FOG HORN Editorial 24 Aug 2010

of its scope without a detailed look at the budget

Department of Defense FY 2011
Budget Request
By: Sal Palma
The illustration below portrays the Defense Budget
Process; it provides the non-expert reader with an
understanding of how defense budgets are
developed. Without this understanding, the budget
becomes nothing more than a compilation of
numbers lacking reason or meaning.
Budgets are the chief planning tools, used by
organizations, to allocate resources to planned
activities for the fiscal year. They represent
management’s best estimation of what activities will
take place during the year; however, because they
are estimates, they are also fluid, and the DoD
request is subject to Congressional and Presidential
prerogatives; therefore, the final appropriation
signed into law will vary from the original request.
As submitted to Congress, the DoD’s FY2011 budget
calls for $708B in total funding - $549B Base budget
and $159B Overseas Contingency Operations (OCO).
In developing its budget request, the DoD makes
intelligent assumptions about what its requirements
will be for the fiscal period. Therefore, should world
events be materially different from the DoD’s
assumptions, supplemental funding is requested and
appropriated - as was the case with the President’s
$33B supplemental request for FY 2010 to fund the
Afghan surge.
With this in mind, we look at the DoD’s FY 2011
Budget Request.
numbers. The FY 2011 touches everything from
national defense to homeland security domestically.
On the international front DoD will play a major role
in developing the security forces of Afghanistan, Iraq
and selected allies.
In the FY 2011 Budget Request, Secretary Gates and
The President of the United States place people and
the All-Volunteer Force at the top of an immense list
of priorities.
Service members can expect to see a 1.4 percent
increase in salaries. Included in the people-funding
request are funds for construction of new facilities.
Detailed compensation, benefit and construction
funding can be found in the C-1 Schedule
(Construction Programs). Compensation and benefit
details including accruals for retirement pay are
detailed in the M-1 schedule – Military Programs.
Funding requests for Military Programs are
scheduled by branch, active, reserve and national
guard (U.S. Army) components. The budget numbers
include all elements of compensation and benefits to
include some contingency costs.
Force augmentation is reflected in the FY 2011
Budget Request.
Branch 2011 Target Increase/
Reduction over
FY 2007
Baseline
Army 547,400 65,000
Navy 324,300 (13,300)
Marine Corps 202,100 27,100
Air Force 332,200 (1,300)
Table 11
WII – Wounded Injured and Ill programs should
see $2.5B, which breaks down to $2.2B to fund
care for our warriors and $0.3B to fund facilities
in Bethesda and elsewhere. These line items
1

