[Economic Outlook, Highlights from FY 1994 to FY 2001, FY 2002 Baseline Projections]
[III. Major Functions of the Federal Government]
[2.  National Defense]
[From the U.S. Government Printing Office, www.gpo.gov]


[[Page 43]]

 
                          2.  NATIONAL DEFENSE

  ----------------------------------------------------------------------

                          Table 2-1.  Federal Resources in Support of National Defense
                                          (Dollar amounts in millions)
----------------------------------------------------------------------------------------------------------------
                                                                                                        Percent
                                Function 050                                     1993        2001       Change:
                                                                                Actual     Estimate    1993-2001
----------------------------------------------------------------------------------------------------------------
Spending:
  Discretionary budget authority............................................    276,109     311,030         13%
  Mandatory outlays.........................................................     -1,344        -418        -69%
Credit Activity:
   Direct loan disbursements................................................  ..........         11          NA
   Guaranteed loans.........................................................  ..........         39          NA
Tax expenditures............................................................      2,115       2,160          2%
----------------------------------------------------------------------------------------------------------------
NA = Not applicable.

  ----------------------------------------------------------------------
  Since 1993, the Clinton-Gore Administration has sustained its 
commitment to supporting the world's strongest military force, capable 
of defending the United States, its citizens, and its allies, and 
protecting and advancing American interests and values around the world. 
Today, the United States is the sole remaining superpower in the world, 
with military capabilities unsurpassed by any Nation. The United States 
has sought to use that position of strength in a manner consistent with 
the fundamental values and ideals upon which our republic was founded. 
We have maintained a steadfast focus on simple goals--peace, shared 
prosperity, and freedom. The U.S. military, as the world's best trained 
and best equipped fighting force, provides the strength and leadership 
that serve as the foundation for regional peace and stability that 
allows us to share our goals with others around the globe. This has been 
demonstrated throughout the tenure of this Administration, most recently 
by the restoration of stability in Kosovo and during humanitarian relief 
and other contingency operations.
  President Clinton took significant steps to ensure that our Nation's 
military is fully prepared to meet the challenges of this new century. 
The Administration strengthened our Nation's security by sustaining a 
commitment to recruit, train, and equip the best fighting force that the 
world has ever known, one capable of defeating large-scale cross-border 
aggression in two distant theaters in overlapping timeframes. This was 
achieved by enhancing military readiness and operational capabilities, 
and supporting programs to take care of military personnel and their 
families from recruitment through retirement, including defense health 
programs. The Administration also prepared for the future by procuring 
effective and modern weapons systems and funding a strong and diverse 
research and development effort to maintain our technological advantage 
through the development of advanced weapons systems.
  The Administration's efforts to shape the strategic landscape through 
continued deterrence, arms control agreements, such as the START 
agreements, and threat reduction assistance programs in Russia and other 
states of the former Soviet Union, has reduced the global danger from 
nuclear weapons and other weapons of mass destruction. The Department of 
Energy's (DOE's) national security program has maintained confidence in 
our nuclear stockpile deterrent and has significantly advanced the 
cleanup of radioactive waste from fifty years of weapons production.

[[Page 44]]

Building a new Defense Strategy for the Post-Cold War World

  The end of the Cold War left the United States armed forces with a 
strategy, force structure, and infrastructure no longer appropriate for 
the new security environment. Based on an in-depth assessment of the new 
security environment and rethinking of U.S. defense strategy, the 
Administration conducted a Bottom Up Review (BUR) in 1993 and 
restructured its forces to meet four key requirements:
  fight and win two nearly simultaneous major regional wars;
  conduct, in peacetime, a variety of operations short of a 
          major regional conflict;
  maintain a strong forward presence; and,
  deter and prevent the use of weapons of mass destruction 
          against U.S. territory, forces, and allies.
  In an effort to better align U.S. military strategy, force structure, 
infrastructure, manning, and resource requirements, the Administration 
conducted the Quadrennial Defense Review (QDR) in 1997. This is the 
Department of Defense's (DOD's) strategic plan, which was reviewed and 
approved by the President and the Congress. The QDR supported the BUR 
requirement to maintain the ability to fight two major-theater wars 
nearly simultaneously, and adopted a defense strategy of shaping the 
international environment to prevent conflict, responding to crises, and 
preparing for future threats. It also emphasized that it was in the 
Nation's interest to respond to small-scale contingency operations and 
address asymmetric threats such as information warfare, weapons of mass 
destruction, and terrorism. The QDR force structure is shown in Table 2-
2.
  ----------------------------------------------------------------------

