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PDI SAN ANTONIO, TX May 2009

FY 2009/2010 Operation and Maintenance, Navy Budget Overview. PDI SAN ANTONIO, TX May 2009. STEVEN CORBIN, FMB-12 HEAD, READINESS PROGRAM. Agenda. Overview – FY 2009 through FY 2011 Calendar FY 2009 Mid-Year Review Update Overview of FY 2010 O&M, Navy Budget PR-11 Outlook. Dec.

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PDI SAN ANTONIO, TX May 2009

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  1. FY 2009/2010 Operation and Maintenance, Navy Budget Overview PDI SAN ANTONIO, TX May 2009 STEVEN CORBIN, FMB-12 HEAD, READINESS PROGRAM

  2. Agenda • Overview – FY 2009 through FY 2011 Calendar • FY 2009 Mid-Year Review Update • Overview of FY 2010 O&M, Navy Budget • PR-11 Outlook

  3. Dec Sep Oct Nov Mar Aug May Jun Jul Apr Execution/Budget/Program Events Program/Budget Review – FY 2011 Legend pSecretariat p Marine Corps pNavy pDON/OSD/OMB Review • SRB Deputies Brief (tbd) • Service POM Briefs to DAWG • SRB ASNs/GC Brief (tbd) • SRB SECNAV Brief (tbd) • Submit to OSD / Issue Controls (8/14) • POM Brief to SN (6/29) • OSD Budget Justification Books Submit (tbd) • Issue Controls (6/1) • POM Brief to SN (6/30) • Sponsor Program Proposals (5/22 – 6/1) • Program Review Final Decisions • Budget Exhibits Due (7/6) • Budget Review • Leadership Updates (6/29 – 8/12) Budget Lock • PBCGs (7/07 – 8/08) • OSD Fiscal Guidance (5/5) • N/MC Program Database submit (7/2) Congressional Review – FY 2010 President’s Budget • Authorization Conference (7/?) • Presidents Budget Submission (5/6) • Appeals Process (7/?) • HASC Posture Hearing (5/14) • Authorization Bills (9/?) • HASC Markup (6/17) • SASC Posture Hearing (6/4) • SASC Markup (6/22) • SAC-D Posture Hearing (6/02) • HAC-D Posture Hearing (6/03) • Appropriation Conferences (9/?) • HAC Markup (6/22) • Appropriation Bills (9/?) • HAC-M Hearing (5/6) • SAC Markup (7/27) • SAC-M Hearing (5/?) • Appeals Process (8/?) Current Year Execution – FY 2009 Next Year Execution • FY09 OCO Hearings (tbd) • Ops/Pers Midyear Review (4/22 – 5/4) • Investment/Development Midyear Review (4/17 – 5/18) • NWCF 3rd Qtr Review • OSD Midyear Review • NWCF 2nd Qtr Review • Apportionment Review • Issue New FY Allocations • Individual Reprogrammings • Omnibus Reprogramming toUSD(C) (5/15) • Omnibus Reprogramming Implementation 3

  4. FY 2009 Bridge Supplemental Received O&M,N - $3,388M • $783M Air Operations and Aviation Support • $ 98M Aircraft Depot Maintenance • $379M Ship Operations and Ship Support • $285M Ship Depot Maintenance • $1,018M Combat Support Forces, Training, and Infrastructure • $ 76M Weapons Maintenance/Systems Support • $ 24M Mobilization • $ 67M Training and Recruiting • $222M Administration and Servicewide Support • $436M Base Operations Support (BOS) Note: Total Bridge reflects amount appropriated directly to OMN, excluding ~$200M that is transferred into OMN from other sources.

  5. FY 2009 Pending Supplemental O&M,N - $2,159M • $611M Air Operations and Aviation Support • $ 53M Aircraft Depot Maintenance • $237M Ship Operations and Ship Support • $155M Ship Depot Maintenance • $730M Combat Support Forces, Training, and Infrastructure • $ 96M Weapons Maintenance/Systems Support • $ 13M Mobilization • $ 36M Training and Recruiting • $ 67M Administration and Servicewide Support • $161M Base Operations Support (BOS) Note: Total Bridge reflects amount appropriated directly to OMN, excluding ~$200M that is transferred into OMN from other sources.

