RDML (ret) Joe Carnevale Senior Defense Advisor Shipbuilders Council of America

Transcription

1 Opening Brief 5 March 2013 RDML (ret) Joe Carnevale Senior Defense Advisor Shipbuilders Council of America

2 Monday Reception Hosted by the Port of San Diego Ship Repair Assoc 8:30 Rear Admiral (Ret.) Joe Carnevale Senior Defense Advisor, SCA 9:30 Rear Admiral Dave Gale Commander, Naval Regional Maintenance Centers 10:00 Honorable Ray Mabus Secretary of the Navy 11:00 Vice Admiral Kevin McCoy Commander, Naval Sea Systems Command 11:45 1:00 Lunch Tuesday 5 March Agenda 1:00 Rear Admiral Tom Rowden Director Surface Warfare Division, OPNAV N96 1:30 Rear Admiral Jim Shannon Deputy Commander for Surface Warfare, SEA-21 2:00 Ms Paula Reever Government Affairs Coordinator, SCA 2:30 Break 3:00 Vice Admiral Bill Burke Deputy Chief of naval Operations Warfare Systems, OPNAV N9 3:45 RADM Ron Rabago, USCG Assistant Commandant for Engineering & Logistics, CG-4 6:00 Dinner at Crystal City Marriott - Reception hosted by the Jacksonville Area Ship Repair Assoc. 2

3 Embassy Suites (A) to the Crystal City Marriott (B) 3

4 Wednesday 6 March Agenda 8:00 Buses depart for Capital Hill 8:30 Arrive Capitol Visitor Center HVC 9:00 Congressman Buck McKeon (R-CA), Chairman House Armed Services Committee (Invited) 9:15 Senator Patty Murray (D-WA) (Invited) 9:30 Senator Tim Kaine (D-VA) (Invited) 9:45 Congressman Derek Kilmer (D-WA) (Invited) 10:00 Coffee Break 10:15 Congressman Rob Wittman (R-VA) 10:30 Congresswoman Colleen Hanabusa (D-HI), HASC readiness Subcommittee (Invited) 11:45 Lunch at the Liaison Capitol Hill Co-hosted by the American Society of Naval Engineers Congressman Randy Forbes (R-VA) 1:30 to 5:00 Hill Crawl 1:30 to 5:00 Industry Day At the Liaison Capitol Hill moderated by Mr Mike McGrath, Executive Director, Jacksonville Area Ship Repair Association 5:00 Reception Hosted by the Virginia Ship Repair Association at Honeywell, 101 Constitution Avenue NW 4

5 Liaison Capitol Hill (A) and Honeywell (B) 5

6 Thursday 7 March Half day Joint Industry Navy Improvement Initiatives (JINII) Canceled Half Day Retired Engineering Duty Flag Officer s Conference 6

7 VSRA PSDSRA JASRA PSSRA SRAH SCA None Total This year NSRIC NSRIC NSRIC

8 National Ship Repair Industry Conference 2013 FY 2012 Depot Language Fixed in FY 2013

9 FY 2012 Depot Maintenance Language Sec Definition Deleted exception for nuclear aircraft carrier refueling. For modernization deleted exception and added: Fabrication of parts Software Installation Sec Core Capabilities Deleted exception for nuclear aircraft carrier. Sec /50 Split No change but the calculation is effected.

10 FY 2013 Depot Maintenance Language Repeals the FY 2012 amendments to Sec & Revives the Sec & 2464 provisions to those in place the day before the FY 2012 NDAA was passed. Amended to include or the nuclear refueling or defueling of an aircraft carrier and any concurrent complex overhaul.

