SECRETARY OF DEFENSE MARK T. ESPER: Well thank you for that introduction -- kind introduction Michael and good morning everyone. It’s great to be here and I also want to thank Dr. Edward Harshberger for moderating today’s discussion.
And I really look forward to a good conversation with all of you.
It is great to be here at the RAND Corporation, with many of the thought leaders who have made significant contributions to national security policy for more than seventy years, as Mike mentioned.
RAND has played a vital role in connecting military planning with research and development decisions since its founding in the wake of World War II.
You know, just two weeks ago, I stood on the deck of the USS Missouri, in Pearl Harbor, to commemorate the 75th anniversary of the end of that conflict. In the aftermath of that great struggle, the United States, our allies, our partners led the creation of an international rules-based order, rooted in our shared values, that has supported stability and prosperity around the world for more than seven decades.
Yet this free and open order is now under duress.
We all understand that, because peace is never fully assured, the United States and its partners must continue to protect our founding principles and our way of life. And we are committed to doing just that.
Today, in this era of great power competition, the Department of Defense has prioritized China then Russia, as our top strategic competitors. These revisionist powers are using predatory economics, political subversion, and military force in an attempt to shift the balance of power in their favor, and often at the expense of others.
China for example is exerting its malign influence through its “One-Belt, One-Road” Initiative. This campaign has left weaker nations with crushing debt, forcing them to take their economic relief at the expense of their sovereignty.
Additionally, Beijing’s aggression and disregard of its commitments in the South and East China Seas -- such as the sinking of a Vietnamese vessel and escorting of Chinese fishing fleets into the exclusive economic zones of Indonesia and the Philippines -- are further examples of the Communist Party’s attempts to reshape and undermine the international order that has benefitted nations, large and small.
At the same time, Russia is overtly redrawing international borders. Moscow’s invasion of Georgia in 2008, annexation of Crimea in 2014, and sustained aggression in Ukraine demonstrates its blatant disregard for international rules and norms.
Moreover, both nations are expanding and modernizing their armed forces, and extending their capabilities into the space and cyber domains, in order to exert greater pressure against other countries.
Meanwhile, for nearly two decades the United States concentrated on fighting violent extremist organizations in low intensity conflicts that left us less focused and prepared for a high-end fight against near peer adversaries. And in the last decade, the Department was crippled by the devastating effects of sequestration, continuing resolutions, and insufficient budgets, prior to 2017. For years, our military was in a period of strategic atrophy and burning down readiness, as our adversaries watched from the sidelines, searching for opportunities to erode our hard-earned gains.
Today, with a view of the world very different from our own, emboldened competitors are using their growing power to coercively alter the strategic environment to our detriment.
Given these challenges, in 2018, the Department of Defense developed the National Defense Strategy, the NDS, which states that we are now in this era of great power competition and defines the challenges we face. The NDS also directs us to adapt to this increasingly complex security environment now in order to deter conflict, and if necessary, fight and win, to secure our future.
I am pleased to report that a great deal of funding and effort has been put behind this strategy over the past three years to ensure the U.S. military is organized, trained, equipped, manned and ready to compete, deter, and fight, and win in this new age.
During my confirmation hearing last year, as Mike mentioned, I made clear that my highest priority would be the irreversible implementation of the NDS.
This strategy tells us that to be successful, we must follow three lines of effort: first, enhance our lethality and readiness across the force; second, strengthen our alliances and build partnerships; and third, reform the department to align our highest -- our resources with our highest priorities.
Soon after becoming the Secretary of Defense, I met with our senior DOD leaders – uniformed and civilian – and we developed a list of ten targeted goals to advance implementation of the NDS aligned under its three major thrusts.
Our first line of effort aims to maintain our warfighting advantages and continue outpacing the competition when it comes to lethality and readiness. To modernize our capabilities, we have successfully secured funding for game-changing technologies such as artificial intelligence, hypersonics, directed energy, and 5G networks. We have also made significant progress recapitalizing our strategic nuclear triad. Among our other efforts, we conducted a comprehensive review of the Future Naval Force to meet our requirements in the years ahead – something I will discuss in more detail in a few moments.
We are also modernizing how we maintain our readiness to fight. We have re-reorganized our ready forces into plan-based Immediate Response and Contingency Response Forces.
In addition, we have implemented enhanced readiness concepts such as dynamic force employment – demonstrated recently by our bomber task forces in the Indo-Pacific and the European theater – that also reassure our allies and help deter our competitors.
We are developing a modern Joint Warfighting concept, which will ultimately become doctrine, and ensure the whole of the joint force is far more effective than the sum of its parts.
