No. 98-004 Feb. 2, 1998 THE ARMY BUDGET FISCAL YEAR 1999 The Army today announced details of its budget for Fiscal Year 1999, which requests $64.3 billion in Total Obligation Authority. The Fiscal Year 1999 budget supports the Army’s vision and commitment to maintain a total quality force of Active, Reserve, and National Guard soldiers and civilians. It supports the "shape, respond, prepare" strategy validated by the Quadrennial Defense Review. Such a seamless, total force is capable of executing the full spectrum of operations and employing the most modern equipment available. The budget also emphasizes quality of life for our most precious resources – America’s sons and daughters – our soldiers. The budget has been balanced to preserve readiness, enhance modernization, integrate the force structure, and maintain quality of life. For example, it provides for operational training that is still superior to that of any other nation in the world. At the same time, critical modernization programs such as Crusader, Comanche, Longbow Apache, Longbow Hellfire, Army Tactical Missile System-Brilliant Anti-Tank (ATACMS-BAT), Abrams Tank Upgrade, and the Family of Medium Tactical Vehicles (FMTV), continue to move forward. Moreover, the Army’s digitization strategy, which will ensure information dominance, situational awareness, and combat overmatch, is adequately funded in this budget. The Fiscal Year 1999 budget integrates the force structure, continuing the Army’s progress toward improved Active Component and Reserve Component (AC/RC) integration. Increased modernization investment in the Reserve Component and implementation of the ARNG Division Redesign Study are two examples. The budget seeks to maintain quality of life programs in Fiscal Year 1999. At the forefront, a 3.1 percent pay raise and a Fiscal year 1999 barracks construction program are fully funded. The Army fully endorses Defense Secretary William Cohen’s efforts to reduce the Department’s infrastructure and overhead to ensure resources are available to support future readiness and force structure. Therefore, the Army strongly endorses the proposal for two additional BRAC rounds. The Army continues to pursue a variety of management initiatives designed to produce efficiencies and streamline operations. The Fiscal Year 1999 budget includes $1.3 billion in savings across all functional areas. The Fiscal Year 1999 budget also includes $1.5 billion in transfers of Defense-wide programs to the Army (e.g., Chemical Demilitarization, Commissaries, and Defense Reform Initiatives). I. READINESS The Fiscal Year 1999 budget request supports the Army’s readiness objectives by providing adequate funding of ground Operating Tempo (OPTEMPO) and flying hour program requirements. These programs fund tough, realistic training at home stations, combat training centers, and joint and combined exercises. Fiscal Year 1999 represents the second year of the Army’s long-range plan to leverage training device and simulation technology that reduce training costs while maintaining combat readiness. However, training is not the sole measure of readiness. The budget also addresses sustainment, quality of life, and installation maintenance - all critical components of a trained and ready force. A. Operating Tempo: The Army’s ground OPTEMPO and flying hour program have been funded to meet readiness levels specified in Defense Planning Guidance. In Fiscal Year 1999, the budget supports ground OPTEMPO of 800 miles per year for the M1 Abrams Tank (934 miles for the M2 Bradley Infantry Fighting Vehicle, 970 miles for the M3 Bradley Cavalry Fighting Vehicle). It supports an average of 14.5 flying hours per attack helicopter per month (AH64 Apache and the armed OH58D helicopters) and slightly less than 14.0 flying hours for all other aircraft for the active component. In selected units, OPTEMPO miles include a small number of Close Combat Tactical Trainer (simulator) miles, as well as actual miles. The Fiscal Year 1999 budget supports 174 tank miles and 6.9 flying hours per month for the National Guard, and 102 miles and 8.7 flying hours for the Army Reserve. The Operations and Maintenance budget will support 10 brigade rotations (nine AC and one ARNG) through the National Training Center, 10 brigade rotations (nine AC and one ARNG) through the Joint Readiness Training Center, and five brigade rotations through the Combat Maneuver Training Center. Additionally, the Battle Command Training Program will train eight corps/division command groups and staffs. B. Institutional Training. The Fiscal Year 99 budget continues to emphasize institutional training modernization. Army Training XXI (AT XXI) provides the framework to train from individual to Joint