Statement of Secretary of Defense William S. Cohen
In Connection with the FY 1999 Defense Budget
House Committee on National Security
5 February 1998
Mr. Chairman, members of the Committee, it is a pleasure to be here to present the fiscal year (FY) 1999 Department of Defense (DoD) budget request. This is the first budget to incorporate fully my guidance and decision-making as Secretary of Defense, and our plans reflect an intensive analysis of U.S. security needs carried out during my initial year in office.
Both FY 1999 DoD budget and the FY 1999-2003 Future Years Defense Program (FYDP) begin
implementation of a new security vision for the post-Cold War era. Our vision can be
characterized in one word: Transformation. Having inherited the defense posture that won
the Cold War and Desert Storm, the Clinton Administration intends to leave as its legacy a
defense strategy, military force, and support structure that have been transformed to meet
the different challenges of this new security era.
Our transformation began last May when the Department completed its quadrennial Defense
Review (QDR) - a comprehensive analysis of our nation's defense posture, strategy,
policies, and programs. The QDR examined the security threats, risks, and opportunities
facing the U.S. - both today and out to the year 2015. It developed many far-reaching
recommendations on force structure, readiness, modernization, infrastructure, and more. It
presented a new strategy that can ensure America's military superiority as well as
implement vigorously the defense requirements of the President's National Security
Strategy for a New Century, which stresses global engagement.
Then last November I announced a sweeping reform of DoD support activities and business
practices. My Defense Reform Initiative seeks to bring to the Department many business
practices that U.S. corporations have used to become leaner, more agile, and highly
successful. Money saved by this Initiative will help fund weapons modernization.
Finally, in December the Department received the report of the National Defense Panel.
I was very pleased that most of the Panel's recommendations were consistent with those
reached in the Quadrennial Defense Review and Defense Reform Initiative. We strongly
endorse the Panel's central conclusion that the Defense Department must accelerate the
transformation of U.S. military capabilities using savings generated by aggressive
business reforms and additional base closures.
Highlighted below are the three components of the Defense Department's transformation
vision: defense strategy, military forces, and DoD support activities.
New Defense Strategy
The new defense strategy has three elements. It says that the U.S. must:
(1) Shape the international security environment in ways favorable to U.S.
interests. We seek to do this by promoting regional stability, preventing or reducing
conflicts and threats, and deterring aggression and coercion. Especially crucial to
achieving this are the overseas deployment and superior capabilities of U.S. forces, the
strengthening and adapting of international alliances, and peacetime engagement with
selected nations with the aim of them being friends not adversaries in the future. Beyond
the defense realm, economic and diplomatic initiatives such as nonproliferation can help
shape a favorable international environment. Also important are the Cooperative Threat
Reduction program and the Comprehensive Test Ban Treaty, which I urge the Senate to
(2) Respond to the full spectrum of crises. America's military must be capable
of responding effectively to crises in order to protect our national interests,
demonstrate U.S. resolve, and reaffirm our role as a global leader. U.S. forces must be
able to execute the full spectrum of military operations -- from deterring aggression and
coercion, to conducting concurrent smaller-scale contingency operations, to fighting and
winning major theater wars. Although America will retain the capabilities to protect its
interests unilaterally, our nation will continue to recognize the advantages of acting in
concert with like-minded nations when responding to crises.
(3) Prepare now for an uncertain future. Our major efforts to do this include:
- Pursue a focused modernization effort to replace aging systems and incorporate cutting-edge technologies to ensure continued U.S. military superiority
- Continue to exploit the coming Revolution in Military Affairs (detailed below)
- Radically streamline and improve our Defense infrastructure and support activities
- Hedge against the possible emergence of a major unanticipated threat through such priorities as carefully targeted research and development
This new defense strategy and the funding supporting it are especially attuned to countering what we term "asymmetric" threats. This term refers to the unconventional means that adversaries are increasingly likely to use to offset, rather than try to match America's military strengths. Asymmetric threats include threatened or actual use of nuclear, biological, and chemical weapons; terrorism; and disruption of U.S. command, control, communications, computers, and intelligence networks.
