Department of Defense News Briefing on the President's Fiscal Year 2020 Defense Budget

David L. Norquist, Performing the Duties of the Deputy Secretary of Defense; Deputy Under Secretary of Defense (Comptroller) Elaine McCusker; Lt. Gen. Anthony Ierardi, Director, Force Structure, Resources and Assessment, J-8, Joint Staff


Eds. note:  The detailed Future Years Defense Program (FYDP) numbers in their entirety, and as provided to the Congress annually, are classified.  The department's topline request across the FYDP at the appropriation level is not classified, which is why it is in the Green Book.  Unclassified numbers are also provided in the justification books.

PERFORMING THE DUTIES OF THE DEPUTY SECRETARY OF DEFENSE DAVID L. NORQUIST:  Good afternoon.  Thank you for being here today to discuss the fiscal year 2020 defense budget.  We have senior leaders from the comptroller and Joint Staff, Ms. McCusker and General Ierardi, to brief you on the details.  So I just want to take a minute to give you some few high-level takeaways.

Wars of the future are going to be radically different from the short conventional wars and protracted counterterrorism operations we've fought since the collapse of the Soviet Union.  Conventional opponents have typically lacked a navy or meaningful air force, never mind cyber or space capabilities.  As a result, they were limited to a single domain, land, where they were quickly over-matched.  So the conflicts were short and lop-sided.  

The conventional war phase of Desert Storm and Operation Iraqi Freedom took less than 45 days.  To assume future conventional wars will be like these wars would be a tragic mistake.  The National Defense Strategy has made it very clear that, to preserve peace, we must be prepared for the high-end fight against peer competitors.  Future wars will be waged not just in the air, on the land or at sea but also in space and cyberspace, dramatically increasing the complexity of warfare.

This budget reflects that challenge, pulling together all the pieces of the National Defense Strategy that have been built over the past two years, from our readiness gains and nuclear posture review, joint artificial intelligence center, elevation of U.S. Cyber Command and development of the space force, to our strength and partnerships in the Indo-Pacific and Europe and our reform initiatives, all these pieces come together in this budget.

The 2020 budget executes the National Defense Strategy by re-prioritizing resources and increasing our investments in the following four areas.  First, it invests in the emerging space and cyber war-fighting domains.  Second, it invests in modernizing capabilities in the air, maritime and land domains.  Third, it accelerates innovation in technologies such as artificial intelligence, hypersonics, autonomy and directed energy.  And, finally, it sustains our force and builds on our readiness gains.

It is the largest research development test and evaluation request in 70 years.  It is the largest shipbuilding request in 20 years.  It includes a 3.1 percent military pay raise, the largest in a decade, all this with defense spending remaining near a record low as a percentage of our economy.

The stakes are clear.  If we want peace, adversaries need to know there's no path to victory through fighting us.  With that, I will turn it over to my colleagues to get into the details.

Thank you very much and thank you for being here today.

DEPUTY UNDER SECRETARY OF DEFENSE (COMPTROLLER) ELAINE MCCUSKER:  Good afternoon.  I'm Elaine McCusker, deputy comptroller.  I'm accompanied today by General Ierardi of the Joint Staff J-8.  Mr. Norquist gave a great preview of our strategic thinking behind this budget.  To understand our budget, it is important to remember where we have been, how we got here and our strategy for the future.

Deterring or defeating great power aggression is a fundamentally different challenge than the regional conflicts against rogue states that were the basis of our planning constructs for the last 25 years. 

We took a hard look at the nature of competition, our global commitments, and our resources:  people, capabilities and funding.  We also looked at our competitors.  China and Russia will not fight us the way we have gotten used to fighting.  

Next slide. 

To be successful, we have to change how we develop, posture and employ the joint force.  This slide summarizes the key takeaways of the NDS and emphasizes what is different about this strategy, compared to prior defense strategies. 

It sets the department on a path to prepare for long-term strategic competition.  It introduces operational surprise and unpredictable force employment.  

It moves past the Desert Storm model, to multi-domain operations within denied environments.  

Next slide. 

This slide provides a brief recap of our budget focus the last few years.  In F.Y. '17 and '18, we were about readiness and recovery, to include training and rebuilding our munitions inventory. 

In F.Y. '19, we had our first really strategy-driven budget with a focus on lethality.  The NDS drove the issues we considered, the decisions we made and the funding we needed.  