Our second line of effort builds on our relationships with other Nations, an asymmetric strategic advantage that no rivals can match. To do so, we are implementing a coordinated plan, the first of its kind, to strengthen allies and build partners. In our priority theater, the Indo-Pacific, we have worked hard toward this end – as evidenced by my multiple trips throughout the region and numerous interactions with leaders from across the AOR.
This is part of our theater strategy based on three-pillars:
- preparedness,
- strengthening partnerships,
- and promoting a more networked region.
Our third line of effort drives us to reform the department for greater performance and effectively manage our Fourth estate, which includes organizations such as the Defense Logistics Agency. In doing so, we are redirecting our time, money, and manpower to the highest priorities while maximizing the use of every taxpayer dollar. We have made great progress on this front with our Defense-Wide Review, where we identified $5.7 billion in defense reforms and efficiencies across the Fourth estate last year.
The Chief Management Officer, who is now responsible for these agencies – a first ever DOD reform – is working hard to identify billions more this year. We have also directed our Military Services to conduct clean-sheet reviews to identify savings and efficiencies, as well as to develop their plans for reform to the NDS. Our Combatant Commands are going through a similar review to consolidate and reduce legacy requirements in order to optimize our operational footprint.
Underpinning all three of these lines, and principal to many of our efforts, is to focus the department on China.
To fulfill this objective, we stood up a new Defense Policy office on China, and established a China Strategy Management Group to better integrate our enterprise.
I also directed our National Defense University to dedicate half of its coursework to the PRC, and I tasked the Military Services to make the People’s Liberation Army the pacing threat in all of our schools, programs, and training.
These are just a few of our efforts to focus attention on our priority theater, the Indo-Pacific. Not only is this region important because it is a hub of global trade and commerce, it is also the epicenter of great power competition with China. And in the face of destabilizing activities from the PLA, particularly in the maritime domain, the United States must be ready to deter conflict, and if necessary, fight and win at sea.
So today, I want to talk to you about our efforts to modernize our military, specifically our great Navy.
And over the next few days here in California, I will get a chance to see first-hand, what we are doing to prepare our naval force for the high-end fight, as I visit the USS Carl Vinson, Naval Base Point Loma, and industry partners who are developing unmanned naval systems.
Over the past year, I’ve had the chance to visit U.S. Navy ships and units of all types, all across the globe; to spend time with our senior naval officers; and to meet with hundreds of Sailors where they live and where they work. And I can assure you that we command, without a doubt, the best and most capable Navy on this planet.
But as the NDS states, our military does not have a preordained right to victory in combat. Beijing and Moscow have studied how we fight and are developing asymmetric capabilities designed to counter our strengths.
The Chinese Communist Party, for whom the PLA serves, intends to complete the modernization of its armed forces by 2035, and field a world-class military by 2049.
In addition to developing traditional weapons systems, Beijing is also investing in long-range, autonomous, and unmanned submarines, which it believes can be a cost-effective counter to American naval power.
I want to make clear that China cannot match the United States when it comes to naval power. Even if we stopped building new ships, it would take the PRC years to close the gap when it comes to our capability on the high seas.
Ship numbers are important, but they don’t tell the whole story.
They do not address the types of ships and the capabilities of the vessels being counted; the skill of the crews that operate them; the prowess of the officers that lead them; or the ways in which we fight and sustain them…just to name a few.
Nonetheless, we must stay ahead; we must retain our overmatch; and we will keep building modern ships to ensure we remain the world’s greatest Navy.
That said, to compete in a 21st century high-end fight, we will need a future fleet that optimizes the following operational attributes: first, distributed lethality and awareness; second, survivability in a high intensity conflict; third, adaptability for a complex world; fourth, ability to project power, control the seas and demonstrate presence; and fifth, capability to deliver precision effects at very long ranges.
This future naval force will be more balanced in its ability to deliver lethal effects from the air, from the sea, and from under the sea.
This fleet will be made up of more and smaller surface combatants; optionally-manned, unmanned, and autonomous surface and subsurface vehicles; unmanned carrier-based aircraft of all types; a larger and more capable submarine force; and a modern strategic deterrent.
And we must keep investing in our People, ensuring they are the best trained, educated, technologically skilled, and ready force in the world.
At the same time, this force must be affordable in an era of tight funding; sustainable over the long term; and operationally ready and available at higher rates.
In addition, it must have a robust and healthy industrial base, with modern shipyards and highly skilled workers, which have the capacity to build and maintain the fleet we need.
That is why, earlier this year, I asked the Deputy Secretary of Defense to lead a Future Naval Forces Study, tasked with assessing a wider and more ambitious range of “future fleet” options.