              Table 2-2.  U.S. Conventional Force Structure
------------------------------------------------------------------------
                                  Cold War                   QDR Target
                                   (1990)         2001        (by 2003)
------------------------------------------------------------------------
Land Forces:
  Army divisions (active/             18/10          10/8          10/8
   National Guard)............
  Marine Corps divisions                3/1           3/1           3/1
   (active/reserve)...........

Tactical Air Forces:
   Air Force fighter wings            24/12        12+/7+         12+/8
   (active/reserve)...........
  Navy air wings (active/              13/2          10/1          10/1
   reserve)...................
  Marine Corps wings..........          3/1           3/1           3/1

Naval Forces:
   Aircraft carriers (active/          15/1          12/0          11/1
   reserve)...................
  Battle forces ships.........          546           317           306

Mobility Forces:
   Airlift (tactical/               513/432       526/335       478/329
   strategic).................
  Sealift (Surge/Ready Reserve       69/102         67/76         78/90
   Force).....................

Military Personnel:
   Active.....................    2,069,000     1,382,242     1,367,600
  Selected reserve............    1,128,000       863,775       837,200
------------------------------------------------------------------------

  ----------------------------------------------------------------------

Maintaining a Strong Defense

  When this Administration took office, the DOD budget, as a result of 
the end of the Cold War, had already declined by 33 percent in real 
(after inflation) terms from its 1985 peak, when the drawdown started, 
and active military forces had been reduced by 25 percent. Today, our 
military forces and programs are sized to meet the threats and strategy 
addressed in both the BUR and QDR.
  The Administration requested several significant increases in the 
defense budget to provide full support in the near term for

[[Page 45]]

military readiness and quality of life, and to modernize our forces over 
the long term. These objectives--first outlined in the Defense Funding 
Initiative of December 1994--which added $25 billion over five years--
have remained the essential pillars of this Administration's defense 
program.
  The President's approval of a six-year, $112 billion increase for 
defense in the 2000 Budget furthered these efforts and represented the 
first long-term, sustained increases for defense programs in over a 
decade. That, and subsequent budget proposals, provided continued 
significant increases for military readiness programs to enhance our 
forces' ability to respond immediately to crises; build for the future 
by increasing funding for weapons modernization programs; and, care for 
our military troops and their families by further enhancing quality of 
life programs. These efforts help ensure that the United States will be 
fully prepared to meet the security challenges of the 21st Century.
  In addition, the Administration has placed great emphasis on managing 
our defense resources more efficiently by reforming and improving the 
management of defense programs. The Defense Reform Initiative increased 
the use of competitive sourcing and privatization, adopted best business 
practices through acquisition reform, and eliminated excess 
infrastructure through base realignments and closures. Other initiatives 
included streamlining of the civilian work force, improving financial 
management practices, and implementing information technology reforms.

Ensuring the Nation's Security Through the Best Equipped, Best Trained, 
and Best Prepared Fighting Force in the World

