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Department of the Army Historical Summary
Fiscal Year 1999
Chapter 2

2.

Organization, Management, and Budget

Organizational Changes

In March 1993, Secretary of Defense Les Aspin initiated a comprehensive review of U.S. defense strategy, force structure, modernization, infrastructure, and foundations from the bottom up. A response to the sweeping changes in geopolitics and security threats brought on by the end of the Cold War and the collapse of the Soviet Union, the Bottom-Up Review was the first step in a complete restructuring of the U.S. military. By 1994 the Army had responded to the Report on the Bottom-Up Review with the genesis of its own plan for an organization capable of meeting the demands of national security in the early twenty-first century.

The resulting force structure, Force XXI, required substantial changes in the institutional Army, information technology, and operational units. The transformed units would be easier to deploy and capable of precision engagement and dominance across the full spectrum of missions. Emerging information technologies would be exploited to maximize the efficiency, flexibility, and lethality of the new configuration.

The Army quickly articulated its goals for harnessing information technology as the Army Enterprise Strategy, which mandated the creation of a seamless information environment throughout the range of command, control, communications, computers, and intelligence (C4I) activities. The Army Enterprise Strategy, as a component of Force XXI reforms, produced substantial changes in the institutional Army in the late 1990s. The U.S. Army Modernization Plan for 1995 and its successors provided the architecture for the Army’s transition to the new structure.

By FY 1999, the major organizational realignments and implementation of new technologies called for in the Army Enterprise Strategy and the Force XXI campaign were well under way, if not accomplished. As a result, the Army Staff introduced few substantive changes in FY 1999. The year’s organizational activities were marked by the continued pursuit of prior initiatives rather than the creation of new ones as the Army furthered its transformation to meet the requirements of the National Military Strategy and the transition to Force XXI.

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Demonstrating the growing prominence of contingency operations and coalitions in the post– Cold War era, the Office of the Deputy Under Secretary of the Army (International Affairs) (ODUSA-IA) completed its second full year of operations in FY 1999. Established in FY 1997, the ODUSA-IA develops, coordinates, supports, and assesses Army international activities in support of the National Security Strategy, the National Military Strategy, and the regional strategies of the Combat Commands.

One of ODUSA-IA’s two directorates, the International Policy Integration and Assessment Directorate, houses the International Policy, Plans, Programs, and Integration Division (IPP). The IPP participated in restructuring The Army Plan (TAP) mission areas and revising AR 11-32, Army Long-Range Planning System, during FY 1999. The revisions consolidated ten mission areas into seven and established co-chairs for each mission-area team. The ODUSA-IA became a co-chair of the mission areas “Promote Regional Stability” and “Reduce Potential Conflicts and Threats,” integrating its objectives into Army strategic planning guidance. The IPP also translated the requirements for Army international activities into capabilities for inclusion in Army Planning Guidance, section two of TAP. These developments promoted the integration, through ODUSA-IA, of the Army’s international programs and coalition-building efforts into strategic planning.

The potential threat of terrorist acts using weapons of mass destruction was addressed in FY 1999 through an organization that briefly fell under the Army’s administrative aegis. Originally functioning as a Department of Defense (DOD) office supported by the Army, the newly created National Domestic Preparedness Office (NDPO) soon transferred to the Department of Justice. The organization, a working group focusing, synchronizing, and integrating federal support of domestic response to weapons of mass destruction, coordinated the activities of the DOD, the Federal Emergency Management Agency, the Environmental Protection Agency, the Department of Energy, the Department of Health and Human Services, and the Department of Justice. The decision to allow the Department of Justice to lead the NDPO through its designated agent, the Federal Bureau of Investigation, ended several months of rivalry as various constituents struggled to define the organization’s structure and role.