The Navy, Marine Corps, Joint Staff, the Office of the Secretary, as well as outside advisors conducted a comprehensive, cost and threat-informed review and analysis.
First, they examined the naval forces we currently have; second, they explored future force options needed to retain dominance in 2045 given China’s likely modernization plans; and, third, they war gamed these options, assessing the strengths and weaknesses of each combination of ships against different future mission sets.
This week I met with the Deputy Secretary and the Navy/Marine Corps/OSD/Joint Staff team to discuss their findings. The results are a game-changer that reflect a good deal of serious work and effort based on facts and data.
This study will serve as our guidepost as we decide on, program, and build our future fleet, and conduct follow-on assessments in select areas.
In short, it will be a balanced force of over 355 ships – both manned and unmanned – and will be built in a relevant timeframe and budget-informed manner.
And we will build this fleet in such a way that balances tomorrow’s challenges with today’s readiness needs, and does not create a hollow Navy in the process.
To achieve this outcome, we must increase funding for shipbuilding and the readiness that sustains a larger force. Doing this, and finding the money within the Navy budget and elsewhere to make it real, is something both the Navy leadership and I are committed to doing.
As an example of where we are headed, earlier this year, the Navy granted a $795 million contract to purchase the first ship of a new class of guided missile frigates – with an option to purchase nine more totaling nearly $5.6 billion.
This is the first new major shipbuilding program the Navy has sought in more than a decade. These combatants will support the National Defense Strategy across the full range of military operations, with increased lethality, survivability, capability, and capacity to conduct distributed warfare—a key requirement born -- borne out by the Future Naval Force study.
As I visit with industry partners over the next few days, I will learn more about the Navy’s latest transformational pursuits – unmanned surface vessels and unmanned undersea vehicles.
We are making solid progress on these fronts.
Earlier this month, for example, the Sea Hunter prototype completed operations with the USS Russell, demonstrating various aspects of manned and unmanned teaming.
We are planning on-going training events to continue developing tactics, techniques, and procedures for these platforms. These efforts are the next step in realizing our future fleet, one in which unmanned systems perform a variety of warfighting functions, from delivering lethal fires and laying mines, to conducting resupply or surveilling the enemy. This will be a major shift in how we will conduct naval warfare in the years and decades to come.
Finally, this future Navy and Marine Corps will employ novel concepts such as “Distributed Maritime Operations” and “Littoral Operations In A Contested Environment,” which will modernize the way we fight as they enable our future Joint Warfighting doctrine.
Over the course of our history, the United States Navy evolved from the earliest wooden frigates of the Revolution to the low-profile ironclads of the Civil War; and from the enormous steel battleships of Teddy Roosevelt’s Great White Fleet to Admiral Rickover’s “nuclear navy” of the Cold War; all the way up to today’s powerful supercarriers.
Each one of these eras was marked by great technological change and new capability. Today, we are at another inflection point, one where I believe unmanned technologies, AI, and long-range precision weapons will play an increasingly leading role. The U.S. military, including the Navy, must lean into that future as the character of warfare changes.
Building this future force and maintaining our maritime superiority now and into the future will require a whole-of-nation approach across government, industry, and academia.
To our private sector partners, particularly in shipbuilding, we must continue to work together to promote a robust and healthy industrial base with modern shipyards, infrastructure, and highly skilled workers. We will need your help to match our level of ambition for new capabilities and more capacity in the coming years, with innovation that performs on cost and on schedule.
For Congress and our partners on Capitol Hill, we need your support to continue our momentum, namely through adequate, sustained, predictable, and timely budgets. To support critical next-generation capabilities, our future budgets must also be able to free up needed resources by divesting from legacy systems and lower priority activities. We also request the authority to put unused end of year Navy funding directly into the shipbuilding account, rather than see it expire.
To our partners in academia and at think tanks, such as RAND, we need your “outside the box” thinking; your research and your analysis to help us adapt to this increasingly complex and challenging environment; to help us refine our future fleet plans and warfighting concepts in follow on studies; and to do all of this faster, in order to outpace our competitors.
Finally, to our allies and partners around the world, know that we are committed to strengthening our relationships and preserving the international rules-based order that has benefitted us all for more than 75 years. We urge you to increase your defense spending to at least 2% of GDP, and to make the needed investments to improve your capabilities and capacity, just as we are doing with our armed forces, to achieve our shared goals – that is to protect our mutual interests, preserve our security, and defend our common values.
We all have a collective responsibility to prepare for the challenges of the future – while addressing the security issues of today. We cannot be complacent and must recognize the shifting landscape, otherwise we risk inviting greater aggression and further challenges to our values and security.