We are executing this budget now.  And with the help of Congress, jump-started our focus on new warfighting domains and capabilities.

The F.Y. 2020 budget is the next big step.  The NDS drove our decisions, and this budget is a major milestone in its implementation. 

To support the NDS, we need a budget that stays the course.  This is our budget top-line snapshot.  At $718 billion for DOD, it shows growth over the F.Y. '19-enacted amount of just over five percent.

The F.Y. '20 budget request conforms to the Budget Control Act that caps with a $545 billion base budget request.  It includes $165 billion for overseas contingency operations, and $9 billion for emergency funding.  The OCO and emergency will be broken out, and we'll discuss that a little bit later. 

The F.Y. '20 budget request carries out the NDS by prioritizing resources and shifting investments to prepare for a potential future high-end fight.  

We are requesting resources in the four focus areas and the grey areas on this slide that were highlighted by Mr. Norquist in his opening statement.  

I will now turn it over to General Ierardi to talk about warfighting domains, innovative technologies and readiness on the next several slides. 

LT. GEN. ANTHONY IERARDI:  Good morning, ladies and gentlemen.  I'm just going to briefly walk through the next few charts to amplify the comments that Mr. Norquist and Ms. McCusker made with respect to enhancing competitiveness through emerging warfighting domains -- indeed, contested domains. 

In the space domain, the focus was on enhancing our organizational structure and improving our capabilities, including satellite communications capabilities, space-based warning and space launch capacity.

We come in at about $14.1 billion of investment, and that's approximately a 15 percent increase over last year. 

In the cyber-domain, we see about a $9.6 billion investment, a 10 percent increase over last year for offensive and defensive cyberspace capabilities and operations enhancements, resilient networks to protect our operating networks and systems, and a modern multi-cloud -- create a modern multi-cloud environment.  

Next chart.  

As was mentioned, we also continue to modernize our capabilities and capacity in the air, maritime and land domains.  Namely, enhancing fourth and fifth generation aircraft capabilities to be able to fulfill the priorities of the National Defense Strategy against our primary competitors.

As well as in the maritime domain, with significant increases in naval capacity, with strike options including unmanned capabilities, and in growing the battle force fleet on its way to 355 ships down the road. 

Land domain, we see increased capabilities in the ground tactical and ground combat vehicle categories, including Future Vertical Lift, a key capability we require, and also attention and resources in the items, equipment and capabilities required by our small units.  Our squads -- infantry squads in the Army and Marine Corps. 

In the multi-domain category, in nuclear, missile defense and special operating forces, we see significant increases to look to the competitive advantages of the United States, protecting the homeland and also preserving our ability to project power.  

Next chart, please. 

Looking forward in terms of advanced technologies and fielding innovative technologies, the four categories shown on these charts are highlights including unmanned and autonomous systems in all domains, artificial intelligence and machine learning, hypersonics in the air, sea and maritime -- and ground domains.

And finally directed energy and enhancing the ability to be able to use directed energy appropriately in the future.  And this would be mostly in the research and development phase for directed energy.  

Next chart. 

In terms of readiness gains, first, it's important to call out that the services are supporting readiness to the max executable level in this budget.  We've seen readiness improvements across the force over the past few years.  

I'll highlight air and ground training, naval training, maintenance enhancements, logistics enhancements, munitions in terms of what we've done to -- to increase munitions stockage levels as appropriate to meet the requirements of the combatant commanders, and taken greater emphasis on training for cyber-operations as well. 

And I'll turn it back over to Ms. McCusker. 

DEP. UNDER SEC. MCCUSKER:  On the next slide, sustaining our force.  Our force is our most valued asset.  And we continue to provide a competitive compensation package, including a 3.1 percent military pay raise.  And as Mr. Norquist said, the largest in 10 years. 

We're working to modernize and transform the military health system and continue to take care of our families, with support programs, child care and schools. 

We also continue to emphasize our facilities investments, and have put just over $36 billion toward combined MILCON and sustainment, restoration and modernization.  This includes nearly $3 billion for hurricane recovery and reconstruction. 

LT. GEN. IERARDI:  With respect to end strength and numbers of service members, the total military end strength will increase from Fiscal Year '19 projected levels to Fiscal Year '20 in this budget, by approximately 7,700.  And across the five-year plan by almost 40,000, 39.5. 

These projections go to ensuring that the force is properly resourced with people who are -- who are trained and equipped to accomplish their missions. 

