Transcripts For CSPAN2 Armed Services Officials Brief On FY 2018 Budget 20170524

[inaudible] this breathing will be 40 minutes in duration and on the record. Well start off with opening comments with both gentlemen and the will open the 44 questions. Good morning, good afternoon. It is good to see you all. Im not going to do a dramatic reading of the book. I promise it is there for reference in case i have to go to a. We walked your presentation of the budget here between the general and myself we will try to answer questions as best we can. Today president johnson to congress his proposed budget requests. What will do is outline the request for the Defense Department. And so go to the first light please and so the messages on the first slide is the intent is that fy 18 budget request be the next step in the armed forces. Secretary mattis from virtually the first day he was in the building he talked in terms of a threestep process on how to get there in terms of getting ready, getting balanced and getting bigger and more lethal. Her request in fiscal year 2017 for Additional Resources and culminating it in the fy 17 appropriations act was intended to address nearterm readiness. With Additional Resources we get any fy 17 budget. Were in the process of implementing that as we speak. With this budget request we will build on the readiness improvements for the remainder of this fiscal year and add resources to balance the force. I will walk through the examples where will do that. Ultimately thats not the end of the journey. Our goal is that 2019 we will sustain the gains were able to make an 2017 and 2018. By that time informed by the new Defense Strategy will build further to achieve a bigger more lethal and ready force. The base budget request is 574. 5 billion. The overseas Contingency Operation budget is 64. 6 billion for a total of 639. 1 billion. This request is 52 billion above the Defense Departments share of the fy 2018 budget cap in the current law. The budget and control act. Its essential for us to achieve the goals and meet the strategy, we must increase the Defense Budget cap. We have to reverse sequestration in order to adequately protect National Security. Since enactment of the control act in 2011 the world is becoming a more dangerous place with rising terrorism and more aggressive adversaries. Under the budget control act the military has during the same time become smaller, readiness has eroded a modernization has to for. That is not a good place to be. This budget begins to balance the Defense Program and establishes a foundation for rebuilding the u. S. Military into that more capable lethal and ready force. Here are some of the major themes from a budget perspective that informed the building of this budget. Again as i continue to emphasize improving readiness has been priority one for secretary mattis, what is that mean . What will result in . More aircraft in the air, more ships at sea, more troops in the field the more munitions on hand to rebuild the current force. This also addresses the National Security challenges we need to retain our counterterrorism and counterinsurgency competencies. We want to seek to preserve our advantages and our capability for new war fighter concepts. One of the highest priorities to recapitalize an enterprise we prioritize key investment in cyberspace capabilities. We continue to focus on innovation as a way to maintain advantage and we seek to sustain a fighting force in the world. Sensitive to the fact that were asking a lot of money we look to continue to identify pursue reforms to achieve cost savings. Like any good budgets i have a couple of graphs. What this slide is is a picture of the Defense Budget since 911. The base budget i draw your attention to the most important thing of the last two bars on the right ever fiscal year 17. Again, theyre the numbers i alluded to. The 574 billion. In addition theres also a significant increase in the enacted fy 17 level which was 523 billion. The overseas budget is a distorted picture. I caution you as the appropriations act was finalized the congressional committees put all of the Additional Resources we requested all into the overseas operation budget. So that makes your comparisons from 17 to 18 a little difficult. It offers me a chance to apologize for a difficult comparison between any fy 17 numbers and fy 18 numbers. It has to do with what was happening and when we had to lock this 18 budget and when it had not concluded yet. So depending on which book you have, or were providing for you today and overview book and the like, the numbers you see there for the fy 17 column by the request number. Thats because we didnt have those numbers available to us. As we look at the budget documentation all the books they had virtually all of their fy 17 numbers are mathematical calculation of a yearlong continuing resolution. Its a mathematical number that doesnt have any particular basis. So that distorts the comparisons between 17 and 18. The selectively i did pick up the enacted numbers. But be aware that weve been playing catchup since we block the budget. And then we are making our final decisions on fy 18. Its unfortunately the nature of the timing to put the two processes through the paces. Basically a bit of an expansion on the previous slide to show you the plus 52 billion. We sit on the right the calculated budget and control act, the dod cap will be around 522 billion. Our request is 52 billion above that. The capacity to and capability and Mission Preparedness of our units. This supports Combatant Commander exercises and engagement to increase during training capability