OVERVIEW

UNITED STATES DEPARTMENT OF DEFENSE

FISCAL YEAR 2015 BUDGET REQUEST

OFFICE OF THE UNDER SECRETARY OF DEFENSE (COMPTROLLER)/ 

CHIEF FINANCIAL OFFICER

 MARCH 2014
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Preface

The Overview Book has been published as part of the President’s Annual Defense Budget for the 

past few years. This continues for FY 2015, but with modifications as proposed by 

congressional staff. From FY 1969 to FY 2005, OSD published the “Annual Defense Report” 

(ADR) to meet 10 USC Section 113 requirements. Starting with the President’s FY 2006 

Budget, this report was no longer produced. Subsequently, the Overview began to fill this role.

The Overview is one part of an extensive set of materials that constitute the presentation and 

justification of the President’s Budget for FY 2015. This document and all other publications for 

this and previous DoD budgets are available from the public web site of the Under Secretary of 

Defense (Comptroller): www.comptroller.defense.gov. Performance Improvement tables and 

charts can be viewed at http://comptroller.defense.gov/budgetmaterials/budget2015.aspx.

Especially relevant is the Press Release and Budget Briefing often referred to as the “Budget

Rollout.” Also key is the Program Acquisition Costs by Weapons System book, which includes 

details on major DoD acquisition programs – e.g., aircraft, ground forces programs, shipbuilding, 

space systems, etc. Other background information can be accessed through www.defense.gov.
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Overview – FY 2015 Defense Budget 

TABLE OF CONTENTS

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Table of Contents

1. FY 2015 Budget Summary 1-1

Seek a Balanced Force ................................................................................................... 1-2

Prepare for Prolonged Readiness Challenges ................................................................. 1-2

Continue to Focus on Institutional Reform ....................................................................... 1-2

Pursue Compensation Changes ...................................................................................... 1-3

Pursue Investments in Military Capabilities...................................................................... 1-3

FY 2015 – FY 2019 Topline............................................................................................. 1-4

Opportunity, Growth, and Security Initiative ..................................................................... 1-4

2. Seek a Balanced Force 2-1

Security and Fiscal Environments.................................................................................... 2-1

The Defense Strategy...................................................................................................... 2-2

Rebalancing the Joint Force ............................................................................................ 2-3

Rebalancing the Defense Institution ................................................................................ 2-6

3. Prepare for Prolonged Readiness Challenges 3-1

Generating Service Capabilities....................................................................................... 3-2

Generating Joint Capabilities ........................................................................................ .3-18

4. Continue to Focus on Institutional Reform 4-1

More Disciplined Use of Resources................................................................................. 4-1

Improving the Financial Management Workforce............................................................. 4-4

Financial Improvement and Audit Readiness Initiative..................................................... 4-5

Audit and Contract Management Oversight ..................................................................... 4-6

Better Buying Power........................................................................................................ 4-8

Control Costs Throughout the Product Life Cycle ............................................................ 4-9

5. Pursue Compensation Changes 5-1

Military Compensation ..................................................................................................... 5-2

Military Compensation and Retirement Modernization Commission................................. 5-7

Managing the Military Health System............................................................................... 5-8

Strengthening Military Families...................................................................................... 5-14

Transitioning from Service Member to Veteran.............................................................. 5-15

Supporting DoD Civilians............................................................................................... 5-16
Overview – FY 2015 Defense Budget 

TABLE OF CONTENTS

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6. Pursue Investments in Military Capabilities 6-1

Missile Defense ............................................................................................................... 6-3

Space-Based Systems .................................................................................................... 6-5

Cyberspace Operations ................................................................................................... 6-5

Reserve Components...................................................................................................... 6-6

Science & Technology..................................................................................................... 6-9

Defense Acquisition Workforce Sustainment ................................................................. 6-10

7. Military Departments 7-1

Army................................................................................................................................ 7-1

Navy/Marine Corps........................................................................................................ 7-11

Air Force........................................................................................................................ 7-15

8. Performance Improvement 8-1

Appendix A. Resource Exhibits A-1

Table A-1 Combat Force Structure Overview ..................................................................A-1

Table A-2 Active Component End Strength – Base Budget .............................................A-2

Table A-3 Active Component End Strength – OCO Budget .............................................A-2

Table A-4 Active Component End Strength – Base + OCO Budget .................................A-2

Table A-5 Reserve Component End Strength..................................................................A-3

Table A-6 DoD Base Budget by Appropriation Title .........................................................A-3

Table A-7 DoD Base Budget by Military Department .......................................................A-3

Table A-8 DoD Base Budget by Military Department and Appropriation Title...................A-4

Appendix B. Acronym List B-1

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Overview – FY 2015 Defense Budget 

CHAPTER 1 FY 2015 BUDGET SUMMARY

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1. FY 2015 BUDGET SUMMARY 

The Fiscal Year (FY) 2015 budget submission 

aligns program priorities and resources with the 

2014 Quadrennial Defense Review (QDR). The 

QDR makes clear that our updated national 

defense strategy is right for the Nation, sustaining 

the global leadership role of the United States and 

providing the basis for decisions that will help 

bring our military into balance over the next 

decade and responsibly position us for an era of 

both strategic and fiscal uncertainty. The FY 2015

budget of the Department of Defense (DoD) is 

designed to protect capabilities that are most 

closely aligned to the pillars of the defense 

strategy – defend the homeland, build security globally, and project power and win decisively. 

The budget also maintains a mission ready force, continues to emphasize efficiencies by being 

even better stewards of taxpayer dollars, and continues to take care of our people and their 

families. In developing the FY 2015 budget and planning for future years, the Department is 

seeking to rebalance the Joint Force. It will be reduced in size but will become more modern 

and more ready to confront a broad range of future defense challenges, while also ensuring full 

support for our All-Volunteer Force. 

Throughout this year’s budget review, key determinations were made to achieve even more 

efficiencies, to establish more effective procurement reforms, and to initiate a review of 

compensation practices. All of those areas are part of the Department’s budget plan to achieve 

strategic ends, balancing the ways and means. 

The FY 2015 funding levels will allow the military to protect and advance U.S. interests and 

execute the updated defense strategy – but with somewhat increased levels of risk for some 

missions. The Department will continue to experience gaps in training and maintenance over 

the near term and will have a reduced margin of error in dealing with risks of uncertainty in a 

dynamic and shifting security environment over the long term. As a global leader, the United 

States requires a robust national defense strategy to protect and advance its interests, and 

ensure the security of its allies and partners, with a military that can implement that strategy 

effectively. This can only be achieved by the strategic balance of reforms and reductions that 

the Department is presenting to Congress and will require Congress partnering with DoD in 

making politically difficult choices.

The FY 2015 base budget provides $495.6 billion, a reduction of $0.4 billion from the FY 2014

enacted budget of $496.0 billion, and is consistent with Administration-wide efforts to make 

tough program choices within current funding constraints. This budget adjusts programs that 

develop and procure military equipment, re-sizes ground forces, slows the growth of

Key Themes

• Seek a Balanced Force

• Prepare for Prolonged Readiness 

Challenges

• Continue to Focus on Institutional Reform

• Pursue Compensation Changes

• Pursue Investments in Military Capabilities

• FY 2015 – FY 2019 Topline

• Opportunity, Growth, and Security

Initiative

Figure 1-1. Department of Defense Budget 

DoD Budget

$ in billions

FY 2013 

Actual*

FY 2014 

Enacted

FY 2015 

Request

FY14 – FY15 

Change

Base 495.5 496.0 495.6 -0.4

Discretionary budget authority Numbers may not add due to rounding

* Includes the sequestration of funds under the Budget Control Act of 2011. 
Overview – FY 2015 Defense Budget 

CHAPTER 1 FY 2015 BUDGET SUMMARY

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compensation and benefit programs, continues to make better use of defense resources by 

reducing lower priority programs, and makes more disciplined use of defense dollars. 

The overall themes developed in this overview are explained in the following chapters: 

• Seek a Balanced Force (Chapter 2)

• Prepare for Prolonged Readiness Challenges (Chapter 3)

• Continue to Focus on Institutional Reform (Chapter 4)

• Pursue Compensation Changes (Chapter 5)

• Pursue Investments in Military Capabilities (Chapter 6)

SEEK A BALANCED FORCE

For much of the past decade, the Department of Defense (DoD) focused on fighting terrorism 

and countering violent insurgencies, and the Department will continue to do so as long as these 

threats exist. But the security environment is evolving. The defense strategy outlined in the 

2014 QDR and developed in this budget creates a smaller, more agile, flexible Joint Force that 

will be prepared to defend U.S. national interests in a rapidly changing security environment. 

The FY 2015 budget request continues most of the force reductions made in the FY 2014 

budget request. The budget continues to make informed choices to achieve a modern, ready, 

and balanced force to meet the full range of potential military missions. The restructured force 

will sustain its technological edge, be capable of deterring and, if necessary, defeating

aggression, and improve its readiness to accomplish key missions. 

This budget will protect basic and applied research despite a significantly constrained fiscal 

environment to ensure our technological edge. The Administration emphasizes a strong 

national investment in research and development, emphasizing science and technology that is 

vital to our future competitive advantage. 

PREPARE FOR PROLONGED READINESS CHALLENGES

The 2014 QDR highlights the importance of and commitment to maintaining ready and capable 

forces. Readiness investments in training technologies, force protection, command and control, 

and intelligence, surveillance and reconnaissance systems strengthen U.S. standing as the 

most formidable military force in the world. Today U.S. forces are postured globally, conducting 

counter-terrorism, stability, and deterrence operations, maintaining a stabilizing presence, 

conducting bilateral and multilateral training to enhance U.S. security relationships, and 

providing the crisis response capabilities required to protect U.S. interests. This budget seeks 

to restore readiness levels affected by sequestration cuts in FY 2014. It also continues 

initiatives started in the FY 2014 budget to transition from a force focused largely on current 

operations to one capable of meeting a broader mission portfolio. The investments made in fullspectrum readiness will yield a smaller but more ready and capable force. Readiness 

investment provides the capabilities and enhances the ability of U.S. forces to achieve their 

missions anywhere at any time required. 

CONTINUE TO FOCUS ON INSTITUTIONAL REFORM

The Department achieves a balanced approach by reviewing all areas of the budget for 

potential savings. This includes achieving new efficiencies, eliminating duplication, reducing 

management headquarters and overhead, tightening personnel costs, enhancing contract 

competition, terminating or restructuring weapons programs and consolidating infrastructure. 
Overview – FY 2015 Defense Budget 

CHAPTER 1 FY 2015 BUDGET SUMMARY

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The Department has learned from prior drawdowns that it is impossible to generate all the 

needed savings just through efficiencies. The Department prioritizes by focusing on key 

missions relevant to the future security environment. 

This budget continues the reform agenda advanced in the previous four budgets, but with more 

emphasis on enhancing how DoD does business. The Department must continue to reduce the 

“cost of doing business” as a means of protecting future funding for our highest priority 

programs. A share of the savings is reinvested in higher priority military programs. 

PURSUE COMPENSATION CHANGES

America asks much of its All-Volunteer Force (AVF) and the civilians who support that force. 

The AVF is DoD’s most prized asset – it enables the Department to have high quality, educated, 

motivated personnel who are committed to excellence in defense of the nation. Therefore, the 

Department must preserve the quality of our All-Volunteer Force. This budget keeps faith with 

the men and women in uniform, and their families because the volunteer force is central to a 

strong future military. 

The cost of military pay and allowances, combined with military health care, comprises about 

one-third of the Department’s budget. These costs have been growing rapidly in recent years, 

about 40 percent faster than growth in the private sector, while active duty end strength has 

grown by only 1 percent. The FY 2015 budget for the Department of Defense continues to take 

care of its people and their families while addressing costs in a responsible manner. The 

Department continues to provide a strong package of pay and benefits that is commensurate 

with the stress of military life. Yet in order to build the force needed to defend the country under 

existing budget constraints, the Department recognizes the need to make tough choices to 

achieve a balanced and responsible budget. Given the sharp growth in military compensation, 

such as medical costs that have more than doubled since 2001, the Department is taking steps 

in the FY 2015 budget request to slow the growth in military pay and health care costs. 

However, in recognition of the burdens placed on U.S. military, these changes are 

disproportionately small to those for other budget categories. 

Civilian personnel also play a key role in performing key functions that directly support DoD’s 

military and readiness, including critical functions such as equipment maintenance, medical 

care, family support, and base operating services. Civilians also have a primary role in 

intelligence and cyber mission requirements. The budget request supports a civilian workforce 

appropriately sized, shaped, and compensated to reflect changes to the Department’s reduced 

force structure. 

PURSUE INVESTMENTS IN MILITARY CAPABILITIES

In support of the defense strategy, the FY 2015 President’s Budget emphasizes the capabilities 

needed to modernize the force for a wide range of missions, including the ability to project 

power against advanced adversaries. The Department’s weapons program investments are 

designed to yield a military force that achieves the nation’s security objectives and ensure that 

the United States remains a global force to promote peace and security. 

The FY 2015 budget request continues to give prominence to the improved lethality, 

survivability, sustainability, and affordability of the next generation of weapons systems and 

military equipment. The budget also protects key capability areas in support of DoD’s strategy, 

including cyber; missile defense; nuclear deterrence; space; precision strike; intelligence, 

surveillance, and reconnaissance; and counter terrorism and special operations. 
Overview – FY 2015 Defense Budget 

CHAPTER 1 FY 2015 BUDGET SUMMARY

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FY 2015 – FY 2019 TOPLINE

The historical funding picture is summarized here:

Figure 1-3 presents the proposed FY 2015 – FY 2019 DoD topline for this year’s President’s 

Budget, as compared to last year’s FY 2014 President’s Budget. 

OPPORTUNITY, GROWTH, AND SECURITY INITIATIVE

For FY 2015, the President’s Budget includes a separate, fully paid-for Opportunity, Growth, 

and Security (OGS) Initiative. The OGS Initiative, which is split evenly between defense and 

non-defense funding, shows how additional discretionary investments in 2015 can spur 

economic progress, promote opportunity, and strengthen national security. For the Department

of Defense, the OGS Initiative proposes additional funding of $26.4 billion in FY 2015. 

The budget documents issued by the Office of Management and Budget provide additional 

detail on the OGS initiative and the balanced package of mandatory spending cuts and tax 

loophole closers that will offset its discretionary spending increases. This section summarizes 

the funding proposed for DoD under this Initiative. The OGS Initiative includes FY 2015 DoD 

funding in three key areas:

Making Faster Progress toward Restoring Readiness

Sequestration degraded readiness throughout the Joint Force by requiring sharp cuts to 

training, maintenance, and support. More than a decade of war contributed to readiness 

problems. Although the base budget provides the resources needed to gradually restore 

readiness and balance, it does not provide funds to accelerate readiness improvements in 

Figure 1-2. Department of Defense Topline Since September 11th Attacks

(Dollars in billions)

FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15

Base 287.4 328.2 364.9 376.5 400.1 410.6 431.5 479.0 513.2 527.9 528.2 530.4 495.5 496.0 495.6

OCO 22 9 16.9 72.5 90.8 75.6 115.8 166.3 186.9 145.7 162.4 158.8 115.1 82.0 85.2 79.4*

Other 5.8 -- -- 0.3 3.2 8.2 3.1 -- 7.4 0.7 -- -- 0.1 -- --

Total 316.2 345.1 437.5 467.6 478.9 534.5 600.9 665.9 666.3 691.0 687.0 645.5 577.6 581.2 575.0

Numbers may not add due to rounding

Discretionary budget authority. FY 2013 includes the sequestration of funds under the Budget Control Act of 2013. 

*The FY 2015 OCO figure is a placeholder pending submission of a final OCO request. 

Figure 1-3. DoD Proposed Outyear Topline for the Base Budget

Current

$ in billions

FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY15 – FY19 

TOTAL

FY 2014 PB 540.8 551.4 560.0 568.6 577.1 2,797.9

FY 2015 PB 495.6 535.1 543.7 551.4 559.0 2,684.9

Delta -45.2 -16.2 -16.2 -17.2 -18.1 -113.0

Real Growth +6.3% -0.1% -0.5% -0.6% +1.3%*

Numbers may not add due to rounding

*Average annual real growth of the FY 2015 President’s Budget for FY 2015 – FY 2019. 
Overview – FY 2015 Defense Budget 

CHAPTER 1 FY 2015 BUDGET SUMMARY

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FY 2015. The OGS Initiative provides the resources needed in FY 2015 to make faster 

progress by supporting increased activity at depot maintenance facilities around the country; 

greater training support; and increases in funding for fuel, spare parts, and transportation costs. 

Some specific examples include increased readiness and training range support for the Air 

Force; increased training and base support for the Army; increased aviation depot maintenance 

funding for the Navy; and increased training and Intelligence, Surveillance, and Reconnaissance 

operations for U.S. Special Operations Command. 

Accelerating Modernization of Key Weapons Systems:

Consistent with the reductions in discretionary spending required by the Budget Control Act of 

FY 2011 and the Bipartisan Budget Act of FY 2013, DoD has reduced or slowed down planned 

purchases of a variety of weapons systems and equipment in recent years. The OGS Initiative 

would allow DoD to accelerate the schedules for developing and buying new or upgraded 

systems in order to ensure that the United States maintains technological superiority over any 

potential adversaries. For example, the OGS Initiative provides enhanced resources for 

procurement of manned and unmanned aircraft, helicopters, ground vehicles, and 

communication systems. Some specific examples include the procurement of eight P-8, one 

E-2D, and three C-40 aircraft for the Navy; procurement of two H-1, one KC-130, and one 

C-12 aircraft for the Marine Corps; two F-35 aircraft, 10 C-130s, and 12 MQ-9 Reapers for the 

Air Force; and modernization of the Army’s helicopter and the Air Force’s C-130 programs. 

Improving DoD Facilities Around the Country

Sequestration required significant cuts to funding for DoD facilities, forcing the Department to 

defer some sustainment, restoration, and modernization (SRM) costs as well as some military 

construction projects. The base budget provides the funds necessary to keep DoD bases, 

housing, and other facilities safe, secure, and operational in the near term but not enough to 

keep up with long-term deterioration. The OGS Initiative adds additional resources for SRM and 

construction at DoD installations across the country that will generate jobs and avoid some 

larger than necessary future costs to replace buildings, roads, runways, and other facilities. 

Highlights of items funded under the OGS Initiative, by Component, include:

• Army 

– Increase OPTEMPO, training, and Training Support System operations and services 

($1.8 billion)

– Increase base support and facility sustainment ($1.6 billion)

– Procure 26 AH-64 Apache helicopters ($0.6 billion)

– Procure 28 UH-60 Blackhawk helicopters ($0.5 billion)

– Increase depot maintenance capabilities ($0.4 billion)

– Procure 2 CH-47 Chinook helicopters ($0.1 billion)

• Navy

– Increase demolition and facility sustainment, recapitalization and modernization 

($2.3 billion)

– Procure 8 P-8A Poseidon aircraft ($1.1 billion)

– Increase Military Construction ($1.2 billion)

– Increase aviation logistics and maintenance ($0.3 billion)
Overview – FY 2015 Defense Budget 

CHAPTER 1 FY 2015 BUDGET SUMMARY

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– Increase Permanent Change of Station (PCS) funding ($0.2 billion)

• Marine Corps

– Increase Military Construction ($0.3 billion)

– Improve infrastructure readiness ($0.1 billion)

– Increase field logistics support ($0.1 billion)

• Air Force

– Increase facilities sustainment, maintenance, and repair ($1.6 billion)

– Increase Military Construction ($1.4 billion)

– Procure 10 C-130J series aircraft ($1.1 billion)

– Increase readiness and training range support ($0.4 billion)

– Procure 2 F-35 aircraft and associated modernization ($0.3 billion)

– Procure 12 MQ-9 Reaper unmanned air systems ($0.2 billon)

• United States Special Operations Command (USSOCOM)

– Increase training, readiness and Intelligence, Surveillance and Reconnaisance (ISR) 

operations ($0.3 billion)

– Recapitalize Command, Control, Communications, Computers and Intelligence (C4I) 

($0.1 billion)

• Missile Defense Agency

– Procure additional radar spares ($0.2 billion)
Overview – FY 2015 Defense Budget 

CHAPTER 2 SEEK A BALANCED FORCE

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2. SEEK A BALANCED FORCE

This chapter summarizes the defense strategy 

developed by the 2014 Quadrennial Defense Review 

(QDR) and major changes to the defense program 

resulting from this strategy. The Secretary of Defense 

is required by 10 U.S.C. section 118 to conduct a 

QDR that examines the defense strategy, force 

structure and modernization, infrastructure, and budget plan. The Department released the 

2014 QDR in March 2014.

The 2014 QDR was a strategy-driven and resource-informed planning effort focused on 

preparing the Department of Defense for the future and prioritizing our efforts in a period of 

fiscal austerity. The QDR advances three important initiatives. First, it builds on the 

2012 Defense Strategic Guidance to continue protecting and advancing U.S. interests and 

sustaining American leadership. Second, the QDR describes how the Department is 

responsibly and realistically taking steps to rebalance major elements of the Joint Force given 

the changing fiscal environment. Third, the QDR articulates our intent to rebalance the 

Department itself as part of our effort to control internal cost growth that is threatening to erode 

our combat power in this period of fiscal austerity. We will protect the health of the All-Volunteer 

Force as we undertake these reforms.

SECURITY AND FISCAL ENVIRONMENTS

The United States faces a rapidly-changing security environment. We are repositioning to focus 

on the strategic challenges and opportunities that will define our future: new technologies, new 

centers of power, and a world that is growing more volatile, more unpredictable, and, in some 

instances, more threatening to the United States.

Challenges to our many allies and partners around the globe remain dynamic and 

unpredictable, particularly from regimes in North Korea and Iran. Unrest and violence persist 

elsewhere, creating a fertile environment for violent extremism and sectarian conflict stretching 

from the Sahel to South Asia, and threatening American citizens abroad. Meanwhile, modern 

warfare is evolving rapidly, leading to increasingly contested battlespace in all domains in which 

our forces enjoyed dominance in our most recent conflicts. 

At the same time, the Department of Defense is facing a changing and equally uncertain fiscal 

environment. Beginning with the Fiscal Year (FY) 2013 budget, the Department began 

implementing a $487 billion, 10-year cut in spending consistent with caps instituted by the 

Budget Control Act of 2011. The Budget Control Act also instituted a sequestration mechanism 

requiring additional cuts of about $50 billion annually, although the American Taxpayer Relief 

Act provided some relief in FY 2013. The Bipartisan Budget Act of 2013 provided modest 

immediate relief from sequestration but, unless Congress acts, annual sequestration cuts are 

set to begin once more in FY 2016. To protect the security interests of the United States while 

recognizing the fiscal security imperative of deficit reduction, the President’s Budget reduces 

projected defense budget by about $113 billion over 5 years compared to levels in the FY 2014 

budget. The FY 2015 President’s Budget provides a balanced and responsible path forward, 

given continuing fiscal uncertainty. It reflects the strict constraints on discretionary funding 

required by the Bipartisan Budget Act in FY 2015. It does not accept sequestration levels 

thereafter and funds the Department at about $116 billion more than projected sequestration 

levels over the 5-year period.

Seek a Balanced Force

• Security and Fiscal Environments

• The Defense Strategy

• Rebalancing the Joint Force

• Rebalancing the Defense Institution
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CHAPTER 2 SEEK A BALANCED FORCE

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THE DEFENSE STRATEGY

The 2014 QDR embodies the 21st century defense priorities outlined in the 2012 Defense 

Strategic Guidance. These priorities include rebalancing to the Asia-Pacific to preserve peace 

and stability in the region; maintaining a strong commitment to security and stability in the 

Middle East; sustaining a global approach to countering violent extremists and terrorist threats, 

with an emphasis on the Middle East and Africa; continuing to protect and prioritize key 

investments in technology while our forces overall grow smaller and leaner; and invigorating 

efforts to build innovative partnerships and strengthen key alliances and partnerships. The 

2014 QDR builds on these priorities and incorporates them into a broader strategic framework. 

The Department’s defense strategy emphasizes three pillars and, particularly in an era of 

reduced resources, the Department will redouble its efforts to protect capabilities that are most 

closely aligned to these pillars:

• Protect the homeland, to deter and defeat threats to the United States and to support 

civil authorities in mitigating the effects of potential attacks and natural disasters. This 

means making selective investments in missile defense, nuclear modernization, and 

cyber capabilities. It also means sustaining capacity to protect U.S. airspace, shores, 

and borders, as well as reshaping the ability of U.S. military forces to provide support to 

civil authorities when needed.

• Build security globally, to preserve regional stability, deter adversaries, support allies 

and partners, and cooperate with others to address common security challenges. In 

practice, this means continuing to rebalance our posture and presence to the AsiaPacific while maintaining a focus on the Middle East. This also means working closely 

with our European partners to strengthen their capabilities, maximizing the impact of a 

relatively small U.S. presence in Africa, and working with our interagency partners as 

appropriate to counter illicit drug trafficking and transnational criminal organization 

activity.

• Project power and win decisively, to defeat aggression, disrupt and destroy terrorist 

networks, and provide humanitarian assistance and disaster relief. Sustaining superior 

forces will remain a top priority for force planning and development, so the following 

focus areas will be key: air/sea investments to counter anti-access challenges; space; 

counterterrorism and Special Operations; precision strike; intelligence, surveillance and 

reconnaissance; and resilience. 

These pillars are mutually reinforcing and interdependent, and all of the Military Services play 

important roles in each of the three pillars. Across each of the three pillars of the defense 

strategy, the Department is committed to finding creative, effective, and efficient ways to 

achieve our goals and assist us in making hard strategic choices. Innovation – within our own 

Department and in our interagency and international partnerships – is a central line of effort. 

Going forward, the U.S. Armed Forces will be capable of simultaneously defending the 

homeland, conducting sustained, distributed counter-terrorist operations, and in multiple 

regions, be able to deter aggression and assure allies through forward presence and 

engagement. If deterrence fails at any given time, U.S. forces could defeat a regional adversary 

in a large-scale multi-phased campaign, and deny the objectives of – or impose unacceptable 

costs on – an aggressor in another region. 

The President’s Budget provides the resources to build and sustain the capabilities to conduct 

these operations, although at somewhat increased levels of risk for some missions. Budget 

reductions inevitably reduce the military’s margin of error in dealing with risks, and a smaller 
Overview – FY 2015 Defense Budget 

CHAPTER 2 SEEK A BALANCED FORCE

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force strains our ability to simultaneously respond to more than one major contingency at a time. 

But with the President’s Budget, our military will still be able to defeat any aggressor. The 

Department can manage these risks under the President’s FY 2015 budget plan, but the risks 

would grow significantly if sequester-level cuts return in FY 2016, if reforms are not accepted, 

and if uncertainty over budget levels continues. 

REBALANCING THE JOINT FORCE

Given major changes in our nation’s security environment – including geopolitical changes, 

changes in modern warfare, and changes in the fiscal environment – our updated defense 

strategy requires that the Department rebalance the Joint Force in several key areas to best 

prepare for the future. 

Rebalancing for a broad spectrum of conflict. Future conflicts could range from hybrid 

contingencies against proxy groups using asymmetric approaches to a high-end conflict against 

a state power armed with weapons of mass destruction or technologically advanced anti-access 

and area-denial capabilities. Reflecting this diverse range of challenges, the U.S. military will 

shift focus in terms of what kinds of conflicts it prepares for in the future, moving toward greater 

emphasis on the full spectrum of possible operations. Although our forces will not be sized to 

conduct large-scale prolonged stability operations, we will preserve the expertise gained during 

the past 10 years of counterinsurgency and stability operations in Iraq and Afghanistan. We will 

protect the ability to regenerate capabilities to meet future demands.

Our Joint Forces must also be prepared to battle increasingly sophisticated adversaries who 

could employ advanced warfighting capabilities while simultaneously attempting to deny 

U.S. forces the advantages they currently enjoy in space and cyberspace. We will sustain 

robust investments in science, technology, research, and development both within the defense 

sector and beyond. The Department is taking steps to ensure that progress continues in areas 

most critical to meeting future challenges such as full-spectrum cyberspace capabilities and 

where the potential for game changing breakthroughs appears most promising. We will actively 

seek innovative approaches to how we fight, how we posture our force, and how we leverage 

our asymmetric strengths and technological advantages. Innovation is paramount given the 

increasingly complex warfighting environment we expect to encounter.

The United States will maintain a worldwide approach to countering violent extremists and 

terrorist threats, using a combination of economic, diplomatic, intelligence, development, and 

military tools. The Department of Defense will rebalance our counter-terrorism efforts toward 

greater emphasis on building partner capacity, especially in fragile states, while still retaining 

robust capability for direct action, to include intelligence, precision strike, and Special 

Operations Forces. We will remain focused on countering the proliferation of weapons of mass 

destruction, which continues to undermine global security. We will sustain efforts to adapt key 

alliances and partnerships, placing more focus on deepening existing cooperation as well as 

building new and innovative partnerships. Finally, our Combatant Commanders will invigorate 

efforts to adjust contingency planning to better reflect the changing strategic environment.

Rebalancing and sustaining our presence and posture abroad to better protect 

U.S. national security interests. In striving to achieve our pillars, the Department will also 

continue to rebalance and sustain our global posture. We will continue our contributions to the 

U.S. rebalance to the Asia-Pacific, seeking to preserve peace and stability in a region that is 

increasingly central to U.S. political, economic, and security interests. Faced with North Korea’s 

pursuit of long-range missiles, and weapons of mass destruction—particularly nuclear 

weapons—the United States is committed to maintaining peace and security on the Korean 

Peninsula. As part of our broader efforts for stability in the Asia-Pacific, the United States will 
Overview – FY 2015 Defense Budget 

CHAPTER 2 SEEK A BALANCED FORCE

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maintain a robust footprint in Northeast Asia while enhancing our presence in Oceania and 

Southeast Asia. The United States also has enduring interests in the Middle East, and we will 

remain fully committed to the security of our allies and partners in the region. We will continue 

to maintain a strong military posture in the Gulf region – one that can respond swiftly to crisis, 

deter aggression, and assure our allies – while making sure that our military capabilities evolve 

to meet new threats. Given our deep and abiding interests in a Europe that is whole, free and at 

peace, we will work with allies and partners to continue promoting regional security, 

Euro-Atlantic integration, and enhanced capacity and interoperability for coalition operations. 

As we end all combat operations in Afghanistan, our commitment to the Afghan National 

Security Force will endure, transitioning from a U.S.-led counterterrorism and counterinsurgency 

mission to a more normalized U.S.-supported security assistance and cooperation role. Across 

the globe, we will assure the access needed to rapidly surge forces in the event of a crisis.

Rebalancing capability, capacity, and readiness within the Joint Force. After more than 

12 years of conflict and amid ongoing budget reductions, the Joint Force is currently out of

balance. Readiness further suffered due to the implementation of sequestration in FY 2013 and 

the force has not kept pace with the need to modernize. We will need time and funding to reset 

and reconstitute the Joint Force as we end all combat operations in Afghanistan. The 

President’s FY 2015 Budget proposal outlines a range of realistic and responsible adjustments 

in specific areas the Department believes must be taken in the near term to restore balance in 

the Joint Force. The force will become smaller in the next 5 years, but will gradually become 

more modern as well, with readiness gradually improving. Taking the prudent steps outlined in 

the 2014 QDR in the near term will improve the Department’s ability to meet the nation’s 

national security needs should the fiscal outlook not improve. The longer critical decisions are 

delayed in the hope that the budget caps will be raised, the more difficult and painful those 

decisions will be to implement, and the more damaging they will be to our ability to execute the 

strategy if no additional resources are made available. Key force structure decisions in the

2014 QDR include:

• Sustaining a world-class Army, capable of conducting the full range of operations on 

land, including prompt and sustained land combat, by maintaining a force structure that it

can train, equip, and keep ready. To sustain this force, the Department will rebalance 

within the Army, across the Active, Guard, and Reserve components. The active Army 

will reduce its end strength from a war-time high of 570,000 to 440,000 to 

450,000 personnel. The Army National Guard will continue its downsizing from a 

war-time high of 358,000 to 335,000 Soldiers, and the U.S. Army Reserve will reduce 

from 205,000 to 195,000 Soldiers. If sequestration-level cuts are imposed in FY 2016 

and beyond, all components of the Army would be further reduced.

• Preserving the Navy’s capacity to build security globally and respond to crises. While 

prioritizing day-to-day presence demands, the Navy will decommission some assets and 

modernize its fleets of surface ships, aircraft, and submarines to meet 21st Century 

threats. Current Littoral Combat Ship (LCS) production plans will either transition to a 

future LCS Flight or new-design small surface combatant with capabilities tailored to the 

emerging security situation. 

• Maintaining the role of the Marine Corps as a vital crisis response force, protecting its 

most important modernization priorities and ensuring readiness, but planning for an end 

strength of 182,000 active Marines. This end strength includes an increase of about

900 Marines for the Embassy Security Guard program, which will protect U.S. interests 

and installations abroad. If sequester-level cuts return, the Marines would be further 

reduced.
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• Maintaining an Air Force with global power projection capabilities crucial for this updated 

defense strategy. Modernizing next generation Air Force combat equipment – to include 

fighters and bombers – particularly against advancing modern air defense systems. To 

free resources for these programs as well as to preserve investments in critical 

capabilities, the Air Force will reduce or eliminate capacity in some single-mission 

aviation platforms. 

As the Joint Force rebalances so that it remains modern, capable, and ready, the Department 

will take the following additional steps that are consistent with the President’s Budget 

submission to protect key capability areas in support of our strategy: 

• Cyber. We will invest in new and expanded cyber capabilities and forces to enhance our 

ability to conduct cyberspace operations, and support military operations worldwide; to 

support Combatant Commanders as they plan and execute military missions; and to 

counter cyber-attacks against the United States. 

• Missile Defense. We are increasing the number of Ground-Based Interceptors and 

deploying a second radar in Japan to provide early warning and tracking. DoD will make

targeted investments in defensive interceptors, discrimination capabilities, and sensors; 

and is studying the best location for an additional missile defense interceptor site in the 

Eastern United States if additional interceptors are needed.

• Nuclear Deterrence. We will continue to invest in modernizing our essential nuclear 

delivery systems, warning, command and control, and, in collaboration with the 

Department of Energy, nuclear weapons and supporting infrastructure. 

• Space. We will move toward less complex, more affordable, more resilient systems and 

system architectures and pursue a multi-layered approach to deter attacks on space 

systems, while retaining the capabilities to respond should deterrence fail.

• Precision Strike. We will procure advanced air-to-surface missiles that will allow fighters 

and bombers to engage a wide range of targets and a long-range anti-ship cruise missile 

that will improve the Joint ability of U.S. aircraft to engage surface combatants in 

defended airspace.

• Intelligence, Surveillance, and Reconnaissance (ISR). We will rebalance investments 

toward systems that are operationally responsive and effective in highly contested 

environments while sustaining persistent capabilities appropriate for more permissive 

environments in order to support global situational awareness, counter-terrorism, and 

other operations.

• Counter Terrorism and Special Operations. We will maintain overall Special Operations 

Forces end strength at more than 69,700 personnel, protecting our ability to sustain 

persistent, networked, distributed operations to defeat Al Qaeda, counter other emerging 

transnational threats, counter weapons of mass destruction, build the capacity of our 

partners, and support conventional operations. 

Rebalancing tooth and tail. Finally, the Department itself will rebalance internally to control 

cost growth and generate greater efficiencies to prioritize spending on combat power. The DoD 

has previously submitted three packages of proposals aimed at achieving efficiencies and now 

the Department plans to implement an additional $93 billion in efficiencies. Key ongoing 

activities include reducing the Department's major headquarters’ operating budgets by 

20 percent and decreasing the number of direct reports to the Secretary of Defense. These 

activities will reduce the Department's operating costs by $5 billion over the next 5 years and by 
Overview – FY 2015 Defense Budget 

CHAPTER 2 SEEK A BALANCED FORCE

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more than twice that amount over the next decade. The Department is also improving its 

financial management, in part to achieve auditable financial statements. 

We are continuing to implement acquisition reform efforts, most notably through the Better 

Buying Power initiative that seeks to achieve affordable programs by controlling costs, 

incentivizing productivity and innovation in industry and government, eliminating unproductive 

processes and bureaucracy, promoting effective competition, improving tradecraft in contracted 

acquisition of services, and improving the professionalism of the total acquisition workforce. 

The DoD will remain committed to continuously increasing productivity in defense acquisition. 

Substantial long-term savings will be realized if the Department is permitted to eliminate 

unneeded infrastructure. We estimate that we already have more infrastructure than we need,

and this will grow as we reduce end strength. The most effective way to eliminate unneeded 

infrastructure is through the Base Realignment and Closure (BRAC) process. Congress has 

denied the Department’s request for another BRAC in each of the past 2 years. If the 

Department is to make more effective use of taxpayer dollars, it is imperative that Congress 

authorize another BRAC round in 2017. 

REBALANCING THE DEFENSE INSTITUTION

As we restore balance to the Joint Force and the Department, America will maintain its two-fold 

sacred contract with U.S service members: to properly compensate and care for service 

members and their families both during and after their service, and to provide our troops the 

best training and equipment possible so they can safely accomplish their missions. We are 

continuing to expand opportunities for women, seeking to eliminate sexual assault, and 

implementing changes needed to fully realize the decision to allow gay and lesbian people to 

serve openly in the Military Services. We must also continue to provide the best possible care 

to those returning from combat ill or wounded, and those who require hospitalization or 

rehabilitation. 

In a constrained fiscal environment, the Department cannot afford to sustain the rate of growth 

in military pay and benefits that we experienced over the last decade. The Department and the 

American people have rightfully been very supportive of our men and women in uniform over 

more than a decade of war, providing increases in military pay and benefits that have more than 

closed compensation gaps and have appropriately recognized the sacrifices of those who are 

serving and have served, and their families. The Department is proposing changes that will

ensure we can continue to offer a competitive compensation package to recruit and retain our 

Joint Force of the future. These changes include: limiting the size of the annual military pay 

raise over the next 5 years; slowing the rate of growth in basic housing allowances; creating a 

consolidated TRICARE plan with modestly higher co-pays and deductibles; adjusting pharmacy 

co-pay structure; establishing a modest fee for the TRICARE-for-LIFE coverage for Medicareeligible retirees; limiting travel; and decreasing commissary subsidies. If implemented fully, 

these proposals would save approximately $12 billion over the next 5 years and considerably 

more by the end of 10 years.
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3. PREPARE FOR PROLONGED READINESS CHALLENGES

Maintaining Ready Forces 

The FY 2015 budget submission reflects the Department’s 

continued effort to transition from a force predominantly 

capable of counterinsurgency to one capable of meeting a 

broader mission portfolio. More than a decade of demanding operations in Iraq and Afghanistan 

forced the Services to generate forces suitable for those missions at the expense of maintaining 

the full spectrum of capabilities required by the defense strategy. The President’s Budget 

request for FY 2014 proposed defense spending that reflected the Services’ plans for 

recovering these full-spectrum capabilities over the next 5 years. The sequester-imposed cuts

of $37 billion in FY 2013, operating under a 6-month continuing resolution, and increased war 

costs all contributed to degraded readiness and hindered those initial readiness recovery plans. 

In addition, sequestration impacted DoD’s ability to generate the ready forces necessary to 

meet the requirements of a rapidly evolving and complex security environment. The Secretary 

of Defense has been very clear that sequestration-level funding limits would yield a force that is 

too small and not ready enough to meet the nation’s security objectives. The FY 2015 budget

begins to restore some of the training and maintenance shortfalls that resulted from 

sequestration cuts in FY 2013. However, this level of funding still poses significant readiness 

and modernization challenges in FY 2015. The FY 2015 President’s Budget request complies 

with the Bipartisan Budget Agreement (BBA) for FY 2015 and contains a new budget plan for

FY 2016 – FY 2019 that projects more in defense spending than the current law would allow. 

This plan re-balances the military’s readiness, capability, and capacity, favoring a smaller-butmore-capable ready and modern force. 

