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Department of Defense Briefing by Maj. Gen. Horlander and Deputy Director Welch on the FY 2016 Army Budget in the Pentagon Briefing Room

Presenters: Director, Army Budget, Maj. Gen. Thomas Horlander and Deputy Director, Army Budget Davis S. Welch
February 02, 2015

STAFF: I'll go ahead and get started.

Good afternoon. Thanks for being here. My name is Lieutenant Colonel Alayne Conway. I'm the chief of the Army's media relations division.

Major General Thomas Horlander, director for Army budget, and Mr. Davis Welch, deputy director for Army budget, will spend about 25 minutes briefing the Army F.Y. 2016 budget overview. We will have about 15 minutes for questions.

I will be moderating the discussion today. Please wait for me to call on you. Let's please keep it to one follow-up so we can try to get everybody in. And with that, Major General Horlander, sir?

MAJ. GEN. THOMAS HORLANDER: Thank you. And good afternoon. First of all, let me thank you for coming and thank you for the opportunity here to present to you an overview of the Army's 2016 budget request. As she presented, I'm joined here by my deputy and perhaps a familiar face to some of you, Mr. Davis Welch.

I will spend a few minutes at the beginning of this briefing providing you an overview of the Army today and its fiscal posture and then spend some time providing a second level of detail about the Army's funding requirements that we have submitted in our budget request. Next slide, please?

I start today's presentation by providing you a little context behind our request by giving you an appreciation of what America's Army is doing and where we are serving around the world. As you can see from the map before you, America's soldiers are conducting operations in virtually every corner of the globe and in every combatant commander's area of operation.

In the Pacific theater alone, over 50,000 men and women serving in our Army are forward-based in this critical region of the world, conducting a spectrum of operations ranging from deterrence to regional engagement operations like Pacific Pathways. In the Southern Command, the Army continues to support Joint Task Force Gitmo in Guantanamo Bay and Joint Task Force Bravo in Honduras.

In the European Command, the nation has over 28,000 soldiers on the ground, as we have seen a renewed level of activity involving Army units. Many of these soldiers are supporting Operation Atlantic Resolve that provides our European allies assurance of U.S. commitment in the region and America's opposing Russian aggression and supporting Ukraine's democracy.

In the nation's Africa Command, the Army soldiers are supporting joint task force operations in the Horn of Africa and, more recently, Operation United Assistance to combat the Ebola outbreak in western Africa.

The Middle East continues to be very active and a dangerous area of the world with over 20,000 Army soldiers deployed in six of the 20 countries in the Central Command's area of responsibility. In addition to Operation Freedom Sentinel, which many of you might remember was formerly called Operation Enduring Freedom, in Afghanistan, we are providing advisory assistance to our Jordanian counterparts who are hosting Syrian refugees in their country. We're also providing support, to include training and equipping, to the Iraqi security forces who are combating a formidable ISIL threat.

With this much widespread activity, requiring a trained and ready landforce presence throughout the globe, the U.S. Army has nine of its 10 division headquarters currently deployed or forward stationed.

I took the time to share this snapshot with you because I wanted to emphasize that not only are we a very busy Army, but if you were to juxtapose this map against last year's or the year before, you would see that the U.S. Army is supporting more and more operations as the world continues to experience an increased velocity of instability. This alone makes the point that America's Army needs to be resourced to not only be trained and ready to address any number of emergent missions that may arise and to have an effective engagement capability through regionally aligned forces that can ultimately, over time, help prevent some of these crises from maturing.

Through this regionally aligned capability, the U.S. Army can shape the strategic security environment with the aim of foregoing any force-on-force kinetic operations that may develop. Should efforts to prevent and shape the security environment not yield the intended results, then of course we want our nation's Army to continue to be the most formidable land force in the world, capable of winning on any battlefield.

Next slide, please.

It is valuable to start by looking at the Army's budget over time and providing a little commentary that may inform your views of the Army's current funding request.

