Competition of contracts continues to be a major Army success story. Since the implementation of the Competition in Contracting Act of 1984, the Army has made steady and continuous progress in increasing competitive awards as a percentage of contracts awarded. In 1984, the Army only competed 42% of the dollar value of its contracts. Last year, that figure was nearly 59%. Competition works. It encourages innovation and discourages the abuses widely reported by the media. It provides a tool with which to capture the major merits of a market economy. Experience has shown that competition may bring savings of 20-30% on previously sole-source acquisitions a significant saving. - We realize that competition may not be the most beneficial strategy in every case. It is an acquisition approach that we will use when it buys the Army the best value. Under no circumstances will we accept a lesser quality in either supplies or services just to have competition. Competition is a means, but not an end in itself. Although there are numerous programs that one could cite as examples of progress in developing and fielding modernized equipment, I would like to specifically mention two in the communications arena. The Army is now in the progress of fielding the SINCGARS radio, a new tactical communications system which will provide commanders an effective, reliable, and easily maintainable radio enhancing battlefield command and control. Recent evaluations have demonstrated that SINCGARS exceeds the established standard for reliability of 1,250 hours mean time between failures (MTBF). Currently fielded in Korea, where it has performed exceptionally well with units along the demilitarized zone, this system will begin fielding in the Training and Doctrine Command this August. A second source selection for SINCGARS is scheduled for May 1988. This award will include a firm, fixed price contract with a reliability incentive. Full competition will begin in FY 91. The fielding of SINCGARS will allow the Army to replace the aging and vulnerable VRC-12 family of radios which have served as the backbone of our tactical communications system for nearly 20 years. The Army is currently fielding at Fort Hood, Texas, the first division set of the Mobile Subscriber Equipment (MSE), an integrated, switched communications system for Corps and Division forces. MSE is a $4.6 billion Nondevelopmental Item (NDI) which relies on existing hardware and software components to satisfy operational and functional telecommunications requirements. The acquisition of MSE will give the Army the command and control aspects necessary to fully implement our AirLand Battle doctrine. MSE fielding will essentially be by Corps including their assigned Reserve units. For the first time, the Army will have both Components equipped with a communications system that is interoperable, mobile and secure. Intelligence Over the past few years, Army intelligence has made significant progress in organizational structure and doctrine. On the battlefield, combat electronic warfare and intelligence (CEWI) units have been formed to provide maneuver commanders organic, integrated, and responsive intelligence support. At the national level, the Army continues to play a key role in both intelligence and counter-intelligence. In the human intelligence (HUMINT) arena, Army personnel represent over 50% of all Department of Defense HUMINT assets. In acquisition, the Threat Integration Staff Officer (TISO) system provides Program Executive Officers and Project Managers continuous threat support for each system throughout its developmental life cycle. These diverse efforts are coordinated and detailed in the Army Intelligence Master Plan (AIMP) which establishes a single, coherent strategy for the evolution of Army intelligence functions and force structure through the year 2004. It covers all systems including collection, processing, and communications. This master plan has become the model for other Army functional area development efforts, and is used and studied by other services and agencies. Army intelligence continues to lead the way in providing high quality and timely intelligence support to our soldiers in the field, and to other national agencies as directed. Reorganization Finally, the Army is nearing completion on the reorganization effort undertaken last year in conformity to the Reorganization Act of 1986. The Army has completed its work on Titles I, III, and V with the exception of the manpower realignments that are progressing and will be completed by 30 September 1988. The implementation of Title IV, where we continue to have reservations over the management of joint officer assignments, is ongoing. Army work on Titles II and VI is continuing on schedule. As I testified last June before the House Armed Services Committee, we approached the reorganization as an opportunity to improve operations. We thoroughly analyzed all functions to identify duplications, supervisory layering, and the existence of organizations which might be transferred to other agencies. We realigned certain functions within the Army Secretariat and the Army Staff moving several activities to the Secretariat where they became responsible to the Secretary, but responsive to the Chief of Staff. The new organization is working well and residual actions, primarily personnel realignments, are on schedule. Conclusion The FY 89 Budget that we have submitted is designed to maintain the positive momentum we have generated over the past seven years. It will provide funds to protect readiness and training levels, as well as continue with our most important modernization programs and sustainability enhancements. It does, however, reduce Army personnel and force structure. This was a cost we accepted reluctantly in the face of significant budget constraints. Again, in real terms, the Army's budget for FY 89 is 1.6% less than that of the previous year. As I have said before, less money buys less defense and less deterrence. This budget and the program it supports are not risk free, but with certain exceptions, we believe it is adequate in providing for our most immediate needs. CHIEF OF STAFF, U.S. ARMY STATEMENT OF GEN. CARL E. VUONO, CHIEF OF STAFF, U.S. ARMY ACCOMPANIED BY: LT. GEN. PIHL, MILITARY DEPUTY TO THE ASSISTANT SECRETARY OF ARMY READINESS General VUONO. Thank you, Mr. Chairman. I request that my formal statement be placed in the record, and I will just have a few words to add to Secretary Marsh's overview. First of all, I want the committee to know that you have a ready Army