Training and readiness are the foundation of ensuring a capable military that provides the 

President with a range of options to deter or defeat aggression or coercion against the United 

States and its allies, friends, and interests. The FY 2015 President’s Budget request fills the 

most critical readiness gaps but still leaves readiness and modernization challenges in FY 2015. 

The additional $7 billion over sequester levels for FY 2015 provided by the BBA does not 

provide adequate funding for aircraft modernization, increased training, and facility sustainment 

needed to fully resolve the Department’s readiness challenges. As Secretary Hagel indicated, 

this budget responsibly positions the Department for an era of both strategic and fiscal defense 

uncertainty. The budget will allow the military to protect the nation and fulfill the President’s 

defense strategy, but with some increased levels of risk. Over the near-term, the military will 

continue to experience gaps in training and maintenance, putting stress on the force and 

diminishing the Department’s global readiness even while the Department sustains heightened 

alert posture in regions like the Middle East and North Africa. 

As noted in the 2014 Quadrennial Defense Review (QDR), the Department is rebalancing 

capability, capacity, and readiness across the Joint Force. As a result, the force will become 

smaller across the Future Years Defense Program (FYDP) but will gradually become more 

modern with readiness gradually improving. 

Challenges in Creating Full-Spectrum Readiness

The FY 2015 budget begins with an understanding of current readiness status and the force 

generation plans afforded in FY 2014. With the enactment of the FY 2014 appropriations, the 

readiness levels are trending positive, but the fiscal year began with relatively low readiness 

levels. The Services face a series of challenges in simultaneously broadening their operational 

focus and reducing force capacity in an era of diminishing resources. However, sequester 

exacerbated these challenges. Specific examples at the end of FY 2013 include the following:

Key Initiatives

• Generating Service Capabilities

• Generating Joint Capabilities
Overview – FY 2015 Defense Budget 

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• The Army produced just 2 of 43 active duty brigade combat teams fully ready and 

available to execute a major combat operation. During FY 2013, the Army was forced to 

cancel full-spectrum training for seven brigade combat teams. It takes 1 year to build full 

readiness for unified land operations. 

• The Navy’s average global presence was down about 10 percent from normal levels with 

fewer ships patrolling the waters. 

• Only 50 percent of non-deployed Marine units were at acceptable readiness levels. 

• Air Force was forced to stand-down 13 combat units for several months due to the

FY 2013 sequester. In addition to standing down combat units, the Air Force cancelled 

Red Flag training events, ultimately affecting 20 U.S. and coalition squadrons. It will 

take at least 3 to 6 months to recover to already low readiness levels and will inflict 

lasting institutional impacts. 

• Because Special Operations Forces (SOF) depend on conventional forces to provide 

enabling and logistics support for training and operational force packaging, degraded 

readiness across the Services began to directly impact SOF training and readiness. 

The FY 2014 enacted appropriations at the BBA spending levels begin to mitigate the readiness 

erosion caused by sequester in FY 2013. Capacity and throughput constraints in pipelines, such 

as shipyards, ranges, and schoolhouses, limit how quickly the Services can “catch up” to the

FY 2014 President’s Budget readiness recovery plans. Increasing operational demands require

that the Services continue to generate and deploy forces at a rate that constrains their ability to 

reset the force and recover full-spectrum readiness. Unless legislation is changed for FY 2016 

and beyond, this brief reprieve will not be sufficient to rebuild readiness and mitigate the security 

risks. 

The sections below discuss the Services’ and the United States Special Operations Command 

(USSOCOM) force generation and resourcing strategies associated with the FY 2015 

President’s Budget request that includes funding above the current law projections for FY 2016 

through FY 2019. These readiness investments needed to reliably improve readiness for full 

spectrum operations cannot be achieved at BCA spending levels. The force generation and 

resourcing strategies are also dependent on Overseas Contingency Operations (OCO) funding 

that will be submitted in a later budget request.

GENERATING SERVICE CAPABILITIES

The Services have the legal responsibility to organize, train, and equip units to meet operational 

requirements. In doing so, each creates a force generation process that combines the basic 

inputs of labor and capital to provide the requisite supply of ready forces. These force 

generation processes naturally differ based on the particulars of the capabilities being produced 

as well as the demand signal derived from current operations and strategic guidance. 

The next several sections detail each Service’s and USSOCOM’s readiness plans and the 

associated resourcing strategies that comprise the FY 2015 President’s Budget submission. 

Army

The FY 2015 President’s Budget request arrests recent declines in Army readiness and enables 

reinvestment in the core warfighting competencies of both combat units and enablers. The 

strategy provides an Army Contingency Force (ACF) ready to deploy in support of Combatant 

Commander needs worldwide that include various Brigade Combat Teams (BCT), aviation and 

enabler units to sustain the fight until full mobilization is practical. This budget provides 
Overview – FY 2015 Defense Budget 

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mitigation for the readiness shortfalls that were inflicted by sequestration in FY 2013; however, 

accelerated end strength reductions and continued demand for the force require sustainable 

resourcing and time to restore the balance of end strength, modernization, and readiness. If 

forced to return to sequestration-level funding in FY 2016 and beyond, any readiness gains 

achieved in FY 2014 and 2015 will be temporary and cause readiness recovery to be further 

delayed. The details of this strategy are described below. 

Generating Army Readiness 

The Army is fundamentally changing the organization and management of its forces. Its focus 

is on building rapidly deployable contingency capabilities in support of the Combatant 

Commanders while at the same time reducing its end strength across all components. These 

adaptations are informed by wartime experiences since 2001, which include operations in an 

increasingly joint, interagency, intergovernmental, and multinational environment. Key initiatives 

include:

Army Contingency Force (ACF): In the near-term, the Army is rebuilding readiness from

FY 2013 sequester shortfalls while facing the challenges of limited funding and continued 

demand for Army forces. The FY 2015 budget enables the Army to realize the Chief of Staff’s 

intent to develop a contingency response force which provides Combatant Commanders an 

initial response capability that can achieve early objectives for most contingency plans. This 

force consists of a mix of infantry, armor, and Stryker BCTs, an aviation task force, and 

associated enabling units. This budget funds the highest training level for the ACF BCTs and 

sustains or improves the readiness in critical enabling formations. 

Regionally Aligning Forces: As the Army transitions, it must restore and even increase its level 

of commitment to Combatant Commanders to better provide presence, shape the environment, 

and win decisively. Regional alignment aids in deterring aggression and provides increased 

responsiveness to and focus on specific regional requirements, while preserving the strategic 

flexibility necessary to respond to emergent requirements. In FY 2013, the Army began to align 

forces regionally with the goal of increasing both the quantity and quality of forces available to 

Combatant Commanders. Simply described, the Army aligns units with specific geographic 

Combatant Commands (GCC) based on existing assignments, State Partnership Program, or 

anticipated demand. In doing so, the Army establishes operational and planning associations 

between aligned units and the combatant commands. Training is tailored to include an 

understanding of the languages, cultures, geography and militaries of the countries where the 

units are most likely to be employed. The Army’s initial regionally-aligned force began its 

relationship in 2013 with the assignment of a BCT to the U.S. Africa Command (USAFRICOM). 

The Army estimates by the end of 2015, GCCs will be able to plan for increased use of their 

assigned forces. 

BCT Re-organization: The Army is continuing its comprehensive re-organization of Army units 

to provide more lethal, better aligned force structure with increased capability. This action 

serves to provide a fiscal situation that requires a more economical force structure driven by 

current and future fiscal reality. The centerpiece of this re-organization will be the enhancement 

of BCTs by adding maneuver, fires, and engineer organizations. Over half of the Active 

Component units will be directly impacted by this re-organization, either through realignment, 

unit moves, conversion, or inactivations. The BCT re-organization and inactivation combined 

with the effects of fiscal reductions and continued global demand for Army forces reduces the 

opportunity to build readiness in FY 2014 and FY 2015. However, only by quickly changing 

force structure can the Army once again begin to achieve balance among force structure, 

modernization, and readiness. The FY 2015 budget continues to support this transition by 
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funding the movement of Soldiers and equipment, providing sustainment services, continuing 

reset, redistribution of equipment from Afghanistan, and funding logistics readiness centers. 

Aviation Restructure: The Army is also undertaking a comprehensive Aviation restructure that 

optimizes the aviation force to better respond to contingencies at home and abroad. The Army 

must at once reduce its legacy fleet, modernize its primary aircraft, maintain readiness to meet 

operational demand, and balance active and reserve structure. The Kiowa Warrior will be 

divested, and the armed aerial scout mission will be assumed by the AH-64 Apache teamed 

with unmanned aerial vehicles. This comprehensive restructure not only ensures the timely 

modernization of the National Guard’s existing aircraft, but also provides additional UH-60L 

Blackhawk helicopters that enable both Title 32 and Title 10 missions. The training fleet will be 

replaced with aircraft the Army already owns – the LUH-72, and aviation brigades will be 

streamlined into a single configuration. This approach will ensure Soldiers on the ground, and 

the entire Joint Force, continue to benefit from world-class aviation support.

Training

The most important element of the Army’s updated training strategy is the return to BCT 

decisive action operations. The Army’s training process is based on units progressively 

improving their proficiency beginning with individual soldier skills training, progressing through 

small unit (squad, platoon, and company) live fire and maneuver training, and culminating in a 

battalion/brigade-level Combat Training Center (CTC) event conducted in either a live or 

constructive environment that integrates all capabilities into a synchronized exercise. For the 

last 11 years, the majority of Army collective unit training focused on generating units in 

preparation for counterinsurgency operations in Iraq and Afghanistan. This budget supports the

transition to decisive action training at CTCs and training readiness improvement over the next 

several years. Figure 3-1 provides the number of BCTs planned to rotate through maneuver 

CTCs each year.

Figure 3-1. Required, Planned, and Executed Rotations through Maneuver Combat Training 

Centers (Unified Land Operations (ULO) versus Mission Rehearsal Exercises – MRE*)

FY 2013** FY 2014*** FY 2015

CTC Capacity 21 Rotations 21 Rotations 21 Rotations

Planned CTC Rotations 14 x DA/ULO

7 x MRE

15 x DA/ULO

6 x MRE

17 x DA/ULO

2 x MRE

Executed CTC Rotations 

(Decisive Action (DA) /ULO 

vs MRE)

7 x DA/ULO

7 x MRE

13 x DA/ULO

6 X MRE --

* Rotations train units to meet their designed mission sets. MRE rotations train units for the actual, assigned Security Force

Assistance missions they will perform in Afghanistan. The Army essentially stopped DA training between 2004 and 2011

** FY 2013 the Army intended to refocus on decisive action/unified land operations. However, given sequestration pressures the 

Army was forced to cancel 7 advanced training opportunities. 

*** FY 2014 Defense Appropriations Act does not enable the Army to fully execute planned CTCs. As a result of budget reductions,

the Army is expected to cancel 2 CTC training opportunities.

The FY 2015 budget also funds professional military education and the institutional training 

necessary for Army leaders to operate effectively in a joint and combined environment. This 

budget will provide for leader development by funding 8,900 officers to attend Intermediate 

Level Education; 7,500 Warrant Officers to attend professional developmental schools; and 

61,000 Non Commissioned Officers to attend the required professional military education. 

Additionally, the FY 2015 budget increases Army Civilian leader development and funds over 

150 officers to attend the School of Advanced Military Studies. 
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Proficiency lost due to lack of training resources and opportunities from previous years has 

accumulated and becomes more difficult to recover over time, compounding the risks to support 

National Military Strategy objectives. Restoring training readiness requires time, consistent 

investment, and additional training days to make up for collective training and leader 

development shortfalls. 

Manning

The Army’s base budget for FY 2015 funds an active Army end strength of 490,000 soldiers and 

Army National Guard end strength of 350,200 soldiers. The Army Reserve remains unchanged. 

The FY 2015 budget contains authorizations to retain soldiers with critical skills and combat 

experience, and transition medically non-available soldiers to the Department of Veterans 

Affairs through the Disability Evaluation System (DES). Soldiers in the DES remain on active 

duty until their status is adjudicated, thereby reducing the Army’s ability to fill operational units to 

authorized strength. 

Equipping

The FY 2015 budget allows continued funding of the Army’s high priority efforts to 

upgrade/replace aging fleets and increase soldier capabilities in the following areas: advanced 

command and control capabilities; soldier/squad program upgrades (M4 improvements, body 

armor, sights, etc.); and armored multi-personnel vehicle to replace the M113. The Army has 

continued to see small improvements in the equipping levels of units due to previous resourcing 

decisions. The mid- to long-term equipping goals are clearly at risk as near-term procurement 

decisions impact long-term equipping capability. The clearest examples are in major end items,

particularly aviation and ground combat systems. The Army is examining options to divest 

equipment including airframes and rebalance structure across the components, and reviewing 

the viability of modernization plans. The FY 2015 budget provides some temporary relief, but 

does not fully mitigate risk to equipment modernization over the long term. Investment will focus

on Science and Technology and incremental improvements to existing systems with very few 

new start programs. 

Sustainment

Recovering and reconstituting Army equipment after more than a decade of intensive use will 

continue for several years after the cessation of significant combat operations in Afghanistan. 

This budget is part of a multiyear plan to reset equipment, and is highly dependent on the OCO 

portion of the budget to accomplish this mission. This budget partially addresses four key areas 

in that regard: the retrograde and reset of equipment from contingency operations, overhaul of 

equipment deferred maintenance due to depot capacity that was consumed by higher OCO 

priorities, the added challenges of sustaining digital technologies, and the incorporation of 

non-standard equipment procured since 9/11. The Army’s FY 2015 budget for depot 

maintenance allows support to critical requirements and core capability in aviation, 

communications and electronics systems, embedded software systems, general purpose items, 

and combat and tactical power. 

Installations

The FY 2015 budget reflects the Army’s measured facility investment strategy that focuses on 

restoration, modernization, and limited new construction resourcing towards capabilities and 

facilities that support the readiness of an expeditionary Army. The Army will continue to accept 

measured risk in the base operations accounts commensurate with the reduction of Army end 

strength over the next several years. 
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The Army continues to resource high-priority soldier/family programs, to include the Army 

Substance Abuse Program, Sexual Harassment Response and Prevention Program, Suicide 

Prevention and Soldier Family Assistance Centers, and maintains an overall moderate level of 

base operations support services at its installations world-wide. 

Navy

The FY 2015 President’s Budget request makes the best use of available resources to deliver a

ready Fleet, prepared to operate forward to deter and defeat aggression and provide a

stabilizing forward-deployed presence, able to secure the global maritime commons. This has 

been achieved by striking an affordable balance across readiness, modernization, and force 

structure while ensuring strategic objectives, such as supporting the rebalance to the AsiaPacific region, are met. This “balancing the force” approach is necessary to ensure that today’s 

Force is mission ready but not at the expense of future readiness which requires, for example, 

support for planned modernization, weapons procurement, and sustainment of a viable 

industrial base. 

Over the course of the past year, there were a growing number of indications that the combined 

effect of consistently operating the Fleet at a level that exceeds the intent of the supporting force 

generation process and budget sequestration in FY 2013 were stressing the readiness of the

Fleet. Extended operations, with resulting uncertain maintenance schedules and disrupted 

planning, increased the time required to complete maintenance and caused additional 

deployment extensions and schedule perturbations across the force. Combined with sequesterdriven training reductions, the Navy was forced to delay and reduce some deployment 

commitments in FY 2013 and FY 2014, and significantly reduce capacity to surge forces for 

contingency operations. Navy readiness will improve during FY 2014 with funding made 

available in the FY 2014 Consolidated Appropriations Act. This budget continues that trend by 

rebuilding surge capacity and enhancing critical warfighting capabilities, but at the expense of 

slowed modernization, weapons procurement, and less total capacity. 

This balance was achieved by viewing current and future requirements through the lens of the 

three guiding principles outlined in the Chief of Naval Operations’ (CNO) Navigation Plan:

Warfighting First: The core responsibility of the Navy and its joint partners is to deter aggression

and, if deterrence fails, fight and win the Nation’s wars. This budget submission sustains the

primary commitment to provide ready forces to the Combatant Commanders, and to provide

Navy men and women with the resources and tools they need to fight and win.

Operate Forward: The Navy forward presence reassures U.S. partners, ensures joint 

operational access, and supports global freedom of action. The resulting security of the global 

commons also protects the Nation’s economic strength and enables a stable global economy. 

A combination of rotational deployments, forward bases, temporary and austere facilities, and 

partner nation ports are leveraged to provide forward presence. This budget also supports the 

employment of new, innovative platforms, such as Littoral Combat Ship, Joint High Speed 

Vessel, Mobile Landing Platform, and Afloat Forward Staging Base vessels to meet Combatant 

Commander requirements, enhancing the optimal employment of the entire Fleet.

Be Ready: The Navy must ensure its people are personally and professionally ready and 

proficient in the operation of their weapons and systems. In this budget submission, 

compensation savings are re-invested to enhance the “Quality of Service” of all Sailors. The

Navy defines quality of service in terms of quality of work (Sailors possess the training, tools 

and resources necessary to effectively accomplish their duties) and quality of life (Sailors and 
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families are supported with adequate barracks, Sailor and family support programs, and other 

support facilities and capabilities). 

Generating Navy Forces

The Navy force generation model, Fleet Response Plan (FRP), was designed to deliver 

certified, ready forces to meet projected global presence requirements and additional surge

capacity to address the most likely contingency requirements. In today’s environment, the FRP 

cycle time has proved incapable of adapting to increased operational requirements, 

accommodating an executable maintenance schedule, allowing full time to train, or providing a

degree of schedule certainty for Sailors and families. In FY 2015, the Navy will initiate transition 

to an optimized FRP (O-FRP), employing a 36-month cycle, and beginning with the phase-in of 

Carrier Strike Groups (CSG) over the course of several years. Adoption of the O-FRP will 

stabilize maintenance schedules, ensure adequate time for training, and support predictable 

theater presence for Combatant Commanders. It has the additional advantage of aligning all 

elements of each CSG, enhancing continuity of command, and training all deploying units to a 

single, high certification standard. Furthermore, the post deployment readiness and overall 

operational availability of Navy forces will be optimized through recurring and predictable 

investment in cyclic maintenance and training. 

The O-FRP will continue to include time to conduct deep maintenance and modernization 

followed by a progressive training plan designed to produce forces ready for rotational

deployment. Forces will progress through basic and integrated training phases leading to final

deployment certification. Basic phase events focus on core mission capabilities at the unit

level for ships and submarines, and individual aircrew skills for aviation squadrons while 

integrated training milestones focus on multiple unit, group, and joint war fighting skills. 

Operations and Training

The FY 2015 budget request provides the resources to support the FRP and transitional O-FRP

training progression. Within the FRP/O-FRP framework, ship operations and flying hour

programs are funded to complete the live training requirements for deployment certification

and sustain readiness for surge when not deployed. These programs also provide the funding

for deployed operations to meet the requirements of the Combatant Commanders. These

operation and maintenance programs also fund the repair parts necessary to sustain Fleet 

operations following initial outfitting. The Navy tracks supply effectiveness to ensure overall 

performance, and also executes special protocols for critical or troubled systems to enhance 

readiness. 

The Navy budget submission includes separate funding for the operation of Fleet schools, the 

Fleet Synthetic Training program and the associated Navy Continuous Training Environment

network, training and certification teams, training ranges, procurement of range systems and

necessary targets to complete pre-deployment and sustainment training. As part of the Quality 

of Service initiative, funds are invested in improved training capabilities for both live and 

synthetic training. 

Manpower/Personnel

Manning Fleet units with the right number and type of properly trained, properly experienced

Sailors is a critical element of readiness. To ensure continuing readiness, Navy tracks not only

how many billets are filled, but whether they are filled by individuals with the requisite

qualifications. These data sets are closely managed by the Fleets, each warfare community, 

and by individual units to predict future readiness and correct critical shortfalls for deploying

units.
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Materiel Readiness

Navy manages the materiel readiness of its capital-intensive force through a three tier system: 

depot, intermediate and organizational-level maintenance. Depot-level maintenance is 

performed in Navy public and privately-owned shipyards, Fleet Readiness Centers, and other 

DoD depots. Intermediate-level maintenance is conducted by Regional Maintenance Centers 

for ships and submarines, and Aviation Intermediate Maintenance activities for aircraft. 

Organizational (unit level) maintenance is performed by trained enlisted technicians assigned to 

ships, submarines and squadrons. Each tier contributes to completing the maintenance 

necessary to achieve the expected service life of all platforms.

The Navy’s maintenance plans for ships, aircraft, and expeditionary squadrons are outlined 

below:

Ships: Ship and submarine maintenance requirements are based upon Class Maintenance 

Plans, and they are informed by the individual unit’s maintenance history. The Navy programs

the required number of depot maintenance periods (called “availabilities”) for each fiscal year by

unit type (carriers, submarines and surface units) to ensure these critical evolutions are

scheduled and funded. In FY 2015, this requires 6 carrier availabilities, 11 submarine

availabilities and 54 surface ship availabilities. Approximately 80 percent of the requirement is 

funded in the base budget. Much of this reset work must be accomplished during dry-docking

availabilities, but this budget allows a portion of the reset (approximately 40 percent to be 

accomplished during non-docking availabilities. The Navy estimates reset of backlogged 

maintenance must continue through at least FY 2018 to complete all the impacted ships. To 

sustain future readiness, availability planning now reflects all known deferred maintenance. The 

Navy has relied in recent years on OCO funds for ship maintenance and reset activities, and will 

address any OCO requirements in a subsequent budget request for OCO funding.

Aircraft: Aviation depot maintenance requirements are categorized by the number of airframes

and engines/engine modules requiring depot repair. Naval Aviation successfully employed 

reliability-centered maintenance concepts to define and control airframe depot maintenance

requirements, focusing on systems, corrosion, and safety assessments. Engine maintenance 

requirements are based on predicted failure rates and high time component repairs.

The Navy funded aviation depot maintenance to 80 percent in the base budget, supporting 

presence requirements and the most likely contingencies, with an anticipated backlog of 

70 airframes and 641 engines/engine modules awaiting induction at the end of FY 2015. The 

Navy feels the effects of the high operational tempo on aging aircraft in rising levels of work-inprocess at the aviation depots, including high-time inspection workload and service life 

extension requirements for legacy strike fighters. 

Expeditionary Combat Units: For each Navy Expeditionary Combat unit (Naval Mobile 

Construction battalions, Explosive Ordnance Disposal platoons, Coastal Riverine squadrons, 

etc.), material readiness is measured by assessing the state of the equipment included in each 

unit’s Table of Allowances. Sustainment for this equipment is 50 percent funded in FY 2015

baseline.

Installations

The Navy continues to take calculated risk in funding installations, but is mitigating this risk by 

focusing investment on capabilities that directly support the operational forces and implementing 

a force laydown that supports the defense strategy. The Navy continues to prioritize Fleet 

Operations, Quality of Life Programs, Base Security, and Public Safety while taking increased 

risk across other base support programs. This budget submission provides infrastructure to 

support initial operational capability for new platforms (e.g., P-8A Poseidon, F-35C Joint Strike 
Overview – FY 2015 Defense Budget 

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Fighter, MH-60 Seahawk, Littoral Combat Ship, and the Ohio replacement submarine), 

enhances Nuclear Weapons Enterprise Support (Training & Security), upgrades utility systems, 

and provides training facilities for Sailors (to include a facility at the U.S. Naval Academy for the 

emerging cyber warfare mission area). The Navy maintains commitment to meeting the key

needs of service members and their families.

Marine Corps

The Marine Corps is committed to remaining the nation’s expeditionary force: a force capable of 

responding to crisis anywhere around the globe at a moment’s notice. Marines are forward 

deployed, protecting the nation’s security by conducting operations to defeat and deter 

adversaries, support partners, and create decision space for national-level leaders. Readiness 

is the critical measure of the Marine Corps’ ability to do just that. 

While the FY 2014 budget request included significant cuts for the Marine Corps, it was 

underpinned by a readiness management strategy to recover readiness over time. That 

strategy was derailed by sequester during FY 2013 that impacted institutional readiness. From 

that severely constrained position, the FY 2015 President’s Budget request (above BCA funding 

limits) helps to put the Marine Corps on a better trajectory to reconstitute its full spectrum 

combat capability but still contains risk. The FY 2015 budget continues the transition to a postOperation ENDURING FREEDOM Marine Corps that complies with strategic guidance and is 

capable across the range of military operations. Within this budget, the Marine Corps is able to 

reduce risk in readiness and infrastructure sustainment while continuing to accept risk in longterm equipment modernization. 

The FY 2015 budget provides additional funds for enduring, rotational deployments, to include 

Special Purpose Marine Air Ground Task Force (SPMAGTFs), as well as unit-level training and 

readiness. This budget reflects tough choices in balancing readiness with the requirement to 

responsibly redesign force levels. The consequences of these choices, to include investments 

in modernization, infrastructure, and force capacity, will be carefully monitored over the next 

several years as part of an effort to quickly mitigate unintentional degradations. 

The FY 2015 budget will allow the Marine Corps to resource emergent near-term requirements 

that were unknown in the FY 2014 President’s Budget request. Specifically, the Special 

Purpose Marine Air Ground Task Force – Crisis Response (SPMAGTF-CR) and Marine Corps 

Embassy Security Group (MCESG) expansion initiatives are funded in the FY 2015 budget, 

leveraging the Corps’ crisis response capability through lighter, agile, forward-deployed forces 

to meet congressional intent. The rebalance to the Pacific also remains a top priority and is 

reflected in the resourcing of the Unit Deployment Program (UDP) as well as Pacific-based 

operational units. The FY 2015 budget also provides support to other areas that will enhance 

overall institutional readiness, to include base operating support and depot maintenance. 

The Marine Corps manages readiness across five pillars: (1) Capability and Capacity to Meet 

Requirements, (2) Unit Readiness, (3) High Quality People, (4) Infrastructure Sustainment, and 

(5) Equipment Modernization. Maintaining balance across these pillars is the key to achieving 

and sustaining the level of readiness expected of the Marine Corps. This budget reflects hard 

choices that the Marines made to protect readiness largely at the cost of modernization. The

following paragraphs describe the Marine Corps’ approach for generating ready forces today 

and informing an investment strategy that will ensure the future readiness of the Marine Corps. 

Generating Marine Corps Readiness through Capability and Capacity

A confluence of events – namely, the promulgation of New Normal directives coupled with the 

continued need to transition the Marine Corps to meet requirements of the defense strategy –
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brought about an operational transition in the Corps. The Marine Corps saw this requirement as

an opportunity to generate “other-types” of capabilities. These additive capabilities to meet New 

Normal assigned missions will, in time, improve the readiness and responsiveness of the Marine 

Corps. 

Overall, the Corps received added personnel for the New Normal mission. Specific Corpsprovided capabilities brought about by the New Normal will be sourced from standing units and 

newly assembled task organized units. Such units include SPMAGTF-Africa and SPMAGTF 

Black Sea Rotational Force (BSRF), both of which have been permanently operating in the 

African and European areas. These units assist Combatant Commanders in executing Theater 

Security Cooperation plans by providing military-to-military engagement such as bi/multilateral 

training, thereby building partner confidence and deterring would-be adversaries. Moreover, 

these Marine units are capable of rapid crisis response to seize the initiative and defeat those 

who threaten U.S. interests. 

The New Normal posture also initiated the creation of another additive capability, the

SPMAGTF-CR. Originally built around a Marine Expeditionary Unit (MEU) command element, 

this unit was deployed to land bases in the northern Mediterranean and employed elements to 

protect designated U.S. diplomatic facilities in northern Africa. The Corps intends to aggregate 

SPMAGTFs Africa and BSRF into the SPMAGTF-CR, to generate a ready force capable of 

simultaneously conducting theater security cooperation events, security force augmentation, 

and responding to crises in support of the USAFRICOM and the U.S. European Command. The 

Corps is also considering similar capabilities where regionally aligned SPMAGTFs are provided 

to other GCCs. These additive capabilities provide training opportunities through force 

generation and employment periods that produce ready units capable of responding to other 

military operations. These units are already formed (i.e., manned and equipped) and have 

trained together. Such units may mitigate the risk of sending less ready units to major 

contingencies simply to meet established time lines. Forward presence of Marines ashore and 

afloat reduces response times and enables the Marine Corps to better shape the security 

environment for appropriate crisis response or follow-on Joint Force operations. 

Force providers may be challenged to meet the prescribed timeline demands of major 

contingencies. However, SPMAGTFs that are regionally aligned and rotational units are ready 

and, therefore, could constitute the lead elements of a surge. Additionally, the Corps is 

reestablishing three permanent Marine Expeditionary Brigade command elements (MEB CE). 

The MEB is light enough for rapid employment, heavy enough to prevail against threats in the 

littorals, and can command and control operations up to the Marine Expeditionary Force level. 

The MEB is capable of Joint Forcible Entry Operations and could be part of the Global 

Response Force. The MEB CE could deploy as the nucleus of a Joint Task Force 

Headquarters. Regionally aligned SPMAGTFs, forward deployed and forward stationed units 

(i.e., MEU and UDP), and MEBs will provide scalable, expeditionary units that are capable of 

functioning as the lead elements of a surge. The FY 2015 budget enables the Corps to sustain 

these capabilities efficiently in the near-term. 

Unit Readiness

The Marine Corps provides well trained, highly ready forces to meet the Combatant 

Commanders’ requirements. The Marine operating forces depend on funding for training and 

equipment maintenance to preserve and enhance their readiness. Although deployed Marine 

forces are at the highest levels of readiness, this level of readiness often comes at the expense 

of non-deployed units that provide equipment and personnel to support deploying units. The

FY 2015 budget provides some help to improve the readiness of non-deployed units, although 

improvements will be temporary if the post-sequester BCA levels are maintained. 
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The Marine Corps’ much needed comprehensive effort to reset and reconstitute equipment that 

has been employed in Iraq and Afghanistan continues in earnest. Reset is the subset of 

reconstitution that is comprised of the actions taken to restore units to a desired level of combat 

capability commensurate with future missions. After more than a decade of combat, reset will 

require an unprecedented level of effort. The reset of the Corps’ equipment is expected to

extend 2 to 3 years after the last Marines leave the Afghanistan theater due to the time it will 

take to bring all of the equipment back to the U.S. and move it through depot-level maintenance. 

The Marine Corps reviews and refines life-cycle sustainment strategies and depot maintenance 

requirements for its ground equipment annually through a deliberate requirements determination 

process. The most recent review, conducted in August 2013, was guided by the Commandant 

of the Marine Corps’ direction to “determine the minimum possible funding level to preclude 

long-term degradation to material readiness.” That review resulted in a $544 million reduction in 

previously identified FY 2014 baseline depot maintenance requirements across the FY 2015 

outyear budget period. Despite these cost savings and the relief provided by the FY 2015 

budget, depot maintenance challenges will require several years to fix. 

Aviation depot maintenance is equally critical to maintaining readiness. The Marine Corps has 

consistently registered its concern about the impact that aging platforms, high demand/use, and 

constrained depot funding is having on aircraft availability and squadron readiness. The

FY 2015 budget allows the Navy to restore some much-needed funding into the depot 

programs. This is an area, however, that the Marine Corps will continue to monitor closely for 

readiness impacts. 

The FY 2015 budget continues to support the Marine Corps’ Service-level training program by 

fully funding an Integrated Training Exercise (ITX) program designed to recover full spectrum 

readiness. Figure 3-3 lays out the Marine Corps’ service training exercise plan over the next 

several years. 

Figure 3-3. Planned Large Training Exercises

Annual exercises for 2015 

Integrated Training Exercise Mountain Exercise*

Infantry Battalion 10 2

Infantry Regiment -- --

Artillery Battalion 4.5 --

Logistics Battalion 5 --

Squadrons 30 --

* Figures represent maximum planned exercises depending upon global environment. 

High Quality People

Recruiting and retaining high quality people plays a key role in maintaining the Marine Corps’ 

high state of readiness. Recruiting quality youth ultimately translates into higher performance, 

reduced attrition, increased retention, and improved readiness for the operating forces. 

In 2011, the Marine Corps designed an active component force of 186,800 end strength. 

However, the FY 2014 budget, in line with the defense strategy, proposed further end strength 

reductions to 182,100. This effectively postures the Marine Corps to preserve forward presence 

and crisis response capabilities, but takes acceptable risk in major combat operations and large, 

long-term stability operations. 
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Infrastructure Sustainment

Readiness also depends on the availability and condition of real property and infrastructure. 

Adequately resourcing the sustainment of Marine Corps bases and stations is essential to 

safeguarding unit readiness as they provide the means by which units conduct training and 

deploy. The need to be better stewards of installations and facilities grows as resources 

become more constrained. The Marine Corps is depending on the FY 2015 budget to protect 

today’s facilities, users of these facilities, and resultant force generation. 

The Marine Corps continues to accept risk in this pillar, reducing funding for several programs 

that will affect long-term installation readiness including Military Construction and restorations 

and modernization. The FY 2015 budget funds facilities sustainment with limited impact on 

capability to perform missions and provides required family housing operations and construction 

funding. The enactment of the FY 2015 budget will help decrease, but not eliminate, risk in this 

pillar. Given readiness priorities, the Marine Corps’ FY 2015 investment in facilities sustainment 

only reaches 75 percent while reducing risk in base operating support. 

Equipment Modernization

The Marine Corps’ ground and aviation equipment must meet the needs of current and 

emerging security environments. As the Marine Corps explores options to adjust to changing 

fiscal realities, there is a clear imperative to upgrade and modernize portions of legacy 

equipment used in Operation ENDURING FREEDOM and Operation IRAQI FREEDOM. Aging 

aviation platforms are becoming simultaneously more expensive to operate and less available,

especially for non-deployed training. Aging ground platforms, such as the nearly 40-year-old 

Amphibious Assault Vehicle, underscore the need for investment in modernization and servicelife extensions to guarantee dominance over future threats. The Marine Corps accepted the 

greatest amount of risk in its equipment modernization budget to support investments in 

personnel and unit readiness. 

The Marine Corps is fully committed to funding the Amphibious Combat Vehicle. It remains the 

Commandant’s number one priority for ground programs. The FY 2015 budget addresses 

limited shortfalls in the Ground Combat Tactical Vehicle modernization strategy and maintains 

sustainable acquisition profiles for other major investment systems. It further reduces critical 

maneuver capabilities, net-centric, interoperable, persistent ground surveillance capability and 

command and control capabilities. The FY 2015 budget also continues to accept risk in 

reduced funding for both equipment sustainment and service life extensions that sustain legacy 

equipment until modernization can be achieved. 

Air Force

The FY 2015 President’s Budget request supports the Air Force’s efforts to provide trained and 

ready forces for operations ordered by the Secretary of Defense by improving near-term 

readiness. The Air Force budget reality is that it continues to increase the risk in executing the full 

range of operations required by the defense strategy but it represents difficult choices between 

strategy-based modernization/acquisition programs and the need to correct near-term readiness 

shortfalls to slow the Air Force’s adverse readiness trend. The FY 2015 budget allows the 

Air Force to begin recovering readiness. 

Readiness remains a concern for the Air Force. To support the defense strategy, the Air Force

must be postured to respond rapidly anywhere on the globe and thrive in a highly contended 

environment. The FY 2015 budget supports the Air Force’s ability to maintain a smaller, more 

technologically advanced, but force better prepared to generate the forces required to satisfy 

anticipated warfighting requirements. The Air Force remains committed to building and 
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maintaining a high level of readiness across the total force at all times, while continuing to 

modernize and acquire the capabilities most critical to meet the new strategy. Rotational 

mission readiness, particularly for the Combat Air Forces, meets Combatant Commander 

rotational demand but limits forces available for surge or emerging requirements. Force 

presence comes at a cost; forward-deployed units are not fully capable of attaining requisite fullspectrum training, which degrades readiness rates.

Given FY 2015 President’s Budget funding levels and the need to preserve critical 

modernization programs that ensure a future viable force, the Air Force has made targeted 

strategic management decisions in prioritizing capability over capacity to build sustainable 

readiness. A critical element of this strategy is divesting single mission weapon systems (A-10) 

in favor of multimission systems that enable the Air Force to thrive in anti-access/area denial 

(A2/AD) environments. Without the authority to divest low priority/less relevant weapon 

systems, the Air Force plans to recover readiness will fall apart quickly, as available resources 

will be diverted towards retaining excessive force structure. In refocusing to an A2/AD 

environment, the Air Force plans to retire the entire fleet of A-10 tactical fighters, a number of 

older F-15C aircraft along with significant upgrades in its Intelligence, Surveillance, and 

Reconnaissance (ISR) systems by replacing the U-2 with a composite of next generation Global 

Hawks and other ISR systems.

In addition to funding, Air Force readiness is heavily influenced by ongoing operations as time 

and resources consumed in supporting current operations limit opportunities to train for the full 

spectrum of potential operations. Operational demands over the last 12 years have eroded the 

Air Force’s ability to conduct missions involving A2/AD, Weapons of Mass Destruction, and 

other complex threats. To better meet the Combatant Commanders’ demands, the Air Force

has adopted longer standard deployment lengths for their personnel, which subsequently 

increases the reconstitution time when they return. These operational demands are unlikely to 

decrease following the planned withdraw of land forces in Afghanistan. Balancing these 

rotational requirements with the full-spectrum training required to meet the defense strategy will 

be an important element of Air Force strategy going forward. 

Generating Air Force Readiness

The Air Force’s FY 2015 budget submission addresses adverse readiness trends using five 

main levers of readiness that can be used to produce ready forces. Each of these non-linear 

variables work together to produce ready forces; since they are interrelated, funding one of 

these levers without appropriately funding the others will not produce the readiness outcome 

desired. The levers are: (1) Flying Hour Program (FHP), which includes the dollars associated 

with sortie production; (2) Weapons System Sustainment (WSS), which includes dollars 

associated with aircraft availability production or enabler war-fighting systems; (3) Training 

Resources Availability (TRA), which encompasses ranges, live virtual construct, munitions and 

dollars to provide capabilities to replicate realistic training; (4) Critical Skills Availability (CSA),

which includes specialty level enlisted training, special certifications and other skills that aid in 

producing aircraft availability or qualified enabler capabilities; and (5) Deploy-to-dwell, which is 

affected by force capacity against current tasks. 

Manpower/Personnel

Realizing fiscal limitations, the Air Force continues to implement its force shaping efforts and 

divest force structure and associated manpower in the FY 2015 budget. 

The FY 2015 budget request will assist the Air Force in attempting to realize its goal of adjusting

CSA. While government-wide initiatives seek to constrain travel expenditures, the Air Force

must leverage its critical operation and maintenance resources to facilitate essential training that
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requires the utilization of temporary duty (TDY) training. This supports the Joint Force, as well 

as the Air Force, to train the force to fulfill joint missions. However, CSA concerns remain, 

specifically in planned force shaping and potential impacts to the Air Force’s maintenance 

career fields. 

Training and Equipment Maintenance

The FHP, WSS, and TRA are intertwined and must be discussed together (e.g., funding flying 

hours without associated WSS will cause hours to be flown at a pace where WSS no longer 

supports aircraft availability and causes an inability to execute the flying hours). In particular, 

the FY 2015 budget increases flying hours in the Operation and Maintenance accounts, which 

greatly assists the Air Force to fly at levels that are needed to begin improving readiness. The 

additional funds will help the Air Force recover flying hour-related readiness due to FY 2013 

sequester and reduced flying in the first 3 months of FY 2014 to produce a small readiness 

increase in FY 2014 and FY 2015. The President’s Budget request supports adding more hours 

to the FHP in FY 2016–FY 2019 to return the program to the total force requirement 

(100 percent FHP) as much as possible to meet the minimum training requirements, but this will 

require adjustments in the other levers. 

To sustain the higher levels of flying, WSS must also increase. The Air Force had 

approximately $260 million in unaccomplished depot level repairs in FY 2013. The enacted

FY 2014 WSS program goes from approximately 70 percent to 83 percent funded in FY 2014 

with OCO and to 70 percent with base funding in FY 2015. 