and investing critical aviation munitions and isr and support of Combatant Commander theater activities. Next chart. This chart describes the service that highlights Service Specific increases or investments intended to increase readiness and so you see here under each of these Service Entries areas that we will invest in regarding training, equipping maintaining the force at higher levels than we had been under previous years where decisions were made to ensure that the force is always ready to accomplish the mission to deploy to the theaters of operation that we are engaged in today while in some way sacrificing the longterm readiness of the force in the modernization of the force. Fiscal year 18 as we say fills those holes and allows them to recover the readiness in the aspect in the full spectrum readiness, readiness to operate in different theaters against different adversaries over different periods of time. This budget allows us to be able to recover that readiness and establish a baseline for which to move forward from as we look to the future. Next slide a very busy slide with lots of numbers mostly to provide that information. The only Important Message on that slide is the righthand column in the bumper sticker. With this budget does it sustains essentially an increase in end strength over 56,000 from what the team column in fy17 budget was. To some extent predicted the army was inherent in fy17 authorization act. The pickup and continue to fund that paid there were minor increases you see in the middle column in the Navy Marine Corps and air force. For the most part this continues the momentum to building the force as we go forward. As i alluded to the National Defense Defense Strategy and we will figure out what is the appropriate force structure to execute the Defense Strategy when thats done in fy19 budget. Next slide please. This gives you Market Basket of some of the major Acquisition Programs. Its not allinclusive. The big ticket drivers if you will. The dollars you see on the slider combination of procurement and r d dollars in the base budget. You will see in terms of aircraft you see the biggest Acquisition Program we continue to have the f35 joint strike letter program. We are requesting 70 aircraft and fiscal year 17. Those aircraft are broken down into 46 aircraft for the air force. Which is the f. 45 00 a. M. Asking for 20 aircraft for the marine craft variant in for aircraft for the navy variants. You can see we are asking for four, f18s another aircraft as well. To be 21 are purely r d. We have essentially a combat ships we are requesting an athlete teen. A rescue ship ata gf as well so we are asking for eight ships. These are the ships in terms of two submarines to destroyers and lcs. You see the continued investment Space Programs three launches finance an athlete teen opry will be procured under competitive acquisition process. I want to stop this particular slide. As we close out this budget over the last two or three weeks particularly great deal of concern was raised for current inventory levels and particularly given some of the expenditures in the centcom area of operations as we have talked so the secretary mandated and assisted that we fully fund as maxim to the extent possible for full production capability things like the and the multiple launch rocket system. This is only half the story. There was another billion dollars of deferred emissions overseas Contingency Operations. You see there is like the brown system for the amphibious combat and the marine corps and the multipurpose vehicle. This is the first year determined for both of those programs. The total missile Defense Program and athlete teen is 10 billion in these are the two major programs in that portfolio. Please. This again is a select if set of examples. They were unclassified and i will give you some some examples of some of the things we have done in past years in terms of opus on transparency and innovation. Amar mind we have funded a robust Science Technology program 13. 2 billion and then we offer you a couple of examples in terms of alternate Navigation Technology directed energy kinds of efforts highspeed strike weapons lowcost Unmanned Systems and in particular on the bottom reacting to current changes in the threat in the field we are investing across dod to counter the Unmanned Aerial Systems that we are countering even today. This is a Market Basket of our continued concern with investing in new innovations in technology. Next slide, please. We are pretty please with their situation with facilities investments. This is an area where when you get constrained budgets and you have lower toplines you tend to take risks and tend to divert or you want to wait to fix that window until the next year as long as the ref is not leaking or Something Like that. This era faksa. 5 increase in military construction budget going from 7. 8 ilion dollars to 9. 