If we can do this, I am confident that we will be able to maintain the international rules and norms that have enabled our security and prosperity, for many, many more generations to come.
Thank you and I look forward to our discussion.
MODERATOR: Let's do a mic check here. Is it working? I think its working.
SEC. ESPER: OK.
MODERATOR: Hey, thanks very much, sir, for those remarks. I know that there's some folks in our Maritime studies unit who are doing back flips listening to that right now out there in Zoom land.
SEC. ESPER: Well, get back to work.
MODERATOR: Yes. I'm also a little nervous in that I just realized that my family is actually watching out there too probably, so. Let me also add my thanks to your team for letting us put this on safely here today. It's great to be able to gather again and we've got some great RAND colleagues here and particular our military fellows who get to spend the year here serving with us side by side.
We have -- we have folks here working the full range of challenges you have, sir from diversity inequity, to hypersonics, to COVID response, to artificial intelligence. And given my job, I’d love to work and sit here talking with you about air and space issues all morning, but I'd get in trouble for that.
So let's talk instead a little bit about China, the competition with China and the strength of our U.S. responses embodied in our industrial base. We'll get back to the industrial base in a minute.
But I'd like to think that RAND Research kind of helped galvanize thinking about the rise of Chinese military capabilities. It -- it set the stage, in some ways, for the National Defense Strategy and the ideas that are embodied there, in terms of the long term competition that's been sparked by China's rise.
Strategist who think about that tend to think in terms of cost imposing strategies, ways to force the opponent to spend more than us. That's in one way how we won the Cold War against the Soviet Union.
I think it's fair to say the United States has had trouble with that, the way it's acquired systems and approached modernization. Where do you think the best opportunities sit in our military to flip that dynamic, to turn ourselves onto the other side of the cost imposition curve and place the onus on our competitors, not ourselves?
SEC. ESPER: Sure. Well, it's a good question and I think about it more broadly. I'd say first of all there are a number of strategies we're pursing that I can't tell you about obviously. So there's that set of things. But when you look more broadly, I think as I mentioned in my remarks, we -- first of all we have to -- we have to invest in those game-changing technologies and we've actually identified 11 of them.
I've mentioned some of them like A.I. To me A.I. is very important, particularly A.I. matched with robotics. But there's other things like directed energy technology, we've talked about 5G, microelectronics, other things that we really need to lead on because those technologies, when turned into a capability, I think, will change the character of warfare as we know it.
And whoever gets there first in areas such as A.I., for example, I think will dominate for years to follow after that. That's number one. Number two though, and what I -- what I think is one of the biggest advantages we have that it does impose cost on countries such as Russia and China, is our robust network of alliances and partnerships.
They have nearly none and we have many. And I spend a lot of time working with my colleagues speaking to the Indo-Pacific region to do just that. I -- I bet in the last two weeks I've probably spoken to a dozen or so defense ministers, prime ministers, everywhere from Bangladesh and Sri Lanka to Japan and Indonesia, to continue to build these relationships, to share information and ideas.
We talk about everything from attending our schools to arms sales, and I think that's an incredible advantage we have. So when you -- when China has to think about a potential conflict with the United States, it just can't think about the United States. It has to think about the United States and Japan and Australia and Korea, Singapore, and whoever else -- and I'm not even speaking about our European partners, many of whom have a presence in this theater as well. So I think that's why it's such an important part of the National Defense Strategy, we call it line of effort number two, to continue to build those partnerships and strengthen those alliances so that each country has the capacity and the capability, two different things, to come to the fight and be prepared to -- to help. And we're not looking for a fight to begin with. What we want to do -- do is deter conflict and I think to me, that's the biggest cost imposition we can -- we can do, and it involves a lot more than military, it gets into the other aspects of national power, you know, diplomacy, information, economy.
MODERATOR: Do you see a balance of effort? Do you see something that you'd like to see more -- I know you asked for more resources from our allies, but is there a particular set of capabilities or willingness to undertake activities that you're looking for, for some allies and others?
SEC. ESPER: I think -- to me, what I talked about often privately with them and publicly, I'll state again is, I think the more we can move away from bilateral relationships to multilateral relationships. So there's too much one-on-one, too much U.S.-Australia, too much -- I shouldn't say too much, but we're very good when it comes to the bilats, U.S.-China -- I'm sorry, U.S.-Japan, U.S.-Korea, U.S.-Australia, et cetera. We --we need to start doing more where it's -- where it's multiple countries...
MODERATOR: So as a quad kind of...