The FY 2015 budget request supports the Air Force’s focus on sustaining the TRA to support 

readiness. The FY 2015 budget assists the Air Force in funding Live Virtual Construct, 

exercises, training munitions, and other TRA items critical to replicating threat environments and 

required to improve readiness. This funding is essential to funding ranges to approximately 

98 percent, which historically have been as low as 21 percent. The additional funding will begin 

to bring ranges back up to requirements. The Air Force now plans for all exercises such as Red 

Flag and Green Flag to be conducted at full strength by Air Force participants, given the

FY 2015 budget funding levels. 

Munitions

The FY 2015 budget includes $4.5 billion to begin to address shortfalls in the most critical 

munitions programs and realigns funds in others to accelerate production and reduce unit cost 

(e.g., fuzes, penetrator bomb bodies, Joint Direct Attack Munition tail kits, Joint Air-to-Surface 

Standoff Missile), though critical shortfalls in preferred munitions still exist. These investments 

maintain the industrial base and support the rebalance to the Asia-Pacific. 

Figure 3-4. Air Force Historical and Planned Large Force Exercises

FY 2013 FY 2014 FY 2015 FY2016 – FY2019

Planned Executed in Full Planned Planned Planned per FY

RED FLAG 6 4 6 6 6

GREEN FLAG 20 13 20 20 20

Total 26 17 26 26 26
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Modernization

The need for modernization spans the Air Force. The FY 2015 budget keeps the Air Force’s top 

three modernization programs (F-35, KC-46 and LRS-B) on track. While service life extension 

programs and periodic modifications have largely kept the inventory viable for the current 

environment, emerging threats and technologies require new investments. The FY 2015 budget 

allows for progressive recapitalization of the fighter fleet with the F-35 and continues 

development of the long-range-strike bomber as a requirement to meet forecasted future threat 

assessments and provide the ability to operate/survive in an A2/AD environment. It funds 

legacy fleet service life extensions and critical capability upgrades, and preserves the KC-46 as 

the Service’s highest acquisition priority, recapping a tanker fleet that averages 49 years in age. 

The budget also begins procurement of MQ-9/Block 5 aircraft, a new configuration that provides 

robust communication, encryption and power for next generation sensors, and continues 

production for the E-3G (Airborne Warning and Control System) Block 40/45 program. 

Additionally, the FY 2015 budget focuses on reinvigorating the nuclear enterprise by undertaking 

platform modernization efforts (e.g., B-2 defensive management system, B-52 digital connectivity, 

Inter Continental Ballistic Missile fuzes) and upgrading nuclear command and control systems. 

The Air Force also continues to improve space capabilities by developing Space Fence Site 1, 

a next generation radar which enhances DoD’s ability to track and identify space objects, and 

continues support of GPS Enterprise modernization efforts, providing anti-jam/anti-spoof/antitamper capabilities. Fielding of Space Based Infrared System (SBIRS) is funded, providing 

improved overhead persistent infrared detection supporting missile warning, missile defense, 

technical intelligence, and battle space awareness missions. Finally, the Air Force budget funds 

the Advanced Extremely High Frequency and the Enhanced Polar System capabilities, 

providing protected communications (anti-jam, low probability of detection/intercept) at higher 

bandwidth and capacity for the warfighter. 

These investments will help sustain forward momentum in capability and capacity for the future 

and contribute to meeting requirements derived from the defense strategy. However, the 

Air Force has identified additional modernization and acquisition requirements, such as 

recapitalizing our advanced training aircraft, which remain unfunded. 

Infrastructure

The Air Force took a balanced approach in sustaining critical infrastructure by increasing 

funding to $1.05 billion in FY 2015 before adjusting to an average level of $1.3 billion in total 

Air Force Military Construction resources in FY 2016 – FY 2017. Furthermore, the budget 

provides sufficient funding for environmental requirements at Air Force installations to ensure 

compliance with statutory guidance. As part of the rebalance to the Asia-Pacific, base resiliency 

is critical to overall readiness and will drive further Military Construction requirements in 

future years. 

Special Operations Command

The USSOCOM continues to provide trained, equipped, ready and regionally aligned Special 

Operations Forces (SOF) in support of GCCs. In so doing, USSOCOM will leverage the whole 

of government, allies and partners, to conduct sustained special operations as part of a broader 

strategy to eliminate threats and buy down risk to U.S. interests and protect the American 

people. 

The USSOCOM maintains a healthy readiness level despite over a decade of combat and 

heavy deployments primarily in the U.S. Central Command’s (USCENTCOM) area of 

responsibility. Current high readiness is largely due to OCO funding and the continued support 
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to SOF by the four military Services. This state of readiness is critical to ensure SOF remains 

the United States’ on-call and ready force for global engagements. The SOF continues to 

experience and project an increase in global demand outpacing capacity. Sustained high 

demand, despite an Afghanistan drawdown, has initiated a downward trend in SOF readiness in

FY 2014. The FY 2015 budget, however, offers sufficient near-term resources to arrest much of 

the downward trend by enabling USSOCOM to buy back investments in readiness programs 

such as aviation flying hour training, language training, and unit/institutional level training. 

The FY 2015 President’s Budget request positions USSOCOM for a realignment of SOF force 

structure to best respond to global demands while maintaining a high level of readiness. This 

budget preserves key initiatives where specific investments are made to regain SOF critical fullspectrum mission skills, and organize to expand the global SOF network. Lastly, while 

USSOCOM prepares to reduce select SOF capacity to preserve readiness, the FY 2015 budget 

reflects increased investments in important areas, to include the preservation of the force and 

families, SOF education, and unit level training. 

To protect USSOCOM’s readiness and resource SOF engagements around the globe, 

USSOCOM will carefully manage its future force generation process. The force has become 

stressed and vulnerable to reduced readiness after 12 years of a high operational tempo. 

Programs such as the Preservation of the Force and Families have been implemented to 

address the manifestations of that stress on SOF and their families. 

The USSOCOM relies heavily on Service-provided capabilities for both training and contingency 

operations. Additionally, SOF relies on the Services for much of its qualification pipeline training 

and training infrastructure such as ranges and support facilities. Uninterrupted Service-provided 

capability will require close collaboration to ensure SOF continues to receive critical enablers. 

Enhancing Capability for Full Spectrum Missions 

The USSOCOM is actively adapting how it trains, organizes, and manages its force to regain 

critical skills required to support full-spectrum mission sets. The USSOCOM continues to focus 

on cultivating Joint Combined Exchange Training events (JCET), which are its premier global 

training venue. Over the past 4 years, there has been a steady increase in the number of 

requests for SOF JCET participation (Figure 3-5). This unique training continues to be 

instrumental in providing access, strengthening combined and joint warfighting capabilities and 

is critical to preserving SOF’s worldwide readiness posture. These deployments are also vital to 

sustaining SOF’s language, culture, combat and combat support, and instructor skills. 

Exercising these skills improves SOF capabilities and is complementary to the GCC’s regional 

strategy. The USSOCOM is forecasting increased JCET requests in FY 2015 as the drawdown 

in Afghanistan allows for a more global dispersal of SOF assets – the FY 2015 budget allows 

USSOCOM to continue prioritizing these events. 

With respect to the air domain, USSOCOM is improving and reconstituting the SOF aviation 

fleet. The Air Force Special Operations Command (AFSOC) decided to take risk in mobility and 

Figure 3-5. Joint/Combined Exchange Training Events/Personnel

FY 2013 FY 2014 FY 2015

Event/Requested 154/300 172/275* 175/299

Personnel 3510 4400** 4500

Countries 63 98 103

* Current requests as of January 2014 (emergent requests are expected to continue throughout the year)

** FY 2014 estimated number of SOF Personnel required for all currently requested JCETS for FY 2014. 
Overview – FY 2015 Defense Budget 

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strike capacity. Total aircraft inventory for mobility was reduced from 57 to 47 and strike from 

37 to 32 across the FYDP. This reduction in AFSOC aircraft capacity will allow for a 

realignment of assets increasing ISR. Indications of success in this area will be increased ISR 

capabilities and capacity and an increase in overall readiness. 

The Army Special Operations Command (USASOC) will invest in Civil Affairs and Military 

Information Support Operations (MISO), better positioning SOF forces for the global demand of 

Phase “0” shaping activities. The FY 2014 enacted funding level allowed USASOC to resource

aviation readiness levels. The FY 2015 budget is expected to follow the enacted FY 2014’s 

prioritization for readiness by funding expected training requirements. 

Lastly, the transformation of the sea domain is evident with a renewed emphasis on SOF 

maritime capabilities contributing to the strategic rebalancing of military capability throughout the 

maritime domain, specifically in the Asia-Pacific and Africa regions. These investments will 

become increasingly critical to both expanding the Global SOF Network and winning the current 

fight. Indications of success in this area will be increased maritime capabilities and 

engagements with partner nations. 

In FY 2013, the Secretary of Defense signed the Forces for Unified Commands Memo, directing 

that USSOCOM will have Combatant Command Authority for the Theater Special Operations 

Commands (TSOCs) and the GCCs will retain Operational Control. This authority enhances 

USSOCOM’s SOF support to the GCCs. The FY 2015 budget enables USSOCOM to remain 

committed to providing the GCCs with forces organized, trained, educated and equipped to 

rapidly or persistently address regional contingencies and threats to stability. This is best 

accomplished through USSOCOM’s TSOCs. The USSOCOM will continue its ongoing effort to 

fully man the TSOCs as a part of the over-riding priority to best support GCCs. 

Figure 3-6. AFSOC AC-130 Strike Inventory

FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018

AC-130H 8 5 1 -- -- --

AC-130U 17 17 14 12 12 10

AC-130W 12 12 12 12 12 12

AC-130J -- -- 2 4 8 10

Figure 3-7. AFSOC MC-130 Lift Inventory

FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018

MC-130H 20 20 18 13 13 10

MC-130P 14 11 -- -- -- --

MC-130J 15 17 27 35 37 37

Figure 3-8. AFSOC ISR Inventory

FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018

MQ-1 (CAPs) 6 6 2 2 -- --

MQ-9 (CAPs) 3 6 7 8 12 12

U-28 25 26 16 -- -- --

MC-12 -- -- 43 43 43 43
Overview – FY 2015 Defense Budget 

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Support the Force and Families

A consistently high demand for SOF has exerted significant stress on the force and their 

families, and therefore jeopardizes readiness. Lack of predictability and difficulty reconnecting 

and reintegrating into family life are the primary stressors, which ultimately degrade unit 

readiness. The USSOCOM is developing innovative and comprehensive solutions across the 

SOF enterprise to improve the well-being of the force and their families. The USSOCOM is 

taking action to fund two specific actions. 

First, USSOCOM continues implementing a holistic wellness program that is being developed 

and resourced to integrate prevention, resiliency, and rehabilitative services throughout the 

readiness/deployment cycle designed to improve the physical, psychological, and spiritual 

health of our SOF warriors. 

Second, USSOCOM will complete implementation of an enhanced SOF generation model 

(SOFORGEN), which is designed to improve predictability and better manage the operational 

tempo and readiness of SOF. Additionally, SOFORGEN provides the Services with more 

accurate and predictable information on requested support for SOF. This improves the total 

force package SOF presents to the GCCs by institutionalizing habitual training relationships. 

GENERATING JOINT CAPABILITIES

This budget also reflects investments in joint readiness. The operational readiness of units not 

only includes proficiency in their Service-specific tasks, but also includes in the integration of 

these tasks as part of a cohesive Joint Force. Overall mission success is dependent on 

U.S. forces ability to operate seamlessly with other Services, interagency partners, and 

international partners. 

The last 12 years have reinforced the importance of the Services operating harmoniously as a 

Joint Force, specifically in terms of combined effects, intelligence, reconnaissance and 

surveillance, cyber operations, unmanned aerial vehicles, and the agile and surgical application 

of fires on the battlefield. There is an ever-growing interdependency between the Services as 

some organic capabilities have been divested in lieu of that capability being provided by another 

Service. Operational trends include the increasingly significant roles of interagency and 

international partners as well as the provision of essential supporting and logistical capabilities 

that enable the deployment and sustainment of forward operations. 

To this end, the Office of the Secretary of Defense (OSD) has resourced Joint Force integrated 

training through an open, transparent, and collaborative resourcing program in close partnership 

with the Services, the Combatant Commands and the Joint Staff. This partnership has served 

the Department well over the last 12 years of conflict, providing timely capabilities that bridged 

the training gap between Service training and what is needed to function as a joint task force. It

has assisted the Combatant Commanders in the readiness assessment of their staffs, and 

addressed their regional engagement requirements. The Department is committed to sustaining 

this hard fought proficiency through continued investments in joint readiness. These 

investments include joint training coordination programs between the Services, unit regional 

familiarization through engagement with partner nations, enterprise wide technologies focusing 

on network connectivity between Service training venues, networking Combatant Command 

exercises to other each and with their Service Components, joint simulations and emulations 

that improve joint training capabilities at home station, and language and culture programs. 

Recognizing the importance of the joint training and exercise resources, the Secretary of 

Defense has issued guidance that protects the Combatant Commander’s Exercise Engagement 

and Training Transformation (CE2T2) program from further efficiency cuts; he has directed 
Overview – FY 2015 Defense Budget 

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continued programming, oversight and management through OSD and has asked to be briefed 

biennially on the alignment of joint exercises with defense strategy. This renewed emphasis on 

major exercises is consistent with the new requirement from section 331 of the National 

Defense Authorization Act for Fiscal Year 2014 to provide exercise assessments to Congress. 

Building on Service Capabilities: Joint Training

The Services must regularly train and exercise together to operate effectively as a Joint Force. 

They must also actively participate in Combatant Command-sponsored large Joint Force 

exercises as well as innovative, low-cost, and small-footprint engagements across the globe. 

Such participation enables the Services to develop regional expertise and build trust and 

relationships with other Services, U.S. allies, and potential partners, while developing the joint 

operational experience that is essential for success in the global security environment. 

Each of the Service readiness programs produces a set of building blocks that make up the Joint 

Force. The Department has allocated $196 million in FY 2015 for the joint training enablers 

through the CE2T2 program to cement these Service building blocks into a cohesive joint ready 

force. Building on Service-specific training and readiness capabilities, the CE2T2 program fills the 

gaps between Service and joint capabilities with joint training opportunities and enablers. 

As a specific example, the CE2T2 program funds the Joint Training Enterprise Network (JTEN),

that links geographically-separated Service and Combatant Command live, virtual, and 

constructive training capabilities into a realistic joint training environment. The JTEN also helps 

bridge the seam between the tactical and operational level of war training and mission rehearsal 

activities by providing real-time connectivity, which emulates higher headquarters authorities 

such as a joint task force command element. 

The CE2T2 program also funds the Joint Training Coordination Program (JTCP) that enables live 

participation of Service assets in the tactical-level exercises of another Service. The Air Force’s 

Red Flag and Green Flag exercises at Nellis Air Force Base; the Navy’s Fleet Readiness exercise 

at Air Wing Fallon Naval Air Station, Fallon, Nevada; the Marines’ Integrated Training Exercise at 

Twentynine Palms; and the Army’s Mission Rehearsal Exercises at the Joint Readiness Training 

Center and National Training Center are specific examples of exercises covered within the JTCP. 

Through this joint training, the Services prepare for combined tactical operations, including 

operations in Afghanistan, Libya, Africa and other contingencies. 

Other joint training opportunities funded through CE2T2 program include: joint individual 

training that prepares service members to operate in a joint environment; Service-unique 

training simulations that allow them to interoperate realistically in a joint environment and with 

U.S. international partners; replication of robust opposing forces that optimize training on 

Service tactical ranges for both the host Service and other Service participants; and 

development of a virtual training environment that facilitates 24/7 online joint training from the 

individual to the joint task force level. 

Exercises and Engagement and Building Partner Capacity

The Department invests $474 million a year to support the exercises and engagement 

requirements of the nine Combatant Commands. These events improve the readiness of the 

force to conduct joint operations, highlight U.S. capabilities, deter potential adversaries, and 

build partner capacity. For Combatant Commands, exercise and engagement events are a 

cost-effective method to provide U.S. presence, reassure allies, and hedge against 

destabilization. More specifically, this funding supports approximately 160 exercises and 

engagement events that prepare U.S. forces to execute operational plans, train the Combatant 
Overview – FY 2015 Defense Budget 

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Command staffs, provide presence and regional expertise with U.S. allies and partners, and 

build habitual relationships and trust. 

Examples of the Combatant Commander exercises that are funded over the next few years 

include: 

• AUSTERE CHALLENGE, a biennial exercise conducted by the USEUCOM, designed to 

increase readiness for the current threats and work the seams between multiple 

Combatant Commands; in 2012, this exercise strengthened the U.S.-Israeli relationship, 

while improving cooperative ballistic missile defense 

• KEY RESOLVE/FOAL EAGLE, an annual exercise, with U.S. Pacific Command 

(USPACOM) participation, that tests combined plans to defend the Republic of Korea 

(ROK) against external aggression, strengthens the readiness of combined forces, and 

demonstrates commitment to the ROK-U.S. alliance

• Association of Southeast Asian Nation Exercises, multilateral exercises with Association 

of Southeast Asian Nations partners, with USPACOM as a participant, with the following 

objectives: preparing for humanitarian assistance and disaster relief missions; 

emphasizing defense cooperation; and building mutual trust and confidence

• GLOBAL LIGHTNING, an annual exercise designed to test and validate the ability of 

United States Strategic Command (USSTRATCOM) and its component forces to deter a 

military attack against the United States

• International Mine Countermeasures Exercise, an annual, multilateral defense exercise 

near the Straits of Hormuz, conducted by USCENTCOM, that trains U.S. and partner 

nations’ forces to defeat naval mines, to protect maritime infrastructure, and to protect 

commerce in this critical region. In 2013, more than 40 nations participated in this 

exercise, demonstrating international solidarity and resolve

• Joint Logistics Over the Shore Exercise, an event designed to increase the Joint Forces’ 

ability to deploy without an established seaport (i.e., offload forces while still offshore)

• Baltic Operations, an annual multinational exercise focused on maritime operations with 

Russia and multiple other partner nations from the Baltic Sea region

• Global Response Force Exercise, an event that tests all facets of “alert” forces 

designated to response on short notice to a range of crises (from armed conflict, to 

natural disaster response, to homeland defense missions)

• CYBER FLAG, a joint operations exercise designed to enhance DoD readiness to 

operate and defend DoD networks. 

Language and Culture Capabilities

The FY 2015 budget supports the importance of language, regional, and cultural understanding 

in building international partnerships as well as contributing to successful operational outcomes 

across the entire spectrum of operations. The Department has learned, after a decade of war, 

that a basic understanding of U.S. partners’ language and culture is important for the efficacy of 

the total force and not just for special operations and intelligence forces. For this reason, the

FY 2015 budget funds several investments that increase language and cultural competency. 

These investments are paying off. Currently, there are more than 336,000 DoD personnel with 

foreign language skills, which is an increase of 12,884 personnel with language skills since

last year.
Overview – FY 2015 Defense Budget 

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Some of our language and culture investments support all Federal departments and agencies. 

Specifically, the National Security Education Program is designed in statute to provide a future 

Federal workforce with skills in languages and cultures critical to national security. The FY 2015 

budget request for this program reflects a $26.2 million commitment from DoD as well as 

$16 million from the Office of the Director of National Intelligence. These efforts include publicprivate partnerships, competitive scholarships and fellowships, and the development of 

recruiting and retention policies to increase the return on these investments. These funds also 

support the National Language Service Corps which provides language surge capacity across 

the entire U.S. government, including the DoD. This corps provides an effective hedge against 

the effects of uncertainty in current and future national security language needs. 

The FY 2015 budget supports efforts to increase the capacity of language-enabled personnel, 

specifically within DoD. The budget includes funding for the Defense Language Institute 

Foreign Language Center (DLIFLC), the Department’s primary training facility for intelligence 

community military professionals. During FY 2013, more than 2,500 students completed basic 

courses in 24 languages. In addition, DLIFLC provided Mobile Training Teams to deliver 

pre-deployment and familiarization training for over 3,400 general purpose force personnel. 

Beyond the Mobile Training Teams providing “just-in-time” training for deploying personnel, the

FY 2015 budget supports Language Training Centers to provide advanced language instruction 

and work as a partnership between universities and the Department. In FY 2014, the 

Department expanded the Language Training Center Program from five to nine institutions of 

higher education at a cost of $7 million. In FY 2013, over 5,400 military service members, a 

majority of who were Special Operations and Guard and Reserve personnel, benefited from 

alternative training delivery systems provided by these centers in 10 languages. 

Joint Logistics

The Joint Force’s ability to support OEF during the past 12 years demonstrates the superior 

capability and flexibility of the Joint Logistics Enterprise (JLEnt). The amalgamation of military 

and civilian logistics capability has created a logistics system that is unmatched in its global 

reach and responsiveness. The JLEnt’s capability is exemplified by the ability to rapidly adjust 

to Afghanistan retrograde network disruptions while remaining on target to achieve the 

President’s drawdown goals. 

Despite success over many years, the Joint Force has traded future logistics capability and 

capacity for current logistics readiness. The DoD’s ability to sustain equipment readiness at its 

current high operational tempo jeopardizes the readiness of non-deployed equipment and 

threatens equipment service life because of continued deferred programmed maintenance. 

Sequestration effects in FY 2013 exacerbated already existing shortfalls in sustainment and 

contributed to higher deferred maintenance levels. Post-combat reset of the Joint Force, which 

is estimated to require cost of war funding up to 3 years after the majority of forces redeploy, 

remains a top priority. The FY 2015 budget begins to address these effects and addresses 

maintenance requirements and shortfalls that support critical aviation, ship, and ground depot 

maintenance, and procurement of associated spare parts. 

Guided by the defense strategy within a resource informed environment, this budget addresses 

current and future logistics requirements needed to shape Joint Force 2020. The Joint Force 

will increase the resiliency of key operational bases in the Asia-Pacific region and improve 

critical infrastructure associated with crisis response and force sustainment (such as Military 

Ocean Terminal Concord in California). In addition, the Department continues development of 

critical information technology tools to enhance visibility of logistics commodities while 

addressing increasing cyber threats and other impediments to global access. 
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Overview – FY 2015 Defense Budget 

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4. CONTINUE TO FOCUS ON INSTITUTIONAL REFORM

The FY 2015 budget continues efforts started in the

FY 2012, FY 2013, and FY 2014 budgets to reduce the 

cost of doing business by identifying opportunities for 

better use of resources. The Department continues to 

identify further reductions associated with more effective 

use of funds, terminating or restructuring weapons

programs, restructuring or delaying Military Construction 

programs, and consolidating infrastructure. The FY 2012 

budget proposed more than $150 billion in 5-year savings 

through efficiencies; the FY 2013 budget proposed 

another $60 billion in reductions, and the FY 2014 budget 

identified an additional $35 billion in reductions. The

FY 2015 budget proposes another $93.6 billion in 

reductions for the years FY 2015 to FY 2019.

The FY 2015 budget continues the reform agenda 

advanced in the previous five budgets, but with greater emphasis on contracting and other 

efficiencies:

• FY 2010 budget: Focused on weapons programs, e.g., terminating F-22 fighter 

production and the VH-71 Presidential helicopter.

• FY 2011 budget: Again focused on weapons programs, e.g., ended C-17 production 

and stopped pursuit of a second engine for the Joint Strike Fighter.

• FY 2012 budget: Much more focus on DoD business operations, but plans included

some changes in weapons programs. Also proposed military health care changes.

• FY 2013 budget: Continued focus on DoD business operations, overhead activities and 

support functions.

• FY 2014 budget: Continued focus on more effective use of resources, with greater 

emphasis on weapons programs and Military Construction.

• FY 2015 plan: More focus on contracting efficiencies, controlling health care costs and 

reducing management headquarters.

Many of these efficiencies have been reinvested into higher priority military programs. Others 

have been used to accommodate lower defense budgets.

MORE DISCIPLINED USE OF RESOURCES

This section summarizes the substantial reductions the Military Departments, Combatant 

Commands, Defense Agencies, and Office of the Secretary of Defense staff will be able to 

achieve as a result of more effective use of funds (including better business practices) in

FY 2015 to FY 2019. Specifically, the Department will:

• Control health care costs by taking advantage of lower prices for private-sector care and 

reducing infrastructure and research funding. 

• Implement contracting efficiencies and reductions consistent with force structure.

• Modify weapons programs and reprioritize military construction projects to focus on the 

most critical capabilities.

Major Themes

• More Disciplined Use of Resources

• Improving the Financial 

Management Workforce

• Financial Improvement and Audit 

Readiness Initiative

• Audit and Contract Management 

Oversight

• Better Buying Power: Obtaining 

Greater Efficiency and Productivity 

in Defense Spending

• Control Costs throughout the 

Product Life Cycle
Overview – FY 2015 Defense Budget 

CHAPTER 4 CONTINUE TO FOCUS ON INSTITUTIONAL REFORM

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• Reduce management headquarters staff and consolidate duplicative efforts.

• Consolidate infrastructure with authorization for a Base Realignment and Closure 

(BRAC) round in 2017.

A summary of the Future Years Defense Program (FYDP) savings follows:

Headquarters Reductions ($5.3 billion)

• Implementation of the Department's institutional reform efforts to consolidate duplicative 

efforts and reduce management headquarters staffs. ($5.3 billion)

More Effective Use of Resources ($38.3 billion)

• Health care cost savings and efficiencies, including reductions in projected health care 

costs to slow growth in the Private Sector Care program ($10.3 billion), reduction in 

medical facility sustainment and restoration/modernization (including military 

construction) funding to better scope projects ($3.0 billion), and savings achieved by 

reducing redundancy and consolidating key functional and business support areas 

($4.0 billion). ($17.3 billion) 

• Funding reductions across all Defense-wide agencies and field activities to promote 

more efficient and effective management of resources, including reducing training by 

promoting more web-based training solutions, reducing travel through increased use of 

video teleconferencing capabilities, reducing the procurement of supplies and materials, 

and reducing printing costs. ($15.0 billion) 

• The Air Force’s reduced training and education based on force structure changes and 

taking risk in support areas as well as funding reductions beyond Department-wide 

headquarters reductions from intermediate and headquarters level. ($3.5 billion) 

• Funding reductions in the Navy’s procurement and research and development programs 

to reflect underexecution and to promote more efficient and effective use of resources. 

($2.5 billion)

New Contracting Efficiencies ($29.9 billion)

• Reduction in the Navy and Marine Corps funding for research and development, 

knowledge-based, and communication services contracts and implementation of better 

buying power initiatives in procurement. ($17.8 billion) 

• Savings from the Army’s reduced contract funding commensurate with reductions in 

force structure. ($8.4 billion)

• Savings from the Air Force’s reduced contract costs, largely for the Evolved Expendable 

Launch Vehicle Program and the KC-46 Aircrew Training System. ($3.7 billion)

Manpower or Force Restructuring ($8.0 billion)

• Reduction in the Army’s civilian manpower consistent with its military end strength 

reduction, including managing civilian workforce levels to retain net attrition in the prior 

year resulting from hiring freeze and reducing depot manpower according to reduced 

depot maintenance needs. ($4.9 billion)

• Reduction in the Air Force’s military manpower, including reducing C-130H excess to 

need aircraft to reach a C-130 aircraft inventory of 316 by FY 2015, changes to Mobility 

Air Force aerial port manpower standards, and Air Mobility Command crew ratio 
Overview – FY 2015 Defense Budget 

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changes. ($3.1 billion) 

Weapons Programs Terminations and Deferment ($9.5 billion)

• The Army terminates Ground Combat Vehicles (GCV) and continues development 

efforts toward a future infantry fighting vehicle. ($3.4 billion)

• The Army will continue to invest in the development and procurement of increments of 

the Warfighter Information Network Tactical (WIN-T) capability, to include completing 

development of the Network Operations (NetOps) software enhancement for both WIN-T 

Increments 1 and 2. The WIN-T Increment 3 program, envisioned to add more robust 

connectivity with increased network access via an Air Tier, has been significantly 

descoped to a software-only program. ($3.4 billion)

• In pursuing resiliency and affordability in Space Architectures, the Air Force divests 

funding for the procurement for Advanced Extremely High Frequency (AEHF) Space 

Vehicles (SV)-7/8. Some of the related funds reductions ($2.1 billion across the FYDP) 

are re-invested into the evolved Space Based Infrared Systems (SBIRS) and evolved 

strategic and tactical protected Satellite Communication (SATCOM) systems. 

Additionally, the Air Force defers two Global Positioning System (GPS) III satellites 

beyond FY 2019 as Global Positioning Satellites are lasting longer than previously 

forecasted, with reductions of $560 million across the FYDP. ($2.7 billion)

Military Construction Restructuring and Delays ($4.2 billion)

• Provides funding of the most critical facility requirements and allows for the rebalancing 

of resources to higher DoD priorities, such as operations and readiness. The military 

construction FYDP funds the Secretary of Defense’s strategic choices/capabilities and 

administration priorities while considering Congressional action and fiscal constraints.

• Defers most recapitalization projects, increasing the requirement for sustainment and 

base operating funds, to ensure that new construction only supports enduring 

capabilities after infrastructure consolidations.

− Programmatic reduction to Army military construction projects. ($1.3 billion)

− Requirements changes to multiple Department of Navy construction projects. 

($0.6 billion)

− Funding of minimal essential Air Force military construction requirements in

FY 2015 and restoration of some Air Force military construction investment over 

the future years. ($-0.6 billion)

− Programmatic reduction to Defense Agencies’ military construction projects 

($2.9 billion) Note: Medical investments, including Medical Military Construction

changes, are included under more effective use of resources for the Defense 

Health Program.

Infrastructure Consolidation ($-1.6 billion)

• The Department proposes a FY 2017 BRAC round to accomplish reductions in civilian 

workforce levels and garner future multiyear savings. This proposal results in cost 

increases of $1.6 billion through FY 2019, but generates multiyear savings starting in

FY 2020. ($-1.6 billion)
Overview – FY 2015 Defense Budget 

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IMPROVING THE FINANCIAL MANAGEMENT WORKFORCE

The Department requires a well-trained financial management 

workforce to achieve auditable financial statements and 

provide strong financial management. The National Defense 

Authorization Act (NDAA) for Fiscal Year 2012 (Public Law 

112-8) provides DoD with the authority to prescribe certification 

and credentialing standards for the financial management 

community. The Department initiated a multiyear effort to develop a course-based Financial 

Management (FM) Certification Program. The Program applies to personnel in the FM 

workforce and offers training and professional opportunities while establishing a standard 

financial management body of knowledge throughout the Department.

The Office of the Under Secretary of Defense (Comptroller (OUSD(C)), in consultation with the 

Office of the Under Secretary of Defense for Personnel and Readiness (OUSD(P&R)) and the 

DoD Components, has consolidated multiple FM development efforts across DoD into a 

cohesive program to effectively educate, train, and certify financial management personnel 

(civilian and military). This effort has been supported by the House of Representatives, the 

Senate, and the Government Accountability Office. 

While DoD has many FM training programs, it did not have an overarching framework that 

guided financial management training or emphasized key types of training in areas such as 

audit readiness and decision support. The Certification Program aims to move the FM 

workforce toward a more analytical orientation and to ensure the FM workforce has the 

knowledge necessary to achieve auditable financial statements. It also establishes the DoD 

framework to guide professional development of approximately 54,000 members of the DoD FM 

workforce and to ensure the workforce has the competencies to adapt to future mission 

requirements.

Similar to the Defense Acquisition Workforce Improvement Act Program, all FM positions will be 

coded with an FM Certification Level 1, 2, or 3. Each certification level requires a minimum 

number of training course hours and FM experience. Members must earn a minimum level of 

continuing education and training credits every 2 years to sustain their achieved certification 

level and maintain and improve financial management proficiency and skills. 

The foundational framework for the Certification Program is the set of 23 enterprise-wide 

financial management competencies, associated proficiency levels, and selected leadership 

competencies. Training is tied to 17 specific FM technical competencies in categories such as 

accounting, audit, finance, budget, payroll, and specific topics such as audit readiness, fiscal 

law, ethics and decision support. The DoD Leadership competencies, adopted from 

OUSD(P&R)’s enterprise-wide DoD Civilian Leader Development Framework and Continuum,

are designed to develop the FM professional’s ability to be a leader within the Department and 

to be a better strategic partner to commanders and decision makers. Identifying and defining 

key competencies in both FM and leadership enables us to assess and close the gaps between 

current capabilities and the competencies required by the future financial management 

workforce. 

The policy for the DoD FM Certification Program was signed in November 2013. The policy 

establishes a certification program management structure to provide governance and ensure 

the Program objectives are achieved, as well as delineating responsibilities and prescribing 

procedures for the full implementation of Military Departments and Defense Agencies. 

Prior to the full implementation, the Department carried out a pilot implementation phase which 

included 650 members from the FM Community from 12 different organizations. The pilot 
Overview – FY 2015 Defense Budget 

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4-5

focused on the implementation of a commercial off-the-shelf Learning Management System 

(LMS). Following the pilot, DoD updated policies and procedures to improve efficiency during 

full Program implementation. The DoD FM LMS is currently used by members to facilitate 

Program administration, oversight, validation, records management, and auditability. 

The Program began a full phased implementation of DoD Military Departments and Defense 

Agencies in June 2013. Throughout the implementation, the Department provides virtual 

training on Program policies, procedures, and navigation of the DoD FM LMS. Additional tools 

and resources are provided through the FM Online Web site, a central repository of information 

related to the Program. The FM Online is also the gateway to FM myLearn, which serves as an 

electronic catalog of training mapped to financial management and leadership competencies, 

aligned to Program requirements. Initial implementation of approximately 50,000 FM members 

is projected to be complete in September 2014. Following initial implementation, Air National 

Guard and Reserve components will be incorporated into the Program. 

The DoD FM Certification Program represents an innovative and significant change for the 

Department’s FM workforce. It provides the framework to advance the professionalism of DoD

financial managers, while improving the Department’s ability to adapt to future requirements. It 

is designed to develop and maintain a capable workforce that is better able to assist 

commanders and decision makers in using financial information to make fully-informed 

decisions. Finally, through increased training in key areas such as audit readiness, the Program 

supports the Department’s effort to achieve auditable financial statements by 2017 as directed 

by of the Secretary of Defense and Congress.

FINANCIAL IMPROVEMENT AND AUDIT READINESS INITIATIVE

The Department is committed to achieving audit readiness on all financial statements by 

September 30, 2017. Achieving audit readiness means the Department has reliable financial 

management practices, systems, and internal controls that are capable of producing accurate 

and complete financial information. 

Financial statement auditability is important to the Department for many reasons. It is required 

by law, but will also confirm that the Department is properly and effectively managing and 

executing the resources entrusted to it by Congress and the public. The Financial Improvement 

and Audit Readiness (FIAR) initiative carries out the Department’s strategy to achieve audit 

ready financial statements. 

Focusing first on improving the information most often used to manage DoD operations, the 

FIAR Initiative has targeted two priorities: Budgetary information validated as audit ready by 

September 30, 2014, and the existence and completeness of mission critical assets validated as 

audit ready by June 30, 2016. Meeting these priorities will ensure the Department makes the 

best use of every dollar while supporting its national security mission. 

The Department tracks audit readiness progress through financial statement audit opinions, 

audit readiness validated by DoD Office of the Inspector General (OIG) or Independent Public 

Accounting firm examinations, and audit readiness assertions. Substantial progress is being 

made. Today, $235 billion or 19 percent of total budgetary resources have an opinion or are 

under audit. Six DoD organizations received unqualified audit opinions on their FY 2013 

financial statements, and one DoD organization received a qualified opinion. 

To achieve full audit readiness by September 30, 2017, and begin full financial statement audits

in FY 2018, the DoD Components that have not achieved a financial statement audit opinion are 

employing a mandatory, comprehensive strategy comprising four waves: 
Overview – FY 2015 Defense Budget 

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• Wave 1 – Appropriations Received Audit has been validated as audit ready. 

• Wave 2 – Statement of Budgetary Resources Audit is currently being worked to achieve 

audit readiness. 

• Wave 3 – Mission Critical Asset Existence and Completeness Audit is also currently 

being worked to achieve audit readiness by type of assessable unit and must be 

completed prior to achieving Wave 4. 

• Wave 4 – Full Financial Statement Audit has been started, as discussed below. 

In March 2013, the Department validated audit readiness of Appropriations Received and 

completed Wave 1. Additionally, for both budgetary resources and mission critical assets 

existence and completeness, 26 examinations have been completed or are in sustainment, and 

30 examinations are underway, pending or have found that additional corrective actions are 

needed. 

In December 2014, the DoD OIG announced the successful audit of the U.S. Marine Corps 

(USMC) FY 2012 Schedule of Budgetary Activity (SBA). This was a significant achievement for 

the USMC and the Department, because it validates the approach the Department is employing 

to achieve auditable Statements of Budgetary Resources (SBR). As currently planned, most

Defense organizations will begin SBA audits in FY 2015, which will lead to auditable SBR audits 

within several years. 

The Department is committed to achieving auditable financial statements and has taken 

significant steps to accomplish this goal. These include:

• Involving the Secretary of Defense, Service secretaries, and military leaders by keeping 

them informed of progress and challenges and seeking their active support;

• Engaging the Service Chief Management Officers and senior leaders from both business 

and financial communities; and

• Integrating the Enterprise Resource Planning (ERP) system deployments with FIAR 

activities and performing incremental audit readiness testing at ERP sites.

The ultimate goal of this important initiative is to provide accurate, reliable, and relevant financial 

information to decision makers and achieve audit ready DoD financial statements no later than 

September 30, 2017. Improving the quality of DoD’s financial information provides additional 

value in potential improvements in cost management and higher quality budget justification 

materials by leveraging more modern, better integrated tools within or related to ERPs. 

Achieving this goal is more important than ever as the Department winds down the war in 

Afghanistan and maintains a global presence to defend the Nation and conduct peacekeeping 

and contingency operations, while still facing challenging economic times and reduced budgets. 

AUDIT AND CONTRACT MANAGEMENT OVERSIGHT

The Department provides independent contract audits and management support to the Military 

Services and Defense Agencies to ensure that the contracts the Department enters into are 

priced fairly and that the Department and the taxpayer receive agreed upon products and 

services. Three agencies provide these services: (1) the Defense Contract Audit Agency 

(DCAA); (2) the Defense Contract Management Agency (DCMA); and (3) the Office of the 

Inspector General (OIG). 

Establishment of the DCAA and DCMA consolidated audit and contract management functions, 

previously performed by the Military Services, into independent organizations that now apply 
Overview – FY 2015 Defense Budget 

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4-7

consistent and methodical audit, contract management, and assessment regulations and 

principles across the Department.

• The DCAA performs contract audit functions for all DoD Components, and other Federal 

agencies. The DCAA was established in 1965 as an independent agency. In FY 2013, 

they audited $50 billion of costs incurred on contracts and reviewed over 1,300 forward 

pricing proposals totaling $100 billion. In FY 2013, DCAA achieved approximately 

$4.4 billion in savings as the result of audit findings.

– In FY 2015, the DCAA continues efforts to reduce the incurred cost backlog. 

Reducing this backlog will: (1) assist in achieving auditable financial statements; 

(2) assist the Department in closing completed contracts; and (3) prevent undue 

delays in payments of fees to contractors (a portion of fees to contractors is delayed 

until the contract is closed).

• The DCMA represents the Military Services, other Federal agencies, and related 

government buying agencies at defense contractor locations worldwide, prior to and 

after contract award. The DCMA was established as an independent agency in 

March 2000. The DCMA provides Contract Advisory Services on more than 

350,000 prime contracts with a total value of more than $1.8 trillion, which is performed 

by over 19,900 contractors.

– In FY 2015, the DCMA continues the Department’s efforts to grow the acquisition 

workforce to mitigate known acquisition oversight workforce shortfalls, primarily in the 

areas of price costing, earned value, and quality assurance.