And so it's a moderate growth pattern but an important growth pattern to enhance the readiness of the force and to allow us to accomplish the tasks as spelled out in the National Defense Strategy. 

DEP. UNDER SEC. MCCUSKER:  Next slide.  The next three slides have some of our major investments in the categories of aircraft, shipbuilding, space, ground, munitions, nuclear and missile defense.  We won't go through every line, but I would like to just highlight a few. 

For aircraft, of the total 522 aircraft we have in our '20 budget request, we have 78 F-35s, plus significant resources for F-35 modernization.  We also have 12 KC-46s and eight F-15Xs.  For shipbuilding, we are requesting funds to buy 12 battle-force ships, plus two new unmanned surface vessels.  

On the next slide, for space, we have four launch services budgeted under the National Security Space Launch.  Our ground system investments include over 4,000 JLTVs, which is in low-rate initial production, and expected to go to a full-rate production decision later this year.  

We have also supported maximum production rates for our key munitions such as the Joint Direct Attack Munition, Guided Multiple Launch Rocket System, and the Hellfire missile.  

Switching to nuclear deterrence, we continue our strong investment in all three legs of the triad, with a total of $14 billion in the budget request for this effort, including $3 billion for the B-21, and $2.2 billion for the Columbia.  Finally, we are requesting a total of $13.6 for missile defense and defeat, including $9.4 billion for the Missile Defense Agency.  

It is important to note that we surged our missile defense investment in F.Y. '18 and '19, and we are now sustaining that surge while investing it in Missile Defense Review efforts to shift the cost curve and expand new facets of defeat and defense.  

I would like to take just a couple of minutes to discuss our OCO and emergency requests, which are critical to the budget as a whole that we need to support the NDS.  We have binned our requests into four categories for full transparency.  Three categories for OCO, and then one for emergency.  

Our first OCO category is direct war requirements.  These are costs associated with combat or combat support that we expect would continue -- we expect would not continue once combat operations cease.  

The second bin is enduring requirements that have not yet moved to the base budget.  These are (inaudible) presence in the Middle East, Africa, and the Philippines, along with the European Deterrence Initiative.  Taken together, these two bins are consistent with the F.Y. '19 enacted OCO level.  

The third bin is our OCO for base, which support things like munitions, base operations support, weapons systems sustainment, and maintenance, and other readiness efforts that have been funded in part in OCO in the past.  

And finally, our emergency funding for MILCON that would support hurricane recovery and commitment -- continued commitment to the Southwest border.  We have new money for the border in our budget to support the president's priority and to avoid the need for further potential use of 2808.  

Before we conclude, I would like to spend just a minute on business reform.  The department captured $4.7 billion in savings in F.Y. '17 and '18.  It is on-track to save $6 billion in F.Y. '19.  We have projected reform savings of $7.7 billion for F.Y. '20.  

We have also just completed our first full financial statement audit.  This was not a box to check for us.  This was not just about financial management.  This was about cyber-security, inventory, property management, and readiness.  It was also about better data to support management and decision-making.  We are aggressively working to correct the findings that we found.  And we have already kicked off our 2019 audit.  

And finally, can't do a budget briefing without a pie or a bar.  So this is the split of appropriations on the left side, by appropriation, and on the right side by military department.  We have increased military personnel operation and maintenance and RDT&E.  And we have decreased procurement to reflect our focus on modernization as part of the NDS.  

On the next slide we've got information on where you can find all of these budget materials.  And we're ready to take questions.  

STAFF:  Great, if I can, we'll go with Tony Bertuca.  

Q:  Hi, Tony Bertuca from Inside Defense.  I wanted to talk about the $9 billion emergency fund.  Can you provide us a more detailed breakdown of what's hurricane, what is wall, what is new money for the wall?

And you mentioned that maybe the new money for the wall means you don't have to do 2808.  Can you walk us through that fund, please?

DEP. UNDER SEC. MCCUSKER:  Yes, we have $9.2 billion in the emergency fund, and the way it's broken out is $2 billion for hurricane relief and recovery, and that is at both of our locations -- mostly for the Marine Corps, because the Air Force is still doing a refinement of the requirements.

We have $3.6 billion -- up to $3.6 billion to backfill any MILCON projects that we end up having to fund in '20 instead of '19.  And then we also have $3.6 billion for potential new construction for the border, and the reason we've done this is to reflect the fact that we have a presidential priority that has a macro funding level and we want to help get to that funding level.