  Enhancing Military Readiness and Operations: Maintaining high levels 
of readiness has been this Administration's top defense priority. Robust 
funding has been provided for training, spare parts, and weapons 
maintenance critical to unit readiness, and for recruiting and retaining 
quality personnel. In addition, in an effort to monitor current and 
future military readiness, the Administration has undertaken efforts to 
improve readiness reporting systems to ensure early identification of 
potential problems, and allow prompt remedial action. To meet the 
diverse security challenges of the 21st Century, the Administration has 
undertaken initiatives to transform the Army into a more deployable 
force, restructure the Air Force into 10 flexibly-sized air 
expeditionary force units, and reduce the Navy's operating costs and 
manning requirements through the Smart Ship Program. Greater use has 
also been made of National Guard and reserve forces and personnel to 
complement active duty forces.
  Funding Contingency Operations: The U.S. military has protected U.S. 
interests through involvement in contingency operations such as Bosnia, 
Kosovo, and Iraq. To pay for these operations, the Administration 
consistently sought supplemental appropriations, including nearly $4 
billion in a 1999 request for Kosovo operations. These supplemental 
requests ensured that U.S. military forces remained at high levels of 
readiness as they participated in contingency operations. The 
Administration developed accurate cost projection methodologies which 
served to inform policy decisions. The Administration made special 
efforts to track the incremental costs of these operations, especially 
Kosovo, separately from traditional defense operations costs. The 
Administration also sought supplemental funding in advance, whenever 
possible, so that normal military activities would not be disrupted by 
diverting funds to cover contingency costs. It is true that U.S. 
military participation in contingency operations has been costly in 
terms of dollars, in part because the Congress has provided funding 
above the requested levels for items not directly related to these 
operations. However, costs of individual operations have come down as 
they have made progress toward their objectives. Moreover, the 
Administration has clearly advanced U.S. national security interests by 
helping to contain Iraq, stopping the bloodshed in the Balkans, 
strengthening the NATO alliance and demonstrating its continuing value.
  Taking Care of Military Personnel and their Families from Recruitment 
through Retirement--including Defense Health Programs: In order to 
attract and retain high quality personnel and ensure that military 
compensation remains competitive with private sector pay, the 
Administration has consistently supported increases in military pay

[[Page 46]]

and retirement benefits. The Administration has also provided 
significant enhancements to the quality of life of our military 
personnel and their families, including a compensation initiative to 
reduce service members' out-of-pocket costs for housing. This program, 
approved by the Congress in 2001, will reduce out-of-pocket costs for 
military personnel from 19 percent to 15 percent by 2001, and eliminate 
these costs entirely by 2005.
  Additional quality of life improvements have been demonstrated by the 
tremendous decline in the number of military personnel on food stamps--a 
result of the Administration's consistent support for military pay 
increases. In 1991, 19,400 military personnel received food stamps; by 
2000, this number had been reduced to 5,100. For 2001, the 
Administration submitted legislation designed to immediately eliminate 
military personnel dependence on food stamps by providing a military 
commissary benefit. Other quality of life improvements include a 
worldwide family support and communications program to ease the 
hardships of deployments and family separations, and the construction 
and improvement of child care centers, fitness centers, upgraded 
barracks, and family housing. Specifically, the Administration has moved 
aggressively to upgrade the inventory of Government-owned housing for 
military families and utilize private sector capital and expertise to 
provide new, modern privatized housing for military families. DOD has 
awarded contracts for the construction of about 5,600 housing units and 
issued solicitations for the construction of approximately another 
22,000 units.
   To reduce the costs of defense health programs, the Administration 
established a managed care approach to military health care known as 
TRICARE---now also available for Medicare-eligible military retirees for 
the first time. The Administration has also implemented special programs 
for active duty families stationed in remote areas of the country where 
health care may not be available.

