Department of the Army Historical Summary: FY 1989

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Organization and Budget

Headquarters, Department of the Army

Having been elected in November 1988 to succeed President Ronald Reagan, President George Bush did not immediately select a new Secretary of the Army. The incumbent, the Honorable John O. Marsh, Jr., remained in office until a successor was sworn in. Marsh's tenure as Secretary, having begun in January 1981, was longer than that of any preceding Secretary of the Army or Secretary of War.

In late April 1989 President Bush nominated Richard Lee Armitage, then serving as the Assistant Secretary of Defense for International Security Affairs, to replace Marsh. Citing personal reasons, Armitage withdrew his name from consideration a month later. President Bush subsequently nominated Michael P. W. Stone to be Secretary of the Army. Stone had served as Assistant Secretary of the Army (Financial Management) between May 1986 and May 1988, and as Under Secretary of the Army from May 1988 to May 1989. As Under Secretary he was also the Army Acquisition Executive. When nominated by Bush in July 1989, Stone was Acting Under Secretary of Defense for Acquisition, having been selected for that position by the new Secretary of Defense, Richard Cheney. Stone was sworn in as Secretary of the Army on 14 August 1989. The Army had been without an under secretary between May and September 1989, when the vacancy created by Stone's move to the Office of the Secretary of Defense was filled by John Shannon, who had served as Assistant Secretary of the Army for Installations and Logistics since 1984.

Stone served as Secretary of the Army for a little more than a month before the end of FY 1989. The reforms in the Army's acquisition process that he had initiated as Under Secretary continued to unfold. Important decisions regarding the formation of the military and civilian elements of the Army Acquisition Corps began to come up for Stone's review at the end of FY 1989. During his confirmation hearings, Stone articulated his vision of the Army. The service's "pressing needs," he told the Senate Armed Services Committee, "are to have a force immediately ready for war . . . with sufficient stores for a long fight." He stressed the importance

of proper modern equipment, adequate battlefield sustainment, continued emphasis on recruiting high-quality soldiers, and rigorous, realistic training. With Congress, he shared concern about some readiness problems in the reserve components and pledged to enhance Army special operations forces. Stone also called for the continued modernization of heavy forces because of the Soviet Union's modernization of its armored forces and emphasized the priorities needed for both ammunition procurement and weapons systems. If budget reductions demanded retrenchment, Stone indicated he would minimize the effect on force structure, continue to modernize but at a reduced pace, and maintain both force readiness and essential sustenance.

Stone's views were similar to those espoused throughout FY 1989 by the Army's senior military leaders. During FY 1989 the service's senior military leadership was characterized by more continuity. Chief of Staff General Vuono, who assumed that office on 23 June 1987, served as chief throughout FY 1989. Foremost among the personnel changes in key Army Staff positions during FY 1989 was the appointment of a new Vice Chief of Staff. Effective 17 January 1989, Lt. Gen. Robert W. RisCassi, formerly Director of the Joint Staff, became Vice Chief of Staff, U.S. Army, succeeding General Arthur E. Brown, Jr., who retired after serving in that position since June 1987. General RisCassi's background included recent participation in the development of Army doctrine and design of the new light infantry division concept.

Major organizational elements of Headquarters, Department of the Army, in FY 1989 are depicted in the table in the appendix. During FY 1987 and FY 1988, as mandated by Title V of the Department of Defense Reorganization Act of 1986, the Army Secretariat had assumed added responsibilities for acquisition, research and development, auditing, comptroller functions (including financial management), information management, and inspector general duties within the Army. In accord with Title V of the 1986 act, the Army also continued to reduce its administrative and headquarters staffs. Effective FY 1989, Congress limited the strength of the Secretariat and the Army Staff to 3,105 military personnel and civilian employees.

