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Department of Defense Priorities and Challenges
John P. RothDeputy Comptroller (Program/Budget)
7 March 2005
2
DoD Priorities and Challenges
Fiscal pressures and challenges
DoD Program/Budget process
USD (Comptroller) responsibilities and initiatives
3
Fiscal Pressures and Federal Spending
Federal budget deficit and escalating mandatory spending is putting heavy pressure on discretionary spending
Projected outlays for FY 2006-10
National Defense discretionary: +$38 billion
Non-defense discretionary: +$3 billion
Mandatory spending: +$406 billion
Net interest: +$136 billion
(Projections do not include costs for global war on terror)
4
On-Budget Surplus/Deficit(FY 2006 Budget projections, excluding Social Security)
-700
-600
-500
-400
-300
-200
-100
0
100
200
300
400
500
600
FY90 FY92 FY94 FY96 FY98 FY00 FY02 FY04 FY06 FY08 FY10
Fiscal Years
$ Billions
Actual
Billions of dollars
Projected
5
0
250
500
750
1000
1250
1500
1750
2000
2250
2500
2750
3000
79 90 00 05 10
Trends in Federal Spending(Outlays in billions of dollars)
Nondefense
Defense
Mandatory
Discretionary
Total Federal Outlays
Net Interest
6
Department of Defense Topline(Discretionary budget authority $ in billions)
*FY 05 FY 06 FY 07 FY 08 FY 09 FY10FY11
DoD (051) 400.1 419.3 443.1 462.4 482.0 492.1502.3
FY 2006 DoD budget:
Increase over FY 2005: 4.8 percent
Increase over FY 2001: 41.4 percent
*Excludes supplemental appropriations
7
DoD Topline Chronology (Discretionary budget authority $ in billions)
FY01 FY02 FY03 FY04 FY05 FY06
Baseline 296.5 327.5 375.2 377.1 400.1 419.3
Enacted Supplementals: 19.2 17.5 62.3 90.1 76.0
Program 5.5
GWOT 4.3 3.5 62.3 65.1 74.9
GWOT 9.4 14.0
GWOT (Title IX) 25.0
Hurricane 1.1
Total Enacted w/ Supps 315.7 345.0 437.5 467.2 476.1 419.3
Total GWOT $ Enacted FY 2001-2005 = $258.5 Billion
8
0
2
4
6
8
10
60 70 80 90 00 06
DoD Outlays as Percent of GDP
Fiscal Years
8.98.2
4.6
FY 06 = 3.3%
6.76.0
9
DoD Outlays as Percent of Federal Budget
0
15
30
45
60 70 80 90 00Fiscal Years
43.4
22.5FY 06 = 16.5%
27.3
20.7
10
DoD Budget Reflects Fiscal Realities
President’s FY 06-11 DoD topline $25B lower than previously
Programs curtailed to keep within topline
Rigorous agenda planned for 2005 Quadrennial Defense Review
Action continuing to get greater security from each budget dollar:
New generation of weapons with greater capabilities, less manpower
Changing how DoD does business across all functions: acquisition, human resources, infrastructure, financial management, and more.
11
Action on Budget-Related Challenges
Military Personnel and health care costs: Working with Congress and internally to moderate growth
Defense requirements: Continuing rigorous assessment based on capabilities needed, looking forward – not clinging to the past
Delivery of support services: Continuing to streamline and integrate
Infrastructure: Advancing the restructuring of overseas basing and realigning of US bases through 2005 BRAC process
Personnel: Moving military out of non-military billets, overhauling management of civilians with National Security Personnel System, and innovating on compensation, recruiting, and retention
(These are challenges cited by Government Accountability Office in two March 2005 reports on high risk fiscal challenges.)
