Monday night at 8 00 eastern on cspan two. The Trump Administration released its 575 billion. Efense budget this week defense under secretary and chief Financial Officer john ross outlines the details and Spending Priorities during a pentagon briefing. This is 45 minutes. Hello, everybody. Welcome budget relief day. Today, we are grateful to have with us mr. John ross, performing the duties of the undersecretary of defense, and Lieutenant General anthony, joint staff, director for resources and assessment. This briefing will be 40 minutes in duration and on the record. We will start off with a few opening comments. We will open the floor to questions. With that, thank you. Good morning or good afternoon. Good to see you all. I will not do a dramatic reading of a book. Just there for reference. We will walk through our presentation of the budget. We will try to answer your questions as best we can. Again, as you know, today, the president President Trump sent to congress his fy 2018 budget request. What we will do here is outline the request for the Defense Department. Go to the first slide please. The message is on the first slide. Secretary matus from the first day he was in the building had 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. Our request in the fiscal year of 2017 for Additional Resources and the appropriations act was intended to address nearterm readiness. With the Additional Resources, id get readinessild on the improvements that are ready for the maker of this fiscal year and add resources in order to balance the force. We will walk through some of the examples where we will do that. Ultimately, that is not the end of the journey, our goal is in fiscal year 2019, we will sustain the gains, hopefully we andble to make them in 17 2018. By that time, we will be informed by the new Defense Strategy, we will build further to make a rigor, more lethal and more ready force. The numbers, the base budget request is 574. 5 billion. The overseas Contingency Operation is 64. 6 billion for a total of 639. 1 billion. Is 52se budget request billion above the Defense Budget cap in the current law. The budget and control act. It is absolutely essential for us in order to achieve the goals and meet the strategy, we must increase the Defense Budget cap. We have to reverse the frustration in order to adequately protect u. S. National security. Since the enactment of the budget control act in 2011, the world has become a more dangerous place with rising terrorism and more aggressive potential adversaries. Under the budget and control act, the military has during the same. Of time become smaller, readiness has eroded and modernization has been the word. That is not a good place to be. Balances the Defense Program and establishes a foundation for rebuilding the u. S. Military into that more capable lethal and ready force. The. Here are some of the major themes in terms of a budget perspective that informs the building of this budget. As i continue to emphasize, improving readiness has been priority one four secretary matus since he walked in the door. What does it mean russian mark what will it result in . More aircraft in the air, more ships at sea, more troops in the field and more ammunition. This budget also addresses the evolving National Security challenges, we need to retain our counterterrorism and Counter Insurgency competencies. Ourant to seek to preserve competitive advantage versus our major adversaries and we look to sustain our Capabilities Development for new war fighter concepts. A recapitalization area, one of the highest prayers is to modernize the nuclear enterprise. We prioritize key investments and space capabilities. We continue to focus on innovation as a way to maintain our technological advantage and we seek to sustain the finest fighting force in the world. We are asking for a lot of money of the american taxpayer. We look to continue to identify and pursue reforms to improve efficiencies and achieve this. Those are the major themes of the budget. Like any the budget, i have a couple of graphs that will make your eyes gloss over here for the next two slides. This is essentially a picture of the Defense Budget since 9 11. The base budget, the great is the overseas Contingency Operation budget. I will draw your attention to the most important thing on the slide. This is for fiscal year 17 and 18. There are the numbers that i just alluded to, the 574 billion. You can see that in addition to being above the budget cap, it is a significant increase over 523nacted fy 17 which is billion. Overseasee in the Contingency Operation budget, that is a distorted picture, i caution you as many of you are as the fy 17 appropriations act was filed, the congressional committees put all the Additional Resources we requested for the readiness improvements and put it in the overseas Contingency Operation budget. That fy 17 number is distorted. That makes your comparisons from 17 to 18 a little difficult. That also offers me an opportunity to apologize for what has been a difficult of the fy between any 17 numbers and the fy 18 numbers. It has to do with the tyranny of what was happening in the calendar and when we have the locks on this fy 18 budget. The fact that the fy 17 appropriations process had not concluded yet. It is late april and early may. We didnt have the final fy 17 appropriations. Depending on which book you have, we are providing an overview book and a weapons book and the like, the numbers you see there for the fy 17 column are the fy 17 budget request numbers. We do not have those numbers available to us as we put those books to bed. Ofyou look at the Office Management and duck mutations budget, all of their fy 17 