11 National Ship Repair Industry Conference 2013 Budget Brief: Background

12 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, National Ship Repair Industry Conference 2013 Total Federal Budget Authority and Receipts years DoD Budget Authority Total Federal Budget Authority Total Receipts $Billions 1980 Billions of dollars

13 The National Debt National Ship Repair Industry Conference 2013 Total foreign debt $ trillion as of June 2012 Asia $3T: China $1T, Japan $900B Europe: $1T Middle East $292B North America $253B South America $245B Rest of World $199B

14 Entitlements (FY 2011) 551 Health Care Services Including Medicaid ($322B) 570 Medicare ($502B) 600 Income Security: 601 General retirement and disability insurance ($8.0B) 602 Federal employee retirement and disability ($123B) 603 Unemployment compensation ($119B) 604 Housing assistance ($44B) 605 Food and nutrition assistance ($105B) 609 Other income security ($184B) 650 Social Security ($732B) 700 Veterans Benefits and Services: 701 Income security for veterans ($55B) 702 Veterans education, training, and rehabilitation ($10B) 703 Hospital and medical care for veterans ($50B) 704 Veterans housing ($1.3B) 705 Other veterans benefits and services ($6.1B)

15 Total Federal Budget Authority Defense and Entitlements Billions o Total Federal Budget Authority National Defense: Entitlements

16

17 Total Federal Budget Authority Defense and Entitlements $100B per year reduction $100B per year increase in receipts Billions of Dollars Total Federal Budget Authority Total Receipts National Defense: Entitlements

18 National Ship Repair Industry Conference 2013 Budget Brief: FY13 Budget

19 FY 2013 Maintenance & Modernization Budget FY11 FY12 FY13 FY13 FY13 FY13 O&MN Base & OCO REQUEST REQUEST SAC HAC NDAA Ship Depot Maintenance $7,173,659 $6,026,107 $6,399,991 Ship Depot Maintenance Base $4,532,935 $5,089,981 $ 150,000 $ 68,000 $ 67,963 Ship Depot Maintenance OCO $1,493,172 $1,310,010 Reserve $88,590 $53,916 $49,522 OPN DDG Modernization $288,118 $117,522 $452,371 $ (39,715) CG Modernization $348,934 $573,349 $101,000 $ 506,660 $ 83,972 Small Boats $72,665 $33,653 $30,131 Ship Modernization, Operations & Sustainment Fund $ 2,382,100 Notes: FY 2013 Ship Maintenance & Modernization Navy announced it will retain four of the cruisers. MIAMI repairs Retains Retains Retains all 9 ships 3 CGs all 9 ships

20 Maintenance Funding History $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 Total Base Budget Adjustments

21 National Ship Repair Industry Conference 2013 Budget Brief: Continuing Resolution

22 Continuing Resolution Continuing resolution funds agencies at FY12 levels +.6% $4.560B CR level vs $5.090B in base budget. OCO funded at FY13 request of $1.310B. Base plus OCO CR Level is $5.870B. $540M (8%) lower then the $6.400B total in the budget. A year long continuing resolution reduces ship depot maintenance by $540M.

23 Factors for Maintenance & Modernization No reductions were taken in the 1 st or 2 nd quarters of the fiscal year. Deploying ships will get priority. Submarines and aircraft carriers will get priority. Naval shipyard workload reduction is limited by 22 workdays of furlough authorized. Canceling surface ship availabilities is contractually easy. Navy could reprogram funds into ship depot maintenance, subject to Congressional approval. A disproportionate number of canceled and deferred availabilities will be of surface ships.

24 National Ship Repair Industry Conference 2013 Budget Brief: Sequestration

25 Budget Control Act of 2011 Security includes: DoD, DHS, VA, National Nuclear Security Administration, and Budget Function 150 International Affairs Implemented $917 billion in cuts over 10 years to increase debt limit by $900 billion. Joint Select Committee on Deficit Reduction, the Super Committee, failed to produce debt reduction of at least $1.5 trillion over 10 years. Sequestration of $1.2 trillion is now the law. Was to go into effect on January 2, Postponed by the American Taxpayer Relief Act of 2013 until March 1, 2013.