By FY 1989 the pace of organizational change spurred by the 1986 act abated within the Army Secretariat, but FY 1989 saw continued centralization of civilian management of the functional areas noted above. The Under Secretary, who was also the Army Acquisition Executive, adjusted the acquisition chain of command during FY 1989 by consolidating and eliminating subordinate program executive officers. To facilitate the developmental and acquisition process, a new staff group, the Army Test and Evaluation Management Agency (TEMA), was established on 1 November 1988 as a staff support agency assigned to the Office of the

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Chief of Staff, with operational control exercised by the Deputy Under Secretary of the Army (Operations Research). As the single point of contact at HQDA for test and evaluation (T&E) matters, TEMA coordinated Army T&E policy and resource actions with the Office of the Assistant Secretary of Defense (OASD) (Research, Development, and Acquisition), the Army Staff, and the other Army agencies and armed services, and developed and monitored major range and test facility funding policies.

The US Army Financial Management Systems Integration Agency, located in Washington, D.C., was established as a staff support agency of the Financial Management Systems Directorate, effective 31 March 1989. As of 15 February 1989, the US Army Information Systems Selection and Acquisition Activity, Alexandria, Virginia, was redesignated as the US Army Information Systems Selection and Acquisition Agency and assigned as a field operating agency of the Director of Information Systems for Command, Control, Communications, and Computers. The agency continued to rely on the Commander, US Army Information Systems Command, for administrative and logistic support until FY 1990.

Continuing the realignment of the organization and functions of The Adjutant General's Office, the Adjutant General Center was disestablished as a field operating agency under the jurisdiction of The Adjutant General at the start of FY 1989. Its organizational elements and functions were realigned to other Army activities, principally the Total Army Personnel Agency. The Headquarters, Armed Forces Courier Service, a derivative unit of the Adjutant General Center, was disestablished and transferred to the Defense Courier Service as a joint service and DOD activity under the command and control of the Commander in Chief, Military Airlift Command, US Air Force. The Administrative Assistant to the Secretary of the Army assumed financial and administrative duties formerly carried out by The Adjutant General.

In addition, effective 1 October 1988, in accord with the US Total Army Personnel Agency (USTAPA) concept plan, the US Army Civilian Personnel Center (CIVPERCEN), formerly a field operating agency of the Office of the Deputy Chief of Staff for Personnel (ODCSPER), HQDA, was incorporated into USTAPA as a separate directorate. USTAPA, a provisional field operating agency of ODCSPER since FY 1988, was redesignated the US Total Army Personnel Command (PERSCOM), effective 8 December 1988. PERSCOM remained a field operating agency of ODCSPER and retained proponency for the following elements: US Army Central Personnel Clearance Facility, Fort Meade, Maryland; US Army Central Identification Laboratory, Hawaii; US Army Enlistment Eligibility Activity, St. Louis, Missouri; US Army Enlisted Records and Evaluation Center, Fort Benjamin Harrison, Indiana; six US Army Personnel Assistance Points at entry and debarkation sites at Charleston

In a change of Army Staff proponency, the US Army Center of Military History (CMH), a field operating agency of the Office of the Deputy Chief of Staff for Operations and Plans (ODCSOPS), was redesignated a field operating agency of HQDA on 1 March 1989, with proponency resting in the Management Directorate of the Director of the Army Staff (DAS), Office of the Chief of Staff, Army. The DAs shares some administrative functions regarding CMH with the Office of the Administrative Assistant to the Secretary of the Army.

During FY 1989 the Redistribution of Base Operating Information System (BASOPS)/Unit Structure Within TDA (ROBUST) Task Force completed its review of the Army's Table of Distribution and Allowances (TDA) structure of more than 600,000 spaces and nearly 3,000 units. Established in 1988, the task force had a goal to recommend a TDA structure best suited to complement the force design of Tables of Organization and Equipment (TOE) organizations adopted under the Army of Excellence program. The task force was also motivated by the need to scale down the strength of TDA organizations to protect combat force structure. Although submitted to the Army leadership early in FY 1989, the ROBUST Task Force's recommendations continued to be reviewed throughout the year.

