Explanation

While DoD develops and builds the most capable weapons systems in the world, these programs continue to exceed cost and schedule targets. Between 2000 and 2003, cost growth for major weapons rose by an estimated 15 percent on average. Part of that increase is due to more realistic cost estimating. DoD has begun to establish initiatives to enhance its ability to monitor and to control cost growth and schedule delays.

The Army's program to destroy the U.S. stockpile of chemical weapons is behind schedule. Costs have increased over 60 percent, from $15 billion to $24 billion. These delays are the result of various difficulties, including unrealistic schedules, site safety and environmental concerns, and poor planning.

The Departments have historically lacked genuine commitment to
coordinate systems. Many areas for integration exist. For example,
VA and DoD could better serve mutual constituents by developing an
integrated enrollment system. There has, however, been progress in
some areas. VA and DoD have begun discussions on how to better
coordinate and share patient medical information. For significant
and rapid progress to be made in this area, both VA and DoD must
focus their efforts on developing common business processes that are
supported by fully integrated information technology standards and
architecture.

Congressional Earmarks

Congressional earmarks add funding for programs that are not requested by the Defense Department, diverting funds from higher priority and more effective programs. The 2002 Defense and Military Construction Appropriations Acts earmarked funds for 963 DoD projects totaling $5.4 billion. The DoD budget process thoroughly reviews all programs to determine the optimal cost-effective mix of programs for national defense. Earmarking disrupts this balance of programs and crowds out other important projects.

For example, the Congress has added funds for aircraft the Air Force does not require and thereby limits resources for war fighting needs. In addition, funding has been directed for military construction projects that the services do not want to build. Some earmarks have little relationship to an agency's mission. For example, the 2002 Defense Appropriations Act included over $600 million for a variety of unrequested medical research projects. These projects include research on breast cancer, ovarian cancer, prostate cancer, diabetes, and osteoporosis. While research on these diseases is very important, it is neither the mission nor the core competency of the U.S. military. Rather, these functions can be carried out and coordinated more effectively by other medical research agencies, such as the National Institutes of Health.

Intelligence

The intelligence community is adapting to the changed environment of the 21st Century. Advances in encryption, denial and deception techniques, and information technology create enormous challenges for intelligence gathering and analysis. Policymakers need timely, accurate and insightful information on the capabilities and intentions of foreign powers. The armed forces also need real-time battlefield data furnished with a significant level of detail. The intelligence community meets the full range of U.S. intelligence needs from the national level to the tactical level.

The 2003 Budget strongly supports these efforts and makes a substantially increased investment in our intelligence capabilities. This budget also makes major investments to transform the intelligence community to meet the challenges of the 21st Century.

Transforming Our Armed Forces

This revolution in our military is only beginning, and it promises to change the face of battle.
Afghanistan has been a proving ground for this new approach. These past two months have
shown that an innovative doctrine and high-tech weaponry can shape and then dominate an
unconventional conflict. The brave men and women of our military are rewriting the rules of war with
new technologies and old values like courage and honor... This combination—real-time intelligence,
local allied forces, special forces, and precision air power-has really never been used before. The
conflict in Afghanistan has taught us more about the future of our military than a decade of blue
ribbon panels and think-tank symposiums.

President George W. Bush
December 11, 2001

One of the President's key defense priorities is to transform America's armed forces to perform their missions more effectively and to meet emerging security challenges. The Defense Department began the process of transformation with its 2001 Quadrennial Defense Review. The review shifted to a "capabilities-based" defense strategy that focuses on capabilities of potential adversaries and the tools that America's armed forces will need to deter and defeat adversaries employing those capabilities. Both the terrorist attacks of September 11, 2001, and the subsequent conduct of Operation Enduring Freedom in Afghanistan underscore the urgency of military transformation. They illustrate the need for America's military to prepare for different types of conflict and execute missions with new tactics and new technologies. The growing use of unmanned aerial vehicles, the effective utilization of real-time intelligence, and the coordination among special operations and allied forces all demonstrate the cutting edge of what military transformation can achieve and offer a glimpse of a future transformed joint force. To shape this effort, DoD has recently established an Office of Force Transformation to coordinate all of the military service transformation efforts and advise the Secretary of Defense.

In 2003, the Department will invest over $9 billion in science and technology. New efforts include: easy-to-wear chemical/biological protection masks, chemical, biological, and nuclear weapons detectors, bunker and cave-defeating weapons, intelligence systems to detect assembly of weapons of mass destruction, and unmanned air, land, and sea surveillance and combat vehicles. In addition, DoD will invest $7.8 billion in ballistic missile defense with the objective of developing the capability to defend the forces and territories of the United States, its allies, and friends against ballistic missile threats.

Besides continuing the development of highly capable fighter aircraft such as the Joint Strike Fighter and new ships, the Defense Department's 2003 budget invests in technologies that will transform the military and fundamentally change the American way of warfare. These systems include:

⚫ four Trident ballistic missile submarines converted to submarines equipped with long-range cruise missiles which will dramatically increase the range and precision of strikes and our capability to insert Special Forces;

⚫ unmanned aerial vehicles such as those used in the war against terrorism, which provide greater, longer-endurance intelligence and combat capabilities directly to the war-fighter at far less cost and risk to military personnel than manned aircraft;

⚫ unmanned underwater vehicles that can greatly extend the range and capabilities of submarines and surface ships at less cost and without risk to sailors;

• the Army's Land Warrior technology, which digitizes the communications and intelligence capabilities of the individual infantry soldier to enhance situational awareness and combat capability;

small precision bombs, which increase the quantity of targets that each individual aircraft can strike;

⚫ bunker-defeating munitions to target the growing threats of deeply hidden weapons of mass destruction; and

space-based radar and space control systems, which enhance our surveillance capabilities and our capabilities to collect and utilize information from space.

Other emerging areas of defense investment focus on America's ability to conduct information and space operations.

Eliminating Poor Performers: Navy Area Theater Ballistic Missile Defense

Delays in the development schedule and large projected cost increases caused DoD to cancel a
multi-billion dollar Navy missile defense program. The program, known as Navy Area Theater
Ballistic Missile Defense, was designed to give Navy cruisers and destroyers the ability to shoot
down short- and medium-range ballistic missiles. DoD previously thought that the Navy's system
would cost about $6.2 billion to develop and deploy. However, in December 2001, DoD announced
that "unit costs" would grow by more than 50 percent. The Administration still plans to pursue
sea-based terminal missile defenses, but this Navy program was too costly to continue.

Assuring the Readiness of Our Armed Forces

U.S. Marines on a CH-46E Sea Knight helicopter on their way to
Afghanistan.

Despite these strains, the U.S. armed forces remain the most capable in the world and have demonstrated their readiness with their rapid response to the events of last September. Soldiers, sailors, air force crews, and marines have routed enemy forces in Afghanistan, while also keeping the peace in the Balkans, patrolling the no-fly zones of Iraq and maintaining a strong forward presence around the globe.

Readiness relies upon three main factors. First, we must recruit and retain personnel with key skills and talents. Second, we must provide high quality training to give troops the expertise and skill to fight and win our nation's wars. Third, we must maintain equipment and facilities that our forces use to accomplish their missions.

These three factors are a high priority in this budget.

First, a 4.1 percent across-the-board pay increase supports the Services' recruiting and retention goals.

Second, the adage "you fight the way you train" remains true. This budget robustly funds the Services' training goals, as measured in aircraft flying hours, ship steaming days, and ground vehicle miles. Without these crucial training and operating activities, the safety and well being of our troops and their ability to accomplish their missions successfully will be at risk.