As you can clearly see from the chart, the Army's budget in both the base and the overseas contingency operations has been on the decline since its high-water mark in the year 2008, and inflation during the same time period has averaged between 1 and 2.5 percent.

In the base budget, which is meant to man, train and equip the nation's Army, we spent in the year 2010 at the highest point this century $144 billion. And as you can see, we have been trending downward since that time, with today's base funding level about 15 percent less than what it was just 5 years ago.

Of course, this is partially attributed to the fact that we are a smaller Army, but it also reflect the great stewardship of our leaders across the force.

Likewise, as large overseas contingency operations have become smaller, the Army's OCO budget has been reduced to about 20 percent of what it was in the year 2010. I'll talk more about the Army's OCO program later in this briefing.

Next slide, please.

Transitioning to this next chart, you quickly get an appreciation for the unpredictability of the past few years of the Army's funding program. I will walk you from left to right and highlight some of the more salient points on this chart.

In the years 2012 and 2013, the Army received and executed a base funding program that was $7 billion to $8 billion less than the Pres Bud request.

This started the Army on a downward readiness trend that was aggravated in 2012 when we were funded at the sequestered level governed by the Budget Control Act of 2011.

This had a huge impact on Army readiness and cast all but two of our non-deploying brigade combat teams into a non-ready status.

In 2014, temporary relief from sequestration was provided by the Bipartisan Budget Act, and you can see on the chart that we actually spent $126 billion against a request of $130 billion for base requirements.

This allowed us to buy back some lost readiness, but that does not happen in a year's time; on the average, it takes about 30 months to restore a brigade combat team's readiness after it has had to forgo some critical training.

That is why it is so important to have predictable and consistent funding levels. If the Army would've had to operate at the sequestered levels in 2014, this loss of readiness would've had a detrimental and cumulative impact on the Army's ability to fully support the combatant commanders operations called for in the defense security strategy.

2015 is the second and final year of the Bipartisan Budget Act. However, you can see that the Army is still funded at $5 billion less than what it was funded just last year.

While this is still above the BCA funding level, this dip in funding forces the Army to pursue a tiered readiness strategy in the near term and forgo some modernization and investments for the mid-term future. Maintenance of Army infrastructure and equipment will also suffer at this funding level.

The Army's 2016 budget request represents a base funding level commensurate with what the Army actually spent in 2014. It would allow the Army to transition from a tiered readiness construct to a more balanced readiness across the force, which is what is required for today's world.

It would bring the Army's operations in maintenance and investment accounts back to a level of funding it had in 2014, while sustaining a planned end strength of forces in all three components.

Should there be no relief from sequestered funding levels, tiered readiness will continue, allowing only nine of the Army's brigade combat teams to be fully ready as a part of the Army's contingency force pool.

Additionally, end strength will further decline, modernization accounts will be decremented by 12 percent, give or take, and the Army's infrastructure will be funded to support only critical life, health and safety repairs.

In essence, the Army, or the nation's Army, will lose some of the readiness it recovered from the Bipartisan Budget Act legislation.

Next slide, please.

With the FY '16 budget request, we are seeking to achieve the following objectives on the slide.

You've heard me previously use the words "prevent, shape" and "win." This budget has been formulated to provide the combatant commands we support with trained and ready land forces capable of conducting not only preventing and shaping operations, but decisive operations to win in a very complex strategic environment.

This requires a carefully measured balance between Army end strength, readiness and modernization, a resourcing program that is reflected in the budget you will start to see on the next slide.

The Army's 2016 base budget request is $126.5 billion, and again, is consistent with what the department spent to man, train and equip the nation's Army in the year 2014. This slide represents funding requirements for all three components -- the active component, the National Guard and the reserve, and is a breakout in the aggregate across the major defense appropriations.

We will talk about each appropriation in more detail on subsequent slides.

The Army is people. While the Army's MILPERS request accounts for approximately 45 percent of the topline, another 16 percent of it is used to pay for its civilian workforce, bringing the Army's total personnel costs to roughly about 61 percent of the total budget.