numbers are a mathematical calculation of a year long continuing resolution. It is a mathematical number that doesnt have any particular programmatic basis. That distorts all the comparisons between 17 and 18. As we go forward, selectively, we will have hopefully made some sense in this graph. We have been playing catchup since we locked up this budget in terms of trying to catch up to when the actual fy 17 budget was enacted. We were making our final decisions here on fy 18. It is unfortunate, the nature of the timing as we put these through their bases paces. It was a bit of an expansion. I was so you the plus 52 billion. There it is on the right. The calculated budget control act for fy 18 would be around 522 billion. Our request is 52 billion above that. Some of you may have seen terms ofn the press in plus 54 billion, that is the whole defense function which includes the department of engineering portion of the budget as well. That is also in the material. Our portion of that increase is the 52 billion. To thepause and hand off general here. The fy 18 request picks up after the supplemental appropriation for the fiscal year of 17. 17 was about addressing immediate war fighting readiness. In 18, we want to continue to build a baseline from which to move forward from regarding readiness. We have continued significant investment in the aspect of unit preparedness, training maintenance and modernization to restore were fighting readiness while setting the conditions for future sustained comprehensive readiness. When we say that, this is the capacity,tween the the capability and Mission Preparedness of our units. This budget also supports Combatant Commander exercises and engagement to enjoy invest in critical Aviation Innovations and isr in support of commander theater activities. This chart describes the service and budget highlights of the Service Specific increases in our investments intended to increase readiness. What you see here under each of these Service Entries is areas that would mean that we will invest in equipping, maintaining the fourth at higher levels than we have been under previous years. Where decisions were made to ensure that the forces always ready force is always ready. Ways, we are sacrificing the longterm readiness of the force and the modernization of the force. This fullyear 18 fills those holes. It allows us to recover readiness in the aspect of fullspectrum readiness. Differentperate in theaters against different adversaries over different periods of time. This budget allows us to be able to recover that readiness. It establishes a baseline from which to move forward from as we look to the future. Is a very busy slide. That forostly provide your information. I draw your attention to the only Important Message on that slide, the righthand column and the mop or sticker. What this budget does is pick up andsustain an increase in strength over 56,000 from what the 18 column in the fy 17 budget was. Extent, particularly, the Army Strength increases were inherent in the fy 17 authorization act. We continue to fund that, there are some minor increases. You can see that in the navy marine corps. For the most part, this continues the momentum to building the force as we go forward. We will work on this. We will figure out what is the appropriate force structure to when that is done, it will inform the fy 19 budget. It is not allinclusive inclusive, isnt it bigticket driver. The knowledge you see on the slide is procurement. It is in the base budget. You will see that in terms of aircraft, youll see the biggest acquisition program. It is in we are requesting 70 aircraft. They are broken down into 46 aircraft for the air force variant. That is the f35 a. We are asking for 20 aircraft for the marine corps variant. That is the f35 the. You will see that we are asking for other aircraft as well. Dollars are right there. Ships. A combat these are the six biggest ships here. There is a fleet oiler. Ship, the tescue ats as well. We are asking for eight battle force ships. These are major shift in terms of two submarines, two destroyers. The boarde second of class aircraft carriers. You can see the condemned discontinued investment in space programs. I want to put a stop on this particular slide. We close out this budget over the last two or three weeks in particular, a great deal of concern was being raised with current inventory levels. The secretary mandated and insisted that we fully fund this to the maximum extent possible. Things like the hellfire, things like the guided multiple launch rocket system. This is really only half the story. This is the base budget, there is another billion dollars that is in the overseas contingency budget as well. You can see the selected ground systems for the amphibious combat vehicles. This is the first year of procurement for those programs. Then you see a couple of selected examples. These are the two major programs that are in that portfolio. Next slide please. This is a selected set of examples. They were unclassified and just to give you some examples of the things we have done in past years in terms of the focus on technology and innovation. We have funded a pretty robust science and technology program. 13. 2 billion. Then there are a couple of examples. In terms of the alternate navigation technology. Highspeed strike weapons. In particular, on the bottom, they were reacting to current changes in the threat in the field. To counter theg Unmanned Aerial Systems that we are encountering even today. Our is a basket of continued concern in investing in new technologies. We are pretty pleased with our situation with facilities. When you get constrained budgets and have lower top lines you tend to take risks and defer. You wait to fix the window until the next year and is on is the group is not leaking or Something Like that and so, we have had pretty anemic facilities budgets. This reflects a 25 increase in military construction going from 7. 