14 44 321 -54

F-35B Lightning II (STOVL) 3 6 6 6 6 9 14 47 290 -25

V-22 Osprey (MYP) 30 30 30 17 18 19 19 18 121 408 -24

UH-1Y / AH-1Z Helos 27 31 25 27 26 27 26 31 162 348 1

MH-60S (MYP) Helo 18 18 18 18 18 8 62 275 0

MH-60R (MYP) MM Helo 24 24 24 19 19 31 38 131 289 -9

P-8A Poseidon MMA 6 7 11 13 17 20 20 13 94 107 -10

E-2D Adv. Hawkeye 3 5 5 5 5 7 6 7 35 113 -10

T-6 Texan II JPATS 36 33 31 100 100 40

KC-130J Hercules 1 2 2 2 2 9 104 -7

RQ-4 BAMS UAS Adv. Proc. 3 4 4 5 16 65 16

MQ-8 Fire Scout UAV 12 3 12 6 7 7 8 6 46 168 -24

STUAS (Lite) 60 5 5 5 15 75 -5

Other Aircraft 6 1 0 0 0 0 0 1 1 19 -6

Total 186 232 215 191 174 142 141 111 974 3,361 -117

FY13 PRESBUDG


• 54 F-35C (CV) taken out of FY13 plan

• 25 F-35B (STOVL) taken out of FY13 plan

• Navy reduced F-35C total requirement by 48 A/C

• USMC reduced F-35B total requirement by 21 A/C

• 24 USMC V-22 Osprey taken out of plan

• 9 MH-60R helos taken out of plan and req’t

• 10 P-8A Poseidon MMA A/C taken out of plan / req’t

• 10 E-2D Adv. Hawkeye taken out of plan

• Added 40 T-6 JPATS but cut req’t by 195 aircraft

• Added RQ-4 BAMS Adv. Procurement

• A total of 117 aircraft / UAVs taken out of FY13 plan


$12.1B (13.3%) Taken out of APN 0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

FY10FY11FY12FY13FY14FY15FY16FY17

Other Aircraft

STUAS (Lite)

MQ-8 Fire Scout UAV

RQ-4 BAMS UAS Adv. Proc.KC-130J Hercules

T-6 Texan II JPATS

E-2D Adv. Hawkeye

P-8A Poseidon MMA

MH-60R (MYP) MM HeloMH-60S (MYP) Helo

UH-1Y / AH-1Z Helos

V-22 Osprey (MYP)

F-35B Lightning II (STOVL)F-35C Lightning II (CV)

F/A-18E/F Super Hornet

EA-18G Growler

FY12 APN 1-4 Plan

Navy APN Funding Plan(Only APN BA 1-4 new aircraft)


Implications by Service – Navy

• 11 CVNs and 10 Air Wings maintained for power projection in contested anti-access / area denial (A2/AD) environments

• Early surface ship retirements, shipbuilding program delays and cost increases push out date for 313 ship Navy

• Rebalancing to Asia-Pacific means renewed emphasis on air and naval forces

• Strategy includes forward basing ships in Japan, Rota, Singapore, Bahrain

• F-35C JSF (CV) procurement slowdown means 54 less aircraft in near-term

• Aegis Ballistic Missile Defense needed for robust homeland defense

• Two-year SSBN(X) development delay puts strain on Ohio-class FBM SSBNs

• Increased emphasis on SOF (SEALS) for COCOM support

• A robust shipbuilding industrial base is critical to the success of the Navy

313 Ship Navy Still over the Horizon

DoN Base Budget Reduction of $0.91B from FY12 to FY13


U.S. Air Force


Current bomber fleet Minor change, reduce B-1B by 6 A/C Maintained bomber fleet for AA/AD

No new bomber Increase funding for new bomber Protect power projection forces

ICBM inventory Fewer silos / reduce inventory Maintain ICBM deterrent with less

F-35 JSF testing / LRIP production Slowed procurement / more testing Committed to long-term JSF POR

A-10 / F-15 / F-16 squadrons Retire 5 A-10, 1 F-15, 1 F-16 squadrons ~ 135 less tactical aircraft (102 A-10)

