A Defense Budget for the 21st Century

Aviation Week Defense, Technology and Requirements Conference Speech

This conference could not be focusing on a more timely or important topic: "How we should structure the budget for the Department of Defense?" The Government Accountability Office is right - DoD does not have a good track record of matching needs and wants to available resources.

We enter into more acquisition programs than we can afford to complete, and we want more than any realistic budget can ever satisfy.

We don't do a good job of prioritizing our purchases, nor do we have a formalized process for doing so.

Coupled with the present financial crisis, this reinforces the fact that, as Secretary Gates has said, the defining principle of our national security strategy and the defense budget is "balance."

This is not about the present financial crisis. We need to strike a balance and learn to say "no" to programs and activities that don't fit in our most important priorities, no matter how strong our economy is.

In a minute, I will talk about some of the challenges and opportunities in our defense-acquisition process. But first I'd like to share some thoughts about how I think we need to strike this balance that Secretary Gates has identified.

I have heard it said that when Robert McNamara testified at his confirmation hearing for secretary of Defense in 1960, no one asked him about Vietnam. When Les Aspin testified at his confirmation hearing for secretary of Defense in 1993, no one asked him about Bosnia. And when Donald Rumsfeld testified at his confirmation hearing for secretary of Defense in 2001, no one asked him about Afghanistan.

I think the message is pretty clear. We have perfect track record in predicting our nation's next military conflict: We have been wrong every time.

At the first hearing of the Senate Armed Services Committee to consider the FY09 DoD budget last February, Secretary Gates made a comment that has been widely circulated: Regarding the requirement for more F-22s, he said, "The reality is we are fighting two wars, in Iraq and Afghanistan, and the F-22 has not performed a single mission in either theater."

I think we all know the point he was trying to make: that we need to be focused on the current fight. And we do.

But we should never focus on the current fight to the exclusion of the next fight.
I could list several other weapon systems, such as the Virginia-class submarine, Trident submarines, the Minuteman ICBM, and the Ground-Based Midcourse Defense System, in each of which we have invested billions of dollars. To my knowledge, none have performed a single mission in Iraq or Afghanistan, and thank goodness we haven't needed to use them in those conflicts. But we may need them for the next war, and we need to modernize them.

Here's an example of why: In the Cope India exercise in 2004, F-15s flew against an Indian version of the SU-30.

For the first time, the U.S. realized that it was basically at parity with participating Indian aircraft. The pilot capabilities and upgraded avionics in the SU-30 proved extremely well-matched against the F-15.

Today, Russian SU-35 and SU-37 aircraft are available and are more capable than the SU-30. These aircraft would prove even more effective against the F-15. SU-30 variants outmatch F-15s, F-16s and F-18s in most tactical areas, including electronic attack, range and maneuverability. 409 SU-30s and variants have been delivered to eight nations.

Where do we strike the important balance between meeting the requirements of the present conflicts and preparing for future ones? Let me offer three suggestions:

1) We must build a budget that delivers the necessary capabilities to achieve victory in our current endeavors.
2) We must build a budget that prepares us for the likely challenges of the next 10-to-20 years.
3) And we must do it in a way that is equally respectful of our present responsibilities and the responsibilities inherited by future generations.

I believe that, if we are disciplined in meeting the immediate capability gaps we have -- through careful attention to combatant commanders' requirements, through disciplined acquisition processes and through effective contract management -- and if we are committed to not starting programs we don't truly need, or at least don't let them progress into the development stage, we will find ourselves with more resources than we knew we had.

First, we must build a budget that delivers the necessary capabilities to achieve victory in our present conflicts. Additional resources in ISR, cyber-defense and other capabilities to meet asymmetric threats do not have natural sponsors within the military or the defense industry to promote and protect them.

Nevertheless, we need them, and it has been necessary to push the military in these and other directions that it would not naturally go on its own. This is the job of the DoD leadership and Congress.

We need to re-commit ourselves to ensuring that these asymmetric threats are addressed, even when doing so doesn't add jobs to our states and districts.

Second, we must build a budget that prepares us for the likely challenges of the coming decades.

If you could tell me what enemies we will face 20 years from now, I could tell you exactly the kinds of weapon systems we should purchase. But we don't know this. Again, McNamara, Aspen and Rumsfeld did not know what was around the corner, much less 20 years out.