As the Army's biggest cost driver of course, we spend a lot of time with personnel and talent management and we've continued to reduce the size of the civilian workforce, commensurate with the drawdown of the military force.

As you can see the Army's procurement and RDT&E accounts represent only 18 percent of the entire budget. Proportionately, this is at an all-time low since the beginning of the century. The norm is usually between 20 percent and 22 percent of our total obligation authority.

Lastly, you can see that the main growth from fiscal year '15 to '16 is in our O&M and our research, development and acquisition accounts.

Next slide, please.

Military personnel accounts for the largest portion of the Army's budget. Our request funds a multi-component Army of just over 1 million soldiers. This account covers pay, entitlements, recruiting and retention incentives, permanent change of station moves, and some training, primarily in the reserve components.

Given our projected end strength -- (inaudible), FY '16 will be the first year the Army does not use its OCO funding to pay for end strength above 490,000 in active component, as it has done in previous years. It may strike you unusual that we are requesting the same amount of funding in FY '16 that was enacted in '15, even though our end strength is 23,000 fewer soldiers from '15 to '16 across all components. This is primarily attributed to compensation, cost of living, and housing allowance adjustments.

Next slide, please.

The following slide provides you a clear picture of military strength levels and how they continue to trend downward even though land force requirements have been on the rise. These strength levels are generally aligned with force structure changes as the Army reorganizes its brigade combat team formations.

Just a few short years ago, the Army had 45 active component BCTs, or brigade combat teams, with an active component end strength of 540,000 soldiers. It will have 32 by the end of this year, and is conducting a thorough study of further BCT reductions for 2016 and beyond as the Army had budgeted for an active component end strength in 2016 of only 475,000 soldiers.

Similarly, the Army's National Guard is reducing its end strength by 8,000 soldiers in 2016, to 342,000, and is also examining further brigade team combat team reductions from its current level of 28.

Next slide, please.

I will discuss the Army's operations and maintenance by component starting with the active component. The operations and maintenance Army, we call is OMA, portion of the 2016 budget request totaling $35.3 billion seeks to resource a more balanced readiness across the force, instead of a tiered readiness model that only has approximately one-third of our 32 BCTs in 2015 ready for contingency force operations.

It funds a total of 19 combat training center rotations. This is the Army's centerpiece of training. And of those, 17 are for the active component and two are for the National Guard. And it provides critical funding for regional engagement activities with our allies and strategic parrtners.

This OMA request constitutes a 21 percent increase from 2015 in professional military education. This will help reduce the current backlog of leader development courses that we have. This request also represents a seven percent increase for funding for civilian education. This critical funding will help lay the foundation for the Army's future operating concept that we've been working on.

This request will cover the sustainment of the Army's equipment by increasing the level of spend for depot maintenance, to help bring our equipment to a greater level of repair and restore the Army's pre-positioned stocks to ensure our expeditionary force capabilities.

Lastly, this OMA request supports base operations and facilities sustainment of the Army's 74 active component installations. The Army's base operations support will be funded at 95 percent of its requirement. Its facilities sustainment will be funded at about 79 percent of its requirement, and necessary growth in recent years have funded the Army's sustainment restoration and modernization of its facilities to as low as 62 percent, adding to the amount of backlog maintenance that already exists.

This request also maintains the same level of investment in the Army's family programs, staying true to our commitment of taking care of soldiers and families.

Next slide, please.

The Army's 2016 budget request supports a $9.4 billion O&M requirement for the Army National Guard and Army Reserve. For the Army National Guard, its 2016 O&M request is marginally lower than what it's been in 2014, but it continues to progress to restoring readiness, sustaining soldier and family programs, and funding critical facility and base operation requirements. It funds the training of a 342,000 soldier National Guard, with two BCTs conducting combat training center rotations in 2016.

For the reserves, their $2.7 billion O&M budget request supports all 72 brigade-size elements that they have its three installations and over 700 reserve centers and the professional education and specialized training of a reserve force of 198,000 soldiers.

