Comptroller Michael McCord, Joint Staff Director of Force Structure, Resources and Assessment Navy Vice Adm. Sara Joyner Hold a Press Briefing on President Biden's FY 2025[...]

STAFF: Good afternoon. Thank you for coming. I'm Christopher Sherwood, OSD Public Affairs. Today's briefing is on the Department of Defense's Fiscal Year 2025 Budget Request. Speaking with you today are Under Secretary of Defense Comptroller/Chief Financial Officer Michael J. McCord and director for structure resources assessment with the joint staff, Vice Admiral Sara A. Joyner. They will provide opening remarks and take a few questions. Attribution is on the record. Prior to asking your question, please state your name and affiliation. Please limit your questions to one and one follow-up. I will let you know when we're nearing the end and we have time for one last question.

With that, it's my pleasure to introduce the Honorable Mike McCord and Vice Admiral Sara Joyner.

UNDER SECRETARY OF DEFENSE (COMPTROLLER)/CFO MICHAEL J. MCCORD: Thank you very much, Chris. Thank you all for being here today. Vice Admiral Joyner and I, as Chris said, are going to give you an overview of the budget request, and then we're happy to take some questions.

I want to start by thanking Admiral Joyner and the whole Joint Staff team from the deputy secretary, the vice chairman on down, we have ourselves and CAPE Joint Staff try and bring that corporate overview to everything that we do to help us through this very robust process it takes to build a budget where you kind of hear some of the problems from the bottom up. You bring the strategy from the secretary at the top down and you try and make sure everyone's heard, the COCOMs and the -- and the components as well, to make sure that we get this to be the best product that we can be. So I want to thank everyone that was involved in building this budget. Only two of us get to sit here and sort of present it, but it was the work of many people.

With that, let me turn to the first slide, which I can see is already up. Very good.

The strategy is the same strategy that as you know, that the secretary put out in late 2022. This is the third budget fully informed by that strategy. You'll see a lot -- a lot of continuity in this budget, therefore, continuity of strategy, of priorities, of programs, of funding levels. There's going to be more that -- more that -- you -- more that you expect than surprises you, I believe, in this budget as you get a chance to go through it.

The flow of this briefing is also somewhat similar as -- to last year; help you kind of compare from last year to this year.

So with that, I won't belabor the strategy again. The -- there is nothing new on that front. Let's get to the numbers real quickly.

Again, (inaudible) This should not be a surprise to you because the topline was agreed to in June of 2023, so not quite a year ago, but several -- nine months ago in the Fiscal Responsibility Act, so we mark to that topline. Again, everybody should have been expecting that -- I think probably was expecting that, so we followed the law there. This chart, as you will see, we do not have anything filled in in F.Y. '25 for supplemental. There is no supplemental attached to this budget. We, of course, are very interested in getting Congress to get across the finish line the supplemental that was sent last October that is still on the plate there. The Senate passed a very good bill. We we need Congress to act as a whole on that. I can speak to that more in Q&A. I won't go too long on the supplemental because it is technically not part of this budget, other than to say it is -- it is essential that we get action on that. We, as the United States, extended our hand of friendship and support to Ukraine when they were attacked, and we should not be withdrawing that support now. We do need that supplemental.

Everything else in here, again, tracks very closely with last year. The supplemental -- or I'm sorry -- the Fiscal Responsibility Act topline is, as you know, about a one percent increase over last year's level, which is less than the rate of inflation, as everybody, I'm assured, knew at the time when they set the topline. So we have -- do not have positive real growth in this budget, but again, that was as intended by our elected officials who agreed on the topline last year.

OK, with that, let me just make one brief commercial about -- to reinforce what the deputy secretary just said about the -- the insidious kind of nature of continuing resolutions. I came up with this chart to kind of portray it in a different way. Some of you have heard me talk about this before. I do get tired of complaining about it, but unfortunately, the problem persists.