  Preparing for the Future by Modernizing Weapons Systems: The U.S. 
military is the best equipped fighting force in the world. Over the past 
eight years, the Administration has strongly supported a robust 
modernization program focused on the most advanced technologies to 
incorporate in future systems. This effort is critical to maintaining 
military forces capable of deterring and winning wars and successfully 
executing all contingency missions that may arise. Weapons 
modernization, including procurement of new systems, upgrades to 
existing systems, and development of new technologies to incorporate in 
future systems, has been a high priority for this Administration. The 
Administration's efforts in developing and procuring new systems have 
positioned the U.S. military to continue its unrivaled military 
superiority well into the 21st Century, as the discussion that follows 
highlight.
  Ground Forces: Over the past eight years, the Army developed 
          new systems to improve warfighting capabilities, such as the 
          Comanche helicopter and the Crusader howitzer, and upgraded 
          existing systems such as the Apache helicopter and the Abrams 
          tank to enhance operational readiness and improve 
          capabilities. In addition, both the Army and the Marine Corps 
          have developed a new light weight 155mm howitzer. The hallmark 
          of the Army's modernization effort is its plan to transform 
          itself into a more mobile and lethal force. The Army plans 
          first to field a medium weight force between now and 2007 to 
          provide greater combat power and mobility to units that deploy 
          to hostile areas in the early stages of a conflict or to peace 
          enforcement operations. In the long term, the Army plans to 
          field an ``objective force'' that is lighter and more lethal 
          than the current force by developing a Future Combat System 
          (FCS). Ultimately, Army transformation will exploit technology 
          advances anticipated in the FCS along with new operational 
          concepts and organizational structures to maintain its 
          battlefield superiority.
          The Administration has funded the cornerstones of the Marine 
          Corps' modernization program--the V-22 tilt-rotor aircraft and 
          the Advanced Amphibious Assault Vehicle--to significantly 
          enhance capability as well. Both programs, developed over the 
          course of the last decade, will replace aging helicopters and 
          tracked vehicles and increase the Marines' ability to execute 
          their ship-to-shore and cross-country

[[Page 47]]

           movements with greater speed, range, and payload.
  Naval Forces: Since 1994, the Administration has funded 
          several new classes of ships that will ensure U.S. naval 
          superiority far into the future. These new classes include the 
          LPD-17 amphibious ship, the Virginia Class attack submarine, 
          and a new auxiliary support ship. The Administration also 
          fully funded continued procurement of Nimitz class nuclear 
          aircraft carriers, the backbone of the Navy's fleet, as well 
          as Seawolf attack submarines, and DDG-51 class destroyers. The 
          Administration provided funds to develop new technologies that 
          will lead to procurement of next-generation systems including 
          a new design nuclear aircraft carrier and the next generation 
          surface combatant, known as DD-21, that will serve the Navy 
          well into this century. The Administration has also supported 
          programs that augment the fleet's warfighting capabilities and 
          enable more cost-effective operation. Initiatives, such as 
          Cooperative Engagement Capability and the Smart Ship program, 
          take advantage of advances in information technology to 
          deliver improved combat capabilities to our Navy while also 
          reducing personnel and operations costs.
  Tactical Aviation Forces: Aviation force modernization has 
          been an important part of the Administration's modernization 
          program from the start. As a result of the President's 
          efforts, the Navy's F/A-18E/F attack fighter and the Air 
          Force's F-22 fighter are now in production, and the Joint 
          Strike Fighter, a low-cost, stealthy, multiservice attack 
          aircraft, is entering advanced development. These aircraft 
          will ensure that U.S. troops will never have to fight under 
          threat of enemy air attack.
  Mobility Forces: The Administration has aggressively pursued 
          modernization of DOD's strategic airlift and sealift forces, 
          which are vital to transporting U.S. forces where they are 
          needed anywhere in the world. The Administration corrected 
          serious problems it inherited in the C-17 airlift aircraft 
          program and put the program on track. Recent operations in the 
          Balkans proved the C-17's versatility in performing a variety 
          of airlift missions. The Department plans to purchase 
          additional C-17s in coming years to ensure that U.S. mobility 
          forces possess the maximum possible flexibility with which to 
          face the uncertain world of the future. In addition, the 
          Administration provided funding that enabled the Air Force to 
          initiate a C-5 modernization program to ensure that they are 
          capable of meeting the projected airlift requirements; and it 
          funded procurement of a new class of sealift ships intended to 
          expand the ability to transport large quantities of equipment 
          around the world.
  Tactical Munitions: The Administration has pursued a munitions 
          investment strategy to develop and procure weapons with 
          revolutionary capabilities--such as precision accuracy, all-
          weather performance, U.S. Global Positioning System (GPS) 
          guidance, and increased standoff range. America's role in 
          NATO's victory in the Kosovo air war showcased the success of 
          this strategy. The Joint Direct Attack Munition (JDAM), a GPS 
          guidance kit which inexpensively transforms unguided bombs 
          into accurate weapons with all-weather capability, is a 
          revolutionary munition first procured during this 
          Administration; the Air Force used JDAM to great effect in 
          Kosovo. The Administration requested funds to improve the 
          Navy's Tomahawk cruise missile, a ``weapon of choice'' against 
          high-value, heavily-defended targets. The newer Tactical 
          Tomahawk version will feature a number of improved 
          capabilities, including in-flight re-targeting. The military 
          Departments also initiated a mid-range Joint Air-to-Surface 
          Standoff Missile which is now under development.
  Space Systems: The Administration made significant investments 
          in space systems that are critical to supporting military 
          operations worldwide. These systems will enhance military 
          communications, positioning and navigation, missile detection 
          and warning, and weather monitoring. The Administration's 
          National Space Transportation policy sustained and revitalized 
          U.S. space launch capabilities and led to development of the 
          Evolved Expendable Launch Vehicles program to provide