  6. FY 2009 Mid-Year Review Update

  7. O&M,N Mid-Year Process • Process began later due to PB 10 timing • FMB FY 2009 Mid-Year Review memo of 13 MAR 2009 requesting the following: • Overseas Contingency Operations (OCO) Impact Statements • Unfunded Requirements (w/ prioritized list) • Reconciliation of planned to actual obligations • BSO Mid-Year Review discussions and visits occurred between 22 APR 2009 and 4 MAY 2009 • Through a collaborative process with BSO’s, FMB reviewed information and determined that the issues consisted of must pay, emergent, GWOT, and enhancement requests. Shortfalls reflect the full spectrum of funding challenges facing the Department this fiscal year. • Mid-Year process is still underway • OSD Mid-Year Review – TBD

  8. Summary of MAJOR FY 2009 Mid-Year Requests O&M,N MAJOR UNFUNDED ISSUES: • DFAS Services • Mass Transit Subsidy • Pentagon Renovations/Rent • Navy ERP costs • Joint Command and Control Initiatives • BSO Initiatives • Identified Program Shortfalls

  9. Review of FY 2010 President’s Budget

  10. FY 2010 Budget Breakdown (in billions) MilPers:$44.3B Basic Pays $17.6 Housing Allowance $6.7 Retired Pay Accrual $5.7 Health Accrual $3.3 Reserve Personnel $2.6 Special Pays $2.4 Subsistence $2.0 Allowances $1.0 Other $3.0 Procurement:$44.8B Aircraft $18.4 Ships $14.9 Weapons Procurement $3.5 Marine Corps Procurement $1.6 Ammunition Procurement $0.8 Other Navy Procurement $5.7 Balanced Investment $ Navy Strength 324,400 Marine Corps 202,100 FY10: $156.4B R&D:$19.3B Basic Research $0.6 Applied Research $0.6 Advance Tech Dev $0.7 Adv Component Dev $4.2 System Dev & Demo $8.0 Management Support $1.0 Ops Systems Dev $4.3 O&M:$42.9B Ship Ops $9.9 Base Support $6.9 Aviation Ops $5.7 Marine Corps O&M $5.5 Combat/Weapons Support $5.1 Service Wide Support $5.0 Training and Education $2.9 Reserve O&M $1.5 Environmental Restoration $0.3 Infrastructure:$5.1B MILCON $3.8 BRAC $0.8 Family Housing $0.5 Prevail in Current Conflicts Maintaining the Edge Sustaining the Institution *Numbers may not add due to rounding

  11. Operation and Maintenance, Navy Pricing and Program Adjustments ($ in Millions) BA1BA2BA3BA4TOTAL FY 2009 Estimate* $26,833 $538 $2,156 $3,949 $33,476 Pricing Adjs 541 26 45 53 666 Net Program Adjs (233) 96 732 334 929 FY 2010 Baseline Budget 27,141 661 2,933 4,336 35,070 FY 2010 OCO Request 5,521 277 103 318 6,220 TOTAL FY 2010 Request 32,662 938 3,036 4,654 41,290 * FY2009 Estimate includes fuel recession $881.5M

  12. O&M,N: Budget Activity 1 – Operating Forces ($ in Millions) FY 2009FY 2010 Baseline Funding $26,833 $27,141 Air Operations & Maintenance 6,309 5,684 Ship Operations & Maintenance 8,986 9,487 Combat Ops Spt 2,849 2,953 Weapons Support 2,005 2,117 Base Operations 6,684 6,900 Other Contingency Operations $5,120 $5,521 • $542M baseline inflation • $223M net decrease for baseline program • Funds the Navy’s air operations, ship operations, combat operations/support, and weapons support programs. • Navy shore bases to support these missions. • Maintains combat ready forces to respond to national objectives. • In-sourcing preserving inherently governmental functions.

  13. BA-1 Baseline Operating Accounts EIT

  14. Flying Hours ($ in Millions) FY 2009FY 2010 Baseline Funding $4,384 $3,935 Mission and Other Flight Ops 3,490 3,814 Fleet Air Training 894 121 Overseas Contingency Operations $1,323 $1,141 • $68M baseline inflation • $517M net baseline program decrease • $780M transfer of Fleet Air Training to BA 3 (3B2K) • $270M growth in TACAIR flying hours to achieve and sustain USN and USMC readiness levels of T-2.5 and T-2.0 • TACAIR is measured in T-rating across the notional FRP deployment cycle. FY09FY10 Metrics: Navy T-Rating (Goal T-2.5) T-2.6 T-2.5 USMC T-Rating (Goal T-2.0) T-2.2 T-2.0

  15. Aircraft Depot Maintenance ($ in Millions) FY 2009FY 2010 Funding $1,125 $1,058 Airframes 599 569 Engines 366 277 Components 159 212 Overseas Contingency Operations $151 $159 • $7M baseline inflation • $74M net decrease in baseline program adjustments • Airframes: Net reduction of 20 airframe inductions • Engines: Net reduction of 469 engine inductions • Components: Net Increase for V-22 and KC-130J Power by the Hour programs and stand up of Joint Strike Fighter Performance Based Logistics Program Metrics FY09FY10 Airframes Deployed Squadrons meeting goal 100% 100% Non-Deployed Squadrons meeting goal 100 % 97% Engines Engine pools meeting Zero Bare Firewall goal 97% 97% Engine pools meeting RFI Spares goal 83% 62%