We have been in -- in a continuing resolution, or a C.R., where we're not able to make positive steps forward, but can only keep doing what we are doing last time for now approaching 1,800 days as of March 22nd, when we get -- when we get to the end of this current C.R., 1,800 days out of the last 15 years. So it's an average of about five years or -- out of 15, one third of the time we have been stuck in neutral, rather than moving forward. That is a dysfunctional, harmful, unhealthy pattern that really needs to stop. And I know it is not that our appropriations committees are unable or unwilling to write a bill, or that there are necessarily anything specific to defense that is causing a lot of these delays. You know, there is sort of the larger difficulty of getting deals in Washington that has proven time and again to be just driving a lot of -- a lot of slow behavior, and I think the deputy secretary just alluded to certainty, having having your funding in a timely matter is as important as having more funding. Years ago, people were already -- I know former Chairman Dempsey spoke about this, about having some certainty is just as important as getting more money six months late. In this case, the Fiscal Responsibility Act was supposed to provide some certainty. So far, that hasn't panned out in getting '24 done faster. We do hope that that will be the case for '25.

Flipping to the next chart, if we could, this just shows you kind of where the topline has been under the -- under the four budgets that this administration has submitted. Reading from top to bottom, F.Y. '22 being the light blue one. The green one, F.Y. '23, the first one fully informed by our strategy, was a pretty healthy increase once we got the strategy underpinning of what we were trying to do. Another increase last year, and then in '24.

This year's budget, which is the red line -- I know it can be hard to see from, maybe, from where you're sitting -- very much tracks last year's, which is the blue line, the dark blue line at the top, except for the one-year hit in F.Y. '25, which is the Fiscal Responsibility Act that's about $10 billion, or a little over a one percent decrement to what we had planned. Deputy Secretary Hicks spoke about the importance of getting back on track. That's what our plan does. It gets back on track in '26, '27, '28 to what we had said before. So we do need to -- we do need to get back to more positive growth, but we understand, and as I said, submitted as the law for this year.

Let me now turn to the next chart, which is on our end strength. Most of the other charts -- probably all of the other charts in this briefing are about money. There's implicitly dollar signs in front of them. But before we do all that, just talk for a second about the most important part of what we have here, which is our people, which is not just our quantity, which is on this chart, but their quality and their skills are really what makes this department go.

Our end strength, as you can see -- again, this one, probably need to have it up close and personal to see all of the details on this chart -- is a very slight decrease, about 0.6 percent total force structure, total strength less than where we project to end this year, six months from now. So this is a projection for a year and a half from now. Minor change from this year.

We probably many of you who cover this know that we have had some recruiting challenges, but strong retention. So a bit of a mixed picture on the manning side over the last couple of years continues to be a -- the lowest history -- lowest unemployment rate in history at the all-volunteer force that is over 50 years -- two years in a row, '22, '23, lowest unemployment rates we've had.

I think most people know that that creates a bit of a challenge because the people you're trying to recruit, the talent you're trying to get in have so many opportunities to do other things. And so that's not a bad problem to have but it is -- it is a problem that we have in the Defense Department as we're competing for talent and trying to, you know, do that with unemployment being as low as it is.

So with that, I think it's time for me to turn to Admiral Joyner to talk about some of the particular capability areas that really make up the bulk of what we look at when we go through our review of the different -- the different parts of integrated deterrence and military power.

VICE ADMIRAL SARA A. JOYNER: Good afternoon. And thank you, Mr. McCord.

Wanted to say up front that, in the face of increasingly complex security challenges across the globe and competing demands in our nation, our uniformed service members appreciate the hard work and support of the department's leadership and Congress in these unprecedented times.

The F.Y. '25 budget request reflects our efforts to balance the department's priorities under a top line constraint, to maintain a ready, lethal, and combat-credible Joint Force. You will see those priorities reflected in the investments slides that follow.

This year, our air power request focuses on advanced fighter and mobility platforms and makes prudent revisions to our future aviation programs to ensure that we appropriately pace our competitors.

Next, the request increases the capacity and capability of our maritime forces, ensuring the Navy remains a relevant deterrent while also increasing and optimizing our industrial base.

The budget request also provides the troops on the ground with improved firepower, maneuver, and command and control. These investments directly support Marine Corps and Army modernization efforts, ensuring they remain dominant on land.

Our investment in platforms and systems across these domains increases the lethality of our Joint Force and enhances our ability to deter threats while we adapt to the future.

Today's nuclear enterprise is safe, secure, effective and credible, and all three legs of the triad are ready if called upon. However, all three legs of the triad are undergoing a generational modernization effort. The F.Y. '25 budget request makes a significant investment in the nuclear enterprise as an essential component of integrated deterrence to ensure its continued efficacy.