This request is less than the actual expenditures in 2014, and also reflects a decrease in the civilian workforce by 500 military technicians. It is designed to increase readiness from individual and crew-level to platoon-level.

At this time, I will hand the briefing over to Mr. Welch, who will spend a few minutes presenting the research, development and acquisition portion of the Army's 2016 funding request. Sir?

MR. DAVIS S. WELCH: Thank you.

Good afternoon.

We're going to transition from a discussion of near-term readiness and manning the force, to Army modernization. The Army's FY '16 research, development, and acquisition budget request of $23 billion is $2.4 billion over the FY '15 enacted level. Though this is a sizable increase, I want to provide some context with respect to this budget request.

Research, development and acquisition as a percent of the Army's budget historically is about 22 percent. From FY '13 sequestration through this FY '16 request, RDA funding is about $4 billion each year below that amount. As you may recall, the Army made resource-informed decisions in recent years, and delayed efforts on several high-dollar programs: the infantry fighting vehicle -- the future infantry fighting vehicle, the armed aerial scout, and full-on-the-move tactical networking, to name a few. These reductions allowed us to reduce the portfolio about $4 billion from the historically balanced level of modernization funding.

The FY '16 budget request includes no program terminations. It wisely allocates funds to maintain science and technology at a level to facilitate equipping the force of 2025. It supports a higher level of aviation modernization, offsetting some of the inherent risk associated with the aviation restructure initiative. It incrementally funds improvements to several of our current ground combat vehicle fleets.

This funding table on the slide shows the actual funding for FYs '13 and '14, the FY '15 enacted amount. The FY '16 research, development, acquisition amount reflects where the Army continues to take mid-term risk under our president budget topline to ensure we increase near-term readiness as we prudently reduce end strength. We cannot sustain historically low investment funding without increasing risk.

This chart also depicts the Army's 10 largest equipment portfolios. What I'd ask you to take away from this is the Army is a nation -- as the nation's full-spectrum operational force, requires a very broad encompassing set of modernization efforts. Our focus remains the soldier in the squad, with aviation to provide their mobility, protection and firepower, to mission command that enables their situational awareness and networking, to the soldier portfolio that focuses on the soldier's individual's kit.

Next chart.

For the procurement appropriations, our FY '16 request is a $2.2 billion increase over the FY '15 enacted level. Our request continues investments associated with the Army aviation restructure initiative, while abiding by the FY '15 National Defense Authorization Act, which created the National Commission on the Future Structure of the Army.

This initiative restructures Army Aviation by retaining the most modernized aircraft while divesting models -- all models of the legacy, single-engine aircraft. The plan equips reconnaissance and attack units with the AH-64 Echo Model Apache, chained with Gray Eagle or Shadow unmanned aerial vehicles. ARI also equips the training base with the Lakota helicopter in lieu of the legacy TH-67 Creek helicopter.

And, if approved, this budget will complete that transition. In the end-state, all components will receive modernized Black Hawk and Chinook to fill their cargo and lift aviation structure requirements.

There are significant savings and cost avoidances for the Army associated with this initiative. Our procurement budget is prioritized to maximize our existing multi-year purchase agreements for Chinook and Black Hawk, as well as reflecting the increased demand on the Echo Model Apache.

The portfolio supporting network modernization shows that the Army is committed to developing and fielding a tactical network. It is a combat multiplier for a regionally responsive and engaged army. Network modernization encompasses many facets. We're requesting 783.1 million for WIN-T, $196.3 million for defense wide-band satellite communications, $166.4 million for generators, $145.4 million for a maneuver control system, $133.3 million for a joint command platform, and $92 million -- or $92.4 million for radios.

This request supports the revised full and open competition acquisition strategy for handheld, manpack, small form fit radios, increasing competition and ultimately providing a better product at a lower cost.