Aging C-5A airlifter fleet Retire 27 aging C-5A Galaxy A/C 52 C-5Ms and 222 C-17 aircraft

Aging C-130 fleet Retire 65 of oldest C-130 Hercules 318 C-130 aircraft

38 C-27J Joint Cargo Aircraft Divest current and planned C-27J Employ C-130 aircraft in mission

RQ-4 Global Hawk fleet Cancel Global Hawk Block 30 A/C Other RQ-4 blocks / extend U-2

MQ-1/9 Predator / Reaper fleet Sustain 65 MQ-1/9 CAPs 65 CAPs with surge to 85

Existing space satellites Protected $ for SBIRS, AEHF, GPS Maintain ISR, comm, navigation

Defense Weather Satellite System Terminate DWSS program Program premature to need

332,200 active Air Force personnel Reduce by 3,600 personnel by FY17 End strength at 328,600 in FY17

Air Force Strategy



USAF FY13 Aircraft Procurement Plan(Only APAF BA 1-4 new aircraft)

74 Aircraft / UAVs Funded in FY13; 642 A/C / UAVs in FYDP


• Low point of USAF APF plan is FY13 with 74 aircraft / UAVs funded for a total of $5.3 billion

• 135 aircraft / UAVs taken out of plan since FY12 USN Budget, including 99 F-35A JSF aircraft

Aircraft Procurement Quantity in Units POM Total Total POM Delta

Program FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY12-17 Program FY12-17

F-35A Lightning II 10 25 18 19 19 32 48 48 184 1,763 -99

F-22 Raptor 0 179 0

C-17A Globemaster (MYP) 10 1 1 224 1

C-130J Hercules 4 8 1 12 10 7 30 134 -3

HC-130 Recapitalization 4 3 1 3 2 4 2 15 37 -1

MC-130 Recapitalization 5 6 4 7 2 5 5 29 69 3

HC/MC-130 Recap 2 0 15 0

AC-130 Recapitalization 1 2 5 8 16 -8

C-27J JCA 8 8 9 9 25 0

C-12A 5 0 42 0

C-40 3 0 6 0

C-37 1 2 3 3 7 0

Light Mobility Aircraft 15 0 15 0

USAFA Powered Flight 13 12 0 25 0

T-6 Texan 0 452 0

Common Vert. Lift Sppt. 2 2 2 -26

CV-22 Osprey 5 6 5 4 3 12 49 -1

HH-60M Operational Loss Repl. 4 16 4 4 24 0

Light Attack Armed Recon A/C 6 6 6 -9

RQ-11 Raven B 50 0 50 0

RQ-4 Global Hawk 4 4 3 3 45 -10

MQ-9 Reaper 24 48 48 24 24 24 24 24 168 401 -72

STUASL0 33 25 22 22 80 22

Target Drones 9 15 18 20 25 25 103 112 25

Civil Air Patrol 5 18 5 5 5 5 5 43 76 43

Interim Gateway 1 0 1 0

Total 127 242 150 74 96 95 118 109 642 3,855 -135

FY13 PRESBUDG


USAF FY13 APAF Funding Plan(Only APAF BA 1-4 new aircraft)

• 99 F-35A (CTOL) taken out of FY13 plan

• Last F-22 Raptor delivered (179)

• C-17A Globemaster production essentially done

• Buying 30 C-130J Hercules in plan

• Investing in HC/MC/AC-130 recapitalization – 52 A/C

• Divested C-27J Spartan JCA

• Ordered 12 CV-22 Osprey in plan

• Cancelled RQ-4 Global Hawk Block 30 airframe

• Took 72 MQ-9 Reaper UAV out of plan

• A total of 135 aircraft / UAVs taken out of FY13 plan

• A 27.7% reduction in FY13 alone


$12.5B (22.7%) Taken out of APAF 0

2,000

4,000

6,000

8,000

10,000

12,000


Other Aircraft

Target Drones

STUASL0

MQ-9 Reaper

RQ-4 Global Hawk

RQ-11 Raven B

Light Atk Armed Rec.

