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Remarks at the Aerospace and Defense Finance Conference

As Delivered by Deputy Secretary Of Defense William J. Lynn, III, Credit Suisse Building, New York, NY, Wednesday, December 02, 2009

            The President announced a new commitment last night of forces in Afghanistan.  As he noted, the situation there is serious.  And as he said, the new terrorist attacks against our homeland are even being planned there now, including a recent plot that was disrupted by American authorities.

 

            Those facts have compelled us to act.  Our overarching goal remains the same -- to disrupt, dismantle and defeat al Qaeda in Afghanistan and Pakistan and to prevent it from threatening America and our allies.

 

            To meet that goal, we will pursue several objectives.  We must deny al Qaeda a safe haven.  We must reverse the Taliban's momentum, especially in the population centers of Afghanistan.  And we must strengthen Afghanistan's government and security forces.

 

            As the President said, our military commitment is not open-ended.  We are surging our forces so that we can continue to transfer responsibility to a capable Afghan partner.  Our goal is to establish the conditions to begin a drawdown of combat forces in the summer of 2011.

 

            Now, I want to say a brief word about the contributions of this industry, the aerospace and defense industry, in the Afghan theater.  As you know, our battlefield success in Afghanistan is, to a great degree, underwritten by aviation and space platforms.  In a landlocked nation with few workable roads, helicopter lift and cargo aircraft make possible almost everything we do, from dumps of food, fuel and ammunition, to maneuver support.

 

            It's hard to imagine a more difficult place to support combat operations.  Yet even in Afghanistan's remote corners, combat air patrols and search and rescue teams watch over our troops day and night.  So do intelligence, surveillance and reconnaissance platforms, both manned and unmanned.

 

            Without question, our offense against the Taliban and al Qaeda depend on air power.  Enhanced intelligence surveillance and reconnaissance deserve special mention in this fight.  Because of a significant investment in technology and in personnel, commanders receive actionable intelligence in minutes rather than hours.  And unmanned aircraft now combine surveillance with attack capabilities.

 

            Many of these systems did not even exist when the fight in Afghanistan began.  Thanks to the leadership of Secretary Gates, we are surging these technologies into theater and making a major investment in their development.  This is one area where lessons learned in combat are driving immediate institutional change and new budget priorities.

 

            We now have an Air Force that this year, for the first time, graduated more pilots of unmanned aerial vehicles than fighters and bombers.  But this change has not come easily, as all institutional changes are difficult.

 

            As Secretary Gates is fond of reminding us, Cavalry officers were initially opposed to military aircraft because they scared the horses.

 

            The Air Force chief of staff, General Norton Schwartz, will tell you more about the Air Force contributions to the Afghan fight, tomorrow.  And Vice Admiral McCullough and Lieutenant General Shackelford will also speak about aerospace acquisition in the services.

 

            But I want to take a step back, and I want to share with you how I see the nature of war changing and how we plan to ensure a strong defense.  And I will talk, at least in general terms, about the QDR.

 

            We are, at DOD, in the middle of a major undertaking.  It's one of those events that occur once every four years.  It's not as exotic as the World Cup.  It's not as well-known as the Olympics.  It's not as consequential as a presidential election.  But in the defense world, the Quadrennial Defense Review is the main event. 

 

            The thirst for insights into the QDR can be insatiable.  Observers parse every Pentagon statement as if it were going back to Cold War Kremlinology.  And people look for any sign of decision, like smoke from the Vatican chimney.

 

            We are still hard at work on the QDR.  Those of you who are looking for white smoke today will probably have to wait a little bit longer.  But I do want to share with you where we are, where we're heading, the trends and patterns we see, and how we are adapting to them.

 

            Let me start with how this QDR is different, how the QDR now under way is unlike those that came before.  First, the political context of this QDR is unique in DOD history.  For the first time in history, a President has kept the Secretary of Defense from his predecessor of a different party.  I'm pretty sure the President wasn't thinking about the QDR when he asked Secretary Gates to stay on, but it has enormous benefits as it relates to the QDR.

 

            In contrast, when I arrived at the Pentagon in the Clinton administration in 1993, we had an entirely new team lead by Secretary Aspin.  And he described our first budget as a, quote, "treading-water budget."  And he was right.  Few decisions were made in that budget.

 

            But in contrast in the fiscal 2010 budget that we submitted last spring, we have done just the opposite.  We made several significant decisions, and we set the stage for the QDR.

 

            This all flowed from the decision to keep Secretary Gates at the helm.  He has a very concrete sense of our strategic direction that's been distilled from three years in the Pentagon most recently, and in a career spent in the national security echelons of Washington.

 

            As President Obama has made clear, it's time to break out of our conventional thinking that has failed to keep pace with unconventional threats.  So we made big changes in our fiscal '10 budget.  The fiscal '10 budget has given us a running start into the QDR, which will inform still more of what we do ahead.

