HIGHLIGHTS OF THE

DEPARTMENT OF THE NAVY

FY 1997 BUDGET

OFFICE OF BUDGET

MARCH 1996

SECTION I

FOREWORD

The purpose of this document is to provide a summary of the Department of the Navy(DON) FY 1997 budget to assisst members of Congress and their staffs in their review of the President's budget. The emphasis in this second year of the FY 1996/1997 Biennial Budget remains unchanged from the first preservation of near-term readiness; protection of quality- of-life enhancements; a strong commitment to increased efficiency in our infrastructure and other resources; and a continued emphasis on future recapitalization. Within these priorities, the Department has made modifications necessitated by events which occurred during the past year, such as the specific action approved for BRAC IV.

Readiness

The Department is committed to providing the resources necessary to ensure our near-term readiness goals are fully met. The budget funds aircraft and ship operations at the levels required to provide the necessary training and to meet our normal operational obligations. Ship and aircraft depot maintenance programs are budgeted at levels required to maintain readiness and to obtain optimal utility from our organic depot maintenance facilities.

To address a potential shortfall in the number of TACAIR squadrons needed to fulfill deployment requirements, the budget includes funds to continue operations and support to retain one F-14 and two A-6 squadrons which were previously scheduled for disestablishment in FY 1997. These squadrons will transition to the F/A-18 beginning in FY 1998. To avoid a drain on readiness, and as directed by Congress, the Department budget for FY 1996 and FY 1997 includes the costs of known contingencies. The budget also includes the funds necessary to retain USS GUAM until FY 1998, thus maintaining the capability of twelve big deck amphibious ships.

Quality of Life

The Department is continuing an ambitious program to improve the quality of life of our personnel. The budget supports the needs of both our married and single military personnel, focusing on housing needs. The Department has placed major emphasis on replacing antiquated and unserviceable housing units. Community centers and family housing offices will be constructed to provide the full spectrum of services required to meet the needs of our Navy and Marine Corps families. Management efficiencies in underway training will allow reducing non-deployed ship OPTEMPO from the traditional 29 days per quarter to 27 days per quarter beginning in FY 1997, thus providing our sailors and marines with more time at home. The budget also includes a 3 percent pay raise in FY 1997 that is consistent with the current Economic Cost Index minus one-half percent. Additionally, we have increased the budget to accommodate growing demand for continuing education programs such as Tuition Assistance, Program for Afloat College Education, and the Veterans Education Assistance Program.

Efficiency

The Department of the Navy is aggressively reducing the cost of maintaining it infrastructure. The budget includes the funds necessary to implement base realignments _and closures mandated by BRAC II, III, and IV. Appropriation estimates for FY 1997 now include specific costs and savings for BRAC IV. Savings resulting from BRAC realignments and closures, when fully implemented, are estimated to exceed $2 billion per year. As a result of BRAC and other streamlining initiatives, industrial overhead and supply operating costs at DBOF activities will decline by more than $400 million between FY 1996 and FY 1997. We have also taken aggressive action to reduce or validate carryover of funded workload at DBOF activities to ensure that funds budgeted are available only for work that can be accomplished efficiently. BRAC and other efficiencies being implemented by the Department result in our civilian personnel resources declining by almost 22,000 between FY 1995 and FY 1997 and by more than 46,000 by FY 2001.

The Department also continues to pursue more efficient utilization of our limited resources and a responsible stewardship of those resources entrusted to us. In particular, we reviewed our acquisition programs to ensure that defense-unique product specifications are reduced or eliminated, unless they are the only way to ensure that the user's needs are met. We will focus instead on performance metrics. Also, in conformance with the Government Performance and Results Act (GPRA), we have reflected more quantitative measures in our budget materials, to better correlate the budget to performance goals of the Department. We continue to dedicate substantial effort to improvement in the accuracy of financial records and this will remain a top priority as we satisfy the requirements of the Chief Financial Officers Act and related legislation. The relocation of the Marine Corps leadership to the Pentagon may be the first and most obvious evidence of our move toward more integrated DON management.

Recapitalization

The Department's recapitalization efforts accelerated from the track established by the President's biennial budget for FY 1996/1997. For surface ships, the FY 1997 budget includes procurement of four Arleigh Burke Class guided missile destroyers as facilitated by Congressional action in FY 1996, and conversion of two ammunition ships. In addition, the National Defense Sealift Fund budget for FY 1997 includes funds for construction of two Large Medium Speed Roll-on/Roll-off (LMSR) ships for prepositioning/surge.

