STATEMENT OF
REAR ADMIRAL ALBERT T. CHURCH III, U.S. NAVY
DIRECTOR, OFFICE OF BUDGET/FISCAL MANAGEMENT DIVISION
11 JULY 2001
INTRODUCTION
Chairman Weldon, distinguished members of the Committee, thank you for the opportunity to discuss the readiness of our Navy and Marine Corps and the FY 2002 budget request. I would like to thank the committee for its continued support for our Sailors and Marines.
I appear before you today in my capacity as the Department of the Navy Budget Officer as well as the Director, Fiscal Management for the Navy. As such, I will address matters regarding the Department of the Navy budget request and details relating to the Navy. Mr. William Wallenhorst, Fiscal Director, United States Marine Corps will address details relating to the Marine Corps.
ASSESSMENT OF FY 2002 DON BUDGET REQUEST
Our FY 2002 Department of the Navy budget request focuses on manpower and near-term readiness first, balancing current needs (manpower and readiness) with long-term requirements (modernization and infrastructure). The significant increase in Defense resource levels recently approved by the President will have a direct impact on readiness and also allows us to relieve some of the pressure on one of our historical "bill-payers"-- our infrastructure. However, significant adjustments to improve the pace of modernization have in the most part been deferred to FY 2003 and beyond pending results of the Quadrennial Defense Review.
For both the Navy and Marine Corps, this budget adequately funds the military pay accounts to provide the end strength we need to man our existing force structure (376,000 active Navy and 172,600 active Marine Corps). Our other readiness-related accounts, principally in the Operations and Maintenance appropriations, are also adequately funded to maintain the near-term readiness of both the Navy and Marine Corps. This focus on our near-term readiness accounts is designed to end the reliance on a supplemental appropriation during execution.
ASSESSMENT OF FY 2002 NAVY BUDGET REQUEST
Within the fiscal levels prescribed, this budget request provides the Navy with the support it needs. To this end, I believe we have minimized the funding risk to meeting Navy's goals in our readiness-associated programs. An assessment of the adequacy of funding for meeting those goals follows:
FLYING HOUR PROGRAM (FHP): The FY 2002 budget achieves the goal of 83% Primary Mission Readiness (PMR) for our tactical aviation squadrons and funds the Marine Corps campaign plan. Approximately 1/3 of the FHP supports Marine Corps flying operations. Three key elements are included to minimize funding risk: (1) using the most recent (FY 2000) execution data including the associated higher cost for spare parts pricing and usage, (2) budgeting for anticipated 8% increased usage of depot level repairable spare parts based upon recent rigorous analyses of FHP costs and, (3) increasing investment in engineering and logistics improvement programs to create and incorporate the changes necessary to reduce the cost of flying. These actions resulted in increasing the FY 2002 budget request for the FHP and associated engineering/logistics by $731 million and $107 million respectively, above the currently approved FY 2001 budget.
AIRCRAFT DEPOT MAINTENANCE: The FY 2002 budget is sufficient to achieve the engine and airframe readiness goals for both our deployed and non-deployed squadrons, providing sufficient aircraft for deployment and inter-deployment training requirements. The readiness-based model used to determine maintenance requirements is based on the squadron inventory of "ready aircraft" necessary to execute assigned missions.
SHIP OPERATIONS: The FY 2002 budget request includes the funds necessary to achieve the operational tempo (OPTEMPO) goals for both our deployed and non-deployed ships as determined by our readiness-based model. Prior-year execution experience is incorporated in the model and it's proven success in predicting funding requirements indicates that the ship operations funding level is adequate to meet the readiness goals of 50.5 underway days per quarter for deployed forces / 28 underway days per quarter for non-deployed forces and support Southwest Asia contingency operations.
SHIP DEPOT MAINTENANCE (SDM): The FY 2002 budget funds 90% (composite) of the notional ship depot maintenance requirement. This is below the goal of 96%. The stress on an aging force of satisfying deployment requirements and our commitment to ensuring that maintenance requirements are accurately articulated are evident in the increasing funding levels dedicated to ship depot maintenance in preparation of the FY 2002 budget request. Although our budget request does not meet the prescribed readiness goal, we have increased the FY 2002 SDM program by $850 million since the FY 2001 President's Budget request. Further, our budget represents a $662 million increase over the currently approved FY 2001 budget. There is some funding risk associated with this program, as submitted, to the extent that it is funded 10% below validated requirements. However, due to a more extensive analysis of our ship depot maintenance requirements we are more confident in the validity and accuracy of the estimates in our FY 2002 budget request, and in our ability to execute 90% of these maintenance requirements. We should not experience the same program erosion as in the recent past.
BASE OPERATIONS: The FY 2002 budget request meets minimum base operations readiness goals. Critical operations functions including port and air operations, utilities and counter-terrorism/force protection are funded to maintain a C2 readiness level. Other supporting base functions are funded to at least C3. These include community support, facilities management, public safety and command support. This budget request has low funding risk because it incorporates the most recent FY 2001 execution experience including increased utility costs, GSA lease increases, force protection enhancements and increased costs associated with some contracted functions.
REAL PROPERTY MAINTENANCE (RPM): RPM includes recurring maintenance and repair and minor construction of our shore infrastructure. One indicator measuring the adequacy of facility funding is Asset Protection Index (API), which measures RPM as a percentage of the current value of the facilities (Current Replacement Value). While the FY 2002 amended budget makes modest increases in RPM (funding approximately 2% API), our recapitalization cycle still exceeds 160 years with a large backlog of maintenance and repair.
In summary, I believe that our FY 2002 budget request adequately funds sustainment of acceptable military readiness and slows the growth of our backlog of critical maintenance and repair work. To the extent that significant unforeseen requirements do not emerge during execution, and that DoD's legislative proposals provide anticipated savings, there is acceptable risk in meeting Navy's readiness goals. However, we are counting on approval of the supplemental request for FY 2001 so as not to increase that risk by deferring maintenance requirements from FY 2001 to FY 2002.
The Congress has addressed emergent, unforeseen and unfunded requirements in Navy's readiness programs by providing significant additional funding over the last several years. For example, from FY 1998 through FY 2001, $2 billion has been provided to augment Navy readiness programs including the Flying Hour Program, Aircraft Depot Maintenance, Ship Operations, Ship Depot Maintenance, Base Operations and Real Property Maintenance. These funds were provided through Congressional increases in making basic appropriations and a variety of supplemental appropriations. We have utilized these funds as specified and intended by the Congress, and they have resulted in significant improvements to Navy readiness.
As I previously stated, this budget is designed to adequately fund our manpower and readiness requirements without the need for supplemental appropriations. However, it does not address the capital investment needed by the Navy and Marine Corps to both modernize combat capability and retire costly-to-maintain legacy systems. Subject to the results of the Quadrennial Defense Review, we will need to increase the pace of investment across a broad spectrum - ships, aircraft, munitions, ground combat vehicles etc. - to provide for our future readiness.
I thank the committee for your continued strong support and for the opportunity to discuss Navy and Marine Corps readiness.
2120 Rayburn House Office Building
Washington, D.C. 20515
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