Deputy Defense Secretary Gordon England has directed a $7 billion increase to the Army's fiscal year 2008 budget, $17.8 billion short of the amount Army leaders say is required to execute its part of the current military strategy, according to Pentagon officials.

In a memo signed last week, England issued revised fiscal guidance for FY-08 and sought to bring closure to an unusual round of requests for additional funds by all of the military services that began this summer, when the Army said it required billions of dollars more than it was allocated, according to sources familiar with the document.

However, the Army may not be done pressing its case. Army Chief of Staff Gen. Peter Schoomaker met with Defense Secretary Donald Rumsfeld last Friday to discuss the service's FY-08 budget request, according to Pentagon officials.

“In a normal year, $7 billion is a huge amount of money,” said an industry official familiar with the new budget guidance. “But this year the Army says: ‘It’s not enough.’”

Schoomaker, who has argued that finding additional resources for the service should not be a question of affordability but a matter of national priorities, has twice taken his case directly to the White House: In July the Army general briefed Vice President Dick Cheney, and in August he met with President Bush, according to Pentagon officials.

England’s memo -- which Pentagon officials speculate was informed by a promise from the White House Office of Management and Budget to increase the total size of the Defense Department’s budget in FY-08 -- calls for raising the Army’s FY-08 budget from $114 billion to almost $121 billion. It also calls for adding tens of billions of dollars to the Army’s base budget over the next five years.

The increase in FY-08 would leave the service nearly $18 billion shy of the $138.8 billion Army leaders have argued all summer is required to execute its portion of the strategy set forth earlier this year in the Quadrennial Defense Review.

Including cuts to the Army’s FY-08 budget directed by Pentagon leaders earlier this year -- along with similar decrements to each of the services’ spending plans -- the total increase offered by the England memo amounts to a net gain of $5 billion above what the service expected in FY-08, according to the budget request submitted to Congress at the beginning of this year.

Still, the Office of the Secretary of Defense may offer the Army additional funds in the FY-07 base emergency supplemental package, which could take shape as soon as next month, according to Pentagon officials. This supplemental package would cover needs not funded in the $50 billion bridge supplemental included in the FY-07 Defense Appropriations Act.

Proponents of increased Army spending may also look to Congress to raise the level of funding when it reviews the Pentagon’s FY-08 spending request next year, sources said.

The debate over how much to increase the Army budget -- which has in recent months involved officials from the Joint Staff, the Office of the Secretary of Defense and OMB -- has come to a head behind closed executive branch doors.

However, many Pentagon officials are keenly aware that the political backdrop for the Army funding debate is the Nov. 7 midterm congressional elections. Which party is viewed as better suited to handle national security matters could determine whether Republicans or Democrats control Congress.

Meanwhile, the service is pressing forward with plans to formalize its spending plan for fiscal years 2008 to 2013, which some Pentagon officials say will under-fund key Army accounts.

Schoomaker told reporters earlier this month that if the service receives less than $138.8 billion, its modernization accounts would suffer. Specifically, he said the Army would slow the pace of converting the force from its division structure to modular brigades and would delay the acquisition of portions of its marquee modernization effort, the $125 billion Future Combat System.

“And we’re probably going to have to do some of that,” Schoomaker said Oct. 11, suggesting that the service was bracing for less than the full amount of its requested increase.

Army officials are now determining which accounts will shoulder the remaining $17.8 billion shortfall in the service’s FY-08 budget plan.

Beyond FY-08, England’s guidance calls for additions of $12 billion a year in both FY-12 and FY-13.

The boosts in 2012 and 2013 reflect what Pentagon officials say was an agreement between Army officials and OSD, reached in December 2004 as part of negotiations over a major budget restructuring in program budget decision 753. That document added $5 billion a year for the service’s plans to convert and modernize its force from a division-based organization to one structured around modular combat brigades.

Fiscal guidance issued this spring for FY-08 through FY-13 did not include the $5 billion a year in funding for modularity in FY-12 and FY-13, InsideDefense.com reported in April. 

Lt. Gen. Jerry Sinn, the Army’s senior budget official, said in a brief Oct. 9 interview that, if pressed, the Army could deliver an electronic version of its program objective memorandum in as few as three weeks. Other service officials said it could take a bit longer.

That would mean OSD might begin issuing program decision memoranda and program budget decisions as soon as mid-November, making changes to the service budget proposals and giving shape to the Pentagon’s fiscal year 2008 budget request.