Task Force (JTF) level. It incorporates the spectrum of Army training and education, integrating institutional, self-development and collective training initiatives. AT XXI represents the training strategy that will prepare Army forces to exploit new operational concepts, capabilities and systems on future battlefields. Through an initiative called "Future Army Schools XXI Century," the Army established a Total Army School System (TASS) with fully accredited and integrated Active Army, National Guard and Army Reserve schools. Each component is expanding its efforts to reduce duplication, share information and resources, and make the tough decisions on organizational change. Distance Learning technology will further enhance the operation of TASS and provide high quality, standardized training to soldiers and civilians. The Fiscal Year 99 budget provides additional funding to expand its Basic Combat Training (BCT) and One Station Unit Training (OSUT) by one week, beginning 1 October 1998. This will enable the Army to improve "soldierization," emphasize Army values throughout the training process and better institute professional pride for the Army's soldiers in their future assignments. The Army is improving training by providing additional subjects to instill Army values in the new soldier. These values of Loyalty, Duty, Respect, Selfless Service, Honor, Integrity, and Personal Courage will receive greater emphasis in the expanded BCT and OSUT programs. The Army will also provide a "Warrior" field exercise developed as a comprehensive final measure of proficiency for all new soldiers. These efforts will result in a better trained soldier with reinforced Army values and heritage. C. Mobilization Operations. The Fiscal Year 1999 budget includes funding for improvement projects to rail, highway, port, and airfield facilities to support the Army's Strategic Mobility Program. These improvements facilitate movement of personnel and equipment from stateside bases to sea and air embarkation points for rapid and efficient deployment. Projects are focused at designated stateside power projection platforms that include four installations, two airfields, one strategic seaport, and five ammunition depots and plants designed to ensure the Army meets its deployment timelines. D. Sustainment: Supplying and maintaining equipment for the Army's soldiers is essential to overall readiness. The Fiscal Year 1999 budget supports sustainment by funding an executable depot maintenance program as well as logistics support programs such as second destination transportation, supply depot operations, the Conventional Ammunition Program, and Army Prepositioned Stocks. E. Quality of Life. The budget further contributes to force readiness by providing a quality of life structure for the Army's soldiers, civilians, and their families. This structure includes financial management of Army commissaries and such family programs as child development centers, the Exceptional Family Member Program, Army Community Services and youth programs. For the second consecutive year, this budget meets the goal of funding child care centers to provide service for 65 percent of the child-care demand. The quality of life structure also includes maintenance and repair of housing for single and married soldiers as well as the renovation of substandard barracks and housing. Funding for these crucial programs is similar to that of Fiscal Year 1997 and Fiscal Year 1998. F. Facilities: Posts, camps and stations provide the platform needed to train and launch today’s power projection Army. The Fiscal Year 1999 budget ensures this platform supports the national strategy. The budget also sustains, with some risk, base support infrastructure to include communications, engineering and public works, and minor repairs and maintenance. Funds are provided to demolish old facilities excess to current needs. II. QUALITY FORCE AND FORCE REALIGNMENT The Fiscal Year 1999 budget continues to emphasize quality personnel as the key ingredient to the best force possible. Maintaining pay incentives, fostering upward mobility, and improving quality of life are essential to obtaining and retaining a quality force. A. Military Personnel: The Fiscal Year 1999 budget supports an end strength of 480,000 Active Component, 357,000 Army National Guard, and 208,000 Army Reserve soldiers. B. Civilian Personnel: The Army will reduce the civilian work force to an end strength of approximately 237,000 in Fiscal Year 1999, down about one percent from Fiscal Year 1998. III. MODERNIZATION Modernization continues to be a critical component of the Army’s ability to support the National Military Strategy, and its effort to maintain a comprehensive ability to defeat any