8 billion. Theres a readiness nexus as well. We are investing in operating and Training Facilities and maintenance and production facilities in particular. As far as overseas we invest in infrastructure to support the relocation of marines from japan to guam and we are seeking the authority to commence a realignment close around in 2021. In order to get around in 2021 you have to begin the analysis in the process here. Its been over 10 years since we have had eight 2005 was the last year. The sum total of the four firebrands we have had since the 1990s and 2005 has resulted in approximately 12 billion a year in savings by having done that that is a gift that keeps giving. All we are asking for is the authority. We can even do the Detailed Analysis under current law. What we have is a parametric estimate that tells us we have about 20 excess capacity. If the numbers anywhere near correct we estimate we can save about 2 billion a year that we can reinvest into readiness and modernization kinds of requests so we are foregoing a very significant opportunity. Saberi structured systematic rigorous process that ultimately congress has the final say on. We are asking for the authority. We think we are getting signals from a couple of committees that are more amenable to it so we will be pushing that pretty hard please. We are also again as i noted we continue to look at our business process. The secretary when he came in as well said he had of rebuilding and reform agenda that he has in mind. Theres a number of ongoing activities that we continue to pursue and continue to look at the major headquarters to reduce them by 25 . We continue with acquisition reforms particularly the better buying power of 3. 0. We continue to look, take a hard look at our Service Support contracts to make sure they are appropriate and particularly for us in the Financial Management world 2018 is an extremely important year. We are going to move from getting ready for an audit to beginning the audits so thats an extraordinarily important year. We learned a lot from it. Therell be winds and losses that come out of that process but what i described spring training is over and we need to get on to actually doing the audits and we will learn an awful lot in getting us to where we need to be. It, please. Similar here some of the reforms that came out of the 2017 authorization act. Many as many of you are where we are we urbanizing the Acquisition Committee breaking into two undersecretaries one in charge of acquisition and sustainment. In the process of standing up the chief management officer. We are going to update the Cyber Command to a standalone combatant command and we are going to develop and implement a plan to reform the administrations Defense Health agency and the military treatment facilities. Again smart things to do in terms a rear organizing the department and hopefully we will elicit a fair amount of savings. Next slide these. We have seen relatively modest set of compensation reforms this year mostly tweeting things at the margins. The goal here throughout this in terms of our compensation packages is to maintain the health of the force through a competitive compensation package that reflects the unique demands and sacrifices of our servicemembers. Our senses this budget does that. This budget is going to us for 2. 1 pay raise for military members and a 1. 9 pay raise for civilians which is the government for all civilians. We will see modification is a military Health Care System we continue to look at efforts for example to rely on telehealth for additional nurses i slide in those kind of things to try to improve the beneficiaries experience with the process. We would like to exempt from many car share increase the medically retired family members of those who died on that duty. We did get from last year the fy 1617 we did get a fair amount of the revised some vocation of the Fee Structure the military Health Care System they grandfather the provision for anybody comes in a january 1, 2018 and that wiped out any of the nearterm savings and created what we think is an awkward twotier system those under one system verses those will be entered in other soil as the congress that they would consider eliminating the grandfathering. We are very pleased with where we are with the blended retirement system. There is a widespread education and Training Program that is going on as we speak in order to educate the members in terms of the kinds of choices they now have which are similar to some of the choices many civilians have. We are going to ask congress if they would basically end up matching for the military members that 20 years of service and ask at least for members they be allowed to have matching be on the 26 year service. Next slide. There is nothing particularly new on the slide that i want to emphasize we continue to have what we think is a very healthy and robust family of System Program and family at benefits that you see there. We are investing 8 million in this range of Services Everything from Spouse Education Career Assistance for all recreation and welfare and things like the schools and the commissaries and the like. To emphasize continued support to members and their families. Thanks a lot. As far as the overseas Contingency Operations request 64. 6 billion. Basically supports the level of Ongoing Operations in afghanistan and iraq and syria. It also includes additional Security Cooperation money for looking at the counterterrorism Crisis Response and other things throughout the globe. It reflects a force level structure in afghanistan of 8448 a four structure in iraq a 5765. In particular there is a major commitment to the european reassurance initiative. That goes up from 3. 4 billion in fy17 to 4. 