The Army, as part of the Joint Force, must remain ready to prosecute on-going operations and face unforeseen contingencies while preparing for future challenges. Today the Army can meet its obligations under the current strategic guidance but as the world becomes more complex and dangerous, the level of risk increases. Specifically, there is a clear and growing divide between Budget Control Act (BCA) funding and the reality that confronts the Army across Europe, the Middle East, and the Asia-Pacific Region.

We do not know where and when the next conflict will occur; however, we do know that the Army must be ready to face near peer competitors, regional actors, and transnational terrorism. Our Army is busy and remains engaged in a wide array of missions across the globe. On any given day, there are approximately 185,000 Soldiers assigned or allocated in support of global operations in over 140 countries. In Eastern Europe, Soldiers reassure our allies and deter a revanchist Russia. In Afghanistan and Iraq, Soldiers train local security forces and conduct a counter-terrorism mission against al Qaeda, the Taliban, and ISIS. Soldiers support military-to-military engagements in the Pacific to strengthen our partnerships and alliances and deter potential adversaries in places like Thailand, the Philippines, Malaysia, Australia, Indonesia and the Republic of Korea. And, of course, the Army remains ready to prevent and respond to attacks and emergencies inside the Homeland.

As the Army approaches an end strength of 980,000 Soldiers by the end of 2018, we must constantly assess the impact of operational tempo on the health, viability, and modernization of the force. We must ensure that we have both the capability - and the capacity - to respond to unforeseen demands and to rebuild and then sustain high levels of readiness.

The Army has enjoyed a technological edge over potential enemies through most of our recent history, but this is no longer the case. Russian operations in Crimea, Ukraine, and Syria have highlighted advanced Russian capabilities. Russia's use of long and short range air defense artillery, the use of drones to complement indirect fires, and unexpectedly advanced electronic warfare and cyber capabilities give us reason for concern as we take a hard look at our modernization programs. These technologies and methods will proliferate-we do not know when or where we will face them. For the first time since World War II our technological overmatch is being challenged. Army modernization requires attention and resources.

The Army allocates available resources into three broad categories: structure, near term readiness, and capital investments. The science of building a budget is relatively straight forward, but the art of balancing resources between the three categories to minimize risk is not. That is the fundamental challenge the Army faces, and unpredictable budgets and the threat of sequestration make it more difficult.

Under current planning guidance end strength is relatively fixed. The Army's 2017 budget request allocates approximately 60% to personnel costs. The only way to reduce this is to reduce the number of Soldiers, and that must be done slowly if we want to maintain a quality all volunteer force. The National Commission on the Future of the Army stated that an end strength of 980,000 is "minimally…acceptable"i to meet the sustained, and growing, demand for our forces. The bottom line is that until demand goes down, the Army will not be able to reduce end strength lower than the planned 980,000.

The Chief of Staff of the United States Army's guidance is very clear: "[R]eadiness is the Army's number one priority and will be as long as I am the Chief of Staff".i We must ensure our Soldiers are always prepared to face the unforgiving crucible of ground combat. The Army must, and will, continue to dedicate resources to improve the near term readiness of our units. In the FY17 Budget Request, readiness spending increased by approximately 5%.

Given that personnel costs are fixed and readiness is the Army's number one priority, the Army's options for coping with unpredictable and constrained funding is fairly straightforward: accept risk in the modernization of our equipment and the maintenance of our installations. Since 2011 the Army's modernization budget has declined by approximately 30% and we have consistently underfunded the maintenance of our installations -- deliberately -- to resource higher priorities. The risk is accumulating, the backlog of required maintenance on our installations is increasing and our technological edge over potential opponents is rapidly eroding.

As Under Secretary of the Army Murphy stated in his recent Congressional testimony, "… [W]e are mortgaging our future readiness because we have to ensure success in today's battles against emerging threats."

Even with the constraints the Army faces we must continue to provide our Soldiers the most capable equipment we can deliver, now and into the future. This will continue to be a challenge, especially if sequestration returns in 2018. The Army's current modernization strategy is designed to prepare for the day when the next conflict arises and we must once again rapidly expand the Army. The strategy focuses our modernization dollars in five areas: 1) protecting Science and Technology investments to prepare for the future, 2) investing in a limited number of new developmental programs to address only the most critical capability gaps, 3) incrementally modernizing a small number of our current systems to extend service life and upgrade their capability to maintain overmatch, 4) sustaining and resetting current equipment to meet near-term readiness requirements and finally, 5) divesting obsolete and non-standard equipment to free up resources for reinvestment in higher priorities.

The Army's 2017 budget request emphasizes five capabilities: aviation, the network, air and missile defense, combat vehicles, and emerging threats.

The Army continues to modernize its helicopter fleet by fielding the AH-64E and UH-60M aircraft. Additionally, the Army continues to invest in research and development for both the Improved Turbine Engine Program (ITEP) and Future Vertical Lift (FVL) to develop the next generation of Army rotorcraft.

The Army continues to invest in a network that is protected against cyber-attacks and enables mission command. The Army will field the Warfighter Information Network-Tactical (WIN-T), update communications security (COMSEC), and upgrade cyber situational awareness and offensive and defensive cyber capabilities.

In the past, the Army could take command of the sky for granted, this is no longer true. The Army will field the Integrated Air and Missile Defense Battle Command System (IBCS) and modernize our PATRIOT missile system. To protect the force from enemy missiles, rockets, mortars, and artillery we will field the Indirect Fire Protection System (IFPC).

The Army will increase the lethality, protection, and mobility of its tactical formations by fielding the Ground Mobility Vehicle (GMV) and the Armored Multi-Purpose Vehicle (AMPV), invest in the Mobile Protected Firepower (MPF) program, and upgrade Stryker lethality by mounting 30mm cannons.

The Army will continue to protect investments in science and technology which will enable us to field new capabilities in the future. Science and technology investments include active air and ground protection systems, offensive and defensive electronic warfare capabilities, long range precision fires, directed energy weapons, and autonomous robotic systems.

It is more important than ever that we are able to rapidly assess and field emerging technologies to retain or regain our technological edge. The Army cannot afford long, costly developmental programs that either fail to deliver or field only niche capabilities. The 2016 National Defense Authorization Act strengthened the Service Chiefs' acquisition role and the Army continues to explore steps to improve the speed and effectiveness of our acquisition process.

In coordination with the Secretary of the Army, the CSA has begun to make changes to Army Acquisition; streamlining processes, functions, and decision making. The CSA has reinvigorated the Army Requirements Oversight Council (AROC), making it a "commander centric" decision making forum. The AROC serves as the venue for approving requirements, making cost, schedule and performance trades, and concurring with milestone decisions. Additionally, we have stood up the Army Rapid Capabilities Office (RCO) which will capitalize on lessons learned from the Rapid Equipping Force and the Air Force's RCO.

In the future, the CSA intends to focus on prototyping, experimentation, rapid acquisition and outreach to non-traditional defense industries. The Army seeks to use existing technologies in innovative ways and, as much as possible, avoid unnecessarily long developmental timelines. This will require a delicate balance between the rapid pursuit of capability and oversight to minimize waste.

The United States Army faces an unpredictable future. Nations will continue to be motivated by fear, honor, and interest. Peace and security will remain elusive. The United States and its allies will face challenges from state and non-state actors. The Army will remain deployed and engaged, furthering America's interests around the world. The G-8 will continue to allocate resources against our defense strategy balancing policy, requirements, and resources to help deliver the world's most capable and modern fighting force - our Soldiers deserve no less.