 

            The second way that this QDR is different is that it's the first truly wartime QDR.  This is not meant as a criticism of the last QDR in 2005 and '06.  That was a second-term QDR and it explicitly was not intended to have the agenda set by the conflicts in Afghanistan and Iraq.  But in contrast, the QDR now under way takes a very different approach.

 

            Secretary Gates has made clear that the conflicts that we're in should be at the forefront of our agenda.  We need to focus more on them and to reshape our priorities accordingly.

 

            He wants to make sure we're not giving up capabilities needed now for those needed for some unknown future conflict.  He wants to make sure the Pentagon is truly on a war footing. 

 

            The third way this QDR is different is that, to an unprecedented degree, this QDR is linked to other reviews, both within the Department of Defense and beyond it.  In particular, the State Department and USAID have undertaken their own QDDR, that is, the Quadrennial Diplomacy and Development Review, which takes a hard look at the role of civilian instruments in our foreign policy.

 

            How we employ all dimensions of our national power to avoid military action or to ensure its success is a vital question—a question with both policy and institutional ramifications, and a question that was at the center of President Obama's address last night.

           

            By working in concert, these reviews in the State and the Defense Department will provide the new administration with integrated tools and approaches that are both powerful and coordinated.

 

            So this is a landmark QDR, and it comes at a time when the nature of war is changing in ways that we must adapt to.  The conflicts in Iraq and Afghanistan, different in significant ways than other conflicts in our history, reflect the changing nature of war.

 

            The QDR is seeking to identify these changes and the challenges they present to our security.  What I'd like to do in the next few minutes is share our perspective on four of those changes and the implications they have for how we construct the program going forward.

 

            The first and most prominent change in the global strategic environment is the change in the nature of lethality.  Previously, when you looked at the range of threats we faced, the more capable the potential adversary, the higher the level of lethality they possessed.  Nation states had nuclear weapons and robust conventional forces, terrorists and insurgents did not.

 

            But in the world we face now, that is no longer the case.  Terrorist organizations and rogue states seek weapons of mass destruction.  Insurgents are armed with improvised explosive devices that can penetrate even the most sophisticated armored vehicles.  We even see criminals who have world-class cyber capabilities. 

 

Lethality no longer tracks closely along the threat spectrum.  We now live in a world in which lethality at the low end of the spectrum can be equal to that at the high end of the spectrum.

 

            This leads towards hybrid threats -- low-end actors who have access to high-end capabilities.  The end result is that conventional and unconventional threats are increasingly blurred.

 

            To defeat this new range of threats, we need our military forces to be agile.  They need the capability to respond to both high-end and to low-end threats.  They need what Secretary Gates has called ”a portfolio of military capabilities with maximum possible versatility across the widest spectrum of conflict.”  This, of course, includes the ability to fight irregular conflicts. 

 

            And so in this QDR, we are working to institutionalize our capability for irregular warfare.  This includes our capabilities to track and neutralize WMDs, a mission that is equally important for the defense of our homeland.

 

            In this QDR, we are also thinking much more about the military support to civil authorities and working closely with the Department of Homeland Security to make sure that we're fully prepared for anything that might come at us.

 

            Now, the second change in the global security environment is the increasing duration of conflicts.  As we look out at potential scenarios, the possible duration of a conflict has become as important a driver of our planning as the intensity of that conflict.

 

            Since the Cold War, most war planning, as you know, has historically revolved around fighting two major conflicts nearly simultaneously.  There has been different iterations of that over the past 15 years, but that's been at the core of things.  And what we really anticipated was that, while a conflict would be very intense, it would be relatively short.  Desert Storm was the classic example of this. 

 

            Most other scenarios we thought of we thought could be lesser cases, manageable within the force structure that we bought for these intense periods of conflict.  But this construct does not fit our current reality.

 

            We are already fighting two wars, and it has not been the intensity of the initial combat phase that has proved most challenging.  Rather, after eight years in Afghanistan and Iraq, we're finding that the duration of these conflicts places tremendous stress on our military.  Those wars have now lasted longer than the U.S. participation in World War I and World War II combined.

 

            Sending forces back for second, third and fourth deployments comes at a high cost.  It imposes a tremendous burden on our war fighters, on their families, and even on the nation.

 

            The longer duration of these conflicts has implications for how we do our defense planning.  The QDR will be the first to move beyond the two-war framework.  It will plan for a range of plausible conflicts.  This includes potential high-end conflicts as well as major overlapping campaigns in distant theaters, but it also must take account of engagements that may be of lower intensity but longer duration.

 

            Given these pressures, we are already moving to reduce the stress on our force.  To address the broader set of missions our forces are taking on, we have halted reductions in the Navy and in the Air Force, and we have increased the size of the Army and the Marine Corps ahead of schedule.  We've also added a temporary increase to the Army.

 

            The QDR, though, needs to move beyond these steps and think differently about how we organize the Army.  What used to be more of a garrison force must continue to develop expeditionary capabilities. 