[[Page 48]]

          more efficient, economical access to space. The Space Based 
          Infra-red Satellites will replace the existing missile 
          detection and warning satellite constellation. The 
          Administration consolidated Department of Commerce and DOD 
          programs into a single enhanced, polar-orbiting satellite 
          system now in development to reduce the cost of acquiring and 
          operating weather systems. Finally, the Administration 
          formulated a national policy and strategic vision for the 
          management and use of the GPS, and funded a modernization 
          program for GPS that will significantly improve services for 
          all users, both civil and military.
  Missile Defense: The Administration has invested in both 
          ballistic missile defense technologies and theater missile 
          defense systems that will defend against missiles directly 
          threatening deployed United States and allied forces. The 
          Administration has also been committed to the development of a 
          limited National Missile Defense (NMD) system to counter the 
          emerging ballistic missile threat from states of concern, and 
          to working with Russia on any changes to the Anti-Ballistic 
          Missile Treaty that may be required to deploy a limited NMD. 
          The NMD system as a whole is not yet proven, and the President 
          decided in September 2000 not to proceed with the deployment 
          at this time. However, the Administration is continuing a 
          program that represents the fastest, and most technologically 
          mature path to achieving an effective NMD that can protect all 
          50 States against emerging threats.

Reducing the Global Danger from Nuclear Weapons and Other Weapons of 
Mass Destruction

  Shaping the Strategic Landscape Through Deterrence, Arms Control, and 
Cooperative Threat Reduction: The President has remained firmly 
committed to maintaining a robust deterrent capability while reducing 
the threat from weapons of mass destruction (WMD) through arms control 
and cooperative threat reduction efforts with states of the former 
Soviet Union.
  President Clinton's budgets over the past eight years have 
          maintained and improved the Nation's deterrent capability by 
          selectively enhancing the current nuclear force. The largest 
          program in this regard will modify the remaining four Trident 
          nuclear submarines to enable them to carry the most accurate 
          and longest range submarine launched ballistic missile. Other 
          DOD efforts to maintain the strategic nuclear force include 
          programs that support upgrades to intercontinental ballistic 
          missiles and intercontinental bombers such as the B-2.
  DOE also plays a critical role in the nuclear deterrence 
          mission. Following President Clinton's announcement in August 
          1995 that he would seek a ``zero yield'' Comprehensive Test 
          Ban Treaty, which would ban any nuclear weapons test 
          explosions, DOE implemented a science-based Stockpile 
          Stewardship Program to ensure the safety and reliability of 
          our nuclear deterrent. Through this program, which relies on 
          non-nuclear test facilities and computer codes (rather than 
          underground testing) to simulate nuclear explosions to predict 
          the performance of the weapons, DOE has been able to annually 
          certify the nuclear weapons stockpile as safe and reliable. 
          The 2001 enacted level for this program is nearly $5 billion. 
          The Administration successfully negotiated the zero-yield 
          Comprehensive Test Ban Treaty with the other nuclear powers 
          and sent it to the Senate for ratification in September, 1997. 
          It remains in the Senate awaiting ratification.
          In addition, DOE made significant progress in reducing 
          contamination at former weapons production facilities. Over 
          the past eight years, DOE completed remedial action at more 
          than 4,000 of the 9,700 areas of known hazardous or 
          radioactive material contamination, including cleanup of some 
          ecologically sensitive areas such as along the Columbia River 
          in Washington and above the Snake River Plain Aquifer in 
          Idaho.
  While investing in these force enhancements and the stockpile 
          stewardship program, the Administration has simulta

