Restructuring Year 2003

A shortened version of the Norwegian defence budget for 2003(Proposal No. 1 (2002-2003) to the Storting).

Year two of the Restructuring Period 2002-2005

Norwegian Ministry of Defence

Foreword bythe Minister of Defence

The Government’s budget proposal for 2003contributes to the resolution of the greatestsingle problem faced by the Armed Forcesthroughout the ’90s - the imbalance between adefence structure and the funding available tofinance it. We have achieved a majority agreementin the Parliament regarding the shape of the newstructure and the allocation of resources tofinance it. With this year’s budget proposal theGovernment is acting in line with the plan toallocate a total of NOK 118 billion in defencefunding over the period 2002-2005. This level offunding represents a historic high but isabsolutely essential if we are to realise our aim ofachieving modern, flexible defence forces with amarkedly improved operational capability. Forcesable to undertake a broader spectrum of missions- most often in conjunction with our allies - moreswiftly and more efficiently than is the case today.

The terrorist attacks of 11 September 2001, havebecome a central reference point for themodernisation and reshaping of the defencestructures of many NATO countries. New threatsand challenges make it essential to enhanceflexibility, readiness and the ability to worktogether both nationally and internationally.NATO and its individual member countries mustbe able to produce suitable military forces to carryout all types of missions, including the fightagainst international terrorism.

Our ability to carry out military tasks in Norwayand in our immediate neighbourhood will bestrengthened by the current restructuring of thearmed forces. In the resource-rich sea areas underNorwegian jurisdiction, our presence is beingstrengthened. This will enhance our capacity torespond with firmness and consistency ifNorwegian sovereign rights should at any time bechallenged.

A number of important milestones essential to therestructuring of the armed forces and our futuredefence planning have been achieved. Therestructuring process, if it is to be accomplished inaccordance with the programme endorsed by theParliament, is highly demanding in terms offinancial resources. This applies both in moneyterms, an aspect which the Government isaddressing as already mentioned, and - equallyimportantly - in human terms. The challengesfacing personnel in all areas of the defenceorganisation, and the strain under which they areworking during this period, are severe. Without theformidable contribution that all concerned havemade and will, I feel sure, continue to make in thefuture, this restructuring would hardly have beenpossible.

I am also pleased that the Armed Forces, despitethe restructuring, are still managing to carry outthe services expected of them. We have been ableto make important contributions, involving a greatmany resources, both to the peace operations inKosovo and to the coalition’s campaign againstterrorism in and around Afghanistan. We do notonly deliver, we deliver high quality.

I should like, therefore, to make use of thisopportunity to thank each and every member ofour defence organisation for the job they havedone to date, and to wish them every success intheir continuing work.

Kristin Krohn Devold

33

Defence Budget 2003 – Overview

Defence Budget 2003 – Overview

Main aims and priorities

Investment

Operations

Organisational changes

Operation costs

Investments

Overall defence budget

18,970,152

9,686,212

28,656,364

-1.83 %

3.98 %

0.06 %

Budget proposal 2003(2002 prices)

Percentage change

19,863,668

9,750,145

29,613,813

Budget proposal 2003(2003-kr)

OVERALL DEFENCE BUDGET 2003 in relation to that for 20021)

Allocated for 2002*)(2002 prices)

19,323,582

9,315,646

28,639,228

1) The table shows defence budget changes in relation to the 2002 budget, including supplementary allocations made in 2002 given inCommittee Recommendation No. 232 (2001-2002), cf. Proposition No. 55 (2001-2002) to the Storting, and the reductions made in connectionwith the revised national budget for 2002.

*)In accordance with Proposal No. 55/RNB to the Storting

4

Main aims and priorities

The most important task for 2003 is to carryforward the restructuring of the ArmedForces. If this process of restructuring is tosucceed, funds have to be allocated throughcuts in the Armed Forces’ operating budget.Compared with 2002, the operating budgetfor 2003 is being reduced by a little undertwo percent. Priority can thus be given to theinvestment budget which is being increasedby four percent in real terms compared with2002note 3. The overall aim of this restructuringis to ensure that we have Armed Forcescapable of carrying out more complex,missions - most often in concert with alliedforces - more rapidly and more effectivelythan is possible today. It is significant thatthere is no longer a clear distinction betweenthe security threats that we face, whetherthey be national or international, or betweenthe kinds of forces required to counter them.Restructuring will thus also yield furtherbenefits, for example strengthening thecapability of the defence organisation inroles such as the fight against terrorism.