Now I think as we get into execution as we work with Congress through the rest of the budget review cycle, we'll see a little bit better how that $7.2 billion breaks out, how much actually we can execute in F.Y. '19 versus how much we'll be doing in '20, but that's the basic breakout of how we built that part of the budget.

Q:  And then -- sorry General, do you have anything to add?

LT. GEN. IERARDI:  No, it's ... 

Q:  And then separately on the F-35, buying fewer F-35s, buying more F-15s, seems like the sustainment cost of the F-35 probably played a role in this.  What is the sustainment cost you used to make the determination that the F-15 was a -- a more intelligent buy, a -- a better buy?

And does this mean the department's going to alter its posture on the F-35 with regard to how much it wants to spend?

DEP. UNDER SEC. MCCUSKER:  So I think just first on the tac-air mix between the F-15, the F-18 and then the F-35, tac-air was one of the, you know, key issues that the leadership reviewed as part of its program budget review, really looking at, you know, what threat we're facing and what our -- what our cost calculus is and what we need to address different parts of our threat.

And that's how we came up with the balance between the fourth and the fifth generation aircraft, a decision that was made by Secretary Mattis before he left.  

And I think, you know, General Ierardi can add more about what the capabilities are that -- that we're going for, but I think, you know, we've really invested a lot of money into the F-35 modernization, so we have 78 aircraft and then we've also got significant resources for -- for modernizing that aircraft.

LT. GEN. IERARDI:  Yeah, the -- the F-35 remains a critical program for the -- for the joint force as we look to the future and the kinds of capabilities we -- we require.  The F-15X provides additional capacity and readiness, especially in the near years to mid years, as we look at the -- the threats and the kinds of combat potential that we needed to bring to bear.

So as the F-35 program and the -- and the stockage of aircraft -- aircraft in the fleets continue to grow, the fourth generation fighters in that mix, we -- we felt was appropriate to have, as we looked at the threat and the kinds of flexibility we required as we went -- as we go forward.

STAFF:  Jeff Schogol, please?

Q:  Thank you, Jeff Schogol with Task and Purpose.  Can you talk about why the Defense Department is ordering fewer JLTV, especially for the Army in fiscal '20?

DEP. UNDER SEC. MCCUSKER:  (Inaudible) to defer to the Army to talk specifically about their procurement program, but my understanding is they're on their path to meet their requirement and their order this year reflects that requirement.

Q:  OK, and recently the Air Force Chief of Staff said that there would be $135 billion in the budget over the FYDP for penetrating capabilities.  Can you talk about where that's reflected here?

DEP. UNDER SEC. MCCUSKER:  We don't have our FYDP budget here, we have our F.Y. '20 budget here and I think what you'll see in the increases in the Air Force budget -- and actually all of the service budgets for RDT&E is a reflection in those -- that kind of priority.

STAFF:  Kevin, did you have a question?

Q:  Yeah, yeah, I have a question on OCO funding.  So as we know, this year the fight against ISIS in Syria is rolling out, and that the U.S. forces are pulling out of Syria, but we see that still the budget allocates $300 million for Syrian training (inaudible) program and then $250 million for the border security of that -- in that country.

Can you explain how this (inaudible) money will be used and who the U.S. is going to train, as the U.S. is already pulling out and the fight against ISIS is coming to be over?

DEP. UNDER SEC. MCCUSKER:  I'll start and then let General Ierardi comment.  I think what you're seeing in our budget is a reflection as, you know, an updated part of the strategy on sort of where we stand in defeating ISIS, but also continued emphasis on our second line of effort, which is our -- our partnerships and our allies and their critical role in, you know, maintaining the -- the gains that we've achieved in that area.

LT. GEN. IERARDI:  I think we'll adjust as appropriate as we move forward.  As we built this -- this budget, it was based on the information at the time, still is an important part of the overall request and we'll -- we'll adjust as -- as necessary.

STAFF:  Tony?

Q:  Ms. McCusker, this budget's going to be attacked cause it seems as using the -- abusing the OCO for -- as a slush fund.  This is a phrase that then Representative Mulvaney used in 2016 to describe OCO funding, slush fund.

Can you give us a sense of what your defense is going to be or your rationale for using it when you go up to the Hill?