• Created by the Inspector General Act of 1978, the DoD OIG is an independent, objective 

agency within the U.S. Department of Defense. The DoD OIG is responsible for 

conducting audits, investigations, and inspections and recommends policies and 

procedures to promote economic, efficient, and effective use of agency resources and 

programs that prevent fraud, waste, abuse, and mismanagement. In FY 2013, the DoD 

Inspector General achieved $2.8 billion in savings and $2.1 billion in recovery.

– In FY 2015 the OIG will continue its efforts in serving the warfighter, and the taxpayer, 

by conducting audits, investigations, inspections, and assessments that provide 

guidance and recommendations for both the Department and Congress.

Figure 4-1. Contract Management and Oversight

(Dollars in Billions, Base Budget only FY 2013/2014, Direct Full-Time Equivalents (FTEs) in whole numbers)

Program

FY 2013

Actual

FY 2014

Request

FY 2015

Request

Defense Contract Audit Agency $0.5 $0.6 $0.6

 DCAA Direct FTEs 4,043 4,205 4,205

Defense Contract Management Agency $1.2 $1.2 $1.3

 DCMA Direct FTEs 8,801 9,942 9,999

Office of Inspector General $0.3 $0.3 $0.3

 OIG Direct FTEs 1,555 1,614 1,614

Total – Audit and Contract Management $2.0 $2.1 $2.2

 Total FTEs 15,509 16,881 16,977

Source: FY 2015 President’s Budget Numbers may not add due to rounding
Overview – FY 2015 Defense Budget 

CHAPTER 4 CONTINUE TO FOCUS ON INSTITUTIONAL REFORM

4-8

BETTER BUYING POWER: OBTAINING GREATER EFFICIENCY AND 

PRODUCTIVITY IN DEFENSE SPENDING

Achieving greater efficiencies is a central tenet of the Department’s efforts to increase 

productivity in defense spending to deliver better value to the taxpayer and Warfighter. 

Introduced in 2010, Better Buying Power (BBP) encompasses a set of initiatives intended to 

move the Department toward this goal. In November 2012, the Under Secretary of Defense 

(Acquisition, Technology & Logistics) introduced the next phase of BBP: The BBP 2.0 reflects 

the Department’s commitment to continuous improvement, and it is made up of 34 initiatives 

organized into 7 areas:

• Achieve affordable programs;

• Control costs throughout the product life cycle;

• Incentivize productivity and innovation in industry and government;

• Eliminate unproductive processes and bureaucracy;

• Promote effective competition;

• Improve tradecraft in acquisition of services; and

• Improve the professionalism of the total acquisition workforce.

The 34 initiatives include a broader array of efficiency efforts that places increased emphasis on 

innovation, technology, best value, and professionalism of the workforce. This last area 

recognizes that people are essential to changing the way the Department provides critical 

capabilities to the Warfighter and thus seeks to establish higher standards for key leadership 

positions, implement stronger professional qualification (and not just certification) requirements 

for all acquisition specialties, increase the recognition of excellence in acquisition management, 

and continue to increase the cost consciousness of the acquisition workforce by changing the 

culture. 

The BBP 2.0 also continues work begun under the original BBP effort. Mandating affordability 

as a requirement, instituting a system of investment planning, and enforcing affordability caps 

remain essential elements of achieving greater efficiencies. Similarly, controlling cost 

throughout the product life cycle through a combination of implementing “should cost”-based 

management, eliminating redundancy within warfighter portfolios, and building stronger 

partnerships with the requirements community, among other key initiatives, remains an 

important priority in BBP 2.0.

Industry is a vital partner to the Department in the defense acquisition enterprise; without the 

industrial base, DoD cannot equip and support the warfighter. A healthy industrial base means 

a profitable industrial base, but it also means a lean, efficient base that provides good value for 

the taxpayers’ defense investments and increases in productivity over time. BBP 2.0 addresses 

this requirement by incentivizing productivity and innovation in industry and the Government. It 

seeks to do so through a combination of efforts, to include aligning profitability more tightly with 

Department goals, employing appropriate contract types, increasing the use of Fixed Price 

Incentive contracts in Low Rate Initial Production, better defining value in “best value” 

competitions, defining technical acceptability to ensure needed quality when lowest price 

technically acceptable contracts are used, instituting a superior supplier incentive program, 

increasing the effective use of Performance-Based Logistics, reducing the backlog of Defense 

Contract Audit Agency audits without compromising effectiveness, and expanding programs to 

leverage industry’s independent research and development programs. Through these collective 
Overview – FY 2015 Defense Budget 

CHAPTER 4 CONTINUE TO FOCUS ON INSTITUTIONAL REFORM

4-9

efforts, the Department and industry can achieve a win-win relationship that results in greater 

rewards for superior performance.

As the Department seeks additional ways to generate greater value for the taxpayers within a 

fiscally-constrained environment, BBP 2.0 is continuing to eliminate unproductive processes and 

bureaucracy by reducing the frequency of senior-level reviews; re-emphasizing acquisition 

executive, program executive officer, and program manager lines of responsibility and 

accountability; eliminating requirements imposed on industry where the costs outweigh the 

benefits; and reducing cycle times while ensuring sound investment decisions. These collective 

efforts aim to reduce overhead costs that burden the Department and enable the savings 

generated to be spent on efforts that directly support the Warfighter.

Another area of continued focus in BBP 2.0 is the promotion of effective competition. Within this 

area, the Department is emphasizing competition strategies and creating and maintaining 

competitive environments, enforcing open system architectures and effectively managing 

technical data rights, increasing small business roles and opportunities, and using the 

Technology Development phase of the acquisition system for true risk reduction. Competition, 

when applied effectively, results in lower costs to the Government, greater innovation from 

industry, and added savings for the taxpayer.

Improving tradecraft in the acquisition of services is integral to achieving greater efficiencies in 

BBP 2.0. Service contracts comprise over 50 percent of the Department’s contract funding and 

opportunities exist for DoD to improve the manner in which it competes and awards service 

contracts. BBP 2.0 continues to emphasize the role of senior managers for the acquisition of 

services and the use of market research and small business participation, while also 

strengthening contract management outside of the normal acquisition chain, such as at military 

installations and expanding the use of requirements review boards and tripwires. 

As the nation enters a new era of emerging security challenges and fiscal austerity in FY 2014 

and beyond, it is more important than ever that the Department remain an effective steward of 

the investment dollars entrusted to us. We will have to provide essential products and services 

that our warfighters require and protect the taxpayers’ interests by obtaining as much value as 

possible through a reduction in unproductive overhead costs, reinvesting should-cost savings to 

fund higher Service priorities, promoting effective competition by creating and maintaining 

competitive environments, and pursuing other cost-controlling measures as detailed in the 

Department’s Better Buying Power initiative. 

The initiatives introduced in BBP and continuing in BBP 2.0 demonstrate the Department’s longterm commitment toward continuous process improvement in the acquisition system. More 

importantly, they address both the fiscal and security challenges that face our nation. The focus 

of BBP remains delivering better value to the taxpayer and warfighter by improving the way the 

Department does business.

CONTROL COSTS THROUGHOUT THE PRODUCT LIFE CYCLE 

As the Department continues to provide the world’s best military capabilities, we know that we 

must do so at lower costs. Controlling cost throughout the life cycle is a focus that deserves 

continued emphasis; proactive cost control is everyone’s business. 

As the Department acquires and sustains new capabilities, Should Cost management is an 

approach to cost control that will enable the Department to meet the needs of a ready force 

within the budget. At its core, Should Cost management means not accepting what has been 

budgeted as a foregone conclusion. The Department has mandated the use of Should Cost 

management for acquisition programs; managers at all levels must be innovative in continually 
Overview – FY 2015 Defense Budget 

CHAPTER 4 CONTINUE TO FOCUS ON INSTITUTIONAL REFORM

4-10

initiating concrete measures that drive cost from their programs. Program Managers for 

Acquisition Category 1 programs specifically report Should Cost targets and progress in 

achieving them during programmatic reviews. Specific Should Cost training and a best 

practices reference repository have been implemented through the Defense Acquisition 

University. The Department has seen programs implement Should Cost in multiple ways, 

among them contract incentives for suppliers to reduce operating and support (O&S) costs 

through more reliable designs. 

Cost control starts with clear requirements, avoiding redundant capabilities, and not buying 

more than necessary to accomplish the mission. The Department will continue to align the 

communication between requirements and acquisition communities to ensure we start and 

execute programs that have the best likelihood of success. Product life cycles typically last for 

decades, and requirements and acquisition decisions will influence the Department’s costs well 

into the future. Today’s design decisions for systems in development affect tomorrow’s costs for 

sustainment and the need to enable foreign sales. In the past, management of operations and 

support cost was not an explicit program objective; now the operations and support Cost Key 

System Attribute is a requirement for all new programs. 

The Department has learned from past drawdowns that a near-term focus on cost reduction can 

significantly impact future readiness and increase long-term cost. Our emphasis on cost control 

throughout the life cycle is grounded in the lessons of the past and the strategic imperatives of 

the future. 
Overview – FY 2015 Defense Budget 

CHAPTER 5 PURSUE COMPENSATION CHANGES

5-1

5. PURSUE COMPENSATION CHANGES

Government Personnel – Military and Civilian, Active, 

Reserve, and National Guard – are the foundation of 

the Department of Defense and constitute its premier

asset. As such, they must have the full support of 

the Nation and the Department to ensure they 

successfully accomplish their arduous mission of 

defending the United States of America 24/7.

The Department’s full support of its people extends 

far beyond just providing competitive pay and 

benefits to ensure there are enough highly qualified 

men and women to fill the ranks of the All-Volunteer 

Force. It also means providing the best possible training and equipment for these selfless 

warriors to carry into combat and accomplish the incredible array of missions they undertake 

around the globe each and every day. 

While providing full support in each of 

these areas is relatively straight-forward in 

an era of increasing budgets, finding the 

appropriate balance in the current fiscal 

and political environment is a monumental 

challenge for both the Department and the 

Nation. However, this balance must be 

found if the Department is to maintain the 

highest quality, ready, and modern military 

force the United States has today far into 

the future.

Throughout the on-going budgetary

dialogue, much has been made of the cost 

of personnel relative to the overall defense 

budget. Frequent statements such as 

“military and civilian personnel costs now 

make up nearly half of the defense budget” 

or “military personnel costs are about onethird of the budget” are routinely bandied 

about and are accurate and interesting data 

points. However, the exact percentage is 

not the main point in the debate as 

personnel costs have always consumed a 

large portion of the defense budget. The 

more important point is that because 

military and civilian personnel costs are 

such a large portion of the budget, if this 

area does not take a reduction when the 

overall defense budget decreases, these

costs can quickly eat into the training and 

equipping portions of the budget (readiness 

and modernization efforts) – particularly in 

the short-term as it takes substantial time to 

properly adjust personnel levels.

Key Initiatives

• Military Compensation

• Military Compensation and Retirement 

Modernization Commission

• Managing the Military Health System

• Strengthening Military Families

• Transitioning from Service Member to 

Veteran

• Supporting DoD Civilians

Figure 5-1. Pay & Benefit Costs /1

(Dollars in Billions)

Military Pay & Benefit 

Costs

FY 2001

Actual

FY 2012

Actual

FY 2015

Request

Military Personnel 

Appropriations /2 77.3 130.8 129.0

Medicare-Eligible Retiree 

Health Care Accruals -- 10.7 6.2

Defense Health Program/3 13.7 32.3 32.5

DoD Education Activity /4 1.5 3.3 3.0

Family Housing 3.7 1.7 1.2

Commissary Subsidy 1.0 1.4 1.1

Other Benefit Programs /5 2.4 3.7 3.6

Total Military Pay & 

Benefit Costs 99.5 183.8 176.6

Civilian Pay & Benefit 

Costs /6 39.8 69.6 69.8

Total Pay & Benefit 

Costs 139.3 253.4 246.4

DoD Base Budget 

Authority (BA) 287.4 530.4 495.6

Mil. Pay & Benefits as % 

of BA 34.6% 34.6% 35.6%

Total Pay & Benefits as 

% of BA 48.5% 47.8% 49.7%

End Strength (Active & 

Reserve) /7 2,253,650 2,239,942 2,128,000

Numbers may not add due to rounding 1/ Base Budget only – excludes OCO funding. 2/ Includes pay & allowances, PCS move costs, retired pay accruals, 

unemployment compensation, etc. 3/ DHP funding includes O&M, RDT&E, and Procurement. It also 

includes construction costs funded in Military Construction, DefenseWide account. 4/ DoDEA funding includes all O&M, Procurement, & Military 

Construction costs.

5/ Includes Child Care & Youth Programs, Warfighter & Family Programs, 

MWR, Tuition Assistance and other voluntary education programs. 6/ Civilian Pay & Benefits amounts exclude costs in funded in the DHP, 

DoDEA, Family Housing and Commissary Subsidy programs. 7/ Total number of active and reserve component military personnel 

funded in the Base Budget as of September 30.
Overview – FY 2015 Defense Budget 

CHAPTER 5 PURSUE COMPENSATION CHANGES

5-2

Figure 5-1 displays a summary of the Department’s base budget military pay and benefit costs 

in FY 2001, FY 2012, and in the current FY 2015 request. Although military pay and benefit 

costs increased from $99.5 billion in FY 2001 to $183.8 billion in FY 2012 (an 85 percent 

increase), they remain at roughly one-third (34.6 percent) of the total budget due to a similar 

increase in the Department’s base budget authority. However, as Figure 5-1 also shows, the 

base budget funded active and reserve component end strength from FY 2001 to FY 2012 has 

remained relatively stable in size and composition, which indicates that the average cost of 

military personnel has increased during this period. 

The FY 2015 Request column of Figure 5-1 shows that military pay and benefit costs decrease 

by $7.2 billion from FY 2012 but actually increase as a percentage of the defense budget 

(34.6 percent to 35.6 percent) due to the size of the overall reduction to the Department’s base 

budget authority. This reduction in military pay and benefits costs is primarily driven by planned 

force structure reductions consistent with adjustments to defense strategy necessitated by the 

fiscal realities faced under the Budget Control Act (BCA) of 2011 and the Bipartisan Budget Act 

(BBA) of 2013. However, the reduction to military pay and benefit costs also reflects a slowing 

of medical growth trends experienced across the Nation in recent years as well as numerous 

efficiencies and efforts to slow the growth in these costs, both in previous budgets and with the 

current proposals included in the FY 2015 President’s Budget request and addressed within this 

chapter.

MILITARY COMPENSATION (INCLUDING TRAVEL BENEFITS)

Providing competitive pay and benefits is clearly a necessity to attract and retain the highly 

qualified people needed in today’s military, and it is also generally viewed as a national 

obligation to the small percentage of the population who choose to serve this nation. While 

there is no perfect benchmark or comparison to determine the adequate level of compensation 

military members should receive, for more than a decade the work of the Ninth Quadrennial 

Review of Military Compensation (9th QRMC) has been the primary measuring stick and 

justification for many improvements that have occurred in military pay. In their final report, the 

9th QRMC asserted that –

Military and civilian pay comparability is critical to the success of the 

All-Volunteer Force. Military pay must be set at a level that takes into account the 

special demands associated with military life and should be set above average 

pay in the private sector. Pay at around the 70th percentile of comparably 

educated civilians has been necessary to enable the military to recruit and retain 

the quantity and quality of personnel it requires.

In the late 1990s, even though the trajectory of military compensation was slightly upward, it 

had sunk to an unsatisfactory level relative to the rest of the working population. The 

9th QRMC’s analysis noted that in 2000, regular military compensation (RMC) (defined as basic 

pay, housing and subsistence allowances, and the Federal tax advantage associated with these 

non-taxable allowances) for mid-grade enlisted personnel (E5 – E7s) and mid-grade officers 

(O4s) only placed in the 50th and 58th percentiles, respectively, compared to similarly educated 

and experienced workers in the United States. To address this and with the help of the 

Congress, substantial targeted and overall increases to the basic pay table were enacted, well 

above the level of growth in private industry wages and salaries as measured by the 

Employment Cost Index (ECI). 
Overview – FY 2015 Defense Budget 

CHAPTER 5 PURSUE COMPENSATION CHANGES

5-3

In addition to increasing basic pay, during the same period, the Department also began increasing 

housing allowance rates to bring them in line with actual rental market housing costs across the 

country and to reduce members’ out-of-pocket housing costs. Prior to this initiative, a military 

member’s housing allowance covered only about 80 percent of their full housing costs, leaving an 

out-of-pocket cost of up to 20 percent. By 2005, housing allowance rates were increased enough 

so that the median out-of-pocket “off-base” housing cost was completely eliminated for members 

by pay grade, location, and dependency status. As a further quality-of-life initiative, the Military 

Services also entered numerous public-private ventures (PPVs) designed to eliminate inadequate 

government housing by leveraging private sector financing, expertise, and innovation to provide 

necessary housing faster and more efficiently than traditional Military Construction processes 

would allow. The PPV process significantly increased the Department’s Basic Allowance for 

Housing (BAH) program costs due to an increased number of military personnel receiving a 

housing allowance but it quickly enhanced the quality-of-life for members and their families 

through revitalized family housing in many military locations.

By the late 2000’s, the increased trajectory of compensation designed to close the gap with the 

private sector had overshot the mark – understandably so during a decade of war. By 2009 and 

as a direct result of these improvements, the 11th QRMC reported in June 2012 that average 

officer and enlisted RMC had climbed to the 83rd and 90th percentile of comparable civilian pay,

Figure 5-2. Military Pay and Benefits Summary

• The foundation of military pay is Regular Military Compensation (RMC). Every member receives the following 

pay or in-kind entitlement:

– Basic Pay

– Basic Allowance for Housing (BAH) with the advantage of non-taxability

– Basic Allowance for Subsistence (BAS) with the advantage of non-taxability.

• Members may also receive a series of other allowances to offset the costs they incur because of official travel 

and relocation, family separation, uniform replacement, and the greater than normal living expenses associated 

with assignments to high-cost locations.

• Every member receives 30 days paid vacation annually; free health, dental, and vision care; and automatic 

survivor coverage in event of death on active duty. For members on active duty, free health care is also 

available for their dependents.

• Members who qualify, may receive in addition to the above universal benefits, additional compensation in the 

form of Special and Incentive (S&I) pays which are used to target specific occupations, specialties, and 

segments of the force to:

– Attract and retain members in certain occupations or specific skills (e.g., enlistment and reenlistment 

bonuses, critical skills retention bonuses, medical special pays)

– Motivate attainment of specific skills (e.g., language proficiency pay, dive pay)

– Recognize hardships, danger, or arduous duty (e.g., hardship duty pay, parachute duty pay, imminent 

danger pay, firefighting crew member pay)

– Incentivize hard to fill assignments or those of special responsibility (e.g., assignment incentive pay, special 

duty assignment pay).

• Members, as well as their dependents, are offered many other non-monetary benefits such as:

– Subsidized child care

– Subsidized life insurance

– Education and tuition assistance

– Child, youth, and family support programs

– Discounted retail shopping (Commissary and Exchange)

– Spiritual health and support

– Access to a wide range of welfare and recreation offerings (e.g., club, golf, pool, other sports and recreation 

facilities, commercial discount tickets, internet cafes)

• Members who qualify receive a retirement:

– Lifetime defined benefit after 20 years of service

– Lifetime defined benefit upon occurrence of significant disability

– Most of the same non-monetary benefits as while serving

– Subsidized health care for self and family

– Subsidized survivor protection
Overview – FY 2015 Defense Budget 

CHAPTER 5 PURSUE COMPENSATION CHANGES

5-4

respectively. It should be noted that while RMC is the foundation, it is by no means the totality 

of military pay and benefits available to Members, a summary of which is provided in Figure 5-2.

Against this backdrop of a healthy and competitive military compensation package, the 

Department has done a significant amount of work to explore how we can slow the rate of 

growth in military pay and benefit costs and individual compensation responsibly, fairly, and 

effectively. The Department has provided several proposals in recent years to do just that, 

some of which have been accepted by the Congress. 

• Congress has modestly increased TRICARE enrollment fees and indexed them to inflation 

as well as permitted increases in pharmacy co-pays that are structured to provide incentives 

to use generic drugs and the lower cost mail order program over retail pharmacies. 

• For FY 2014, Congress accepted a 1.0 percent annual across-the-board basic pay raise, 

even though the ECI called for an increase of 1.8 percent. 

The Department has also taken other actions to improve efficiencies and to reduce the overall 

costs for health care. For instance, with the support of Congress, the Department championed 

changes in law (known as Federal Ceiling Price (FCP)) that required pharmaceutical 

manufacturers to provide discounts for drugs for TRICARE beneficiaries through retail network 

pharmacies. As a result, the FCP discounts for drugs are at least 24 percent less than the 

average manufacturer’s price for its non-Federal customers. To further reduce costs, the 

Department also changed the way it buys medical products by leveraging the bulk buying power 

of the military health system (MHS). Additional examples are provided in the Managing the 

Military Health System section of this chapter.

These have been important steps in controlling costs. However, given the long-term fiscal 

realities faced within defense budget funding levels under the BCA and the BBA, the 

Department must continue to explore proposals that promote slower growth in pay and benefits 

costs. 

In a January 28, 2014, Senate Armed Services Committee hearing on Recent Changes to the 

U.S. Military Retirement System, the Acting Deputy Secretary of Defense and Vice Chairman of 

the Joint Chiefs of Staff articulated the Department’s overall approach to military compensation 

in this challenging fiscal environment –

Slowing the growth of compensation must be one element in a larger approach to 

preparing a future force that is balanced and ready to meet challenges seen and 

unforeseen. Yet pay and benefits are an area where we must be particularly 

thoughtful, as we weigh commitments made, ensure we are able to recruit and 

retain the force needed for tomorrow, and make certain those we send into 

harm’s way have all they need to accomplish their mission.

Whereas in recent years the Secretary of Defense worked closely with military and civilian 

leaders through the budget process to review and recommend adjustments to military pay and 

allowances and health care, as a follow-on to the Strategic Choices and Management Review 

(SCMR) process, the Joint Staff led the FY 2015 military compensation review with the Joint 

Chiefs and their senior enlisted advisors as the primary driving force. With a clear focus on 

reinvesting any savings in warfighting capability and personnel readiness, the review again 

concluded that savings realized from military pay and benefit changes should be 

disproportionately small compared to those for other budget categories, simple and easy to 

explain. Though growth in pay would be slowed, no member would experience a cut in pay. In

terms of Regular Military Compensation, which includes basic pay, housing and subsistence 
Overview – FY 2015 Defense Budget 

CHAPTER 5 PURSUE COMPENSATION CHANGES

5-5

allowances, and tax advantage, indeed the package of changes will still result in an increase but 

at a slower rate than inflation. 

Figure 5-3 displays the estimated 

savings from the military 

compensation proposals included in 

the FY 2015 President’s Budget as 

compared to the FY 2014 program. 

These proposals decrease military 

pay and benefit costs by $1.6 billion

in FY 2015 and by almost $23 billion

through FY 2019 and are critical to 

achieving a balanced drawdown in 

the defense budget. However, the 

net additional savings available to 

maintain warfighting capability and 

personnel readiness is $11.9 billion

through FY 2019, as significant 

savings were already assumed for 

the TRICARE benefit change 

proposals that were not enacted as 

part of the FY 2014 budget and are 

not being resubmitted in the FY 2015 

budget.

• Limits on basic pay raises through FY 2019 –

– As part of the FY 2014 President’s Budget, the Department had already planned on 

limiting basic pay raises through FY 2017 to levels likely below those called for under 

the formula in current law, which calls for a raise to equal the annual increase in the 

wages and salaries of private industry employees as measured by the ECI. This

FY 2014 plan called for pay raises of 1.0 percent in FY 2015 and FY 2016, 1.5 percent 

in FY 2017, and then returned to more likely ECI levels of 2.8 percent in FY 2018 and 

beyond. 

– Similar to FY 2014, the FY 2015 President’s Budget again seeks a 1.0 percent basic 

pay raise for military members in FY 2015, which is less generous than the 1.8 percent 

increase in ECI as of September 30, 2013. Outyear pay raise planning factors 

assume limited pay raises continue through FY 2019 with increases of 1.0 percent in

FY 2016 and FY 2017, 1.5 percent in FY 2018, and 1.8 percent in FY 2019. It should 

be emphasized here the military pay raise is set only 1 year at a time by Congress. 

Therefore, the outyear pay raise assumptions beyond FY 2015 are notional planning 

factors that the Department believes are necessary to live within current budgetary 

caps while maintaining a balanced force fully capable of executing its national security 

missions. 

• FY 2015 General Officer/Flag Officer (GO/FO) Pay Freeze – The FY 2015 request 

seeks a pay freeze for GO/FOs; a 1.0 percent basic pay raise is recommended for the 

rest of the ranks. While this proposal provides only limited savings of about $1 million in

FY 2015 and $8 million through FY 2019, the Joint Chiefs believe that if they ask our 

young men and women to accept a slower growth in pay, then the most senior 

leadership ought to accept an even lower level.

Figure 5-3. FY 2015 PB Military Compensation Proposals /1

(Dollars in billions)

Proposal FY 2015

Savings

FY15 – FY19

Savings

Modest Military Pay Raises through

FY 2019 0.0 3.8

FY 2015 General Officer/Flag Officer 

Pay Freeze <0.01 <0.01

Slow BAH Growth 0.4 5.0

Reduce Commissary Subsidy 0.2 3.9

Consolidated TRICARE Health Plan /2 0.8 9.3

Total Compensation Proposal 

Savings 1.5 22.1

Travel Efficiencies 0.1 0.7

Total Reform Savings 1.6 22.8

Less PB14 TRICARE Proposal Savings -1.7 -10.9

Net Savings/1 -0.1 11.9

Numbers may not add due to rounding /1 Savings compared to PB14 program estimates /2 Includes previously submitted pharmacy co-pay and TRICARE-for-Life 

(TFL) enrollment fee proposals. Savings compared to current plan costs.
Overview – FY 2015 Defense Budget 

CHAPTER 5 PURSUE COMPENSATION CHANGES

5-6

• Slow BAH Growth to Achieve a 5 percent out-of-Pocket Cost and Eliminate 

Renters Insurance – The proposal gradually slows annual BAH increases until rates 

cover 95 percent of housing rental and utility costs on average and eliminates renter’s 

insurance from the housing rates. Overall, this results in an out-of-pocket cost of 

6 percent on average, which is far less than the 20 percent out-of-pocket in the 1990s. 

In areas where average rates increase, DoD will slow the growth of that increase until 

the 6 percent target is reached. The actual percentage will vary by area, because it 

would be unfair to those who live in high rental cost areas to make this change on a 

strict percentage basis. Rather, service members in the same pay grade but living in 

different areas should see the same dollar amount of out-of-pocket cost. This is done so 

the individual member will know the amount they will contribute toward housing and can 

make informed trades in their own budgets. The rate protection feature will also remain 

in effect. In other words, no one who is currently living in a particular area will see their 

BAH decrease. If the survey data in an area indicates that the BAH rate should 

decrease; only members moving into the area will receive the lower rate, which already 

happens under the current rules. We expect that the out-of-pocket target of 6 percent

will take several years to achieve because the Department is just slowing the growth of 

future increases.

• Reduce Commissary Subsidy – The Defense Commissary Agency (DeCA) operates 

243 stores around the world, including 178 domestic locations, providing groceries at 

cost plus a 5 percent surcharge to service members and retirees. The DeCA reports 

that commissary shoppers save about 30 percent on average worldwide compared to 

major retail and discount grocers in the private sector. The Department subsidizes 

DeCA’s operations to pay overhead and employee wage expenses in the amount of 

$1.4 billion per year. 

The Department intends to reduce by $1 billion, over a 3-year period, the subsidy paid by the 

Federal government to the commissaries. This will leave DeCA with an annual operating 

appropriation of approximately $400 million starting in FY 2017 to continue subsidies to fund 

shipping goods to commissaries overseas and subsidizing about 25 commissaries in remote 

and isolated locations in the U.S. The Department proposes applying the successful post and 

base exchange business model to the commissaries. Under this plan, the commissaries would 

continue to provide a valuable and convenient benefit to the military community. The plan 

includes expanding the variety of products sold in stores, reducing transportation costs, and 

raising prices to cover the cost of operating commissaries. The shoppers at commissary 

facilities should continue to enjoy significant savings on grocery purchases (about 10 percent or 

more) compared to high priced private grocery stores, and modest savings over discount 

grocery chains. The Department will not direct any commissary to close. In the end, patron 

usage of the commissaries will determine the savings and their competitive advantage. 

• Consolidated TRICARE Health Plan 

– Proposal will streamline the current TRICARE managed care and fee-for-service 

options (Prime, Standard, and Extra) into a simplified structure of Military Treatment 

Facility (MTF), in-network and out-of-network cost sharing that provides incentives for 

wellness, decreases overutilization of services, and provides beneficiaries with open 

access to providers. Through modestly higher deductibles and co-pays, this simplified 

structure is designed to encourage members to use more affordable means of care. 

Active duty members will remain exempt from co-pays or fees, and active duty family 

members will experience only limited co-pays for TRICARE Network and out-ofnetwork care. When fully implemented, the Consolidated TRICARE Health Plan will 

remain a generous benefits package. By FY 2019, a retiree family will pay about 
Overview – FY 2015 Defense Budget 

CHAPTER 5 PURSUE COMPENSATION CHANGES

5-7

11 percent of total health care costs – well below the original 27 percent back when the 

program was established in the mid-1990s. 

– In conjunction with the Consolidated Plan changes, the Department again seeks to 

adjust pharmacy co-pay structures and establish a modest annual enrollment fee for 

the TRICARE-for-Life coverage for Medicare-eligible retirees. Additional details of the 

Consolidated TRICARE Health Plan and other proposed health benefit changes are 

provided in the Managing the Military Health System section of this chapter.

• Travel Efficiencies – For the last several years, the Department has made significant 

efforts to reduce travel costs. Specific actions were taken to reduce conferences, 

provide training programs online, strengthen internal controls over travel approval and 

execution, and, wherever possible, substitute the use of technology such as video 

teleconferencing. In a continued effort to manage spending effectively, the Department 

plans to implement further changes to simplify travel policies to reimburse for costs that 

are more reflective of modern day expenditures and incentivize both military and civilian 

personnel to make more prudent, smarter choices in travel management. In addition to 

compensation changes, the FY 2015 budget request includes pursuing changes in travel 

benefits such as eliminating payments for separate “incidental” expenses such as 

laundry services, bottled water, etc., reducing per diem for extended travel and pursuing 

changes in travel legislation and benefits.

MILITARY COMPENSATION AND RETIREMENT MODERNIZATION COMMISSION

The National Defense Authorization Act for Fiscal Year 2013 directed the establishment of a 

more expansive Military Compensation and Retirement Modernization Commission to review 

the compensation and retirement systems and make recommendations to modernize the 

systems in order to:

• Ensure the long-term viability of the All-Volunteer Force 

• Enable the quality of life for Service members and their families that fosters successful 

recruitment, retention and military careers

• Modernize and achieve fiscal sustainability for the compensation and retirement systems 

for the 21st century

Over time, the world and generally accepted compensation practices in the United States have 

changed, but the military compensation and retirement systems have remained essentially the 

same. The Department embraces the Commission goals and believes it is appropriate to 

conduct a comprehensive review of the military compensation and retirement systems to ensure 

the right mix of pay and benefits to maintain the All-Volunteer Force. However, the Congress 

must be willing to take action on the recommendations; otherwise the important work of the 

Commission will simply be relegated to the ever growing list of esoteric compensation studies 

and reports.

The recently enacted change to the military retirement cost-of-living adjustment (COLA) formula 

included in the BBA has shined a spotlight on military retirement system and likely made the 

work of the Commission more challenging but even more critical to the debate. The “CPIminus-one” provision reduces the annual COLA adjustment for working age military retirees by 

one-percentage point each year until age 62, at which time their retired pay is recomputed 

based on full past Consumer Price Index (CPI) increases, and all increases after age 62 are 

based on the full CPI. Initially, the change applied to all current and future retirees under age 62 

without any exceptions or grandfathering. However, the FY 2014 Omnibus Appropriations Act 
Overview – FY 2015 Defense Budget 

CHAPTER 5 PURSUE COMPENSATION CHANGES

5-8

subsequently modified the provision to exempt military disability retirements, and payments to 

survivors of those who died while on active duty and the survivors of disability retired members. 

Then, on February 15, 2014, the President signed S. 25, which grandfathers all military 

members and retirees who entered Service prior to January 1, 2014, from the reduced COLA 

formula. As this legislation was passed too late for inclusion in the FY 2015 President’s Budget, 

the Department’s retired pay accrual payments in FY 2015 will be $500 million more than 

budgeted.

Due to the complexity of the military retirement system, the Department believes that further

changes should not be made in this area until the Commission completes it work. The 

Department also believes there is sufficient information already available to make 

recommendations on key areas of the current military compensation system (other than 

retirement), and that immediate action is necessary in the FY 2015 budget to slow the growth in 

military pay and benefit costs in order to permit a balanced drawdown in defense spending. The

FY 2015 proposals outlined in this chapter will be shared with the Commission and explained by 

DoD senior leaders as part of the ongoing dialogue, so they can be fully integrated in the 

Commission’s deliberations. The Department has also shared with them its views on “options” 

for modernizing military retirement. The DoD will continue to work with the Commission as it 

considers this important topic and completes its report to President and the Congress by 

February of 2015.

MANAGING THE MILITARY HEALTH 

SYSTEM 

The FY 2015 budget includes $47.4 billion 

for the DoD Unified Medical Budget to 

support our Military Health System (MHS). 

The MHS currently has 9.6 million eligible 

beneficiaries, which includes active military 

members and their families, military retirees 

and their families, dependent survivors, and 

certain eligible Reserve Component 

members and their families. 

In this constrained fiscal environment, 

growing health care costs will limit the 

Department’s ability to fund readiness 

requirements. From a historical perspective, 

the Department has seen health care costs 

grow from 4 percent of the Department’s 

base budget in 1990 to almost 10 percent in 

20121

. Since TRICARE’s original establishment, Congress has also dramatically limited

beneficiary contributions.

The MHS Quadruple Aim:

The Quadruple Aim forms a strategic 

construct that drives MHS planning. 

 1 Congressional Budget Office Report: Approaches to Reducing Federal Spending on Military Health Care, January 2014

Figure 5-4. Military Health Care Costs/1

(Dollars in Billions)

Program FY 2015

Request

Defense Health (DHP) 32.0

Military Personnel /2 8.6

Military Construction /2 0.5

Health Care Accrual /3 6.2

Unified Medical Budget 47.4

Treasury Receipts for Current 

Medicare-Eligible Retirees /4 9.3

Numbers may not add due to rounding

1/ Excludes OCO funds and other transfers. FY 2015 DHP and 

Health Care Accrual amounts include estimated savings from 

TRICARE benefit proposals of $92 million and $727 million, 

respectively. 2/ Funded in Military Personnel & Construction accounts.

3/ Includes health care accrual contributions into the MedicareEligible Retiree Health Care Fund to provide for the future 

health care costs of our personnel currently serving on active 

duty – and their family members – when they retire. 4/ Transfer receipts in the year of execution to support 2.3 million 

Medicare-eligible retirees and their family members. 
Overview – FY 2015 Defense Budget 

CHAPTER 5 PURSUE COMPENSATION CHANGES

5-9

• Readiness: Ensuring that the total military force is medically ready to deploy and that 

the medical force is ready to deliver health care anytime, anywhere in support of the full 

range of military operations, including humanitarian missions.

• Population Health: Reducing the causes of poor health, 

encouraging healthy behaviors and decreasing the likelihood 

of illness through focused prevention and the development of 

increased resilience.

• Experience of Care: Providing a care experience that is 

patient- and family-centered, compassionate, convenient, 

equitable, safe, and always of the highest quality.

• Responsibly Managing the Total Cost of Health Care: 

Creating value by focusing on quality, eliminating waste, and 

reducing unwarranted variation; considering the total cost of care over time, not just the 

cost of an individual health care activity.

The Quadruple Aim drives an integrated continuum of preventive and curative services to 

eligible beneficiaries and establishes accountability for health outcomes and cost while 

supporting the Services’ warfighter requirements. Key initiatives support the Quadruple Aim:

• Promote more effective and efficient health care operations through enhanced 

enterprise-wide shared services.

• Deliver more comprehensive primary care and integrated health services using 

advanced patient-centered medical homes.

• Coordinate care over time and across treatment settings to improve outcomes in the 

management of chronic illness, particularly for patients with complex medical and social 

problems.

• Match personnel, infrastructure, and funding to current missions, future missions, and 

population demand.

• Establish more inter-Service standards and metrics and standardize processes to 

promote learning and continuous improvement.

• Create enhanced value in military medical markets using an integrated approach 

specified in 5-year business performance plans.

• Align incentives with health and readiness outcomes to reward value creation. 

• Improve population health by addressing health determinants. 

Health Care Costs: 

Controlling health care costs is a priority for the Department. In recent years, additional 

emphasis was placed on achieving savings and efficiencies within the operational environment 

of the MHS. This has been a success story, with roughly $3 billion in savings per year achieved 

through programs like Federal Ceiling Pricing (a discount drug program) and the Outpatient 

Prospective Payment system (a transition to more favorable Medicare rates for private 

hospitals). 

However, these internal savings initiatives are not enough to curb the expected increase in 

health care costs the Department expects to experience in the coming years. Therefore, DoD 

must pursue reasonable health benefit reform now as part of a balanced approach to cost 

containment. Congress permitted small increases in the TRICARE Prime enrollment fees for 
Overview – FY 2015 Defense Budget 

CHAPTER 5 PURSUE COMPENSATION CHANGES

5-10

working age retirees and some adjustments to retail and mail order pharmacy co-pays in the

FY 2012 and FY 2013 budget and legislative cycles, but these changes are not enough to 

sustain the benefit in the long-term. For example, when TRICARE was fully implemented in 

1996, a working age retiree’s family of three who used civilian care contributed on average 

roughly 27 percent of the total cost of its health care. Today that percentage has dropped to 

less than 11 percent. While health care costs have doubled or tripled over this time frame, a 

family’s out-of-pocket expenses, including enrollment fees, deductibles and cost shares, has 

grown by only 30 to 40 percent.

Health Benefit Reform: 

The Department has submitted several reform plans since 2005, largely to control health care 

costs. These plans have generally been met with resistance in Congress and opposition from 

military and veteran service organizations. 

In the FY 2015 President’s Budget submission, the DoD seeks to leverage proven utilization 

management controls by building a shared commitment to health care while offering 

beneficiaries more flexibility and choices. The Department is proposing a consolidated 

TRICARE health plan to replace the TRICARE Prime, Standard, and Extra health insurance-like 

plans. Following are key elements of the consolidated health plan:

• A Simpler System – provides beneficiaries with open access to providers and less 

complexity in their health plan. 

• No Change for Active Duty – who would maintain priority access to health care without 

any cost sharing and would still require authorization for civilian care. 

• Cost shares – will depend on beneficiary category (excluding active duty) and care 

venue and are designed to minimize overutilization of costly care venues, such as 

emergency departments. Cost shares would be the lowest in MTFs, higher in the 

network, and highest out of network, which will facilitate the effective use of military 

clinics and hospitals and thereby improve the efficiency of our fixed facility cost structure. 

• Participation Fee – for retirees (not medically retired), their families, and survivors of 

retirees (except survivors of those who died on active duty). They would pay an annual 

participation fee or forfeit coverage for the plan year. 

• Open Season Enrollment – similar to most commercial plans, participants must enroll for 

a 1-year period of coverage or lose the opportunity. 

• Catastrophic Caps – which have not gone up in 10 years would increase slightly but still 

remain sufficiently low to protect beneficiaries from financial hardship. The participation 

fee would no longer count towards the cap.

• Medically retired members and their families and survivors of those who died on active 

duty would be treated the same as Active Duty Family Members with no participation 

and lower cost shares. 

• Tables 1 – 4 in Figure 5-5 below provide additional details on the Consolidated 

TRICARE Health Plan.