The restructuring period started in January2002 and will be concluded before the end of2005. A number of measures were, however,set in motion earlier, during the first half of2001, immediately following consideration of

The Defence Budget for 2003 is based on an overallfigure of NOK 29,6 billion. The main focus of the

budget is on the implementation of the restructuringof the Armed Forces as endorsed by the Stortingfollowing consideration of the «Implementation

Proposition» Note 2.the «Long-Term Proposition» by the Parlia-mentnote 4. The budgetary imbalance betweenthe structure as endorsed, and the fundingmade available by the Parliament in theLong-Term Proposition to finance thisstructure, was resolved during theParliament´s consideration of the«Implementation Proposition». Agreementwas reached at that time on certain changesto the structure and other measures whichtogether would achieve savings amountingto NOK 5.6 billion over the restructuringperiod 2002-2005.

The Parliament’s endorsement of abudgetary framework of NOK 118,039 billion(at 2002 prices) for the period 2002-2005represents a historic high for defenceexpenditure. At the same time, a budgetaryframework of this magnitude is absolutelyessential to the success of the restructuringprocess, the creation of stability andpredictability for future defence planningand the achievement of a balance betweenthe organisational structure endorsed andthe resources available to sustain it.The Government’s proposals for a defencebudget of NOK 29.6 billion in 2003 is thus inline with the Parliament’s intentions regard-ing the implementation and financing of therestructuring process.

Cost saving targetsThe restructuring is proceeding according toplan and is on schedule with regard tostructural measures - setting up the new anddismantling the old - and measures to cutoperating costs. The budget proposal for2003 is based on the assumption thatcontinuing progress towards the target of

5

RESTRUCTURING PERIOD 2002-2005

2002 2003 2004 2005 Total

Total NOK 118 billion2002 2003 2004 2005

Goal figures (NOK billion - 2002 prices) 28.7 28.7 29.7 30.9 118

reducing operating costs to a level which isNOK 2 billion lower than it would have beenin the absence of restructuring. With regardto defence manpower reductions, somethingapproaching 3,000 of the minimum of 5,000man-years which are to be cut have beenidentified and the personnel concerned havein most cases been released.

The work of clarifying and realising thevarious cost savings in 2005 will now befocused on:• efficiency improvements associated with the establishment of the Norwegian Defence Logistics Organisation (FLO)• realising the potential benefits of the GOLF programme for the efficient application of information technology• intensified efforts to achieve a further net reduction in defence manpower• identification of further defence property, buildings and installations for closure and disposal.

The most important resource of all, theresource which is vital to the success of therestructuring, consists of the men andwomen employed throughout the defenceorganisation, with all their individual skillsand experience. We have to take good care ofthis resource. The essential aim is to achieve abalance in the manning level reductions,taking account of future needs in the light ofreality while ensuring a proper balance with

regard to numbers, skills and age distribution.The aim is to increase the proportion ofwomen in the defence organisation and thesame applies to persons with an immigrantbackground. Important in this respect are themeasures being taken to attract morewomen to the various Armed Forces schoolsand colleges and the consideration beinggiven to a voluntary period of initial militaryservice for women.

2) Committee Recommendation No. 232 (2001-2002), cf.Proposition No. 55 (2001-2002) to the Storting

3) Comparing the figures for 2002 and 2003, the 2002figures include the supplementary allocations andbudget reductions given following consideration of the«Implementation Proposition» and the revised nationalbudget for 2002.

4) Committee Recommendation No. 342 (2000-2001), cf.Proposition No. 45 (2000-2001) to the Storting.