HH-60M Oper. Loss

CV-22 Osprey

Common Vert. Lift

Light Mobility Aircraft

C-37

C-27J JCA

AC-130 Recap.

MC-130 Recap.

HC-130 Recap.

C-130J Hercules

C-17A Globemaster

F-22 Raptor

F-35A Lightning II

FY12 APF 1-4 Plan


USAF FY13 Missiles & Space

Procurement Plan

USAF Scaling Back Its Missile Procurement

• USAF procuring 919 fewer Missiles in FY13 Plan and requirement dropped by 507 Missiles

• USAF procuring 1 additional satellite in FY13 Plan, but requirement increased by 18 satellites (i.e., GPS III)

Missiles & Space OPF Budget in Qty POM Total Total POM Delta TP Delta


Missiles:

JASSM 0 171 142 157 163 204 360 360 1,386 4,900 54 0AIM-9X Sidewinder 219 178 125 164 150 248 153 153 993 5,030 -447 0

AGM-114 Hellfire 1,175 938 678 693 412 419 419 419 3,040 9,889 223 -11

AMRAAM 170 246 138 113 195 211 230 229 1,116 11,778 -749 -496

Total Missiles 1,564 1,533 1,083 1,127 920 1,082 1,162 1,161 6,535 31,597 -919 -507

Space:

Advanced EHF 1 2 2 4 -2 -2

Wideband Gapfiller Satellites 1 2 2 8 1 1

GPS III Space Segment 2 2 2 2 2 3 13 30 2 19

Evolved Expend. Launch Veh. (EELV)3 3 4 4 5 5 5 5 28 150 0 0

SBIRS High (Space) 1 1 2 2 6 0 0

Total Space 5 5 10 8 7 7 7 8 47 198 1 18

FY13 PRESBUDG


USAF FY13 Missiles & Space

Procurement Plan

USAF Spending More on Satellite Procurement

0

200

400

600

800

1,000

1,200


AMRAAM

AGM-114 Hellfire

AIM-9X Sidewinder

JASSM

FY12 Missiles

0

1,000

2,000

3,000

4,000

5,000


SBIRS High (Space)

Evolved Expend. Launch Veh. (EELV)

GPS III Space Segment

Wideband Gapfiller Satellites

Advanced EHF

Missiles:919 fewer missiles;

$608M less funding

in plan period;

JASSM & AMRAAM

are drivers

Satellites:1 add’l satellite;

$1,800M more

funding in plan period;

GPS III up to 30 as

requirement;

EELV is driver

$M

$M


Implications by Service – Air Force

• Rebalancing to Asia-Pacific means renewed emphasis on air and naval

forces for power projection in contested A2/AD environments

• Current bomber force maintained and new generation bomber funded

• Maintain ICBM deterrent with fewer missiles

• F-35A JSF procurement slowdown means 99 less aircraft in near-term

• Buying only 54 new aircraft in FY13 – the low point of procurement

• Retirement of one F-15, one F-16 and five A-10 squadrons plus 27 C-5A,

65 C-130 and 38 C-27J airlifters means ~ 227 less tactical aircraft

• KC-46A tanker a critical development effort over next 10 years

• Aging aircraft will get older before replacement

Fly, Fight and Win in Air, Space and Cyberspace

Base Budget Reduction of $4.8B from FY12 to FY13


U.S. Marine Corps


USMC force structure in Pacific AOR Maintain force structure in Pacific Maintain presence in contested areas

USMC force structure in Middle East Maintain persistent presence in ME Return to afloat posture

MARSOC / SOF forces Increase emphasis on MARSOC Increase personnel in SOCOM

F-35B JSF STOVL testing Continue testing / start LRIP prod. Slowed F-35B procurement

MV-22 Osprey fleet Continue 408 MV-22 MYP build Improved afloat lift capabilities

Expeditionary Fighting Vehicle (EFV) Previously cancelled EFV program Search for modern afloat assault veh.

