Fiscal Year 2012

Defense Spending Request Briefing Book

Laicie Olson

Center for Arms Control & Non-Proliferation

322 4th St., NE
Washington, DC 20002

February 14, 2011

Fiscal Year 2012 ii
 Table of Contents
Fiscal Year 2012 .............................................................................................................. 1
The President’s Request ................................................................................................... 3
Table 1: Breakdown of Fiscal Year 2012 Defense Budget Request .................................. 4
Graph 1: Total Defense-Related Spending Request for Fiscal Year 2012......................... 4
Graph 2: Department of Defense Topline FY 2001 – FY 2012 ....................................... 5
2011 Weapons Terminations and Reductions.................................................................... 6
2012 Weapons Terminations and Reductions.................................................................... 8
Nuclear Weapons and Non-Proliferation ........................................................................ 10
Table 2: Breakdown of Fiscal Year 2012 Department of Energy
Defense-Related Budget Request ................................................................................. 10
Graph 3: Department of Energy Defense-Related Spending
Request for Fiscal Year 2012 ....................................................................................... 11
Iraq and Afghanistan War Funding ................................................................................ 12
Table 3: FY 2012 War Funding by Appropriation Title ................................................ 12

Fiscal Year 2012 iii

 Center for Arms Control & Non-Proliferation

Fiscal Year 2012

Defense Spending Request Briefing Book

In September 2010, Secretary of Defense Robert Gates

laid out the details of a major new initiative meant to
eliminate waste and redundancy within the Pentagon.
The initiative would generate over $100 billion in
overhead savings over the next five years in an attempt
to turn off the “gusher of defense spending” Gates
notably referred to just months before in a speech at the
Defense Secretary Robert M. Gates
Eisenhower Library in Abilene, Kansas. and Navy Adm. Mike Mullen,
chairman of the Joint Chiefs of Staff,
address the media at the Pentagon,
The initiative was not meant to reduce the Pentagon’s Jan. 15, 2010.
budget, nor contribute to deficit reduction. Rather, it was
meant to move money to higher priority programs. As such, the entire $100 billion would be
reinvested in the Department of Defense (DOD). “To be clear, the task before us is not to
reduce the department’s topline budget,” Gates said, “Rather, it is to significantly reduce its
excess overhead costs and apply the savings to force structure and modernization.”

More importantly, though, the initiative was meant to stave off the inevitable reality that
eventually, due to rising deficits and increasing pressure on the budget, the Pentagon might have
to actually reduce its budget below prior year levels..

In the following months, it became clear that Gates’ $100 billion efficiencies initiative would not
be enough. Multiple deficit reduction plans, including the Bowles-Simpson Deficit Reduction
Commission, detailed large cuts to the Pentagon’s budget beyond those Gates had planned.
Eventually, the Administration informed Gates that he would need to trim an additional $150
billion. Moreover, this time the Defense Department would not be allowed to keep the savings.

Gates eventually negotiated the $150 billion figure down to $78 billion. On January 6, 2011 he
announced that only $72 billion of the original $100 would be reinvested, but that an additional
$78 billion would be cut, for a total $178 billion. $28 billion of the original $100 billion would
be used over the next five years by the Army, Air Force, Navy and Marine Corps to deal with
higher than expected operating costs including health care, pay and housing allowances,

Fiscal Year 2012 1

maintaining weapon systems, depot maintenance, base support and training. In addition, $54
billion saved by the president's decision to freeze federal civilian worker pay would go toward
deficit reduction, along with $24 billion generated by changing economic assumptions, the
restructuring of the F-35 program and plans to reduce the end strength of the Army and Navy.

In Gates’ proposed cuts, the Pentagon’s base budget will not go down at any point in the next
five years (as opposed to spending for the wars in Iraq and Afghanistan, which is finally
declining as the U.S. withdraws its troops from Iraq). DOD’s budget will continue to grow at a
slower rate than it has in the past. This is considered a reduction only because the budget will
eventually stop growing with the rate of inflation, so further programs will have to be cut. The
“gusher” will be reduced to more of a trickle, but will be far from turned off.

In delivering his announcement, Gates made clear that, “This plan represents, in my view, the
minimum level of defense spending that is necessary, given the complex and unpredictable array
of security challenges the United States faces around the globe,” and called various deficit
reduction plans, “math, not strategy.” Gates did not address the potential threat posed by the
rising deficit, something Admiral Mike Mullen, chairman of the Joint Chiefs of Staff, has called
“our biggest national security threat.”

