United States Department of Defense

Dr. John P. White, Deputy Secretary of Defense

American Defense Preparedness Association

Washington, D.C.

Dec. 19, 1996

There couldn't be a better time to get together to talk about our mutual goal: defense preparedness. We're in a period where the only constant is change ... change as far as the eye can see. We must prepare our defense for a tomorrow that we cannot predict today. And we must begin preparing now.

I don't need to tell you -- the defense industry -- about change. A story in the current issue of Newsweek about Norm Augustine and Lockheed-Martin is illustrative. Referring to all the consolidations and downsizing, it portrayed Norm as the lone gorilla of the defense industry, with everybody else being chimpanzees and marmosets. Well, even before Newsweek arrived in my office, this story was out of date. Over the weekend a new gorilla was born when Boeing merged with McDonnell Douglas. This demonstrates two things about the defense business. First, the news gets old fast. And second, change can make a monkey out of you.

The Defense Department also faces the challenge of a changing world, and the stakes are staggering. We face a strategic environment no one could have predicted even a few years ago, and it will be different in the future. Nations old and new are grasping for democracy, prosperity and security. Regional dynamics are changing and power is shifting. Old tensions are flaring up anew. All of which pose potential and sometimes unforseeable threats to our global interests. This world of change is also defined by high rates of technological change in a global marketplace, and shifting national priorities at home.

Meanwhile, each day there are immediate national security crises to deal with -- from Korea to Bosnia, from Haiti to Iraq. The very number of issues that we need to deal with at any one time can be a major challenge. In focusing on the immediate crises, we risk forgetting about the long-term big picture. But we cannot afford to do that. Because in the big picture, the Defense Department needs to change.

The change I am talking about is institutional change. I don't think the Defense Department as a whole is changing and adapting to the new world quickly enough. The military forces have changed dramatically to stay ahead of the threats. These changes are reflected in their superb operational performance. In general, it seems to me that the Department as a whole that supports these operations has not changed and adapted. More is needed. We also face greater pressure to be more efficient, to do more with less. There is a greater emphasis on making sure that we are delivering more for the taxpayer dollar than we did in the past. We are already feeling the pressure from the commitment to a balanced budget by 2002. I welcome this pressure -- it is absolutely appropriate.

The question is, where are we going, and how are we going to get there? To me, the answer to the first question -- where -- ironically can be found by looking back on a 10-year-old law: the Goldwater-Nichols Act. We are determined to find the answer to the second question -- how -- in the Quadrennial Defense Review, the QDR. Today, I want to talk about why Goldwater-Nichols and the QDR are going to give us these answers, because the answers certainly will mean more change for you, the defense industry.

This year is the 10th anniversary of the Goldwater-Nichols Act. This milestone did not get a lot of headlines, but the impact of Goldwater-Nichols on the United States military has been quietly revolutionary. There's just no question that because of Goldwater-Nichols, we are stronger. We are better at joint operations. The chain of command is more clear. The roles of the CINCs and the services are clearly enunciated. The President and the Secretary are better served by having the Chairman as their principal military advisor. The quality of the Joint Staff is utterly remarkable. And there is close, effective cooperation between OSD and the Joint Staff. We have made great strides from where we were in the 70s, and Goldwater-Nichols is the principal reason. As a result, the Defense Department is stronger and more versatile, our troops are better used, better trained and better led, and thus our nation is more secure.

I have observed the impact of Goldwater-Nichols for many years, from different angles. A couple of years ago, I studied it from my perspective as Chairman of the Commission on Roles and Missions, the CORM. Indeed, the CORM's central goal improving DOD's operational effectiveness was the same as that of Goldwater-Nichols. The CORM's central conclusion was that, today ... the emphasis must be on molding DOD into a cohesive set of institutions that work toward a common purpose -- effective unified military operations. Everything else DOD does from developing doctrine to acquiring new weapons must support that effort.

Goldwater-Nichols has taken us far down that road. Take joint military operations, a major goal of Goldwater-Nichols. Ten years ago these were considered a major challenge. Today they are the norm whenever our military is called upon to uphold and defend American interests, whether it is in Panama, the Arabian Gulf, Haiti, Rwanda, Bosnia or an evacuation such as Liberia.

The authors of Goldwater-Nichols were more visionary than they realized, because in terms of joint operations it forced us to start doing in the 80s what the strategic environment of the 90s and beyond absolutely demands. Today, the range of potential security crises we could face means that joint operations have to be the norm. Indeed, for almost any conflict we can imagine, the key to victory will be the synchronized application of military force from land, sea and air, along with coalition forces. Thanks to Goldwater-Nichols, no one does this any better than the US military.

But the CORM concluded Goldwater-Nichols has not reached its full potential. Nothing I have seen as Deputy Secretary in the last year-and-a-half has dissuaded me from this view. Indeed, quite the opposite. We need to do much more.