30.9

29.7

28.7

6

Investment

IMPORTANT MILESTONES in 2003 (NOK millions)

Project/programme

Category 1 projects/other projects/programmes

Milestones in 2003Forecast outgoings

in 2003, item 45

Escort vessels

Common infrastructure

C2I communications

Eskort vessels

Maritime helicopters

Missile Torpedo Boats

New frigates

FISbasis

Multi-role radio

New surface-to surface missiles

Unit helicopters

New MTB structure

In production

Final deliveries

Continuing deliveries

Test firings

Progress by contractor, conclude

contract for other equipment

HAUK Class deliveries

1,663

231

220

162

150

112

NEW NATIONALLY FINANCED WORKS PROJECTS (NOK millions)

Location Project name Overall cost2003

Bodø

Gråfjell

Heggelia

Countrywide

Countrywide

Countrywide

Kolsås

Laksevåg

Mauken-Blåtind

Rena

Rena

Setermoen

104

1 948

166

114

137

129

124

128

159

170

136

254

Outgoings2003

25

223

60

17

30

20

4

50

70

103

71

73

The investment budget amounts to NOK 9.75 billion, anincrease in real terms of four percent compared with thebudget for 2002note 5.The Armed Forces will be devoting

NOK 6.76 billion to investment in materiel andNOK 2.50 billion to investment in nationally

financed buildings and works projects.

Priority areas:• Approximately one third of the investment in materiel planned for 2003 will be devoted to the Royal Norwegian Navy, the largest single project being the procurement of new frigates.

• For land defence the emphasis is on adaptation for multinational operations. This includes strengthening of the Norwegian Army High Readiness Force (NOA HRF) through the procurement and adaptation of used Leopard 2 A4 main battle tanks and the upgrading of M113 tracked armoured personnel carriers (APC). The acquisition of a new tactical training system will bring a decisive improvement in the quality of combat training at company level with benefits extending down to the individual soldier.

• In the air, the procurement of new unit helicopters for the Coast Guard and the Navy’s new frigates represents the largest single project for 2003. Other projects include the upgrading of the NASAMS air defence system and the upgrading of the electronic warfare equipment for the F-16 combat aircraft.

• The Armed Forces are giving priority to investment in joint infrastructure, in particular joint information systems and information technology. One notable example is the Norwegian-developed Multi- Role Radio (MRR). Resources are also being devoted to the Armed Forces’ capability to operate jointly with allies through so-called network-based defence.

• Among the important future projects on which development work is planned for 2003, special mention should be made of the project to introduce new roles for the updated F-16 combat aircraft now in service and the project for a future replacement for the F-16.

• Priority is being given to investment in defence properties, buildings and installations associated with the process of restructuring. Restructuring measures earmarked for implementation early in the planned programme are those linked to functions which have to be in place prior to the relocation of particular activities.

Renewal of water supply and drainage

Regional exercise area South Norway

Multi-use buildings

Technical fire prevention measures Phase

Electronic firing ranges

Upgrading Defence Data Network FDN

Accommodation

Renovation and extension of Naval Academy

Merging of firing ranges

New accommodation for officers/NCOs

Multi-use buildings

Common services project, including heating

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Operations

• Over the period 2003-2005, resources for investment in the relevant properties, buildings and installations will also be given priority over those required for force production for multinational operations.

• In addition to the above, priority will also be given to works projects associated with the introduction of new materiel systems.

The operating budget for 2003 amounts to NOK 19.9billion, a reduction in real terms of 1.8 percent

compared with 2002 note 6.

Priority will in 2003 be given to Norwegianparticipation in and around Afghanistan, andto Norway’s force contribution to KFOR.Norway’s contribution in Afghanistan hasbeen strengthened by the deployment of sixF-16 combat aircraft to participate in theoperation «Enduring Freedom» over theperiod 1 October 2002 - 1 April 2003. Theseaircraft will take part in joint flight operationswith aircraft from Denmark and theNetherlands. Norway will continue as anactive contributor to the peace operations inthe Balkans. Participation in KFOR will bemaintained through the contribution of amechanised infantry battalion operatingjointly with forces from the United Kingdom,Finland and Sweden.

CGV Svalbard entered operational service inautumn 2002 and will represent a significantstrengthening of the Coast Guard’s capacityto undertake operational tasks in bothnorthern and southern waters. This willaugment the existing Coast Guard structurewith a fourth helicopter-equipped patrolvessel which also has been speciallydesigned for operations in the difficult

climatic conditions encountered in thenorthern sea areas. The ocean-goingelements of the Coast Guard will be affordedspecial priority in 2003.

The existing SAR helicopter serviceorganisation will be retained in 2003 and forthe foreseeable future. The requirement foraircraft readiness will also remain unchangedat one hour. The SAR helicopter based atRygge will be maintained at a state ofreadiness for a minimum of 85% of the time.