This budget increases funding for Columbia-class ballistic missile submarines through the submarine industrial base, as well as a ramp-up in advanced procurement funding to support a planned procurement of one submarine per year beginning in F.Y. '26.

The request continues development for -- and procurement of the B-21 program, and it supports key modernization efforts for the B-52. It also revitalizes several S&T efforts focused on evolving threats.

This budget seeks to modernize NC3 senior leader communications required to maintain continuity of operations in times of crisis. And though the Sentinel program is currently undergoing a Nunn McCurdy certification, it is fully funded in the F.Y. '25 request.

Finally, the F.Y. '25 budget expands the nation defensive posture with additional investments and enhancements to missile defense capabilities. These critical programs defend the homeland, deployed forces, and allies and partners against increasingly complex threats, particularly from China and Russia.

Long-range fires is an important component of our modernization effort. Hypersonic weapons and other long-range missiles provide offensive capabilities to hold adversary targets at risk while reducing risks to U.S. forces and equipment.

The department is requesting nearly $10 billion in PB '25 to continue developing air, sea, and ground-launch weapons to provide flexibility and impose operational, technical, and fiscal challenges on potential adversaries. This substantial investment is over 39 percent more than our last enacted budget, F.Y. '23, of $7.2 billion.

Building on several recent successes, this budget procures a lethal and survivable mix of networked long-range weapons and maximizes procurement of critical maritime strike capabilities that directly address the priority national security challenges.

These investments will grow the department's advanced offensive fires capability and field operational, multi-domain hypersonic capabilities beginning in the mid-2020s to achieve maximum deterrent threat against a peer adversary.

Our adversaries continue to field weapons that could deny or destroy our space capabilities, a critical component of the U.S. power projection. To meet these potential threats, the department is investing in resilient and combat-credible space capabilities that enhance lethality and the effectiveness of our Joint Force.

We have made significant investments in previous budgets to ensure we could provide reliable space support in competition or a conflict. We are now focused on ensuring those systems remain funded and deliver as planned.

The request continues the path of those previous budgets and invests in resilient capabilities, with the goal of denying first mover advantage to any potential adversaries. Our budget also includes funding for essential position, navigation, and timing modernization, and invests in the development of protected satellite communications and target systems that can operate in contested environments.

Finally, the budget request maintains an active eye on increasing competition for space by procuring launch vehicles that provide assured access along with funds for modernizing our infrastructure.

The F.Y. 2025 cyber activities budget focuses modest investments into three portfolios -- covering cybersecurity, cyberspace operations, and cyber research and development activities. The cybersecurity budget requests improves our cyber posture by funding development and modernization in cybersecurity tools and capabilities. It also expands investment in zero trust technology to ensure the department can fully secure and protect its data.

Similarly, the cyberspace operations request increases Cyber Mission Force team training and readiness, increases ally and partner reach -- outreach via Hunt Forward activities, and improves capabilities' access and infrastructures.

In recognition of the rapidly adapted nature of cyber, the R&D request focuses on emerging cyber prototypes and development, and A.I. and machine learning-enabled capabilities and technologies. Cyber capabilities will continue to be a crucial component of our national defense, and accordingly, a top priority within our budget.

The Chairman of the Joint Chiefs of Staff has charged the Joint Force to be ready to fight today's battles but also prepare for tomorrow's wars, but we cannot just focus on modernization at the risk of today's operations. The Secretary of Defense has made it clear through a deliberate effort reflected in this request to preserve the gains we have made in resourcing readiness.

The highlights of these efforts are reflected on this slide. The FY '25 budget invests more than ever to ensure our Joint Force is ready to respond to any strategic challenge. As mentioned, the budget was purposely designed to prioritize a near-term warfighting capability and readiness efforts displayed while sustaining ongoing modernization efforts.

Overall, the Department's strategic readiness effort framework keeps our eyes on multiple horizons so that we can counter near-term threats and meet the challenges we expect to face in long-term strategic competition or high-end conflict.

And I'll now turn it back over to Mr. McCord to discuss further budget priorities.

MR. MCCORD: Thank you, Admiral.

Next chart we have is on, and just to step back and, hopefully, you will all remember that the strategy is kind of described in three areas, integrator deterrence, with which Admiral Joyner discussed and some of the modernization programs campaigning, which has two aspects, the readiness and the building readiness of the force day to day, month to month, that she just described. And then the campaigning part, which is the more deliberate use of our presence and our exercises and our activity to achieve a planned outcome.