[[Page 49]]

          neously worked to lower the risks associated with WMD. To that 
          end, the President has maintained arms control as a high 
          priority of U.S. policy and implemented reductions under the 
          Strategic Arms Reduction Treaty (START I), brought the START 
          II treaty to the threshold of implementation (pending Senate 
          approval), and laid the groundwork for even further reductions 
          under a START III agreement. In addition, the Administration 
          negotiated the passage in 1997 of the Chemical Weapons 
          Convention to ban the worldwide production, storage, and use 
          of chemical weapons. To date, the United States has destroyed 
          22 percent of its chemical weapons stockpile.
  ----------------------------------------------------------------------

                      Table 2-3.  Strategic Forces
------------------------------------------------------------------------
                                  Cold War       Current      Projected
                                 (Pre-START)    (START I)    (START II)
------------------------------------------------------------------------
ICBMs
  Minuteman...................          950           500           500
  Peacekeeper.................           50            50             0

TRIDENT Submarines............           31            18            14
SLBMs.........................          568           432           336

Heavy Bombers.................          324        97 \1\        97 \1\

Total Warheads................       13,498     6,000 \2\         3,500
------------------------------------------------------------------------
\1\ Excludes 93 B-1B bombers dedicated to conventional missions.

\2\ Maximum number of warheads on delivery vehicles determined by
  ``counting rules'' established by each treaty.

  ----------------------------------------------------------------------
  The Administration's threat reduction assistance programs in 
          Russia and other states of the former Soviet Union have 
          steadily grown to nearly $1.0 billion per year, and they have 
          reaped significant benefits over the past eight years. Managed 
          by DOD, DOE, and State, the programs mitigate the danger posed 
          by WMD, the proliferation of their fissile material 
          components, and the scientific expertise behind them. In 2001, 
          DOD's Cooperative Threat Reduction (CTR) program accounted for 
          about 48 percent of the total Administration threat reduction 
          request while DOE's portion was about 37 percent and State's 
          was 14 percent.
          DOD funds support accelerated strategic arms reductions in 
          Russia and states of the former Soviet Union by dismantling 
          and destroying strategic warheads, their delivery systems, and 
          infrastructure. They also support WMD nonproliferation efforts 
          by enhancing the safety, security, and control of nuclear 
          weapons and fissile material components as well as chemical 
          and biological munitions. Over the past eight years, CTR 
          programs have supported deactivating over 5,000 nuclear 
          warheads, destroying 17 strategic nuclear submarines and 405 
          intercontinental ballistic missiles (ICBMs), and eliminating 
          365 ICBM silos and 67 strategic bombers, while maintaining the 
          fissile components of these weapons in a secure environment.
          The Administration began eliminating United States surplus 
          weapons-grade plutonium by conversion and immobilization, and 
          negotiated a similar program to dispose of Russian surplus 
          plutonium; improved the safety of 65 reactors at Soviet-
          designed nuclear power plants and assisted nine countries to 
          adopt and implement internationally accepted nuclear safety 
          programs; and, provided security and accounting upgrades to 
          protect over 400 metric tons of weapons-grade nuclear material 
          at dozens of Russian and former Soviet sites. The United 
          States and Russia also concluded an agreement in 1993 under 
          which Russia will sell to the United States low-enriched 
          uranium (LEU) derived from 500 tons of highly enriched uranium 
          (HEU) from dismantled former

[[Page 50]]

          Soviet Union nuclear weapons. To date, the U.S. Enrichment 
          Corporation (the United States agent in these purchases) has 
          purchased LEU fuel derived from about 6,000 nuclear weapons' 
          worth of HEU.
          State's programs also support proliferation prevention 
          activities by engaging former weapons scientists to direct 
          their efforts away from weapons programs to activities with 
          civilian benefits, and by preventing the illicit transfer of 
          WMD through implementation of effective export controls.