8 billion dollars in athlete team paid the only thing i would caution is theres a number of plans in terms of change of plans that are under consideration by the building in the white house right now that are going through the vetting process in this discussion stage. This particular request is not request approval of those plans so once those plans are approved we will have to take a look and reassess whether the Resource Requirements would have to be in work with the white house and congress to see if there are any changes due to the request that might be necessary. At the end i want to talk briefly about one concern that has been raised in the runup to this briefing and that is whether or not they would be a future Defense Program plan or not. What im here to tell you is what we have done today under the process that i alluded to on the very first slide is we have focused on getting a budget ready for fy17 and we are pleased that we finally got the appropriations act for fiscal year 17 and then we worked on getting the fy18 budget done in order to meet this as well pick the secretary is not spent any time at all looking at anything beyond fy18 to date. In large part because what we have stood up as i alluded to earlier as we have begun the process of developing a new Defense Strategy and the antenna and the goal was under the new defense tragedy it would inform anything beyond fy19 in terms of the fy19 and 23 program for example. What you have and what has provided to date to the Defense Department is a flat topline beyond fy18 which is simply the fy18 number that is extrapolated and inflated. That is not the topline that youll be seeking particularly as we go to fy19 budget. That line that you have, that flatline is not informed by strategy and its not informed by policy. I actually feel any analysis or any comparisons of what is in that profile is a relatively empty exercise because one of the standard answers are going to be we are going to have to go back and look at that. That is not the number. You will not see it growth in four structure. You will not see growth in the ship to link finance review will not see a robust modernization program. So therefore i caution anybody from trying to make any comparisons and i am of the school that providing it really doesnt provide anything thats particularly insightful. Where it makes sense in terms of the acquisition exhibit some of the military exhibits we will in fact be providing out your data but its all tempered by the fact that i essentially have the topline that goes anything beyond fy19 at this point. So might get off the stage comments are waiting to sustain and build a readiness improvements that we began in fy17. We need to begin the process of balancing the force to become bigger and more lethal and we absolutely essentially need to reverse defense sequestration and we must increase the budget caps to support the National Security strategy in the new Defense Strategy as well. We have a few charge there and some pie charts. Those are therefore your information. We are open to answering any questions that you might have. If i call on you name your immediate affiliation. I just wanted to clarify something. If you munch back a few months back at delay occurred with the f35 endy said his office would take money out of follow on station. Is that still the plan right now is that this budget . I would differ to discussing particular with the air force and navy. They will be following us in terms of those details. We did look at the f35 program as we finalize the budget. We did it just procurement and r d funding a properly to bring it up to date with where the program is today so i will say mostly intuitively i think we have in fact accommodated with the general was alluding to but i defer to the air force and navy to fill in the blanks for you. Can you talk about the funding. Could you talk a bit about the train and equip fund . The rationale again is in fact our idea in terms of fighting the campaign is by a partner campaign. All we really did the only changes for perhaps to fill in some more blanks. All we did from a budget perspective is we had a separate train and equip fund in the fy17 request so what we did is actually with approval from last years authorization act as we can bind those into a single train and equip fund to deal with more flexibility in the 1. 8 billion request for that right now our estimate is 1. 3 for iraq and. 5 for syria. Those are just notional estimates. A couple of quick clarifying things. I think you said in the munitions request to put in the maximum amount. For those elected munitions. Spin number two Reform Efforts mentioned by documents are those new for fy18 . For the most part there was no particular new ones but we havent stopped looking. The ones you see alluded to on the chart for the most part are a continuation of efforts we had on hand. Part of this has to do with the sure period of time that the secretary has been here but he has made it clear that this is important to them so we will continue particularly as we stand up to chief management officer. We will continue. One of their charters will be to take a look at the department when in fact we get a new deputy secretary. It will be one of his jobs to take that on in terms of looking at endtoend in terms of our business processes and try to seek savings and improvements where we can. There is a note in the budget document about nsa funding. Essentially it looks like funding is clear that up. Spin that has been an annual, we in the past that some money set aside to help support mnsa in the thinking there as we drive a lot of the requirements. In putting this budget to bed this year essentially we shift that topline to nsa now. Their budget stands on its own and are budget stands on its own. You gentlemen have been through this a number of years. What is your level of confidence this year that the budget will be enacted at the level that you propose dot . Its hard to predict. I could take the chicken way out and say its hard to predict that the answer is i think we have made our case. Our Service Chiefs have been up there over the last few months on many different occasions testifying before the Armed Services committee and the appropriations