26 American Taxpayers Relief Act and the Sequester National Ship Repair Industry Conference 2013 Reduced the amount of the FY13 sequester ($12B defense, $12B non-defense Delayed sequestration by 2 months Changed the budget caps for FY13 & FY14

27 FY13 Total = $585B Source: House Armed Services Committee

28 Impact of Sequestration Pre BCA FY 2013 budget was $585B. PRESBUDG cut $49B (8.4%). Sequestration cuts another $54B (9.2%). Total reduction of $103B (17.6%). Post sequestration budget would be $482B. MILPERS exempt Funds already obligated can t be used. Overseas Contingency Operations a factor. Unobligated prior year balances can be used. Approximately 7.5% of all operations, procurement, research and construction get cut from the PRESBUDG level.

29 Required Defense Cut New Mechanics of Sequestration $54.7B - $12B = $42.7B Percentage Cut = $525.4B + $88.5B + $81.6B B - $149.4B 9.5% = 7.5% Base DOD Budget OCO Budget Unobligated Balances Non-DOD Defense MilPers Exemption Approximate 7.5% Reduction Across Investment and O&M Accounts last 7 months of fiscal year Latest: OMB Says 7.8% * Function 050

30 National Ship Repair Industry Conference 2013 Budget Brief: Current Crisis

31 Continuing Resolution Plus Sequestration Scenario 1: Budget Passed Sequestration taken from FY 2013 budget numbers. Maintenance reduced by approximately $480M. Scenario 2: Year Long CR Sequestration taken from FY 2013 budget numbers. Maintenance reduced by approximately $540M (the larger of the two reductions). Scenario 3: Year Long CR Sequestration taken from FY 2012 budget numbers. Maintenance reduced by approximately $1B (the sum of the two reductions, about 20%).

32 Continuing Resolution Plus Sequestration Joint Chiefs to The Honorable Carl Levin, Chairman Committee on Armed Services: The timing and magnitude of Sequestration under the 2011 Budget Control Act along with the 2013 Defense Budget Continuing Resolution - if carried through the end of the fiscal year - will trigger a cut in operating budgets of more than 20 percent across the Joint Force compared with the President's budget.

33

34 Potential actions Fleet-wide = Actions Completed = Actions Initiated Continuing National Resolution Ship Repair Industry Sequestration Conference ($4.0B OMN, 2013 $7.75B investment ($4.6B OMN B investments) accounts) Cancel ship depot maintenance (rolling schedule): 11 ship avails in Norfolk, VA ($287M) 5 ship avails in San Diego, CA ($103M) 1 ship avail in Mayport, FL ($4M) 1 ship avail in New London, CT ($45M) 1 ship avail in Hawaii ($35M) 2 ship avails in Japan ($17M)(1 is de scoped) 1 ship avail in Bahrain ($2M) Cancel 3 rd and 4 th Quarter aircraft depot maintenance (rolling schedule) in San Diego CA, Norfolk VA, Jacksonville FL, Whidbey Island WA, Lemoore CA, & Cherry Point NC ($433M) Reduce ship ops, flying hours ($557M) Cut NECE by 20% ($182M) Release up to 655 temporary workers ($12M) Implement civilian hiring freeze ($70M) Cut administrative expenditures by 25% ($385M) Cut IT expenditures by 25% ($141M) Eliminate non essential travel/conferences ($26M) Reduce Facilities Sustainment, Restoration, and Modernization (FSRM) by 50% ($1.16B) Reduce Base Operating Support (BOS) by 10% ($495M) Cancel 29 building demolition projects (rolling schedule) ($56M) Delay decommissioning and/or disposal prep ($33M) Seek Congressional authority to incrementally fund USS ENTERPRISE (CVN 65) inactivation over multiple years and apply FY13 savings (~$561M) to restore Navy CR and Sequestration impacts Cancel deployments (rolling sked): 10 DDG (7 are BMD in FY14), FFGs Delay HARRY S TRUMAN (CVN 75) CSG deployment; reduce Middle East CSG presence 50% Cease workups for 2 CSGs (RONALD REAGAN (CVN 76), CARL VINSON (CVN 70)) Cancel BATAAN (LHD 5) Amphibious Readiness Group Deployment Shut down 4 of 9 CVWs months to restore readiness at 2 3x cost Stop non deployed ops that do not support pre deployment training Reduce non deployed operations for pre deployment training Cut WESTPAC deployed ops ~35%; Non deployed PAC ships cut ~40% Cancel ops to S. America (CONTINUING PROMISE USNS COMFORT) Cancel non BMD deployments to Europe in FY13 Reduce exercises (e.g., MALABAR, CARATs, FOAL EAGLE) Reduce CONUS and OCONUS port visits Lay up 4 combat logistics force ships Cancel 3 ship depot avails (rolling schedule) in San Diego, CA ($72M) Defer repairs to USS PORTER ($125M), USS MIAMI ($339M) Reduce SYSCOM fly away emergent repair travel teams Delay/defer combat vehicle, weapon, trainer maintenance Delay up to 20 CVN / Submarine public shipyard availabilities Cancel F 35B testing w/ USS WASP(LHD 1); further program delay Planning furlough (~186k eligible) Civilians for 22 work days ($448M) Reduce throughput of new pilots/flight officers in flight training 44% Cancel Midshipmen summer training programs Cancel 3 rd/ 4 th Qtr Blue Angels ($28M); Cut outreach (e.g. Fleet Week)