Major Army Commands and the Unified Commands

Major Army Commands (MACOM) are also depicted in the table in the appendix. During FY 1989 changes occurred in several MACOMs One source of change was the Army's increasing involvement with environmental issues and compliance with state and federal laws. This workload had increased dramatically in recent years as the Army exerted itself to comply with tougher standards, to contend with lengthy litigation, and to overcome adverse publicity. In some instances environmental concerns had curtailed missions. To meet better its growing environmental respon-

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sibilities and to streamline environmental management, the Army Environmental Office became an HQDA staff support agency under the Office of the Assistant Chief of Engineers, effective 1 October 1988.

At the same time, the US Army Toxic and Hazardous Materials Agency (USATHAMA) was transferred from the Army Materiel Command (AMC) to the US Army Corps of Engineers. The Chief of Engineers, as the environmentalist of the Army, delegated execution authority to the Assistant Chief of Engineers (ACE). USATHAMA, a field operating agency under the ACE, is responsible for centralized environmental support of the worldwide Total Army Environmental Program. To carry out its mission, USATHAMA can exploit the substantial environmental talent available through the Corps of Engineers' civil works missions in its districts and divisions. To enhance support to installation commanders in the environmental area, USATHAMA's mission expanded to encompass environmental restoration, which included the assessment and cleanup of hazardous waste disposal sites, regulatory compliance, hazardous waste reduction/minimization (HAZMIN), environmental training and awareness, and environmental technology development in support of installation restoration programs and pollution abatement.

Several organizational changes occurred in the Training and Doctrine Command (TRADOC) in FY 1989. On 14 July 1989 TRADOC inactivated the US Army Training Board. Established in 1971 as an Army "think tank" devoted to training issues, it was inactivated as a result of funding cuts and reorganizations of TRADOC's training functions. Over the years many of the board's activities began to duplicate other TRADOC training activities- the Combined Arms Training Activity, the Center for Army Lessons Learned, and the combat training centers. During FY 1989 TRADOC began reorganizing its subordinate test and evaluation structure, while it concomitantly planned to realign the Army's entire test and evaluation community. The Army sought to consolidate test and evaluation activities under two centers-one for technical and the other for operational T&E. In a realignment completed in early FY 1989, TRADOC gave primary responsibility for T&E functions to the Commander, TRADOC Combined Arms Test Activity (TCATA), at Fort Hood, Texas. It entailed a realignment of TCATA, the Combat Developments Experimentation Center (CDEC), and eight TRADOC test boards under the Test and Experimentation Command (TEXCOM). Concurrent with this realignment, TEXCOM became a major subordinate command of TRADOC.

On 18 July 1989, soon after TEXCOM was reorganized, the Deputy Under Secretary of the Army (Operations Research) asked for a review of the Army 's entire test and evaluation organization. He aimed to consolidate all T&E activities under one command. Three major issues were involved in the review: the consolidation of Army test and evaluation organizations;

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Operational test and evaluation, in turn, would be centralized under a newly created Operational Test and Evaluation Command (OTECOM) consisting of the US Army Operational Test and Evaluation Agency and the US Army Test and Experimentation Command. This arrangement, while it reduced personnel spaces, saved money, and streamlined operations, also responded to Congress' desire to separate technical T&E, which focused on engineering design and item performance, from operational T&E, which determined the operational effectiveness and suitability of weapons and equipment under development.

The proposed realignment was not approved during FY 1989. A general officer steering committee was chartered by the Vice Chief of Staff and the Deputy Under Secretary of the Army (Operations Research) to manage and implement the reorganization. Tentative plans envisioned a technological test and evaluation center in the Washington, D.C., area and an operational test center at Fort Hood, Texas. The latter would include the TEXCOM Experimentation Center (TEC) at Fort Ord, California; the Airborne and Special Operations Test Board at Fort Bragg, North Carolina; the Air Defense Artillery Board at Fort Bliss, Texas; and several liaison elements at various locations that would replace seven test boards (Arm o r, Engineer, Aviation, Communications-Electronics, Field Artillery, Infantry, and Intelligence and Security). Army planners believed this alignment would reduce intraservice conflicts between T & E organizations and save the Army more than $300 million between FY 1991 and FY 1995. Others considered that the proposed organization would reduce the Army 's testing capacity, particularly by eliminating an

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immediately responsive branch test capability through the abolition of the seven boards.