committees and have laid out the concerns and the erosion of readiness that exist today. I think in my personal opinion i think theres recognition on the hill that there is a mismatch between the resources made available in order for us to do what we are asked to do. That said asking for elimination of the defense sequestration is not an easy thing and i understand it will take on the hill that is frankly outside of our control. A lot of direction we have gotten so far from our meetings with some of the members is why didnt you ask for more kinds of thing. For a budget guy thats always good to hear. Why did i ask for more . We will have to see. Obviously its going to take a lot for congress both the house and senate to try to get it done. We are ready to help any way we can and what you will see the next two or three weeks in the military departments plus the secretary of the Service Chiefs will testify at layout their case. Im very comfortable. We have a good case to make here spin ryan brown is cnn. A followup quickly why didnt you ask for more . Capitol hill is said that number is too small to address the readiness shortfalls faced by the services so can you explain the delta between what capitol hill is saying and what you are proposing . Its a bit of a judgment of tang. There is not a total that anyone can point to and say thats a perfect number. What i will say largely is to fall back on the threestep process we think we are in. We asked and 17 for what we thought was politically palatable and we did everything and 17 that we asked for. We are frankly very pleased and grateful for what the hell provided in the fy17 appropriations. In a similar fashion where asking for an increase. 52 billion i would argue is not chump change. Thats a pretty significant increase in the Defense Budget that we are requesting here and we are not done. We are at taking a look and we will look at what seems to be the appropriate amount of resources to support that strategy will probably go in with a request that will have some degree of bashur midway team. They are going to solve the readiness problem in one year. We are going to modernize overnighted offices a multiand what we need more sustainable is multiyear commitment to defense spending more than anything else spin the erosion of the readiness didnt occur in one year and we wont be able to satisfy requirements in one year. Its going to be a while for us with a sustained fun. Spin mr. Roth when is it going to start and how long will it take and when will it be finished and what you have to say about you have been here as long as i have two remember the last time an audit was successfully done. First of all how can we have confidence in the numbers you have here since they are another did and what makes you confident if you are that this will be complete . I love references to how old i am so thanks for that. Beyond that the answer is yeah we cannot pass a clean audit and we are the last federal agency to do so. Thats not a good place to be and we recognize that. There are a lot of issues in terms of complexity and the Number Systems in the legacy i. T. Systems we have said we will have to work our way through. The answer to your question as we have been spending particularly in the past five to six years. Management turned to one focused on this as a priority. One of the reasons we are where we are is no one really cared so thats why we didnt move the ball but basic way somewhere in the last six or 77 years particularly with secretary gaetz and beyond it became a high priority for the entire department through this isnt something that only a comptroller and financial manager can do. Needs a buyin from the entire in price so we have that. Therefore we made in enormous amount of effort but to answer your question we are not going to get to clean audit in one year. I dont want to oversell this but we wont know until we start the audit. As we start the audit we will get what is called disclaimers and get good audit opinions and frankly we will get bad audits and that will lead to remediation efforts in terms of either changing business processes for changing accounting processes and the like. The answer is its going to take more than a year. I dont have a good feel and anything i would predict that would be foolish. I tried most of the time to avoid eating foolish. Its going to take more than a year to get their. We have to start and thats importance of 2018. As far as the trust and credibility we do in fact know what we spend. The problem is we cant take the way past the clean audit so thats something we need to correct. We do over than years nowhere we spend the money by every appropriation to the decimal point. What we have to do is build up credibility in terms of passing it clean audit and we understand that. Tony from inside defense. This budget has been criticized on capitol hill are being only 3 more than what the Obama Administration had planned. What is it about this budget that is a departure from what the Obama Administration are planned or how can you say 3 is taking us in a different direction what would you say to the critics . 