current or foreseeable military threat with minimum casualties. Modernization of Army weapon systems and equipment is managed through a continuous process of change and growth that encourages innovation, imagination and responsible risk-taking. The near term Army Modernization Strategy is to focus on information dominance, maintenance of combat overmatch and recapitalization of aging systems. This short-term focus allows the Army to pursue leap ahead science and technology concepts required to field the Army After Next. The Quadrennial Defense Review validated the Army modernization objectives and programs, and supported additional Fiscal Year 1999 resources for the digitization of the force to achieve information dominance on the battlefield, and the increased modernization of the Army Reserve and National Guard. The following two sections are representative of the Army’s major efforts in modernization, continuing to fulfill high priority research, development and acquisition needs to support the Army’s evolution toward the 21st Century. A. Procurement Appropriations 1. The Fiscal Year 1999 budget continues modernization upgrades to the Abrams tank and the Bradley Fighting Vehicle. The budget continues funding for a 120-per-year multi-year contract for the Abrams Upgrade program. These programs increase mobility, survivability and lethality over existing systems. These warfighting improvements are crucial to the Army’s overall ability to defeat any current or foreseeable ground combat threat. 2. The Fiscal Year 1999 budget provides funding for the close combat, air defense and deep battle missile programs. This funding allows for continued procurement of the Army Tactical Missile System Block 1A, and allows initiation of multiyear contracts for the Longbow Hellfire and the Improved Target Acquisition System for TOW. Additionally, Fiscal Year 1999 funds the first year of procurement for the Brilliant Anti-Armor Submunitions. The budget also provides for a third year of full-rate production multi-year procurement for Javelin and the second year of Low Rate Initial Production (LRIP) for the Multiple Launch Rocket System upgrade (M270A1), and Stinger missile. 3. The Fiscal Year 1999 budget supports aviation programs that will modernize, upgrade and replace existing equipment. This includes modifying basic Apache helicopters to the Longbow Apache configuration, armed with an improved radar-guided Hellfire missile possessing fire-and-forget capability. These improvements substantially increase weapon system effectiveness and aircraft survivability. The budget provides increased funding for procurement of 22 Black Hawk helicopters in Fiscal Year 1999. 4. Funding for the FMTV in the Fiscal Year 1999 budget supports continued truck production. FMTV modernizes the medium tactical vehicle fleet with state-of-the-art automotive technology to fill shortages, improve tactical mobility and deployability, and replace obsolete, overaged and maintenance-intensive trucks. 5. The Fiscal Year 1999 budget provides training ammunition and four modern types of war reserve ammunition items. The budget also provides for a modest reduction to the ammo demilitarization backlog and support production of the Army’s newest smart munitions, the Sense and Destroy Armor Munitions (SADARM). The SADARM provides a target activated, fire-and-forget capability against armored targets for 155mm howitzer systems. 6. The Fiscal Year 1999 budget continues funding for satellite communications systems, including the Defense Satellite Communications System; SHF Tri-Band Advanced Range Terminal; Enhanced Manpack UHF Terminal, also known as Spitfire; Army Milstar programs; Single Channel Anti-Jam Manportable Terminal and Secure Mobile Anti-Jam Reliable Tactical Terminal; and NAVSTAR Global Positioning System. The Enhanced Position Location Reporting System data radio was accelerated. These systems provide essential capabilities to the warfighter as quickly as possible. Other communications systems and command and control programs such as the All Source Analysis System, Advanced Field Artillery Data System, Army Global Command & Control System, Forward Area Air Defense Command & Control System and Maneuver Control System are also funded. 