Also under TRADOC's jurisdiction, the command structure at Fort Lee, Virginia, was reorganized in FY 1989. Command of Fort Lee was transferred from the Quartermaster Center, a major general billet, to the Commanding General, US Army Logistics Center, a lieutenant general billet, on 3 January 1989. The Logistics Center's mission did not change except for the additional responsibility for garrison operations. This change made Fort Lee's command structure parallel to Fort Leavenworth's, where the Commander of the Combined Arms Center was also the Commandant of the Command and General Staff College and the installation commander.

Plans to realign or close selected bases in the United States affected several TRADOC installations. The proposed closure of Fort Dix, New Jersey, a major training base, led TRADOC to study a realignment of the Army's entire training base. The possible closure of Fort Ord, California, increased pressure to relocate Headquarters, TEXCOM, to Fort Hunter Liggett, California, where the command had its mission elements. This move was delayed during FY 1989 pending the review and approval of an environmental impact statement and by other factors.

Chart 1 illustrates the relationships among Army MACOMs and the unified and specified commands subordinate to the national command authority in FY 1989. Army MACOMs constitute Army component commands in several unified commands and in certain specified and subordinate unified commands. These MACOMs are the principal suppliers of ground combat power for the appropriate CINCs. US Forces Command (FORSCOM), as a CONUS MACOM, was responsible for the readiness of Army forces and, as required, provided forces in its role as a specified command. FORSCOM was also the Army component of the US Atlantic Command, provided the nucleus for the Army component of the US Central Command, and through its subordinate 1st Special Operations Command (1st SOCOM) provided the Army component of the US Special Operations Command (USSOCOM).

During FY 1989 extensive planning was done to convert the 1st SOCOM to an independent MACOM by FY 1990. These efforts were closely coordinated with USSOCOM, since the 1st SOCOM would continue as the Army component in USSOCOM. (See Chapter 5 for additional discussion of this matter.) Through a Joint Mission Analysis (JMA), USSOCOM had refined its special operations forces (SOF) in FY 1989 to achieve a proper balance of readiness, modernization, sustainability, and force structure for SOFs of all three services. Its primary missions were to provide combat-ready SOFs to reinforce other unified commands and to plan and conduct special operations when directed by higher authorities.

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The command also assumed responsibilities for research, development, and acquisition of specialized SOF materials and supplies and management and training of all SOF personnel. To enable it to exercise greater independence, on 24 January 1989 DOD delegated program and budget execution authority to the Commander in Chief, USSOCOM, for all SOFs beginning in FY 1992. Until that time, service budgets would contain funds to support USSOCOM. The Commander in Chief, USSOCOM, already had received "head of agency acquisition authority" to facilitate his logistical responsibilities.

In carrying out its operational and logistical functions, USSOCOM relied heavily on the assets and capabilities of each armed service. In addition to Army special operations forces being dedicated to USSO-COM, the command sought to avoid duplication by the services in SOF research, development, and procurement programs and systems. T h e Army also identified items in its FY 1989 budget that might be included in USSOCOM's Major Force Program budget. The Army also provided

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In FY 1989 the Army moved to establish a Theater Army Special Operations Command (TASOC) in each theater or Army component command to exercise command and control over Army SOF deployed to an overseas theater. On 21 August 1989, General Vuono approved the concept of establishing numbered Theater Army Special Operations Support Commands (TASOSC), a renaming of TASOC, following a one-year assessment of a provisional TASOSC in U.S. Army, Europe (USAREUR). The establishment of four additional TASOSCs was expected in FY 1990. Realization of this goal, however, entailed protracted discussions with several unified commands. The Army Staff explored activation of a TA S O S C with Pacific Command (PACOM), and also proposed a TASOSC for the Western Command (WESTCOM), the Army component command in PACOM. The proposed TASOSC would become the Army component of the Special Operations Command, Pacific (SOCPAC), a subordinate unified command under the Commander in Chief, Pacific Command. Progress toward this goal in FY 1989 was complicated by such issues as adjusting Army tables of organization and equipment and obtaining approval for additional Army spaces in the Joint Manpower Program (JMP).