Over the next year, as attention continues to focus on deficit reduction, the entire budget will
come under increased pressure. At 19 percent of US federal spending and about 56 percent of
discretionary spending, the defense budget is unlikely to escape at least some of the spotlight.
Whether or not one agrees with such scrutiny, the fact is that in a time of intense economic
pressure, the really tough choices have yet to be made.

Fiscal Year 2012 2

 The President’s Request
For Fiscal Year (FY) 2012, which begins on October 1, 2011, the Obama Administration has
requested a base budget of $553 billion for the Department of Defense (DOD). This is $13
billion below the Pentagon’s Future Years Defense Program (FYDP) estimate, released last
year, but represents about 3 percent in real growth over the funding the department would
receive for FY 2011 under the current continuing resolution, which expires on March 4.

In addition, the Administration has requested $117.6 billion for Overseas Contingency
Operations (OCO), to fight the wars in Afghanistan and Iraq. This is a 26 percent decrease
from last year’s request of $159.4 billion and represents the administration’s commitment to
reduce troop levels in Iraq and Afghanistan and place more strict rules on what can and cannot
be included in the war spending request. In the past, additional funding has been made
available through emergency supplemental appropriations, when needed. This remains a
possibility for FY 2012. This brings the FY 2012 defense budget request to a total of $670.6
billion.

These numbers do not include nuclear weapons related spending in the Department of Energy
(DoE) or other defense related funding.

In addition to an initial $670 billion for the Pentagon’s base budget and the wars in Afghanistan
and Iraq, the Administration has requested $18 billion for nuclear weapons activities at
Department of Energy and $7 billion for additional non-Pentagon defense related activities. This
brings total non-Pentagon defense related spending (053/054) to $25 billion, an increase of
about $200 million over FY 2011.

Fiscal Year 2012 3

 Table 1: Breakdown of Fiscal Year 2012 Defense Budget Request

(in billions of constant FY 2012 dollars)

FY 2012 Funding Request Allocated to:

$553 Billion Department of Defense Base Budget (051)

$118 Billion Wars in Iraq and Afghanistan

$25 Billion Department of Energy and Other Defense Related Funding

(053/054)
$696 Billion Total Defense Spending Request for FY 2012 (050)

Note: This number does not include any additional FY 2012 supplemental funding to support the wars in Afghanistan and Iraq.

Graph 1: Total Defense-Related Spending Request for Fiscal Year 2012

DoD Base Budget

Overseas Contingency
Operations
DoE and Other Defense
Related Funding

Fiscal Year 2012 4

 Graph 2: Department of Defense Topline FY 2001 – FY 2012

(in billions of current dollars)

800

700

600

500
OCO Funding
400
Non-War
300 Supplemental

Base Budget
200

100

* Figures for FY 2011 and FY 2012 are estimates based on the President’s requested funding and do not included any additional
supplemental funding to support the wars in Afghanistan and Iraq.

Fiscal Year 2012 5

 2011 Weapons Terminations and Reductions
F-35 Joint Strike Fighter (JSF) Extra Engine

The Pentagon has attempted to cut a second engine for the F-35 every year since FY 2007, but
has been blocked by Congress. It has yet to be determined if the same will happen in FY 2011.
Ideally, the f136 extra engine, developed by General Electric and Rolls Royce, would eventually
save money by driving down the price of the original engine, Pratt & Whitney’s f135.

C-17 Globemaster Strategic Airlift Aircraft

Another program that has previously been unsuccessfully slated for cuts is the C-17, a transport
aircraft designed to carry large and heavy military cargoes over long distances. Congress
provided unrequested funding for 10 C-17s in the FY 2010 defense spending bill at a cost of $2.5
billion, $2.2 billion for eight planes in the FY 2009 supplemental spending bill, and $2.4 billion
for 10 planes in the FY 2008 defense spending bill. Cancellation of the C-17, manufactured by
Boeing, would equal an estimated $3 billion in savings each year.

Next Generation (CG(X)) Cruiser

The Navy’s CG(X) Cruiser, envisioned as a multi-mission ship with an emphasis on air and
ballistic missile defense, encountered increasing delays and rising costs to the point of
unaffordability. Rather than procure more CG(X), the Navy will instead build an improved
version of the Arleigh Burke (DDG-51) class Aegis destroyer called the Flight III version.