So, on the campaigning side, the two things that people think of most are what are we doing in the Indo-Pacific? What are we doing in Europe? And there are particular descriptors, boxes if you will, that Congress has set up or previous administration set up called Pacific Deterrence Initiative. You heard P&D Deterrence Initiative, as you know, neither of these are particularly descriptive of everything that we do in these theaters or of -- especially of the forces that can be flowed by the secretary between theaters. But these are -- these are lens that the committees have asked us to use. And so, we're showing you here what we have on both of those, 9.9 billion Pacific Deterrence and about 4 billion -- 4.2 billion on European Deterrence.

On Pacific Deterrence, probably the biggest new news, which I believe the deputy secretary just alluded to, was that we now have funding into follow in on or fall in or the NDAA authorization of drawdown for Taiwan. We now have 500 million in this budget to put funding against that, possibly, you know, would have liked to done a little more, but this being a capped year we thought that was a good way to start against the $1 billion a year ceiling in the authorization.

On Europe, again, as you know, the big issue is the supplemental that is pending before Congress, not the more stable, much smaller part that has been this European Deterrence.

Okay, with that, let me turn to the next slide, and sort of the last leg of the -- of the strategy. Again, just to refresh, I'm sure you all know this, is building enduring advantages refers to having a healthy institution that has good practices and quality that can sustain itself. That refers both to the force itself, particularly the people in uniform and their families, but also the entire -- the entire force, military and civilian. And then the industrial base that we work with to deliver capabilities.

So, taking the people side first. First leg of this paying compensation, not everything, but an important thing. The budget has, this year, a 4.5% pay raise. Those of you who are familiar with the formula that drives that, that is consistent with the law, it is nothing -- you know, nothing out of the ordinary there. But in the last three years now we have last year, as many of you remember, the largest pay raise in 20 years combined across the last three years that's now up to 15% pay raise for the troops in addition to a very substantial increases in housing allowances and subsistence allowances just on the basic pay that everybody gets, up 15% over three years.

On the military -- on the civilian side, the pay raise is 2%. That, I think, is fair to say that's an administration-wide decision that is not made here in the Department, because all civilians are treated equally across federal agencies in that respect. I do think it's fair to -- fair to assume that the pressure of the Fiscal Responsibility Act cap, which hits every cabinet agency, was a factor in the thinking about why the civilian pay raise could be less this time than what the military pay raise is. But even so, civilian pay raise will be 12.2% across the last three years in this budget.

Another compensation thing I just want to highlight is that for a couple years now the Authorization bill has promoted a concept of that became to be defined as basic needs allowance, looking at the kind of the particular needs of perhaps a more economically pressed part of the Department, maybe junior enlisted, those with families. Congress has taken action a couple years in a row to revisit this issue. It's kind of stabilizing now, but we are proposing in this budget to go from 150% of poverty level as income threshold to qualify for this allowance, to opening the door a little bit more to 200% and we think that's a positive step that I hope will find favor with the committees when they see it. So, those are kind of the two big highlights on the compensation side.

On the next slide, the flip side of taking care of people beyond pay and compensation or all the things you do to take care of the health of your force, providing childcare, looking after issues like suicide prevention, sexual assault prevention. Here we have -- we continue to implement initiatives that have -- that are high priorities of the secretary and other military and civilian leaders across this department. This is not news, probably, to any of you, but we are continuing to build out, especially on the sexual assault prevention, the historic NDAA provisions from a couple years ago to now higher the people up and build the structure to make it actually real. So again, not new initiatives so much as continuing to build out what was already laid in on that front.

Now, the second part of building Enduring Advantages, as I said, refers to kind of the industrial base and to the way that we deliver technology. In my view, that's property within the -- within the overall frame that I had that there is a lot of continuity in this budget, a lot of continuity of priorities and approaches. Probably the biggest area, I would say, of new emphasis from both the deputy secretary and the vice chairman is on innovation and agility.

And I'm not talking about the biggest dollar shifts here, more about the biggest mental shifts and the biggest push, whether it's on JADC2, Replicator, RDER, all these sorts of things, to try and get faster, get better and have impacts at the margin. So, you won't see necessarily giant dollars on a number of these things, but the emphasis is important. Many of you have heard the deputy secretary talk about the RDER, Rapid Defense Program, to get experimentation results faster out into operationalizing them if you will.