So, where does that leave us? I think it leaves us with the need to make investments in areas where conflicts will likely require us to be dominant and decisive, and that means being able to control the oceans, land and skies, and space and cyberspace.

Someone once quipped that no one has ever surrendered to an airplane. This is true, although some may have tried. But I can ensure you that no present and future conflict will ever be won if we can't control the skies.

No one has ever surrendered to a satellite or a computer, either, but I can guarantee that we will be unable to prevail in any future conflict if we are unable to adequately control space and cyberspace.

This is the foundation of our future military and should receive appropriate resources, not to the exclusion of meeting requirements for present conflicts, but with the same philosophy that we invest in training for officers and enlisted personnel: We basically remove them from their career paths for up to a year at a time and send them back to school -- even when we are fighting two wars. We do this so they will have the capabilities and perspective to meet the challenges they and our nation will face in 10 years. We forego that training at a huge price, just as we forego modernizing our forces at the risk of being unprepared for future challenges.

When the future arrives it will be too late to prepare for it.

Third, we must do this in a way that is equally respectful of our present responsibilities and those inherited by the next generation.

Herein lies the rub: What should be the balance between budgeting to meet present challenges and budgeting for the future?

In FY 2009, DoD will spend more than $180 billion -- roughly one-third of its non-supplemental budget -- for procurement, research and development, what is more generally referred to as "investment." Most of these dollars will be spent on conventional, non-asymmetric capabilities. The remainder is divided among personnel, operations and maintenance, plus a small amount for housing and facilities.

Is it appropriate that much of that $180 billion is spent on threats that are not fully realized? I believe it is, for several reasons.

1) It is an investment in deterrence. Whether it is a ship, an airplane or a tank, when we invest in systems that outperform what our potential adversaries possess, we are doing so, in a real sense, so we won't have to use them.
2) Ironically, we may find that not investing in them may encourage our adversaries to take actions that -- in the end -- will end up costing us much more than if we had successfully deterred them by being prepared.
* Never again will we or should we procure a high-value military asset that has only one use. The Conventional Trident Missile program has been criticized, and I agree that we need to make sure it is undertaken in a way that doesn't create more risk, but it is the right way to go. We should not have more than a dozen of our largest, most expensive submarines patrolling under the oceans carrying missiles that have only one use.
3) Old systems are not less expensive. Anyone who owns a 15-year-old care knows that they don't get cheaper as they get older. We should be good stewards of taxpayer dollars and require the military to develop business cases before it attempts to re-capitalize systems. We should expect nothing less when billions of dollars are on the line.
* But we need to apply common sense here. No one is going to argue that we should be conducting crucial air-refueling operations in support of the global war on terrorism with tankers on 50-year old airframes. It doesn't make sense. In addition to being more expensive, it is more dangerous, as we have seen with numerous aircraft failures in recent years. We would not permit our nation's airlines to fly planes in this condition; neither should our armed forces.

Instilling Discipline in Defense Acquisition

Now I want to discuss some of the challenges we are facing in defense acquisition. Everyone in the audience today is well aware of those challenges.

There has been a lot of discussion about the health of the defense industrial base. I'd first like to say that, without question, the best, brightest, most-responsive and most-successful defense industry in the world is in the United States. We have our problems and our challenges, but we do a lot of things right and for that, we have you to thank.

We had a Senate Armed Services Committee hearing recently on the topic of defense acquisition reform and we had some very bright, experienced people speak, and we also have some very bright and intelligent people on our committee. Senator Levin and Senator McCain have put a great deal of thought and time into the bill they just introduced, and while I don't agree with everything in it, I do agree with most of it and believe that, if enacted, it will help us achieve success more often.

I was struck by several things as I listened to the witnesses last week.

First I was impressed that, since the Packard Commission of the 1980s, and even the Fitzhugh Commission in the 1970s, the basic issues in defense acquisition have not changed much. They remain: 1) requirements stability; 2) funding stability; 3) personnel stability; and 4) technology maturity.

Also, I was struck at the degree of unanimity among the witnesses.

They largely agreed on our challenges. However, since we identified these challenges decades ago, no one has really been able to fix them or change the culture within DoD to move us past them.