Army personnel began implementing a new system for managing temporary-duty travel in FY 1999. The Defense Travel System (DTS) is a DOD-directed program in which the newly established DTS-Army worked in close cooperation with the DOD Project Management Office-DTS to create an automated, paperless travel system. Fort Campbell, Kentucky, was selected as the test site for the new system, which was extended to the reserve components before the end of the fiscal year. Digitizing the

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management of temporary-duty travel reduced the former forty-eight–– step procedure to only nine steps, shortening the time required for a person to complete travel arrangements from 9.0 to 1.3 hours. The full processing cycle was reduced from twenty-one days to slightly over two days, a clear improvement in efficiency and cost control.

Management and Information Systems

Information technology constitutes one of the Force XXI campaign’s three axes. To facilitate the campaign, the Army Enterprise Strategy provides a comprehensive vision for all C4I activities. Information infrastructure, quality assurance, modernized battlefield communications and network management, and battlespace awareness were the Army chief information officer’s priorities for FY 1999. The assistant secretary of defense for command, control, communications, and intelligence recognized the Army commitment to those priorities by designating it as the executive agent for developing theater joint tactical networks. That decision combined previous appointments as the executive for joint network management (1993) and tactical switching systems (1992), placing responsibility for all theater network infrastructure under the Army’s director of information systems for command, control, communications, and computers (DISC4).

By sharing information networks at the theater level, the armed services can coordinate their activities and leverage their strengths to an unprecedented extent. The potential impact of such technology on joint operations lies at the core of Joint Vision 2010, the operational paradigm for the early twenty-first century. The DISC4 therefore bears responsibility both for ushering Force XXI through the ongoing Revolution in Military Affairs brought about by information systems and new technologies, and for extending the benefits of those technologies through joint applications.

The Joint Network Management System was approved by the Joint Requirements Board in October 1998. But the board also required an assessment of the system’s key performance parameters, addressing interoperability, that was not completed before the end of FY 1999. Defense Planning Guidance calls for the Army to develop and field the system’s threshold requirements by FY 2003; a separate inquiry concluded that development and deployment of the Joint Network Management System could not be accelerated to advance that date because of budget constraints.

Similarly, the Army’s future tactical network management system— Integrated System Control (ISYSCON), a component of the Warfighter Information System (Terrestrial)—suffered from budgetary limitations. The system is intended to establish an automated, theater-wide network that signal units can use to manage multiple tactical communications systems

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in support of battlefield operations. ISYSCON facilities will manage tactical communications and interface with each battlefield functional area in the Army Tactical Command and Control System architecture. The Army approved full-rate production of the ISYSCON on 5 February 1999. But the FY99 budget precluded fielding thirty systems as originally scheduled, thus hampering the ability of signal units to manage voice and data networks as planned. Although the program continued, it failed to meet its Army acquisition objective and did not have funding restored to programmed levels in the FY00 budget.

AUTODIN, the automatic digital network, which had long served as the principal means of DOD record message transmission, was officially closed at the end of FY 1999. Its last four switching centers were redesignated as digital messaging system transition hubs and are scheduled to remain operational to handle message traffic from remaining AUTODIN equipment. The DISC4 also maintained several other previously initiated programs intended to modernize a number of space, communications, and network systems.

During FY 1999, the Army continued to make progress toward the creation of the Army Information Warehouse (AIW), one of the primary initiatives for securing the Army’s information superiority. Based on the Army’s strategic vision and a revised record-keeping process, the AIW will collect, protect, and project information to support the Army’s needs. The new record-keeping process itself was developed during FY 1998, reducing the standard 117-step procedure of the Army records management program to a 20-step procedure. As the focus of the Army’s records management efforts during FY 1999, the AIW concept was further defined through the creation of a mission needs statement, approved as an Army requirement and forwarded for review by the Joint Requirements Oversight Council. That review is particularly important in light of the Army chief information officer’s FY99 approval of the draft DOD Directive 5015.2. Under the new directive, responsibility for implementing records management policy and procedures for the combatant commands will be transferred from the services to the Joint Staff.