And something you may not be as familiar with, Office of Strategic Capital is the Secretary of Defense priority, where we have needed congressional action to give us authorities that we did not possess as the Defense Department to make loans to have an interaction with smaller vendors that might need that to get to do business with us.

We got step one in the NDAA that was enacted in December. What authorities, if the appropriations bill can get across the finish line with funding to put against those authorities in the next two weeks, we will be up and running but we've already got a good leg up in the NDAA to get the authorities that we did not have. So, that's one example. RDER is another.

And then on the next slide, I believe I heard the deputy secretary already talked about the Replicator Initiative, which is yet another -- again, the impact is, we hope, will be outsized to the dollar amount, which is not the point here, but the idea of imposing cost on the adversary in a more effective way than we sometimes are able to by getting more things fielded more quickly.

Next thing on industrial base, two more aspects. You've heard us. Again, this is an area of continuity. Last couple years we talked about some key technologies, microelectronics, casting and forging critical materials. Those have been and remain emphasis of industrial base. We now have an industrial base strategy, which probably many of you are familiar with, that came out I want to say a month or a little more ago. I probably lost track of time exactly, but a fairly new industrial base strategy. Some continuing particular investments.

And then submarine industrial base you have heard us and will hear us talk a lot about as a particularly important and impactful industrial base. And then on the next slide, if I can kind of segue into that a little bit, munitions industrial base, which was probably the biggest message we had in last year's budget that we are proposing multi years on missiles and munitions in a space that hadn't had that before.

We are still waiting unfortunately. It's not a year since we submitted that budget at 52 weeks right now. And we are hopeful to get that across the lien soon. We can't -- we don't have the funding or the authority to do those multi years, so sad to say we've lost that we could have been moving out on that. The other part of helping the munitions industrial base, which I know you all are familiar with, on -- particularly on ground munitions, on a subset munitions, is Ukraine supplementals. We have provided a lot to Ukraine. We need the funding to come back in to replenish those inventories.

The proposal we had last year in the spring between the multi years and last fall, the supplemental, was kind of a one, two, you know, boost to that industrial base, and we don't have either of those things finalized yet. So that's a hindrance to where we would wanted to be at this time, but there is still an ability to get moving in the right direction if we can get those two pieces across the line hopefully at the same time in two weeks.

There are no new multi years in this budget. We don't -- you know, we don't have any of the ones from last year started. It seemed a little unrealistic to jump into new ones given where we actually are.

I'll go quickly over the last couple slides here. The next slide is on sort of the business side of the health of the institution, including but not limited to audit and many other performance improvement areas. I believe that our DOD strategic management plan is also being posted today by a different office, possibly through our same link on our website. Not my office isn't the owner of that, but there's more detail on any number of management priorities in another document that you should see today.

A final area that I want to hit is on the installation side. As many of you know, we did finally get our F.Y. '24 military construction family housing funding approved, signed by the president on Saturday. So as I'd like to say, that's 2 percent of our top line down. Only 98 percent to go in the Defense appropriations bill coming. You got to start somewhere, but we do appreciate that and we do -- we do have, you know, a continued emphasis on both quality of life in the mission side and, speaking of submarine industrial base, in addition to investing in the industrial base through the acquisition accounts and the operating accounts where we're dealing -- we're talking about workforce, talking about the supply chain, then we've got the infrastructure side.

Many of you know who are now on, I think, the third year of the so called SIOP, the 20-year Navy shipyard industrial -- shipyard investment plan -- I'm sorry -- in the four public yards. Again, a big investment in that this year, so that's the infrastructure lag of the submarine industrial base or submarine maintenance industrial base in this case in addition to family housing and barracks, which are an important part of what we're doing here and hopefully expanded, you know, if we can get this approved, expanded investment in Indo-Pacific infrastructure, which is part of our whole war fighting plan and operational plan for that theater.

So with that, I think we're ready to take your questions. Again, the strategy here and the framework, the funding levels, there should be a lot that it's kind of what you would have expected based on the top line that was set and on the direction that we have followed pretty consistently, I want to say, over the last couple years.

STAFF: OK. Let's start with Mike Stone.

Q: Hi. Mike Stone from Reuters. You mentioned Replicator, the (secretary ?) that there was about 500 for Replicator, but there's no line item in the budget. So is that going to come from reprogramming? Or how is that going to be -- how is that 500 going to be found?

