The security challenges of tomorrow will be met, to a great extent, with the equipment we develop, procure and modernize today. We can never know with certainty what lies ahead. It is clear, however, that the Army must be capable of conducting many missions, at many speeds, in diverse environments, all while maintaining a decisive overmatch over any adversary. Potential adversaries will continue to develop disruptive technologies and increasingly destructive weapons. The demand for properly equipped and modernized Army units will also continue to be high to meet Defense strategy and ensure combatant commanders have what they need to Prevent, Shape, and Win in support of the Nation's interests.

The greatest risk to modernizing Soldiers' equipment is today's fiscal environment. Over the past three years, the Army has absorbed several budgetary reductions in the midst of conducting operations overseas and rebalancing the force for a wider array of missions called for by the President's defense strategy. During this period of fiscal and strategic uncertainty, our goal has been to maintain the proper balance between end strength, readiness, and modernization across the Total Army. We are reducing end strength as rapidly and responsibly as possible, while at the same time doing our best to meet our operational requirements. Additionally, we need to concentrate funds on rebuilding readiness. To do this we must accept greater risk in our modernization programs in the near-term.

Since fiscal year 2012, the Army has experienced a 39 percent decline in Research, Development and Acquisition funding. Current budget realities challenge steady funding for programs and limit our investment resources. We must make decisions on cost effective and affordable investment solutions in key capabilities to provide the Force that meet combatant commanders' requirements and provide necessary alternatives for our Nation. To do this, the Army is employing principles that guide investments in modernization that include procuring smaller quantities; using more Commercial-off-the-Shelf (COTS) products and non-developmental solutions to drive down risk and fielding incremental capability improvements. Truly revolutionary military-unique technologies will also be targeted for Science and Technology investments. These principles allow the Army to focus investments on its highest equipment modernization priorities.

As the Army modernizes, its highest priority is the Soldier and Squad -- the centerpiece of Army equipment modernization. The Army equips the Soldier and Squad for tactical overmatch in all situations, connected to an integrated Network, and operating in vehicles that improve mobility and lethality while preserving survivability. Army modernization provides our small units over time with a range of equipment to provide Soldiers with an advantage including improved individual and crew-served weapons, next generation optics and night vision devices, body armor and advanced individual protection equipment, providing lethality and force protection to the Soldier on the ground. For the Squad, tactical overmatch will be facilitated by a suite of small-unit systems including unmanned aerial vehicles, ground based robots, counter-Improvised Explosive Device systems, and the latest surveillance systems.

A leading effort to enable the Soldier and Squad is the Network. The Network, including mission command improvements, connects Soldiers across the Joint Force -- linking them to the right information from a range of sensors and data sources at the right time to make the best possible decisions. It provides the Squad connectivity with Joint assets, allowing access to Joint firepower systems in the most complex physical and human terrain.

For situational awareness, the Nett Warrior is a dismounted Soldier mission command system that provides unprecedented command, control, and situational awareness capabilities for dismounted leaders down to the squad level. Nett Warrior is an example of successful COTS integration and is the foundational program to converge handheld devices onto one technology -- the Handheld Computing Environment. To further support decision making at the Squad level, the Family of Networked Tactical Radios is the Army's future for tactical radio systems. Formally known as the Joint Tactical Radio Systems, these multi-band/multimode radio capabilities leverage Internet Protocol-based technologies. These devices depend on the Network backbone, the Warfighter Information Network-Tactical which is the Army's incremental modernization effort to deploy a mobile network, providing intranet and telephone service to command posts from theater to company level.

Recognizing that the Army will fight on complex battlefields with Joint partners, we continue to make investments in mission command systems that improve our interoperability and situational awareness. Joint Battle Command-Platform (JBC-P) is the next generation of Force XXI Battle Command Brigade and Below and Blue Force Tracking which is the foundation for achieving information interoperability between Joint warfighting elements on current and future battlefields. JCB-P provides commanders integrated, on-the-move, timely, relevant command and control and situational awareness, especially critical for wide area operations.