The Army also continued its efforts, begun in 1995, to prepare its information systems for the arrival of the year 2000. Many systems, ranging from payroll programs to weapons platforms to the global positioning satellites, employed software using only two digits to identify the year. If left uncorrected, those systems could experience a wide range of errors dealing with the double zeros that would represent the year 2000, which they might read as 1900. To deal with this Year 2000, or Y2K, problem, more than twenty-five thousand Army information systems and six hundred thousand microprocessor-controlled devices had to be prepared and tested, at a cost of some $600 million, before calendar

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year 1999 ended. The Internet became a tool in this process, as the Army Y2K homepage provided information for the entire Army community, and Web-enabled databases allowed real-time tracking of efforts to defeat the “Millennium Bug.”

Army Operations Order 99-1, Millennium Passage, was published in January 1999 to direct Y2K preparations. In response to that order, the Army Operations Center established a Y2K Transition Operations Cell to track the status of systems and installations during transition periods and to monitor worldwide Y2K events that could affect Army operations. An independent examination by the Army Audit Agency validated contingency tests, organized by the Joint Chiefs of Staff, that verified the Army’s ability to maintain its mobilization, deployment, sustainment, and intelligence capabilities in the face of major Y2K-related systems failures.

Economies and Efficiencies

In FY 1999. the Army continued to face expanding operational and force readiness challenges with limited funds. This reality of America’s post– Cold War defense posture had a significant impact on all areas of military activity and made cost reduction and fiscal efficiency issues increasingly important throughout the Army. One telling example of efforts in this regard was the secretary of the Army’s order that, after 1 December 1998, paper media would no longer be purchased for administrative publications and forms. The Department of the Army’s administrative documents were to be available in electronic form exclusively and to be printed from CDROM or the World Wide Web only when necessary.

Legislative action underscored the need for financial responsibility and accurate record keeping. The Chief Financial Officers (CFO) Act of 1990 required major government agencies to prepare auditable financial statements for the first time. The Government Management Reform Act of 1994 extended the CFO Act to include all major executive branch agencies, their components, and the government as a whole. If that was not mandate enough, the Federal Financial Management Improvement Act of 1996 (FFMIA) and the Information Technology Management Reform Act (Clinger-Cohen Act) of the same year required all federal agencies to develop integrated information systems to produce those auditable financial reports.

All of that legislation resulted in the publication of the Army Chief Financial Officers Strategic Plan (General Fund): Five Year Plan (FY 1999–2003). Through FY 1998, the Army had consistently failed to receive an unqualified opinion from external auditors examining its financial statements. As a result of this failure to produce verifiable statements, the Army received special attention in reports to Congress mandated by the

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FFMIA—reports by the inspector general, the Office of Management and Budget, and the comptroller general. The Army Audit Agency (AAA), which provides internal advice, oversight, and evaluation of the Army’s accounting procedures, itself disclaimed an opinion of the reliability of the Army’s financial statements for FY 1998. To correct that state of affairs, the Chief Financial Officers Strategic Plan called for an unqualified opinion on Army financial statements by FY 2003. The five-year effort to meet that goal began in FY 1999.

The AAA began to pursue that end with an internal restructuring to improve its own efficiency. Grouping personnel into dedicated functional areas enabled auditors to specialize and to receive function-specific training. The new task-focused orientation allowed the function groups to build expertise and improved client relationships as it decreased their learning curves and response times. To further this internal transformation, the AAA initiated the Army Follow-Up Program. Under the new practice, functional experts returned to Army activities that the AAA had evaluated to assess the effects of measures undertaken in light of the previous audit. As a whole, this transformation of the AAA should serve as a catalyst for the efficient documentation of Army expenditures and the elimination of unnecessary costs.

Such gains can have immediate operational consequences. The chief of staff, U.S. Army, Europe, and Seventh Army, requested that the AAA create a team in Skopje, Macedonia, to support operations in Kosovo. After its arrival in August 1999, the team provided the deployment commander with real-time assistance in creating and employing management processes and controls to guarantee the effective and appropriate use of resources.

During a review of the Army Strategic Management Plan, the AAA established a new strategic model (Audit Report AA 99-746) to be used throughout the Department of the Army. That model directs senior commanders in the creation and implementation of performance management systems similar to those developed for Kosovo, which should assist those commanders in maximizing the efficiency of their accounting procedures.

