Faced with a shrinking budget and growing demand for soldiers around the world, the Army is being forced to sacrifice some of its modernization priorities, the Army's No. 2 officer said Monday.

"It is, fundamentally, a math problem," said Vice Chief of Staff Gen. Daniel Allyn. "Our focus is on readiness, to ensure no soldier, no unit, is sent into a mission for which they're not prepared. The downside of that is we are definitely facing the potential that two to three years down the road, to ensure we deliver the most modern equipment possible, is where we have accepted risk."

Allyn, who spoke Monday at The Heritage Foundation in Washington, D.C., said the Army spends about 50 percent of its budget on soldiers, who Allyn called "our primary weapon system." Another 10 percent is spent on civilian employees, leaving 40 percent for readiness and modernization, he said.

"About 22 percent of that is consumed in readiness generation, [so] that leaves about 18 percent for modernization," Allyn said. "If you look at the 700 to 800 portfolios we current have for equipping our Army, that gets spread very, very thin."

The Army has been forced to prioritize its modernization efforts, including divesting obsolete or redundant systems "so we can apply increased funding to our priority needs," he said.

These priorities include delivering active protective systems for the Army's vehicles and aviation platforms; modernizing the Army's helicopters; and addressing "critical" cyber vulnerabilities across the Army's network, Allyn said.

"Our expectation is this picture we're currently facing is not going to change in the near future, so we must look internally to make the most of what we have to address the emergent needs that are out there," Allyn said.

When asked how the Army can deliver the most capable forces it can in a resource-constrained environment, Allyn had a simple answer.

"You can't have it all," he said.

To overcome that, the Army is getting creative. This includes, for example, looking at how it can prioritize the delivery of new capabilities to certain units.

"We know that by doing that there are a couple dynamics at play," he said. "Technology is changing so fast that we think by the time you field a smaller set you'll be going after newer, more capable technology anyway."

The challenge is if the Army is called upon to face a "near-peer" adversary that "requires a massive military response," Allyn said.

"I think where all of us struggle is should we get into [that] scenario," he said. "At the end of that pipeline you'll stand a chance that some of those units will not be as prepared as they should be."

Allyn also was asked to elaborate on Army Chief of Staff Gen. Mark Milley's recent comments about the Army being in a state of "high military risk."

"When you look at the set of tasks that we've been given and the force that we have available, that's where Gen. Milley drew that conclusion," Allyn said. "You have to respond to one near-peer competitor and near simultaneously deploy forces to deny the objectives of another. Therein lies the stress as we've gotten smaller."

The Army, however, is making slow but steady progress when it comes to readiness, Allyn said.

"While our surge capacity has not been growing because emerging demands have continued to place a high premium on that, we've been able to build the leadership experience of our tactical commanders to be able to respond to high-intensity combat should it emerge," he said.