The true vision of Goldwater-Nichols will not be fulfilled until we have effective cooperation not just in operations, but in the way we prepare for and support those operations. This means extending the philosophy that underlies Goldwater-Nichols to virtually everything the Defense Department does to support the warfighter, from doctrine and training, to requirements and acquisition, to logistics and support, and even to personnel management. It means turning vision statements into realistic plans of action under real fiscal constraint.

How are we going to do these things in a systematic, coherent and yes -- joint -- manner? How are we going to truly fulfill the promise of Goldwater-Nichols? The vehicle is the Quadrennial Defense Review. Most of you have heard of the QDR, and know it is a major review of US defense policy that will determine what force our nation will have and how it will fight in the 21st Century.

The QDR will be a fundamental taking stock, examining every aspect of our defense program: what we do, why we do it, how we do it, and how we pay for it. It will not be a budget review, but it will guide future budget reviews. The QDR will take a fresh look at our defense needs, and a fresh look at how best to meet those needs. But it will also look at major, fundamental change in the way the Department operates, with the goal of making it more flexible, more responsive, more cooperative and more efficient. All of these changes are necessary if we are to be successful in a dynamically changing world.

Why are we doing this now? The world continues to evolve from the one envisioned in the Bottom Up Review in 1993. Indeed, you could look at the BUR as the very first QDR. We will build on our experience under the BUR, with the policies and forces we built from that. But we now have four more years of operating in the post-Cold War world, and a lot of new challenges and opportunities. In addition, the start of the new Administration is an appropriate time to conduct a critical re- assessment of our defenses. And in a world that is constantly changing and throwing at us new security challenges by the week, let alone by the year, it is much more important to reexamine our assumptions, programs and operations on a regular basis and more often than we used to.

What are the principles for conducting the QDR? The bottom line is that everything will be on the table. We are not holding sacrosanct any particular end strength, any particular platform size, any particular platform structure. We are going to look at everything, raise impertinent questions and challenge fundamental assumptions. In addition to that, we are going to stress innovative approaches to what it is we're doing. We're going to stress joint approaches to what it is we're doing. And we are going to stress providing the Department with choices. Concrete choices. Choices that have clearly defined policy and programmatic effects; choices that honestly spell out the relative pros and cons of each course of action.

Having clear choices is particularly critical today, given the current fiscal environment for defense. Arthur Miller once defined heaven as a place where you don't have to make choices. Our budget choices will not be made in heaven. Everywhere you turn there is either a rock or a hard place. We need to be brutally realistic about the resources available to defense. Absent a marked deterioration in world events -- which is not on our wish list -- I doubt that the nation will commit more resources to national defense. Indeed, obligations to domestic priorities, tax cuts and deficit reduction, or even an economic downturn, may impose topline lower than the stable $245 billion in our plans.

We also need to be realistic about our internal budget challenges. There are inherent tensions in resource allocation among force readiness, quality of life and modernization. They are the natural tensions between paying for today and investing in tomorrow. We must resolve those tensions in ways that meet the nation's requirements both now and in the future.

Let me say a few words about how the QDR will approach each of these issues:

The first issue is the readiness and quality of life of our forces. Over the past four years, we've concentrated on keeping the readiness of our forces at peak levels. We've seen this effort pay off whenever and wherever we've sent our forces. But readiness has more than one dimension. There is a tension between the readiness to perform the core competencies of fighting the nation's wars, versus the readiness to meet smaller contingencies and presence missions. Again, it is the natural tension between today and tomorrow. The QDR must seek innovative ways to resolve this tension.

In terms of the quality of life of our forces, again, we have concentrated on improvements in this area over the past four years, with the direct support of President Clinton. Our number- one military asset has been the quality of our people. We've attracted terrific people and invested heavily in their training and development. We want to retain these quality forces, and ensure we can recruit more. We also need to maintain our core of quality civilians in DoD. So a part of the QDR will be a review of our quality of life strategies, particularly the military and civilian personnel and compensation systems.

Beyond these day-to-day issues, the QDR will focus heavily on developing the right choices for our military strategy and force structure. Our forces must be versatile and flexible enough to shape the evolving security environment and to respond effectively to a wide range of contingencies. We must vigorously pursue innovative approaches to being effective on the battlefield. And we need to identify a force structure that is large and capable enough to meet the full spectrum of challenges, yet lean enough to allow us to have a robust modernization effort. Our approach to sizing forces will focus on fielding joint capabilities. This means refining long-term joint and service visions, as well as conducting practical experiments to test those visions. And let me repeat: no force structure, platform count or endstrength is sacrosanct.

This leads me to modernization. We must reexamine our programs to ensure that they are appropriate in both size and configuration. A key element of this review should be the incorporation of advances in information technology, sensors and precision weapons. We need to translate the revolution in military affairs from briefing slides into concrete programs and operational concepts.