The Army continues to provide incremental improvements to the battle-tested and proven vehicles. We are requesting $367.9 million for Abrams engineer change proposal 1, which includes armored production and hardware procurement in FY '16 for support of the M1A2 SEP version 3 production in fiscal year '17.

For the Bradley modification program, we're requesting $225 million for its engineer change proposal 1, which encompasses track and suspension improvements. These funds also provide for transmission and safety upgrades and funds for training devices in the conversion of M3 to M2 models.

Of the $486.9 million requested for Stryker, $181.2 million completes the 3rd brigade double-V hull combat set. $305.7 million will be applied to the engineer change proposal 1, which includes electrical upgrades, adding power and cooling efficiencies as well as starting the conversion of 87 flat-bottom to double-V hull for a 4th brigade set.

Paladin Integrated Management, or PIM, funds that we're requesting of $273.9 million continues the low-rate initial production with 30 systems.

The Army is requesting $308.3 million to continue the low-rate initial production for 450 Joint Light Tactical Vehicles. The Joint Light Tactical Vehicle, as you know, is a program with the Army and the Marine Corps. It is paramount to the Army's tactical wheel vehicle modernization strategy. And it is our intent over time to procure over 49,000 of them, with the procurement to end sometime around 2041. .

Next chart.

The Army's $6.9 billion request for research and development test and evaluation funding is a modest increase over the FY '15 enacted amount.

By capability portfolio, science and technology efforts comprise basic research, applied research and advanced technology. We're requesting $2.2 billion, or 33 percent of the overall request at S&T.

Demonstration validation, engineer manufacturing and development, and operational system development is spread across our equipment portfolios that are depicted on the pie graph. The slice listed as "other" is predominantly tests and management support activities.

Of the request, $139 million is for combat vehicle prototyping. It is the S&T portion of the Army's strategic path toward future combat vehicles. Its focus is to refine concepts, requirements and key technologies and to develop the mature leap-ahead technologies in the areas of survivability, lethality and vehicle architectures.

Funding will inform future combat vehicle requirements and reduce technology integration risks.

We're requesting investment of $55 million for the assured position, navigation and timing technologies to enable operations in conditions that impede or denied access to the global positioning system (GPS).

We're requesting $62.3 million dollars for the Joint Multi-Role Vertical Lift Aircraft program to demonstrate the feasibility of an affordable medium lift aircraft at speeds one and a half to two times greater, covering distance twice as great as existing platforms.

In October of 2014, Sikorsky, Boeing and Bell Helicopter were selected to complete the design, fabricate and test fly demonstrator aircraft. Flight demonstrations will occur between fiscal years '17 through fiscal year '19.

We're seeking $43 million science and technology funds for a high-energy laser program to demonstrate laser technology focused on defeating rockets, artillery, mortars, unmanned aircraft and cruise missiles.

$24.5 million is requested for aviation degraded visual environment advances, in three separate technology areas of queuing, sensors and flight controls. The Army's long-term goal is to provide technology for 360-degree awareness and allow pilots to operate in formation in all regimes and in all degraded environments. The capstone flight demonstration for degraded visual environment mitigation program is scheduled in 2020.

We're requesting $48.9 million for long-range precision fires. This science and technology effort will extend missile ranges to 300 meters and provide GPS-denied precision in a single warhead for point and area targets.

For long-range runs, we seek to develop technologies for a light-weight gun for the PIM, to match our adversarials' ranges of 50 kilometers in the near term and to develop the next-generation artillery with revolutionary range capability to 75 kilometers.

I'd like to highlight a few of the nonscience and technology programs. Our '16 request continues Army cyber-investment. Our request includes a 31 percent increase in procurement funds, or $96.3 million, and a 92 percent increase in non-S&T RDT&E funds of $89.4 million.

The majority of these increase impact defensive cyber-operations in the areas of big data, insider threat and continuous monitoring of DOD information networks' operations.

$230.2 million is requested to continue the armored multi-purpose vehicle development to replace the M113 at brigade and below. An engineering, manufacturing and development contract was awarded in December of 2014 to support detailed design, component and subsystems, including a critical design -- concluding with a critical design review in third quarter of 2016.