Equally important as JBC-P is to mission command, the Distributed Common Ground System-Army will provide commanders situational understanding in seconds and minutes versus hours and days. It will connect tactical, operational, and theater-level commanders to hundreds of intelligence and intelligence-related data sources at all classification levels and allows them to focus efforts of the entire Intelligence, Surveillance and Reconnaissance community on their information requirements.

Our combat and tactical wheeled vehicles and aviation improvements enable our forces with greater lethality, mobility and responsiveness. Overall, our modernization efforts will prepare the entire Force for the complex and uncertain battlefield by putting a squad with precise information and overmatch capability in the right place, at the right time, to accomplish their mission.

Soldier mobility will be enhanced by the Joint Light Tactical Vehicle, or JLTV, which continues to be the centerpiece of the Army's tactical wheeled modernization. Its capabilities will exceed performance limitations of the High Mobility Multipurpose Tactical Wheeled Vehicle. JLTV's maneuverability will enable operations across the spectrum of terrain, including urban areas, while providing inherent and supplemental armor against direct fire and improvised explosive device threats. For our Armored Brigade Combat Teams, the Armored Multi-Purpose Vehicle will replace the M113 family of vehicles at brigade and below. It will provide required protection, mobility and networking for the Army's critical enablers including mortars, medical evacuation, and command and control vehicles.

In terms of lethality, the Paladin Integrated Management (PIM) provides readily available, low risk upgrades enhancing the responsiveness, force protection, survivability, and mobility of the self-propelled howitzer fleet. The PIM replaces the current M109A6 Paladin and M992A2 Field Artillery Ammunition Supply Vehicle with a more robust platform.

Within Army Aviation, fiscal constraints brought about by the Budget Control Act necessitated significant changes. The Aviation Restructure Initiative (ARI) is in response to this reality and keeps Aviation across the Army viable under reduced funding levels by simplifying sustainment for fewer systems, reducing pilot training course loads over time, and facilitating retirement of old aircraft the Army cannot afford to replace. ARI will require cross-leveling and divestiture of aircraft among all components--Active, Guard, and Reserve. The Army National Guard will transfer all AH-64 Apache helicopters to the Active Army, where they will be teamed with Unmanned systems for Armed Reconnaissance or continue their traditional attack role. The Active Army plans to transfer 111 UH-60 Black Hawk helicopters to the Army National Guard, which will significantly improve its capabilities for support of civil authorities, such as disaster response. The UH-72 Lakota will replace the TH-67 training helicopter fleet. We will divest almost 900 legacy helicopters including the entire Kiowa Warrior and TH-67 training helicopter fleets. The Active Army's overall helicopter fleet will decline by about 23 percent, while the Army National Guard's fleet will decline by eight percent. The resulting Active and Reserve Component Aviation force mix will result in better and more capable formations which are able to respond to contingencies at home and abroad. The initiative is estimated to save the Army $12 billion in procurement costs and $1 billion per year overall. This is not an ideal situation by any measure, but with reduced resources, we must make such difficult decisions and challenge the status quo.

In a perfect world the Army can ensure Soldiers have the best equipment through sufficient, predictable, and consistent funding. However, due to today's fiscal uncertainty and constrained budgets, the Army has decided to take risk in modernization. But when Sequestration-level budget caps return in fiscal year 2016, the Research, Development and Acquisition accounts will bear the burden of these unrelenting reductions. Accordingly, this will directly impact every modernization priority and every equipping program the Army has on the books. The magnitude of this cut in funding is expected to incur in the range of 25 percent if existing laws do not change. Equally impacted, the industrial base will be severely stressed, in both the near- and long-term. And without Congress' intervention to overcome Sequestration, our ability to field Soldiers needed capabilities will be impeded and Soldiers will risk being less prepared to operate in an unpredictable world.