12
DoD Program/Budget Process
Goals Focus on capabilities – not prejudge how best to achieve them Balance near-term readiness and long-term modernization Emphasize joint requirements and joint operations Support the President’s and Secretary’s priorities Ensure that planning guidance is followed Assess program performance and effectiveness Use program assessment to inform budget decisions and improve
program performance
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DoD Program/Budget Process – 1st Year
BudgetExecution
DevelopNational Security
PlansServicesDevelop
ProgramsBudgets
OSD/OMB ProgramBudget Review
CongressionalReview
SubmitBudget
to Congress
Winter-Spring
Spring-Summer
Summer-Fall
Winter
Spring-Summer
14
DoD Program/Budget Process – 2nd Year
BudgetExecution
Off-Year Defense
Planning Guidance, as
necessary
ServicesPrepare Program Change Proposals/
Budget Change Proposals
OSD/OMB Program/Budget
ExecutionReview
CongressionalReview
SubmitBudget
to Congress
Winter-Spring
Summer
Fall-Winter
Winter
Spring-Summer
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Supporting SecDef Priorities in FY 06 Request
Successfully pursue the Global War on Terror FY 06 budget request complements FY 05 supplemental
Added funding for Army restructuring, chem-bio defenses, language skills
Strengthen joint warfighting capabilities Make hard choices to fund most pressing priorities
Accelerate to new generation of systems
Transform the joint force Restructure Army & Marines to gain more units, more deployable
Restructure US global posture and basing
Improve manning/take care of our forces Improve pay, allowances, health care, housing, and facilities
Mil-to-Civ conversions and rebalancing to increase high demand skills
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USD (Comptroller) Responsibilities
Ensure DoD follows Secretary of Defense policies
Serve as the DoD Chief Financial Officer
Prepare annual DoD budget and financial statements
Present/defend budget to Congress
Implement/enforce congressional direction
Formulate and enforce financial management policies
Improve DoD business/financial management
17
Transforming DoD Business Management
Business Management Modernization Program (BMMP)- Overhaul DoD management processes- Consolidate and integrate information systems- Facilitate auditable financial statements
Budget execution- Achieve greater ability to shift funding to address new requirements- O&M funds available for 2 years
Defense Business Board Metrics: to measure and improve program performance Management Initiative Decisions (MIDs)
19
FY 2005 Supplemental Request
To be included in request, funding had to be:
Vital, urgent, and temporary in nature
Incremental costs related to Global War on Terror
For funding executable in FY 05
Issues on inclusion in supplemental appropriations
Army/USMC restructuring
Army end strength above baseline (both FY 05 and FY 06)
Military construction -- urgent and/or temporary?
20
Department of DefenseWithin the Executive Branch
PRESIDENT
Office of Manageme
nt& Budget
Secretary of Defense NationalSecurityCouncil
Office of the Secretary of
Defense• Policy• Acquisition• Intelligence• Comptroller• Personnel & Readiness• Legal• Public Affairs• Congressional Affairs
Combatant Commanders
Europe Special Operations Joint ForceSpacePacific TransportationSouthern StrategicCentral Northern
MilitaryDepartme
ntsArmyNavyMarine CorpsAir Force
Chairman,Joint Chiefs
of Staff--------
Joint Staff
21
Office of the Secretary of Defense
Secretary of Defense/Deputy Secretary of Defense
Secretary of Defense/Deputy Secretary of Defense
Under Secretaryof Defense
Policy
Under Secretaryof Defense
Policy
Deputy ChiefFinancial Officer
Deputy ChiefFinancial Officer
Deputy Comptroller(Program Budget)
Deputy Comptroller(Program Budget)
DirectorProgram, Analysis &
Evaluation
DirectorProgram, Analysis &
Evaluation
Under Secretary of Defense
Acquisition,Technology & Logistics
Under Secretary of Defense
Acquisition,Technology & Logistics
Under Secretary of Defense
Personnel & Readiness
Under Secretary of Defense
Personnel & Readiness
Under Secretary of DefenseComptroller/Chief Financial
Officer
Under Secretary of DefenseComptroller/Chief Financial
Officer
Under Secretary of DefenseIntelligence
Under Secretary of DefenseIntelligence
22
Secretary of Defense President Congress OSD CJCS Staff Party Leadership
Army Navy USAF OMB Authorization
Combatant Cdrs Appropriations
External Influences
Defense Budget Influences
global events economy & fiscal conditions public attitudes
media industry interest groups constituencies