$214.1 million for the integrated air and missile defense program. The funding will provide for engineering, manufacturing and development testing to include preparation, flight tests and a limited user test. And the program is on track to deliver initial operating capability in FY '18.

We're requesting $257.2 million for combat vehicle improvements. And the Army is pursuing engineer change proposals for Abrams, Bradleys and Strykers to be able to increase protection, enable size, weight, power and cooling improvements to be able to accept the future network.

Next chart.

This final slide in the research, development and acquisition portion of the briefing is a summary of our largest procurement programs and the quantities to be delivered, should Congress agree with or support our request.

With respect to the WIN-T increment 2 procurement, with congressional support for the FY '16 request, 43 percent of the Army acquisition objective will be met.

This concludes my portion.

General Horlander?

MAJ. GEN. HORLANDER: Okay, I'll continue with facilities. And as the Army seeks to choose the balance between readiness, end-strength and modernization, it is challenged to fund its facilities infrastructure requirements at levels in recent previous years.

As you can see, in both 2015 and 2016, these years have some of the Army's smallest MILCON budgets since the year 2000. This year, the Army's request -- the Army requests funding for 32 construction projects totalling just over a billion dollars. In the Army's family housing request, which totals less than $500 million, there is a small growth in new construction for family housing in the continental United States and Korea and in Army family housing operations

And the Army's BRAC funding requirement continues to decrease as previously provided BRAC funding is still available for most requirements, with only a small portion of new money needed for some environmental cleanup, restoration and conveyance of excess property.

Next slide, please.

In the Army's budget request resides several requirements that are managed and funded separately outside the main appropriations. This year's request includes $70.8 million for the Arlington National Cemetery to fund salaries, support contracts and 29 restoration and modernization contracts.

The Army is also requesting $720 million for chemical agents and munition destruction in 2016. This funding supports the continued closure of three incineration facility sites in Utah, Alabama and Oregon, and the completion of the construction and systemization of two chemical neutralization facilities in Pueblo, Colorado, and Bluegrass, Kentucky. This will enable the Department of Defense to complete the destruction of the remaining 10 percent of the U.S. stockpile.

The Army is also requesting appropriated funds for its working capital fund to acquire Army pre-positioned stocks in
the Paladin, PIM, engines.

Next slide. The Army has been managing a large OCO, or Overseas Contingency Operation budget since the year 2001. As illustrated earlier in the briefing, this has been an account that has ebbed and flowed as contingency operations have expanded and contracted over time.

The Army's 2016 OCO budget request is the smallest it has been in over a decade and still represents requirements in military personnel, operations and maintenance, and research, development and acquisition. This year's multi-component request totals $20.7 billion, which includes funding for the pass-through accounts. The 2016 OCO request supports Operations Freedom Sentinel in Afghanistan, the Horn of Africa and the Philippines and other CENTCOM countries. It supports Operation Inherent Resolve, primarily in Iraq, European Reassurance Initiative in Europe, and the Iraq and Syrian train-and-equip mission.

The request also includes approximately $4.5 billion for the Joint IED Defeat fund and the Afghanistan security force fund.

As stated earlier, 2016 is the first year where the OCO military personnel account is not used to pay for active component end-strength above 490,000 soldiers. The 2016 OCO MILPER request of $2 billion is primarily for entitlements and paying allowances, training and administrative support for mobilized reserve soldiers.

The OCO operations and maintenance represents about 55 percent of the Army's OCO request and supports theater operations to include transportation, force protection, support contracts, pre-mobilization and pre-deployment training, mobilization station requirements and reset of equipment returning from theater.

And a smaller portion of the request, about $1.6 billion, is for the replacement of battle losses and the ammunition.

In all areas of this OCO request, the reductions are sizable and represent the large drawdown of soldiers in Afghanistan, but should not be interpreted to mean that the Army's level of engagement is of an equal reduction. The number of contingency operations involving Army soldiers on the ground continues to increase, leaving the future of the OCO funding in the balance for the mid-term future. Next slide.