Besides developing this new defense strategy, the Quadrennial Defense Review
revalidated that U.S. forces must be able to deal with more than one conflict at a time.
We articulate this strategic requirement as follows: As a global power with worldwide
interests, it is imperative that America, now and for the foreseeable future, be able to
deter and defeat large-scale, cross-border aggression in two distant theaters in
overlapping time frames - preferably in concert with our regional allies.
The Department of Defense continues to be criticized for retaining this requirement
that our forces be capable of fighting and winning two overlapping major theater wars. But
we remain convinced that maintaining such a core capability is central to credible
deterrence. Our aim must be to avoid a situation in which an aggressor in one region might
be tempted to take advantage when U.S. forces are heavily committed elsewhere. This core
capability also will help ensure that we are able to deter or defeat a future adversary
that is more potent, or under circumstances that are more difficult, than expected.
Finally, such a capability strongly supports our efforts to shape the international
environment to reduce the chances that serious crises will occur in the first place.
The essence of our new defense strategy is balance. After substantial analysis
the QDR recommended a strategy that strikes a balance between current dangers and
opportunities and those we might face in the future. Our approach mandates sufficient
forces and capabilities to meet today's requirement, while at the same time investing
wisely and with vision for the future.
Transforming America's Military Forces
The second element of our department's QDR-based vision is to transform U.S. military
forces. The goal is to maximize their effectiveness across the full spectrum of future
crises and conflict scenarios. While we will transition to forces that are different in
character, the hallmarks of America's military will continue to be top quality people,
high readiness, and superior doctrine and technology.
Transforming U.S. forces requires implementation of Joint Vision 2010, our new
conceptual framework for how U.S. forces will fight and achieve what we call "full
spectrum dominance." At the heart of Joint Vision 2010 is the ability to collect,
process, and disseminate a steady flow of information to U.S. forces, while denying the
enemy the ability to gain and use battle-relevant information. DoD's long-term campaign to
exploit such advanced technology to ultimately bring about fundamental conceptual and
organization improvements to U.S. forces is called the Revolution in Military Affairs
(RMA). This Revolution promises to enable our forces to attack enemy weaknesses directly
and with great precision -- and therefore with fewer munitions, less logistics strain, and
less collateral damage.
It is important to note that U.S. forces are being transformed, not shrunk
substantially. The Quadrennial Defense Review recommended end strength and force levels
that are only slightly below those already planned as a result of the Department's earlier
post-Cold War adjustments. The QDR concluded that our nation must continue to possess the
forces necessary to meet the demands of global engagement without placing unacceptable and
counterproductive demands on our military people. The forces being reduced are ones that
are least likely to be used in operations envisioned by the new QDR strategy.
The QDR called for reductions in previously planned aggregate end strength of about
60,000 active military personnel; 55,000 in Selected Reserves; and 80,000 DoD civilians.
These remain our targets. Our actual end strength at completion of the current programming
period (2003) and beyond will ultimately be determined by scores of decisions over the
next several years, based heavily on our experiences in transforming the U.S. defense
posture and infrastructure.
End strength trends and projections are shown below:
Department of Defense Personnel End Strengths
(End of Fiscal Year in thousands)
|FY 1987||FY 1998||FY 1999||Goals|
Reforming DoD Support Activities
The third element of our QDR-based vision went into high gear last November with my
Defense Reform Initiative (DRI). Our goal is to substantially streamline and improve DoD
infrastructure and support activities. The shorthand for our DRI blueprint is the
Revolution in Business Affairs, and it is essential to the success of our planned
Revolution in Military Affairs. Our plan adopts the best business practices
responsible for success in America's private sector. Reforming DoD support activities is
smart in and of itself; but it also is imperative in order to free up funds to help pay
for high priorities like weapons modernization.