8 billion dollars to 9. 8 billion. There is a readiness nexus with this as well. Operational and training facilities. As far as overseas, we continue to invest in infrastructure to support the relocation of marines. My foot stop on this is we are seeking authority for a new closure around and 2021. In order to get a rounded done in 2021, you have to begin the analysis and process. It has been over 10 years since we had a background. The sum total of the four or five rounds we have had has resulted in approximately 12 billion per year and savings by having done that. That is a gift that keeps giving. We are looking for the authority. We cannot do the Detailed Analysis under current law. What we have is a parametric estimate that tells us we have about 20 access capacity. If that is anywhere near correct we estimate we can save about 2 billion a year that we can reinvest in readiness and modernization. This is a significant opportunity to get savings it is a structured, systematic, rigorous process that ultimately congress has the final say on we are asking for the authority and we are pushing it pretty hard we are also, as i noted, we continue to look at our business processes. The secretary when he came in as well said he was rebuilding and reforming an agenda. There is a number of ongoing activities we continue to pursue and we are looking at the headquarters to reduce them by 25 . We continue with acquisition reform, particularly the better buying power three point zero. We continue to look at our Service Contracts to make sure they are appropriate. In the Financial Management world, we are moving from getting ready to begin the audit to beginning the audience. It is an extremely important year. We will learn a lot. In particular for us in the Financial Management world, 2018 is an extremely important year. We will move from getting ready to audit to actually doing the audit. Its an extraordinarily important here. We will learn a lot from it. There will be waves and losses be wins and losses. Spring training is over, we need to get on with the season. We need to get on to actually doing the audit, and we think we will learn on awful lot. Next. Inilar here with the theme this slide, some of the reforms that came out of the 2017 authorization act. As many of you are aware, we are reorganizing acquisition communities, breaking it into two undersecretaries. Were in the process of standing up to chief management officer. We will elevate this Cyber Command into a standalone combatant command. We are going to develop an implemented plan to reform the health agency. Smart things to do in terms of reorganizing the department. Modest setelatively of compensation reforms this things atly tweaking the margins. The goal throughout this in terms of compensation packages is to maintain the health through a competitive compensation package that reflects the unique demands and sacrifices of our service members. Our since is this budget does that. Forill added 2. 1 pay rise military pay members, which is the government. Some going to seek modifications to military health care. We continue to look at efforts, for example, to rely on telehealth, those kinds of things, to try to improve the beneficiarys experience with the process. We like to exempt from any cost share increase the medically retired and family members of those who die on active duty. Thats a tweak that perhaps the hill has overlooked. What we did get from last year, we did get a fair amount of the revised and simplification structure of the health care system, that they grandfathered the provision for anybody who 2018,in on january 1, which wiped out nearterm savings and created what we think is an awkward twotier system. So we are going to ask the congress if they would consider eliminating the grandfathering. And 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 the choices many civilians have. We are going to ask congress if they want the current law to match, and we are going to ask at least for the enlisted members, that they be allowed to have matching. Next slide. Theres nothing particularly new on this, i just want to emphasize that we continue to have a robust Family Assistance Program and benefits. We are investing 8 billion in this range of service, from spouse education, morale recreation and welfare, things like the schools and the commissaries and the like. Just emphasize continued support to members and their families. Next slide. As far as the contingency request, 64. 6 billion. It basically supports the level of Ongoing Operations in a status and, iraq, in syria. It also includes cooperation money for looking at counterterrorism Crisis Response and other things throughout the globe. It reflects a north level and inof is a major there commitment to the european reassurance initiative. That goes up from 3. 4 billion to 4. 8 billion. Caution thing i would is there are a number of plans in terms of change of plans that are under consideration both the building and the white house right now that are going through the vetting process and discussion stage. This particular request does not reflect approval of those plans, and once the plans are approved we will have to take a look at this and reassess with the Resource Requirements might have with the white house and congress to see if there are any changes to the request that might be necessary next slide. Talke end, i want to briefly about one concern that has raised in the runup