As we prepared this request, we pursued several initiatives to help us live within the fiscal realities of our topline. These initiatives include compensation reform, health care reform, and, as Mr. Welch discussed, the aviation restructuring initiative, all designed to enable the Army to remain trained and ready, capable of decisive action in any operations, and able to take care of our soldiers and their families.

Should any of these reforms not be supported, the Army will be challenged to further spread its topline against -- across all accounts that have already been reduced in previous years.

The Army has also been working hard to become more effective and better postured to support the combatant commanders while funding levels trend down.

We have reduced force structure and military end strength as well as a number of contractors and civilian personnel. Modernization efforts have been leaned, and base operation support and facility maintenance have been reduced.

Next slide.

So I conclude today by emphasizing several challenges that face our Army and need -- and that need to be the backdrop for current and future budgetary discussions.

The amount of -- as you were -- the amount of velocity of instability is on the rise. In just the past year, we have seen a number of emergent operations that required American soldiers to deploy and operate for extended periods of time for contingency operations that were not even anticipated a year earlier.

To continue to support these operations and ones that may emerge in the future, America's Army must stay trained and ready. The world security environment is changing so fast that the Army needs predictable and consistent funding that is represented in this request.

Once readiness is lost, it requires years to get back, as I stated earlier, on the average, 30 months for a brigade combat team. It is the cumulative effect of training over time, both at home station and in the combat training centers that make a unit ready, not one major training exercise every other year.

One of the key components to having a formidable ground force is to achieve a balance between end strength, readiness and modernization. The nation needs enough soldiers trained and ready for decisive action and equipped with the best equipment that provides them an unmatched advantage over any potential adversary.

Continuous delayed or reduced funding in our modernization and equipping accounts puts the Army's technological overmatch advantage at risk.


Marginalizing one component of readiness to benefit the other may net a near-term solution but may create unacceptable risk in the future.

The U.S. Army needs to retain force structure and end strength, readiness and cutting edge equipment, all critical to providing for our national security.

Ladies and gentlemen, that concludes the formal portion of our presentation. I want to, again, thank you for coming, and at this time, we'll be happy to take any questions that you might have.

Q: Hi. Jen Judson with Politico.

I wanted to ask, why has there been a boost in AH-64 procurement when the restructure calls for using what you have now? Why boost this number now?

In -- in FY '15, you wanted only 40 Apaches -- in FY '16, so I'm wondering what the reason is for that.

MR. WELCH: I appreciate the question.

The -- the aviation restructure initiative, as I said -- we're taking risk -- part of that risk was -- was not continuing on with the armed aerial scout, so what we need is the Apache model E to be able to do the manned-unmanned teaming effort with the UAVs.

And so what we're doing is we're taking the older D model and remanufacturing them into an Echo model Apache.

Q: I'm sorry, but wasn't the Apaches that you needed just coming from the guard instead?

MR. WELCH: We -- we had a plan -- long-term plan to modernize to the E model, but it is essential that we have an E model to be able to do the manned-unmanned teaming.

Part of the restructure initiative is to move the Apaches from the guard into the active component, should the commission support.

Q: So you're accelerating the conversion is what's happening in FY '16 this time?

MR. WELCH: I would have to go back and see whether we're accelerating.

We're certainly converting more in -- in '16 than we did in '15. I don't recall whether that was part of the original plan or not.

Q: General Horlander -- (inaudible).

What does the Army gain by extending the drawdown to 2018 to -- to 450,000? That was supposed to have been in the last year, by fiscal '17. You slowed it down to 2018.

What does the Army gain by that one year of --

MAJ. GEN. HORLANDER: In general terms, what we gain is near-term flexibility, so we have a great number of soldiers to address the emergent -- these emergent operations that we just saw this year.

Again, we're still committed to getting to 15 by the end of '18, but we're -- we're leveling out the slope of -- of the drawdown a little bit, because we need to be sure we have the right amount of soldiers for any -- any contingency operations that might arise.