More substantial progress was made in adjusting command arrangements between PACOM and FORSCOM regarding the command and control of Army forces in Alaska. The Pacific Command, headquartered in Hawaii, planned to establish a subordinate unified command in Alaska to relieve FORSCOM of responsibility for Alaska's defense. The plan also entailed transferring operational command of the 6th Infantry Division (LID) from FORSCOM to WESTCOM. As the Army component command in PACOM, WESTCOM would assume command of all FORSCOM assets in Alaska, less the Northern Warfare Training Center, which FORSCOM would continue to control. The change in the defense

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of Alaska was facilitated by amending statutory restrictions for such changes. The realignment of command responsibilities became effective at the start of FY 1990.

FY 1989 Budget

In his 1987 biennial budget for fiscal years 1988 and 1989, President Ronald Reagan requested $323.3 billion in defense funds for FY 1989 and assumed that defense outlays would increase approximately 4 percent annually. Congress chose not to enact a two-year budget, and in January 1988, as part of the Presidential Budget (PB), President Reagan proposed an FY 1989 DOD budget of $291 billion. Primarily because of congressional cuts for the Strategic Defense Initiative, President Reagan vetoed a defense spending bill that Congress had passed. Congress approved a revised FY 1989 defense budget of $280 billion that was signed by the President in October 1988. Total DOD outlays for FY 1989, including out-lays of money appropriated in previous years, amounted to $295 billion. National defense spending in FY 1989 represented 5.8 percent of the nation's gross domestic product (GDP) and 26.1 percent of total federal outlays. Defense spending, as a percent of GDP, decreased steadily after its high of nearly 52 percent during the Korean War. By FY 1989 it neared its historic low of 5 percent, previously reached in the late 1970s. Adjusted for inflation, defense spending in FY 1989 continued a four-year trend in the decline in real spending that began in FY 1985.

A significant factor in the Army budget was the fluctuation of the dollar in countries where American forces were stationed. For the FY 1989 budget, for example, the American dollar was initially valued at 2.06 West German deutsche marks. At the start of the fiscal year the dollar's value was pegged at 1.88 marks, but it declined to 1.726 by late November 1988. The persistent weakening of the US dollar in Germany diminished the buying power of the Army's operation and maintenance budget by almost $700 million in FY 1989. US soldiers and their dependents in West Germany experienced a loss of purchasing power.

The Army's portion of the President's Budget of January 1988 was approximately $82.6 billion. Actual disbursement, or total obligation authority (TOA), by the Army totaled $78.9 billion in FY 1989 (in constant dollar terms) and represented 27 percent of the total DOD budget, approximately 7 percent of total federal spending, and 1 percent of GDP. Although the Army's TOA increased by about $2.1 billion over its $76.8 billion TOA of FY 1988, its share of the total DOD budget increased less than 1 percent. Of the three military departments, the Army had the lowest share of the FY 1989 DOD budget, 27 percent (Navy 33.5; Air Force 32.6; and 6.9 percent for other DOD agencies). In terms of constant FY

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1989 dollars, the FY 1989 budget represented a decrease of about $1.3 billion in comparison to FY 1988, or a 1.6 percent reduction in purchasing power. Table 1 traces the Army budget, by appropriation account, through the budget process from the President's Budget request of January 1988, the amended President's Budget of April 1988, the appropriated amount, and actual disbursements or TOA.