Despite its success in overseeing Army expenditures, the AAA suffered from the same budgetary problems as other establishments. The competitive labor market of 1999 forced the agency to launch its own recruitment efforts to overcome shortages of skilled personnel. Relatively expensive General Services Administration rents forced the AAA to relocate its capital field office and Fort Belvoir field office to Army-owned facilities in the Washington, D.C., area. (A similar move was scheduled for the Atlanta field office in FY 2000.)

The accounts of the AAA itself did not go unchallenged. In a joint series of peer reviews, the AAA audited the Naval Audit Service and was itself

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successfully audited by the Air Force Audit Agency. The DOD inspector general conducted two oversight reviews of the AAA, one on the processes used to determine audit requirements and request resources, and one on the Army’s internal review organizations. These efforts at rationalizing Army financial records and checking figures proved their worth. In FY 1999, the AAA spent $51.1 million to issue 522 audit reports of various types that identified potential savings projected at $794 million.

Budget

Reducing the Army of the Cold War era into a more economical, more mobile, and more lethal institution was neither an easy task nor a rapid process. The original Report on the Bottom-Up Review produced guidance for budgets from FY 1995 through FY 1999. In June 1994, the Office of the Secretary of Defense released the Army Program Objective Memorandum FY 1996–2001, a document that clarified the Army’s intent in the drawdown of forces to reflect new strategic and fiscal realities. President William J. Clinton’s FY99 budget request for a total obligation authority (TOA) of $64.3 billion supported a force consistent with both of those planning documents. Congress appropriated slightly less than requested, giving the Army a TOA of $64 billion.

Table 1 compares the FY99 budget with that of FY 1993, the year in which the Bottom-Up Review originated. The comparison illustrates the impact of the Army’s continued restructuring on funding requirements. Even ignoring the effects of inflation, over seven years the Army reduced its TOA by $1.6 billion—almost $3.1 billion if new expenditures for chemical weapons demilitarization, environmental restoration, and former DOD programs are disregarded. Constant dollar savings would be significantly greater.

The FY99 budget attempted to preserve mission readiness, enhance modernization, integrate the force structure, and maintain the quality of life for military and civilian personnel. The balance among those needs was an elusive one, for the Army faced an accelerating operational tempo that strained its resources. On a typical day in 1999, the Army had 140,000 personnel abroad in seventy foreign nations—that is, more than 60 percent of U.S. forces were committed to external engagements.

Maintaining readiness while balancing resources and demands was particularly difficult. Because of competing priorities and congressional reductions, the Army consistently proved unable to meet its self-imposed goals in combat vehicle training mileage between FYs 1997 and 1999. In FY 1999, M1A1 Abrams tank crews were scheduled to complete 800 miles of training; M2 Bradley infantry fighting vehicle crews, 934 miles; and M3 Bradley cavalry fighting vehicle crews, 970 miles. Abrams crews recorded

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TABLE 1: APPROPRIATIONS COMPARISON: FY 1993 AND FY 1999
(Unadjusted Millions of Dollars)

Category
FY 1993
FY 1999
Military Personnel, Army
23,236
20,836
Operations and maintenance, Army
17,847
16,630
Procurement
Aircraft
1,441
1,384
Missiles
1,049
1,209
Weapons and tracked combat vehicles
921
1,538
Ammunition
1,094
1,063
Other procurement
3,067
3,306
Research, development, test, and evaluation
6,015
5,022
Military construction, Army
437
869
Chemical demobilizationa
0
777
Environmental restoration
0
367
Army Family Housing
Operations
1,364
1,095
Construction
160
135
Army National Guard
Personnel
3,240
3,490
Operations and maintenance
2,297
2,670
Military construction
215
142
Army Reserve
        Reserve personnel
2,170
2,167
        Operations and maintenance
2,297
1,199
        Military construction
42
102
Totalb
65,628
64,005
        
a. New Category, FY 1999
b. Discrepancies result from rounding

an average of only 681 miles of training for the year; M2 crews, 710 miles; and M3 crews, 573 miles—less than sixty percent of the objective for each type of vehicle.