And for the admiral, there's a lot of activities particularly about the Navy right now. When do you expect a supplemental for that activity? Let's use OCO as the previous example, and how big do you expect this supplemental to be? Thank you.

MR. MCCORD: OK. On Replicator, OK, where programming is a possible solution in F.Y. '24, the year that we're halfway through, should not be necessary in '25 because we're proposing it in the budget. Our first hope for F.Y. '24, and the deputy has personally engaged with the committees on this, is that they will work with us to put some funding in the appropriations conference that we hope to see in a few weeks, and therefore, the re-programming would be moot because the funding would be done and in that bill.

So step one is to see able to get that in there, and is the bill able to get to the president's desk? And then if it is not, then -- then, sorry, reprogramming will have to be the approach. If I can sort of -- I know she's going to arm wrestle me this, but the -- on this, if you're referring to operations in CENTCOM, for example, to the Navy's undertaking, yes, we -- the quickest way home -- I'm going to sound like a broken record on some of these issues perhaps.

The quickest way home for us to get help there is the supplemental the Senate already passed, which had $2.5 billion in there, $2.4 billion to be precise, for Central Command area of responsibility response cost, and that could be operating cost, which the Navy is barring the brunt of but not all of. In addition, it could be replacement cost, replacements of munitions that have been fired. So all of those were eligible recipients of the extra funding that the Senate added. That was an opportunity for us to work with them, by the way, where the committees asked us after we submitted a supplemental early October or in mid-October, I'm sorry, shortly after the Hamas attack on Israel, we did not have any of those costs projected in there. We had absolutely no data in the first two weeks for which to do that, but over -- unfortunately, the supplemental didn't get acted on quickly. And so, here we are months later that we've had time to communicate with the committees on some of those cost. And result of that was the Senate adding funding in for that.

So that would be a big help to us if we could get that across the line. That would give us a real opportunity to get started on replenishing either stockpiles or operating cost. The Army, of course, has the same issue in EUCOM, Army and the Air Force. All services, but the Army has -- they've borne more of the brunt in the Europe, the Navy more so in CENTCOM, but either way the supplemental is the quickest way home to addressing cost that we have been incurring everyday since October 1 that need some way to be absorbed or funded.

STAFF: Tony Capaccio.

Q: A couple questions. One on the procurement budget. It was $167 million -- billion dollars versus $175 billion that was projected last year. Virginia Class and the F-35 were reduced. Can you address both of those? Were those strictly budget driven because that's where the money was? Or was the Virginia Class' deliver schedule and the F-35's TR-3 software problems, were those drivers?

And for the admiral, any specifics on where the JROC focused investments this time? I asked Admiral Grady and he gave a broad answer, but...

ADM. JOYNER: Right.

Q: ... you're the point specific budgeter, so I'd ask you.

ADM. JOYNER: OK.

MR. MCCORD: OK, on procurement writ large, it -- you are correct that procurement -- if you look at last year's plan compared to what -- where we ended up and where is the single place where the most of that $10 billion reduction occurred, it was in procurement.

I -- hopefully the Secretary -- or the -- the overall DOD press release is available by now. There's a very direct quote right in there where the Secretary addresses his guidance that we prioritize readiness and taking care of our people and where we had to take some additional risks to take it in the acquisition of newer technologies.

So that is reflected in the -- in the -- the procurement number tracks with the statement which hopefully you've seen, but if you haven't seen, it'll -- it should be filtering its way out any minute here.

On -- Virginia-class was not a budget-driven decision. Every decision that we make obviously only happens once in a budget that has a particular top line, but that's not the same as saying that every decision in this $850 billion budget was about how to take the $10 billion.

And Virginia-class is probably the primary example of something that was a management decision. The Navy proposed that -- got considerable discussion inside the group, and I think we all felt that it made sense. I believe the -- boats that are delivering, are supposed to deliver this year are averaging over 30 months late. And we have -- we have a -- more than a dozen on order that are still in production already.

So the question was really what can we do to get a better result, other than keep doing the same thing and hoping for a different result than what -- what was happened in the last couple of years? So we've already had some beginnings of submarine industrial base investments. We had -- it was a priority in last year's budget, which, again, we don't have that money yet, so that's a problem.

