1. Deliberative Working Document - Predecisional Supporting the Secretary’s Top Priorities Brad Berkson, Director, OSD Program Analysis and Evaluation

2. Deliberative Working Document - Predecisional Agenda Financial Realities FY08 Budget Overview Strategic Planning

3. Deliberative Working Document - Predecisional

5. Defense Spending in Context 40% 20% 1945196519852005 Vietnam 8.9% Korea 11.7% Gulf War 4.5% GWOT 3.9% DoD Outlays as Percent of GDP WWII 34.5% Defense spending is 3.9 percent of GDP –Lowest level for any previous period of conflict This is significantly higher than our NATO allies –France: 2.5 percent –UK: 2.3 percent –Germany: 1.4 percent –All NATO: 1.7 percent Source: Source: Historical Table, Budget of the United States Government; FY 2007 President’s Budget 100% 80% 60% 40% 20% 1945196519852005 WWII 82.5% Vietnam 43.4% Gulf War 19.8% GWOT (2008) 20.1% DoD Outlays as Percent of Federal Spending Korea 57.2% 199519751955

6. Deliberative Working Document - Predecisional Total DoD Budget Authority

7. Deliberative Working Document - Predecisional

8. Agenda Financial Realities FY08 Budget Overview Strategic Planning

9. Deliberative Working Document - Predecisional DoD Base Budget and non-GWOT Supps.Supplemental President’s BudgetFY07 Allowance Source: National Defense Budget Estimates for FY 2007, Table 1-9 Investing in America’s Defense (Dollars in Billions) FY07 Supplemental Request FY08 GWOT Request 316 345 443 468 479 535 598 623

10. Deliberative Working Document - Predecisional Defense Budget Source: Defense Appropriation Act and Emergency Supplemental Appropriation FY 2007 and FY 2008 DoD Budget Request $432.4B FY07 Projected Enacted Appropriation (Dollars in Billions) FY07 Emergency SupplementalFY08 GWOT RequestFY08 Base Budget Increase Combat Capability Improve Force Readiness Develop Future Combat Capabilities Improve Quality of Life Increase Combat Capability Improve Force Readiness Develop Future Combat Capabilities Improve Quality of Life Prevail in the Global War on Terror $481.4B $623.1B $141.7B FY07FY08 $595.8B $70.0B $93.4B $70.0B $432.4B FY07 Projected Enacted Appropriation Priorities

11. Deliberative Working Document - Predecisional Source: Defense Appropriation Act and Emergency Supplemental Appropriation FY 2007 and FY 2008 DoD Budget Request; FY06 Base Structure Report The FY 2008 President’s Budget for Defense: $481.4B Improves Force Readiness and Modernizes Warfighting Capabilities Military Pay & Healthcare ($137.0B) Family Housing & Facilities ($21.1B) Strategic Modernization ($176.8B) Readiness & Support ($146.5B) $481.4B

12. Deliberative Working Document - Predecisional Note: *Projected enacted total Source: Defense Appropriation Act and Emergency Supplemental Appropriation FY 2007 and FY 2008 DoD Budget Request Budget Provides Real Increases to Support the Warfighter (Dollars in Billions) +$49.0B FY07FY07* Improve Force Readiness & Support +$16.8B 34% Develop Future Capabilities +$8.8B 18% Improve Quality of Life +$11.3B 23% FY07*FY08 Increase Ground Forces +$12.1B 25% Base Budget Increases by $49.0B (+11.3%) Over Projected Enacted Level – Real Rate of Growth is 8.6% +$49.0B FY08 +$49.0B FY08

13. Deliberative Working Document - Predecisional Develop Future Capabilities –1 Aircraft Carrier –1 Submarine –1 Amphibious Assault Ship –1 Logistics Ship –3 Littoral Combat Ships –1 Joint High Speed Vessel –20 F-22A Raptor –24 F/A-18 Hornet –18 E/A-18G Growler –12 F-35 Joint Strike Fighter –21 MV-22 Osprey –5 CV-22 –UAVs –Recapitalization of Missiles and Weapons –Future Combat System: Manned and unmanned vehicles Non-line of sight launch system Joint network –Space-Based Infrared Systems –Communications Satellites –GPS satellites –Advanced Extremely High Frequency Satellite –Environmental Satellites –Launch Vehicles +$8.8B FY08 +$8.8B FY08 FY08 Budget Strengthens Current and Future Capabilities Joint Maritime Capabilities Joint Air Capabilities Joint Ground Capabilities Space-based Capabilities

14. Deliberative Working Document - Predecisional Increased Combat Capability with Predictability 48 Brigade Combat Teams Current Baseline FY 2012 Goal 42 Brigade Combat Teams Adds 65K Soldiers +6 Brigade Combat Teams Note: Number of BCTs in current state represent funded modular conversions, not force availability. Add of 92,000 Ground Forces Increases Combat Capability and Doubles Time at Home Station 482.4K Soldiers 1 year Home Station for 1 year Deployed 547.4K Soldiers 2 years Home Station for 1 year Deployed +$12.1B FY08 +$12.1B FY08 Army Marines 3 Marine Expeditionary Forces 2.5 Marine Expeditionary Forces Adds 27K Marines Fills out 3 rd Marine Expeditionary Force 175K Marines 7 months Home Station for 7 months Deployed 202K Marines 14 months Home Station for 7 months Deployed