3 is on inconsequential but having said that what we had was a notional budget at the tail end of a previous semesters that hadnt gone anywhere in oh by the way the important fact is the budget and control act of 2011 those caps are still in place. They kick in again. We had a couple of years where we had an amended budget that the dca had been amended which gave us headroom but not a lot. Important the important thing is something has to be done about the Defense Budget. Berger commitment. The 52 billion is real, its ever a request. Thing before this was just a notional paper exercise to this point. Its a significant increase as you saw what i showed you above what was actually appropriated in fiscal year 17 was somewhere around 523 billion. Where asking for 574 billion. That is a significant increase commitment on the part of this administration to defense spending. Thats really the answer to your question. I was just going to say reflected in terms of site increases in the force, additional capabilities in the services and the joint force that result in the cumulative effect of 17 budget in supplemental appropriations in this budget request. Our footing is firmer where the conference of readiness in the joint forces concern from which we depart from to become bigger and more lethal. We expect the request to go to congress and say this is how much above the the department would like to see congress raise the caps for defense spending . I would hope. I would hope they would increase the caps. When a dude tackle the caps they would do it over multiyears and thats what happened when they amended the budget last couple of time should they did it into your windows or for your windows or five your windows. We would hope that those caps increase before we get to fy19. The answers answer to your question is if not we would have the same dialog. Last question. Ineloquent disclaimer that i need to ask you the services are telling us they cant do figures for major Acquisition Programs because the comptroller put the word out to undo it. Are you going to about them to give up the numbers or columbia a lot of big programs because your office cast a pall on those terrific figures. The answer is where it makes sense to think we should provide the out your numbers. I simply caution people that those numbers are constrained in what we would think is a placeholder top line we have in the outyears right now. Actually i havent seen the navy exhibits yet but i think the guidance we have provided to them was in the procurement r d exhibit that where appropriate they should show the out your numbers and protect the rear asking for multiyear contracts for example the b22 being one to show the sevenyear profile for the b22. I think there is bennett bit of a misreading of the guidance from this office. But im not particularly crazy about is providing the entire amount at this point in time because it has no analytical standing. Where appropriate we ought to provide information. The irs has big implications in arizona. I would caution any out your numbers going to be constrained by the fact that we dont really have a real top line. You havent addressed is that that they made their case before the headlines cannot yesterday on major cuts to medicaid and the s. N. A. P. Program 54 billion you are seeking is offset by domestic spending. Among many of the 90 of the people in the United States are connected to the mel terry to what extent do those cuts now complicate your efforts to gain support among the 98 of the public who are connected to the military . Its not my place to comment on the politics of that. Others will have to work through the plants of the answer to your question is without getting into the political dynamic of getting to the budget control act theres a lot of imperative at play here pudas administration and previous demonstrations are committed to balancing the budget and those kinds of goals and objectives. All i can tell you is an all i can do and the only thing appropriate for me to do is to outline what the Defense Department needs and requirements are and let it go into the public forum and let people debate that is they will and should. If you are going to sell the budget people say why should we buy the f35 if you are cutting our Food Stamp Program . Its a responsibility to advocate for the need for a joint force that can do with the nation asked us to do to defend the nation. The world is a very dangerous place these days. I think there is a compelling, thats another is a compelling justification for this budget to enhance the readiness of the force to the levels at which we request. Thanks a lot. Appreciate it. Thank you. [inaudible conversations] Homeland Security secretary john kelly will be on capitol hill tomorrow to discuss the departments annual budget of Health Appropriations subcommittee hearing. Spin that seems like ferguson is kind of the anchor in many ways of the books im wondering how your experience eliminated what you are talking about growing up in the bronx. Semantic thing, if you grow up in a city you have this conception of cities. In cities you have bad neighborhoods in good neighborhoods, all kinds of loaded ways and which police policed differently and loaded ways in which the border sit on top of each other and create this sandpaper friction. All of that timmy was tied tied deeply to either the bronx to new yorker cities. I lived in chicago and i lived in d. C. And all the things pertain to the thing that will my mind that ferguson was its a municipality 20,000 people. Its anywhere usa. Its the Northern Edge of st. Louis and the suburbs. It looks like anywhere. Its strip malls and parking lots and houses and the idea that what i experienced there was the level of exploitation and the level of racial oppression, the level of policing, the intensity of humiliation. All of that in this place that was heretofore anonymous. That blew my mind. At a hearing on global securitya threats director of National Intelligence dan coats was asked about possible collusion between the Trump Campaign and russia. Hes joined on the witnessed him by the head of the defense