SRS is a precision readiness measurement tool that provides Army leadership with accurate, objective, predictive, and actionable readiness information to dramatically enhance resource management toward one end - strategic readiness to defend the United States. The Army Scorecard - a product of SRS- will integrate readiness data from the business arena and the operating, generating, and sustaining forces of both the Active and Reserve Component. Army Scorecard methodology focuses on four critical areas: People - investing in Soldiers and their families; Readiness maintaining the support capability to the Combatant Commanders' operational requirements; Transformation transforming The Army into the Objective Force; and application of sound business practices.

SRS markedly improves how we measure readiness. It gathers timely information with precision and expands the scope of the data considered. We are further developing this system to leverage leading indicators and predict trends - solving problems that affect readiness before they become problems, from well-being to weapons platforms. SRS will help enable The Army preserve readiness to support Combatant Commanders, invest in Soldiers and their families, identify and adopt sound business practices, and transform The Army to the Objective Force.

INSTALLATIONS

Army installations are our Nation's power projection platforms, and they provide critical training support to The Army and other members of the joint team. Additionally, Soldiers, families, and civilians live and work on Army installations. The quality of our infrastructure directly affects the readiness of The

Army and the well-being of our Soldiers, families,
and civilians.

The Army has traditionally accepted substantial
risk in infrastructure to maintain its current
warfighting readiness. However, a decade of
chronic under funding has led to a condition in
which over 50% of our facilities and infrastructure
are in such poor condition that commanders rated
them as "adversely affecting mission requirements."
Our facilities maintenance must improve. Over
the past two years, with the help of the
Administration and Congress, The Army has begun to rectify this situation with significant
increases in funding and innovative business practices. These efforts have been
dramatically successful as we continue to correct a problem that was 10 years in the
making. Thus, in an effort to prevent future degradation of our facilities, The Army has
increased its funding for facilities sustainment to 93% of requirement beginning in FY04.

Transformation of Installation Management (TIM)

Recognizing the requirement to enhance support to commanders, the Secretary of the
Army directed the reorganization of The Army's management structure. On October 1,

2002, The Army placed the management of Army installations under the Installation Management Agency (IMA). IMA is a new field-operating agency of the Assistant Chief of Staff for Installation Management (ACSIM). Its mission is to provide equitable, efficient, and effective management of Army installations worldwide to support readiness; enable the well-being of Soldiers, civilians and family members; improve infrastructure; and preserve the environment. This new management approach eliminates the migration of base operations funds to other operational accounts below the HQDA level. It also enables the development of multi-functional installations to support evolving force structure and Army Transformation needs. The Army is poised to capitalize on opportunities TIM gives us to provide excellence in installations.

Two programs that significantly increase the well-being of our Soldiers and their families are the Barracks and the Family Housing programs. The Army established the Barracks Upgrade Program (BUP) in the late 1990's to improve single Soldiers' housing conditions. Through 2002, we have upgraded or funded-for-upgrade 70% of our permanent party barracks to Soldier suites that consist of two single bedrooms with a shared bath and common area. The Army will continue the BUP until all permanent party barracks achieve this standard.

The

With the strong support of Congress, The Army established the Residential Communities Initiative (RCI) for our families. This program capitalizes on commercial expertise and private capital to perform a non-core function for The Army - family housing management. program provides greater value to The Army by eliminating the housing deficit at our first eleven sites, while leveraging a $209M Army investment into $4.1B of initial private development. The Army's privatization program began with four pilot projects and will expand to 18 active projects by the end of FY03. Pending OSD and Congressional approval, 28 projects are planned through 2006 that will impact over 72,000 housing units or 80% of Army Family Housing in the United States. By the end of 2007, we will have the programs and projects in place to meet the OSD goal of eliminating inadequate family housing. We will accomplish this goal through RCI and increased Army investment in family housing Military Construction (MILCON) at non-privatized installations. The Reserve Component (RC) enhances RCI through real property exchange authority that is only available to the RC. This legislative authority allows the exchange of RC. owned property with public or private entities and has a tremendous potential to improve future Reserve Component infrastructure at no governmental cost.

The Army has also aggressively reduced its financial burden and physical footprint by disposing of 34% of its facilities from a 1990 high of 116 billion square feet. The Army anticipates that the Congressional FY05 Base Realignment and Closure (BRAC) authority will permit additional appropriate reductions. BRAC will enable The Army to dispose of excess infrastructure and realign the remaining facilities with the requirements of the transforming Army and the Objective Force. BRAC will also allow The Army to reallocate resources from closed or realigned installations to other high priority requirements.

AT WAR AND TRANSFORMING

The Army continues to improve its utilities infrastructure by divesting itself of non-core utility systems' operation and maintenance through privatization. As of December 2002, we had privatized 64 of the 351 systems in the program, and we have an additional 104 presently under negotiation.

As part of our Army Knowledge Management (AKM) - described later in more detail we are modernizing our Installation Information Infrastructure - infostructure to support a network centric, knowledge-based Army. The Installation Information Infrastructure Modernization Program (13MP) executes a multi-year, $3.2B program for upgrades to optical fiber and copper cable, installation of advanced digital equipment, and upgrades to Defense Global Information Grid gateways. This program will ensure worldwide, high-speed data connectivity at Army installations. To date, we have completed 22 of 95 CONUS installations and initiated upgrades at four installations outside of the continental United States (OCONUS). We plan to complete 13MP in 2009.