Our Defense Reform Initiative mandates four major areas for change:
First, the plan calls for the Department to reengineer its processes and
procedures. We need to adopt modern business practices to achieve world-class standards of
performance. The goal is to redesign our DoD business practices so they work better and
cost less. To meet our ambitious goals for personnel and dollar savings, it will not
suffice simply to try to execute the same old business practices with fewer people,
calling that reform. For example, we must make more of our processes paper free,
especially defense contracting. We must increase use of our purchase card for lower-cost
items. We must discontinue the printing of voluminous regulations. We must expand the
prime vendor process. We must use electronic catalogues and electronic shopping malls for
some procurement. And we must replace "just in case" military logistics with
"just in time" procedures.
The second area of the DRI requires us to consolidate or streamline
organizations to remove redundancy and maximize synergy. For example, under this new
reform plan, personnel in the Office of the Secretary of Defense will be reduced 33
percent from FY 1996 authorized levels over the next 18 months. Personnel in Defense
Agencies will be reduced by 21 percent over the next five years. Defense Agencies and
other DoD organizations will be expected to fundamentally transform how they do business,
while simultaneously cutting personnel.
In the third Reform area, DoD must compete - that is, to apply market incentives
to improve quality, reduce costs, and meet customer needs. Competition must be a powerful
incentive for optimizing the performance and efficiency of DoD support activities. We need
to analyze every activity for which the private sector alternative may be better or
helpful in improving our operations. We also should do more to adopt existing commercial
products, rather than trying to develop our own products -- which in the past ended up
being too slow and too costly.
The fourth Reform area requires that the Department eliminate excess support structures
and focus on core competencies. As part of this, we very much need Congress to approve two
more rounds of base closures for 2001 and 2005. The new budget includes $830 million in FY
2002 and $1.447 billion in FY 2003, with which DoD could begin implementation of a 2001
BRAC round. Projected long-term savings from two new BRAC rounds are at least $3 billion
Between 1988 and 1995 four BRAC Commissions proposed the closure or realignment of 152 major installations and 235 smaller ones. Complete implementation of those recommendations are projected to net $13.6 billion in savings by FY 2001.
After FY 2001 recurring savings from them will be about $5.6 billion. However, more
streamlining is required. Without additional BRAC authority, scarce defense dollars will
continue to be spent on excess infrastructure, rather than on the vital needs of America's
Achievement of all four of these types of reform is crucial not just to save money.
Robust support of U.S. forces in combat has long been one of their great advantages, and
that must be preserved. But such support has tended to rely primarily on its overwhelming
mass. To be most effective in the future, support operations must depend increasingly on
speed and agility. Absent a concomitant revolution in DoD support activities, our
Revolution in Military Affairs will risk outrunning the capabilities of our logistics,
personnel, medical, and other support systems.
Defense Budget Topline and Priorities
To advance the transformation of our defense strategy, forces, and support activities,
President Clinton's FY 1999 budget requests $257.3 billion in budget authority and $252.6
billion in outlays for the Department of Defense. Funding levels in the President's budget
are consistent with last year's budget agreement between the White House and congressional
leaders. Projected spending is shown below:
Department of Defense Budget Authority
($ in billions)
|FY 98||FY 99||FY 00||FY 01||FY 02||FY 03|
FY 1999 Budget
|Percent Real Growth||-||-1.1||0.0||+0.9||-1.1||+1.1|
As shown, plans for FY 1999 through FY 2003 call for DoD budget authority to generally
keep up with projected inflation. In real purchasing power, the FY 1999-2003 FYDP will buy
more defense than previously planned because President Clinton allowed the Department to
keep about $20 billion in savings projected from lower estimates of future inflation.