Third Generation Infrared Surveillance (3GIRS)

Rather than continue the 3GIRS program, the administration will focus on upgrading a missile
detection satellite that is currently in development, the Space Based Infrared Systems (SBIRS).
Technology being developed for the 3GIRS program will be incorporated into  future  
deployments  of  SBIRS.  

Net-­‐Enabled  Command  Capability  (NECC)  

The  NECC  was  cancelled  because  it  was  unlikely  the  program  would  be  completed  on  time.    
Rather,  DOD  will  upgrade  its  current  command  and  control  capability  -­‐-­‐  the  Global  Command  
and  Control  Systems  (GCCS).  

   

Fiscal Year 2012 6

Command  Ship  Replacement  (LCC-­‐R)  

In  FY  2011,  the  administration  proposed  a  delay  in  the  procurement  of  the  Navy’s  LCC-­‐R  
beyond  2015.    The  LCC-­‐R  would  have  replaced  the  two  command  ships  that  the  Navy  currently  
operates.    Rather,  the  Navy  will  extend  the  service  life  of  the  current  command  ships  to  2029.    
This  delay  will  save  approximately  $3.8  billion  in  procurement  costs  over  five  years.  

Expeditionary  Fighting  Vehicle  (EFV)  

In  FY  2011,  the  administration  proposed  a  delay  in  the  procurement  of  the  EFV  for  one  year,  
while  maintaining  planned  EFV  research,  development,  test  and  evaluation  (RDT&E)  funding.    
On  January  6,  2011  Secretary  Gates  announced  the  Pentagon’s  plans  to  cancel  the  EFV  program  
altogether.    The  EFV  would  cost  an  additional  $12  billion  to  build.

Fiscal Year 2012 7

 2012 Weapons Terminations and Reductions
Expeditionary Fighting Vehicle (EFV)

Originally conceived in 1995, the EFV was supposed to be a high-speed amphibious assault
vehicle that would speed through water at 25 knots and over land at 45 miles an hour. In
addition to its unpredictability and rising costs, however, the flat hull that allows the EFV to
skim over water also makes it extremely vulnerable to Improvised Explosive Devices (IEDs). In
addition, since system development began in 2000 the EFV has had severe cost growth and
technological problems. The Pentagon has proposed its cancellation in FY 2012.

F-35 Joint Strike Fighter (JSF) Extra Engine

Once again, the Pentagon has not requested additional funding for the f136, an alternative
engine option for the F-35 Joint Strike Fighter. The Administration notes that the extra engine
program began as an effort to reduce technical risk. However, since the main engine program is
progressing well, it is no longer needed.

C-17 Globemaster Strategic Airlift Aircraft

The Pentagon also has not requested additional funding for the C-17. A total of 223 C-17s have
now been ordered with the budgetary resources provided up to and including 2010.

F-35B Short Take-Off/Vertical Landing (STOVL) Joint Strike Fighter (JSF)

The  largest  RDT&E  and  DOD  acquisition  overall,  the  JSF  is  an  ambitious  program  to  build  three  
related  but  slightly  different  aircraft  for  the  Air  Force,  Navy,  and  Marine  Corps.    It  is  more  cost-­‐
effective  to  produce  the  new  JSF  platform  than  to  upgrade  older  systems,  which  need  to  be  
replaced.    Due  to  large  delays  and  cost  overruns,  however,  Secretary  Gates  announced  on  
January  6,  2011  that  the  Marine  Corps’  version  of  the  F-­‐35  would  be  placed  on  a  two-­‐year  
probation.    If  testing  problems  cannot  be  resolved,  the  Pentagon  will  recommend  the  variant  be  
cancelled.    To  fill  the  gap  created  by  this  slip  in  the  JSF’s  production  schedule,  the  Pentagon  will  
purchase  more  Navy  F/A-­‐18s.

TRICARE

Secretary Gates announced on January 6, 2011 that he would propose modest increases to the
military’s TRICARE medical program. The FY 2012 request proposes to shift future enrollees
of the Uniformed Services Family Health Plan into Medicare and the TRICARE-for-Life

Fiscal Year 2012 8

wraparound program when the enrollees become Medicare-eligible at age 65, saving an
estimated $34 million from 2012-2016 and another $279 million from 2012-2021.