7. The requirements of the Chemical Demilitarization Program are funded in two separate appropriations, the Chemical Agents and Munitions Destruction, Army (CAMD,A) and Military Construction, Army (MILCON,A). The Fiscal Year 1999 CAMD,A budget request of $855.1 million includes research and development ($182.8 million), procurement ($140.7 million) and operations and maintenance ($531.6 million). Significant program activities funded in the CAMD,A request include the continuation of disposal operations at the Johnston Atoll Chemical Agent Disposal System and the Tooele Chemical Agent Disposal Facility; continuation of construction-related activities for the Anniston, Umatilla and Pine Bluff disposal facilities; award of systems contracts and initiation of final designs for neutralization pilot facilities at Aberdeen Proving Ground, MD and Newport, IN; continuation of environmental permitting activities for the disposal facilities at Pueblo, CO and Blue Grass, KY; and continuation of the Chemical Stockpile Emergency Preparedness Project activities. 8. A summary of the procurement major system quantities follows: MAJOR SYSTEM QUANTITIES SYSTEM PROGRAM FY97 FY98 FY99 MULTI-YEAR BLACKHAWK 34 28 22 YES LONGBOW APACHE 24 44 66 YES JAVELIN 1,020 1,080 3,316 YES LONGBOW HELLFIRE 1,056 1,100 2,000 YES ATACMS BLOCK IA 97 100 96 NO ATACMS BLOCK II 0 0 30 NO BAT 0 0 420 NO M1 TANK UPGRADE 120 120 120 YES M2A3 BRADLEY 35 18 73 NO SADARM 600 507 550 NO SINCGARS 44,707 32,847 0 NO FMTV 1,807 1,213 2,038 YES MLRS (M270A1) 35 24 NO 9. The Fiscal Year 1999 budget continues the Army’s commitment to modernize the Reserve Component. Following is funding for new major systems for the Reserve Component (excludes serviceable equipment cascaded from active units): SYSTEM COMPONENT FY99 AVENGER ARNG 18 SENTINEL ARNG 7 BLACKHAWK ARNG 10 HEAVY EQUIPMENT TRANSP ARNG 153 PALATIZED LOADING SYS ARNG/USAR 96 TRUCK, DUMP 20T ARNG 12 TRUCK , DUMP 20 T USAR 54 TRUCK TRACTOR LINE HAUL ARNG 305 ATLAS USAR 15 B. Research, Development, Test and Evaluation (RDTE) Appropriation The Army continues to maintain a strong and stable Science and Technology (S&T) program to ensure the timely development and transition of technology into weapon systems and system upgrades and to explore alternative concepts in future global, capabilities-based warfighting. The Army S&T program emphasizes: 1) technology insertion via upgrades to existing platforms; 2) support of Joint Chiefs of Staff future warfighting capabilities and Force XXI Advanced Warfighting Experiments; 3) early reduction of risk in material development programs, and 4) management through the Army Science and Technology Master Plan. The following major RDT&E efforts are supported in the Fiscal Year 1999 budget: 1. The RAH-66 Comanche helicopter will provide the Army with new capability to conduct armed reconnaissance during both day and night in adverse weather, a long-standing need for the Army. The Comanche will significantly expand the Army’s ability to conduct operations in all types of combat scenarios and battlefield environments while providing increased crew survivability through low observable technology. The Fiscal Year 1999 budget supports testing of two prototype aircraft and development of the advanced T801 engine, composite air vehicle and Mission Equipment Package. 2. The Crusader (formerly known as Advanced Field Artillery System and the Future Ammunition Resupply Vehicle) will provide commanders with increased accuracy, rate of fire, survivability, mobility and ammunition handling speed with decreased crew size. These systems will displace the M109A6 Paladin self-propelled Howitzer and M992 Field Artillery Ammunition Supply Vehicle. 3. Missile systems under current development include the Brilliant Anti-Armor Submunitions, Multi-Purpose Individual Munition/Short Range Assault Weapon, Enhanced Fiber Optic Guided Missile, Line-of-Sight Antitank Missile, Guided MLRS, Stinger, Follow-on to TOW, and ATACMS Block IIA. All of these programs are designed to leverage technology and provide soldiers with superior firepower. 4. The Army's Digitization strategy represents a substantial investment (approximately $ 2.6B in Fiscal Year 1999) and provides a significant improvement in command and control capability for the Army's forces. A digitally networked Army provides a fully integrated command and control capability from the CINC to the soldier. The focus of the strategy is on capability enhancement rather than individual systems. Force XXI Battle Command Brigade and Below is the cornerstone digital command and control system for mounted and dismounted combat, combat support and combat service support commanders, leaders and soldiers. However, digitization investments in Fiscal Year 1999 also include continued integration and development efforts with: the Army Battle Command System, the communications backbone, sensors, and weapons platforms to include the Abrams and Bradley programs, key aviation platforms like Longbow Apache and Kiowa Warrior, the Land Warrior program, upgrades to Combat Training Centers instrumentation and support to operational tests and evaluations of digital systems. The Army plans on digitizing the first division in Fiscal Year 2000, the first Corps in Fiscal Year 2004, and the total Army (Active and Reserve) in Fiscal Year 2010. 