Again, to the civilian manpower issue, let me flesh that out a little further. We are basically trying to accelerate the reduction by about 1 year overall to date. We reduced the size of the civilian work force about 85,000 and two primary drivers on that particular piece of the equation are again the defense management report overhead cuts that we have been looking at as a way of reducing costs of doing business, as well as the reduction of workload occurring in industrial facilities because of fewer ship overhauls, fewer aircraft inductions, et cetera, attended to a force that is 25-percent smaller.

Major systems in the fiscal year 1993 budget

On the procurement side of the equation or the investment side, the basic highlights of what are in the budget this year clearly again, through the specifics here, we are primarily still pursuing programs that are in the nature of either strategic defense or mobility equation as part of the overall modernization effort we are still pursuing.

Some other specific budget highlights, the environmental program is up clearly by a substantial amount. This includes the cost of not only environmental restoration, but also statutory compliance for environmental law. The counternarcotics program is roughly where it was a year ago, increased for inflation. The defense medical program, the Deputy Secretary made the decision this past year to merge or consolidate all costs so that we can maintain that visibility over the medical program. And the Congress this past year and the Appropriations Act supported that endeavor.

The 1993 budget has been submitted with all costs associated with medical activity in a defensewide account, which will then be disbursed back to the military departments for allocation, exactly the same way that we conduct the environmental program, for example, in terms of financial changes.

The base closure totals you see here, most of that is attendant to the 1991 Commission actions that were codified this past September. But there is a balance or residual cost that we are still implementing from the 1988 Commission.

The national defense sealift fund is probably the biggest growth industry piece of the budget we are advancing this year for a $3.1 billion program which utilized $1.9 billion of funds that had been previously appropriated to be used specifically for the purpose of construction, acquisition of existing_tonnage, conversion of vessels and operations costs for the Ready Reserve fleet as well as repositioning, all in support of the mobility requirement study which was forwarded here, I believe, about a month ago from the Joint Chiefs of Staff.

The national aerospace plane and the national launch systems surely are cooperative efforts we continue to pursue with the national NASA program in order to split those expenses for future development.

MAJOR PROGRAM TERMINATIONS IN FISCAL YEAR 1991-92 BUDGETS

DOD has recommended terminating over 100 weapon programs including:

Apache helicopter
M-1 tank

TRIDENT submarine

F-14D fighter

F-15 fighter

F-16 aircraft

Naval advanced tactical fighter

A-12 aircraft and Air Force advanced tactical aircraft
Peacekeeper missiles

This is a reminder of some of the programs that are still assumed to be terminated within the fiscal year 1993 budget that has been submitted. Overall, these programs are again programs we produced at impressive rates during the 1980's and now are sufficient to match a modernized force that is by definition going to be in the case of the Army and the Air Force, one-third smaller than what we had planned at the times these programs went into production.

The notable exception, of course, is the Peacekeeper missile, which was primarily attendant to the President's initiative with President Yeltsin just recently.

PROGRAM TERMINATIONS IN FY 1993 BUDGET
($ in Millions)

Reductions to FY 1992 Budget Level
FY 1993 FY 1993-1997

Additional changes, again, these are by comparison, I guess, smaller detailed kind of reductions, but again, we are still attempting to close our programs expeditiously, based on what have been expected to be larger force requirements to be generated or in cases where we have completed the modernization effort and are ready to move on.

Three basic exceptions to that, of course, are the Peacekeeper, the SRAM, and the mobile portion of the small ICBM program, which was specifically the target of the President's initiatives back in September 1991.

IMPACT OF NEW ACQUISITION APPROACH
($ in BILLIONS)

And finally, the final change that Secretary Atwood will elaborate on here in just a second is basically a change in the acquisition of methodology or emphasis of approach that we are looking at for the years to come. The primary programs that are now subject to that alternative or change in mentality are the ones graphically depicted here. This is a net reduction of $42 billion through 1997. It includes an offset increase of about $8 billion for additional R&D efforts to explore the kinds of technologies and technology demonstrators necessary to look at the next generation of systems involved here.

The overall net reduction or growth reduction that occurred is about $49 billion, again offset by an $8 billion increase for the R&D activity.

Thank you, Mr. Secretary.

NEW DEFENSE ACQUISITION APPROACH

Mr. ATWOOD. Thank you, Sean. I would like to spend just a moment on three items that I consider to be critical to the underlying of this budget submission.

First and foremost is the new approach to acquisition. And although, that is a fairly busy chart up there, I would like to just take a moment and say how we have been acquiring systems up until now.

Again, the emphasis has always been that we are being pushed by the former Soviet Union, driven by new technology, driven by the fear that they have caught up with us or they passed us. And so, almost everything that we did was fueled by the desire to get new technology into our weapons and get those new technology weapons into production.

We established over the years and reinforced by the Packard Commission Report, a five-phase program which started off with a concept and development phase, concept evaluation phase. And this was based on mission needs as stated by the services and approved by the Joint Requirements Operating Council under the Vice Chairman of the Joint Chiefs of Staff.

That was a relatively short period. But we set a series of milestones that these systems had to go through and pass before they went to another phase. The next phase was demonstration and validation. At this phase we might even have one or more contractors. And then following that is full engineering and manufacturing development followed by phase three, which is production and deployment, and finally, operations and support.

Unfortunately, because partly driven by the speed at which we had to do this and also by the natural inclination to see these move forward very rapidly, there were a large number of programs that ended up close to production or in production that had troubles. They were overrun, they were technically deficient or they were late.

DEFENSE MANAGEMENT IMPROVEMENTS TO THE ACQUISITION SYSTEM

Streamlined reporting channels

Preset milestone criteria

Disciplined approach to acquisition milestones and phases

So we took steps early on in the administration to effect some fundamental improvements in the way we went at that acquisition system. We streamlined the reporting channels, made it so that a