SEC. ESPER: The quad, it's something that we're trying to continue pushing to the quad, or as I've -- we've set up in the past where I've done FVEY. We've done FVEY meetings, I did one this summer with -- with those partners. So I think the more we can multilateralize the relationships in this theater, the better. You know, NATO is a great standard to hold up, the collective security and cooperation among allies and partners. So I think the more we can move in that direction, the stronger we are and obviously, the more aligned we are, the more interoperable we are, et cetera.
MODERATOR: Let me -- you -- you identified the reasons to shift our priorities and focus based upon China's modernization. We hear a little bit less about what Russia's modernization is doing to drive us. Jim Dobbins from RAND has characterized China as a peer competitor, Russia is a rogue. Could you give your sense about how these two challenges differ from each other and how they're similar and how you're thinking in the department about balancing among these with our resource challenges we face.
SEC. ESPER: Sure. I mean they -- they are different and similar in the same vein, right, they're revisionist powers and led by authoritarian leaders. You know, we -- we have a much longer history in this business if you will, with regard to Russia and its predecessor the Soviet Union, if you will. But what we tend to do though is -- is look at -- well we consider them both. We look at the broader aspects of their power. Clearly when you look at Russia compared to China, China's vast population, its resources, it's this strength, the dynamism of its economy, we see that as a -- a much greater long-term challenge.
MODERATOR: It’s really different...
SEC. ESPER: Very different than -- than Russia in terms of demographics, everything, when we put it together. So we see Russia s challenge today for sure, and -- but probably over time, becoming less so. In fact, I think it's -- I think I can envision a future where China -- where Russia should be far more into our orbit, the European orbit, the western orbit, if you will, for a number of good reasons that don't necessarily apply to China.
But anyways, when we look at both countries, we don't just look at one, we look at what we call best-of-breed. So as we size ourselves up for facing threats against capabilities, we ask ourselves who has the better tank or the better frigate or the better piece of artillery.
MODERATOR: Long range artillery
SEC. ESPER: Exactly.
We look at those things because in many cases we want to make sure we're prepared to deal with the most challenging threat, number one, but two, we also know between these two countries, Russia and China and between some of their proxies if you will, they tend to sell each other these systems, so we need to be prepared to deal with all that. And we see -- we see some areas where Russia and China are cooperating and others where they're competing, so we're cognizant of all that as well.
MODERATOR: We’ve been up at the rarefied world of high strategy, I'll bring us down for a moment to where -- operational level. You mentioned the joint warfighting concept. And I -- some of our RAND researchers are actually involved with the joint staff on that. It's not the first time we tried an overarching effort like this, but it's coming at a really important time. Can you give us your sense of how that's unfolding and what your expectations are, both for the competition, but also cooperation among our military services.
SEC. ESPER: Sure, well let me just speak first to the importance of a concept which eventually becomes a doctrine, and you can see in history where you've had two countries who became enemies that possessed arguably the same levels of technology, if you will. But they employed them very differently and very successfully, to their great advantage, and that's what we need to do.
You know for me when I -- when I entered West Point in 1982 and graduated in 1986, '86 was the year when the Army rolled out its definitive version of AirLand Battle, which was a game changer in terms of how the Army and the Air Force operated, and used to great effect in the first Gulf War, which was my war. So I saw it play out in real time.
So if you think about the power of a doctrine and what it can do, it's -- it's -- it's very dynamic and very, very powerful. That's why I say it ends up becoming greater than the sum of its parts. So now fast forward what is it, 30, 40 years and the AirLand Battle was two domains, right, air and land. We now operate in five domains air, land, sea, space and cyberspace, and we've seen a lot of good work by the individual services.
Now we've got to figure out how to take that work by the services and pull together a joint warfighting concept that we can all work from, we all understand, we all -- we all know its tenets, much like they were taught me up AirLand Battle, and we know how to apply them on the battlefield where you have, you know, all domain awareness, all domain application.
Because that's the way we'll fight and that's the way -- that's going to be a critical advantage we have over any rival and it just has a multiplying effect when you do it. So I'm very happy with the progress. We -- we -- we lost some time due to COVID, but we're looking for the first version be done by the end of this year.
First ever -- first ever joint warfighting concept for DOD, and we'll -- we'll -- we will iterate that, we will wargame it, we'll experiment, we'll put seminars – I’m sure some of you will be involved in this. But eventually it'll evolve and we'll practice it and it'll eventually become doctrine. And that's going to be -- that's why when I -- when I took over in July of last year and sat down with the team early on, I said, what we need to really implement this and make it roll? And we all agreed easily that we needed this new doctrine. And so the joint staff has been busily working on that with the services.
MODERATOR: I believe it's a Soviet general that's quoted saying the most difficult thing about U.S. doctrine is they don't follow it. So we've got to...
SEC. ESPER: Until we do. Then watch out.