5. The Joint Surveillance Target Attack Radar System is supported in Fiscal Year 1999 to continue limited production of the Common Ground Station and to initiate full-scale production following a successful Initial Operational Test & Evaluation scheduled for 2nd Quarter Fiscal Year 1998. The JSTARS system has been a major contributor to conducting peacekeeping operations in Bosnia. Again, the system has proven that its near real-time information collection capabilities play a critical role in total intelligence production and dissemination during peacetime and will provide commanders superior targeting and battle management capabilities in combat operations in the future. 6. The Fiscal Year 1999 budget supports All Source Analysis System (ASAS) software development, Defense Satellite Communications Programs upgrades, Electronic Spitfire Warfare Programs and Night Vision Systems development. Fiscal Year 1999 begins full-rate production (45 terminals) and completes total package fielding of low rate initial production of MILSTAR Secure Mobile Anti-jam Reliable Tactical Terminal (SMART-T). The Fiscal Year 1999 budget resources total package fielding of 93 Army Single Channel Anti-jam Man Portable (SCAMP) Block I satellite communications terminals. 7. The Fiscal Year 1999 budget provides continued funding for Force XXI Initiatives begun in Fiscal Year 1997, a program that uses the Warfighting Rapid Acquisition Program (WRAP) as a vehicle to jump-start technology and put proven technology into the hands of soldiers, while achieving significant time and dollar efficiencies. The Army established WRAP to accelerate fielding of systems and technology to meet a compelling need that emerges from successful battle lab experiments, Advance Warfighting Experiments, Advanced Technology Demonstrations, Advanced Concept Technology Demonstrations or similar demonstrations and evaluations. Force XXI Initiatives are part of Army’s Acquisition Reform Initiatives. The Army used the WRAP process in the evaluation and selection of Fiscal Year 1997/98 candidates, relying on their performance during Advanced Warfighting Experiments conducted at the National Training Center, and their promise for the future. IV. CONSTRUCTION The Fiscal Year 1999 budget for Military Construction, Family Housing, and Base Realignment and Closure (BRAC) provides new and renovated facilities needed to improve Army readiness, quality of life, and efficiency. The Military Construction budget includes facilities that improve strategic mobility, modernize barracks, and support the diverse missions of active and reserve component soldiers. Funding for construction of facilities to support the Chemical Demilitarization program has been transferred to the Army budget effective with Fiscal Year 1999. The Family Housing budget includes the construction and revitalization of housing as well as the operation and maintenance of Army family housing world-wide. The BRAC budget provides new facilities at gaining installations for activities that must move due to BRAC mandated actions. In addition, the BRAC budget provides funds to close selected facilities. BRAC actions are an important element in the Army’s continuing efforts to reduce costs and operate more efficiently. A. Military Construction: The Military Construction Budget for the active Army and Reserve Component is $910 million. Representative projects in key areas are listed below: 1. The Whole Barracks Renewal Program to improve the living conditions of single soldiers is supported at a level of $307 million in Fiscal Year 1999. Major projects are located at: # Soldiers $M Schofield Barracks, HI 192 47.5 Fort Bragg, NC 332 47.0 Fort Campbell, KY 336 41.0 Fort Eustis, VA 400 36.5 Fort Benning, GA 240 28.6 Fort Sam Houston, TX 384 21.8 Fort Sill, OK 432 20.5 Camp Castle, Korea 200 18.3 Schweinfurt, Germany 246 18.0 2. Strategic Mobility capabilities are improved with the following facilities: $M Fort Bragg, NC Departure Staging Complex 30.0 Fort Hood, TX Railhead Upgrade PH 1 17.5 McAlester AAP, OK Ammunition Containerization 10.8 Crane AAP, IN Ammunition Containerization 7.1 3. Mission and training requirements are supported by facilities, including: $M Umatilla AD, OR Chemical Demil Facility PH 4 50.9 Charlottesville, VA National Ground Intel Ctr 46.2 Fort Leavenworth, KS US Disciplinary Barracks PH 2 29.0 Newport AD, IN Chemical Demil Facility PH 1 27.5 Miami, FL Southern Command HQS 26.7 Aberdeen PG, MD Chemical Demil Facility PH 1 26.5 West Point, NY Cadet Physical Dev Ctr PH 1 12.0 Fort Lewis, WA Close Combat Trng Facility 7.6 4. Reserve