In addition to consolidating TRICARE Prime, Standard, and Extra, the Department proposes to:

• Increase co-pays for pharmaceuticals (excludes active duty service members). While 

the FY 2013 National Defense Authorization Act included some adjustments to the 

TRICARE pharmacy co-pay structure and initiated a pilot program requiring the use of 

mail order to refill maintenance medications for TRICARE-for-Life (TFL) beneficiaries, 
Overview – FY 2015 Defense Budget 

CHAPTER 5 PURSUE COMPENSATION CHANGES

5-11

the Department believes additional adjustments are necessary to fully incentivize the 

use of mail order and generic drugs. The proposed pharmacy changes in the FY 2015

budget are phased-in over a 10-year period, and prescriptions will continue to be filled at 

no cost to beneficiaries at MTFs. In addition, the proposal requires that all prescriptions 

for long-term maintenance medications (e.g., blood pressure, cholesterol) must be filled 

through the MTFs or the TRICARE mail order pharmacy. Table 5 displays the proposed 

co-pays for prescriptions filled through the TRICARE retail and mail order pharmacy 

programs.

• Implement an enrollment fee for new TFL beneficiaries (grandfathers those already 

Medicare-eligible at enactment). Like almost all Americans, upon reaching age 65, 

TRICARE beneficiaries must enroll in Medicare and begin paying Medicare Part B 

(outpatient care coverage) premiums. With Part B coverage, Medicare typically covers 

only 80 percent of normal health care costs and most people choose to be covered by 

“Medigap” or employer-sponsored retiree health insurance to cover the additional costs 

as well as providing some prescription drug coverage. Enacted in 2001, the TFL 

program acts as a second payer plan for TRICARE beneficiaries covering the costs not 

paid by Medicare. Although the average “Medigap” plan with comparable coverage 

carried premiums $2,100 per individual in 2009, there are currently no annual fees for 

TFL coverage. As part of the FY 2015 President’s Budget, the Department is again 

proposing to implement modest annual fees for TFL coverage, but the proposal will 

grandfather TFL beneficiaries in the program prior to enactment. The TFL enrollment 

fees will be phased in over a 4-year period and will be based on a percentage of the 

beneficiary’s military gross retired pay up to an annual fee ceiling with indexing to retiree 

COLA after FY 2018. There will be a separate fee ceiling specifically for General/Flag 

Officers. Table 7 displays the proposed TFL fee structure by fiscal year.

Despite these changes, DoD still offers a comprehensive health benefit at a lower cost than 

most other employer sponsored health benefits plans. Even after the proposed changes, 

TRICARE will remain one of the best health benefits in the United States, with lower out-ofpocket costs than other employers. It is important to note that the scope of benefits is not 

changing, and the Department will continue to invest in those programs and services critical to 

sustaining a strong Military Health System, like Medical readiness and support to wounded 

warriors and their families.

Figure 5-5. TRICARE Proposal Tables

Table 1 – Consolidated TRICARE Health Plan Participation Fee Rates (Plan Year) 

Consolidated TRICARE Health Plan Participation Fee (inflated annually by cost of living adjustment 

(COLA) percentage)

Non-Medicare eligible 

beneficiary $286 individual/ $572 family ( as of 1 January 2016)

Medicare eligible beneficiary

(TRICARE for Life) See Table 7

Note 1. Retirees (not medically retired), their families, and survivors of retirees. 
Overview – FY 2015 Defense Budget 

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Table 2 – Outpatient Cost Sharing for Consolidated TRICARE Health Plan effective January 1, 2016

TRICARE Network and 

Military Treatment Facility Out-of-Network

Services

Active Duty 

Family Members 

E4 & below/

E5 & above a Retirees and Family a

Active Duty 

Family 

Members a

Retirees 

and Family a

Clinical preventive 

services b $0 $0 $0 $0

Primary care visit $0/0 MTF visit 

$10/15 network visit

$10 MTF visit 

$20 network visit

20% c 25% c

Specialty care visit

(including 

PT, OT, speech)

$0/0 MTF visit 

or network BH group visit

$20/25 network visit

$20 MTF visit 

or network BH group visit

$30 network visit

20% c 25% c

Urgent care center $0/0 MTF visit 

$25/40 network visit

$30 MTF visit 

$50 network visit

20% c 25% c

Emergency department $0/0 MTF visit 

$30/50 network visit

$50 MTF visit 

$75 network visit

20% c 25% c

Ambulance $10/15 trip, 

MTF or network

$20 trip, 

MTF or network

20% c 25% c

DME, prosthetics, 

orthotics, & supplies

10% of negotiated 

network fee

20% of MTF cost or 

network negotiated fee

20% c 25% c

Ambulatory surgery $0/0 MTF 

$25/50 network

$50 MTF 

$100 network

20% c 25% c

a. No cost shares for services received by TFL beneficiaries that are covered by both Medicare and TRICARE.

b. No cost shares for clinical preventive services as selected by the Affordable Care Act

c. percentage of TRICARE maximum allowable charge after deductible is met

Note: MTF – military treatment facility. PT – physical therapy; OT – occupational therapy; DME – durable medical 

equipment

Table 3 – Inpatient Cost Sharing for Consolidated TRICARE Health Plan effective January 1, 2016

TRICARE Network and 

Military Treatment Facility Out-of-Network

Services

Active Duty 

Family Members 

E4 & below/

E5 & above a Retirees and Family a

Active Duty 

Family Members 

E4 & below/

E5 & above a Retirees and Family a

Hospitalization 0 MTF 

admission

$50/80 network per

admission

$17.35 MTF per day 

$200 network per 

admission

20% b 25% b

Inpatient skilled 

nursing / 

rehabilitation c

$17/25 network per 

day 

$25 day $25/35 day $250 per day or 

20% a of billed charges 

for institutional services, 

whichever is less, 

plus 20% for separately 

billed services

a. No cost shares for services received by TFL beneficiaries that are covered by both Medicare and TRICARE

b. percentage of TRICARE maximum allowable charge after deductible is met

c. Inpatient skilled nursing / rehabilitation is generally not offered in MTFs for anyone other than service members. 
Overview – FY 2015 Defense Budget 

CHAPTER 5 PURSUE COMPENSATION CHANGES

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Table 4 – Deductible and Catastrophic Cap for Consolidated TRICARE Health Plan effective 

January 1, 2016

General Deductible (out-of-network care)

E1−E4 active duty family $150 individual/$300 family

E5 and others $300 individual/$600 family

Catastrophic Cap (per fiscal year)

Active duty family $1,500 network/$2,500 combined

Table 5 – Pharmacy Co-pays effective January 1, 2015

Active Duty Family Members/Retirees and Family Members

$3,000 network/$5,000 combined

Table 6 – Cost-Sharing Impact on Beneficiary Families (CY2016)

Current TRICARE 

Triple Option

Consolidated 

TRICARE Health Plan 

Active Duty Family a

(3 members not including service 

member) DoD cost $ 11,301 $ 10,588

Family cost $ 158 $ 364

Total $ 11,459 $ 10,952

% borne by family 1.4% 3.3%

Non-Medicare eligible Retiree 

Family b

(3 members, all under age 65) DoD cost $ 13,435 $ 12,626

Family cost $ 1,378 $ 1,526

Total $ 14,813 $ 14,152

% borne by family 9.3% 10.8%

Note 1. The analysis assumes an average mix of MTF and civilian care within each beneficiary category, and a 

weighted average of Prime and Non-Prime users for the current TRICARE triple option (or former Prime and NonPrime users), for the consolidated TRICARE health plan. For those using all civilian care, the percent borne by the 

family is slightly higher. 

Note 2. The annual employer health benefits survey published by Kaiser Family Foundation (KFF)/Health Research 

& Educational Trust (HRET) offers a useful benchmark for comparison (http://kff.org/health-costs/).

a. Active duty family cost-sharing structure also applies to transitional survivors, TRICARE Young Adult beneficiaries 

with an active duty sponsor, the Transitional Assistance Management Program, and TRICARE Reserve Select.

b. Retiree cost-sharing structure also applies to survivors, TRICARE Young Adult beneficiaries with a retired sponsor, 

and TRICARE Retired Reserve.

Retail Rx (1 month fill) Current Fee FY 15 FY 16 FY 17 FY 18 FY 19 FY 20 FY 21 FY 22 FY 23 FY 24

Generic $5 $5 $6 $7 $8 $9 $10 $11 $12 $13 $14

Brand $17 $26 $28 $30 $32 $34 $36 $38 $40 $43 $45

Non-Formulary $44

Mail-Order Rx (3 month fill)

Generic $0 $0 $0 $0 $0 $9 $10 $11 $12 $13 $14

Brand $13 $26 $28 $30 $32 $34 $36 $38 $40 $43 $45

Non-Formulary $43 $51 $54 $58 $62 $66 $70 $75 $80 $85 $90

Military Treatment Facilities No change -- still $0 co-pay

Available only on a limited basis
Overview – FY 2015 Defense Budget 

CHAPTER 5 PURSUE COMPENSATION CHANGES

5-14

Table 7 – TRICARE-for-Life Annual Family (Two Individuals) Enrollment Fees*

Retired Pay FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 

Percentage of Gross Retired Pay N/A 0.50% 1.00% 1.50% 2.00% 2.00%

Ceiling $0 $150 $300 $450 $600 $614

Flag Officer Ceiling $0 $200 $400 $600 $800 $818

* Individual fees are 50 percent of family fees (e.g., 1 percent of GRP in FY 2017 and after). Ceilings indexed to retiree COLA after

FY 2018

STRENGTHENING MILITARY FAMILIES 

The Department of Defense will keep faith with our service members and their families, who 

have borne the burden of a decade of war, by providing Military Family Assistance programs 

designed to improve military life, including child care, non-medical counseling, and Morale, 

Welfare, and Recreation (MWR) programs. The Department recognizes the demands that 

continue to be placed on the All-Volunteer Force and their families, and remains committed to 

providing assistance. The Military Services recognize the need to continue their investments in 

family assistance programs, funding vital family assistance to military members and their 

families on more than 300 installations worldwide.

All of the major initiatives to improve the quality-of-life of service members and their families are 

designed to mitigate the demands of military life – especially the challenges of deployments and 

frequent relocations. The Spouse Education and Career Opportunities program supports 

spouse educational and career development, recognizing that spouses’ lives are disrupted 

when they relocate every few years with their service member. Military OneSource, a 24/7 

information and assistance line, can link service members and their families with a non-medical 

counselor in their community for up to 12 free sessions per issue (no limits on financial issues) 

to address relationship issues or other stressful situations before they escalate. The MWR 

provides much needed recreational and fitness resources for all members of the family to 

promote overall well-being. These are just a few examples of the web of support designed to 

ensure that service members can confidently attend to the larger mission, knowing that their 

family is able to thrive.

The FY 2015 base budget includes $7.9 billion (Figure 5-6) for military family support programs. 

The request reflects a reduction from the FY 2014 enacted level, driven primarily by three 

factors: (1) the slowdown in the recapitalization of DoD schools to improve execution; 

(2) reductions in commissary subsidies, consistent with the Department’s compensation reform 

proposal, and (3) one-time increases in the FY 2014 enacted bill, which were not carried 

forward in the FY 2015 request. With the exception of the funding reductions for DoD schools 

and commissaries, the FY 2015 request maintains level funding from the FY 2014 President’s 

Budget request for military family support programs.

Figure 5-6 displays a summary of the Department’s FY 2013 – FY 2015 base budget for these 

programs. Key programs are: 

• Child Care and Youth Programs: Includes funding for child care providers, child and youth 

development programs, serving over 200,000 children.

• Morale, Welfare, and Recreation: Includes funding for mission sustaining programs such as 

fitness centers, libraries, and single service member programs, voluntary education, tuition 

assistance, and recreation programs such as outdoor recreation and auto skills centers. 
Overview – FY 2015 Defense Budget 

CHAPTER 5 PURSUE COMPENSATION CHANGES

5-15

• Warfighter and Family Services: Includes funding for Family Support Centers, Armed 

Forces Exchanges, transition assistance, and for non-medical counseling support services 

for Active Duty, National Guard, and Reserve members and their families. Funding 

decrease for these services results from the planned drawdown and projected reductions in 

military end strength.

• Commissary: Includes funding for DeCA to operate 243 commissary stores on military 

installations worldwide, employing a workforce of over 14,000 civilian full-time equivalents 

(FTEs). 

• Department of Defense Education Activity (DoDEA) Schools: Includes funding to support 

the education of 86,175 students in 182 schools (54,588 students in 119 schools in 

12 countries and 31,587 students in 63 schools in 7 states, Puerto Rico, and Guam). The 

DoDEA reductions to infrastructure investments, accounting for nearly 90 percent of the 

overall reduction in FY 2015, allow for additional force structure changes, a slowdown in the 

recapitalization of DoD schools to improve execution, and increased efforts to repair instead 

of replace schools where more economically prudent.

• Spouse Employment: Provides funding for the Spouse Employment and Career 

Opportunities Program, which includes funding tuition assistance for eligible military 

spouses through the My Career Advancement Accounts program, employment counseling, 

and assistance to all military spouses to obtain employment and career opportunities 

through the Military Spouse Employment Partnership.

Figure 5-6. Military Family Support Programs

(Dollars in Billions, Base Budget only)

Program FY 2013

Actual

FY 2014

Request

FY 2014

Enacted

FY 2015

Request

Child Care and Youth Programs 1.2 1.2 1.3 1.1

Morale, Welfare and Recreation 1.8 1.3 1.5 1.4

Warfighter and Family Services 1.9 1.7 2.0 1.9

Commissary 1.4 1.4 1.4 1.1

DoDEA Schools 2.5 2.8 2.8 2.3

Military Spouse Employment 0.1 0.1 0.1 0.1

Total 8.8 8.5 9.0 7.9

As the Department continues to reshape its forces for current and future missions, it is 

committed to sustaining a balanced portfolio of family assistance programs that are fiscally 

sustainable and continue to promote service member and family readiness. The overall funding 

for family assistance programs was made strategically, based on the number of service 

members and families served, but without degradation in the quality of the programs provided.

TRANSITIONING FROM SERVICE MEMBER TO VETERAN

The redesigned Transition Assistance Program (TAP) provides information and training to 

ensure service members leaving military service are prepared for their next step, whether 

pursuing additional education, finding a job in the public or private sector, or starting a private 

business. The TAP includes an outcome-based curriculum on goals, plans, and success (GPS) 

known as Transition GPS that transforms the way the Department prepares service members 

who are transitioning to civilian life. Career Readiness Standards (CRS) are at the heart of the 
Overview – FY 2015 Defense Budget 

CHAPTER 5 PURSUE COMPENSATION CHANGES

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TAP redesign. Just as Service members must meet military mission readiness standards while 

on Active Duty, Service members meet CRS before their transition to civilian life. The 

Departments of Defense, Veterans Affairs and Labor, and the Small Business Administration, 

advised by the Department of Education, deliver services to enable service members to be 

“career ready.” Shortly before they depart the military, service members demonstrate these 

standards through a verification process called Capstone that includes an opportunity to 

connect service members with agency partners who provide them support as veterans.

One of the biggest changes included in the TAP redesign is that participation in specific training 

sessions to prepare for separation, which are the Pre-Separation Counseling session, the VA 

Benefits Briefings, and the DOL Employment Workshop, is now mandatory for all Service 

members including reservists and Guardsmen separating after 180 days of continuous Title 10 

active duty, per the VOW to Hire Heroes Act of 2011, codified in Chapter 58, Title 10, 

U.S. Code. 

Due to the rapid pace of implementation, the Department is supporting the increased resource 

requirements of the redesigned program within existing resources.

SUPPORTING DOD CIVILIANS 

The FY 2015 budget supports a properly 

sized and highly capable civilian workforce 

that is aligned to mission and workload. 

Civilian personnel perform key functions for 

the Department that directly support our 

military and readiness. Some of the critical 

functions performed by civilians include 

equipment maintenance, medical care, 

family support, and base operating 

services. Civilians also play a primary role 

in intelligence and the expanding cyber 

requirements. The budget request supports 

a civilian workforce appropriately sized and 

shaped to reflect changes to the 

Department’s reduced force structure. 

While maintaining training and readiness

levels to support the All-Volunteer Force and provide services to their families, this workforce 

recognizes evolving critical demands like cyber and guards against an erosion of organic skills 

and an overreliance on contracted services.

Civilian workforce reductions in the FY 2015 budget reflect an analytically based workforce-toworkload review designed to preserve mission essential skills and capabilities. Changes reflect 

Component-identified opportunities for reshaping their civilian workforces through realignments 

and workload reductions consistent with Departmental strategies, and with due consideration of 

statutory total force management and workload sourcing mandates.

The Department estimates the number of civilian FTEs∗ will decline from 755 thousand in

FY 2014 to 749 thousand in FY 2015, a 1 percent decrease. The Military Services and Defense 

Agencies will begin to shape the workforce to reflect the changing post-Afghanistan needs and 

 ∗ Excludes Cemeterial Expense and Foreign National Indirect Hire FTEs.

Figure 5-7. Civilian FTEs/1

FTEs in 

Thousands

FY 2014 

Estimate

FY 2015 

Request

Percent 

Change

Army 249.5 245.1 -2%

Department of Navy 201.3 203.5 +1%

Air Force 168.4 167.5 -1%

Defense-wide 136.1 133.0 -2%

Total DoD 755.4 749.1 -1%

U.S. Direct Hires 742.3 733.8 -1%

Foreign Direct Hires 13.0 15.3 +18%

Numbers may not add due to rounding

1/ Excludes 35,517 of Foreign National Indirect Hire (FNIH) 

FTEs in FY 2014 and 32,419 in FY 2015. 
Overview – FY 2015 Defense Budget 

CHAPTER 5 PURSUE COMPENSATION CHANGES

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a declining military force. The need for some skills, such as cyber, disability evaluation, and 

auditing, will increase. Other skillsets directly related to the war, such as skills supporting depot 

maintenance and base support for military end strength, will decrease over time. Actions may 

include offering early out incentives and temporary suspension of recruitment actions to allow 

the Military Services and Defense Agencies to more fully assess the impact of mission changes 

and the introduction of process efficiencies on the workforce composition. 

The Department will continue to support the civilian workforce as skills are reshaped. The

FY 2015 request includes a modest civilian pay raise of 1 percent. The Department remains 

concerned about its ability to attract and retain a highly qualified civilian workforce after 3 years 

of a pay freeze. Emphasis will be placed on civilian education, training, and leadership 

development. Efficiencies and flexibilities for employees will be promoted through flexible work 

schedules and the use of telework. The Department continues to value not only the military 

personnel who keep us safe, but also the civilians who support the military and deploy with the 

military.
Overview – FY 2015 Defense Budget 

CHAPTER 5 PURSUE COMPENSATION CHANGES

5-18

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Overview – FY 2015 Defense Budget 

CHAPTER 6 PURSUE INVESTMENTS IN MILITARY CAPABILITIES

6-1

6. PURSUE INVESTMENTS IN MILITARY CAPABILITIES

Acquisition Summary

The Department maintains a healthy Science and 

Technology (S&T) program of $11.5 billion to invest in 

future technologies, and an overall Research, 

Development, Test, and Evaluation (RDT&E) portfolio of

$63.5 billion, an increase of $0.7 billion over FY 2014

enacted; the procurement portfolio of $90.4 billion, a 

decrease $2.0 billion from FY 2014 enacted, reflects the 

difficult trades-offs that were necessary in the current 

fiscal climate but continues to fund the critical weapons 

systems needed to enhance warfighting capability.

Figure 6-1. Investments 

$ in billions

Weapons Category FY 2014

Enacted

FY 2015

PB Request Change

Aircraft and Related Systems 42.4 40.0 -2.4

C4I Systems 6.2 6.6 0.4

Ground Systems 7.4 6.3 -1.1

Missile Defense Programs 8.7 8.2 -0.5

Missiles and Munitions 9.5 9.0 -0.5

Mission Support 48.5 44.4 -4.1

Science & Technology (S&T) 12.0 11.5 -0.5

Shipbuilding and Maritime Systems 23.0 22.0 -1.0

Space-Based Systems 6.2 6.2 --

Sub-Total 163.9 154.2 -9.7

Rescissions -8.7 -0.3 8.4

Total 155.2 153.9 -1.3

Numbers may not add due to rounding (Includes: Procurement, RDT&E, and the NDSF accounts)

The FY 2015 President’s Budget includes recommendations to terminate or restructure 

weapons systems acquisition programs that are experiencing significant developmental

problems, unsustainable cost growth, and inefficient or ineffective operations, and realign the 

funding to higher priority national security requirements. This includes the termination of the 

Army Ground Combat Vehicle (GCV) program, divestiture of the Army Kiowa Warrior Helicopter 

as part of Army’s restructure of its aviation force, and the Air Force’s delay of the Combat 

Rescue Helicopter (CRH) program. 

Major Weapons Programs

The Department pursues numerous major weapons programs. Some are described in later 

portions of this section; others are described in the Military Departments’ summaries presented 

in Section 7 of this document. The following table (Figure 6-2) summarizes the top 20 DoD 

weapon programs as measured by their total procurement and RDT&E funding in the FY 2015 

budget. The website, http://comptroller.defense.gov/budgetmaterials/budget2014.aspx#press, 

Key Initiatives

• Missile Defense Programs

• Space-Based Systems

• Cyberspace Operations

• Reserve Components 

• Science & Technology

• Defense Acquisition Workforce

Sustainment
Overview – FY 2015 Defense Budget 

CHAPTER 6 PURSUE INVESTMENTS IN MILITARY CAPABILITIES

6-2

displays the Department’s “Program Acquisition Costs by Weapons Systems” book that 

provides more detailed information.

Figure 6-2. Major Acquisition Programs

$ in Billions; Includes RDT&E and Procurement funding; includes OCO funds in FY 2014

FY 2014 FY 2015

Qty $ Qty $

Aircraft

MQ-9 Reaper UAS 20 0.5 12 0.6

C–130J Hercules 17 1.8 14 1.4

F–35 Joint Strike Fighter 29 7.5 34 8.3

V–22 Osprey 23 1.8 19 1.6

AH–64E Apache Helicopter 46 1.0 25 0.8

CH–47 Chinook Helicopter 38 1.3 32 1.1

UH–60 Black Hawk Helicopter 70 1.3 79 1.4

MH–60R Multi-Mission Helicopter 19 0.8 29 1.1

MH–60S Fleet Combat Helicopter 18 0.4 8 0.2

P–8A Poseidon 16 3.7 8 2.4

E–2D Advanced Hawkeye 5 1.3 4 1.2

Bombers Strategic Bombers -- 0.6 -- 0.7

F-22 Raptor -- 0.6 -- 0.5

KC-46A Tanker -- 1.6 7 2.4

Missile Defense

AEGIS AEGIS BMD System 52 1.5 30 1.4

THAAD THAAD BMD System 33 0.8 31 0.8

GMD GBI Midcourse Defense 1 0.9 -- 1.0

Missiles and Munitions

AMRAAM AMRAAM Missile 227 0.5 200 0.5

SM-6 Standard Missile 81 0.5 110 0.5

Trident II Trident II Missile Mods -- 1.5 -- 1.5

Ships

CVN 78 FORD Aircraft Carrier -- 1.7 -- 2.1

DDG 51 AEGIS Destroyer 1 2.3 2 3.1

LCS Littoral Combat Ship 4 2.4 3 2.1

SSN 774 VIRGINIA Submarine 2 6.7 2 6.3

OR SSBN -- 1.1 -- 1.3

Space

AEHF AEHF Satellite -- 0.6 -- 0.6

EELV EELV Launch Vehicle 5 1.4 3 1.4

GPS Global Positioning System 2 1.2 1 1.0

SBIRS SBIRS Satellite -- 0.8 -- 0.8
Overview – FY 2015 Defense Budget 

CHAPTER 6 PURSUE INVESTMENTS IN MILITARY CAPABILITIES

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Terminations and Restructures

Army Ground Combat Vehicle (GCV) Program Termination

The Department determined that the GCV design concepts were not optimized for the future 

Army, and cancelled the program following Technology Development efforts in FY 2014. To 

mitigate some of the capability gaps left by the GCV cancellation, the Army funded additional 

capability enhancements for Bradley Infantry Fighting Vehicles, Abrams Tanks and Stryker 

Vehicles. The Army also funded technology maturation and preliminary design efforts for a 

Future Infantry Fighting Vehicle.

Army Aviation Force Restructure

In the FY 2015 budget, the Army restructures its aviation force to simplify training and 

maintenance requirements by reducing aircraft types from 7 to 4, to improve overall fleet 

efficiency and mission effectiveness, and to optimize roles and missions for the Army National 

Guard and Army Reserve. The plan is cost neutral across the Future Years Defense Program 

(FYDP), but yields significant savings in operations and sustainment and avoids future fleet 

modernization costs. The Army’s restructure of its aviation plan:

• Divests the aging OH-58 Kiowa Warrior over the next few years, beginning with the 

termination of the Cockpit and Sensor Upgrade Program and the discontinuation of all 

major modifications. Replaces the lost capacity with former Guard and Reserve AH-64 

Apaches and Unmanned Aerial Vehicles in the Active force.

• Performs the armed reconnaissance mission with upgraded AH-64 Apaches transferred 

from the National Guard and Army Reserve teamed with Unmanned Aerial Vehicles in 

the Active force.

• Redistributes all AH-64 Apaches from the National Guard and Army Reserve to the 

Active force to better align with needed training, availability, and operating tempo 

(OPTEMPO) demand. The FY 2015 request includes 25 AH-64E(A) Remanufacture

aircraft. 

• Increases UH-60 Blackhawks in the National Guard and Army Reserve for homeland 

defense and theater missions. The FY 2015 request includes 72 aircraft and supports 

the continuation of the 5-year multi-year contract (FY 2012 – FY 2016).

• Divests single-engine legacy aircraft in the training fleet and replace with UH-72 Lakota 

Light Utility Helicopters (LUH) from Active and Guard forces. To restore the training 

base with UH-72 Lakota LUHs, 100 additional aircraft will be procured over the next 2

years. The FY 2015 budget request is for 55 aircraft.

Air Force Combat Rescue Helicopter (CRH) Delay

Due to the funding constraints of the BBA, the FY 2015 budget delays the CRH program for

2 years to fully investigate lower cost options. There is no funding in the FY 2015 request for 

CRH; however, the development program is funded beginning in FY 2016. 

MISSILE DEFENSE PROGRAMS

The FY 2015 President’s Budget funds the development and deployment of robust ballistic 

missile defense capabilities to support the Administration’s priorities: protecting the United 

States homeland, deployed forces, allies, and partners. The budget includes $8.5 billion for 

missile defense, including $7.5 billion for the Missile Defense Agency.
Overview – FY 2015 Defense Budget 

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For homeland defense, the Department maintains its commitment to build out homeland 

defenses to 44 Ground-Based Interceptors (GBIs) by 2017. The next intercept test is planned 

for the 3rd Quarter of 2014 and will focus on Ground-based Midcourse Defense (GMD) system 

reliability and GBI performance. 

As the United States focuses on threats from the Asia-Pacific region and the Middle East, the 

Department continues to support the European Phased Adaptive Approach (EPAA), which is 

designed to protect U.S. deployed forces and European North Atlantic Treaty Organization 

(NATO) Allies forces from ballistic missile attacks. The Department met its objectives for EPAA 

Phase I by deploying Aegis Ballistic Missile Defense (BMD) ships in the Mediterranean Sea; a 

land-based radar in Turkey; and Command, Control, Battle Management and Communications 

system at Ramstein Air Force Base in Germany in 2011. Phases 2 and 3 include deploying four 

BMD-capable Aegis ships to Rota, Spain (2014-2015), and deploying Aegis Ashore capabilities 

to Romania in 2015 and Poland in 2018. Aegis ashore will be capable of launching Standard 

Missile-3 (SM-3) Blocks IA, IB, and IIA (delivery in 2018) variants.

Changes in the FY 2015 President’s Budget request include:

• Begins a program to develop a new Kill Vehicle (KV) for the GBI. The President’s 

Budget request includes $99.5 million to design a common KV that will be built with a 

modular, open architecture and designed with common interfaces and standards, 

making upgrades easier and broadening the vendor and supplier base. The KV will 

improve reliability, be more producible and cost-effective, and will eventually replace the 

KV on the current GBI fleet.

• Begins development of a Long Range Discriminating Radar (LRDR), with the first 

capability increment planned for deployment in 2020. The President’s Budget request 

includes $79.5 million for this new long-range, mid-course tracking radar, which will 

provide persistent coverage and improved discrimination capabilities against threats to 

the homeland from the Pacific theater. 

• Invests in discrimination initiatives to address ballistic missile threats that are expected 

to increase in numbers and complexity.

The FY 2015 President’s Budget request also:

• Procures an additional Terminal High-Altitude Area Defense (THAAD) battery, bringing 

the total number of batteries to seven; and procures 31 THAAD interceptors in 2015. 

• Procures 70 new Missile Segment Enhancement (MSE) missiles. The MSE is a 

significant evolutionary improvement over the Patriot Advanced Capability-3 (PAC-3) 

missile, and provides greater agility and lethality.

• Completes U.S. contributions to the Israeli Iron Dome system to defeat short range 

missiles and rockets. Continues support for the Arrow Weapon System and the David’s 

Sling Weapon System.

• Continues conversion of Aegis ships to provide BMD capability, and procures 

30 SM-3 Blk IB interceptors to be deployed on Aegis BMD ships and at the Romania 

Aegis Ashore site.

• Procures Patriot Modifications, including: Reliability/Availability/Maintainability 

Modifications, Recapitalization, Battery Command Post/Tactical Command System, 

PATRIOT Multi-Echelon Training.
Overview – FY 2015 Defense Budget 

CHAPTER 6 PURSUE INVESTMENTS IN MILITARY CAPABILITIES

6-5

SPACE-BASED SYSTEMS

The FY 2015 President’s Budget request includes $7.2 billion for the DoD Space Investment 

Programs. For FY 2015, the Department modified and re-phased a number of space programs 

that are reflected in several key program initiatives that leverage planning for future follow-on 

systems, develop a more resilient space architecture in the face of emerging threats, and take 

advantage of operational benefits associated with support to the warfighter. 

In keeping with Departmental strategic guidance, the Space Based Infrared System (SBIRS), 

Advanced Extremely-High Frequency (AEHF), and Global Positioning System (GPS) are 

utilizing Space Modernization Initiative (SMI) investments to improve affordability and capability 

for these mission areas in order to remain competitive in the strategic environment. The SBIRS, 

AEHF, and GPS have developed SMI strategies to invest in program efforts that create trade 

space for future acquisition decisions through investments to sustain or improve their current 

Programs of Record and to plan for the future by exploring affordable technology alternatives 

and architectures. Depending on several factors such as the health of the constellation, number 

of satellite builds, parts obsolescence, and technology breakthroughs, each SMI investment 

plan addresses program-specific challenges and threats to ensure continued United States 

dominance in space.

The Department is delaying the GPS-III space vehicle procurement timeline to reflect the 

on-orbit constellation’s increasing operational service life. Although this action moves the 

procurement of three GPS-III satellites outside the FYDP, the new constellation profile will not 

impact DoD’s ability to maintain 24 on-orbit GPS satellites to provide worldwide Positioning, 

Navigation, and Timing (PNT) coverage. The FY 2015 President’s Budget request includes 

$1.0 billion for the procurement of GPS satellite # 9, advance procurement of GPS satellite #10, 

and the development of capabilities for the Operational Control System and the Military GPS 

User Equipment.

The Department also requests funding for programs such as Space Fence, Weather Satellite 

Follow-on, and numerous other classified initiatives. The Department is also investing in 

sustainment of critical space technology development and critical elements of the space 

industrial base.

The FY 2015 President’s Budget request includes $1.4 billion for the Evolved Expendable 

Launch Vehicle (EELV) program, which includes the procurement of 3 launch vehicles. The 

request has been adjusted to reflect the substantial savings realized from the December 2013 

firm fixed price contract, which locks in costs through FY 2017 for 36 launches of Atlas 5 and 

Delta 4 rockets (including four heavy rockets), and associated launch services. The Department 

also adjusted the profile for the EELV program based on the adjustments mentioned above in 

the GPS-III procurement schedule and the removal of planned funding for dual-launch 

capability. Finally, the Department is leveraging economic order purchasing to reduce costs 

and stabilize the United States space industrial base and has also established a process for 

new entrants into the marketplace to obtain more competition in space launch.

CYBERSPACE OPERATIONS

The FY 2015 President’s Budget request of $5.1 billion continues to fully support defensive and 

offensive cyberspace operations capabilities and to develop the Cyber Mission Forces initiated 

in FY 2013. 

The unique attributes of cyberspace operations require trained and ready cyberspace forces to 

detect, deter, and, if directed, respond to threats in cyberspace. Securing and defending 

cyberspace requires close collaboration among Federal, state and local governments, private 
Overview – FY 2015 Defense Budget 

CHAPTER 6 PURSUE INVESTMENTS IN MILITARY CAPABILITIES

6-6

sector partners, and allies and partners abroad. This year’s budget continues the training and 

implementation of Cyber Mission Force teams to execute the cyber missions: National Mission 

Forces to focus on specific threat actors and prepare to counter cyber-attacks on the 

United States in the event of a contingency; Combat Mission Forces to support combatant 

commanders as they plan and execute full-spectrum military missions, and Cyber Protection 

Forces to secure, operate, and defend the Department’s networks and support military 

operations worldwide. 

Other cyberspace operations highlights in the FY 2015 President’s Budget are:

• Continues to support the construction of the Joint Operations Center for U.S. Cyber 

Command at Fort Meade, Maryland. Occupancy is scheduled for FY 2018.

• Continues to support cyberspace operational Science and Technology programs and 

other research and technology projects to develop the tools required by the cyber 

workforce to accomplish their mission.

• Continues to support defensive cyberspace operations providing information assurance 

and cyber security to the Defense networks at all levels.

• Reorganizes and augments personnel within the Combatant Commands to support the 

integration and coordination of cyberspace operations within their all-domain operations.

• Supports ongoing investments in the Department’s larger Information Technology 

budget to consolidate and standardize the Department's networks.

RESERVE COMPONENTS

The FY 2015 budget request supports the requirements for the Reserve Components (RC) 

(National Guard and Reserve) to meet the defense strategy (Figure 6-3). The FY 2015 

submission focuses on restoring the total force readiness levels impacted by sequestration in

FY 2013, while supporting the transition to a smaller military that is more agile and 

technologically superior. The RC plays an essential, efficient, and cost effective role in meeting 

our nation’s strategic defense goals. The Services organize, train, equip, resource, and employ 

the RC to support mission requirements 

utilizing the same standards as the Active 

Components via a “Total Force” perspective. 

The FY 2015 budget focuses on restoring 

readiness by providing trained, ready, and costeffective forces that can be employed on a 

periodic operational basis, while also ensuring 

strategic surge capabilities for large-scale 

contingencies or other unanticipated national 

crises. The FY 2015 funding levels achieve an 

appropriate balance between the Active and 

Reserve Components to rebalance the Joint 

Force for the 21st Century. These resourcing 

levels required the Department to impose hard 

choices and implement adjustments in current 

personnel end strength, force, and investment 

plans to balance capability, capacity, and 

readiness within the Joint Force. As a result,

the RC will maintain a high level of readiness 

and achieve proper balance and integration 

Figure 6-3. Reserve Component Funding*

($ in Billions)

Program (Base Budget) FY 2014 

Enacted

FY 2015 

Request

Army Reserve 8.2 8.0

Navy Reserve 3.4 3.2

Marine Corps Reserve 1.1 1.1

Air Force Reserve 5.7 5.2

Army National Guard 18.0 16.4

Air National Guard 10.1 10.0

Subtotal Reserve 18.4 17.4

Subtotal National 

Guard 28.1 26.4

Total 46.5 43.9

Numbers may not add due to rounding

* Includes Military Personnel, Operation & Maintenance, 

Military Construction Appropriation levels, and estimated 

Procurement funding excluding National Guard and

Reserve Equipment Appropriation (NGREA) funding
Overview – FY 2015 Defense Budget 

CHAPTER 6 PURSUE INVESTMENTS IN MILITARY CAPABILITIES

6-7

with the Active force. The Department recognizes the importance of effectively utilizing the 

RC’s capabilities to capitalize on the Total Force and enhance our agility and maximize our 

capability. Continued operational integration of the RC into steady-state, routine operations 

using non-emergency funding offers an opportunity for the RC to sustain and build critical 

capabilities alongside the Active force. Access authorities have been set in place to facilitate 

this concept. The RC as provided in the budget is both a strategic and operational asset that:

• Efficiently maximizes critical capabilities and capacities for meeting national defense 

strategy;

• Mitigates strategic risk at less cost than a large standing full-time force, while also 

reducing operational risk;

• Provides cost effective returns on significant DoD investment and the ability to retain that 

investment;

• Allows the RC to be part of the operational force as required in peacetime; the RC is part 

of the Service’s force generation models and provides available forces as part of the 

FY 2015 Global Force Management Allocation Plan; and

• Integrates more closely with, and reduces stress on the Total Force.

During the last decade, RC units and individuals have successfully performed across the full 

spectrum of military operations, and added significant strategic and operational value to the 

All-Volunteer Force. Continuing to operationally employ the RC in a non-contingency 

environment will efficiently maximize capabilities providing an available, trained, and equipped 

RC force for day-to-day operational utilization, homeland and Defense Support to Civil 

Authorities operations – as well as providing traditional strategic surge capacity in the RC for 

unanticipated events. Total Force 

capability is significantly enhanced 

utilizing the RC in both an operational 

and strategic capacity. Preventing 

and deterring conflict will necessitate 

the continued use of all elements of 

the Total Force. 

The DoD’s Ready Reserve totaling 

about 1.1 million members contributes 45 percent of total military end 

strength (Figure 6-4) at a cost of 

12 percent of the total base budget. 

In FY 2015, the Ready Reserve

consists of:

• 820,800 Selected Reserve

• 260,000 Individual Ready Reserve

• 2,400 Inactive National Guard

Since the September 11th terrorist attacks, over 890,000 Guard and Reserve members have 

been mobilized/served on active duty in support of Operations NOBLE EAGLE, ENDURING 

FREEDOM, IRAQI FREEDOM, and NEW DAWN, and over 900 have been killed in action. 

Domestically, over 50,000 National Guard responded to Hurricane Katrina and more recently 

more than 7,000 Guard and Reserve to Hurricane Sandy.

Figure 6-4. Reserve Component End Strength

(End Strength in Thousands)

Selected Reserve FY 2014

Enacted

FY 2015

Request

Army Reserve 202.0 202.0

Navy Reserve 59.1 57.3

Marine Corps Reserve 39.6 39.2

Air Force Reserve 70.4 67.1

Army National Guard 354.2 350.2

Air National Guard 105.4 105.4

Total 830.7 820.8

Numbers may not add due to rounding
Overview – FY 2015 Defense Budget 

CHAPTER 6 PURSUE INVESTMENTS IN MILITARY CAPABILITIES

6-8

In addition to contingency operations, Congress provided enhanced access authorities to order 

selected reserve component Service members to active duty for any preplanned operation 

(10 U.S.C. 12304b) or reserve forces for domestic emergencies (10 U.S.C. 12304A). These 

authorities further enable the Services to utilize the RC in more of a day-to-day operational role,

including by building partners’ capacity, and fully utilize capabilities provided by the RC across a 

broad range of requirements.

As the Services refine their force generation and rotational employment models, RC units will 

receive notification of pre-planned missions up to two years in advance. Innovative Force

generation models have streamlined mobilization, pre-deployment training, and post 

deployment processes to better prepare RC units and Service members; as well as support 

their families and employers’ needs.

The FY 2015 budget supports preparation of RC units and individuals to participate in missions, 

across the full spectrum of military operations, in a cyclic or periodic manner. This provides

predictability for the combatant commands, the Services, service members, their families and 

civilian employers, while increasing DoD’s capacity and ability to expand and contract forces. 

Lessons learned from operational use of the RC have been immense and operational 

integration of the RC over the last 12 years of persistent combat has enhanced our operational 

capability and sustainability.