35

36

37

38

39

40

41

42 300 Peace Dividend DoD cut by $42B Billions of dollars From 1990 to 1994: ,000 leave military service 166 ships retired SCN cut by $7.4B % reduction over four years.

43 Budget Climb from 1998 to 2008 National Ship Repair Industry Conference 2013 TOA (Then Year $) Delta % Increase Total DoD (OMB Tables) % Total DoD (DoD Data) % Defense Wide % Army % Air Force % Navy % TOA (Constant FY10 $) Delta % Increase Total DoD (DoD Data) % Defense Wide % Army % Air Force % Navy % TOA: Total Obligational Authority including supplementals & GWOT Note: DoD data from the DoD FY2010 Green Book Table 6-3: DoD TOA by Service FY 1948 to FY 2010

44 Calendar Key Dates (FY13 Q2-Q3) National Ship Repair Industry Conference 2013 Continuing Resolution FY14 Posture Hearings/Markups DOD Furlough Authorization to Congress Feb 15 Congressional Budget Resolution April 15 Jan Feb Mar Apr May Jun 113 th Congress Jan 3 OMB passback to DOD Jan 28 DOD Risk Mitigation 1 Begins Feb 15 Sequestration March 1 FY14 DOD Budget Due to OMB March 1 DOD Civilian Furloughs Begin April 1 2 FY13 CR Expires March 27 1 Risk mitigation efforts include canceling private-sector contracts for ship maintenance Debt Ceiling Headroom Expires May day wait period from time of Congressional notification

45 Where We Stand on the Continuing Resolution What time is it? Defense appropriations bills were prepared by both the House and the Senate. The House version passed on a broad bipartisan basis. The Senate version passed out of committee unanimously, The bills were informally conferenced in December. House plan: a continuing resolution the week of March 4 that also contains defense, MILCON & veterans bills. Senate plan: amend the House measure to include the other 10 appropriations bills that cover domestic programs.

46 Where We Stand on Sequestration Sequestration took effect 1 March. OMB applies 7.8% to Defense accounts. $44.3B Navy O&M,N looses $3.455B. Senate rejected competing proposals: Democratic plan to head off the sequester with a mix of spending cuts and tax increases failed on a vote of Republican plan to give agencies more flexibility in carrying out the cuts failed on a vote of House plan: House CR limits spending at a sequestered level. $44.3B Navy O&M,N looses $2.7B. Senate plan: Yet to be determined modification of the House proposal possibly limiting FY13 cuts to the BCA level (ie. No sequestration).

47 FY12 Budget = $570.7B for base defense spending in FY13 Revised DOD Budgets Dollars in Billions Expect the FY14 PRESBUDG in April. Approx. 2% growth Source: CSBA

48 Questions? 48