TRANSFORMATION-CHANGING THE WAY WE FIGHT

The Army is fundamentally changing the way we fight and creating a force more responsive to the strategic requirements of the Nation. We are building a joint precision maneuver capability that can enter a theater at the time and place of our choosing, maneuver at will to gain positional advantage, deliver precise joint fires and, if necessary, close with and destroy the enemy.

The Objective Force is an army designed from the bottom up around a single, networked, integrated C4ISR architecture that will link us to joint, interagency, and multi-national forces. It will be a rapidly deployable, mounted formation, seamlessly integrated into the joint force and capable of delivering

decisive victory across the spectrum of military operations. Consolidated, streamlined branches and military operational specialties comprised of professional warfighters will be poised to transition rapidly from disaster relief to high-end warfighting operations.

The Objective Force and its Future Combat System of Systems will leverage and deliver with precision the combat power of joint and strategic assets. It is a capabilities-based force that rapidly responds to the requirements of the strategic environment

in which our Soldiers will be the most strategically relevant and decisively capable landpower no matter the mission, no matter the threats, no matter the risks.

In the final analysis, The Army's combat power does not wear tracks or wheels - it wears boots. No platform or weapon system can match a Soldier's situational curiosity and awareness. It is the Soldiers' ability to discern and to think, their ingenuity and resourcefulness, their endurance and perseverance, and their plain grit that make them the most reliable precision weapon in our inventory. Soldiers remain the centerpiece of our formations.

To help guide our Transformation efforts, The Army leverages lessons-learned from extensive experimentation and wargaming We are working to harness the power of knowledge, the benefits of science and technology, and innovative business solutions to transform both the Operational and Institutional Army into the Objective Force. The

Army's annual Title 10 Wargames provide critical insights for developing the Objective Force. Likewise, results from joint experiments - Millennium Challenge '02 and other service Title 10 Wargames like Global Engagement, Navy Global, and Expeditionary Warrior, to name a few also inform these efforts.

The Army is fully committed to joint experimentation as a means to examine and assess Objective Force contributions to the strategic, operational, and tactical levels of joint warfare. The Army has established a joint Army Concept Development and Experimentation (CD&E) Task Force to ensure that Army CD&E efforts are synchronized with joint CD&E. This task force makes certain that joint experiment lessons-learned inform the design and development of the Objective Force. This year, The Army's Title 10 Wargame co-hosted by Commander, Joint Forces Command - will focus on the Joint Force that will fight the next battle. Linked to Joint Forces Command's Pinnacle Impact 03 experiment, it will be conducted within the context of a future 1-4-2-1 global scenario and the emerging Joint Operations Concept. The Army is committed to these efforts, and in this budget we have nearly doubled last year's funding of these exercises.

Joint, interagency, multinational, and Army warfighting experiments provide invaluable opportunities for The Army to experiment with innovative approaches to warfighting and to test new tactics, techniques, procedures, organizations, processes, and technology. In Millennium Challenge 2002, the largest joint experiment in U.S. history, The Army demonstrated four vital capabilities it brings to the joint fight:

the ability to conduct decisive maneuver to enable dominant joint maneuver

the ability to defeat the opposition in an anti-access environment through rapid entry and employment capabilities

AT WAR AND TRANSFORMING

the ability to support and sustain rapid combat power efficiently by reducing the
operational and tactical logistics footprint

To evaluate the effectiveness of the Stryker Brigade Combat Team (SBCT) concepts for
battalion and company operations in a Joint Force, The Army employed a SBCT unit
during Millennium Challenge. Less than four weeks after Stryker vehicles were delivered
to the first unit at Fort Lewis, the unit demonstrated rapid air and sealift deployability
and integrated into the exercise well. Additionally, when given a mission on short notice
to support a Marine Corps unit in ground operations, the SBCT unit demonstrated its
agility and versatility.

BALANCING RISK AS WE MANAGE CHANGE

Balancing risk is integral to Army Transformation. To maintain current readiness while we transform, we are managing operational risk: risk in current readiness for near-term conflicts with future risk - the ability to develop new capabilities and operational concepts that will dissuade or defeat mid- to long-term military challenges. The Army has accepted risk in selective modernization and recapitalization, and we continue to assess these risks as we balance current readiness, the well-being of our people, Transformation, the war on terrorism, and new operational commitments. Since 1999, The Army has terminated 29 programs and restructured 20 others for a total savings of $12.8B. These funds were reallocated to resource the Stryker Brigades and essential Objective Force research and development.

In Program Budget 2004 and its associated Five-Year Defense Plan (FYDP), The Army has generated an additional $22B of savings by terminating 24 additional systems and reducing or restructuring 24 other systems. To accelerate achieving the Objective Force capabilities and mitigating operational risk, The Army reinvested these savings in the development of transformational capabilities in these and other programs:

The operational risk associated with the decreased funding for certain current programs is acceptable as long as we field Stryker Brigades on schedule and accelerate the fielding of the Objective Force for arrival, this decade. We will continue to reassess the risk associated with system reductions and related organizational changes against operational requirements and the strategic environment.