But you look at last year's budget, this year's budget, and the AUKUS, so-called, supplemental, there's a big investment in sort of three parts in the industrial -- in the sub industrial base that we think is going to be money better spent than putting another submarine on order, that all analysis indicates we can't get two submarines if we order them in '25 any sooner than if we wait.

F-35, as you alluded to, has some issues with -- with -- it's a little behind schedule where we would like to be in delivering technology. Therefore, it made sense to look at whether or not, you know, a ramp -- the ramp could be adjusted.

But I will say that when people get to look through this budget, they will see fourth gen, fifth gen, and sixth gen all had some reductions in investment. It's not just that one program. And again, it's -- it's easy to -- easy to assume that maybe every program decision, you know, was related to the top line.

That's not the case. So there are reasons why, based on -- on technologies, readiness, changes in behavior by your adversaries or your allies, or -- or all kinds of management decisions might feed in to why you relatively change priorities.

But I -- again, thank you for the question cause -- cause Virginia-class, to be clear, was trying to sort of get to a better, more healthy dynamic, where we can get to the two submarine a year production rate. And we thought that going a different direction was our best move in that -- in that case.

STAFF: Tony Bertuca?

Q: Thank you.

(CROSSTALK)

ADM. JOYNER: So the -- my boss absolutely got it right. It is -- the JROC is a top down process. That's really where we focus. We still get the bottom up from the services. The top down process is really focused on key gaps in capabilities.

We're looking for end to end kill chain types of capabilities as we move forward. We don't use funding but we do use requirements. So we're setting the requirements overall. And I think they would be familiar with you. They would be in the CJADC2 long-range fires, the nuclear deterrence areas -- I think as -- in missile defense -- I think are some of the biggest buckets, but part of what we focused on this year, both for the budget side and the JROC side, is really delivering and understanding those end to end capabilities and finding those gaps from the top down. So that's what he's really focused the JROC, as the Chairman of the JROC, but with the -- the members, they've really focused on getting those end to end capabilities, setting those requirements, and identifying those areas where we need to focus more attention.

Q: Thank you.

ADM. JOYNER: Thank you.

(CROSSTALK)

Q: Could you tell us a little bit about the inflation challenge in this budget, how it's changed over the year? You mentioned that it doesn't keep pace with the rate of inflation. So do you have a figure for the lost buying power the department's suffering as a result of -- of inflation? And what does the department say inflation is right now? I know there's a complex sort of formula you all use for it.

MR. MCCORD: Yeah. The inflation rate -- I'll -- I will ask my team to correct me if I'm wrong -- I think that the inflation rate built into the budget from -- from '24 to '25 is 2.1 percent or thereabouts. So it is -- it is more than one percent, as, again, I think everybody reasonably expected when they set the top line.

Pay has come in at -- at a healthy number again because of the formulas and law which we followed. On the military side, we restrained civilian -- you know, the administration restrained civilian pay raises to kind of help keep us -- our costs under control that way.

Overall, this is a bit healthier picture of course than we had. Inflation, when we were here a year ago, was a considerable -- considerably higher. And you've seen it come down. The numbers that come out every month -- the 12 month moving averages are now starting with three, and all of the forecasts are moving in the direction of it -- of us having gotten through this situation with a softer landing than probably many of us would have -- would have liked -- would have -- would have expected, and -- and which is very welcome news given that economic -- strength of the economy is important to us.

So as I said, unemployment has remained low, which gives us our own little challenge in recruiting perhaps, but it's a good thing for the country. Inflation coming back down at the same time is overall a good news story.

We are not -- you know, we are the recipients of that. We have -- we don't get to -- we don't manage the inflation ourselves that way, and we do use the inflation rates that are, you know, consistent across the government.

So it is coming down. Our forecast, I think, is probably not -- not out of line with others. And so it -- it's important that it come -- that it stay on track and keep decreasing, and that will help us be in better shape.

STAFF: We have time for one or two more questions. Sam?

Q: Hi. Sam LaGrone from USNI News. Can you talk a little bit about the Virginia-class program and how those boats are slipping? And then the importance of the strategic weapons systems? Any -- sorry -- any parallel slippage maybe in the Columbia-class or anything that y'all are concerned about as the program continues? I've noticed that that build rate sustains pretty consistent.

MR. MCCORD: I would say -- I'm not the expert here -- the Columbia -- of course, the industrial base is a shared one, right, the skill set of building nuclear submarines. And so the -- Virginia-class doesn't stand entirely by itself, in terms of that pressurization.

