Installation
Leadership Forum
Dr. Craig College, February 28, 2012
2012 ADC WINTER FORUM | PAGE 1
Efficiencies… the Last 12 Months
• Secretary Gates efficiencies ($100B) and reductions ($78B)
• POTUS April 2011 deficit speech… cut $400B in defense over 12
years… amended by OMB to 10 years
• Budget Control Act of 2011… cuts $487B from defense over 10
years, and potentially an additional ~$500B with sequestration
• FY12 Army budget ($203B) enacted 23 December 2011
– ~$13B below President’s Budget (PB) Request ($216B)
• POTUS and Secretary Panetta announce defense strategy 5
January 2012
• FY13 Army PB ($185B) submitted without consideration of
sequestration
2012 ADC WINTER FORUM PAGE 3
The Fiscal Driver
2017
2019
2013
2015
2011
2007
2009
2003
2005
2001
1997
1999
1993
1995
1991
1987
1989
1983
1985
1981
1977
1979
1973
1975
1969
1971
Federal Deficit/Surplus
4%
Surplus / Deficit as % of GDP
GDP
2%
40-year average
(1969-2009):
-2.6%
FYDP average
(2011-2015):
-5.4%
0%
-2%
-4%
-6%
Federal Surplus / Deficit
200
-8%
0
-200
-10%
TY $ in B
-400
-600
-800
-1,000
-1,200
-1,400
-1,600
1940
1942
1944
1946
1948
1950
1952
1954
1956
1958
1960
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
-12%
FY08 – $459B
FY09 – $1413B
FY10 – $1500B
FY11 – $1341B
FY12 – $915B
2012 ADC WINTER FORUM PAGE 4
CBO 5 Mar 10 Projection
The Defense Budget Over Time
• Discretionary spending is ~35% of total federal budget – Defense budget is ~50% of discretionary spending
• Increasing emphasis on reducing spending/deficit – Congress and the Administration
• Historically, funding levels have decreased as military demand decreases
$800 B
$700 B
DoD Military Manpower
Korean War
Armistice (1953)
$600 B
DoD Total Manpower
Height of
Vietnam
War (1968)
Vietnam War
Ends (1973)
DoD $ (FY12 Constant $)
Height of
Cold War
(1985)
9/11
(2001)
FY01-11 Base (FY12 Constant $)
8.0 M
OCO?
Gulf War
Ends (1991)
7.0 M
6.0 M
$500 B
5.0 M
BCA
$400 B
4.0 M
$300 B
3.0 M
$200 B
2.0 M
BCA
impact
1.0 M
?
$100 B
$B
2012 ADC WINTER FORUM PAGE 5
.0 M
The Army Budget
$300 B
Base
OCO
OCO Request
$252
$250 B
$235
$243
$240
$221
$203
$200 B
$167
$121
$177
$92
$99
$185
$100
$68
$109
$143
$150 B
$64
$123
$50
$72
$40
$26
$100 B
$78
$50 B
$86
$78
$84
FY01
FY02
$97
$103
$103
$105
$112
FY03
FY04
FY05
FY06
FY07
$131
$143
$144
$140
$135
$135
FY09
FY10
FY11
FY12
FY13
$B
Execution
2012 ADC WINTER FORUM PAGE 6
FY08
Approp Request
A Strategic Budgetary Way Ahead
• Future budget decisions must…
– Preserve ability to provide national security
– Be capability-based (not ad hoc or piecemeal)
– Not break faith with the men and women who are fighting, or their
families (preserve the all-volunteer force)
• Challenges
– Impact of budget Control Act 2011
– Uncertain status of FY13 Defense Appropriation timelines
– Ability to sustain modernization objectives
• To achieve budget reductions, everything is on the table
– Force Structure, O&M, and Investment programs
– Military compensation
– Military health care
2012 ADC WINTER FORUM PAGE 7
Three Time Horizons
• FY 12: Current Year / Year of Execution
• Must adapt to a ≈$1.5B reduction from FY11
• Must reduce manning by 3766 employees this FY
• FY13: Transition Year
• Execute changes in organization, manning, contracts, &
services to adapt to expected funding
• FY 14-18: IMCOM Operations in the “New Normal”
• IMCOM delivers to standards set by HQDA adapting to a
≈$2.5B reduction from FY10 funding levels
Sustain Army’s Commitment to Soldiers and Families
2012 ADC WINTER FORUM PAGE 8
Installation Management Efficiencies
•
•
•
•
•
•
•
•
FY11: Eliminated 2620 Temporary and Term Employees
FY12: Further reductions of Department of the Army
Civilians
MILCON transfer to SRM
Reductions in IMCOM reliance on contractors and
quarterly reviews of contracts
Reductions in Conferences and Travel
Reductions in Regions from 7 to 4
Eliminated National Capital Region Division
Eliminated 2-Star FMWRC and merged into IMCOM HQs
2012 ADC WINTER FORUM PAGE 9
Organizational Theory
Spider
“Cut off the head and it dies”
 Hierarchical
 Chain of command
 Centralized
Starfish
“No head, cut off an arm, and it
grows into a new starfish”
 No defined leader (catalyst)
 Devoid of chain of command (circles)
 Decentralized
 Open system
 Standing on five legs
 Passion and enthusiasm
Building Spider and Starfish Collaboration and Partnerships
The most affordable future for military installations and their surrounding
communities is to create partnerships in far greater numbers that feed off each other’s
strengths and economize on our weaknesses to survive the coming economic
challenge. These approaches must become routine and pervasive and the Community
Covenant is one such effort.
2012 ADC WINTER FORUM PAGE 10
Concept taken from : The Starfish and the Spider: The Unstoppable Power of Leaderless Leadership by Ori Brafman and Rod Beckstrom
9
A Starfish Strategy
•
•
•
•
•
Army Garrisons and municipalities tend to think like spiders
– but we both need to begin thinking like starfish
The deleterious effects of municipal and federal budget
challenges can be ameliorated through public-public
partnerships
Army Community Covenant is one very successful example
- BUT
We must catalyze the search for partnerships to solve
everyday problems shaved by communities and installations
Much remains to be done to make these broadly applicable
– most importantly, new ways of thinking
2012 ADC WINTER FORUM PAGE 11
Impact on Defense Communities
•
Potential Reduction in Department of the Army Civilian
and Military personnel
•
Potential reduction in dollar value of contracts
•
New opportunities for Public-Public and Public-Private
initiatives
•
Some potential for additional units arriving from
overseas
2012 ADC WINTER FORUM PAGE 12
Team of Teams
“We play with our
cards facing out.”
2012 ADC WINTER FORUM PAGE 13