Aging HMMWV fleet Upgrades deemphasized Focus on JLTV development / buy

Simulation & Training structure Continue S&T emphasis Better trained Marines for COCOMs

Remotely Piloted Vehicle (RPV) fleet 4 initiatives underway * Ensure persistent ISR capability

202,100 active duty USMC personnel Reduce by 20,000 by FY17 End strength at 182,100 by FY17

Marine Corps Reserve at 39,600 Unchanged Maintain USMC Reserve as is

* MCTUAS, CRUAS, STUAS, & SUAS

Marine Corps Strategy



Marine Corps Procurement

USMC PMC “Green Dollars”

PMC Driven by EOD, LAV PIP and Radar Systems

• PMC account drivers: Explosive Ordnance Disposal, Light Armored Vehicle Product Improvement, Radar systems

• USMC procuring 869 fewer Medium Tactical Vehicle Replacement for motor transport

• USMC procuring an additional 146 Heavy Tactical Logistics Vehicles

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000


Other PMC Programs

EOD Systems

Logistics Veh. Sys. Repl.

Med. Tactical Vehicle Rep.

Radio Systems

Command Post Systems

Common Computer Res.

Intelligence Support Equip.

Radar Systems

Air Ops C2 System

SMAW Follow-On Rocket

HIMARS

155mm LW Towed HowitzerExp. Fire Support System

LAV PIP

FY12 PMC

$M


Implications by Service – Marine Corps

• Marine Corps will become smaller by 20,000, but still larger than in 2001

• Retire 6 of 41 Battalion Landing Teams and 4 of 20 tactical air squadrons

• Marine Corps force structure in Asia-Pacific AOR maintained

• Marine Corps to return to afloat / amphibious operations mission

• F-35B JSF STOVL procurement slowdown means 25 less aircraft in near-term

• MV-22 Osprey procurement providing needed lift capability for amphibious ops

• Expect an increase in SOF (MARSOC) forces and funding

• Investment in Joint Light Tactical Vehicle (JLTV) development expected

• Expect continued investment in Simulation and Training of Marines

Smaller, But Still Mission Focused

DoN Base Budget Reduction of $0.91B from FY12 to FY13


Defense-Wide


Ballistic Missile Defense programs Protected homeland defense / EPAA Reduced regional defense / Allies

AN/TPY-2 BMD radar build Reduction in procurement quantity Less regional missile defense

THAAD missile production Reduction in procurement quantity Rely on Allies missile defense

Cyber capabilities Increase investment in cyber ops Improved defensive / offensive ops

Special Operations Forces assets Release to COCOMs / other regions Maintain / improve SOF

Counter weapon of mass destruction Protected investment Expanded to biological weapons

ISR capabilities New unmanned advanced systems Combat counter-terrorism

Science & Technology (S&T) base Largely protected Maintain competitive edge

Military pay Full pay raises in FY13 & FY14 Limited pay raises starting in FY15

DoD civilian end strength Reduce civilian staffing / pay freeze Reorganizations / consolidations

Existing health care benefits Increase TRICARE fees / copays Better cost control

Wounded Warriors, families, veterans Sustain & enhance support programs Respond to troops / families’ needs

Military retirement benefits Special commission review benefits Only future recruits to be affected

Defense-Wide and Across the Board

Strategies



Defense-Wide BMD Procurement

BMD Missile Procurement Slowed, Especially THAAD “Regional” Defense

BMD Procurement, DW in Quantity POM Total Total POM Delta TP Delta


THAAD Missile 26 22 42 36 36 36 36 36 222 453 -112 0

Aegis BMD SM-3 Missile 18 26 46 29 69 82 77 72 375 450 -46 10

BMDS AN/TPY-2 Radar 1 2 1 3 4 -7 -7

SubTotal 45 48 90 66 105 118 113 108 600 907 -165 3

FY13 PRESBUDG

0

500

1,000

1,500

2,000

2,500


BMDS AN/TPY-2 Radar

Aegis BMD

THAAD

FY12 Missiles / Radar

BMD Funding Scaled Back, in THAAD and in Radar Assets

$M


Defense-Wide BMD RDT&E

BMD Program RDT&E Funds Slowed, Especially Test and Targets

BMD R&D Funding Scaled Back $1.7B (- 4.2%)

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000


FY13 PRESBUDG

All Other MDA R&D Programs

Next Generation Aegis Missile

Aegis SM-3 Block IIA Co-develop.

