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SECRET SECRET The NSC, with the advice and assistance of the Office of Management and Budget, will develop revised schedules and procedures to improve the integration of national security strategy with fiscal guidance provided to the Department of Defense. Toward this end, within 90 days of the date of this directive, the Secretary of Defense shall recommend to the NSC and OMB procedures for: (U) A) the issuance of provisional five-year budget levels to the Department of Defense. Those budget levels would reflect competing demands on the federal budget and gross national product, and revenue projections; (U) B) a military strategy to support national objectives within the provisional five-year budget levels. Such strategy would include broad military options developed by the Chairman with the advice of members of the JCS and the Commanders of the Combatant Commands; (U) C) a net assessment of U.S. and Allied Forces as compared with those of possible adversaries. This net assessment will be used to evaluate the risks associated with various strategic options. Such net assessment will be prepared by the Secretary of Defense, the Director of Central Intelligence, and the Chairman of the JCS (with the assistance of the Joint Chiefs of Staff) i (g) (u) and D) selection by the President of a military program and the associated budget level. (U) The NSC and OMB will ensure that such procedures are fully in place prior to the beginning of the budget cycle for Fiscal Year 1989. In the meantime, the Secretary of Defense will ensure that improvements to the planning process, which result from the guidance above, are integrated with the preparation of the Fiscal Year 1988 defense budget to the greatest possible extent. In addition, OMB and DOD will undertake the appropriate steps necessary to produce a two-year defense budget for Fiscal Years 1988-89. (U) My objective is to improve and stabilize strategic planning at the highest level, so that public and congressional debate can be elevated and brought to bear on these larger questions of defense policy. (U) II. Military Organization and Command (U) I fully endorse the recommendations of the Commission concerning military organization and command. To continue to COPY / OF 11 COD SECRET