I -- I -- I think the Navy right now, if I understand it right, is -- is doing a, I want to say, 45 day -- I may have that number wrong -- review of shipbuilding. Secretary Del Toro is -- is concerned about schedule writ large, and I think that's being looked at right now.

We believe, as I think the Admiral said, that the program's fully funded, but the Navy, who's -- who's following, may or may not be able to say anything more later this afternoon when they're here about the schedule and that particularly. I think it is being looked at right now in a Navy review.

STAFF: OK. Brandi?

Q: Thank you. Thank you both so much for doing this. Two separate lines of questions on artificial intelligence.

I noticed that the top line for A.I. request in '25 is $1.8 billion, which is the same that was requested in '24. A.I. adoption seems like a top priority for the department, particularly now. Can you talk a little bit about why it appears to be flatlined and the reason for that?

And then separately, AI is a broad term that refers to many things. And a lot of your sort of programs and portfolios have AI elements, like CJADC2, Replicator, et cetera. So that AI top line, what all does that encompass, that 1.8 billion? Is it all the services and the CDAO and everything or how are you thinking of what AI in that top line is?

MR. MCCORD: Thanks. I think that this one probably merits us getting you a little one-pager. I -- I do believe that basically my answer to your first question would be your second -- was the premise of your second question, that it is in so many things that it is difficult to measure precisely. That being said, if we put a number on piece of paper, then we should be able to get you some more details of how we got it.

But I do think that it is, much as I when I was here in this job the first time, cyber started the same way of, what is cyber, what is not cyber. It's a little hard to put your arms around, and therefore the number is not really necessarily reflective of the impact of it in the fact that it's in so many places.

So we will get you a paper that takes our best stab at how we got that number. But that's probably the best I can do.

Q: Thank you.

Q: One quick follow-up on Replicator.

MR. MCCORD: Uh-huh.

Q: You said that in -- it's going to be inputted -- it's included in the FY25. Where exactly is that? Because I understand it's not in the Air Force requests.

MR. MCCORD: At this time, we -- we have -- as we finish this off, this is one of the later -- later programs to bring to a close in building this budget. There was a debate which -- which I think is maybe at the time things went to press certainly was not settled about so-called reveal-conceal, how much detail we wanted to put out. And given that if I cross a bridge into putting everything out, I can't go back. We're sort of leaning on the side of not disclosing the details until we are confident that that's what the deputy secretary wants to do.

So I know that she mentioned an overall number. I don't believe that we're in a position yet to put out details of which programs in which -- in which a service that we're doing. And the discussions that she had with the committees were all done at a classified level, what particular Replicator initiatives were.

So we're trying -- trying to protect her decision space on that.

Q: Is it classified?

MR. MCCORD: It is classified at this time. That is -- it is -- you know, the conversation will continue both internally and with the committees. And so that my change. But at this time, as I said, I cannot -- my incentive is to air -- if I'm erring on -- on the side of not revealing it too soon, all -- you know.

Q: OK. And then -- then same question, I -- I saw an Army budget that PRSM buy has increased. I'm wondering, at what point does the Army start accepting that -- that missile? And does that free up our ATACMS that we could then potentially send to Ukraine?

MR. MCCORD: I -- I know Under Secretary Camarillo will be out soon. And he probably has more detail on that. But I would say similar to what comments I've made on a couple programs here of we had a munitions request that we made a year ago that we still don't have. So the time that they will be able to implement the FY25 budget on PRSM partly depends on when is the FY25 budget going to get enacted this fall, maybe before the elections or not until a year from now.

I mean, that's -- that's a big swing of months that we have seen -- you know, we've see different results. There are times when Congress makes a push before a presidential election to get a budget done in September. That's sadly the exception. So if we get one of those, the Army will gain a couple of months right there. But beyond that, I would -- I would say the Army, when they come out here, will probably be able to speak to that particular program management issues better than I could for sure.

Q: But you're seeing that -- that procurement won't start until we get a budget or...

MR. MCCORD: Well, I'm saying the '25 budget, you know, here we are waiting for the -- for the budget we submitted a year ago that -- that, you know, how fast we get stuff, it's not as -- it's quite relevant to how soon we can actually get going on contract.

STAFF: All right, thank you all for your time. That's all we have time for. Thank you.

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