Land-Based SM-3

Aegis BMD

BMD Sensors

BMD Test and Targets

BMD Terminal Defense (THAAD)

BMD Mid-Course (GMD)

FY12 BMD RDT&E

• MDA scaled back RDT&E funds in BMD Tests & Targets, THAAD and Next Generation Aegis Missile

• MDA plussed up Aegis SM-3 Block IIA Co-development with Japan and Mid-Course GMD

$M


F-35 JSF Budget Projections

F-35 JSF Program Slowed by 179 A/C and $15.1B in Next 5 Years

F-35 JSF Procurement Quantities

F-35 JSF Procurement Funding in $M

Qty

$M

0

20

40

60

80

100

120

140


USMC F-35B STOVL

USN F-35C CV

USAF F-35A CTOL

FY12 F-35 JSF

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000


USMC F-35B STOVL

USN F-35C CV

USAF F-35A CTOL

FY12 F-35 JSF

0 -8 -1 -13 -33 -37 -42 -53 = -179 Total Reduction

0 -$1.7B -$0.3B -$1.5B -$2.9B -$3.3B -$3.5B -$3.7B = -$15.1B Total Reduction


Army Navy – Marine Corps

JTRS – Ground Mobile Radio (GMR)

Joint Air-to-Ground Munition (JAGM)

Ground Combat Vehicle (GCV) (protest delay)

EMARSS Reconnaissance / Surveillance aircraft

HMMWV Medium Expanded Capacity Vehicle

Family of Medium Tactical Vehicles (FMTV)(FY14)

Joint Precision Approach and Landing System

(JPALS)

Joint Land Attack Cruise Missile Defense

Elevated Netted Sensor System (JLENS)

Mounted Soldier System (MSS)

Joint Air-to-Ground Munition (JAGM)

Medium Range Maritime Unmanned Aerial

System (MRMUAS)

Expeditionary Fighting Vehicle (EFV) (USMC)

Air Force Defense-Wide

Global Hawk Block 30

Defense Weather Satellite System (DWSS)

Divest C-27J Joint Cargo Aircraft (JCA)

Divest 227 tactical aircraft

Defund C-130 Aviation Modernization Program

Light Mobility Airlifter (LiMA)

Light Attack Armed Reconnaissance (LAAR)

Airborne Laser (ABL) retired (MDA)

Sea-Based X-Band (SBX) Radar retired?

Program Terminations / Divestitures


Industrial Base Implications

• Concentrate on affordability and PERFORM, PERFORM, PERFORM

• Know your core competencies and apply them to the markets

• Utilize procurement Multi-Year Plans (MYPs) for savings, wherever possible

• Pursue growth in niche areas of cyber, ISR, SOF, RPVs and missile defense

• Control unit price increases as procurement base decreases

• Consolidate manufacturing where overcapacity exists

• Maintain innovation / advanced technology as Gov’t R&D funds will decrease

• Employ smart partnering / alliances to buy down risk and distribute investment

• Solidify supply base through teaming / distributing risk

• Pursue Simulation and Training opportunities where they exist

• Attend to your people – morale, training, listening, daily communications

Strategize, Understand Customers and Markets, Invest Wisely

Reduction of $487B through FY21 is an 8.6% reduction


Conclusion

• Build down underway for smaller, leaner, more affordable defense posture

• Need to protect the All Volunteer Force through this period

• Defend the homeland / support missile defense capability

• Rebalance force structure to emphasize Asia-Pacific region

• Manage a smaller nuclear deterrent profile

• Maintain innovation / cutting edge technology for competitive edge

• Manage decrease in Modernization accounts

• Monitor / protect military industrial base as much as possible

• Manage inherent risks of this build down

Yet … Remain the Strongest Military Force in the World

Reduction of $259B from FY13 to FY17; $487B through FY21

Janes Usdefensefy2013 Abridged

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