Our broad Defense budget priorities remain the same. We must ensure the high readiness
needed to carry out U.S. defense strategy, so that our forces are able to respond to
crises whenever and wherever necessary. We must continue to attract and retain the high
quality personnel necessary to preserve U.S. military superiority. We must provide a good
quality of life for our military personnel and their families -- focusing especially on
compensation, housing, and medical benefits. Finally, we must transform our forces by
developing and fielding new and upgraded weapons and supporting systems, which in turn
must exploit advanced technologies, in order to guarantee the combat superiority of U.S.
forces in the years ahead.
Ensuring Force Readiness and Good Quality of Life
The continuing high readiness and quality of America's armed forces are evident
everywhere that those forces are deployed or training. To preserve this high readiness,
the FY 1999 budget provides strong support for training, exercises, maintenance, supplies,
and other essentials needed to keep U.S. forces prepared to achieve their combat missions
decisively. Traditional operational indicators of readiness - e.g., tank miles and flying
hours - are projected to remain stable. In preparing their new budgets, the military
services followed my direction that they fully fund their readiness-related accounts. When
adjusted for today's lower troop strengths, FY 1999 O&M funding is well above levels
during the 1980s. Still, the intensity of military operations and other concerns are
requiring the Department to work hard to prevent major readiness problems from developing.
Providing a good quality of life for our uniformed personnel and their families remains
essential to sustaining the quality and readiness of U.S. forces. Reflecting that reality,
the FY 1999 budget includes strong funding for military pay, housing, medical services,
child care, and other important benefits for our personnel. The budget supports military
pay raises up to the maximum percentage established by law. It funds a 3.1 percent pay
increase for FY 1999 and a 3.0 percent rise for the outyears.
As he has publicly stated, President Clinton intends to support an extension of the
U.S. mission in Bosnia past June of this year in order to ensure continued compliance with
the Dayton Accords. The size and structure of U.S. forces that will be committed to Bosnia
is still undetermined, and thus a budget-quality cost estimate for the mission extension
is not yet available. The President's intent is to provide a request for Bosnia funding
before Congress completes deliberations on its FY 1999 Budget Resolution to ensure that
Bosnia is considered as Congress sets its spending priorities.
FY 1998 appropriations fund previously planned Bosnia operations, which assumed that
U.S. forces would be out of Bosnia by the end of June. However, DoD faces unbudgeted FY
1998 costs related to the proposed extension of Bosnia operations and to this year's
increased intensity of operations in Southwest Asia. To cover these costs, the
Administration will propose an emergency, non-offset FY 1998 supplemental appropriations.
Speedy passage of supplemental FY 1998 appropriations will be crucial to preventing
readiness problems during the final few months of this fiscal year.
To cover FY 1999 Bosnia costs, the Administration will submit a non-offset budget
amendment, which also will be designated as an emergency. The President's FY 1999 budget
request contains an allowance for undistributed funds to cover contingencies, such as
Bosnia and natural disasters. The President considers Bosnia funding to have first claim
on this undistributed allowance and has informed the relevant committees in Congress of
In sum, the Administration has structured its Bosnia-related funding requests so that
resources are not diverted from DoD's current and future appropriations, which should
avoid damage to military readiness.
Modernization of U.S. Forces
One of the QDR's most important contributions was to detail a plan to ensure that the
Department could fulfill its ambitious and essential plans to modernize U.S. weapons. The
QDR endorsed increased procurement funding both to prepare for future challenges and to
upgrade aging systems. It also recommended changes to specific major modernization
programs and proposed ways to reduce the future likelihood that the Department would need
to shift funds out of investment accounts to cover must-pay costs like unbudgeted
To support implementation of the QDR, procurement is funded as follows:
Department of Defense Procurement
($ in billions)
|Budget Authority||FY 99||FY 00||FY 01||FY 02||FY 03|
|FY 1999 budget||48.7||54.1||61.3||60.7||63.5|
Among its major modernization initiatives, the new budget emphasizes the advanced
information-technologies needed to fulfill Joint Vision 2010. It accelerates acquisition
of new command, control, communications, computers, intelligence, surveillance, and
reconnaissance (C4ISR) capabilities. For example, funding was added to accelerate by two
years the fielding of the Army's first digitized division and corps. Numerous such
advances will enable military commanders to more effectively direct forces, transfer
information between them, and dominate future adversaries. Also funded are key
surveillance assets such as unmanned aerial vehicles and critical navigation aids like the
Global Positioning System.