For the future, research and development funds are budgeted for the future surface combatant (SC-21), the Auxiliary Dry Cargo Carrier (ADC-X) and the Arsenal ship. The budget also reflects our commitment to sustain the submarine industrial base and support the necessary replacement of our submarine force in the next decade. The SSN-23, approved by Congress in FY 1996, will bridge the gap in submarine construction until the New Attack Submarine begins construction in FY 1998. Advance procurement funds for the New Attack Submarine are budgeted in both FY 1996 and FY 1997.

Recapitalization of our aviation forces also remains on track with initial procurement of the F/A-18E/F and the V-22 budgeted in FY 1997. Other key elements of our recapitalization strategy include procurement of T-45 and E-2C, remanufacture of AV-8B aircraft and Joint Advanced Strikefighter Technology (JAST) developmental efforts. We have also included funding to outfit F-14 aircraft with the Air Force developed LANTIRN FLIR/Laser designator, which provides an immediately available precision strike capability needed to mitigate the imminent retirement of the A-6. In addition, our budget includes funding for integration of the 1000-pound JDAM on the AV-8B, providing new close-air-support options, and development of a four-bladed rotor system for AH-1W and UH-1N aircraft, resolving a safety-of-flight problem while providing significant performance enhancements and growth in weapons carriage capabilities.

Recapitalization efforts to support our Fleet Marine Forces include research and development of replacements for aging equipment and modernization of equipment. The budget provides for continued development of major ground systems to include the AAAV, LW 155 light-weight howitzer, and medium tactical vehicles. The budget includes funds for modernization of communications and electronics systems, such as the Intelligence Analysis Systems and SINCGARS, which will provide intelligence data to the Marine Air Ground Task Force commander, and for procurement of other equipment to support ground forces, such as Javelin, night vision equipment, and various training devices.

This Highlights Book provides a summary of the FY 1997 budget and brief discussions of each program performance area in addition to the traditional appropriation tables found in Appendix A. Also, the Highlights Book includes an explanation of changes in FY 1996, along with information on resource trends, significant force and manpower factors, and selected data on maintenance, readiness, and civilian personnel.

Table 1 summarizes the Department of the Navy (DON) estimates for the FY 1997 budget submission by appropriation.

The total direct program estimates of $79.3 billion in FY 1996 and $75.6 billion in FY 1997, which reflect in real terms, after normalizing for price escalation, decreases of 3.6 percent in FY 1996 and 7.3 percent in FY 1997.

Individual appropriation summaries may be found in the Appendix to this document.

Table 1
Department of the Navy
FY1997 Budget Summary by Appropriation
(In Millions of Dollars)
	FY1995	FY1996	FY1997
Military Personnel, Navy	17,751.8	17,021.5	16,943.0
Military Personnel, Marine Corps	5,735.5	5,843.3	6,102.1
Reserve Personnel, Navy	1,413.6	1,379.4	1,386.3
Reserve Personnel, Marine Corps	351.8	378.2	381.1
Operation and Maintenance, Navy	22,094.6	21,359.0	20,196.2
Operation and Maintenance, Marine Corps	2,139.0	2,420.5	2,203.8
Operation and Maintenance, Navy Reserve	842.3	837.7	843.9
Operation and Maintenance, Marine Corps Reserve	84.8	102.3	99.7
Aircraft Procurement, Navy	4,593.7	4,443.7	5,882.0
Weapons Procurement, Navy	2,377.3	1,765.9	1,400.4
Shipbuilding and Conversion, Navy	6,485.9	6,496.8	4,911.9
Other Procurement, Navy	3,268.2	2,421.4	2,714.2
Procurement, Marine Corps	539.3	638.9	555.5
Research, Development, Test & Evaluation, Navy	8,606.3	8,419.7	7,334.7
Military Construction, Navy	392.6	554.6	525.4
Military Construction, Naval Reserve	22.7	19.1	11.0
Family Housing, Navy and Marine Corps	1,203.6	1,573.4	1,417.9
National Defense Sealift Fund	699.4	1,024.2	963.0
Environmental Restoration, Navy	--	--	302.9
Base Closure and Realignment	1,754.6	2,501.7	1,445.0
Payment to Kaho'olawe	60.7	51.0	25.0
TOTAL	$80,417.7	$79,252.3	$75,645.0