Equipping and Basing Operational Reserve Forces

The FY 2015 budget requests $3.3 billion for RC equipment procurement funded by the Military 

Services as a subset of their procurement budget. The RC and their assigned units will have 

access to modern equipment to train at home station, for contingency/crisis response, and to 

react to domestic consequence management requirements. Access to modern equipment will 

facilitate operational use in non-contingency missions. Fielding and support of Critical Dual Use 

equipment (those items that are essential for both domestic and warfighting missions) will 

ensure the nation’s RCs can always answer the call.

The FY 2015 RC budget includes $427 million for military construction to meet both current and 

new mission requirements for RC operations, readiness, and training facilities. The budget also 

funds sustainment, which is essential to maintaining facilities at a level that supports readiness 

and preserves the substantial investment the country has made in infrastructure.

Family Support of the Guard and Reserve

The FY 2015 budget supports Family and Employer Support Programs that enhance the 

readiness of the Reserve Components. The Yellow Ribbon Reintegration Program, Employer 

Support of the Guard and Reserve, and Employment Initiative programs provide outreach, 

services, and career readiness assistance for RC service members and their families. These 

efforts remain essential support and readiness multipliers for our RC members, their families 

and employers, and at about $41 million for headquarters funding is adequate to support the 

ongoing programs.
Overview – FY 2015 Defense Budget 

CHAPTER 6 PURSUE INVESTMENTS IN MILITARY CAPABILITIES

6-9

Homeland Defense and Civil Support

Homeland Defense is the number one mission of the Department, and the RC plays a key role 

in it. The FY 2015 budget continues requisite support for the National Guard and Reserve’s 

critical role in responding to potential disasters, from terrorist attacks to domestic emergencies –

demonstrating that civil authorities continue to rely upon the Department of Defense for support 

in times of crisis. Local and community-oriented National Guard and Reserve units in every 

state, territory, and the District of Columbia are well positioned to make a substantive 

contribution to Homeland Defense and Civil Support missions. The most recent example of 

Reserve Component response to Defense Support to Civil Authorities request for Title 10 

capabilities under the new authority 12304(a) was exercised during Hurricane Sandy response 

to meet a Mission Assignment (MA) to provide unique capabilities (dewatering operations). 

The Department continues to work with the Department of Homeland Security and other Federal 

agencies, state governors, and others to define specific military requirements. The budget 

request funds the Air National Guard Continental U.S. Aerospace Control Alert missions 

(formerly known as Air Sovereignty), the Civil Support Teams, the Chemical, Biological, 

Radiological and Nuclear Enhanced Response Forces, and the Homeland Response Forces. 

Civil Military Programs

The FY 2015 budget request includes about $120 million for DoD’s Civil Military Programs 

(CMP) to support National Guard Youth Challenge Program and the Individual Readiness 

Training Program (IRT). The DoD STARBASE Program is being terminated in FY 2015 in order 

to support the Administration’s Science, Technology, Engineering and Mathematics education 

initiative. Collectively, CMP helps address the nation’s defense concerns related to the nation’s 

high school dropout rate, and application of military skills to assist remediation of the country’s 

infrastructure and basic medical support to underserved communities.

SCIENCE & TECHNOLOGY

The mission of the Department’s FY 2015 Science and Technology (S&T) Program is to invest 

in and develop capabilities that advance the technical superiority of the U.S. military to counter 

new and emerging threats. 

The FY 2015 President’s Budget overall request for S&T is $11.5 billion, which is 2.3 percent of 

the Department’s budget. Although the FY 2015 request is slightly lower than the FY 2014 

enacted amount of $12.0 billion, the Department’s S&T program remains strong and continues 

the focus on Anti-access/Area-denial, and the rebalance to the Asia Pacific region.

The FY 2015 President’s Budget includes:

• Maintaining a robust Basic Research program at $2 billion

• A modest increase to the Defense Advanced Research Projects Agency budget, now 

$2.9 billion (FY 2014 enacted, $2.8 billion), to develop technologies for revolutionary, highpayoff military capabilities.

• Additional funding for the President’s National Advanced Manufacturing Initiative at five 

centers to support the President’s National Network for Manufacturing Innovation plan and 

the National Economic Council’s manufacturing goals.

Overall S&T funding for the Army, Navy and Air Force are each approximately $2 billion.
Overview – FY 2015 Defense Budget 

CHAPTER 6 PURSUE INVESTMENTS IN MILITARY CAPABILITIES

6-10

A strong S&T investment enables the Department to focus on and align content to meet the 

defense strategy. This strategy will emphasize several missions with strong technology 

dimensions, including:

• Project Power Despite Anti-access/Area-denial Challenges ($2.0 billion) 

• Counter Weapons of Mass Destruction ($1.0 billion) 

• Operate Effectively in Cyberspace and Space ($0.9 billion)

• Electronic Warfare ($0.5 billion)

• High-speed Kinetic Strike ($0.3 billion)

DEFENSE ACQUISITION WORKFORCE SUSTAINMENT

The FY 2015 budget request of $212.9 million for the Defense Acquisition Workforce 

Development Fund (DAWDF) supports the strategic objectives and continuous improvement of 

the defense acquisition workforce. The DAWDF will fund the remaining new hires under the 

original initiative to rebuild workforce capacity from the 1990’s downsizing and help create a 

sufficiently sized future workforce for mission critical acquisition functions. The funding levels 

will support acquisition workforce professionalization, training, development, qualifications, and 

currency. Funded initiatives support the intent of the Defense Acquisition Workforce 

Improvement Act, the purpose of the 10 U.S.C. 1705 DAWDF, fulfilling strategic workforce 

planning requirements of 10 U.S.C. 115b, qualification and career path requirements of 10 

U.S.C. 1723, and strategic workforce objectives under the DoD Better Buying Power (BBP) 

initiative to achieve greater efficiency and productivity in Defense spending. Implementation of 

the 34 BBP initiatives, are dependent on a qualified and professional acquisition workforce. 

Continuous improvement and currency of the acquisition workforce throughout the career life

cycle is critical to achieving increased buying power while modernizing and resetting our military 

force, improving acquisition outcomes, and for ensuring technological superiority for the future.

Figure 6-5. Science & Technology Program 

($ in billions)

Program FY 2014

Enacted

FY 2015

Request

FY14 – FY15

Change

Basic Research (6.1) 2.2 2.0 -0.2

Applied Research (6.2) 4.6 4.5 -0.1

Adv Tech Dev (6.3) 5.2 5.0 -0.2

Total S&T 12.0 11.5 -0.5
Overview – FY 2015 Defense Budget 

CHAPTER 7 MILITARY DEPARTMENTS

7-1

7. MILITARY DEPARTMENTS

The Military Departments generally use several means to report to the Congress on their 

activities. Consistent with Title 10 Section 113 (c)(1)(A) each of the Military Departments is 

providing a summary of their FY 2015 Budget submission for inclusion in the OSD Budget 

Overview. Additional data are contained in Appendix A, Resource Exhibits.

DEPARTMENT OF THE ARMY OVERVIEW

Introduction

America’s Army stands at a pivotal point in history, challenged to reshape the force into one that 

is leaner, yet more capable of meeting national defense priorities while 32,000 Soldiers are 

actively engaged in Afghanistan and 115,000 Soldiers are regionally aligned or deployed in 

nearly 150 countries throughout the world. The Fiscal Year (FY) 2015 President’s Budget 

resources the Army’s plans for adapting to an increasingly uncertain environment while 

remaining the most professional and proficient land force in the world. America’s Army remains 

indispensable to the defense of the Nation – Preventing conflicts with expeditionary land forces 

that send an unmistakable signal of the Nation’s resolve; Shaping the strategic environment by 

returning stability to unstable environments or preempting strategic threats before they evolve 

into crisis; and Winning decisively when necessary with expeditionary, strategically adaptive and 

campaign-quality forces. 

As the Army shapes a force focused on meeting the Nation’s strategic land power requirements 

in an uncertain strategic environment, the reality of current and potential budget reductions 

continues to challenge the optimal path for balancing the requirements of a ready and modern 

Army. The Bipartisan Budget Act (BBA) of 2013, while capping Defense funding well below 

previously programmed levels for FY 2014 and FY 2015, provided predictability in funding levels 
Overview – FY 2015 Defense Budget 

CHAPTER 7 MILITARY DEPARTMENTS

7-2

for 2 years and relief from sequestration-level spending cuts. However, the funding levels 

represent a $7.7 billion reduction from the FY 2014 President’s Budget request, which 

documents the Army’s requirements. The FY 2015 budget continues a trend of decline from

FY 2013 and FY 2014. The FY 2013 funding was abruptly reduced by sequestration that 

directly impacted readiness in units not directly deployed or preparing to deploy in support of the 

war in Afghanistan, stationed in Korea, or the Global Response Force. Budget cuts forced the 

Army to cancel seven Combat Training Center (CTC) exercises, and ended the year with only 

two Brigade Combat Teams (BCT) ready to meet a non-assigned mission requirement. In

FY 2014, the Army focuses funding on assigned missions and a contingency force comprised of 

BCTs, Combat Aviation Brigade(s), and enablers. The FY 2014 appropriation funds 19 CTC 

rotations, and increases the readiness of non-contingency units.

Although there is a decrease in funding in FY 2015, the Army has prioritized BCT and Combat 

Aviation Brigade (CAB) readiness, maintained the number of CTC rotations and continued the 

rebuild of readiness from FY 2014 into FY 2015. However, due to the decrease in topline 

funding and a decrease in the number of units deploying and supported by Overseas 

Contingency Operations (OCO), the Army has taken risk in multi-functional Brigade and theater 

brigade readiness below FY 2014 levels in order to support BCT and CAB training. Additionally, 

other support activities such as facility readiness cannot be maintained at FY 2014 levels –

facility sustainment drops back from 77 percent in FY 2014 to 63 percent in FY 2015, which is 

roughly equal to the levels in the FY 2013 sequester. 

The Army’s approach to budget reductions is to resource near-term readiness under 

affordability constraints, with deliberate risk taken in modernization efforts and other dimensions 

of near-term readiness, including equipment and facilities sustainment. The Army cannot adjust 

manpower fast enough to achieve balance across readiness, force structure, and modernization 

in the near-term. The uncertainty of potential sequestration resuming in FY 2016 poses the 

possibility that balance will not be achieved until FY 2019, and full readiness not restored until

FY 2023 – after substantial reductions to force structure and end strength are realized.

Guided by the Secretary of the Army’s priority for balance and transition of the Army, several 

decisions are leading to change that will sustain land power in new ways, expending fewer 

resources. To meet budget reductions, the Army accelerated end strength reductions, 

projecting that the end of FY 2015 will find the Active component at 490,000 and the reserve 

component at 552,200, two years earlier than planned. Reduced end strength necessitates 

force structure changes in order to preclude hollow forces. By the end of FY 2015, the Army will 

have reorganized 32 BCTs in the Active Component and 28 BCTs in the Army National Guard, 

with 47 percent of the affected units undergoing change during the year

The Aviation Restructure Initiative (ARI), introduced in the FY 2015 President’s Budget will best 

position aviation assets to meet Army component and national needs under budget reductions. 

The ARI is an enterprise solution to the reality of increasing costs in aging aircraft and 

decreasing budgets to support increasing requirements. In FY 2015, the Army will begin to 

divest the oldest, least capable aircraft and retain the best, most capable aircraft. Restructuring 

increases the Army National Guard’s domestic response capability and optimizes the Army’s 

capacity to meet most COCOM requirements. 

The Army is the backbone of the Joint Force, providing ground forces, operational leadership 

and critical enablers such as mission command, aviation, missile defense, intelligence, 

engineers, logistics, medical, signal and special operations. These enabler capabilities are 

essential as the Nation rebalances to the Asia Pacific Region, while maintaining a critical 

presence in the Middle East and sustaining alliances and partnerships in Europe and the 

Americas.
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Over the last decade, the Army has relied on OCO funding for operational support directly 

related to the wars in Iraq and Afghanistan. Although most OCO funding was consumed in 

combat, some OCO funding enabled the reset of equipment returning from the war, with 

projections for OCO funding to complete the reset after full drawdown (estimated to be 3 years 

after the return of equipment). 

To restore a balanced force over time, the Army will reduce all of its components. The Active 

Army will continue to reduce from its war-time high of 570,000 to between 440,000 and 

450,000 Soldiers. The Army National Guard will continue its downsizing from a war-time high of 

358,000 to 335,000 Soldiers, and the Army Reserve will reduce from 205,000 to 

195,000 Soldiers. Depending on the fiscal and security environment, the Department will face a 

decision point in the near-term on whether or not to continue to reduce the size of the Army.

Priorities for 21st Century Defense Strategy 

The Army is transitioning to a smaller, more lethal fighting force that continues to contribute vital 

land forces trained in full spectrum operations; this transition shifts readiness focus from 

counterinsurgency that was critical in support of war to the capability to win decisively, if called 

upon to do so. The All-Volunteer Army remains the most highly trained and professional land 

force in the world--uniquely organized with the capability and capacity to provide expeditionary, 

decisive land power to the Joint Force, and ready to perform across the range of military 

operations to Prevent, Shape and Win in support of Combatant Commanders (COCOMs). 

During this transition to a smaller, more lethal land force, the Army will continue to support the 

priorities in the defense strategy with a trained and ready force. The following section outlines 

the Army’s contribution to key military missions.

Counter Terrorism and Irregular Warfare 

The Army will continue to participate with its partners and allies in Prevent and Shape 

operations that deter conflict. Enhanced BCT capabilities and military leaders experienced in 

war deliver critical capabilities to COCOMs in support of joint operations to counter terrorist 

activities and organizations around the globe. The FY 2015 budget supports this strategic 

priority by increasing Army Special Operations Forces (SOF) capabilities and regionally aligning 

and training of forces to prepare for future contingencies.

Deter and Defeat Aggression 

The Army possesses a lethal combination of capability and agility that strengthens U.S. 

diplomacy and represents one of America’s most credible deterrents against hostility. If 

necessary, a ready Army can defeat or destroy enemy forces, control land areas, protect critical 

assets and populations, and prevent the enemy from gaining a position of operational or 

strategic advantage. In the FY 2015 budget, the Army continues to invest in building decisive 

action capability in support of strategic missions, from power projection to deterring and 

defeating aggression. The dynamic combined arms capability upon which the Army is built 

strengthens credibility as a deterrent force and ensures defeat of any enemy once engaged. 

Project Power Despite Anti-Access/Area Denial Challenges

To support this strategic priority, the Army’s FY 2015 budget resources the provision of 

expeditionary units that are task-organized, scalable, and deployable from the platoon to corps 

levels. Mission-tailored forces are Army units manned, trained and equipped for conducting 

specified missions as directed by the COCOM. The Army maintains a responsive force posture 

through an effective mix of Total Force (Active Army, Army National Guard, and Army Reserve) 

capabilities and network of installations at home and abroad. Prepositioned Army equipment 
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strategically dispersed around the world enables rapid air deployment of Army combat and 

support forces in response to short or no notice missions. 

Counter Weapons of Mass Destruction

The Army continues to ensure preparedness for operations world-wide in a Chemical, 

Biological, Radiological and Nuclear (CBRN) environment. A leader of Chemical Weapons of 

Mass Destruction (CWMD) missions in the land domain, the Army provides the preponderance 

of trained and equipped forces to support Department of Defense (DoD) CWMD efforts in the 

homeland and overseas as part of joint and interagency requirements. The CBRN forces, along 

with integrated conventional forces, SOF, specialized Explosive Ordnance Disposal and missile 

forces provide the support for joint CWMD operations, including planning and regional support 

though all phases of COCOM Theater Campaign Plans. 

Operate Effectively in Cyberspace 

To meet the increasingly complex cyber threat, the Army is adapting to the increasing 

convergence between land and cyberspace operations at all levels of war. The Army, in 

increasing its capability through the cyber teams dedicated to defend military networks, provides

operational support to regional commanders and assistance to civil authorities. The U.S. Army 

Cyber Command (ARCYBER) will reach full operational end strength by the end of FY 2015 by 

developing forces needed to support COCOMs and the Nation, integrate within the Joint 

Information Environment (JIE), and integrate cyberspace operations with Army units down to the 

tactical edge.

Defend the Homeland and Provide Support to Civil Authorities

The Total Force defends the Homeland and provides support to civil authorities for a variety of 

complex missions. Soldiers from both the active and reserve components are actively engaged 

in the Homeland on a daily basis, in capacities ranging from serving as Defense Coordinating 

Officers in support of the Federal Emergency Management Agency to U.S. Army North leading 

and coordinating Army missions in support of civil authorities. The Army stands ready to 

conduct a no-notice response in support of civil authorities, particularly for a complex 

catastrophe requiring employment of a significant Army force. The Total Force provides the 

preponderance of forces for the DoD’s Chemical, Biological, Radiological and Nuclear 

Response Enterprise. Army National Guard air and missile defense units protect the Nation’s 

Capital and provide manning for Ground-Based Midcourse Defense (GMD) systems deployed in 

Alaska, California, and Colorado that deter and defeat missile attacks on the Nation. 

Provide a Stabilizing Presence 

The Army maintains a stabilizing regional presence, building and strengthening partner capacity 

and providing essential enabling capabilities to the Joint Force. Regionally aligned forces, 

bolstered by the unique, adaptable capabilities provided in mission-tailored forces, directly 

address this proactive engagement. Regionally aligned forces provide scalable, tailored 

capabilities to COCOMs in meeting Joint requirements. Forward-stationed Army forces in the 

Republic of Korea, Japan, Europe and the Persian Gulf Region, along with Army units based in 

the United States formally aligned with COCOMs, provide a unique capability to maintain 

relationships with allies and partners and respond to crises. 

Army forces build trust, foster long-term relationships through people-to-people engagements, 

gaining operational access through a wide variety of activities that include bilateral and 

multilateral exercises, theater security cooperation, and training. The Army’s Special Forces 

Groups provide unique and extraordinary regional expertise, as well as years of experience, to 
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the COCOMs. The Army National Guard, through the State Partnership Program, maintains 

long-term partnerships worldwide.

Conduct Stability and Counterinsurgency Operations 

The Army, subject to Department of State approval, conducts military engagements with foreign 

partners to promote specific U.S. security interests. The Army reinforces alliances, ensures or 

solidifies relationships with allies and partners, and supports shaping operations or training that 

are routine military and interagency activities performed to dissuade or deter potential 

adversaries. Support to COCOMs includes security cooperation requirements designed to 

develop partner nations’ military capabilities for self-defense and multinational operations 

through military-to-military engagements, security force assistance, security assistance, and 

exercises. The FY 2015 budget request funds continued support to unique missions that shape 

the environment through people-to-people engagements. 

Conduct Humanitarian, Disaster Relief, and Other Operations 

Within the U.S. and its territories, the Army provides support to national, state, and local 

authorities in Defense Support of Civil Authorities (DSCA). One of the most important elements 

of this support is the CBRN Response Enterprise (CRE). The Army provides a significant 

portion of the DoD CBRN response capabilities, especially in large-scale complex catastrophes, 

contributing a unique force multiplier for DSCA operations.

Department of the Army Objectives 

The Secretary of the Army’s top ten priorities and the Army Chief of Staff’s five strategic 

priorities frame the cultural change and focus on the future in preparing and sustaining land 

forces capable of preventing conflict, shaping the strategic environment, and, when called upon, 

fighting to win decisively. The topical discussions that follow highlight more specific details on 

the strategies that the Army incorporated in its FY 2015 budget request to produce results to 

achieve senior leader priorities. 

Adaptive Army Leaders for a Complex World 

As discussed above, today’s environment requires the education and further development of 

Army military and civilian leaders to grow the intellectual capacity for understanding the 

complexities of the contemporary security environment. The FY 2015 budget request invests in 

leader development as a priority to ensure availability of leader capacity to meet uncertain future 

demands: 8,900 officers will attend Intermediate Level Education (ILE); 7,500 Warrant Officers 

and 61,000 Non-Commissioned Officers (NCO) will attend professional developmental schools; 

150 officers will attend the School of Advanced Military Studies (SAMS); and increased 

resources fund Army civilian leader development. Focused leader development, improvements 

to the Civilian Education System and continued maturity of the Senior Enterprise Talent 

Management Program are all designed to build a more professional and competency-based

civilian workforce. 

A Globally Responsive and Regionally Engaged Army

Fewer resources translate to a smaller Army, which is undergoing change to build increased 

combined arms capabilities and the agility to support a wide range of COCOM requirements. 

The FY 2015 budget supports continued reorganization of the Infantry, Armor, and Stryker 

BCTs, adding a third maneuver battalion, while reducing from 38 to 32 BCTs and eliminating 

excess headquarters infrastructure in the active force. 

In the Department’s rebalance to the Pacific, the Army plays a critical role shaping the strategic 
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environment. The Secretary of the Army made bolstering Army activities in the Asia-Pacific 

region a top priority, recognizing that Army opportunities are natural given that seven of the 

world’s ten largest armies are located in the Asia-Pacific. The Pacific Pathways initiative 

leverages training opportunities and exercises with allies in this region to promote and 

strengthen partnerships. In the Pacific and other geographic theaters, the Army will employ the 

Total Force capabilities to influence the security environment, build trust, and gain access 

through rotational forces, multilateral exercises, military-to-military engagements, coalition 

training, and other opportunities.

Forward stationed Army forces in the Republic of Korea, Japan, Europe, and the Persian Gulf 

Region, along with Army units based in the United States that are aligned with COCOMs, 

provide a unique capability to maintain relationships with allies and partners and respond to 

crises. 

Scalable Forces/Leader Development

The Army is committed to retaining the deep experience among leaders and Soldiers from more 

than a decade at war and investing in civilian and professional military education to enhance the 

intellectual capacity throughout the Army. Adaptive leader development, with the goal of

retaining tactical competence while cultivating strategic perspective, is a top priority of the 

Secretary of the Army and the Chief of Staff, Army. The Army will grow the intellectual capacity 

among Soldiers and Civilians to understand the complex contemporary security environment. 

The Army’s concept for regionally aligned forces directly supports the provision of tailored, 

scalable unit packages in support of the COCOM. Aligning BCTs with geographic COCOMs 

enhances the depth of regional language and cultural knowledge so important to readiness at a 

regional level. Exercises that draw upon scalable forces build capability within budget 

constraints.

A Ready and Modern Army

The Army is committed to providing the Nation with the best trained and equipped Soldiers to 

meet changing demands. The balance required to build a ready and modern Army is 

challenged by the fiscal constraints in declining budgets. The Army will prioritize near-term 

readiness building while giving due consideration to necessary modernization efforts. The

FY 2015 Budget enables progress toward achieving balance as end strength reductions are 

accelerated to reduce manpower costs, the largest spending category in the Army budget. 

The FY 2015 budget request will allow the Army to rebuild the Army’s combined arms maneuver 

and wide area security capabilities validated through CTC exercises, shifting the focus of 

training from security assistance to rebuilding warfighting core competencies, with greater 

emphasis on the ability to rapidly deploy, fight, sustain, and win against complex state and nonstate threats in austere environments. The Army will leverage multi-echelon joint and 

multinational command post exercises, staff rides, simulations, and increased home station 

training to optimize readiness outcomes under fiscal constraints. Tough, realistic multi-echelon 

home station training using a mix of live, virtual, and constructive methods efficiently and 

effectively builds Soldier, leader, and unit competency over time. 

Modernization efforts will prioritize Soldier-centered modernization and procurement of proven 

technologies to ensure that Soldiers have the best weapons, equipment and protection to 

accomplish every mission, including a robust, integrated tactical network. The Army’s 

investment in Science and Technology will maximize the potential of emerging game-changing 

land power technologies to counter emerging threats and ensure that Army formations retain a 

decisive materiel edge and tactical overmatch across the range of military operations. The
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FY 2015 budget maintains investment in Science and Technology at FY 2014 levels, 

reprioritizing portfolio funding distribution to focus on efforts associated with Cyber 

Security/Science, Counter Anti-access/Area-denial, and Combat Vehicle Prototyping and Active 

Protection. 

Equipment Modernization will support the implementation of the resource-saving Army Aviation 

restructure, which reduces complexity by retiring the outdated Kiowa, utilizes the Light Utility 

Helicopter (LUH) for the training base and the Army National Guard, and centralizes the Apache 

in the Active component. The Army will terminate development of the Ground Combat Vehicle 

(GCV) when the Technology Demonstration phase is completed in FY 2014. Research and 

development of associated technologies will be pursued toward a Future Infantry Fighting 

Vehicle. The FY 2015 budget will allow the Army to fund network integration as well as 

survivability, lethality, mobility and protection improvements to the Abrams tank, and Bradley 

Infantry Fighting Vehicle, and Paladin self-propelled howitzer fleets. The FY 2015 budget also 

funds development of the Armored Multi-Purpose Vehicle to replace the obsolete M113 family of 

vehicles and the Joint Light Tactical family of vehicles. The Army is advancing network 

infrastructure and services, employing flexibility and versatility to modernize the network from 

the tactical edge to the installation. Through scalable modernization, the Army will reduce 

network gaps to support global mission demands and envisioned end states, such as distributed 

operations and live/virtual/constructive training. 

Soldiers Committed to Our Army Profession

Nowhere is readiness more critical than with the Soldiers and Civilians responsible for carrying 

out the Army’s missions in support of national defense. The Army supports the Total Force of 

Soldiers, Civilians, and Families across all components, providing programs that build 

comprehensive physical, mental, emotional and spiritual resiliency; and enforcing an 

environment that respects the individual dignity of all Soldiers and Civilians and affords an 

environment free of harassment. 

The Ready and Resilient Campaign, launched in March 2013, serves as the focal point for all 

Soldier, Civilian, and Family programs and promotes an enduring, holistic and healthy approach 

to improving readiness and resilience in units and individuals. The campaign seeks to influence 

a cultural change in the Army by directly linking personal resilience to readiness and 

emphasizing the personal and collective responsibility to build and maintain resilience at all 

levels. As part of the Army’s Ready and Resilient Campaign, the Army’s Performance Triad 

program encourages a culture shift through a robust education campaigns that are intertwined 

with technology. The audience is every professional Soldier, family member, retiree and civilian 

to change and sustain good health behaviors of optimal sleep, activity, and nutrition that can 

improve health, readiness and resilience. The operational approach is through the Performance 

Triad (Sleep, Activity, and Nutrition) that illustrates how investing in these tenets and technology 

positively impacts the health of the force. The campaign leverages and expands existing 

programs, synchronizing efforts to eliminate or reduce harmful and unhealthy behaviors such as 

suicide and suicide attempts, sexual harassment and assault, bullying and hazing, substance

abuse and domestic violence. Perhaps most importantly, the campaign promotes positive, 

healthy behaviors while working to eliminate the stigma associated with asking for help. 

The Army is an organization strengthened by shared professional values. Sexual harassment/ 

assault in all its forms are abhorrent to every one of those values. Prevention of sexual assault 

is a Secretary of the Army top priority. The FY 2015 budget increases resources for 

prosecutors, investigators, and special victim paralegals at multiple installations around the 

world. Efforts are synchronized in the Army’s top priority Sexual Harassment/Assault Response 

and Prevention Program. 
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The Premier All-Volunteer Army

The strength of the Army rests on the diversity, courage and voluntary service of our Nation’s 

men and women. The Army strives to honor the service and sacrifice of Veterans, Retirees, 

Wounded Warriors, and Families by preserving the highest possible quality of life. The FY 2015 

budgets supports a level of military compensation that assures the highest quality Soldiers and 

Civilians, and provides benefits and high quality of life services such as Morale, Welfare and 

Recreation, education assistance, and child care programs that are components of a 

professional force dedicated to the Army for the long term. 

The Army is defined by the quality of the Soldiers it recruits and retains. In 2013, 96 percent of 

the Army’s recruits were high school graduates, exceeding the goal of 90 percent. The Army 

was also on track to achieve the highest retention rate of the past three years. The need to 

recruit and retain high quality Soldiers and leaders experienced in the challenge of war will only 

grow in importance as the size of the Army is reduced. 

Unfortunately, natural attrition alone will not achieve the Army’s reduced end strength 

requirements. There will inevitably be good Soldiers, who have served their Nation honorably, 

that the Army will not be able to retain on active duty. The Army must responsibly balance force 

shaping across accessions, retention, and promotions, as well as voluntary and involuntary 

separations. In FY 2013, the Army executed Selective Early Retirement Boards (SERB) for 

Lieutenant Colonels and Colonels and a Qualitative Service Program for Master Sergeants and 

Sergeants Major, all aimed at achieving 490,000 end strength by 2015. In FY 2014, the Army 

will also execute Officer Separation Boards and Enhanced SERBs for qualified Majors and 

Captains. The Army also reduced accessions to the minimum level needed to sustain force 

structure, achieve end strength reductions, and reestablish highly competitive but predictable 

promotion opportunity rates. 

Women continue to play an important role in making the Army the best in the world. The Army 

is validating occupational standards for integrating women into all career fields, reinforcing 

universal standards that allow for qualification based on performance, not gender, across the 

profession. Building on positions already opened in BCTs and combat arms specialties, the 

Army anticipates opening an additional 33,000 previously closed positions in future years.

Installations and the Environment

The Army has a fundamental obligation and will take a balanced approach to managing 

installations to ensure base operating services provide for Soldier, Family and Civilian quality-oflife and operational Warfighter readiness. The Army will manage risk, safeguarding facility 

investments while focusing on high priority installation services, that take into account the 

transformation and downsizing of the force. 

The Army’s 2015 strategy for base operating services prioritizes funding for Life, Health and 

Safety programs and services ensuring Soldiers are trained and equipped to meet the demands 

of the nation. The Army remains committed to its Army Family Programs and continues to 

evaluate these service portfolios in order to maintain relevance and effectiveness. Ensuring 

resilience across the Total Force requires prioritizing programs such as Army Substance Abuse 

Program, Soldier Family Assistance Centers, Suicide Prevention, Sexual Harassment, and the 

Veterans Opportunity to Work to Hire Heroes Act of 2011. 

The Army continues to refine its enterprise Facility Investment Strategy (FIS), which combined 

Sustainment, Restoration and Modernization (R&M), Unspecified Minor Military Construction, 

Army (UMMCA), and the Facility Reduction Program investments under one umbrella, reserving 

the Military Construction (MILCON) investment for the Army's most critical deficit requirements. 

The FIS also fully supports command priorities along with focus areas in Energy/Utilities, 
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Industrial Base, Organizational Vehicle Maintenance, Ranges/Training Support Systems, 

Reserve Component Readiness Facilities, and Trainee Barracks. 

Large-scale renewable energy initiatives are a high priority critical activity. To meet the 

Presidential mandate and promote development of large-scale renewable energy projects on 

Army lands, the Army will continue pursuing private sector investments in renewable energy 

generation capacity to enhance energy security and meet the Army’s stated goal to deploy 

1 gigawatt (GW) of renewable energy production capacity by 2025. Privately financed projects 

are the most fiscally prudent and expedient way to acquire power from large scale renewable 

energy sources. Investments in renewable and alternative energy reduce the Army’s exposure 

to utility price volatility and reliance on increasingly unstable energy sources.

Net Zero is the foundation of the Army strategy for achieving long-term sustainability and 

resource security goals. Net Zero also supports compliance with a variety of Federal mandates 

and statutes such as those contained in Executive Order 13514, the Energy Policy Act of 2005, 

and the Energy Independence and Security Act of 2007. Net Zero allows the Army to continue 

climate change adaptation and mitigation efforts and develop a strategy for all Army 

installations.

Operational Energy

Operational Energy initiatives encompass business process improvements and environmental 

stewardship. Through a synchronized campaign of performance initiatives, business process 

changes and education and training opportunities, the Army seeks to achieve a lasting 

capability to use energy to the greatest benefit. This campaign includes efforts focused on both 

the energy required for military operations (operational energy) and the energy required by 

power-projection installations around the world. 

The Army will manage its installations in a sustainable and cost-effective manner, preserving 

resources for the operational Army to maintain readiness and capability across the range of 

military operations. Institutional energy savings will be leveraged to generate more resources 

that can be used to train, move and sustain operational forces and enhance Army mobility and 

freedom of action. To take advantage of private sector efficiencies, Army installations are 

privatizing utilities and entering into public-private energy-saving performance contracts. By 

partnering with experienced local providers, the Army has privatized 144 utilities systems, 

avoiding about $2 billion in future utility upgrade costs while saving approximately 6.6 trillion 

British thermal units a year. 

The Army is also exploring opportunities to expand public-public partnerships 

(Intergovernmental Support Agreements) with municipalities and states. These partnerships 

can result in significant near and long-term savings, efficiencies and cash revenues; enhancing 

or sustaining basic benefits and resiliency services for service members and their families.

Operational energy improvements to contingency bases, surface and air platforms and Soldier 

systems will increase overall combat effectiveness. Improved efficiencies in energy, water and 

waste at contingency bases reduce the challenges, risks and costs associated with the 

sustainment of dispersed bases. Next generation vehicle propulsion, power generation and 

energy storage systems can increase the performance and capability of surface and air 

platforms and help the Army achieve its energy and mobility goals. Advances in lightweight 

flexible solar panels and rechargeable batteries enhance combat capabilities, lighten the 

Soldier’s load and yield substantial cost benefits over time. Emergent operational energy 

capabilities will enable Army forces to meet future requirements and garner efficiencies in a 

fiscally constrained environment. 
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Business Transformation

In more traditional efforts to garner efficiencies, the Army continues to transform its business 

operations to achieve efficiencies, greater effectiveness and accuracy. The Army is working to 

reduce business portfolio costs by almost 10 percent annually by capitalizing on eliminating 

legacy systems that are replaced by fielding Enterprise Resource Planning systems. Business 

process reengineering and continuous process improvement efforts continue to confer 

significant financial and operational benefits. Through focus area reviews, the Army developed 

plans to reduce headquarters overhead, consolidate and streamline contracting operations and 

improve space allocation on installations. The Army will improve efficiency and reduce costs as 

core processes in acquisition, logistics, human resources, financial management, training and 

installations are re-engineered. Over the long-term, the Army will improve its strategic planning, 

performance assessment and financial audit readiness so that commanders can make betterinformed decisions on the utilization of resources to improve readiness.

The Army developed an Army-wide Workforce Shaping Group to oversee the balanced 

workforce requirements across military, civilian and contracted labor categories, the cost of 

which comprises the largest portion of the Army’s budget. The Work Group seeks to analyze 

workload and balance labor provisions within affordability constraints and legislation, while 

ensuring a workforce to meet the Army’s mission requirements. The Army will continue to 

leverage workforce shaping tools in FY 2015 to incentivize reductions, enabling a smooth, 

integrated ramp, designed to enhance workforce planning efforts and reduce turmoil on the 

civilian workforce. The Army will comply with directed headquarters reductions and will continue 

manpower reductions resulting from sequestration-reduced funding. Military end strength 

reductions have been assessed and implemented. Civilian reductions will be conducted in 

concert with overall end strength cost savings. The Army is committed to reducing service 

contractor spending at least to the same degree as, if not more than, reductions being borne by 

the civilian workforce. While the Army must make prudent decisions during this period of 

transition, the uncertainty has impacted the morale of our dedicated workforce. 

Conclusion

The FY 2015 Budget reflects Army priorities and difficult decisions to ensure near-term 

readiness in support of the defense strategy under the reality of declining budgets. The budget 

reflects a direction for the Army to enhance combat capability in smaller forces, while enhancing 

access to forces for COCOMs. The budget supports Army Soldiers, Civilians, and Families 

adapting from more than a decade at war with programs that build resilience and uphold Army 

Values that characterize the Army Profession. Resources are allocated to prioritize near-term 

readiness building through training, minimally upholding facilities and equipment sustainment, 

while not losing sight of modernization initiatives necessary to retain a technical edge in the 

future. 
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DEPARTMENT OF THE NAVY OVERVIEW

The United States is a maritime nation with major security and economic interests far from its 

shores. The United States Navy and Marine Corps team stand watch over those interests 

around the globe, operating forward where it matters when it matters. In today’s changing and 

dangerous security environment, this team provides key capabilities to win the nation’s wars, 

deter conflict, rapidly respond to crises and natural disasters, and ensure the maritime security 

on which the U.S. economy depends. The Navy/Marine Corps team executes these missions 

by using the sovereign maneuver space of the sea for simultaneous and seamless operations 

on and below the surface, ashore, in the air and in space, and across the range of military 

operations. 

In a challenging fiscal environment, the Department of the Navy (DoN) Fiscal Year (FY) 2015 

President’s Budget (PB) supports the priorities of the President’s Defense Strategic Guidance, 

as amplified by the Quadrennial Defense Review, and the priorities of the Secretary of the Navy, 

Chief of Naval Operations and Commandant of the Marine Corps. The Department prioritized 

investments to provide a credible, modern and safe strategic deterrent; global forward presence 

of combat ready forces; asymmetrical advantages to defeat and deny adversaries; and a 

sufficient industrial base. This book summarizes the DoN’s allocation of constrained resources 

to provide this balanced force and align with the defense strategy. The Department of Defense 

(DoD) budget provides further details.

This budget reflects a DoN Future Years Defense Program (FYDP) from FY 2015 to FY 2019 

that is $38 billion less across the FYDP than the FY 2014 President’s Budget request. Changes 

in the Navy force structure mix, delay of capability delivery, and readiness challenges due to 

reduced funding and expected demand for naval forces are the principal sources of the 

execution risk under this funding level. The Marine Corps drawdown of Active Component end 

strength preserves readiness with reduced resources but similarly increases risk and, if 

continued to an end strength of 175,000, would result in an average dwell ratio of 1:2.

The FY 2015 budget includes construction of 44 ships across the FYDP. The DoN will build 

14 Littoral Combat Ships (LCS) and sustain steady production of destroyers and submarines, 

with ten of each being constructed through FY 2019. The FYDP shipbuilding construction 

program also includes one aircraft carrier, one LHA replacement, four T-ATF(X) fleet ocean 

tugs, one afloat forward staging base platform, and three T-AO(X) fleet oilers.

The budget supports a balanced manned and unmanned aviation procurement plan of 

470 aircraft over the FYDP. The first Marine Corps Short Takeoff Vertical Lift (STOVL) variant 

Joint Strike Fighter (JSF) squadron was established in 2013 and the Navy’s carrier variant 

continues testing; 105 JSF aircraft are procured across the FYDP as JSF development and 

fielding accelerates. The Marine Corps also invests heavily in rotary wing aircraft, with the 

addition of 133 AH-1Z-1/UH-1Y helicopters and 64 MV-22 Ospreys. Investment in unmanned 

systems will bring the first Small Tactical Unmanned Aircraft System (STUAS) aircraft and MQ-4 

Triton Unmanned Aircraft System to the Fleet with the procurement of 24 systems through

FY 2019. Aviation investments also include procurement of airborne early warning aircraft 

(25 E-2D), multi-mission maritime aircraft (56 P-8A), multi-mission helicopters (29 MH-60R, 

8 MH-60S), presidential helicopters (6 VXX), heavy lift helicopters (13 CH-53K), aerial refueling 

tankers (6 KC-130J), and logistics aircraft (1 C-40A). 

The Navy and Marine Corps team maintain a presence where it matters when it matters with a 

fleet of 283 Battle Force Ships in FY 2015, reflecting the delivery of 8 new ships and 

decommissioning of 13 ships. Cruisers and dock landing ships will undergo an innovative 

modernization program that extends the service life of each beyond 40 years. The base budget 

provides funding for 45 underway days per quarter for deployed forces and 20 days per quarter 
Overview – FY 2015 Defense Budget 

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for non-deployed forces; funds Ship and Aviation depot maintenance to 80 percent of the 

requirement; funds Navy/Marine Corps flying hours to a T-2.5/2.0 rating; and funds Marine 

Corps ground equipment maintenance to 83 percent of the requirement. Facility sustainment 

levels are slightly less than the FY 2014 President’s Budget, with Navy funded to 70 percent of 

the sustainment model and the Marine Corps funded to 75 percent. 