Modernization of ground forces will stress upgrades of primary combat platforms like
the Army's Abrams tank, Bradley Fighting Vehicle, and Apache Longbow helicopter. Major
development efforts include the Comanche helicopter and Crusader artillery system. Marine
Corps modernization features the V-22 tilt-rotor aircraft, the Advanced Amphibious Assault
Vehicle, and the 4BN/4BW helicopter upgrade.
Modernization of naval forces includes procurement of the DDG-51 Destroyer, LPD-17
amphibious transport dock ship, and New Attack Submarine (NSSN). The tenth and final
Nimitz-class carrier (CVN-77) is fully funded in FY 2001, a cost-saving acceleration of
one year. The budget also supports development of the next generation aircraft carrier and
The QDR confirmed the need for, but made major adjustments to DoD's three major programs for modernizing U.S. tactical aircraft. New budget plans reflect DoD's decision to reduce and delay some planned procurement of the Joint Strike Fighter (JSF), F-22, and F/A-18E/F. The JSF will continue in its concept demonstration phase into FY 2001, in preparation for procurement to commence in FY 2005. Funds for the first two production F-22s are requested for FY 1999, leading to a gradual buildup to procurement of 36 aircraft per year by FY 2004. Production should soon increase for the F/A-18E/F, which has greater survivability and weapons payloads than earlier F/A-18 models. For the longer term the Navy plans to transition from F/A-18E/F to JSF procurement at a time based on the pace of JSF development.
The new budget supports the QDR's emphasis on munitions of superior precision.
Substantial funding is provided for ATACMS/BAT, Longbow Hellfire, SADARM, and Javelin for
the Army; Sensor Fuzed Weapon for the Air Force; and JSOW, JDAM, and AMRAAM for both the
Air Force and Navy. The Navy will continue to improve its inventory of Tomahawk missiles
and convert anti-ship Harpoon missiles to SLAM-ER land attack missiles.
The QDR stressed America's ability to project military power to distant regions, and the new budget continues the Department's airlift and sealift investments. Some 120 C-17 aircraft will be procured by FY 2003. All KC-135 tankers will receive major avionics upgrades. To improve sealift, FY 1999 procurement includes the last LMSR transport vessel, needed to move early-deploying Army divisions.
Total FY 1999-2003 programmed funding for major modernization programs includes:
FY 1999-2003 Major Defense Modernization Programs
(Procurement $ in billions)
|M1A2 Tank Upgrade||3.2|
|Longbow Apache Helicopter||2.8|
|New Attack Submarine||7.5|
|LPD-17 Amphibious Transport Dock Ship||6.5|
|V-22 Tiltrotor Aircraft||5.8|
|CV-22 Tiltrotor Aircraft||1.7|
Countering NBC Weapons and Missile Threats
The QDR concluded that nuclear, biological, and chemical (NBC) weapons and the missiles
that deliver them will continue to threaten the security of America and its forces,
allies, and friends. More specifically, U.S. plans must assume that the threat or use of
chemical and biological weapons will be a likely condition of future warfare. The FY 1999
budget includes major investments to stay ahead of these dangers. It adds about $1 billion
in spending through FY 2003 to bolster existing U.S. capabilities to counter chemical and
biological threats. Much of the increase is for improved protective suits and masks, as
well as better detection and decontamination systems. The remainder of it will enhance our
capabilities to destroy or neutralize NBC weapons and materials.