  16. Ship Operations ($ in Millions) FY 2009FY 2010 Baseline Funding $3,012 $3,320 Overseas Contingency Operations $595 $651 • $141M Baseline Inflation • $167M net increase for baseline program • Additional funding for an increase in deployed steaming days OPTEMPO. • Additional per diem days for MSC charter support. • Lease cost for two additional HSVs for Navy missions in SOUTHCOM FY09FY10 Metrics: Deployed 53 58 Non-deployed 20 24 Funds costs associated with operating ships including: fuel, consumables, pier services, organizational repairs and maintenance, ordnance handling, training support, and charter of lease back units through the Military Sealift Command.

  17. Ship Maintenance ($ in Millions) FY 2009 FY 2010 Baseline Funding $4,140 $4,297 CNO scheduled availabilities 42 34 Percent Requirement Funded 97% 96% Overseas Contingency Operations $440 $1,001 • $79M baseline inflation • $78M net increase for program • Realignment of SSBN Engineered Refueling Overhauls from SCN • Increase in the number of Overhauls (1 to 5) • Scheduled decrease in Selected Restricted Availabilities and Planned Maintenance Availabilities (35 to 16)

  18. Combat Operations Support ($ in Millions) FY 2009FY 2010 Baseline Funding $2,849 $2,953 Other Contingency Operations $1,749 $1,960 • $61M Baseline Inflation • $43M net increase for baseline program • Adjustments for Combatant Commanders: • Program increases for USJFCOM and USPACOM, including Joint POW/MIA Accounting Command (JPAC). • Adjustments for the Navy: • Increase supports Fleet Synthetic Training (FST) • Increase to support Integrated Undersea Surveillance System (IUSS) • Decrease in SATCOM Commercial Wideband Satellite Program

  19. Weapons Support ($ in Millions) FY 2009FY 2010 Funding $2,005 $2,117 Other Contingency Operations $172 $168 • $49M baseline inflation • $63M net increase for baseline program • Maintenance • Transit Protection System • Engineered Refueling Overhauls • Unmanned Aircraft Systems • Funds maintenance and support for • Cruise Missiles • Fleet Ballistic Missiles • Tactical Missiles • Gun systems • JWAC • Torpedoes

  20. Base Operating Support ($ in Millions) • FY 2009FY 2010 • Baseline Funding $4,055 $4,058 • Overseas Contingency Operations $ 560 $339 • $74M baseline inflation • $-67M net decrease in baseline program • Meets all other critical mission support requirements • Fully funded Child Development & Fleet & Family Support programs • Adjust program level for MILCON Collateral Equipment

  21. Facility Sustainment, Restoration and Modernization ($ in Millions)FY 2009FY 2010 Baseline Funding $1,741 $1,746 Sustainment (OSD goal is 90%) 90% 90% Recapitalization 59 yrs * 89%** Overseas Contingency Operations $37 $8 *Measured in years for FY2009 with OSD goal of 67yrs ** Measured in % of Fac Modernization Model in FY2010 (OSD Goal not established) • $20M baseline inflation • $-15M net decrease for baseline program • Minor decrease in Restoration & Modernization Program • Minor decrease in Demolition / Footprint Reduction • Funded Sustainment to 93% • Joint Basing investments are included but related requirements have not transferred to the Navy within the model

  22. Base Support – Enterprise Information Technology (BSIT) ($ in Millions) FY 2009FY 2010 Baseline Funding $889 $1,096 • $6M baseline inflation • $201M increase for baseline program • Navy Lead for Information Technology • Consolidates Navy Enterprise Resources • NMCI life cycle costs and seat services • Transition to Next Generation Network • Enterprise Licenses • OCONUS Navy Enterprise Network (ONE-NET) • Common Access Cards (CAC)

  23. O&M,N: Budget Activity 2 – Mobilization ($ in Millions) FY 2009FY 2010 Baseline Funding $538 $661 Ship, Prepositioning and Surge 366 408 Activations/Inactivations 117 200 Mobilization Preparedness 55 53 Other Contingency Operations $279 $277 • $26M baseline inflation • $96M net increase in baseline program • Preposition assets support contingencies worldwide. • Inactivation of ships and aircraft • Maintenance of Navy-Owned equipment on Coast Guard ships and aircraft.