Real progress is being made. For example, the Army not only has a Force 21 vision for a digitized battlefield of the future, it is conducting practical experiments at Fort Hood using the 4th Infantry Division, designated the Experimental Force. In one of the experiments, they've inserted a system of digital subsystems into the 4th ID's weapon systems -- tanks, artillery, helicopters -- forming a system of systems, a huge integrated network of powerful computers and high speed communications. This system of systems will give commanders a constant, complete, 3-D picture of the battlefield.

Beyond pursuing ways to enhance readiness, quality of life and modernization, the QDR is the perfect vehicle to vastly improve the way the Defense Department operates as an institution. I said we need to be more flexible, more responsive, more cooperative and more efficient -- all focused on serving the warfighter faster, better and cheaper. To achieve these attributes, I believe the Defense Department needs to do what many of your companies have done -- undertake a revolution in business practices.

What does a revolution in business practices mean for the Defense Department? To begin with, it means some of the changes we've already made in three areas:

First, we have undertaken defense management reforms, starting with reducing our work force and facilities. On the facilities side, we'll save about $50 billion between the 91 and 97 fiscal years by cutting the number of finance and data centers, printing operations, commissaries and other support facilities in half, from 1270 to 660.

Second, we are reexamining our infrastructure, beginning with base-closing and realignment. BRAC is really paying off. Between the four rounds of BRAC between 88 and 95, we will save $13.5 billion by the year 2001, and nearly $6 billion a year after that.

Third and probably most significant over the long term, we've gotten defense acquisition reform off to a great start. The Secretary and I were talking about acquisition reform not long ago, and he said, You know, this is the third time I've tried this. He said, It's the first time it's really worked, and in fact it's worked better than I thought it would three years ago when I began pushing it. The Secretary likes to tell the story about the JDAMs program, which turns dumb bombs into smart bombs. That program alone, one of our acquisition reform pilot programs, will save us about $3 billion. The pilot programs prove that using commercial buying practices and commercial technology can yield significant savings. The challenge now is to apply what we've learned in our pilot programs to all programs, large and small.

We are counting on acquisition reform to help us modernize the force. The President's budget calls for a 40 percent increase in real terms in the modernization budget over five years. Much of that increase will have to come from internal savings. We're committed to acquisition reform to saving billions of dollars. Acquisition reform will also break down the barriers to the commercial marketplace, allowing us to adopt and adapt the advanced technology out there for military purposes.

There are other areas where we can revolutionize the Defense Department's business practices. One of the most immediate and promising is outsourcing. By outsourcing, I mean we should contract out entire DoD non-core support functions to commercial companies that specialize in these functions, so they can do them more efficiently and innovatively than we can, in a free market. The goal is to tap the power of free enterprise and competition in the commercial market. Acquisition reform taps the market for the things we buy. Outsourcing taps the market for the things we do: our activities and operations. It will enable us to focus our energies and resources more on our core competency, which is fighting and winning in combat. It will improve quality, responsiveness and agility of the Department. It will reduce costs, helping us to save money. Indeed, the military departments are now implementing the first set of outsourcing initiatives, and these alone project savings of about $5 billion by fiscal 2003, and about $2.5 billion every year after that. The incentive for the services to do more outsourcing is that they get to keep these savings.

Another area where we can revolutionize our business practices is in logistics and general support. This summer the Defense Science Board compared DOD logistics support with the commercial sector and found it wanting in almost all cases. For example, distribution of in-stock items took nearly a month for DOD -- most commercial companies do it in one to three days.

Our goal is to achieve a truly joint logistics system. To achieve this goal, we formed a Joint Staff working group to study ways of integrating the logistics systems of all the services. And we are looking at ways to use the tools of the information revolution to speed integration. For example, we are currently developing a Global Command Support System which will become part of the Global Command and Control System. This will produce a super system that will eventually permit users to get instantaneous logistical information -- everything from spare parts to personnel -- from any place on the globe.

In the area of general support, we are committed to revolutionizing how we do business by incorporating modern business practices and the latest information technology. It involves enhancing the services' core capabilities, expanding joint support and the in-theater role of the CINCs, and relying more heavily on the private sector, not just in outsourcing, but in other forms of cooperation.

The bottom line in all these areas the QDR will cover -- our defense needs, how we'll meet those needs, and how we'll meet them more efficiently and effectively -- is the warfighter. More explicitly, the basic question the QDR will tackle is, How can we truly fulfill the underlying goals of the Goldwater- Nichols Act, and employ and serve the warfighter better to protect our national security?

Today, our warfighters are the best-trained, best-equipped, most ready and effective in the world. I see this first-hand whenever and wherever I meet with our troops. And when I meet them, I see first-hand the reason why the Department must change. It is for that individual soldier, sailor, airman and Marine out there who has volunteered to put his or her life on the line every day to serve our national security interests. They're counting on us for the technology, resources and support to do their jobs. They are the ones we must keep in mind as we prepare our defense to face the changes coming in the future. Thank you.