Priority will also be given to some keyexercises. This applies especially to multi-national exercises planned under theauspices of NATO, the Partnership for Peace(PfP) or bilaterally. Particular importance isattached to interoperation between Norwe-gian and allied forces. Cooperation withinNATO is afforded top priority. The highestpriority crisis management exercise in whichNorway is likely to participate in 2003 is theNATO-led Crisis Management Exercise (CMX).This will be considered in the context of thecorresponding EU-led exercise (CME) whichis also planned.

8

Organisational changes

Structural units 2005 Number Measures in 2003

Joint Operations Headquarters

Regional Commands

Territorial command structure

(Home Guard districts)

Other command structure

Special Forces

Home Guard

1

2

18

83 000

Operational from 1 january 2003

Operational from 1 january 2003

Operational from 1 january 2003

JOINT ASSETS

Strategic leadershipAn extensive restructuring and paring down of

the top echelons of Norwegian Defenceconstitutes a central element of the overall

restructuring of the Armed Forces.

Headquarters Defence Command Norway(HQDEFCOMNOR) is being disbanded andthe Chief of Defence (CHOD), together withhis strategic functions, is being integratedwith the Ministry of Defence. The newDefence Staff is being established to supportCHOD in his role as head of the Armed Forcesmilitary organisation. The Defence Staff willbe of limited size and will not form part of theMinistry of Defence. The Inspectors General ofthe individual services will form part of theDefence Staff. The top echelons of NorwegianDefence are thus being pared down in linewith the decisions taken followingconsideration of the Long-TermProposition note 7. These organisationalchanges will be implemented in the course ofthe summer 2003 or as soon as practicable.The strategic leadership will initially berelocated in a number of buildings in oradjacent to Akershus Fortress pendingcompletion of the purpose built facilities nowunder construction.

The Home GuardSince the Home Guard will constitute themain territorial defence force, the 18 HomeGuard districts are being reorganised toenable them to undertake the planning andcommand of operations within this concept.The structure of the Home Guard itself isbeing retained, with the Home guard districtsbeing reorganised as Level 3 in the overallchain of command, with responsibility forterritorial defence both in peacetime and intime of crisis or war. The mobilisationstrength of the Home Guard remains atapproximately 83,000 of which some 73,000belong to the Land Home Guard. Force

production for the Home Guard will be theresponsibility of Porsanger Garrison, togetherwith Værnes and Heistadmoen. The activitiesof the Home Guard School at Dombås willcontinue as at present, with a WeaponsSchool and a Courses Department.

ArmyThe organisation and equipping of thepresent 12th Brigade is being adjusted sothat the Norwegian Army High ReadinessForce will replace part of 12th Brigade. 12thBrigade will be developed as an independentbrigade and reorganised to allow the rapiddeployment of a flexible and mobile force ofconsiderable strength over large distances atshort notice. This mobile force must be fully

ARMY

Structural units 2005 Number Measures in 2003

Mobile divisional command with

divisional units.

Independent brigade. The army

High Readiness Force (NOA HRF)

forms part of 12th Brigade.

Ranger unit. This will form part of

the mobile divisional command.

Tactical brigade (5th brigade).

H M the King´s Guard.

The Border Guard.

Support units.

1

2

1

1

1

1

The organisation and equipping of 12 Brigade

is being adjusted. A rapid reaction force, the

Norwegian Army High readiness Force, will be

established by 1 july 2003.

Procurement of personal equipment.

9

NAVY

Structural unit 2005 Number Measures in 2003

Frigates

ULA Class submarines

SKJOLD Class MTBs

HAUK Class MTBs

Marine Clearance Vessels

Minelayer - redeployed as logistics

vessel

Mines

Support vessels

Coast Guard vessels

Coastal ranger Command

Mine Clearance Command with

support vessel

Coast Artillery installations

New frigates will be phased in from 2005. The

current OSLO Class frigates will continue in

service until the FRIDTJOF NANSEN Class

frigates are phased in

Building starts in 2003. deliveries due over the

period 2006 - 23009

All vessels will be upgraded

Long-term storage

5

6

6

14

8

1

4+3 and some

chartered vessels

1

1

6+9

air transportable. As part of the workinvolved, the Telemark Battalion will bereorganised, no later than 1 July 2003, as arapid reaction force with a permanent base atØsterdal Garrison. The activities at Heistad-moen will be closed down as from the samedate. The battalion is to be capable ofmeeting NATO’s requirements for rapidreaction forces.