(CROSSTALK)
MODERATOR: Yes. So honestly sir, we sent your staff a set of questions and suggested a subset. They kind of threw you under the bus and said “Make him answer all of them.” So that might be payback or they just might be interested in hearing what you have to say...
SEC. ESPER: They might just be walking home.
MODERATOR: So we'll press on here. From operations to organization, you're sitting at one of the birthplaces of the National Security Space Community. RAND's first report back in 1946, preliminary design for an experimental world circling spaceship. We make every new employee...
SEC. ESPER: How did that turn out?
MODERATOR: It worked out OK. It took about a decade for us to get serious but it’s some prescient work there. Under your leadership, the department has set up the new space force as well as a new combatant command, acquisition-related organizations, and in large part to drive more effective competition in the space domain.
How do you see those changes going and what do you see as the biggest challenges still facing the U.S. as it implements this sort of shift in -- in perception?
SEC. ESPER: I think they're going well, particularly on the conditions where we had, you know, a single commander for both organizations at the same time, fighting against COVID, standing up both. And -- but General Raymond did a great job. Now we have, again, two commanders.
So it's really exciting, it's -- it's an exciting time, it's -- you know, for decades now, we, particularly the United States, have relied on the heavens -- would be the means by which we observe the Earth and we've watched weather patterns and it enabled ATM transactions and everybody's iPhone is connected and you could, you know -- the phones, everything. Our way of life -- not just our military, but our way of life is based on the systems we have up in space.
Well, here come Russia and China and evolved it into a warfighting domain and they're putting weapons in space and now we need to defend that. And so I think what Space Command does is it brings -- and Space Force -- but Space Command, as the warfighting lead, what it will do is bring focus to that to make sure that doesn't -- that space doesn't get lost in the shuffle of the traditional domains of air, land, and sea, and he's -- he has done -- the command has done just that.
So we still got a long road ahead of us, we've got to staff up both organizations, we've got to free up billets, we've got to figure out, you know, what will the -- for Space Force, what the Navy and Air Force -- a Navy, Air Force, and Army give to the Space Force ...
MODERATOR: ... what a career path -- path looks like...
SEC. ESPER: Career paths, uniforms, everything. So -- so it's going to take some time but it is exciting to see them play, to sit at the table when we're talking either about Title 10 issues or warfighting issues, to finally have a voice there that says "hey, let's talk about space in this fight, or in this theater, talk about space."
Same thing is happening when it talks to cyber warfare. I have a cyber commander there who's at the table talking about another domain of warfighting that in the past we just hadn't paid as much attention to and -- and again, it's -- it's -- it's game changing in terms of how we think about warfare.
MODERATOR: To circle back to the joint warfighting concept, the Air Force's approach is to -- to -- their line of effort here to support is joint all-domain command and control. How do you see that all-domain activity actually pulling together in the department right now?
SEC. ESPER: Well you have to have the -- the transport layers and all of the links to be able to share information, data, voice freely, quickly, instantly without flaw, without any latency. And so they are -- they're leading on that and they're doing very good work and -- and the services are signing up to it and so we do need to invest in those things.
Too often, we tend to focus on weapons and weapons systems and there's the -- the non-sexy stuff such as transport layers and, you know, nuclear command -- command, control, and communications, and things like the -- the backbone.
You know, when -- when I spoke about the -- the naval -- naval force structure, logistics is very important, will be very important in a -- in the future of naval warfare. So we're looking at all of those things that don't necessarily capture the headlines but none -- nonetheless are key to success on the battlefield, on the -- in the high seas, in space, you name it.
MODERATOR: Yeah. I realize I made the most boneheaded error you can make as the moderator, which I do not have anything telling me what time it is -- so someone give me a five minute signal out there when I'm supposed to be stopping, OK? Thank you.
Hey, sir, I'll use that admission to turn to another topic we -- we planned to discuss, which is the Defense Industrial Base. And it -- you're -- you're out here in a bit of a heartland of the Defense Industrial Base. It's no secret that we're under attack on -- on -- cyber attack every day. I think we're under attack right now at RAND -- you -- you can say that at any minute of any day -- and the department's sort of walking a fine line on this in ensuring the security integrity of key information in the -- in the industrial base and held by industry partners without creating costs and barriers that sort of drive people away or keep us from innovating around the information we have.
How do you think about that balance that the department's rolling out policies right now and -- and how do you think it's going so far?
SEC. ESPER: Well first of all, you're right. I mean, the public sector, the private sector, all parts of it have been under attack from foreign -- foreign adversaries, if you will, for many, many years now and there are a number of them and obviously the -- the most -- the most aggressive is China. I've -- I've said China's theft of our -- of our IP is probably the greatest in history and we can't allow it to happen. We can't be the R&D arm for the People's Liberation Army.