And as you appreciate, that would be -- that's a lot of soldiers to -- to pull out of your ranks all in a year's time.

Q: Also, on the joint lightweight tactical vehicle, there's a lot of interest in it, because of the (inaudible) 49,000 vehicles.

Do you and your cheat sheet have a -- what's the -- (inaudible) -- quantity -- quantity buildup for that? You're going to buy 450 in '16. Do you have a little --

MR. WELCH: Yeah, I don't have that with me.

We're into the low-rate initial production, so we bought a little over 150, 180 or so last year. Yeah. So this is the first full year of low and initial production of 450.

The full-rate production doesn't -- doesn't kick in as planned right now until 2018.

Q: This is 49,000 as Marines -- Army --

MR. WELCH: No, that's the Army piece. I believe the Marine portion is 5,500.

Q: Can you give P.A. the five-year spending projections on this thing?

MR. WELCH: Sure.

Q: Yes. General, sir, two things that Congress is very interested in.

One is a (inaudible) restructuring, and, of course, there's a chance that -- that there's a commission out, which is said -- (inaudible) -- not to prejudge.

And second is they've often added funds to ground combat vehicles to sustain the industrial base between -- Lima.

To what degree does your budget, A, address the ground combat vehicle industrial base considerations keeping enough work in those factories to them going without a need for congressional plus-ups?

And to what degree, if Congress decides to deny the move of the Apaches, does that cause cascading effects in the rest of aviation modernization?

MR. WELCH: Let me -- let me address the second one first, and that -- that is I don't want to, I guess, anticipate the findings of the commission. I -- I'd rather not address what that would or would not do with -- with how the Army has planned the aviation restructure initiative.

With respect to Lima, Ohio, as you know, Congress had put congressional adds in in '13, '14 and '15 for procurement of the M-1 tanks. There is a sizable amount of foreign military sales that are keeping the work force at Lima present.

And then with the -- with the budget that we have right now, with what was going on in '15 and the additional striker conversions from flat bottom to double-V hull those are being accomplished in Lima -- (inaudible) -- also.

So between those three efforts, there is -- there is work at Lima at a minimal rate. And 2017, as we start the M-1 engineer change proposals, that will also occur at Lima also, as well as continuing onto the fourth double-V hulls brigade.

Q: (off mic) at York, I guess, at this point.

MR. WELCH: I believe you're correct, yes.

Q: You spoke a little bit about the need to balance short-term readiness with that longer-term modernization piece, so I wondered if you could elaborate a bit on the mid to long-term -- (inaudible) -- what the Army should be doing in the R&D and determining -- (inaudible) -- can't right now because of budget levels.

MR. WELCH: I think the Army is -- is trying to balance that mid-term risk by maintaining a fairly robust science and technology program as other RDA accounts are being reduced. And I think that's -- that's, with the topline we're given, about the best we can do at the current funding level.

Q: I mean, are there any gaps that you're concerned about in terms of different topic areas, or do you think it's pretty well-covered?

MR. WELCH: I -- I think we're trying to mitigate the risk as best we can by doing the incremental improvement for the existing fleets. I mean, certainly, those fleets have been in existence -- been in the inventory a long time, the M-1 tanks, since 1980.

So we are incrementally improving those proven systems and trying to extend their useful life as -- as one either -- the topline increases and we can start a more robust procurement program or go back for the -- the future infantry combat vehicle, which is what the -- the Army would like to continue doing once -- once toplines return, I guess, more to a historical level -- or to a higher level, not historical.

STAFF: I got to cut us off. Thank you for coming out.

Please note that Army Public Affairs is hosting a budget media roundtable tomorrow. That's Tuesday, 10 o'clock, in We're going to have General Horlander, Welch. We'll also have representatives from G3 and G8. They'll be available to answer additional questions.

Please RSVP to Mr. Dov Schwartz at 703-697-7592. 

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