The Immediate Entry and Follow-onelements of NOA HRF will be deployed toKosovo in 2003 as Norway’s battalion-strength contribution to KFOR. CombinedArms Training Centre (CATC) will beestablished at Østerdal Garrison by 1 January2003. The further development of CATCs willbe one of the Army’s high priority tasks for2003. The Army is also opening a Joint OfficerCandidate School for all branches at ØsterdalGarrison on 1 August 2003. The existingOfficer Candidate Schools/Infantry in Harstadand Trondheim will close as from the samedate.

NavyThe most important activities in 2003 will bethose connected with the procurement offive new frigates with their own maritimehelicopters, preparations for the procurementof SKJOLD Class MTBs (Missile Torpedo Boats),the upgrading of HAUK Class MTBs and the

planning of new acquisitions for the CoastalRanger Command. New minesweepingequipment for the ALTA Class minesweeperswill also be given high priority. Outdated andobsolete materiel will continue to be phasedout and further efforts will be made toachieve a more rational and efficientstructure in the whole range of navalactivities. The Norwegian Navy’s administra-tive organisation will be slimmed to matchthe reduction in regional activities.

10

Air Force

Structural units 2005 Number Measures in 2003

Combat aircraft

Maritime patrol aircraft

Transport aircraft

Transport helicopters

Maritime helicopters

Special aircraft

Base sets

main Air Stations

Air Stations

Mobilisation Air Stations

Air Defence groups

Command Control and

Communications structure

SAR helicopters

48 (+9)

4+2

6

18

14

3

2

2

5

5

3

12

Completion of Mid-life Update.

Procurement of seeker equipment

Study to quantify the Armed Forces overall

requirement for transport and tanker capacity

Existing helicopters (six Lynx) will continue in

service until new helicopters are phased in

from 2005

The possible closure of Gardermoen Air

Station is being considered within the overall

framework of a solution to the question of a

new transport aircraft for the Armed forces

An Air Defence Training and Competence

Centre is being established

Proposals for the type of helicopter will, as

planned, be submitted to the Storting in the

course of 2003

Air ForceFurther measures to rationalise the Air Forcestructure will be considered. Further studieswill be carried out to identify solutions tosatisfy the Armed Forces’ overall requirementfor transport and tanker aircraft capacity. Thepossible closure of Gardermoen Air Stationwill also be considered in the context ofthese studies. Key activities include theestablishment of an Air Defence Training andCompetence Centre (LVUKS) at Rygge,completion of the F-16 Mid-life Update andthe procurement of new targetingequipment for the F-16.

Joint Service functionsThe reorganisation of various Joint Servicefunctions will continue in 2003. The jointinvestment and development organisationfor the Defence Logistics Organisation (DLO)will be in operation as from 1 January 2003.Wide-ranging preliminary process work isalso in hand in preparation for «DLO PhaseThree». This includes a strategic assessmentof this field of activity, information andcommunications technology, process-basedorganisation and the constitutional form ofthe organisation. Proposals for substantivechanges relating to organisation or location

11

will be submitted to the Storting in thecourse of 2003 or in spring 2004 at the latest.

Common management andcontrol systemsThe GOLF restructuring programme consistsof a number of projects, each centred on theefficient use of information technology. Thecontract for the preliminary project wassigned on 1 June 2002. This is intended to laythe foundations for a project that will satisfythe requirements of the Norwegian PublicSector Finance Regulations and the project isplanned to be completed during the first halfof 2003. Work will also be carried out on therestructuring of the Defence LogisticsOrganisation. A preliminary project for thispurpose is planned for early 2003.

Use of contractorsThe use of contractors for certain defenceactivities will allow increased focus onstrategic areas, the improvement of qualityand the Armed Forces’ core activities,resulting in real cost savings. Variouscompetition mechanisms are being used andthe result may well be that external contrac-tors will be taking over certain activities atpresent being carried out by the ArmedForces. Work will be done in 2003 to initiatepossible projects involving such contracts.

Published Oktober 2002 by

The Ministry of Defence

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