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Perry Explains Force Modernization Funding

By Jim Garamone
American Forces Press Service

WASHINGTON, Sept. 18, 1996 – DoD has handled the personnel drawdown well, but now must focus on modernizing equipment, Defense Secretary William J. Perry said.

Perry, speaking at the American Institute of Aeronautics and Astronautics here, said neither personnel nor equipment readiness suffered through the drawdown. He said personnel readiness stayed high due to historically high operations and maintenance funding. Modernization stayed on track because with fewer people, DoD needed less equipment. The department retired older equipment and kept the newer.

But this will change without action now, Perry said. "And the first key to [modernization] is we have to pour more money into it," he said. The administration does not have a "magic wand," so any money put into modernization has to come from funds DoD already has.

Some of the money will come from what the department has saved on infrastructure. "The last few years the savings from base closing have all been negative savings; that is, it's cost us money," Perry said. "There's a front-end investment associated with closing the bases. Two years ago, this was $4 billion, Now, we're going within two or three years to a $6 billion savings in base closing." This $10 billion swing will go to modernization, Perry said.

But this will not fund modernization by itself. The department will reduce inventory, and he said he believes this will result in another $10 billion.

But even this will not be enough, Perry said. Acquisition reform is a primary goal of the administration and should produce enough savings to fund modernization. The first year of the program was to work with Congress to enact legislation. The second year was dedicated to implementing the legislation and setting up pilot programs. In the third year, he said, the pilot programs started paying off. "In the fourth year, our task is scaling up, going beyond the pilot program to hundreds of programs and applying the techniques not just to the new programs being started, but back to the programs that are under way."

Perry pointed to the Joint Direct Attack Munitions program as an example of the type of savings he envisions. The program converts dumb bombs to smart bombs. "Under the old acquisition system, conversion kits were scheduled to cost $42,000 a pop," he said. "And now we have fixed price bids in. We're building and delivering those systems, and they're coming in at $14,000." The two-thirds reduction in price for this system alone will save the department $3 billion -- $3 billion which we will be able to spend on other modernization programs," he said.

These programs, Perry said, will improve not only quantity of systems purchased, but quality and the speed with which technology is fielded. This fits in with U.S. thrust to dominate the battlefields of the future.

Air dominance is one part of this equation. The United States had air dominance during Desert Storm and intends to keep it, he said. "We're going to keep it by tapping into the power of the information technology and investing what we have to invest to get it. It does not come cheap when you're buying it, but the effectiveness of it is without question," he said.

Modernizing precision strike munitions is another area. Perry said DoD is dedicated to making smart munitions smarter. The generation of precision guided munitions the United States is developing will counter any measures an enemy takes and will hit targets in all conditions and weather. "Indeed, the new generation will achieve fire-and-forget capability and near-all-weather capability," he said.

Focused logistics is another key to force dominance. Information technology plays a huge role in this. "The systems that are now being introduced for tracking logistics are going to make a huge difference in out ability to manage the whole logistics center on the battlefield," Perry said.

Finally, situational awareness of commanders is a must for battlefield dominance. With the information systems commanders will have, they will be able to exploit U.S. dominance of a battlespace.

"The key to our succeeding in doing this over the next five to 10 years is our success in acquisition reform," Perry said.

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