Component readiness is improved by facilities, including: $M Ft. Devens MA Reserve Support Command HQ (USAR) 3.3 Ft. Wadsworth NY US Army Reserve Center (USAR) 6.4 Ft. Eustis VA Aviation Support Facility (USAR) 11.6 Papago Mil Res AZ Combined Spt Maint Shop (ARNG) 10.6 Greenville KY Training Complex (ARNG) 5.4 Gowen Field ID Readiness Center Addition (ARNG) 4.2 5. The budget includes investments in barracks construction of $46 million in Korea and $18 million in Germany, along with $10 million for child care facilities in Germany and Belgium. These facilities will improve the standard of living for soldiers and their families overseas. B. Army Family Housing: The Fiscal Year 1999 Army Family Housing budget provides or operating and maintaining family housing and for whole-neighborhood revitalization of military family housing by either replacement construction or major renovation to bring dwelling units up to current standards. 1. The Fiscal Year 1999 budget requests $68.5 million to replace 506 family housing units at four locations where it is more economical to replace the units than to renovate. An additional $28.6 million will fund four whole-neighborhood revitalization projects totaling 514 dwelling units. Fiscal Year 1999 projects are listed below: Replacement Construction $M 118 units Redstone Arsenal, AL 14.0 64 units Schofield Barracks, HI 14.7 170 units Fort Bragg, NC 19.8 154 units Fort Hood, TX 21.6 Construction Improvements $M 36 units Fort Monmouth, NJ 4.3 328 units Fort Sill, OK 13.8 78 units Wiesbaden, Germany 5.4 72 units Vicenza, Italy 5.1 2. The Fiscal Year 1999 Army Family Housing budget also requests $1.1 billion for operating and maintaining approximately 131,000 military family housing units, world-wide. This amount includes $468 million for maintenance and repair, which provides for major repairs on approximately 3,500 dwellings. BASE REALIGNMENT AND CLOSURE (BRAC). The following BRAC related construction projects are requested for Fiscal Year 1999: Location Project Amount ($million) Fort Greely, AK Munition Storage Facility $1.6 Fort Wainwright, AK Family Housing $1.7 Fitzsimons AMC, CO Reserve Center $2.7 Fitzsimons AMC, CO Reserve Center Warehouse $1.6 Crane AAP, IN Surveillance Test Facility $1.8 Fort Detrick, MD Physical Fitness Center $3.0 Fort Meade, MD DIS Administrative Facility $12.0 Fort Meade, MD ESSD Administrative Facility Renovation $2.9 Fort Meade, MD SDC-W Administrative Facility Renovation $6.3 Fort Totten, NY Storage Facility $1.9 Letterkenny AD, PA Enclave Fencing $1.1 Fort Eustis, VA MTMC CONUS Hq $9.6 Fort Lee, VA WAC Museum $2.4 Fort Pickett, VA Reserve Center $3.1 USA Corps of Engrs Program Management $2.4 Total: $54.1 V. MANAGEMENT INITIATIVES The Army continues to pursue a variety of management initiatives designed to produce efficiencies and streamline operations. The Fiscal Year 1999 budget includes $1.3B in savings across all functional areas, which have been reinvested in modernization and other high priority Army programs. Efficiencies in facilities and community services are planned through privatization and partnerships with civilian communities. It is imperative that we accomplish these efficiencies so that savings will be realized. We are also in the process of implementing the Government Performance and Results Act (GPRA) which calls for agencies to develop strategic plans and performance plans with measurable performance targets. Although the law requires reporting of these plans at the Department of Defense level, the Army will model its plans from the DoD Strategic Goals, which are based on the Quadrennial Defense Review. VI. ARMY WORKING CAPITAL FUND Business activities within the Army Working Capital Fund (AWCF) are an integral part of the Army’s Budget. The support services provided by AWCF funded activities are a critical aspect of the readiness and sustainability of the operating forces. In Fiscal Year 1999, the Army will purchase fuels, repair parts, consumable supplies, depot maintenance services and information management services from AWCF activities. Army plays a dual role in Working Capital Fund operations. First, the Army is responsible for operating assigned activities for Supply Management, Depot Maintenance, Information Services and Ordnance. The Supply Management activity ensures that spare parts are available, on time, to maintain unit readiness. The Depot Maintenance activity performs major overhaul and repair of end items and reparable secondary items. The Information Services activity provides development and operational sustainment of automated information services. The Ordnance activity manufactures, renovates and demilitarizes materiel for all branches of DoD. In Fiscal Year 1999 the Army