DEP. UNDER SEC. MCCUSKER:  I think two things really.  The first is that the OCO budget request receives at least as much scrutiny and oversight from OMB as it -- and Congress as our base budget request does, and the second piece is we've provided our OCO request in those three distinct bins, and with, you know, a significant amount of transparency so that Congress will have everything that it needs to do its analysis and understand what we've done and why with our OCO budget.

Q:  Can you tell the world, was this a -- did the Pentagon come up with this funding mechanism?  Or -- was this -- was this an OMB idea?

DEP. UNDER SEC. MCCUSKER:  So we've built our budget based on what we needed in whole to support the NDS, and then we receive direction on how that budget would be financed from OMB.

Q:  General, (inaudible) cyber increase of -- over like a fifth -- 10 or 15 percent from this -- from last year.  Does that reflect some of the new authorities you got from Congress in this year's NDAA, to be more aggressive on offensive cyber and kind of to push the envelope ... 

LT. GEN. IERARDI:  I think the whole -- the whole package, the totality of it all is an emphasis on the department in developing capabilities in cyber.  So yes, there's a -- certainly a recognition that we -- we need to continue to develop capabilities to stay ahead of our -- of our adversaries, and that's what this budget reflects.

STAFF:  (Inaudible)?

Q:  Yeah, thank you.  Previously, the U.S. public debt was described as a -- a national emergency or -- or potential national emergency.  So in your -- in your interaction with OMB, was there any idea of planning possibly for the discretionary budget getting squeezed out by interest payments in the future?

Any concern or planning on the DOD side for that?

DEP. UNDER SEC. MCCUSKER:  Nothing from our perspective.  We've always maintained our watch words of both security and solvency when we look at what our requirements are and what budget we require to carry out the strategy.

And so that's really been, you know, our -- our way of viewing this, and you know, conversations with -- with OMB on the domestic side is really based on those domestic requirements.

STAFF:  Third row?

Q:  Thank you.  (Inaudible).  My question is how did -- the budget will reflect (inaudible) in Afghanistan and also in Pakistan?  What is the future in (inaudible) budget is concerned, India and U.S?

LT. GEN. IERARDI:  I could only say that the India-U.S. relationship is an important one.  This budget continues to resource the necessary activities to counter violent extremism that the United States will carry out when required.

STAFF:  Luis?

Q:  Hi.  Luis Martinez of ABC.  How -- going back to Tony's point about the OCO, I mean, how do you counter the idea that this -- pushing this $97 billion into OCO isn't really just a shell game, and goes against the spirit of the BCA?  

DEP. UNDER SEC. MCCUSKER:  I mean, again, from our perspective, we built a budget that is required to carry out the National Defense Strategy.  The decision on how to best finance that budget was made by OMB, and something that we -- we follow their direction on. 

Q:  But, still, it is law that, you know, you have these budget caps and yet you are making a conscious decision, here, to shift money into an account that doesn't -- really, you're -- I'm looking, here, for the definition of what you're calling a base.  And I don't really find a good definition there that would count towards what traditionally has counted under OCO. 

DEP. UNDER SEC. MCCUSKER:  Well, we're submitting our base budget at the Budget Control Act level, so compliance with the law is what we're actually doing.  And the accounts that we have in OCO are accounts that have been funded in full or in part in OCO in the past. 

STAFF:  Roxane. 

Q:  Hi.  One quick question.  Can you tell us how much funding goes into JEDI for 2020?  

DEP. UNDER SEC. MCCUSKER:  For JEDI, we have $61.9 million. 

Q:  And you foresee going ahead with the program? 

DEP. UNDER SEC. MCCUSKER:  I mean, I think that, you know, the contracting strategy is something that our CIO and our acquisition team is running.  We've got the funding in the -- in the budget for that program. 

Q:  And the second one, very quickly, a follow-up from -- from the previous question.  Are you -- are you not concerned at all that you're running a risk of only just getting $545 billion for defense, or, like, a significantly smaller defense budget because of the gambit with the OCO? 

DEP. UNDER SEC. MCCUSKER:  I mean, I think we're being pretty clear on what level of funding is required to carry out the National Defense Strategy.  And it'll be our job to work through the rest of this cycle to make sure that our requirements are understood. 

STAFF:  Aaron?

Q:  Thanks.  Aaron Mehta, Defense News.  Wanted to ask about the European Deterrence Initiative, which got about a 10 percent cut, $600 million, down from where it was enacted.  What's the thinking behind giving that cut?  Is that a sign that this building believes some of the threat from Russia to the NATO allies has subsided? 