The Army 's highest budget priorities in FY 1989 were people and training. In round figures, the Army disbursed almost $30 billion for p ay, allowances, and other Army personnel programs-$24.4 billion under Military Personnel, Army (MPA), for active personnel and a total of about $5.5 billion for the reserve components (Reserve Personnel , Army [RPA], and National Guard Personnel, Army [NGPA]). Spending for procurement was $14.9 billion-$2.9 billion for aircraft (AC F T ) , $2.6 billion for missiles (MSLS), $2.7 billion for weapons and tracked combat vehicles (WTCV), $2.0 billion for ammunition (AMMO), and $4.7 billion for Other Procurement, Army (OPA), which included a special one-year appropriation of $108 million for special operations forces and $4 million for the National Guard and Army Reserve (NGRP). Funds for the purchase of aircraft allowed the Army to expand its fleet of AH-64 and UH-60 Black Hawk helicopters and to acquire modified CH-47 Chinook and OH-58 Kiowa helicopters. WTCV funding enabled the Army to continue to acquire M1 Abrams tanks and modified M109 155-mm. howitzers, Bradley infantry fighting vehicles, and older troop and ammunition carriers. The OPA category, spending for which totaled nearly $4.7 billion, purchased tactical and support vehicles such as the High Mobility, Multipurpose Wheeled Vehicles (HMMWV), communications and electronic equipment, and other support equipment. The largest amount in this appropriation funded procurement of communications and electronic equipment, in particular the Mobile Subscriber Equipment (MSE) and the Single Channel Ground and Airborne Radio System (SINCGARS).

The Army's total obligation authority for Operations and Maintenance for FY 1989 was $25.7 billion, distributed among $23 billion Operations and Maintenance, Army (OMA), for active forces and $810 million and $1.8 billion for Operations and Maintenance, Army Reserve (OMAR), and Operations and Maintenance, National Guard (OMNG). OMA costs grew from 30 percent of the Army's budget in FY 1986 to 33 percent in FY 1989. This increase reflected increased costs of operating and maintaining more modern equipment and a reduction in procurement outlays that entailed keeping older equipment in the Army's inventory longer than expected. The OMA budget for ground operating tempo (OPTEMPO), $2.7 billion, supported 850 miles per year for the active component forces and underwrote training readiness at the C1/C2 level. OMA funds were

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used for depot maintenance, central supply support, the procurement of spare parts, and transportation costs associated with training.

The Army Flying Hour Program (FHP) supported an OPTEMPO of 15.8 hours per crew per month for rotary-wing aircraft in the active component. The Army wanted FHP OPTEMPO of 9.8 hours for the reserve component, but underfunding supported OPTEMPOs of 9.0 for the USAR and 8.3 for the ARNG flying hours, or approximately 23 percent of the total Army FHP requirements. Costlier aircraft have made the FHP more expensive and have resulted in fewer hours of operation. While the Army has normally adjusted the FHP during the year to reallocate resources, Congress has expressed concern about the program's rising costs and urged the Army to make greater use of flight simulators.

Overall Army expenditures for construction totaled about $1.7 billion in FY 1989 and were distributed among the following accounts: Military C o n s t ruction, Army (MCA), $1.2 billion; Military Construction, National Guard (MCNG), $229 million; Military Construction, Army Reserve

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(MCAR), $85 million; and Family Housing Construction, Army (AFHC), $214 million. The Army also spent $1.4 billion as part of the Family Housing Operations, Army (AFHO), for the upkeep and improvement of existing Army family dwellings in the United States and overseas. The sum expended for AFHO in FY 1989 was insufficient to erase a backlog of deferred maintenance and repair requirements that amounted to $601 million. Army disbursements for Research, Development, Test, and Evaluation (RDT&E) were $5.2 billion in FY 1989, an increase from $4.7 billion spent in FY 1988. Capitalization of the Army Stock Fund (ASF) totaled approximately $292 million in FY 1989, an increase of nearly $100 million over FY 1988.