  Meeting the Challenges of Unconventional Threats: The Administration 
has focused on meeting the challenge from emerging unconventional and 
asymmetric threats designed to offset U.S. superiority. The last decade 
has seen an increase in the frequency and severity of terrorist attacks 
on military forces and civilian targets, as well as the sophistication 
of emerging threats, such as WMD and information-based warfare. 
President Clinton has made defending the United States against such 
threats a top national security priority, and has sought to defend 
against these threats through diplomatic and military means abroad and 
increased preparedness at home. Over the past eight years, the 
President:
  Issued three Presidential Directives to combat terrorism and 
          defend against WMD at home and abroad, and to protect the 
          Nation's critical infrastructure from cyber attack. The 
          Directives codified the roles and responsibilities of the many 
          U.S. agencies involved in these missions.
  Appointed a National Coordinator for Security, Infrastructure 
          Protection, and Counter-terrorism to coordinate the U.S. 
          Government's efforts to confront emerging threats against 
          Americans at home and abroad.
  Provided over $11 billion across the Government in 2001--a 
          funding increase of more than 40 percent since 1998--to combat 
          terrorism, defend against WMD, and protect critical 
          infrastructure. This funding included efforts to equip and 
          train first responders in the Nation's 120 largest 
          metropolitan areas to prepare for and defend against weapons 
          of mass destruction; create the first ever civilian medical 
          stockpile for WMD incidents; and, recruit and train cyber 
          security personnel to protect the Federal Government's own 
          critical infrastructure. 
  ----------------------------------------------------------------------

         Table 2-4.  Overall Funding for Unconventional Threats
               (Budget authority, in millions of dollars)
------------------------------------------------------------------------
                                              Actual
                                   ----------------------------   2001
                                    1998 \1\    1999     2000   Estimate
------------------------------------------------------------------------
Combating Terrorism, excluding WMD     5,871    7,519    6,966     7,759
Defense Against WMD...............       645    1,238    1,454     1,552
Critical Infrastructure Protection     1,142    1,429    1,759     2,027
                                   -------------------------------------
  Total...........................     7,658   10,186   10,179    11,338
------------------------------------------------------------------------
\1\ 1998 was the first year that data were available.

  ----------------------------------------------------------------------

Reforming and Improving the Management of Defense Programs

  Defense Management Initiatives: The Administration identified defense 
reform as a major DOD priority. In November 1997, the Department 
announced the Defense Reform Initiative (DRI), which adopted the best 
business practices used by industry. The goal was to improve these 
activities and to reduce the overhead burden that these support 
activities place on the defense budget. DOD has completed two-thirds of 
54 separate Defense Reform Initiatives and the remainder are well 
underway. Since the DRI was launched, DOD has made progress in 
consolidating various defense organizations, streamlining its

[[Page 51]]