DEP. UNDER SEC. MCCUSKER:  No, absolutely not.  I mean, we are continuing to be committed to our NATO partnership.  And as you see from the strategy, you know, we're very much preparing for great power competition. 

And what you saw last year was a pretty significant investment in EDI.  And part of that was to posture ourselves and our equipment in that theater.  And we are now moving into, you know, sort of our exercises and the other things that we do in that account, that with that other -- the MILCON and the positioning done.  And we're also looking at increased burden-sharing. 

Q:  And just as a follow-up, the U.S. has started production on a system that previously would have been banned under the INF.  This building announced that earlier this week.  What's the funding stream look like for that in F.Y. '20?

DEP. UNDER SEC. MCCUSKER:  Our budget is, right now, INF-compliant.  But we have modernization choices that we'll need to make. 

Q:  But there is a system under way? 

(CROSSTALK)

STAFF:  ... move on.  Aaron?  Please for the sake of time. 

Q:  I wanted to go back to the OCO.  Was there any strategic thinking in what you put in that OCO to base account, considering Congress has indicated they're not very supportive of that?  Like, is it lesser priority stuff or what type of stuff is in that OCO to base account?  That $97 billion. 

DEP. UNDER SEC. MCCUSKER:  It's definitely not lesser priority.  What we did is try to be as transparent as possible, and put things in OCO that had been funded in full or in part in OCO in the past. 

And so what you'll see in that -- in that money is really O&M.  And a lot of our readiness.  You know, our base ops support, weapons systems sustainment, those types of things. 

Q:  Really quickly, do we plan to get FYDP numbers at any point?  And if we don't, what does that say about how the public should look at how the Pentagon is planning toward the future?  

DEP. UNDER SEC. MCCUSKER:  I mean, I think our FYDP numbers are usually classified.  And so we submit those to Congress, and we'll be doing so as we always do. 

STAFF:  Right here. 

Q:  Yes.  Sydney Freedberg, Breaking Defense.  You talk about the $9.6 billion for cyber alongside the air, maritime extra domains.  But if you break that down, everything else is purely procurement and RDT&E, acquisition programs.  

Cyber seems to include operations, so that's not an apples-to-apples comparison.  If you look at cyber procurement acquisition in another book, it says only $2.8, not $9.6.  So what's the delta there? 

DEP. UNDER SEC. MCCUSKER:  If you're looking in the weapons book, that is really focused on investment accounts.  What we've shown here is our full budget for our cyber-activities.  And, you know, the pillars that are involved in cyber.  So we've got security, operations and R&D all included in the $9.6 billion that we -- that we gave you. 

Q:  So it's not comparable to that air, maritime, multi-domain land and space figures, which are purely investment.  Purely acquisition accounts. 

DEP. UNDER SEC. MCCUSKER:  They aren't.  I mean, actually, we've given -- in our brief, we have shown the total requirement for those areas as well.  So if you look in the weapons book, you'll see a much lower number for grounds systems because they're just doing vehicle procurement and investment, whereas what we're showing you is overall in the portfolio, what's that ground portfolio look like. 

Q:  Including O&M, including associated MILPERS, even? 

DEP. UNDER SEC. MCCUSKER:  Correct.  MILCON. 

STAFF:  Right here. 

Q:  Hi.  Sam (inaudible) with U.S. (inaudible) News.  To follow up on Marcus’ point, the FYDP numbers are classified?  I don't believe that was the case previous to now.  Is this a new policy?  I'd like you to elaborate on that...

DEP. UNDER SEC. MCCUSKER:  It's not a new policy.  It's my understanding that our FYDP numbers normally are classified, and we share those with the Hill in that way.  There's no change in policy. 

Q:  That is -- that is not the way it's been for quite a while, if -- I guess I'll take that for the -- for the record. 

(CROSSTALK)

DEP. UNDER SEC. MCCUSKER:  Yeah, let me get back to you on that. 

Q:  And then -- but just to follow up, but another question is, moving forward with the unmanned systems, especially in the Navy, there are a couple of big swings in here, including ten new unmanned large-surface combatants.  

Can you talk a little bit about what are the validated requirements for these?  You know, where did these come from in terms of, you know, a need for the Navy?  I mean, we're still -- don't have a new force structure assessment for how the service is planning on reorganizing.  How does this count against the shipbuilding total, as far as an OSD perspective goes? 

