1. 1 DON Program and Budget Brief NDIA SLAAD Joint Integrated Air and Missile Defense 7April2005 VADM Lou Crenshaw OPNAV N8 NAVY PROGRAMMING Investing the nation’s resources wisely

2. 2 DON Program and Budget Brief 2 Fiscal Environment … obligation to the nation To fight and win in JIAMD, with finite resources, competing priorities, and facing buying power erosion we must: Buy the right tools. To get the best value for the taxpayer, we need: ideas from Industry partners extrapolated to mission analyses run on world-class models assessed by Warfighters. A Joint Warfighter and Industry responsibility

3. 3 DON Program and Budget Brief 3 A Window of Opportunity The next several slides will show: 1.Navy TOA – growing in the right areas Real-growth in Procurement Stability in MPN and Readiness accounts Cresting of RDTEN focused on Transformation An opportunity to Invest 2.Trends capitalizing on past RDTEN to procure transformational ships, aircraft and weapons. Growth trend is toward Procurement

4. 4 DON Program and Budget Brief 4 We are Transforming to Win Tomorrow DoN FYDP Programming Real-Growth … in the proportion for PROCUREMENT +16% +8% +35%

5. 5 DON Program and Budget Brief 5 Transformation.. phased investment strategy RDTEN @ FY06 =$12B Recap = $17B Ship & Aircraft RDTEN Aircraft Procurement Shipbuilding $6.5B $37B RDTEN @ FY11 = $6.5B Recap = $37B TY$B

6. 6 DON Program and Budget Brief 6 A Window of Opportunity … with Challenges The next several slides will show: 1. Navy TOA – growing in the right areas Real-growth in TOA for the first time in years Stability in MPN and Readiness accounts Cresting of RDTEN focused on Transformation An opportunity to Invest 2. Trends capitalizing on past RDTEN to build ships and aircraft and procure weapons Instability within Procurement accounts threatens these real-growth opportunities Growth trend is toward Procurement Cost increases and buying power erosion limit progress

7. 7 DON Program and Budget Brief 7 Cost Growth Challenge 1967 2005 $M 1000 2000 68.2M 2,427M SSN 484M 1967 2005 $M 500 1000 72.5M 1,148M DDG 515M $M 2000 3000 CVN 1967 2005 $M 500 1000 32.3M AMPHIB 229M 1,125M (LPD 17) (SSN 774) (DDG 51) 4000 5000 Adjusted for inflation 401%123%391% TACTICAL AIRCRAFT $M 1967 2005 20 50 40 30 60 10 1.4M Adjusted for inflation 6.7M 60 57M (F/A-18E/F) 851%

8. 8 DON Program and Budget Brief 8 The Impact of Buying Power Erosion FY06 in WPN-PANMC Added investment $900M = funding increase of 34% … but QTY procured increased only 24% Loss of Buying Power for Weapons ~$200M Loss of FY06 Buying Power across all APPNs ~$5B PB02 FY06 PB06 FY06 $2.6B TOA $3.5B TOA $200M

9. 9 DON Program and Budget Brief 9 Warfighting Programs TAMD competing favorably with other warfare areas … 28% in direct support, 37% including CG/DDG Modernization, and that doesn’t factor in MDA’s help at $7B across the FYDP in AEGIS BMD. FYDP TAMD Investment Navy Direct TAMD: $12B Navy Indirect TAMD: $3.8B MDA FYDP programming for AEGIS BMD (i.e. SM-3) : $7B

10. 10 DON Program and Budget Brief 10 Take-Away’s Navy TOA Growing in Procurement Pressurizing Investment Industry must help in controlling costs Leverage our RDTEN investments Buy only what we need to buy at the best price We must create efficiency

11. 11 DON Program and Budget Brief