As operations in Afghanistan continue to wind down, the Marine Corps will draw down end 

strength while maintaining a focus on forward presence and crisis response. The Marines will 

decline to 182,000 end strength. Depending on the fiscal and security environment, the 

Department will have to determine whether or not to continue further reductions beyond this 

level. The Navy maintains a nearly stable end strength profile from 323,600 in FY 2015 to 

323,200 by the end of the FYDP, optimizing the level of Sailors trained for sea and shore duty 

requirements. Although the budget slows the cost growth for military compensation, it maintains 

a robust compensation and benefits program for DoN personnel and their families. Civilian 

personnel full-time equivalents of 215,014 in FY 2015 reflect a slight increase for shipyard 

workers and firefighters.

Investments in readiness and infrastructure are essential to generating combat ready forces at 

home; they support the DoD rebalance to the Asia-Pacific, and enable critical presence in 

strategic maritime crossroads spanning the Middle East, Europe, Africa, the Western Pacific,

and South America. 

QUADRENNIAL DEFENSE REVIEW (QDR)

The 2014 Quadrennial Defense Review emphasizes protection of the homeland, building security 

globally, and projecting power with the ability to win decisively. These QDR priorities are 

supported across the full scope of the DoN budget submission, including investments in 

sustaining today’s sea-based strategic deterrent submarines, Trident D5 Life Extension, and 

nuclear command, control and communications; Ohio SSBN(X) Replacement Program; overall 

ship presence levels in 2020 the same as in last year’s budget; and ongoing investments in 

asymmetric advantages spanning undersea warfare to strike.

The QDR also calls for rebalancing for the 21st Century, to include:

• Rebalancing for a broad spectrum of conflict – supported by DoN investments 

countering Anti-Access Area Denial challenges, maintaining the Navy edge in science 

and technology with strong Research and Development investment, and emphasizing 

investments in undersea dominance, cyber, and in the Arctic.

• Rebalancing and sustaining presence and posture abroad – supported by increased 

forward-deployed and forward-stationed naval forces, introduction of the Optimized Fleet 

Response Plan, the rebalance to the Asia-Pacific region, and sustaining ship 

deployment numbers across the FYDP.

• Rebalancing capability, capacity and readiness – supported with an innovative Cruiser 

(CG) and Dock Landing Ship (LSD) modernization program; sustained investments in 

ship and aircraft procurement and readiness; investments in cyber, missile defense, 

nuclear deterrence, space, precision strike and special operations; and investments in 

fleet manning, maintenance, and shore infrastructure. 

• Rebalancing of tooth and tail – supported with a 20 percent management headquarters 

reduction, reduced administrative and headquarters costs, and reduced contracted 

services funding. 
Overview – FY 2015 Defense Budget 

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PEOPLE, PLATFORMS, POWER, AND PARTNERSHIPS

Four key factors sustain the DoN’s warfighting advantage and global presence; these factors 

are the Secretary of the Navy’s priority areas:

• People provide the critical asymmetric advantage in today’s complex world. The DoN 

will continue to prioritize investments that ensure the proper training, readiness and 

mental and physical well-being of Sailors and Marines. 

• Platforms span the ships, aircraft, submarines, tactical vehicles and unmanned vehicles 

that provide the capability and capacity underpinning the DoN’s global combat-ready 

presence. The budget supports fielding Navy and Marine Corps equipment at the best 

value, working with industry and procuring platforms through competition, multiyear buys 

and driving harder bargains for the taxpayer. This approach is essential to providing the 

platforms needed to execute our missions. 

• Power and energy get the platforms where they need to be and keep them there. The 

DoN continues to make progress toward greater energy security, building on a long 

record of energy innovation from sail to coal to oil to nuclear and now to alternative fuels.

• Partnership development initiatives, spanning exercises, actual operations, and broad 

leadership engagement have created a more interoperable force better prepared and 

more widely available to prevent and respond to crises.

DON FINANCIAL STEWARDSHIP 

The DoN continues to develop and expand the scope of its Business Transformation efforts. 

The DoN is examining business processes for acquiring services to look for ways to reduce 

costs in three areas: Contractual Services, Better Buying Power in Procurement, and More 

Efficient Uses of Research and Development. Additionally, the DoN continues to reduce 

unobligated growth across all programs, achieve savings in military construction bids due to 

increased competiveness, and reduce headquarters staffs. Cost reductions in these areas are 

expected to produce FYDP savings of about $22 billion, as shown in Figure 7-1. 

Figure 7-1 – Department of the Navy More Disciplined Use of Resources

Dollars in Millions FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FYDP

Contractual Services -2,535 -3,143 -3,015 -3,366 -2,743 -14,802

Better Buying Power in Procurement -445 -494 -532 -681 -616 -2,768

More Efficient Use of R&D -124 -43 -22 -16 -17 -221

Unobligated Balances -1,320 -285 -350 -269 -266 -2,490

MILCON Restructure & Delays -805 21 296 -26 -68 -582

Headquarters Operational Reductions -114 -171 -236 -312 -399 -1,233

Total -5,343 -4,114 -3,859 -4,671 -4,109 -22,096

The DoN year-to-year spending for contractual services has grown by about $10 billion since 

2000 after adjusting for inflation. Contractual services spending was reviewed first for savings 

by the acquisition community, with conscious decisions made to challenge stated requirements 

in those areas and to accept higher levels of risk in services spending before additional 

reductions were made in force structure, modernization, or readiness. The DoN FY 2015 

budget request reduces contractual spending in four principal areas: Knowledge Based 

Services; Research, Development, Test, and Evaluation; Equipment-Related Services; and 
Overview – FY 2015 Defense Budget 

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Communications-Related Services. The other initiatives realize savings within programs 

through contracting, competition, or execution. 

Given the current fiscal environment, the Department will continue to aggressively pursue 

opportunities to drive down the cost of doing business. To this end, the Navy/Marine Corps 

team is continually assessing existing business systems, evaluating dated organization 

structures, optimizing the force mix, and seeking bold ideas to maximize the use of taxpayer 

dollars. The goal is to drive innovative enterprise transformation to reduce spending on 

unnecessary overhead so as to preserve critical naval capabilities, presence requirements, and 

operational readiness. 
Overview – FY 2015 Defense Budget 

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DEPARTMENT OF THE AIR FORCE OVERVIEW

The 2014 Quadrennial Defense Review embodies the defense priorities outlined in the 

2012 Defense Strategic Guidance and incorporates them into a broader strategic framework. 

The Department’s defense strategy emphasizes three pillars—protecting the homeland, building 

security globally, and projecting power and winning decisively. In support of these pillars, 

Airmen bring to the Nation’s military portfolio five interdependent and integrated core missions: 

(1) air and space superiority; (2) intelligence, surveillance, and reconnaissance (ISR); 

(3) rapid global mobility; (4) global strike; and (5) command and control.

Through these core missions, the Air Force provides Global Vigilance, Global Reach, and 

Global Power for America. Each of these core missions is, in its own right, vitally important to 

the defense of U.S. national interests; however, no single core mission functions independently. 

Airpower is maximized when Airmen leverage its unique characteristics – speed, range, 

flexibility, precision, lethality, and persistence – to harness the integrated power of the air, 

space, and cyber forces. The Air Force is effective precisely because its interdependent 

operations are synchronized to provide an unparalleled array of airpower options, giving 

America the ability to respond quickly anywhere in the world.

Alignment to Department of Defense Priorities

As the Department looks toward 2023, the Air Force intends to stay on the flight path to building 

the most capable and affordable Air Force that will prevail against high-end threats. The

Air Force’s FY 2015 budget submission represents its effort to develop and retain the 

capabilities the Nation expects of its Air Force within the constraints of an extremely challenging 

fiscal environment. In developing the FY 2015 budget, the Air Force took a bold, but realistic 

approach. To support the defense strategy, the Air Force had to make difficult trades between 

force structure (capacity), readiness, and modernization (capability). As a result, the Air Force

established four guiding principles to steer the strategy and budget process:

1. Remain ready for the full-spectrum of military operations;

2. When forced to cut capabilities (tooth), also cut the associated support structure and 

overhead (tail);

3. Maximize the contribution of the Total Force; and

4. Focus on the unique capabilities the Air Force provides the Joint Force, especially 

against a full-spectrum, high-end threat. 

To best support the defense strategy and comply with the Air Force’s fiscal guidance, the 

Air Force leadership chose to preserve the minimum capabilities necessary to sustain current 

warfighting efforts, while investing in capabilities needed to ensure the Air Force stays viable in 

the battle space of the future. Moving forward, the Department seeks to maintain a force ready 

for a full range of military operations while building an Air Force capable of executing their five 

core missions against future high-end threats. 
Overview – FY 2015 Defense Budget 

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Air and Space Superiority 

Overview

Securing the high ground is a critical prerequisite for any military operation to ensure freedom of 

action for the Joint Force and the Nation. For approximately six decades, Air Force

investments, expertise, and sacrifice in achieving air superiority have ensured that friendly 

ground forces operate without threat of attack from enemy aircraft. While the United States has 

enjoyed this freedom for the last 60 years, there is no guarantee of air superiority in the future. 

Airspace control remains vitally important in all operating environments to ensure the 

advantages of rapid global mobility, ISR, and precision strike are broadly available to the 

Combatant Commander. Currently the United States benefits from the only operational fifthgeneration fighter aircraft, the F-22 Raptor, but several countries are rapidly developing 

competitive fifth-generation fleets. Global and regional competitors are working towards fifthgeneration fighter aircraft and advanced surface-to-air missile systems that present an area 

denial capability that may challenge U.S. air superiority. Additionally, improvements to non-U.S. 

fourth-generation fighters may put them on par with legacy F-15C/D aircraft that constitute a 

significant component of U.S. air superiority capability and further threaten the U.S. ability to 

ensure air superiority. Given these realities, the Air Force’s FY 2015 budget request includes 

initiatives to address current and future air superiority needs. 

America’s freedom to operate effectively across the spectrum of conflict rests not only on the

Air Force’s ability to dominate in the air, but also on its ability to exploit space. Space 

Superiority is the ability to provide the degree of access and freedom of action necessary to 

create military effects in, through, and from space, enabling operations by the U.S. and allied 

forces. Space capabilities are important to warfighting abilities and citizens’ daily lives. 

Through the Space Superiority Core Function, Airmen provide Joint Force Commanders with 

Global Access, Global Persistence, and Global Awareness. These aspects are critical to the 

lethality, precision, flexibility, and responsiveness required to deter aggression, win America’s 

wars, and conduct missions such as humanitarian and disaster relief operations. The Air Force

is the DoD’s steward of space, offering vital capabilities to support the warfighter. These space 

capabilities include nuclear survivable communications; launch detection/missile tracking; 

positioning, navigation, and timing; space situational awareness (SSA); space control; military 

satellite communications; access to space for all National Security Space missions; and weather 

data. Rapid technology advancements and the long-lead time for developing new space 

technology result in an ongoing need to plan, design, and implement space advancements. In 

addition, the U.S. and global economy rely on space systems and space operations to enable 

such vital activities as transportation, commerce, and agriculture.

FY 2015 Initiatives

The Combat Air Force is constantly assessed in relation to the dynamic security environment 

and Joint Force needs, but is necessarily shaped by current fiscal climate. Balancing the force 

requires legacy fleet service life sustainment and modernization efforts as well as F-22A 

upgrades to increase air superiority capabilities and operational effectiveness. 

F-15C/D: The F-15C/D fleet averages over 26 years old and is in need of modernization to 

remain viable. As we reduce the fleet by 51 aircraft across the FYDP, the remaining 197 will 

undergo offensive and defensive improvements including active electronically scanned array 

(AESA) radars and initial development of the Eagle Passive/Active Warning Survivability 

System (EPAWSS). The AESA radars outperform older radars and have a greatly improved 

mean time between failures. The EPAWSS vastly improves F-15 survivability through 

installation of a new radar warning receiver, internal jammer, and an integrated 
Overview – FY 2015 Defense Budget 

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countermeasures dispenser system. These efforts enable the “Long-Term Eagle Fleet” to 

operate effectively for decades to come. 

F-22A: The F-22A Raptor is the most advanced operational fighter aircraft in the world. While 

the F-22A’s primary role is air superiority, continuous improvements ensure its ability to 

dominate in every environment. Similar to other weapons systems in America’s inventory, the

Air Force re-phased F-22A upgrades while maintaining a positive glide path toward sustaining 

air dominance within highly-contested environments. 

To stay ahead of evolving threats and remain the world’s premiere air dominance fighter, 

modernization of the F-22’s combat capabilities is a major area of emphasis. Modernization 

increment 3.1 capabilities continue to be fielded, including APG-77 radar air-to-ground and 

electronic attack improvements. Also in FY 2013, the Air Force prudently responded to the new 

fiscal environment by segmenting follow-on modernization increment 3.2 capabilities into two 

separate deliveries: increments 3.2A and 3.2B. Continuing investment in increment 3.2B 

research, testing, and development efforts will eventually incorporate the most advanced 

air-to-air weapons in the inventory to include the AIM-120D Advanced Medium-Range Air-to-Air 

Missile (AMRAAM) and the AIM-9X Sidewinder.

EC-130H: The EC-130H Compass Call provides vital airborne electronic warfare capabilities 

with continuous upgrades in response to emerging threats. The FY 2015 budget allows the

Air Force to operate the 15 aircraft fleet through 2015. 

Air Superiority Munitions: The Air Force continues to enhance development, production, and 

integration of modern munitions for air superiority. The FY 2015 budget request includes

AIM-9X Block 2 and AIM-120D development, integration, and production. The AIM-120D is the 

next iteration of the AMRAAM missile with increased range and radar capabilities. 

Satellite Architecture: The Air Force is exploring an alternative architecture for Satellite 

Communications (SATCOM) and Overhead Persistent Infrared (OPIR), pursuing greater 

flexibility and responsiveness to the warfighter at a lower unit cost while replacing obsolete 

technology to meet emerging threats. The FY 2015 budget request also sustains the existing 

SATCOM and OPIR systems through the transition, maintaining the Advanced Extremely High 

Frequency (AEHF) capability with vehicles 5/6 through 2027 and the Space-Based Infrared 

System (SBIRS) geosynchronous orbit (GEO) capability with vehicles 5/6 through 2025. This

request supports efforts such as the AEHF Capabilities Insertion Program and Protected 

Tactical demonstration contract award. For SBIRS in FY 2015, the Air Force plans to initiate 

detailed design studies and hardware/software risk reduction efforts to implement approved 

recommendations from previous design trade studies.

Space-Based Environmental Monitoring: The FY 2015 budget commences development of 

the Weather System Follow-On (WSF) in FY 2015 to begin the transition from the Defense 

Meteorological Satellite Program. The WSF will take a disaggregated system-of-systems 

approach to meet specific DoD needs while leveraging near-term civilian and international 

partnerships. The WSF will be comprised of a group of systems to provide timely, reliable, and 

high quality space-based remote sensing capabilities that meet global environmental 

observations of atmospheric, terrestrial, oceanographic, solar-geophysical and other validated 

requirements. 

Evolved Expendable Launch Vehicle: The Evolved Expendable Launch Vehicle (EELV) 

program has been aligned with satellite launch schedules in FY 2015. The Department’s new 

acquisition strategy allowed the Air Force to achieve significant savings with the latest EELV 

contract, which the Air Force has leveraged to deliver increased warfighter readiness and 

capability.
Overview – FY 2015 Defense Budget 

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Space Fence: The Space Fence will be a system of two land-based radars to detect, track, 

identify, and characterize orbiting objects such as commercial and military satellites, smaller 

objects, maneuvering satellites, break-up events, and lower inclination objects. Site I will be 

located at Kwajalein Atoll in the Marshall Islands and will be the most accurate, high-capacity 

radar in the Space Surveillance Network (SSN). In concert with existing and planned SSA 

assets, it will provide the critical SSN capability to maintain a full and accurate orbital catalog, 

ensure orbital safety and characterize potential threats. The Space Fence data will be fed to the 

Joint Space Operations Center at Vandenberg Air Force Base where it will be integrated with 

other SSN data to provide a comprehensive SSA and integrated space picture needed for the 

warfighter. The FY 2015 request re-phases funding following a delay to contract award from

FY 2013 into FY 2014, with initial operational capability (IOC) planned for FY 2018.

Intelligence, Surveillance and Reconnaissance 

Overview 

Intelligence, Surveillance and Reconnaissance includes conducting and synchronizing 

surveillance and reconnaissance across all domains for producing essential intelligence to 

achieve decision superiority through planning, collecting, processing, analyzing, and rapidly 

disseminating critical information to decision makers across the spectrum of worldwide military 

operations at all levels of warfare. Through the ISR core mission, Airmen provide timely and 

actionable intelligence to Joint Force Commanders. The FY 2015 budget request remains 

committed to providing full-spectrum ISR of all-source collection to the Nation’s deployed 

military forces. The FY 2015 budget request supports the goal of Global Integrated ISR 

operations. The FY 2015 budget request represents the Air Force’s restructuring of medium 

altitude manned and unmanned capabilities, ensures viability of high-altitude conventional 

assets to fulfill designated wartime requirements and continues the ISR enterprise-wide 

investment in intelligence analysis and end-to-end automation through dissemination. 

FY 2015 Initiatives 

Platforms: The FY 2015 budget request realigns and reprioritizes capability and capacity 

across the ISR portfolio. For medium-altitude, permissive ISR, the Air Force intends to sustain 

the current capability of 50 steady state MQ-1/MQ-9 Combat Air Patrols (CAPs) with the ability 

to support 65 surge MQ-1/MQ-9 CAPs until the full transition to an all-MQ-9 fleet is made later in 

the FYDP. The FY 2015 budget intends to fully resource 55 steady state MQ-9 CAPs by 

FY 2019. Under BCA-level funding, the Air Force would expect to further reduce the overall 

MQ-9 capacity beginning in FY 2016.

In the FY 2015 budget request, the Air Force alters its high-altitude ISR capacity through the 

restoral of the RQ-4 Block 30 and subsequent planned retirement of the U-2 in FY 2016. 

Investment funds are added to RQ-4 Block 30 to ensure platform viability beyond 2023, improve

reliability, and improve sensor performance to close the gaps with the U-2. 

Finally, in accordance with the FY 2014 National Defense Authorization Act, the Air Force will 

divest the MC-12W manned medium-altitude ISR capability and transfer this capability to the 

U.S. Army and Air Force Special Operations Command. 

Infrastructure: The Air Force continues to invest in improved automated applications at the

Air Force Targeting Center to support deliberate planning requirements. The FY 2015 budget 

also requests military construction investments to meet force structure changes directed in the 

National Defense Authorization Act for Fiscal Year 2013 for an Air National Guard (ANG) Joint 

MQ-9 and Targeting facility at Des Moines, Iowa, a new ANG MQ-9 facility at Kellogg Airport, 
Overview – FY 2015 Defense Budget 

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Michigan, and military construction at Horsham Air Guard Station (Willow Grove), Pennsylvania,

for an MQ-9 mission transition. 

Rapid Global Mobility 

Overview

Rapid Global Mobility consists of a responsive mobility system that delivers and sustains 

combat forces and provides humanitarian assistance around the globe in support of joint, 

coalition, and civilian partners, helping the Nation achieve its security objectives, both locally 

and abroad. 

Based on the Secretary of Defense-directed Mobility Capability Assessment (MCA) analysis and 

DoD strategy, the Air Force reduced portions of the airlift fleets congruent to reductions in force 

structure across the Department while continuing modernization efforts to ensure the remaining 

aircraft are capable to meet strategy requirements. The MCA analysis also validated the

Air Force plan to address the tanker replacement as its number one recapitalization priority and

sustain airlift capacity through modernization, reliability, and efficiency upgrades. 

FY 2015 Initiatives 

Tanker Replacement: The FY 2015 budget request continues to support the tanker fleet 

recapitalization effort. The KC-46 tanker recapitalization program remains an Air Force top 

priority; without tankers, the Air Force is not global. More than a mere replacement for aged 

KC-135s, the KC-46 will provide a significant increase in mobility and air refueling capability. 

The KC-46 will be able to multi-point refuel joint and coalition aircraft, carry significantly more 

cargo or passengers, conduct aeromedical evacuation, and self-deploy to any theater. The 

FY 2015 budget request funds the first production lot of KC-46s. The current program plan will 

deliver 55 aircraft by FY 2019 and procure a total of 179 KC-46 aircraft.

Airlift Modernization: The FY 2015 budget request continues the long-standing Air Force

objective to modernize its C-130 fleet. The Air Force-led joint multiyear procurement effort 

continues procurement of 79 C-130J variant aircraft for the Department plus 1 for the U.S. 

Coast Guard, and saves 9.5 percent over an annual contract. 

In accordance with the Institute for Defense Analysis study regarding C-130H Avionics 

Modernization efforts, the Air Force’s FY 2015 budget request cuts costs by reducing the scope 

of its legacy C-130H Avionics Modernization Program. The FY 2015 budget request continues 

to address aircraft obsolescence issues, Federal Aviation Administration mandates, and global 

airspace access requirements beyond 2020 while reducing over $1 billion in costs across the 

FYDP.

The FY 2015 budget request continues to fund the replacement of the C-5 Core Mission 

Computer (CMC) and Weather Radar to mitigate obsolescence of the existing system. This 

effort centers on upgrading the existing CMC to obtain sufficient capability and capacity for 

future requirements. An upgraded, common fleet offers life cycle cost benefits including greater 

reliability and simplified fleet-wide training. 

Force Structure Changes: The FY 2015 budget request seeks to balance modernization and 

recapitalization. The FY 2015 request retains the KC-10 fleet through 2015 and begins 

recapitalization of the KC-135 while reaching the required fleet size of 479 total tankers. 

However, if constrained by the limitations of the Budget Control Act in future years, the Air Force

will be forced to divest the entire KC-10 fleet, beginning in FY 2016, to allow the Air Force to 

retain critical core capabilities, avert significant KC-10 sustainment and modernization costs,

and preserve investment priorities such as the KC-46A, F-35, and Long Range Strike-Bomber 
Overview – FY 2015 Defense Budget 

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(LRS-B). In accordance with the Intra-theater Airlift Working Group Proposal, the FY 2015 

budget request right-sizes the Air Force’s intra-theater airlift fleet by retiring C-130H aircraft to 

reduce excess capacity within the fleet while still fully supporting strategy and direct support 

requirements. The C-130 enterprise reduces to 318 total aircraft in FY 2015 but grows to 328 

as the final J-models arrive within the FYDP. Lastly, the FY 2015 budget request remains 

consistent with the FY 2014 position by reducing the strategic airlift fleet size to 275 total aircraft 

by the end of FY 2017 (223 C-17s and 52 C-5Ms). In accordance with FY 2013 NDAA 

language and the DoD submission of the 2018 Mobility Capabilities Assessment to Congress, 

the Air Force began retiring 26 C-5A aircraft. 

Global Strike 

Overview

Global strike, a significant portion of America’s deterrence capability, projects military power 

more rapidly than other military options, with increased flexibility and a lighter footprint. Global 

Strike describes the Air Force’s ability to hold any target at risk across the air, land, and sea 

domains. This is primarily accomplished with the B-2, B-52, F-15E, F-16, and B-1B aircraft as 

well as the land-based Intercontinental Ballistic Missile (ICBM) arsenal. While the U.S. and 

coalition partners have a distinct precision attack advantage in Afghanistan today, several 

countries are leveraging technologies to improve existing airframes with advanced radars, 

jammers, sensors, and more capable surface-to-air missile systems. Increasingly sophisticated 

weapon systems and the proliferation of anti-access and area-denial (A2/AD) capabilities will 

challenge the ability of Air Force legacy fighters and bombers to engage in heavily defended 

areas. In response to these challenges, the Air Force’s FY 2015 budget request encompasses 

a balanced approach to precision strike capabilities within fiscal constraints to influence, 

manipulate, or dismantle an opponent’s capacity to deny access. It funds modernization of 

legacy fighters, the B-1B, F-35 development and procurement, development of a new Long 

Range Strike-Bomber (LRS-B), and continued investment in preferred air-to-ground munitions.

FY 2015 Initiatives 

Nuclear Deterrence: Strengthening the nuclear enterprise remains a top priority within the

Air Force. The Air Force continues its actions to deliver safe, secure, and effective nuclear 

capabilities within its Nuclear Deterrence Operations (NDO) portfolio. The Air Force’s 

intercontinental ballistic missiles and heavy bombers provide two legs of the nation’s nuclear 

TRIAD. Dual-capable fighters and bombers extend deterrence and provide assurance to U.S. 

allies and partners. The Air Force continues its efforts to further the skills and leadership of its 

NDO-Airmen at all levels and to further institutionalize improvements and capitalize on gains 

made since the Air Force began reinvigorating the nuclear enterprise in 2008. The Air Force

Global Strike Command, the Air Force Nuclear Weapons Center, and the Assistant Chief of 

Staff for Strategic Deterrence and Nuclear Integration continue to support the Airmen, 

equipment, and processes that achieve nuclear deterrence every day. 

B-52: The FY 2015 budget continues funding for the completion of a fleet-wide upgrade of the 

B-52 with the Combat Network Communication Technology (CONECT) system, provision of

secure line-of-sight and beyond line-of-sight communications, situational awareness upgrades, 

and machine-to-machine conventional retargeting capabilities for all 76 aircraft. The B-52 1760 

Internal Weapons Bay Upgrade continues to develop and procure kits to upgrade the B-52 

internal weapons bay and aircraft integration to allow carriage of “smart” weapons internally and 

adds Laser Joint Direct Attack Munition, Miniature Air Launched Decoy-Jammer, and critical 

Joint Air-to-Surface Standoff Missile-Extended Range (JASSM-ER) capability to the external 

pylons. 
Overview – FY 2015 Defense Budget 

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B-2: The FY 2015 budget continues funding several initiatives for the B-2 to include the 

Defensive Management Systems-Modernization (DMS-M), the Common Very Low 

Frequency/Low Frequency Receiver (CVR), and Flexible Strike programs. The DMS-M will 

enable the B-2 to penetrate dense threat environments via improved threat location and 

identification capabilities, real-time re-routing, and improved survivability against enemy 

advanced integrated air defenses. The CVR will add survivable communications capability to 

the platform. Finally, the B-2 Flexible Strike program will continue integration of the “System 2” 

digital nuclear interface onto the platform, allowing future carriage of the B61-12. 

B61 Tailkit: Sustained funding for the B61 Tailkit Assembly is critical in the FY 2015 budget 

request. This program is the Air Force’s portion of a joint venture with the National Nuclear 

Security Administration’s life extension program, which combines four older variants into the 

B61-12. Investing $1.2 billion in the program will allow the Air Force to field the modernized 

weapon to meet operational requirements, and provide nuclear assurance to U.S. allies around 

the world. 

Intercontinental Ballistic Missile: The FY 2015 budget request funds additional investments 

to sustain the ICBM weapon system through 2030 for Minuteman guidance and propulsion 

system life extension, Ground and Communication Sustainment, and test launch components. 

In addition, the budget includes funding for aircrew and missile crew survivability upgrades, 

such as: crashworthy seats for the fleet of UH-1N helicopters that provide ICBM security; and 

oxygen regeneration units and weapon system printers to ensure Emergency Action Message 

receipt for missile crews. 

A-10C: The A-10C was the primary Air Force Close Air Support (CAS) airframe in the more 

permissive environments of past conflicts, but it does not possess the necessary survivability to 

remain viable in anti-access environments. Fiscal constraints required the Air Force to prioritize 

multi-role legacy platforms. The Air Force will begin retiring the A-10 fleet in FY 2015 to focus 

available funding on more survivable multi-role platforms better capable of providing CAS in 

future conflicts. In consultation with the leadership of the Air National Guard and Air Force

Reserve, the Air Force identified new missions for the affected units to maintain necessary 

capabilities at reduced costs. 

F-15E: The Air Force continues to support the long-range interdiction capabilities of the 

dual-role Strike Eagle by replacing mechanically-scanned radars of the F-15E with AESA 

radars. Current projections supported by fatigue testing indicate that the Strike Eagle will be 

available through the 2040s. To improve access in contested environments, the Air Force will 

improve F-15E electronic warfare capabilities against advanced threats. Like the F-15C, F-15E 

modernization includes EPAWSS, which includes a new radar warning receiver, internal 

jammer, and improved countermeasures dispense system to promote aircraft survivability 

against modern threats. 

F-16: The FY 2015 budget request terminates the Combat Avionics Programmed Extension 

Suite (CAPES) and reduces the level of effort for the structural Service Life Extension Program 

(SLEP). The SLEP activities include a full scale durability test and structural modifications to 

add 8 to 10 years of service life to each airframe. 

F-35A: To counter the A2/AD challenge the United States faces in many potential theaters, the

Air Force is procuring the F-35A Lightning II. The aircraft benefits from stealth technology and 

advanced sensor capabilities. The FY 2015 budget request includes funding for the continued 

development and procurement of 26 F-35A aircraft. The F-35A will eventually perform Global 

Precision Attack functions and will complement the F-22A Raptor for Air Superiority functions.
Overview – FY 2015 Defense Budget 

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Long Range Strike: The Air Force is committed to modernizing bomber capacity and 

capabilities to support LRS military options. Development of the next steps to advance the 

family of systems critical to LRS capability is ongoing. These steps include the platforms, ISR, 

electronic warfare, communications, and weapons that make up this critical national capability. 

The future bomber, LRS-B, must be able to penetrate the increasingly dense A2/AD 

environments developing around the world. To this end, the Air Force FY 2015 budget request 

includes funding to continue the development of an affordable, long range, penetrating aircraft 

that incorporates proven technologies. This follow-on bomber represents a key component to 

the joint portfolio of conventional and nuclear deep-strike capabilities. 

B-1B Modernization: In addition to the development of LRS-B, the Air Force will continue to 

modernize the B-1B to ensure the fleet remains viable until recapitalization can be 

accomplished. The FY 2015 budget request includes the continuation of the B-1 Integrated 

Battle Station contract, which concurrently procures and installs Vertical Situation Display 

Upgrade (VSDU), Central Integrated Test System (CITS) and Fully Integrated Data Link (FIDL). 

The VSDU and CITS each address obsolescence and diminishing manufacturing sources for 

the B-1 fleet. The FIDL provides both the electronic backbone for VSDU and CITS, as well as a 

capability enhancement of line-of-sight/beyond line-of-sight Link 16 communications. In 

addition, the FY 2015 budget request includes upgrades to flight and maintenance training 

devices to ensure continued sustainability and common configuration with the aircraft fleet. 

These initiatives will help sustain long-range strike capabilities for decades. 

Global Precision Attack Munitions: The FY 2015 budget request includes procurement for 

the GBU-53B, Small Diameter Bomb Increment II (SDB II). The GBU-53B provides a capability 

to hold moving targets at risk in all weather and at stand-off ranges. The SDB II is a key part of 

the A2/AD solution for future conflicts and will be integrated onto the F-22 and F-35, as well as 

current operational platforms.

The procurement of 104 JASSM-ER, AGM-158B, in addition to 120 baseline variants is also 

included with the FY 2015 budget request. The JASSM-ER is an upgraded version of the 

baseline JASSM that can fly a much greater distance providing excellent stand-off ranges in an 

A2/AD environment, increasing the flexibility and lethality of the force.

The FY 2015 budget request for Global Precision Attack capabilities reflect the need to win 

today’s fight, while investing in systems to address the A2/AD challenge faced by the United 

States. It also continues to modernize the current operational fighter and bomber fleet to 

maintain sufficient capability and capacity as the Air Force transitions to new capabilities.

Command and Control 

Overview 

Air Force command and control (C2) provides commanders the ability to conduct highly 

coordinated joint operations, providing commanders unequaled shared understanding, speeding 

the decision-cycle, and enabling seamless communication from command to shooter. Air Force

C2 operates at all levels from national decision-makers to the tactical edge. Strategic C2 

consists of strategic national and nuclear command, control, and communication (NC3) 

systems, and service support to the command and control systems of U.S. Combatant 

Commanders worldwide. Strategic C2 includes critical NC3 systems such as the E-4B National 

Airborne Operations Center and strategic warning, secured networks, and command centers. 

Homeland Defense C2 is provided by Battle Control Centers (Air Defense Squadrons) in the 

continental U.S., Alaska, and Hawaii through the Battle Control System-Fixed. 

Theater command and control consists of the Theater Air Control System (TACS), the 
Overview – FY 2015 Defense Budget 

CHAPTER 7 MILITARY DEPARTMENTS

7-23

Air Force’s primary mechanism for theater C2 of joint and coalition air and space power 

comprised flexible airborne elements and persistent ground elements. The senior element of 

the TACS is the Air Operations Center (AOC). The AOC is the primary tool used by the Joint or 

Combined Forces Air Component Commander to plan, execute, monitor and assess operations 

in air, space, and cyberspace. Other primary TACS weapons systems are the Control and 

Reporting Center (CRC), the E-3 B/C/G Airborne Warning and Control System (AWACS), the E8C Joint Surveillance Target Attack Radar System (JSTARS), and the Air Support Operations 

Center. These weapon systems provide critical battle management, sensors, and 

communications necessary to execute air and ground operations. 

The battle management command and control experts employing these weapon systems 

provide commanders the ability to detect, decide, and direct forces to find, fix, and finish enemy 

targets inside their ability to react across the range of military operations. Air Force C2 also 

includes development and sustainment of enterprise C2 communications and data-link systems 

enabling rapid communication across the range of C2. Enterprise C2 encompasses asset 

management and control systems such as the Global Command and Control System, the 

Mission Planning System and the Deliberate Crisis Action Planning and Execution Segments. It 

also includes tactical data links such as Link-16 and future capabilities such as the Joint Aerial 

Layer Network. Air Force C2 also consists of air traffic control systems, which are required to 

support safety of flight missions in the U.S. and deployed locations. 

FY 2015 Initiatives

In the FY 2015 budget request, the Air Force reduces capacity in key areas to retain the 

modernization critical to ensure a smaller but technologically dominant C2 capability supporting 

both the current fight and future conflicts. The Air Force is investing in must-have capabilities 

that ensure decision superiority in an A2/AD environment for the foreseeable future.

E-8C: Based on the outcome of the 2011 Synthetic Aperture Radar, Moving Target Indicator 

JSTARS Analysis of Alternatives, the Air Force is investing funding to recapitalize the E-8C 

JSTARS. The Next Generation JSTARS uses an affordable business class aircraft, reducing 

operation and sustainment costs by 27 percent compared to the E-8C. It yields a smaller 

logistics footprint and improves operational capability with an advanced ground surveillance 

radar and on-board battle management suite. With a planned fleet of 16 aircraft, Next 

Generation JSTARS is slated for initial operational capability in FY 2022.

The new aircraft will have much greater operational flexibility than the E-8C, able to operate out 

of 70 percent more airfields. With on-board battle managers, the Next Generation JSTARS 

provides C2 mission assurance at the tactical edge in an A2/AD environment. This system 

assures affordable joint air C2 dominance in the counter-land and counter-maritime missions 

through the 2040s. To fund JSTARS recapitalization, the Air Force will divest the E-8C test 

capability including the T-3 test aircraft and place the E-8C on a force management to sunset 

profile. The Air Force is also preparing for near-term right sizing of the JSTARS enterprise to 

prepare for fielding of the Next Generation JSTARS.

E-3G: The Air Force reduces AWACS capacity by seven aircraft in FY 2015. In addition, the

Air Force terminates the AWACS reserve association and adjusts the Reserve mission at Tinker

Air Force Base by adding 4 KC-135s, bringing the total number of KC-135s at Tinker Air Force

Base to 12. Though AWACS capacity is reduced, the Air Force assures future C2 relevancy in 

A2/AD by retaining modernization funding for the remaining AWACS fleet, continuing to field the 

E-3G variant, and enhancing the electronic protection capability of the E-3 radar. The Air Force

also plans to fund the stand-up of the E-3G Organic Software Depot Maintenance Facility at 

Tinker Air Force Base.
Overview – FY 2015 Defense Budget 

CHAPTER 7 MILITARY DEPARTMENTS

7-24

Three Dimensional Expeditionary Long-Range Radar: With source selection underway, the

Air Force will fully fund development and low rate initial production of the Three Dimensional 

Expeditionary Long-Range Radar (3DELRR) in preparation for a key milestone in 2014. The 

3DELRR will replace the legacy TPS-75 radar and be the principal Air Force expeditionary 5th 

generation long-range radar, improving aircraft warning. 

Deployable Radar Approach Control: The Deployable Radar Approach Control (D-RAPCON) 

program was reduced by four systems saving $95 million. The D-RAPCON system will replace 

40-year old Airport Surveillance Radar and Operations Shelter subsystems with state-of-the-art 

digital systems. It will provide both a terminal and en-route aircraft surveillance capability, and 

will be used with the Deployable Instrument Landing System (D-ILS) and a fixed or mobile 

control tower to provide a complete air traffic control capability. It also supports tactical military 

operations and provides a capability to support domestic disaster relief. In conjunction with the 

reduction in D-RAPCON units, the Air Force reduced the number of associated D-ILS to 28. 

Finally, the Air Force enhances Homeland Defense by fully funding sustainment over the FYDP. 

The Air Force also fully funds sustainment of the Alaskan air defense radar system in FY 2015 

while the Alaskan radar system requirements are reassessed.

Conclusion

The United States has the best Air Force in the world because of its Airmen. The Department

will continue to attract, recruit, develop, and train Airmen with strong character and commitment 

to its core values. The budgetary constraints in FY 2014 and beyond force the Air Force to 

become smaller. However, as it shrinks, the Air Force must continue to recruit and retain the 

men and women with the right balance of skills to meet its mission requirements, and maintain a 

ready force across the full-spectrum of operations. 

When building the FY 2015 budget, there were no easy choices. The Air Force divested fleets 

and cut manpower that it did not want to lose in order to ensure that the Air Force can field an 

effective force against a high-end threat in 2023. The Air Force focused on future capabilities 

that emphasized global, long-range, multi-role, and non-permissive capabilities and kept 

recapitalization programs on track. The Air Force leadership made these choices because 

while failing to meet national objectives in the next counter-insurgency conflict would be 

distressing, losing to a high-end adversary would be catastrophic.

The Air Force’s FY 2015 budget submission remains strategy-based, but it is also greatly 

shaped by fiscal realities. Regardless of the strategic tradeoffs made, it is not possible to 

budget for an Air Force at the BCA-level that is capable of performing all of the core missions 

the Nation expects. Making the tough choices today set the Air Force on a path to produce a 

ready and modernized force that is smaller, but lethal against potential adversaries in the future 

while ensuring the United States Air Force will always provide Global Vigilance, Global Reach, 

and Global Power for America. 
Overview – FY 2015 Defense Budget 

CHAPTER 8 PERFORMANCE IMPROVEMENT

8-1

8. PERFORMANCE IMPROVEMENT

8.1 INTRODUCTION

Purpose

This chapter satisfies certain requirements of the Government Performance and Results Act of 

1993 (GPRA), the GPRA Modernization Act (GPRAMA) of 2010, and Office of Management and 

Budget (OMB) Circular A-11 – all of which call for integration of annual performance goals and 

results with Congressional budget justifications. This chapter complements the appropriationspecific budget justification information that is submitted to Congress by providing:

• A performance-focused articulation of the Defense Department’s strategic goals and 

objectives; and

• A limited number of Department-wide performance improvement priorities for seniorlevel management to focus on over the current and budget year.

The Department looks forward to working with the Administration and Congress to meet the 

challenge of creating more effective and efficient operations, while delivering a high-value return 

for the American taxpayer’s investment in the Defense Department.

DoD Mission and Organizational Structure

The mission of the Department of Defense (DoD) is to provide the military forces needed to 

deter war, to win wars if needed, and to protect the security of the United States. Since the 

creation of America’s first army in 1775, the Department and its predecessor organizations have 

evolved into a global presence of over 3 million individuals, stationed in more than 140 countries 

and dedicated to defending the United States by deterring and defeating aggression and 

coercion in critical regions. Details on major operating components, Military Departments, and 

DoD geographic spread can be found on www.defense.gov/osd. The Department is also one of 

the nation’s largest employers, with approximately 1.4 million personnel on active duty, 

782,000 civilians, and 835,000 men and women in the Selected Reserve of the National Guard 

and Reserve forces. There are also more than 2 million military retirees and family members 

receiving benefits.