LT. GEN. IERARDI:  Right.  So I'll just maybe address some of your question there, with respect to the -- the unmanned surface vessels.  It's part of a look to the future in the way that we could operate.  

And certainly experimentation and force design activities will follow.  There are requirements for the department to operate in a more autonomous manner.  The Navy will begin to fulfill those requirements as we look at different ways of operating, right? 

So this is about looking at the future differently than we've looked at the past.  It doesn't mean that what we have today is less important or is not critical in the next decade, two decades, even three decades. 

But it is an acknowledgement that we need to start to consider other ways of operating to enhance our lethality, as our adversaries adapt and change their ways of operating. 

STAFF:  Steve? 

Q:  Hi, Steve Trimble with Aviation Week.  On the hypersonic and the $2.6 billion for the hypersonic, we know of four programs of record that have been in the budget:  HCSW, ARRW, CPS and this new land-launched -- newly titled land-launched limited operational capability. 

Are there any other programs of record in the budget for hypersonic programs?  And is there any money allocated for hypersonic defense? 

DEP. UNDER SEC. MCCUSKER:  On the other programs, I think I'm going to ask you to talk with the services about that.  I don't have those details in front of me right now. 

Q:  OK.  

Anything on defense?

LT. GEN. IERARDI:  Yeah, I believe it's included in the Missile Defense portfolio.  I don't have the specifics.  I'll have to get back to you on that. 

STAFF:  Jon? 

Q:  Thank you.  Jon Harper with National Defense Magazine.  The Missile Defense Review called for beefing up existing capabilities and investing in new capabilities.  But in this budget, it seems that the procurement and RDT&E here in the acquisition profile would actually see a decrease in missile defense and defeat.

Can you, kind of, explain that seeming discrepancy between, sort of, the new strategy or outlook versus what's in this budget?

DEP. UNDER SEC. MCCUSKER:  So I think two things are probably making it appear that way.  The first is that we surged our missile defense and defeat capability in '18 and '19, with reprogrammings and a budget amendment.  And so we're basically maintaining that tail, and we're not going to continue to maintain what we surged in those years.  So that, you know, brings that program profile down.

We also see that we've invested about $1.3 billion in specifically MDR-related technologies that are not inside the Missile Defense Agency budget but that are part of our missile defense and defeat program.

Q:  And can you explain what some of those technologies are?

DEP. UNDER SEC. MCCUSKER:  I think I'd rather do that, maybe, in a different forum.

Q:  Hi Paul Shinkman with U.S. News.

In going back to the question about the European Deterrence Initiative, the specific language about that money allocated to provide assistance and support to Ukraine calls for the replacement of any weapons.  Does that mean that there's no consideration for any new kind of weaponry, lethal weaponry going to -- to their military?

DEP. UNDER SEC. MCCUSKER:  I mean, I think, for Ukraine, you know, obviously we'll comply with what the law says.  And I think what we've got is a piece of our EDI, you know, sort of, allocated for -- for those types of initiatives, and they get developed, sort of, as we move forward in partnership with -- with the State Department and others.

LT. GEN. IERARDI:  Two-hundred-million-plus in that account.

Q:  Hey, Justin Doubleday, Inside Defense.  The budget request assumes $7.7 billion in savings through our reforms.  Can you say where that money is coming from and then where are you redirecting it to?

DEP. UNDER SEC. MCCUSKER:  The money is already, sort of -- will be redirected to our higher-priority items.  The money is mainly coming from a couple of different areas, and we've got some divestments of programs that are no longer consistent with the -- with the National Defense Strategy.  And so you'll see some of that when you talk to the services.  

We've got some initiatives in the areas of I.T., which is, you know, again, about cyber security and reform in that area.  We've got initiatives in health care, which is really about delivering the same quality of health care but doing it a little bit smarter and a little bit more efficient.  And then we also have a category called category management, which is really about the department being an overall smarter customer on how we buy goods and services across the enterprise.

Q:  And the higher-priority areas, you know...

(CROSSTALK)

DEP. UNDER SEC. MCCUSKER:  ... discussed already within the budget.

LT. GEN. IERARDI:  Just increase the lethality of the force, yeah.

STAFF: Lara? 

Q:  Hi, Lara Seligman with Foreign Policy.  