FY 1990 Budget Outlook

Approval by the Deputy Secretary of Defense in late FY 1988 of the Army Program Objective Memorandum (POM) for fiscal years 1990-1994 paved the way to prepare the Army 's FY 1990-1991 budget. The Army 's priority was to preserve funding stability between FY 1989 and FY 1994 and also achieve a balance between readiness, sustainment, modernization, and force structure. The Army knew it had to meet the war fighting needs of the CINCs, so it sought the funds necessary for adequate recruitment, retention, training, and OPTEMPO. Continued underfunding of facilities maintenance, base operations, and depot maintenance programs was expected, while the Army hoped to gain funds for host-nation support equipment, accelerated procurement of Deployable Medical Systems (DEPMEDS), and high-priority ammunition items. The Army leadership believed it could maintain its FY1989 active force structure and obtain modest growth in the civilian and reserve components during the next two fiscal years. Some decreases and delays in major weapons systems funding were anticipated, but Army planners expected that Congress would fund key modernization programs such as the Army Aviation Modernization Plan.

By early FY 1989 defense analysts and congressional leaders not only saw little likelihood of an increase in DOD's budget, they foresaw either no-growth or declining budgets that would exceed the defense budget declines experienced since 1985. For FY 1990 DOD's share of the Presidential Budget Request was $305.6 billion, which represented real growth of about 2 percent over the FY 1989 budget. The Army's share, $80.7 billion, did not represent real growth. President George Bush, in his State of the Union address, directed DOD to eliminate $6 billion from Reagan's FY 1990 budget request, which nullified a 2 percent real increase and froze DOD's budget at FY 1989 levels. President Bush's suggested reductions applied across the board, and the Army's share amounted to about $1.8 billion. Army leaders testified before the House

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During FY 1989 several congressional initiatives and studies addressed the Army budget reductions. Congressman Les Aspin , Chairman of the House Armed Services Committee, made several suggestions. Further cost reductions might be attained by staffing and equipping stateside units at less than 100 percent of authorization, extending the major equipment replacement cycle, and purchasing cheaper and less technologically advanced weapons. Army strength, Aspin suggested, might be even further decreased by troop cuts that left certain units under-strength and selective elimination of other units and weapons systems from the active force structure. The Congressional Budget Office suggested reducing the Army's strength by 54,000, including three light infantry divisions, for a saving of about $9.5 billion during the next five years. Others proposed additional transfers of active component missions to the reserve component. The new Secretary of Defense, Richard Cheney, cautioned against "hollow" military forces in March 1989, noting that there would be trade-offs between sustaining a large force that lacked adequate resources and a smaller but better supported force of the highest quality. Kenneth Kramer, Assistant Secretary of the Army for Financial Management, in a report entitled "The Partnership Study" completed in December 1988, foresaw a steady decline in the Army's share of the defense budget during the next ten years. He reiterated the fact that during the past four decades the Army budget had both experienced less growth and was significantly lower than the budgets of the other services. The Army traditionally has spent two-thirds of its budget for military pay and operations and maintenance and was already forced to rely more heavily than other services on its reserve components. The Air Force and the Navy expended twice as much as the Army for weapons research and procurement. Kramer predicted that budgetary pressures had serious implications for the Army as a strategic force and for its future value as part of the nation's deterrent force.

Conclusion

The DOD Reorganization Act of 1986 and a more austere fiscal climate significantly influenced the organization of the Army in FY 1989.

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Continuing a trend of previous years, civilian management by the Army Secretariat expanded to include functional areas formerly the domain of the military staff. The appointment as Secretary of the Army of Michael P. W. Stone, who came from a background in DOD and the Army associated with acquisition reform, underscored the Army's commitment to enhancing its organization for materiel development and acquisition. Other organizational changes at HQDA and in the field reflected the Army's concern over environmental issues and a new emphasis on special operations. While the number of military personnel that could be assigned to the Army Staff was reduced in accord with Congress' direction, an Army-initiated examination of its administrative overhead and the likelihood of budget cutbacks in subsequent years portended future staff reductions both at HQDA and at MACOMs. The Army's FY 1989 budget was sufficient to support the Army's varied roles and missions and to maintain a highly trained professional force. The most inauspicious aspect of the Army's FY 1989 budget was the delay caused to several equipment modernization programs. Further budget cuts threatened to have more dire consequences.

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