activities are estimated to have $11.9 billion in sales. Second, the Army is a major customer of Defense Working Capital Fund (DWCF) activities such as Defense Finance and Accounting Service (DFAS), Defense Information Services Agency (DISA), Defense Logistics Agency (DLA), and Transportation Command (TRANSCOM). As a customer, the Army acquires goods and services to sustain training and readiness at the lowest possible cost. Army was an active participant in the development of the Congressionally directed Working Capital Fund Study which was completed September 1997. The study resulted in a plan that was developed to improve management and performance of the industrial, commercial and support type activities that are managed through the DWCF. Numerous changes and improvements were incorporated into the plan that will result in more accurate cost information and increased operating efficiencies. As an active member of the DWCF Corporate Board, Army will support implementation of the plan while continuing to improve existing policies and procedures. The AWCF routinely acts to eliminate unnecessary spending, serve customers, and help organizations solve their own problems. This philosophy embodies the principles of the National Performance Review. Revolving Fund financial objectives are to include the full cost of providing goods and services in customer rates, to provide cost visibility to customers, and to eliminate cumulative gains or losses in the budget year. In the Depot Maintenance, Ordnance, and Information Services activities, stabilized customer revenue rates are set eight months in advance. Rates are set to recovery costs plus cumulative gains or losses over the number of direct labor hours estimated to be required for the workload. Beginning Fiscal Year 1998, Depot Maintenance operating results will be reviewed and rates revised on a quarterly basis to maintain a break-even environment. This will provide for a more timely recovery of shortfalls. The Army agrees with the Congress that advance billing should not be a part of normal operations of the Working Capital Fund but a measure to be utilized in extreme circumstances. There were no new advance billings in Fiscal Year 1997 and none are anticipated in the future. VII. ARMY ENVIRONMENTAL PROGRAM Army policy mandates that all current operations comply with federal, state, local and applicable host-nation environmental standards. The Army's commitment to this policy is reflected in the $1.28 billion included in the Army’s Fiscal Year 1999 budget request for environmental programs. This requested amount is distributed among various Operations & Maintenance appropriations ($522 million), Environmental Restoration, Army ($386 million), Base Realignment and Closure ($220 million), Research Development Testing and Evaluation, Army ($82 million) and other appropriations ($75 million). The funds will pay for environmental compliance, conservation of natural and cultural resources, and pollution prevention at Army installations worldwide. The budget also provides support to correct violations, meet existing and new environmental standards and dispose of hazardous waste. VIII. SUMMARY The Fiscal Year 1999 budget reflects a balanced assessment of the Army’s needs and priorities. It seeks to preserve readiness, enhance modernization, integrate the force structure, and maintain quality of life. It makes significant progress toward fully digitizing the Army . It sustains and propels the force structure in the direction of a more "seamless" Total Army, seeking improvements in AC/RC integration and communication. It continues to focus on maintaining quality of life for soldiers and their families. The Fiscal Year 1999 budget also reflects the Army’s continuing effort to seek efficiencies and savings through competition and reductions in obsolete infrastructure. Once achieved, these savings can be harvested and reinvested to improve readiness, modernization, and soldiers’ quality of life. The Army has worked hard to achieve a balance between readiness and modernization. This has been a substantial challenge in Fiscal Year 1999. Nevertheless, the Army's commitment to soldiers remains steadfast. The Army continues the fight to provide them the best quality of life, the toughest, most realistic training, and the most capable equipment in the world. FY99 TOTAL OBLIGATION AUTHORITY ( IN BILLIONS) APPROPRIATION FY98 FY99 MILITARY PERSONNEL 25.8 26.6 OPERATIONS & MAINTENANCE 20.4 20.9 PROCUREMENT 6.9 8.2 RESEARCH, DEVLMT, TEST & EVAL 5.0 4.8 MILITARY CONSTRUCTION 0.8 0.9 ARMY FAMILY HOUSING 1.3 1.2 BRAC 0.4 0.5 DEF ENVIRON RESTORATION ACT 0.4 0.4 CHEMICAL DEMILITARIZATION 0.9 TOTAL 61.0 64.3 (Less DoD Mission Transfers) (62.8) -END-