That is what I would like touch on during the remainder of my time.

The witnesses in our hearing said repeatedly that we need to take greater advantage of spiral development and block approaches to major defense programs. No longer can we afford to risk everything on an exquisite approach that has a pretty good chance of being 100 percent over budget and five years late.

Congress needs to play an active role and ask tough questions about what is realistically achievable in the short term, instead of being content to wait 15 years for the perfect solution, which turns out never to be perfect. A block or spiral approach should be the default strategy.

We also need to inject discipline early into the overall requirements process, and not allow more procurement programs to be entered into than we can realistically afford to purchase. We should not begin programs that don't have validated need, and be much more careful about letting programs proceed that are not technologically mature. On this note, I commend Senators Levin and McCain for including a provision in their bill to require a Preliminary Design Review prior to Milestone B approval.

Last, we should find a way to better integrate combatant commanders into the requirements process. However, they also need to make defining their requirements and assessing the capability gaps a priority because no one else can effectively determine their requirements for them.

In the area of funding stability, we need discipline. This is an area near and dear to my heart because I have seen the negative effects of funding instability and how it has been justified, albeit incorrectly.

In the commercial sector, if a system under development runs into trouble, the company involved will generally put more money into the program to address the problems and try to restore it to health.

In the defense sector, we do the opposite. We use technology challenges and schedule delays as a reason to cut funding for systems, and inevitably, those cuts cause even more problems and delays.

This makes sense only because within DoD and before Congress, programs are competing for the same dollars. But it makes no sense from an enterprise-wide perspective, damages our military and is a disservice to the warfighter who doesn't get the system he needs when he needs it.

Regular changes in funding profiles make it impossible to procure weapon systems in a cost-effective way. We need to stop doing that, and commit ourselves to funding programs because they meet valid requirements, not because they happen to be well-managed.

The changes the Levin-McCain bill makes to the Nunn-McCurdy process are also steps in the right direction. We owe Nunn and McCurdy gratitude for taking on cost overruns and reporting as they did years ago. We need to be even more rigorous in putting pressure on programs that aren't performing well, and either get them back on track or cancel them.

On the issue of personnel, our defense industry has the most-qualified, hard-working personnel in the world and there is absolutely no substitute for you. We made a mistake by undervaluing the acquisition workforce in DoD and getting rid of too much expertise. We are paying for it today.

Clearly we need to revamp the acquisition workforce in DoD, and previous defense authorization bills have already addressed this issue. We need to have not just more people, but more-qualified people.

We need to pay and promote defense acquisition personnel according to the value they add to the organization -- we should pay them more and promote them more often.

Much has been said about conflict-of-interest issues, and clearly this is a relevant. Military, civilian and contractor personnel have, on occasion, abused their positions and taken advantage of information in inappropriate ways. Conflict of interest rules are needed, both to stop possible wrongdoing and to eliminate the perception of wrongdoing.

However, I believe that 99 percent or more of those working in government and industry on defense programs are ethical, and want to do the best job possible for their employer, their families, themselves and their nation.

We can go too far in this area and I am afraid the Levin-McCain bill does go too far. To exclude systems-engineering personnel affiliated with a firm from advising DoD on a program that other personnel affiliated with that firm are helping to build goes too far, in my opinion.

We are beyond the days of 20 major defense contractors. We are down to about five.

With mergers and acquisitions happening weekly, I do not think it wise to cordon off some of our most-skilled people from providing the services we need most. If these skilled individuals are not allowed to use what they know, they are going to go to other sectors of industry and leave the defense industry in much worse shape.

We all love technology. However, we have become the victim of our success. Too often we aim for exquisite technology and end up with cost overruns and schedule delays, followed by unmet requirements.

We need to show discipline through block approaches, maturing technology first, and adequately testing and consistently upgrading as new technologies are proven.

We need a balance here, and the balance needs to shift away from the 100 percent solution to the solution we can get fielded on-budget and on-schedule, and that we can grow later.

If we can focus on these four areas -- requirements stability, funding stability, personnel and technology maturity -- I think we can be successful in addressing some of the basic challenges in our defense industry.

This will allow us to spend hard-earned taxpayer dollars more wisely, which will let us procure more of the right things for our military.

Thanks for your time this morning, and thanks for all you do for our country.

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