And so we have to shut that down and it's -- it's hard work but we're making good progress. You know, in January of this year we put out what's called the Cybersecurity Maturity Model Certification, which links up the standards for what we expect that would balance those things you talked about in accordance with NIST standards and then allow us to go back and check and audit whether companies are -- are -- are making those standards or not.
And so I'm -- I'm pleased with that progress but look, it's - it's a daily fight, it's a daily issue that -- you're right, you're -- we -- we probably are under attack right now from any number of players and we've just got to get better at it, we've got to build, we've got to harden, we've got to become more resilient, we've got to be able to share data with you and -- when we know attacks are coming or patches, those types of things, so we can help you protect you, protect us, because the concern is -- you know, it's ...
MODERATOR: The weakest link problem, right?
SEC. ESPER: The weakest link and -- and it tends to be the weakest link is -- just by nature, is when you get further and further out in that supply chain, it's harder for that, you know, mom and pop organization or 50 people in a -- you know, operating out of, you know, somebody's garage to -- to -- to build cybersecurity protections into their systems but yet that may be a crucial component of whatever -- whatever capability they're part and parcel of.
MODERATOR: Yeah. And I'll give a shout out to our information security specialists. We -- they do a fantastic job and we -- we have some serious data that you guys share with us. We feel like we -- we safeguard it pretty well.
Another aspect of that, and this really ties more closely to the naval shipbuilding industrial base, is -- is access to secure materials and vulnerabilities associated with over-reliance on global sources of supply. In particular, things like rare Earth -- Earth minerals and things like that.
Do you have any comment about what the department's doing right now to sort of address those sort of over-reliance issues?
SEC. ESPER: Sure. You know, we've been watching these issues for some time now. It's been accentuated in the wake of COVID, where we -- we found vulnerabilities not just in the areas we knew but areas we -- we didn't know.
And so our -- our acquisition people, I give them credit. They've resurrected a -- a -- an industrial business council, they meet on a frequent basis. I've had multiple conversations with leadership of -- of the major defense suppliers, the mid-tier, the lower-tier to talk about these and many other issues.
So we -- we know there are technologies such as rare Earths that we're making progress on to make sure we have domestic supply because it's critical to certain things, whether it's, you know, guidance systems, you name it, but there are other things we found too -- microelectronics. We want to make sure that we are not vulnerable to off-shore microelectronics supplies.
So we're looking at those and other issues and making sure that it -- they're not just -- it's a -- it's a -- a good supply but it's not counterfeited, it's not manipulated, those things. We want to make sure we know who our partners are and in -- during times of duress, like we've been in with COVID, that they continue to maintain that supply chain.
I can't underestimate how important the defense industrial base is and it's -- and I say that not to narrow one, when you think of the defense companies. It's very broad, it's people -- people don't appreciate how much of our base is services and then how much we rely on innovation from those start up companies or those small -- I'm going to see many of them in the next couple of days, these smaller firms who are really doing cutting edge work.
So we've got to -- we take a very broad, holistic view of the defense industrial base to make sure that we're -- we're helping all of them out and this is critical to our future.
MODERATOR: Let me touch on that because even before COVID, second and third tier suppliers in that -- in that -- in that complex web out there were facing some real financial pressures and there was some concerns about loss of key competencies.
In the aerospace segment, in particular, one I know a little bit more about, many of the defense suppliers also rely heavily on the commercial aerospace industry to -- to make up a part of their meaningful part of their business and that's been facing a lot of headwinds, as well.
How do you see the health of this part of the -- the industry playing out over the next few months and years and what's the department doing to sort of strengthen or bolster it?
SEC. ESPER: It's the one that we're very concerned about is the health of the defense industrial base, particularly in the -- as we've gone through COVID and now coming out of COVID. I mean we've -- first of all, you need a robust defense industrial base, and you need to have more than one supplier because you need competition. Competition gives you better product at lower price.
And so I want to make sure we expand the number of companies working in any number of areas and we keep talking ship building, but that's an area where we're going to need to grow capacity if we're going to do what we need to do, and we're going to need new players to enter the market and we're going to need current players to do more.
So what we've done over the -- to keep the defense industrial base, particularly the second, third, fourth tiers, keep them alive during COVID was a number of things. First for example cash flow, by the way great work by Undersecretary Ellen Lord, but what she was able to do is increase cash payments. She was able to increase the percentage of progress payments made and at the same time tell companies we'll push back, we'll defer repayments.