The budget also continues DoD's strong missile defense programs, which remain critical
to a broader strategy seeking to prevent, reduce, deter, and defend against NBC and
missile threats. In general, the Department's missile defense efforts are proceeding at as
fast a pace as technology risks will allow.
Our greatest emphasis is on theater missile defense - aimed at meeting today's regional threats. The primary goal is to develop, procure, and deploy systems that can protect forward-deployed U.S. forces. We seek a multi-tier, interoperable defense against ballistic and cruise missiles. To defeat shorter range missiles, our key lower-tier programs include the Patriot PAC-3 and Navy Area systems. For the longer term, MEADS is a highly mobile system being pursued cooperatively with Germany and Italy. Key upper-tier programs are the THAAD and Navy Theater Wide systems. To defeat theater-range missiles during their boost phase, we are stressing our Airborne Laser development program.
Also a high DoD priority is the National Missile Defense (NMD) program. The primary
mission of our U.S. NMD system would be to defeat a limited strategic ballistic missile
attack such as could be posed by a rogue nation. The NMD program will develop and test
system elements that could be deployed when such a strategic threat begins to emerge.
Deployment before a threat emerges would preclude us from fielding the most advanced
technology if and when a threat does emerge. As long as a threat does not emerge, the NMD
program will continue to improve our planned system, while maintaining the capability to
deploy it rapidly, if the need arises.
Supporting all our missile defense efforts is the technology base program. It seeks both to enhance the performance and decrease the cost of future BMD systems. It will enable us to reduce program risk, accelerate the insertion of new technology, and advance cutting-edge technologies as a hedge against future surprises.
FY 1999 budget authority requested for missile defense programs is $4.0 billion. For FY
2000 through FY 2003 an additional $12.8 billion is planned. This $16.8 billion total for
missile defense programs in FY 1999-2003 includes funds added as a result of the QDR.
Total Force Integration
The QDR concluded that the Reserve components will continue to be essential to the
success of U.S. defense strategy and the full spectrum of our nation's military
operations. The new budget reflects this conclusion with substantial funding to support
both the current readiness as well as future capabilities of the Reserve components.
The Department has moved decisively to integrate more effectively its active and
Reserve components. During development of the FY 1999 budget, Reserve component issues
were given unprecedented attention. As a result of the review, over $100 million was added
for Army National Guard OPTEMPO, over $200 million added for Reserve component equipment
funding, and other important adjustments were made. Additionally, I have established new
positions for Reserve component general officers, with the aim of enhancing Reserve
component involvement in the DoD management structure.
The FY 1999 budget funds establishment of Reserve component teams to respond to domestic use of weapons of mass destruction. Work also has begun on creating two Army combat divisions that would each integrate three Guard brigades under an active component headquarters. Meanwhile, Reserve components will continue their extensive support of peacetime missions like aerial refueling, strategic lift, exercises, counter-drug operations, and Bosnia peace implementation.
To best support DoD's warfighting plans, allocate scarce defense dollars, and fulfill
the Guard's peacetime mission, some combat elements of the Reserve components will be
converted over time into support units that are critically short. Projected savings from
QDR-directed cuts to Reserve components end strength will go toward increased funding for
new equipment, unit conversions, and other requirements of the Reserve components.
Support for Transforming the U.S. Defense Posture
America's security has always required strong congressional support, but this year the need is especially crucial. To transform America's defense posture for this new security era, we need approval of our carefully crafted spending allocations.
I also urge your support for:
- Bosnia operations and emergency supplemental appropriations
- Authorities needed to implement elements of my Defense Reform Initiative
- Two additional rounds for base realignment and closure (BRAC)
- Repeal of floors for military personnel end strength
In closing, let me say how pleased I have been with the support of this committee
during my first year as Secretary of Defense. I look forward to continued cooperation as
together we work to reinforce America's military strength and global leadership.
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