SLAMRAAM Surface-to-Air Missile

According to the Administration, the Surface Launched Advanced Medium-Range Air-to-Air

Missile (SLAMRAAM) short-range missile defense system would require excessive funds to
procure in sufficient quantities. The cost to procure SLAMRAAM missile interceptors has
tripled since initial estimates. The Pentagon has requested that funding for the program be
reduced in order to complete research and development.

Non-Line-of-Sight Launch System

The Non-Line-of-Sight Launch System (NLOS-LS), a self-contained box launcher system

that can deliver up to 15 precision attack missiles, has performed poorly and is no longer
cost effective. The Administration has recommended its cancellation. NLOS-LS was
originally a part of the Army’s now-terminated Future Combat Systems (FCS).

EP-X Manned Airborn Intelligence, Surveillance, and Reconnaissance Aircraft

The Pentagon has proposed the cancellation of the EP-X program, a new surveillance and
intelligence gathering aircraft, because the strategic need for the program has not yet been
determined.

SM-2 Block IIIB Missile

The Navy first introduced the SM-2 Block IIIB in 1999 as an evolutionary improvement to the
previous versions of the SM-2. Due to the planned transition to the more capable SM-6 Block I
missile, however, the program has been recommended for cancellation.

Fiscal Year 2012 9

 Nuclear Weapons and Non-Proliferation
The numbers below refer to defense-related funding at the Department of Energy. This funding
for the National Nuclear Security Administration (NNSA) is separate from and in addition to
$18 billion described above, which is funded through the Department of Defense. The
President’s FY 2012 request includes increases meant to “maintain a safe, secure, and effective
nuclear arsenal by improving and replacing aging facilities and infrastructure, continuing
nuclear weapon life extension programs, and sustaining stockpile surveillance and certification
activities.” The request includes $2.5 billion in funding for nuclear non-proliferation programs,
an increase of nearly $400 million over the president’s FY 2011 request, and $7.6 billion for
weapons activities, an increase of $580 million over the President’s FY 2011 request.
Unfortunately, current proposals for FY 2011 provide about 22 percent less than the President’s
request for nuclear non-proliferation, leaving the possibility open for further cuts in FY 2012.

Table 2: Breakdown of Fiscal Year 2012 Department of Energy Defense-

Related Budget Request

(in millions of constant FY 2012 dollars)

FY 2012 Funding Request Allocated to:

$2,519 Million Nuclear Non-Proliferation

$7,589 Million Weapons Activities

$450 Million Office of the Administrator

$1,154 Million Naval Reactors

$860 Million Other Defense Activities

$5,407 Million Defense Environmental Cleanup

$17,979 Million Total Department of Energy Defense-Related Spending Request

for FY 2012
* Numbers may not add due to rounding.

Fiscal Year 2012 10

Graph 3: Department of Energy Defense-Related Spending Request for Fiscal
Year 2012

Defense Nuclear Non-

Proliferation
Weapons Activities

Office of the
Administrator
Naval Reactors

Other Defense Activities

Defense Environmental
Cleanup

Fiscal Year 2012 11

 Iraq and Afghanistan War Funding
The US today has roughly 97,000 troops in Afghanistan and 47,000 in Iraq. This total is the
lowest since July 2006, when the U.S. had about 148,100 deployed. Likewise, the FY 2012 war
spending request is the lowest since Congress approved $102.6 billion in FY 2005. This
significant decrease demonstrates the Administration’s commitment to reducing troop levels in
Afghanistan and Iraq.

Annual war costs peaked at $179.7 billion in FY 2008, with the height of troop deployments to
both nations totaling 194,000.

In the past, additional funding has been made available through emergency supplemental
appropriations, when needed. This remains a possibility for FY 2012.

Table 3: FY 2012 War Funding by Appropriation Title

(in millions of constant FY 2012 dollars)

FY 2012 Funding Request Allocated to:

$11,229 Million Military Personnel

$90,761 Million Operations and Maintenance

$15,022 Million Procurement

$397 Million RDT&E

$0 Military Construction

$0 Family Housing

$435 Million Revolving and Management Funds

$117,842 Million Total War Funding (Overseas Contingency Operations) Request for
FY 2012
* Numbers may not add due to rounding.

Fiscal Year 2012 12