In a similar vein, the Army National Guard Depot Maintenance Program experienced continuing shortfalls. The program is intended to repair equipment and return it to its owning unit. Although the Guard had no maintenance float that would allow it to replace equipment awaiting overhaul, the program was funded at only 35 percent of its FY99

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requirement. Funding for depot maintenance for the enhanced separate brigades held steady at 60 percent of required levels, and divisions received only 8 percent of the necessary funds. As a result, backlogs of Army National Guard equipment awaiting repair grew in FY 1999 while readiness suffered.

To avoid underfunding such important activities in an era of intense budget scrutiny, the Army endorsed Defense Secretary William S. Cohen’s continuing efforts to reduce infrastructure and overhead costs. Savings from such decreased spending could then be reinvested to promote force readiness and modernization. The service’s efforts bore fruit in the FY99 budget, which included $1.3 billion in savings from ongoing management initiatives designed to promote efficiency. Those funds are not apparent through a quick glance at budget totals, however, because they were reinvested in high-priority tasks. Any budgetary comparison needs to consider an additional $1.5 billion that was transferred to the Army in FY 1999 from the budgets of DOD programs, including chemical demilitarization, commissaries, and defense reform initiatives.

When the transferred programs are included and adjustments are made for inflation, Congress’s $64 billion appropriation for FY 1999 represented a decrease of less than 1 percent from the preceding year. The president’s proposed budget for FY 2000 included $3 billion in additional Army TOA. Such figures may indicate the possible stabilization of, and perhaps even a rebound in, spending authority as the force drawdown neared its 2003 conclusion and operational tempo remained high.

The approved $2.6 billion in pay for military personnel in the active and reserve components remained essentially static from FY 1998, despite a 3.1 percent pay raise, largely the result of continuing decreases in the Army’s uniformed strength. The active component, numbering 488,000 personnel in FY 1998, declined to just below its targeted 480,000 for FY 1999. Army National Guard and Army Reserve personnel figures also decreased to targets of 357,000 and 208,000, respectively, as the reserve components continued their programmed reductions.

Quality of life is a constant concern within the Army. Family housing accounted for $1.2 billion in Army expenditures, including major projects at Fort Carson, Colorado; Fort Hood, Texas; Fort Lewis, Washington; and Fort Meade, Maryland. Of the $1.1 billion appropriated for military construction, $362 million supported barracks renovations and operations, including new barracks for 11,700 soldiers. Barracks construction at Camps Casey and Hovey in Korea received $49 million of the FY99 Korea supplemental appropriation.

Morale, welfare, and recreation (MWR) programs did not fare so well. The Army was able to execute only 87 percent of MWR’s programmed mission-sustaining activities and 86 percent of its planned community

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support activities. Base commanders were forced to draw on the $206 million budgeted for these activities within the base support account to meet more pressing needs, thus hampering the scheduled MWR efforts.

Equipment modernization and procurement accounted for $8.5 billion of spending during the fiscal year. The Army also established modernization goals for the next decade, an indicator of FY 1999’s transitional role as the force approached a new century and a major milestone in its continued restructuring into Force XXI architecture and eventually the Army After Next. The 1993 Bottom-Up Review had addressed force structure only through 1999. The updated 1999 Army Modernization Plan, with goals similar to the 1995 and 1996 versions, extended the Bottom-Up Review’s priorities and established a series of goals to measure progress toward Army Vision 2010. The five major modernization goals, which will continue to drive Army procurement through 2010, are (1) digitizing the Army, (2) maintaining combat overmatch, (3) sustaining research and development while focusing on leap-ahead technology, (4) recapitalizing the force, and (5) integrating the active and reserve components.