today and I believe we demonstrated that last week during the emergency deployment readiness exercise that we conducted from multiple locations-Fort Bragg, NC, and Fort Ord, CA. Also, I am well aware that the committee knows that this was not an easy budget to put together. It is easier when there is an increment rather than a decrement. So we went back to the basics, focused our budget on what we must do to provide the land forces needed by the United States. It is based on our national security objectives and the threat that the United States faces, with which the committee is very familiar. However, I feel this is very important at this particular time, because we are entering an era in which the burden of deterrence is shifting more to the conventional side as a consequence of the INF Treaty and other matters. To meet the threats to our interest, the Army has to field a carefully tailored mix of forces, one postured for the best deterrent effect and one that takes advantage of our Reserve Components' capability. With your help, we have built a good deal of positive momentum the past several years. I believe we must continue to maintain that high level of readiness and shape the Army to meet the demanding requirements of the future. REQUIREMENTS The characteristics we require in a tailored mix of heavy, light, and special operations forces for both the Active and Reserve Components include the following. First of all, high-quality, retainable soldiers, and that is why we feel very strongly, as the Secretary mentioned, about the 4.3-percent pay raise for our soldiers. I think it is absolutely essential. We want progressive and sequential leadership development for the officers and NCO's who lead the Army. We believe superb, realistic, (402) and dynamic training is the cornerstone to combat readiness. We have a doctrine which guides the leader development, organization, training, and modernization of the force. We believe high-quality materiel systems are necessary for close, deep, and rear operations, and, finally, a research and development establishment that can ensure the Army a qualitative edge over potential enemies in the future. So as we put together the 1989 budget the Army sought to do a number of things. We tried to maintain essential force readiness and sustainment. We had to slow the pace of modernization and minimize the negative impacts on our force structure. The deterrent and warfighting value added was and will continue to be the measure of merit for this and future budgets. BUDGET DECREMENTS As you stated in your remarks, overall the Army's fiscal year 1989 budget represented approximately 1.6 percent negative real growth in the TOA, the fourth consecutive year that the Army budget has declined in real terms. So to meet our decrement target we had to cut deeply. We did not get the growth we wanted in sustainment and we had to cut MILCON significantly. Our RDA accounts are down, but we were able to protect systems with the greatest value added for war fighting. We protected training funds, but depot maintenance took a reduction. We had to reduce the active end strength by 8,600 soldiers, to cut about 12,200 civilians, and to eliminate planned growth in our Reserve Components of 26,000 soldiers. These cuts were necessary to accommodate the large decrement, but it was based on fiscal, not military, requirements, and they were far from easy or risk free. These cuts will add to the risk associated with our national security objectives. They will somewhat lower the readiness of selected Active units and will stop the needed growth in the Reserve Component force structure. The civilian cuts may cause diversion of soldiers to perform tasks that we normally give the civilian work force, something we have tried very hard over the years to prevent. So a significant level of risk unavoidably has been made somewhat worse with this budget. In the future, I believe we must guard particularly against reducing an already small Army to levels where we cannot compensate for reductions and where even our best quality Army will be unable to satisfy the Nation's needs. MODERNIZATION We will also have to increase our attention to modernization, but to do that we need to understand modernization for what it is. It is not an event or merely the introduction of the latest equipment; it is a continuous process where resources, soldiers, materiel, and doctrine are fused through intensive training to produce the greatest warfighting capability. So it is important to keep in mind that our ongoing equipment modernization efforts are long overdue. We are not yet keeping pace with the Soviet developments. They have long outproduced us quantitatively, and now have drawn abreast of us in the quality of their ground force equipment. So in light of the INF Treaty, with the burden of deterrence continuing to shift to the conventional forces, as I said earlier we are in no position to reduce further the pace of modernization. Sound modernization programs are also a prerequisite for any meaningful progress toward an equitable and verifiable conventional arms control agreement with the East. TRAINING Training has been and will continue to be well supported in the Army's budget. It is the basis for both readiness and modernization, and our highest priority effort with the Army in the field. FOREIGN CURRENCY FLUCTUATIONS Now we have one difficult area that cuts across many of our programs and of which you are well aware and we need your help. That is in the foreign currency fluctuation problem. We simply need more flexibility to shift our funds among appropriations covering prior and current years. In my view, this makes sound management sense and will keep us from diverting mission funds to meet our foreign currency bills, as we are being forced to do. So, in closing, Mr. Chairman, our budget will continue to build an Army that addresses the U.S. need for ready, sustainable land forces. It is a sound budget, although one which forces us to cut force structure to meet our fiscal constraints. Since our strategy remains the same and the threat has increased, the decrement we must absorb in 1989 will cause the risk associated with our strategy to increase. Over the program years we hope we can work together, as we have in the past with this committee, to establish a stable level of real growth in our defense programs. We need your support this year and in the future if we are to meet the requirements of our national security strategy. Thank you, Mr. Chairman. [The prepared statement of General Vuono follows:] |