I wanted to follow up on Aaron's question, actually.  We got a statement from you guys yesterday saying, "As part of the U.S. response to Russia's violations of the INF treaty, the DOD commenced treaty-compliant research and development of conventional ground-launch missile concepts in late 2017."

Can you tell us more about what that is exactly and where that appears in the budget and what that funding stream looks like?

DEP. UNDER SEC. MCCUSKER:  I think I'm going to take the specifics of that for -- and get back to you.

Q:  Because you said that you're not, right now, funding non-INF-compliant missiles...

DEP. UNDER SEC. MCCUSKER:  Right, our budget is INF-compliant.  But we have some modernization choices that we're going to have to make based on what's taking place.

Q:  But that statement made it -- well, says that this fabrication started in late 2017?

DEP. UNDER SEC. MCCUSKER:  We didn't do non-INF-compliant work in 2017.

Q:  OK.  Right, but it supports what might be a non-INF-compliant missile in the future?

DEP. UNDER SEC. MCCUSKER:  Well, I mean, there's advanced research that, if taken in one direction, you know, could do one thing and if taken in another direction could do another.  And I think those are some of the decisions we have to make on how we're going to do our modernization.

STAFF: Travis?

Q:  Thank you.  Travis Tritten with Bloomberg Government.

You mentioned health care reforms.  Does that include eliminating health care billets?  And could you say how many?

DEP. UNDER SEC. MCCUSKER:  There's really not an elimination of billets.  We're doing a conversion of military to civilian to put those military billets back into lethality.  And that is part of our proposal for this year.

Q:  Could you explain what that means and could you talk about the number that you're talking about?

DEP. UNDER SEC. MCCUSKER:  I think the number is about 15,000 that we're looking at taking from military billets and converting to civilian billets.  But I'd like to get back to you on the specifics of that.

Q:  Paul Sonne of the Washington Post.  

I just wanted to ask what is that $3.6 billion in the emergency fund that is being back-filled?  What is that going to back-fill?

(CROSSTALK)

DEP. UNDER SEC. MCCUSKER:  Go ahead.

Q:  And how can Congress -- if they don't know the program, the MILCON program that money is being taken from and then back-filled, how can they -- I mean, you're eventually requesting money from them for something they don't even know what it's for?

DEP. UNDER SEC. MCCUSKER:  So what we've done is we've requested the emergency money as part of the Army MILCON budget.  And along with that, we're requesting a transfer fund so that, once we have definition on those projects that we would need to fund in '20 instead of '19, we would be able to put that money in the right place.  And so that fidelity will be available as well, kind of, move through this delivery of process.

Q:  Do you know when?

DEP. UNDER SEC. MCCUSKER:  I don't have an estimate on when at this point.

STAFF:  Ryan?

Q:  Can I just follow up on Paul's question?  Ryan Browne, CNN.

The other $3.6 billion that you say is for additional wall construction -- there's not a lot of information on that.  Is that for the counter-drug authority account?  What authority would that money be spent with?

I'm just a little confused about the nature of that block of money.

DEP. UNDER SEC. MCCUSKER:  That block of money would be regular MILCON, as part of what the department normally requests in MILCON.  And so, again, we requested it as part of emergency fund inside the Army with a transfer request so that, once we have definition on what MILCON projects we'd need to do, we'd get that money moved to the right place.

Q:  So the border would be a military construction?  Border barriers would therefore -- if it was authorized to be a military construction project, which hasn't happened yet, you would be able to...

DEP. UNDER SEC. MCCUSKER:  Right, just like normal MILCON, it would have to be authorized and appropriated for that purpose.

STAFF:  We have time for one more question.  Right in the back there?

Q:  Hi.  Mara (inaudible) with the German Press Agency.  

Going back to the European Deterrence Initiative, you mentioned that you're looking at increased burden-sharing.  What specific options are on the table regarding that?

DEP. UNDER SEC. MCCUSKER:  We're always looking for new ways to partner and -- with our partners out there.  I think, when you look at the EDI in general, it really has five lines of effort.  And only one of those effort -- lines of effort is really decreasing in the F.Y. '20 budget, and that's the infrastructure.  Because we've really done a lot of that work to this point.

LT. GEN. IERARDI:    Yeah, that's the military construction side of it that Ms. McCusker’ s referring to.

DEP. UNDER SEC. MCCUSKER:  And the pre-positioning that I mentioned earlier.

STAFF:  That concludes our time here.  Thank you very much.