15. Deliberative Working Document - Predecisional Source: Defense Appropriation Act and Emergency Supplemental Appropriation FY 2007 and FY 2008 DoD Budget Request FY 2008 GWOT Request Source: Defense Appropriation Act and Emergency Supplemental Appropriation FY 2007 and FY 2008 DoD Budget Request Reconstitution $37.6B Security Forces: $4.7B Military Intelligence $2.7B Coalition Support & CERP: $2.7B Military Construction: $0.7B Operations $70.6B Non-DoD Classified $5.9B Continuing the FightReconstituting the ForceEnhancing U.S. Forces Force Protection & IED Defeat: $15.2B Request Provides Resources for Our Warfighters to Succeed $141.7B U.S. Forces: $1.6B Accel. BCTs / RCT $1.6B Continuing the Fight: $102.5B (Permanent End Strength: $4.9B)

16. Deliberative Working Document - Predecisional CONPLAN 7500 Baseline Funding (CONPLAN 7500 / QDR Reserve) FYDP +$3.9B Fund enduring GWOT sub-regional campaign plans Improve battlespace awareness and counterterrorism analysis Procure small commercial aircraft for GWOT engagement activities Other capability enhancements: CENTCOM infrastructure improvements, foreign language incentives, personnel recovery programs, centers of excellence, etc. Bridge FundingFYDP +$1.8B Sustain / enhance CENTCOM C 4 Other capability enhancements: countermeasures for VIP aircraft, airborne ISR and medium aircraft leases for sub-regional campaign plans, etc.

17. Deliberative Working Document - Predecisional Future Combat System Army POM restructures the FCS program Saves $110M FY08 and $3B across FYDP Saves ~ $15B over the program (10%) Reduces BCT average cost from $6.7B to $5.9B Cancels 4 systems: Two classes of UAVs Armed Reconnaissance Vehicle Intelligent Munitions System Slows fielding from 1.5 FCS BCTs/yr to 1.0 FCS BCTs/yr Delays fielding 6 months Completes fielding by FY30 vice FY25

18. Deliberative Working Document - Predecisional Joint Strike Fighter Service POM 08 submissions funded procurement of two CTOL and no STOVL aircraft in FY08 –PB07 had eight CTOL and eight STOVL aircraft in FY08 Congress reduced FY07 procurement from 5 to 2 CTOL aircraft and funded long lead procurement of six CTOL and six STOVL aircraft in FY08 –Directed funding of alternate engine in FY07 and beyond DepSecDef directed Services to fund the six CTOL and six STOVL aircraft in FY08 consistent with Congressional action (FY08 +$1.8B) –Risk in STOVL First Flight date –Alternate engine not funded Modest procurement reductions over FY09-13 (total of 17 A/C against POM08 submissions) to pay for: –Differences in Services re-pricing in POM08 –SDD growth recognized by JPO

19. Deliberative Working Document - Predecisional Agenda Financial Realities FY08 Budget Overview Strategic Planning

20. Deliberative Working Document - Predecisional Shape/Prepare no longer lesser included Forces not resized to strategy, leading to mismatch QDR 1997 Threat BasedCapabilities Based Force Planning Focus for Ongoing Efforts 2 MTW Force ShapeRespondPrepare QDR 2001 DEFEND THE U.S. DETER FORWARD Europe, SWA, NEA, EAL SWIFTLY DEFEAT ENEMY EFFORTS 2 of 4 Critical Areas WIN DECISIVELY 1 of 2 Conflicts SMALL-SCALE CONTINGENCIES In Non-Critical Regions Frequency Number Scale / Intensity Concurrency Ops Risks Duration Policy Environment Partner Capabilities Sizing Variables: QDR 2006

21. Deliberative Working Document - Predecisional Irregular  Unconventional methods adopted and employed by non-state and state actors to counter stronger state opponents. (erode our power) Disruptive  International competitors developing and possessing breakthrough technological capabilities intended to supplant U.S. advantages in particular operational domains. (marginalize our power) Traditional  States employing legacy and advanced military capabilities and recognizable military forces, in long-established, well- known forms of military competition and conflict. (challenge our power) Catastrophic  Acquisition, possession, and possible employment of WMD or methods producing WMD-like effects against vulnerable, high-profile targets by terrorists and rogue states. (paralyze our power) Security Environment: 4 Challenges LIKELIHOOD VULNERABILITY Lower Higher Lower Capabilities-based planning should apportion risk across challenges (e.g., terrorism, insurgency, civil war, and emerging concepts like “unrestricted warfare”) (e.g., conventional air, sea, land forces, and nuclear forces of established nuclear powers) (e.g., sensors, information, bio or cyber war, ultra miniaturization, space, directed-energy, etc) (e.g., homeland missile attack, proliferation from a state to a non-state actor, devastating WMD attack on ally)

22. Deliberative Working Document - Predecisional What Drives Our Thinking / Time / Energy Budgets / FYDP War Plans TPFDD (Time-Phased Force Deployment Data) Requirements Risk Assessments (Timelines) Do these Processes Help Us Fight… Will our Investment ($3T / FYDP) Counter/Eliminate... An Elusive Enemy What is the Definition of Victory in the GWOT?

23. Deliberative Working Document - Predecisional Final Thoughts Are We … In a War Likely to Fight Massed Armies / Navies Countering Nation States Dealing with a Distant, Short-Lived Problem Or … In a Struggle Likely to Fight Small Groups / Networks Countering Extremists (Supported by Nation States?) Dealing with a Threat to World Freedom While maintaining conventional forces that can deal with emerging world situations