infrastructure, re-engineering its business practices, and competing 
more jobs with the private sector than ever before. DOD has projected 
that the work currently performed by approximately 150,000 positions 
will be bid against private sector firms by 2005, with projected savings 
of approximately $7 billion. Savings that result from competition are 
being reallocated to meet readiness and modernization needs.
  Reforming the Acquisition System: The Administration has also 
          strongly supported efforts by DOD to reform the way it 
          acquires weapon systems and services. Over the past eight 
          years, DOD has reduced the amount of time it takes to field 
          new weapon systems by 25 percent, saved millions of dollars in 
          small purchases through the use of a Government-wide 
          commercial purchase card, and, through the use of electronic 
          commerce, reduced cumbersome paper transactions by 50 percent.
  Reducing Infrastructure: The reduction in the U.S. force 
          structure made possible by the end of the Cold War has left 
          DOD with more land and buildings than it needs to carry out 
          its mission. The Administration inherited an established 
          process, the Base Realignment and Closure Commission (BRAC), 
          to remove this infrastructure from DOD's inventory. Since 
          1988, BRAC has closed or restructured 97 major military 
          installations and hundreds of smaller ones (55 of these major 
          installations since 1993). While this process is costly in the 
          short term, it is an investment that leads to elimination of 
          the cost of upkeep on unused buildings and yields operational 
          efficiencies. By the end of 2001, BRAC will have more than 
          paid for itself, saving a net of $15 billion, and will save 
          nearly $6 billion annually thereafter. At the same time, the 
          Administration has worked diligently to minimize the effect of 
          moving jobs out of affected communities by providing technical 
          support to community redevelopment efforts, and turning over 
          land to reuse as quickly as possible. Although the reduction 
          in total DOD infrastructure has been beneficial and despite 
          the many efficiencies achieved, BRAC has not kept pace with 
          the overall change in force structure. For the last several 
          years, the Administration requested additional BRAC rounds to 
          allow for a further ``right-sizing'' of Defense 
          infrastructure. This request, strongly endorsed by both 
          internal DOD and external analysis, has failed to win 
          congressional approval.
          The Administration has also implemented an aggressive 
          demolition program, and has recently widened the authority to 
          lease out unneeded DOD buildings and land. These programs have 
          helped to reduce costs without moving people, and have become 
          particularly important given the failure of the Congress to 
          pass the legislation needed to replicate the success of 
          previous BRAC rounds.
  Streamlining the Civilian Work Force: Over the past eight 
          years, DOD has used buyouts and early retirements to achieve a 
          streamlined and more productive work force. During this time, 
          the Department has shrunk its civilian work force by 
          approximately 37 percent, roughly commensurate with the 
          reduction in military forces. The Administration was able to 
          achieve this result mainly by offering incentives to those 
          eligible or nearly eligible for retirement. Providing these 
          incentives reduced the need for reductions-in-force, and thus 
          accomplished the downsizing and streamlining with a minimal 
          amount of disruption or economic hardship. While using these 
          transition initiatives to ease the way for the many workers 
          who left the work force, the Administration has also supported 
          pay and benefit increases for the remaining employees who 
          continue to become a more productive work force.
  Improving Financial Management: DOD has made significant 
          progress in reforming its financial management operations. The 
          Defense Finance and Accounting Service (DFAS) is the 
          Department's agent for accomplishing needed financial 
          management reforms. DFAS has consolidated DOD's financial 
          operations, significantly reduced the number of finance and 
          accounting systems, established and implemented ambitious 
          deployment schedules, and reengineered business practices to 
          adopt best practices from both the private and Government 
          sectors. For example, over 300

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          financial management field sites were reduced to just 26, 
          saving about $120 million annually; 324 finance and account 
          systems were reduced to 76--with further reductions planned to 
          achieve ultimately a 90-percent reduction; and, between 1993 
          and 1999, personnel levels at the DFAS decreased by 37 
          percent, from 31,000 personnel in 1993 to 19,500 personnel at 
          the end of 1999. Since 1996, the DFAS has identified over 85 
          percent of its personnel in finance and accounting functions 
          as available for public-private competition, and has committed 
          to study over 6,000 positions for competitive outsourcing. To 
          date, the DFAS has completed six competitions resulting in 
          annual savings of over $28 million.
  Implementing the Information Technology Management Reform Act 
          (ITMRA): Also known as the Clinger-Cohen Act, ITMRA is 
          designed to help agencies improve mission performance by 
          effectively using information technology. One example is the 
          Global Command and Control System, which provides the seamless 
          integration of Service capabilities necessary to conduct joint 
          and multinational operations into the 21st Century. In October 
          2000, the U.S. Navy awarded an eight-year, $6.95 billion 
          Navy--Marine Corps Intranet (NMCI) contract for managing the 
          Service's shore-based computing enterprise. NMCI represents 
          one of the biggest technology outsourcing contracts ever. The 
          DOD Chief Information Officer Council manages DOD's 
          information technology budget and its command, control, and 
          communications budget, and provides advice on ITMRA-related 
          issues. In addition, DOD continues to restructure its work 
          processes while applying modern technologies to maximize the 
          performance of information systems, achieve a significant 
          return on investment, cut costs, and produce measurable 
          results.
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