So that really helped their cash flow. And when you can do that, that means they can help keep workers paid, they can keep them at the job rather than having them walk away. Secondly, we're able to do stuff like accelerate contracts to get them nailed down to kind of show a future. We're able to execute options or even draw greater -- use an existing contract to buy down more supply, more items.
So we've been trying to be very creative to keep them alive and keep them healthy, and so it's something we watch very closely. And I think the sooner we get back to normal or a new normal, the better.
MODERATOR: Yes, thank you.
SEC. ESPER: But I am concerned -- and particularly concerned about the workers who, in many cases, you know, are working side by side welding a ship or riveting a fighting vehicle. We've got to protect their health too. And we've -- I've talked a lot to CEOs about how they do that in this era as well.
MODERATOR: Let me circle and put two things together, which was allies and industrial base. It was a little trickier question in some ways. If we -- if we're -- if we want to emphasize onshore sources of supply particularly in the military industrial base, but we have allies and partners who have fairly robust capabilities and sometime share with us on programs.
How are you thinking about leveraging those capabilities and is there an approach that's balancing those two competing tensions there?
SEC. ESPER: Well, you can't onshore everything and you don't need to onshore everything. You just need to make an honest assessment of what your key vulnerable points are, and I mentioned microelectronics as one of them. Then beyond that, you got to ask yourself well, who can I really rely on when the times get tough. And we know who our best partners and allies are.
You have to nurture that relationship and then you have to look at other ways by which you're not just playing offense with your own systems but how do you play defense. And I'll give you an example with -- back to China if you will as we're all very concerned about Huawei and what it means if it gets into our networks and then how Huawei's access could undermine our security, operational secure -- operational security, our intelligence sharing, and things like that.
So we've now seen many countries such as Australia, U.K., reject Huawei. At the same time, we're talking between us as how do we pop up some western company, you know, that’s one of our treaty partners, to get private sector competition to Huawei that we can all get behind and provide a solution, provide an alternative, particularly to other countries who are on the fence.
MODERATOR: That’s -- it's -- I'm going to go off script a little bit and explore a little bit of that 5G question because there's spectrum issues there, there's competition questions and there's the degree to which we want to insert those technologies into our military capabilities right now. I know that the spectrum issue's been a really challenging one for the department right now. I don't know if you care to comment on that today or not?
SEC. ESPER: Well, I would just say we recognize -- I recognize that getting to 5G is important for the United States, economically, commercially, in our way of life. It's also equally important for the military.
So we all have an interest in getting the 5G, so we've been working very closely with our counterparts across the interagency to come up with 5G solutions that would open up mid-band spectrum, if you will, for 5G without affecting our ability to ensure the readiness of the military, to conduct our training or to guarantee the security of the United States.
So we are committed to that because it's just important to the future. I tend to take a broader view than just the military's needs. I see the broader approach because look, at the end of the day, you can't have a great military unless you have a great economy, and that's the basis of our strength, if you will, in that relationship.
So we've got to continue to make sure that thrives, particularly when you look at a growing China and what it's trying to do. And we're going to have to compete -- we are competing economically with them right now.
MODERATOR: They're a fundamentally different competitor than we faced.
SEC. ESPER: Than we faced in the Soviet Union or what we face with Russia.
MODERATOR: Well, I hope folks have a sense that this was just a very thin wedge of the set of issues that a secretary of defense has to do, a very tiny piece of it. Nonetheless, it requires almost encyclopedic knowledge on that, so I want to thank you sir.
I'd happily stay here all afternoon, but we know you have a busy day in front of you and your staff as you're concerned about getting you onto that, so it's been a great pleasure. Did you have any more closing thoughts that you wanted to give us or if not, we can move on.
SEC. ESPER: I'd just like to wrap it up by saying first of all thank you for all the work you've done for decades now in support of our U.S. military and all of our service members. So it's been game changing in many ways and it means that we're not only successful on the battlefield or on the high seas wherever we're fighting, but we bring more of those young soldiers, sailors, airmen, Marines, coast guardsmen home. So thank you for what you do. We appreciate the partnership.
There are great things happening at DOD, we made a much -- a lot of great progress over the past year with regard to implementing the NDS. Much more to come. I was able to talk about some of that today and specifically our naval future forces. So a lot of good is happening and we look forward to partnering with you and all your outside of the box thinking to enable us. So thank you.
MODERATOR: Well, thank you sir. Okay, so if this was the real world, we would shake hands and gather together for a little while, but it's not the real world yet again, unfortunately. So I would ask folks in the audience if they could just stay in place for a few minutes so we can let the secretary and his party head out. They're going onto their next meetings, that would be a big help. And in the meantime, please join me in thanking him for his outstanding...
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