1
Regardless of how well the DoD mission is Figures exclude OCO appropriations covered in the
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verbalized, it is difficult to gain a clear understanding 2011 Budget Request, and the FY 2010 supplemental
appropriation of $33B.
Copyright, Sal Palma dba Twobirds-Flying Publication, 2010. All rights reserved.
 FOG HORN
will probably see augmentation when Congress
returns from the summer break.
The Military Health System (MHS) will see
funding to the tune of $50.7B. This is a big
number, approximately 10% of the base budget
for FY 2011 - budget line item(s) covering
service members, retirees, dependents, R&D,
service delivery, facilities, etc. This is a number
that will gain increasing attention and I would
not be astonished to see some restructuring in
MHS. That restructuring may take the form of
additional compensation or medical allowances
to the service member in exchange for greater
member participation in commercially available
health plans. The reshuffle that I suggested is
only one possible scenario and is strictly my
opinion of one possible approach.
In addition to the $50.7B funding requested for
the MHS program, DoD and The President has
requested $29.6B for family assistance. This
request funds a variety of programs covering a
number of line items such as spouse
employment and other family support activities;
bringing Family and Health Care 2011 estimates
to $80.3B or 14.6% of the base budget.
Military Construction will get $14.2B in the FY
2011 budget. BRAC – Base Realignment and
Closure is funded for $2.7B. The DoD plans to
close 24 bases and realign 24 in FY 2011. The
Family Housing account should see $1.8B; it is a
line item closely tied to force augmentation.
Mission assets got a boost in the 2011 Budget
Request. These are assets directly tied to
supporting current operations in Afghanistan
and Iraq as well as support the Rebalanced
mission.
Asset 2011 Budget Request
UH-60 Blackhawk $1.4B
Copyright, Sal Palma dba Twobirds-Flying Publication, 2010. All rights reserved.
Editorial 24 Aug 2010
CH-47 Chinook $1.2B
V-22 Osprey $2.7B
MH-60R/S Sea Hawk $1.7B
Rotor wing assets
To my readers, just a quick note to point out that
funding for some of these line items comes from the
base budget and OCO. I do not break that out in my
article to avoid the tedium of a financial analysis.
The U.S. Army will add two Combat Aviation
Brigades (CABs), and will see $2.6B in the 2011
Budget to achieve that end. The Army will
consolidate aviation assets to form a 12th active duty
CAB and will create a 13th CAB from the ground up.
Intelligence Surveillance and Reconnaissance (ISR), a
huge priority for the DoD will receive $2.6B from the
OCO funding request.
The DoD will finally address the weakness in
Electronic Warfare (EW) capability by funding the
acquisition of 12 EA-18G in FY 2011 and 24 aircraft in
FY 2012 at an estimated cost of $3.5B.
Photo Courtesy Boeing Aircraft
USSOCOM will be in the money into the foreseeable
future. The SOF focus articulated in the QDR is a DoD
priority as the Force Rebalancing moves forward. In
the FY 2011 Budget Request, Secretary Gates
2
requests $6.3B baseline and $3.5B OCO for SOF
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priorities. The request also supports augmentation
of SOF personnel with 2,800 personnel.
 FOG HORN
Currently, SOF’s wallet comes from two pots – the
base budget and OCO. That will change and DoD’s
goal is to fund 100% of SOF’s requirements from the
base budget by 2015.
The FY 2011 Budget Request includes funding for
Reserve and National Guard augmentation, WMD
priorities and Homeland Security. It is also very clear
and focused on what it will purchase and how it will
make those purchases in the future. Make sure that
you are spending quality time with your acquisition
point of contacts to ensure that you are tracking the
coming changes.
Winners and Losers
Losers
 C-17 Procurement.
 Joint Strike Fighter Engine (F-35 engine
debate).
 The CG(X) Navy’s Large Cruiser Program.
 EP(X) Aircraft – The Navy’s Intelligence
Aircraft.
 Third Gen Infrared Surveillance (3GIRS).
 The Defense Integrated Military Human
Resources System (DIMHRS).
 Net Enabled Command and Control (NECC).
Winners
 People, Families and Warriors – The DoD is
very serious about ensuring that our
servicemen and women have adequate time
at home with their families between
deployments. Active and Reserve
components will see relief.
 SOF is where the future is. Future budgets
will reflect that emphasis as the force is
rebalanced to meet the more likely
demands placed on the DoD.
Copyright, Sal Palma dba Twobirds-Flying Publication, 2010. All rights reserved.
Editorial 24 Aug 2010
 ISR, C4ISR, Brigade Combat Team
Modernization(BCT)2
 Homeland Security – enhancing the DoD’s
ability to integrate with first responders and
respond to national emergencies more
promptly and efficiently.
 Intelligence, Intelligence and more
Intelligence.
 Cyber defense and communications.
 WMD detection
 Modernization of our nuclear assets and
supporting infrastructure.
In this article, I have given my readers a robust
overview of the DoD’s FY 2011 Budget Request.
However, it is just an overview and there is no
substitute for emersion if you have a budget account
that needs a granular analysis. The Budget Overview
and supporting schedules are available online.
After the summer recess, Congress will be taking up
the DoD FY 2011 Budget Request – expect changes
and a great deal of debate. This article empowers
you to understand those debates and to formulate
your own ideas. More importantly, it will give some
direction as you approach the DoD as a potential
customer.
-SP
3
2
Never underestimate the U.S. Army. This is the
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reworked version of Future Combat Systems (FCS) to
bring the project in line with the 2010 QDR.