Procurement activities in 1999 reflected these goals. The Army spent $1.5 billion on weapons and tracked vehicles in 1999. Abrams tank and Bradley fighting vehicle upgrades directly supporting force digitization accounted for $788 million of that total. Acquisition of command-andcontrol vehicles to coordinate the improved flow of communications resulting from such modernization efforts required an additional $44 million. The upgrades and new vehicles, which incorporated enhanced thermal imaging, navigational, communications, and identification friend or foe systems to avert confusion and friendly-fire incidents, clearly expanded the Army’s ability to overmatch potential enemy forces.

Upgrading Apache attack helicopters to the Longbow configuration, with improved target acquisition and fire-control systems, was the major focus of Army expenditures on aircraft for FY 1999. The $612 million devoted to that program accounted for almost half of the $1.38 billion aviation allocation. Kiowa Warrior helicopter upgrades, modifications and additions to the fleet of Black Hawk helicopters in various configurations, and modernization of the CH–47 cargo helicopter rounded out the aviation program.

Smart, and increasingly brilliant, weaponry figured prominently in missile spending. Longbow Hellfire, the fire-and-forget antitank missile for use with the Apache Longbow helicopter, was but one component in the program. The Brilliant Antiarmor (BAT) submunition for the Army Tactical Missile System (ATACMS) entered initial production, and the ATACMS missile entered Block II production in the BAT configuration so that it could carry the new warhead. Modifications to Patriot, Stinger, Avenger, TOW (tube-launched, optically tracked, wire-guided), and MLRS

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TABLE 2- BUDGET APPROPRIATIONS AND REQUESTS: FY 1999 AND
FY 2000, RESPECTIVELY (Millions of Dollars)

Category
FY 1999
FY 2000
Military Personnel, Army
20,836
22,006
Operations and maintenance, Army
16,630
18,660
Total
37,466
40,666
Procurement
Aircraft
1,384
1,230
Missiles
1,209
1,358
Weapons and tracked combat vehicles
1,538
1,417
Ammunition
1,063
1,141
Other procurement
3,306
3,424
Research, development, test, and evaluation
5,022
4,426
Military construction, Army
869
656
Chemical demobilizationa
777
1,169
Environmental restoration
367
378
Army Family Housing
Operations
1,095
1,098
Construction
135
14
Total
16,398
15,933
Reserve Components
Army National Guard
Personnel
3,490
3,571
Operations and maintenance
2,670
2,903
Military construction
142
16
Army Reserve
Personnel
2,167
2,271
Operations and maintenance
1,199
1,369
Military construction
102
23
Total
9,770
10,153
Totalb
64,005
67,132
        
a. New Category, FY 1999
b. Discrepancies result from rounding

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(multiple launch rocket system), and the acquisition of TOW2 and Javelin missiles, contributed to the $1.2 billion expenditure for missiles.

Procurement of conventional ammunition and other needs required $4.369 billion. At the same time, the Army continued its research, development, test, and evaluation (RDTE) efforts to provide the force with new tools and capabilities. There were no new major initiatives in the $5.022 billion RDTE appropriation. But that appropriation did support the development of a number of technologies vital to the ongoing digitization effort and the implementation of the Force XXI concept.

These technologies included improved night vision systems, control digital networks, and improvements to the Abrams and Bradley weapons platforms. The budget also supported continued development of the Comanche helicopter. Other efforts included research and development of BAT submunitions, the Block IIA ATACMS, and the Crusader artillery system, and further developments to the TOW missile. As a whole, the RDTE effort continued to integrate new technology into weapons and weapons systems while exploring alternative concepts in future capabilities-based warfighting.

The president’s proposed FY00 budget maintained the same goals and strategic assumptions as did the FY99 budget. Table 2 compares the two budgets, showing the general increases the president suggested. The increased funding requirements of the FY00 budget underline the significance of FY 1999 as a transitional year, one marking the end of a decade of decreases in the Army budget. The tight budget of FY 1999 left little room for unforeseen contingency operations without adverse impact on readiness and other Army concerns. Subsequent increases in funding requests for personnel, operations, and maintenance for FY 2000 are indicative of the challenges awaiting the Army as it entered the next decade.

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