DoD Performance Governance

Ultimate responsibility for performance improvement in the Defense Department rests with the 

Deputy Secretary of Defense as the Chief Management Officer (CMO) and Chief Operating 

Officer, pursuant to the GPRAMA of 2010. Principal Staff Assistants (PSAs) within the Office of 

the Secretary of Defense (OSD) are responsible for recommending performance goals and 

achieving results for their respective functional oversight areas.

Title 5, United States Code, section 4312 and Office of Personnel Management (OPM) 

implementing instructions require performance evaluations for DoD’s Senior Executive Service 

members and Senior Level/Scientific and Technical professionals to be based on both individual 

and organizational performance. The OPM further requires that each Agency describe, at the 

end of the performance rating period, how it assessed organizational performance and how it 

communicated that performance to rating and reviewing officials and members of Performance 

Review Boards to inform individual performance decisions. The Department uses its Annual 

Performance Report, along with other PSA and DoD Component-specific performance results, 

as the basis for DoD-wide organizational assessment and senior level personnel evaluations.
Overview – FY 2015 Defense Budget 

CHAPTER 8 PERFORMANCE IMPROVEMENT

8-2

DoD Strategic Plan

In Fiscal Year (FY) 2013, the 2010 Quadrennial Defense Review (QDR) served as the agency 

strategic plan. The QDR forms the basis for the Department’s Annual Performance Plan (APP), 

which includes the goals, objectives, and performance measures that are updated annually to 

reflect changes to strategic direction or management priorities. Performance measures must be 

supported by accurate and reliable data and computation methodologies before they are 

approved, with results verified by the accountable senior-level DoD officials.

In FY 2013, the Department began implementing the Defense Strategic Guidance (DSG) issued 

by the President and the Secretary of Defense in 2012. Entitled Sustaining U.S. Global 

Leadership: Priorities for 21st Century Defense, this guidance revised the Department’s 

strategy from the 2010 QDR. The DSG addressed emerging strategic and fiscal circumstances, 

including the drawdown from Iraq and the planned transition in Afghanistan and budget cuts 

mandated by the Budget Control Act of 2011 (BCA). The DSG was built around four 

overarching principles: (1) Maintain the world's finest military; (2) Avoid hollowing out the force; 

(3) Take needed reductions in a balanced strategic manner; and (4) Preserve the quality of the 

All-Volunteer Force by keeping faith with men and women in uniform and their families. 

The DSG called for a future military force that is smaller and leaner, but also agile, flexible, 

rapidly deployable, and technologically advanced. As a result, the Department took steps to 

implement force structure reductions (including ground forces and tactical air), while decreasing 

the risks of a smaller force by emphasizing readiness across the Military Services and missions.

Despite the continuing fiscal uncertainty, the Department will adhere to its institutionalized future 

budget process. In March 2013, Secretary Hagel directed Deputy Secretary Ashton Carter to 

conduct a Strategic Choices and Management Review (SCMR), with the support of the 

Chairman of the Joint Chiefs of Staff, General Martin Dempsey, and the Department’s civilian 

and military leadership. The SCMR developed a menu of choices for aligning Defense strategy 

with a range of budget scenarios. 

The SCMR focused on both strategic and managerial choices, ranging from options for future 

force structure needs to institutional reform, efficiencies, and compensation. The SCMR sought 

to preserve the key tenets of the President’s 2012 DSG and to optimize savings gained from 

reducing overhead and structural costs with minimal impact on the capability and readiness of 

the force. The SCMR guided the Services and Defense Agencies in developing the budget for

FY 2015. It served as an input to the 2014 QDR, which will determine the Department’s 

strategic course in the years ahead. 

Throughout FY 2013, the Department remained dedicated to obtaining, investing, and 

effectively using its financial resources to ensure the security of the United States and meet the 

needs of both the warfighter and the ever-changing battlefield. Taking care of our people, 

reshaping and modernizing the force in the current fiscal environment, and supporting our 

troops in the field remain the highest priorities for the Department.

DoD Performance Plan and Report

The FY 2013 DoD Annual Performance Report (APR), presented in Section 8.2, provides a 

summary of the Department’s prior year performance. The FY 2014 DoD Annual Performance 

Plan (APP), which is the update of the Department’s strategic objectives and performance goals 

for the current and budget year based on the results of the APR, is presented on the 

web at http://comptroller.defense.gov/budgetmaterials/budget2015.aspx (Section 8.3). These 

documents are ultimately part of the congressional budget justification that is forwarded to the 
Overview – FY 2015 Defense Budget 

CHAPTER 8 PERFORMANCE IMPROVEMENT

8-3

President for approval. The Department will align the FY 2015 APP with the QDR and submit it 

at a later date.

8.2 FY 2013 DOD ANNUAL PERFORMANCE REPORT 

Executive Summary

In FY 2013, the Department demonstrated its resilience in the face of challenging fiscal 

constraints. The BCA sought to reduce the long-term growth of Federal spending by enacting 

strict caps on discretionary funding through FY 2021. In addition, it tasked Congress to enact 

an additional $1.2 trillion in deficit reduction through what was called the “Joint Committee” 

process. When that process failed, it triggered further reductions in discretionary funding caps, 

split equally between defense and non-defense programs. Because military pay and benefits

were excluded from the reductions, other budget areas absorbed larger percentage cuts to meet 

the Department’s mandatory reduction.

In March 2013, the triggering of sequestration resulted in a $37 billion reduction that impacted the 

last 6 months of the fiscal year. The Department also experienced an unexpected shortfall in 

wartime Overseas Contingency Operations (OCO) funding. Together, sequestration and the 

shortfall caused damaging and far-reaching impacts on the Department’s operations. Major cuts 

in training and maintenance seriously damaged overall military readiness. The Air Force curtailed 

exercises and grounded all flights in 13 combat-coded fighter and bomber squadrons. The Army 

cancelled seven combat training center rotations and five brigade-level exercises that were 

essential to preparation for deploying units. The Navy delayed deployment of the USS TRUMAN 

carrier strike group to the Persian Gulf, curtailed the sailing of the USNS COMFORT to Latin 

America, and cancelled other ship deployments. The Department furloughed approximately 

650,000 civilians for six days. Despite these fiscal challenges, the Department made significant 

progress towards achieving its strategic goals and objectives in FY 2013. 

For the FY 2013 APP, the Department presented 74 enterprise-wide performance

goals/measures to assess progress towards achieving the Department’s strategic goals and 

objectives. Performance results are not yet available for six of the 74 performance goals. Of 

the 68 goals assessed, 72 percent (49 of 68) 

met or exceeded the annual performance 

targets by DoD strategic goal area; 28 percent

(19 of 68) did not meet their annual goals. Of 

the 74 total performance goals, 12 are 

associated with Agency Priority Goals (APGs). 

Performance results are not yet available for 

two performance goals associated with APGs, 

but 70 percent (7 of 10) of the available 

performance goals associated with APGs met 

or exceeded targets. 

Figure 8-1 shows the percent of performance 

measures that met or exceeded target 

performance in each year from FY 2008 to

FY 2013. The Department’s performance in

FY 2013 was above historical averages dating 

back to 2008, which is an impressive 

accomplishment given the sequestration 

challenges the Department faced in 2013.

Figure 8-1. Percentage of Performance Goals 

Met or Exceeded since FY 2008

B22-28

69

54

75

80

71

72

50

55

60

65

70

75

80

85

90

95

100

FY08 FY09 FY10 FY11 FY12 FY13

Percentage of Goals Met or Exceeded

Sequestration 

Provisions Take Effect 

March 2013

FY08 – FY13 

Average

Percentage
Overview – FY 2015 Defense Budget 

CHAPTER 8 PERFORMANCE IMPROVEMENT

8-4

In FY 2013, the Department achieved success in some areas. Other areas present

opportunities for continued improvement. The Department ensured that each Combatant 

Command (COCOM) was equipped with the manpower and materiel required to execute 

today’s missions and prevail in today’s wars. Additionally, the Department demonstrated its 

commitment to caring for its people by making continued improvements to its health care 

system. The Department must continue to focus on driving improvements in the Integrated 

Disability Evaluation System (IDES) and identifying ways to reduce energy use at DoD facilities.

Figure 8-2 compares the Department’s FY 2013 performance results in terms of warfighting and

infrastructure goals. The DoD met or exceeded targets for 77 percent and 72 percent, 

respectively, of its warfighting and infrastructure goals. Performance results are not available 

for three warfighting and three infrastructure performance measures at the time of this report.

Summary of Results

Successes: In FY 2013, the Department met or exceeded performance targets for some of its 

most critical performance goals and demonstrated its commitment to caring for its people. The 

Department’s focus on mission readiness resulted in readiness levels to execute current 

operations, although the Department is facing challenges in other mission readiness areas due to 

continued sequestration reductions. In the face of these challenges, the Department has 

maintained its commitment to its people and has made considerable improvements to the 

psychological care and health of Service members. In addition to these mission critical goals, the 

Department’s efforts towards improving audit readiness and inventory management have been 

very successful in supporting the warfighter as the Department continues to reset equipment as 

part of the drawdown from Afghanistan and generating savings for the Department.

Despite budget reductions, the Department is committed to ensuring that our nation’s military 

remains ready to prevail in today’s wars. Activities tied to current operations include 

transitioning security responsibilities to Afghan National Security Forces (ANSF), conducting 

Joint and Coalition exercises and engagements, and maintaining capable and ready forwarddeployed and forward-stationed units and capabilities. 

Caring for our nation’s Wounded, Ill, and Injured (WII) is a top priority. In FY 2013, the 

Department made significant improvements in streamlining services provided to our WII Service 

members. By the end of FY 2013, every WII Service member was assigned a Recovery Care 

Coordinator who administered an active recovery plan within 30 days of enrollment in a Service 

recovery coordination plan. This is a 32 percent improvement from FY 2012. 

Figure 8-2. FY 2013 Performance Measure Results

B22-29

5

23%

17

77%

Goal Not Met Goal Met

14

30%

32

70%

Warfighting Goals Infrastructure Goals
Overview – FY 2015 Defense Budget 

CHAPTER 8 PERFORMANCE IMPROVEMENT

8-5

A comprehensive post-deployment health assessment is a critical tool in assessing the health of 

Service members and identifying potential injuries, both physical and emotional. Emerging 

science and DoD programs and policies have supported the early detection of non-visible 

injuries such as Traumatic Brain Injury (TBI) and Post-Traumatic Stress Disorder which could 

lead to prompt treatment. To incorporate improvements into post-deployment health 

assessments, the Military Health System (MHS) now uses a more comprehensive postdeployment health assessment instrument that is designed to facilitate early identification and 

referral for care to ensure that those with post deployment injuries as a result of service to the 

nation receive the treatment they need. 

The Department also conducted an enterprise-wide review of all psychological health programs 

in FY 2013 to identify programs that are producing measurably effective results and areas 

where improvement is needed. This review identified best practices that the Department can 

implement to continue improving the psychological and TBI care provided to service members 

and their families.

Improving audit readiness across the Department is a critical step in achieving sustained cost 

savings and improving business outcomes. A key component of the Department’s audit 

readiness goal is validating the existence and accountability of mission critical assets such as 

real property, military equipment, and inventory. The Department’s improved validation and 

accountability have played a critical role in identifying and reducing excess inventory, and 

resulted in significant savings from the Department’s approximately $30 billion of secondary 

inventory (defined as inventory supplied by a different Military Service/Agency or residual 

inventory not transferred to the General Services Administration). At mid-year in FY 2013, the 

Department reduced excess inventory from 9.9 percent to 7.8 percent of on-hand secondary 

inventory, generating real savings. The Department’s continued improvement in accountability 

of mission critical assets will drive further reductions in excess secondary inventory.

Improvement Areas: While the Department is improving its overall care to wounded warriors, 

the Department will focus on decreasing the IDES processing time in support of its commitment 

to provide top-quality care to wounded warriors. The Department can also improve facility 

energy performance, which will reduce overhead and headquarters costs and preserve mission 

readiness.

The Department of Defense and the Department of Veterans Affairs (VA) share responsibility for 

processing wounded warriors through IDES. While DoD has made considerable improvements 

in providing top-quality physical and psychological care to its wounded warriors, the percent of 

Service members who are processed through IDES within 295 days (Active) or 305 days 

(Reserve) needs additional focus. In the fourth quarter of FY 2013, 32 percent of Service 

members were processed through IDES within the given timeframe, which is below the target of 

70 percent. This is primarily due to delays in the completion of the transition, proposed rating, 

and benefits decision portions of the process, of which two are outside of DoD’s control. Over 

the past year, the time to complete DoD-specific IDES activities (referral, Medical Evaluation 

Board (MEB), Informal Physical Evaluation Board (PEB), and Transition) improved from an 

average of 188 days to 147 days; the DoD-specific goal was 105 days. The Department also 

provided, and will continue to provide, personnel to assist operations in a Seattle VA site to 

expedite IDES case processing. 

In December 2012, DoD assumed responsibility to download information from the Defense 

Personnel Records Information Retrieval System and upload it into Virtual VA to assist VA in 

completing IDES final benefit determinations sooner. The VA processes and practices have

impacted the Department’s ability to achieve the intended results. The Department will continue 

to work with the VA in FY 2014 to improve the processes, practices, and interfaces that support 
Overview – FY 2015 Defense Budget 

CHAPTER 8 PERFORMANCE IMPROVEMENT

8-6

our shared desire to ensure relevant, timely, and quality outcomes for our warriors and

veterans. 

The Department manages a global property portfolio on 28 million acres with more than 

563,000 facilities and a replacement value of nearly $828 billion. The DoD is the largest 

consumer of energy in the Federal government, spending approximately $4 billion annually to 

power these facilities. This infrastructure is critical to maintaining military readiness, and the 

importance of sustaining these facilities cannot be overstated. The Department’s goal is to fund 

facilities sustainment at a minimum of 90 percent of the Facilities Sustainment Model (FSM) 

requirement. The FSM has been used since 2003 to estimate the annual sustainment funds the 

Services need to budget to perform maintenance and repair activities needed to keep their 

buildings and structures in good working order to maximize facility service life. The DoD 

budgeted for 84 percent of the sustainment requirement in FY 2013 but, due to sequestration 

reductions, it only obligated funding equal to 70 percent of the FSM requirement by the end of 

FY 2013. The Department will require marked improvement in order to accomplish its goals in 

this area.

Facilities maintenance supports the Department’s efforts to improve energy conservation and 

efficiency, reduce operating costs and greenhouse gas emissions, and improve mission

effectiveness. The Department’s goal is to improve the average energy intensity of its buildings 

by 30 percent in FY 2015 compared to the FY 2003 baseline. While the Department has made 

significant improvements towards meeting the goal over the last two years, sequestration 

reductions may make it difficult for the Department to achieve the FY 2015 goal.

FY 2012 - FY 2013 Agency Priority Goal (APG) Results

Pursuant to the GPRA Modernization Act of 2010, the Department established five APGs in

FY 2012, which were used to track the Department’s progress toward achieving priorities 

throughout FY 2012 and FY 2013. Each of the five APGs is provided in its entirety, as follows:

• Agency Priority Goal One: By September 30, 2013, the DoD will attain a passing 

score on a comprehensive cyber security inspection that assesses compliance with 

technical, operational, and physical security standards on an overwhelming majority of 

inspected military cyberspace organizations resulting in improved hardening and cyber 

defense.

• Agency Priority Goal Two: By September 30, 2013, the DoD will improve the care and 

transition of WII Warriors by: (1) increasing the use of Recovery Care Coordinators and 

ensuring WII service members have active recovery plans; (2) improving effectiveness of 

behavioral health programs and ensuring all service members complete quality postdeployment health screenings; and (3) accelerating the transition of WII service 

members into veteran status by reducing the disability evaluation processing time.

• Agency Priority Goal Three: By September 30, 2013, the DoD will: (1) improve its 

facility energy performance by reducing average building energy intensity by 24 percent

from the 2003 baseline of 117,334 British Thermal Units (BTUs) per gross square foot, 

and producing or procuring renewable energy equal to 13 percent of its annual electric 

energy usage; and (2) improve its operational energy performance by establishing an 

operational energy baseline with all available data on fuel use; developing a plan for 

remediating data gaps; funding and implementing a comprehensive data plan; 

establishing and executing operational energy performance targets based on this 

comprehensive data for each Military Service and relevant agency.

• Agency Priority Goal Four: By September 30, 2013, the DoD will improve its 

acquisition process by ensuring that: 100 percent of Acquisition Category (ACAT) 1 
Overview – FY 2015 Defense Budget 

CHAPTER 8 PERFORMANCE IMPROVEMENT

8-7

programs, going through Milestone A 

decision reviews, present an 

affordability analysis; 100 percent of 

ACAT 1 programs, going through 

milestone decision reviews present a 

competitive strategy; the average 

cycle time for Major Defense 

Acquisition Programs (MDAPs) will 

not increase by more than 5 percent

from the Acquisition Program 

Baseline; the annual number of 

MDAP breaches – significant or 

critical cost overruns, for reasons 

other than approved changes in 

quantity – will be zero; and the DoD 

will increase the amount of contract 

obligations that are competitively 

awarded to 60 percent in FY 2013.

Agency Priority Goal Five: By September 

30, 2014, the DoD will improve its audit 

readiness on the Statement of Budgetary Resources for Appropriations Received from 80 to 

100 percent.

The Department uses 12 of its 74 performance measures to track progress towards achieving 

its priority goals. As depicted in Figure 8-3, in FY 2013, the Department met 58 percent (7 of 

12) of its APG performance measures. The results for two APG performance measures were 

not available at the time of this report, but detailed narratives for the remaining ten APG 

performance measures are found in the “Summary of DoD Performance by Strategic Objective” 

section. The two remaining APG performance measures relate to the Department’s use of 

energy and are assessed on an annual basis at the end of the calendar year. The final results 

are not yet available.

Figure 8-4 reflects FY 2013 APG 

performance results by APG. For

FY 2013, the DoD met its cyber 

security and the majority of its 

wounded warrior care goals, 

while achieving less progress in

Acquisition Improvement and 

audit readiness. The energy 

performance APG measures are 

assessed on an annual basis.

For the Defense Department’s 

contributions to the APGs and its 

progress, please refer to 

http://goals.performance.gov/age

ncy/dod.

Figure 8-3. FY 2013 APG Summary of 

Performance

Figure 8-4. FY 2013 Performance Results by Agency Priority 

Goal

B22-29

7

58%

3

25%

2

17%

Met or Exceeded Target

Did Not Meet Target

Results Not Currently Available

B22-31

1

4

1 1

1

2

2

1

0

1

2

3

4

5

6

APG 1:

Cyber

Security

APG 2:

Wounded

Warrior Care

APG 3:

Energy

Performance

APG 4:

Acquisition

Improvement

APG 5:

Audit

Readiness

Met or Exceeded Did Not Meet
Overview – FY 2015 Defense Budget 

CHAPTER 8 PERFORMANCE IMPROVEMENT

8-8

Cross-Agency Priority Goals

In addition to APGs, the GPRA Modernization Act also requires the identification of CrossAgency Priority (CAP) Goals in areas where increased cross-agency coordination on outcomefocused areas is likely to improve progress. In accordance with the GPRA Modernization Act, 

interim CAP Goals were published concurrent with the FY 2013 President’s Budget and are 

addressed in the agency Strategic Plan, the Annual Performance Plan (APP), and the Annual 

Performance Report (APR). Please refer to http://goals.performance.gov/agency/dod for the 

Defense Department’s contributions to those goals and progress, where applicable. The DoD 

currently contributes to the following CAP Goals:

• Entrepreneurship and Small Business

• Veteran Career Readiness

• Data Center Consolidation

• Cyber security

• Sustainability

• Real Property

• Improper Payments

• Closing Skills Gaps

• Strategic Sourcing

High Risk Areas

In an effort to drive increased accountability and efficiencies in the Federal government, the 

Government Accountability Office (GAO) determines high risk areas across the Federal 

government based on vulnerability to fraud, waste, abuse, or mismanagement; and changes 

required to address major economic, efficiency, or effectiveness challenges. The GAO has 

published biennial high-risk series updates since 1990 (see

http://www.gao.gov/highrisk/overview). The Defense Department shares responsibility for the 

following cross-agency areas on the GAO high risk list:

• Limiting the Federal Government’s Fiscal Exposure by Better Managing Climate Change 

Risks;

• Strategic Human Capital Management;

• Managing Federal Real Property;

• Mitigating Gaps in Weather Satellite Data;

• Establishing Effective Mechanisms for Sharing and Managing Terrorism-Related 

Information to Protect the Homeland;

• Protecting the Federal Government’s Information Systems and the Nation’s Cyber 

Critical Infrastructures;

• Ensuring the Effective Protection of Technologies Critical to U.S. National Security 

Interests;

• Improving and Modernizing Federal Disability Programs.
Overview – FY 2015 Defense Budget 

CHAPTER 8 PERFORMANCE IMPROVEMENT

8-9

The GAO also designates the following seven DoD-specific functional areas as high risk:

• DoD Support Infrastructure Management (since 1997 with scope reduced in 2011);

• DoD Supply Chain Management (since 1990);

• DoD Contract Management (since 1992);

• DoD Weapon Systems Acquisition (since 1990);

• DoD Approach to Business Transformation (since 2005);

• DoD Business Systems Modernization (since 1995); and

• DoD Financial Management (since 1995).

All seven DoD-specific high risk areas are under the Department's Strategic Goal Five, focused 

on reforming DoD business and support functions. Performance achieved under DoD's 

Strategic Goal Five and the GAO’s high risk areas for DoD are correlated.

DoD Major Management Challenges

The Office of the Inspector General (IG) works to promote efficiency, effectiveness, and integrity 

in the programs and operations of the Department. The DoD IG identified the following areas as 

presenting the most serious management and performance challenges:

• Financial Management;

• Acquisition Processes and Contract Management;

• Joint Warfighting and Readiness;

• Information Assurance, Security, and Privacy;

• Health Care;

• Equipping and Training Afghan Security Forces; and

• The Nuclear Enterprise.

Detailed information regarding these challenges, the IG’s assessment of the Department’s 

progress, and the Department’s management response can be found with the report at 

http://comptroller.defense.gov/. 
Overview – FY 2015 Defense Budget 

CHAPTER 8 PERFORMANCE IMPROVEMENT

8-10

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Overview – FY 2015 Defense Budget 

APPENDIX A RESOURCE EXHIBITS

A-1

A. RESOURCE EXHIBITS

Table A-1. Combat Force Structure Overview

Service FY 2014 FY 2015 Delta 

FY14 - FY15

Army Active

Brigade Combat Teams (BCTs) 38 32 -6

Combat Aviation Brigades (CABs) 13 11 -2

Army National Guard

BCTs 28 28 -- 

CABs/Aviation Restructure Initiative 8 8 -- 

Navy

Number of Ships 288 283 -5

 Carrier Strike Groups 10 10 -- 

Marine Corps Active

Marine Expeditionary Forces 3 3 -- 

Infantry Battalions 25 23 -2

Marine Corps Reserve

Marine Expeditionary Forces -- -- -- 

Infantry Battalions 9 8 -1

Air Force Active

Combat Coded Squadrons 40 36 -4

Aircraft Inventory (TAI) 3,746 3,563 -183

Air Force Reserve

Combat Coded Squadrons 3 3 -- 

Aircraft Inventory (TAI) 357 337 -20

Air National Guard

Combat Coded Squadrons 21 20 -1

Aircraft Inventory (TAI) 1,091 1,056 -35
Overview – FY 2015 Defense Budget 

APPENDIX A RESOURCE EXHIBITS

A-2

Source: FY 2014 President's Budget and OCO Request

1/ FY 2014 projected end strength levels

2/ Anticipated OCO-funded strength for Marine Corps

3/ FY 2015 the Army funds a baseline ES of 490K with no OCO-funded end strength

4/ President's invoking of emergency authorities permits end strength to vary from authorized levels

Table A-2. Active Component End Strength – Base Budget (in Thousands)

Service FY 2014 

Estimate1/ FY 2015 Delta 

FY14 - FY15

Army 490.0 490.0 -- 

Navy 323.9 323.6 -0.3

Marine Corps 182.1 182.7 +0.6 

Air Force 322.2 310.9 -11.3

TOTAL 1,318.2 1,307.2 -11.0

Numbers may not add due to rounding

Table A-3. Active Component End Strength – OCO Budget (in Thousands)

Service FY 2014 

Estimate1/ FY 2015 Delta 

FY14 - FY15

Army 20.4 -- -20.4

Marine Corps 6.7 1.4 2/ -5.3

TOTAL 27.1 1.4 -25.7

Numbers may not add due to rounding

Table A-4. Active Component End Strength – Base + OCO Budget

 (in Thousands)

Service FY 2014 

Estimate1/ FY 2015 Delta 

FY14 - FY15

Army3/ 510.4 490.0 -20.4

Navy 323.9 323.6 -0.3

Marine Corps 188.8 184.1 -4.7

Air Force 322.2 310.9 -11.3

TOTAL4/ 1,345.3 1,308.6 -36.7

Numbers may not add due to rounding
Overview – FY 2015 Defense Budget 

APPENDIX A RESOURCE EXHIBITS

A-3

Source: FY 2015 President's Budget Numbers may not add due to rounding

* Authorized end strengths are shown for all Services except the Army Reserve. 

Note: Reflects Discretionary Budget Authority, FY 2014 includes $4,205938 

in prior year rescissions

Numbers may not add due to rounding

Note: Reflects Discretionary Budget Authority, FY 2014 includes $4,205938 

in prior year rescissions

Numbers may not add due to rounding

Table A-5. Reserve Component End Strength (in Thousands)

Service FY 2014 

Estimate* FY 2015 Delta FY14 - FY15

Army Reserve 202.0 202.0 -- 

Navy Reserve 59.1 57.3 -1.8

Marine Corps Reserve 39.6 39.2 -0.4

Air Force Reserve 70.4 67.1 -3.3

Army National Guard 354.2 350.2 -4.0

Air National Guard 105.4 105.0 -0.4

TOTAL 830.7 820.8 -9.9

Table A-6. DoD Base Budget by Appropriation Title

$ in Thousands

Base Budget

Military Personnel 135,924,801 135,193,685 -731,116

Operation and Maintenance 192,822,692 198,726,096 5,903,404

Procurement 92,439,558 90,358,540 -2,081,018

RDT&E 62,805,956 63,533,947 727,991

Revolving and Management Funds 2,222,427 1,234,468 -987,959

Defense Bill 486,215,434 489,046,736 2,831,302

Military Construction 8,392,244 5,366,912 -3,025,332

Family Housing 1,415,764 1,190,535 -225,229

Military Construction Bill 9,808,008 6,557,447 -3,250,561

Total 496,023,442 495,604,183 -419,259

FY 2014 

Enacted

FY 2015 

Request

Delta

FY14 - FY15

Table A-7. DoD Base Budget by Military Department

$ in Thousands

Base Budget

Army 121,686,104 120,330,929 -1,355,175

Navy 147,324,539 147,685,630 361,091

Air Force 134,708,938 137,781,235 3,072,297

Defense-Wide 92,303,861 89,806,389 -2,497,472

Total 496,023,442 495,604,183 -419,259

FY 2014 

Enacted

FY 2015 

Request

Delta

FY14 - FY15
Overview – FY 2015 Defense Budget 

APPENDIX A RESOURCE EXHIBITS

A-4

The FY 2015 request for Overseas Contingency Operations (OCO) funding will be 

submitted later.

Numbers may not add due to rounding

The FY 2015 request for OCO funding will be submitted later. Numbers may not add due to rounding

The FY 2015 request for OCO funding will be submitted later. Numbers may not add due to rounding

Table A-8. DoD Budget by Military Department and Appropriation Title

$ in Thousands

Military Personnel 62,014,049 5,845,115 56,168,934 56,123,601 -45,333

Operation and Maintenance 78,201,289 37,460,114 40,741,175 41,963,050 1,221,875

Procurement 17,739,267 2,434,402 15,304,865 14,313,643 -991,222

RDT&E 7,090,081 13,500 7,076,581 6,593,898 -482,683

Military Construction 1,679,112 -- 1,679,112 893,425 -785,687

Family Housing 540,279 -- 540,279 429,585 -110,694

Revolving and Management Funds 219,890 44,732 175,158 13,727 -161,431

Total Department of the Army 167,483,967 45,797,863 121,686,104 120,330,929 -1,355,175

Department of 

the Army 

FY 2014 

Enacted 

Base

FY 2014 

Enacted 

OCO

FY 2014 

Enacted 

Total

FY 2015

Base 

Request

Base Delta

FY14 - FY15

$ in Thousands

Military Personnel 46,135,833 1,401,998 44,733,835 44,971,530 237,695

Operation and Maintenance 55,196,355 11,908,857 43,287,498 46,488,320 3,200,822

Procurement 42,191,814 593,022 41,598,792 38,424,012 -3,174,780

RDT&E 14,921,498 34,426 14,887,072 16,266,335 1,379,263

Military Construction 1,791,278 -- 1,791,278 1,164,992 -626,286

Family Housing 452,851 -- 452,851 370,441 -82,410

Revolving and Management Funds 573,213 -- 573,213 -- -573,213

Total Department of the Navy 161,262,842 13,938,303 147,324,539 147,685,630 361,091

Department of 

the Navy 

FY 2014 

Enacted 

Base

FY 2014 

Enacted 

OCO

FY 2014 

Enacted 

Total

FY 2015

Base 

Request

Base Delta

FY14 - FY15

$ in Thousands

Military Personnel 35,857,845 835,813 35,022,032 34,098,554 -923,478

Operation and Maintenance 55,813,446 12,801,473 43,011,973 45,148,610 2,136,637

Procurement 34,193,262 2,868,740 31,324,522 33,357,810 2,033,288

RDT&E 23,541,991 9,000 23,532,991 23,739,892 206,901

Military Construction 1,290,731 -- 1,290,731 1,046,905 -243,826

Family Housing 464,958 -- 464,958 327,747 -137,211

Revolving and Management Funds 150,231 88,500 61,731 61,717 -14

Total Department of the Air Force 151,312,464 16,603,526 134,708,938 137,781,235 3,072,297

Department of the 

Air Force 

FY 2014 

Enacted 

Base

FY 2014 

Enacted 

OCO

FY 2014 

Enacted 

Total

FY 2015

Base 

Request

Base Delta

FY14 - FY15
Overview – FY 2015 Defense Budget 

APPENDIX A RESOURCE EXHIBITS

A-5

Table A-8. DoD Base Budget by Military Department and Appropriation Title

(cont’d)

The FY 2015 request for OCO funding will be submitted later. Numbers may not add due to rounding

Note: Reflects Discretionary Budget Authority

* The FY 2014 Defense-Wide Family Housing appropriated amount was $57,625 thousand. This was offset by a $99,949 thousand 

rescission to the Homeowners Assistance Fund.

Defense-Wide

$ in Thousands

Military Personnel -- -- -- -- --

Operation and Maintenance 73,294,496 7,512,450 65,782,046 65,126,116 -655,930

Procurement 5,340,326 1,128,947 4,211,379 4,263,075 51,696

RDT&E 17,387,520 78,208 17,309,312 16,933,822 -375,490

Military Construction 3,631,123 -- 3,631,123 2,261,590 -1,369,533

Family Housing* -42,324 -- -42,324 62,762 105,086

Revolving and Management Funds 1,544,003 131,678 1,412,325 1,159,024 -253,301

Total Defense-Wide 101,155,144 8,851,283 92,303,861 89,806,389 -2,497,472

FY 2014 

Enacted 

Base

FY 2014 

Enacted 

OCO

FY 2014 

Enacted 

Total

FY 2015

Base 

Request

Base Delta

FY14 - FY15

Grand Total Budget 581,214,417 85,190,975 496,023,442 495,604,183 -419,259
Overview – FY 2015 Defense Budget 

APPENDIX A RESOURCE EXHIBITS

A-6

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Overview – FY 2015 Defense Budget 

APPENDIX B ACRONYM LIST

B-1

APPENDIX B: Acronym List

NOTE: This is not a comprehensive list of all acronyms used in the Overview.

Acronym Definition

A2/AD Anti-Access/Area Denial 

ACAT Acquisition Category

ACF Army Contingency Force

AEHF Advanced Extremely-High Frequency 

AESA Active Electronically Scanned Array

AFSOC Air Force Special Operations Command 

ANSF Afghan National Security Forces

AOC Air Operations Center

APG Agency Priority Goal

APP Annual Performance Plan

APR Annual Performance Report

ARCYBER Army Cyber Command

ARI Aviation Restructuring Initiative

ASEAN Association of Southeast Asian Nations

AVF All-Volunteer Force

AWACS Airborne Warning and Control System

BAH Basic Allowance for Housing

BAS Basic Allowance for Subsistence

BBA Bipartisan Budget Act of 2013

BBP Better Buying Power

BCA Budget Control Act of 2011

BCT Brigade Combat Team

BMD Ballistic Missile Defense

BRAC Base Realignment and Closure

BSFR Black Sea Rotational Force

C2 command and control

CAP Cross-Agency Priority

CAPES Combat Avionics Programmed Extension

CBRN Chemical, Biological, Radiological and Nuclear

CDU Critical Dual Use

CE2T2 Combatant Commander’s Exercise Engagement and Training Transformation 

CERF CBRN Enhanced Response Forces

CITS Central Integrated Test System

CMC Core Mission Computer

CMP Civil Military Programs

CNO Chief of Naval Operations

COCOM Combatant Command

CONECT Combat Network Communication Technology

CONUS Contiguous United States

CPI Consumer Price Index
Overview – FY 2015 Defense Budget 

APPENDIX B ACRONYM LIST

B-2

Acronym Definition

CRC Control and Reporting Center

CRE Chemical, Biological, Radiological, and Nuclear (CBRN) Response Enterprise

CRH Combat Rescue Helicopter

CRS Career Readiness Standards

CSA Critical Skills Availability

CST Civil Support Teams

CTC Combat Training Center

CWMD Chemical Weapons of Mass Destruction

DAWDF Defense Acquisition Workforce Development Fund

DCAA Defense Contract Audit Agency

DCMA Defense Contract Management Agency

DeCA Defense Commissary Agency

DES Disability Evaluation System

D-ILS Deployable Instrument Landing System

DLIFLC Defense Language Institute Foreign Language Center

DMS-M Defensive Management Systems-Modernization 

DoD Department of Defense

DoDEA Department of Defense Education Activity

D-RAPCOM Deployable Radar Approach Control

DSCA Defense Support of Civil Authorities

EAM Emergency Action Message

ECI Employment Cost Index

EELV Evolved Expendable Launch Vehicle

EISA Energy Independence and Security Act

EO Executive Order

EOD Explosive Ordnance Disposal

EPAA European Phased Adaptive Approach 

EPAct05 Energy Policy Act of 2005

EPAWSS Eagle Passive/Active Warning Survivability System

EPS Enhanced Polar System

ERP Enterprise Resource Planning

ESGR Employer Support of the Guard and Reserve

FHP Flying Hour Program

FIAR Financial Improvement and Audit Readiness

FIDL Fully Integrated Data Link

FM Financial Management

FRP Fleet Response Plan 

FSM Facilities Sustainment Model

FTE Full-Time Equivalent

FY Fiscal Year

FYDP Future Years Defense Program

GAO Government Accountability Office

GBI Ground-Based Interceptors
Overview – FY 2015 Defense Budget 

APPENDIX B ACRONYM LIST

B-3

Acronym Definition

GCC Geographic Combatant Commands

GCV Ground Combat Vehicle

GEO Geosynchronous Orbit

GMD Ground-based Midcourse Defense

GO/FO General Officer/Flag Officer

GPRA Government Performance and Results Act of 1993

GPRAMA GPRA Modernization Act of 2010

GPS Global Positioning System

GPS Goals, Plans, and Success 

GW Gigawatt

HRF Homeland Response Forces

IDES Integrated Disability Evaluation System

IG Inspector General

ILE Intermediate Level Education

IRT Individual Readiness Training Program

ISR Intelligence, Surveillance, and Reconnaissance

ITX Integrated Training Exercise 

JASSM-ER Joint Air-to-Surface Standoff Missile-Extended Range

JCET Joint Combined Exchange Training

JDAM Joint Direct Attack Munition

JIE Joint Information Environment

JLEnT Joint Logistics Enterprise

JSTARS Joint Surveillance Target Attack Radar System

JTCP Joint Training Coordination Program 

JTEN Joint Training Enterprise Network

KV Kill Vehicle

LCS Littoral Combat Ship

LMS Learning Management System 

LRDR Long Range Discriminating Radar

LRS Long Range Strike

LRS-B Long Range Strike-Bomber

LVC Live Virtual Construct

MA Mission Assignment

MALD-J Miniature Air Launched Decoy-Jammer

MCESG Marine Corps Embassy Security Group 

MDAP Major Defense Acquisition Program

MEB Medical Evaluation Board

MEB CE Marine Expeditionary Brigade command elements

MEU Marine Expeditionary Unit

MHS Military Health System

MilCon Military Construction

MISO Military Information Support Operations

MSE Missile Segment Enhancement
Overview – FY 2015 Defense Budget 

APPENDIX B ACRONYM LIST

B-4

Acronym Definition

MTF Military Treatment Facility

MWR Morale, Welfare, and Recreation

MYP Multiyear Procurement

NATO North Atlantic Treaty Organization

NC3 Nuclear Command, Control, and Communication

NDAA National Defense Authorization Act

NDO Nuclear Deterrence Operations

O&S operating and support

OCO Overseas Contingency Operations

O-FRP Optimized FRP

OGS Opportunity, Growth, and Security

OIG Office of the Inspector General

OMB Office of Management and Budget

OPIR Overhead Persistent Infrared

OPM Office of Personnel Management

OPTEMPO Operating Tempo

OSD Office of the Secretary of Defense

OUSD(C) Office of the Under Secretary of Defense (Comptroller)

OUSD(P&R) Office of the Under Secretary of Defense (Personnel and Readiness)

PAC-3 Patriot Advanced Capability-3

PEB Physical Evaluation Board

PPV Public-Private Ventures

PSA Principal Staff Assistant

QDR Quadrennial Defense Review

QRMC Quadrennial Review of Military Compensation

RC Reserve Components

RMC Regular Military Compensation

ROK Republic of Korea

S&I Special and Incentive

S&T Science and Technology

SAMS School of Advanced Military Studies

SATCOM Satellite Communication

SBA Schedule of Budgetary Activity

SBIRS Space Based Infrared System 

SBR Statements of Budgetary Resources

SCMR Strategic Choices and Management Review

SLEP Service Life Extension Program

SMI Space Modernization Initiative

SOF Special Operations Forces 

SOFORGEN SOF generation model

SPMAGTF Special Purpose Marine Air Ground Task Force

SPMAGTF-CR SPMAGTF Crisis Response

SRM Sustainment, Restoration, and Modernization
Overview – FY 2015 Defense Budget 

APPENDIX B ACRONYM LIST

B-5

Acronym Definition

SSA Space Situational Awareness

STEM Science, Technology, Engineering and Mathematics

SV Space Vehicle

TAP Transition Assistance Program

TBI Traumatic Brain Injury

TDY Temporary Duty

THAAD Terminal High-Altitude Area

TRA Training Resources Availability

TSOC Theater Special Operations Commands 

UDP Unit Deployment Program

USAFRICOM United States Africa Command

USASOC United States Army Special Operations Command

USCENTCOM United States Central Command 

USMC United States Marine Corps

USPACOM United States Pacific Command

USSOCOM United States Special Operations Command

USSTRATCOM United States Strategic Command

VA Department of Veterans Affairs

VSDU Vertical Situation Display Upgrade

WII Wounded, Ill, and Injured

WIN-T Warfighter Information Network – Tactical

WSF Weather System Follow-On

WSS Weapons System Sustainment

YRRP Yellow Ribbon Reintegration Program
Overview – FY 2015 Defense Budget 

APPENDIX B ACRONYM LIST

B-6

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