  24. O&M,N: Budget Activity 3 – Training and Recruiting ($ in Millions) FY 2009FY 2010 Baseline Funding $2,156 $2,933 Accession Training 264 284 Basic Skills & Adv Training 1,318 2,067 Recruiting/Other Training 574 582 Other Contingency Operations $103 $103 • $45M baseline inflation • $732M net increase in baseline program • Funds all centrally managed or directed individual training required to meet Navy training standards • United States Naval Academy (USNA), Officer Candidate School (OCS), Recruit Training Program, and Reserve Officers Training Corps (ROTC) • Specialized Skills Training, Training Support, Flight Training including Fleet Replacement Squadrons, Naval War College, and Naval Postgraduate School • Recruiting and Advertising, Blue Angels, Off-Duty and Voluntary Education including Tuition Assistance, Civilian Acquisition Workforce and Financial Management Programs, and Junior ROTC

  25. O&M,N: Budget Activity 4 – Admin and Service-Wide Support ($ in Millions) FY 2009FY 2010 Baseline Funding $3,948 $4,335 Service-wide Support 1,668 1,778 Logistics Ops & Tech Support 1,229 1,426 Investigations & Security 1,045 1,125 International HQ and Agency 66 Other Contingency Operations 389 318 • $56M baseline inflation • $330M net increase in baseline program • Funds shore based/service-wide activities • Administration/Personnel/Engineering Acquisition • Security and investigative support • Space and electronic warfare systems programs, and • Centralized transportation and communications costs

  26. Readiness ($ in millions) Ship Operations 58 Deployed / 24 Days Non Deployed Flying Hour Operations USN T-2.5 USMC T-2.0 Ship Depot Maintenance 96% Projected Maintenance Funded Base Support & Ops. Meets all critical support requirements Aircraft Depot Maintenance 100% PAA for Deployed Squadrons 97% for Non Deployed

  27. A Peek at PR 2011

  28. Action Lanes 15 May 09 FY 2011 Program/Budget Review LU – Manpower Pricing (7/22) Service POM Briefs to DAWG (tbd) USMC POM-11 Brief (6/30) LU – MilCon (7/28) LU – Aircraft Programs (7/30) LU – Final Balance (8/12) LU – Readiness (8/04) LU – Shipbuilding (8/06) LU – Final Balance (8/10) LU – Risk Assessment (7/08) USN POM-11 Brief (6/29) SRB 10 Brief (tbd) Fiscal Guidance (5/05) SECDEF Decision (4/6) Final SLRG (tbd) ------------ Leadership Updates ------------- Submission of Budget Justification Materials to FMB by BSOs (7/6) PR-11 Database Submission (7/2) Sponsor Program Proposals (5/22– 6/1) Budget lock (tbd) OSD Justification to FMB (tbd) Justification Books to OSD (tbd) Submit to OSD (8/14) Issue Controls (6/1) PBCGs (7/07-8/08) Budget Review (6/15-7/15) Issue Paper Origination (5/22-7/15) Jul Aug Sep Oct Nov Dec Jun Mar Apr May 28

  29. Key Elements of the FY 2011 Program/Budget Process DON PR-11 Program/Budget Schedule • FY 2011 Budget Controls issued by FMB 01 Jun • BSO DON budget materials due to FMB 06 Jul • Issue paper origination for BSO 22 May –15 Jul • Primary mechanism for changes to budget • Unfunded requirements • DON budget review and resolution of budget issues 15 Jun – 15 Jul • Program Budget Coordination Group (PBCG) reviews 07 Jul – 08 Aug • Leadership Updates 29 Jun – 12 Aug • Final Leadership decisions TBD • OSD Controls Issued to BSOs 14 Aug • BSO OSD budget material due to FMB Late Aug • OSD Budget Justification material submitted to OSD Early/Mid Sep

  30. *DON PR 11 Baselines APPN$ in Millions OMN 38,235 OMMC 5,968 OMNR 1,246 OMMCR 243 MPN 26,324 MPMC 13,601 RPN 2,019 RPMC 630 ERN 296 INVESTMENTS (PROC/RDTEN) 67,210 OTHER (MILCON, FH, NDSF, etc) 7,243 TOTAL DON FY 11 BUDGETED 166,521 * Source: FY 11 Column of PB 10 as of 18 May 2009

  31. Summary • FY 2009 baseline execution performance • Execution challenges • Fully execute in accordance with obs plan • Identify end of year sweep-ups to FMB as soon as possible • FY 2010 President’s Budget • Minimal program growth over FY 09 • Requirements and associated costs increase • OCO necessary to achieve presence requirements • FY 2011 Outlook • BLEAK!!

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