 

            The third change in the global security environment is that the practice of war has moved more and more towards asymmetric threats.  Battlegrounds used to be a meeting of like-on-like forces -- Cavalry on Cavalry, armor on armor.  In the Cold War, nuclear versus nuclear.  But this is less and less the case.

           

            U.S. conventional dominance in almost all instances leads potential adversaries to employ asymmetric tactics.  Non-state actors use irregular warfare -- terrorism, insurgencies, IEDs -- to bog our forces down. 

           

            Some countries with ambitions in their regions are also investing in asymmetric weapons that deny or could deny our access to the global commons.  These weapons, which include missiles, cyber, and anti-satellite technologies, can be employed in anti-access tactics that block our use of the air, the sea, and cyberspace.

 

            All of these asymmetric tactics are intended to negate our conventional superiority and, in the end, to frustrate our ability to project military power. 

 

            Because asymmetric threats have joined the force-on-force contingencies we've prepared for in the past, we are making a special effort to broaden our military capabilities.  In particular, we need to institutionalize irregular warfare capabilities.  This includes significantly upgrading our Special Operations forces, helicopter lift, and intelligence surveillance and reconnaissance capabilities.

 

            We are also strengthening our ability to offer security assistance to weak and fragile states with the goal of preventing insurgencies and terrorist movements from arising in the first place.  This last mission requires close cooperation between DOD and many other government agencies.

 

            As I said earlier, through the QDR and the QDDR, the Defense and State Departments are working together to coordinate diplomacy, development aid, and stability operations across the government.  We must be able to intervene effectively in conflicts at any stage, no matter what the tactics our enemies use against us.

 

            The fourth and the final trend in the global security environment is one I have spoken about often: the cyber threat.  There is no exaggerating our nation's dependence on information networks.  This is especially true of the Department of Defense.  Command and control of our forces, intelligence and logistics, the weapons and technologies we field, they all depend on computer systems and networks.

 

            Although I.T. enables gains in our military capabilities, it produces a double-edged sword.  As is understood by any company that's suffered a cyber intrusion or any individual who's been a victim of identity theft, our reliance on information technology has costs as well as benefits.

 

            The Defense Department makes a tempting target.  It has 15,000 networks.  We have 7 million computer devices.  And each of those is under threat.  This is not an emerging threat.  It's not a future threat.  The cyber threat is here today.

           

            More than 100 foreign intelligence organizations are trying to hack into U.S. systems.  Foreign governments are developing offensive cyber capabilities.  Some already have the capacity to disrupt elements of the U.S. information infrastructure.

 

            And the cyber threat does not end with states.  Organized criminal groups and individual hackers are building global networks of compromised computers.  They rent these botnets to the highest bidder, in essence becoming 21st century cyber mercenaries.  And al Qaeda and others have expressed a desire to unleash coordinated cyber attacks on the United States.

 

            So our defense networks are under threat each and every day.  They are probed thousands of times a day.  They are scanned millions of times a day.  And the frequency and the sophistication of these attempts and these intrusions are increasing exponentially.

 

            This is why the Defense Department has formally recognized cyberspace for what it is—a domain, similar to land, sea, air and space, a domain that we depend upon and that we need to protect.  It's the only one of the domains that is man made, but it's equally critical as the others.

 

            Just as our economy and our national security depend upon freedom of navigation of the seas, they also require freedom of movement online.  Our efforts to meet the cyber threat fall into three areas -- culture, capabilities and command.

 

            At DOD, we are trying to build a culture of responsibility toward the use of information technology.  It takes 90,000 personnel to administer, monitor and defend our 15,000 networks.  But most are not formally certified in information assurance.  So we're expanding our training and certification programs to build a truly world-class cyber workforce.

 

            Mounting an effective cyber defense also takes new capabilities.  We subject weapon systems to extensive evaluations, we test the skills of our troops on training ranges, but we have no such equivalent in cyber security.

 

            DARPA, which helped create the Internet decades ago, is leading our effort to build a national cyber range, in effect, a model of the Internet.  This will allow us to engage in real-world simulations so we can develop, test, and field new capabilities for cyber security.

           

            The third area where we're taking action is command.  Secretary Gates approved a new Cyber Command as a sub-unified command of the Strategic Command.  It will lead day-to-day defense and protection of all DOD networks.  It will unify all of DOD's cyber operations under a single leader.

 

            But I want to be very clear about one thing.  Cyber Command is not the militarization of cyberspace.  It will be responsible for DOD's networks, the dot-mil world.  Responsibility for protecting federal-civilian networks, dot-gov, and for assisting the private sector and protecting the dot-com networks stays with the Department of Homeland Security, and that's the way it should be.

 

            The progress we are now making on these initiatives in culture, capabilities and command is significant, but we still have a long way to go.  We need to examine how concepts of deterrence apply to the cyber domain.  Deterrence relies on identifying the attackers.  This is not a problem with missiles.  They come effectively with a return address.  (Laughter.)

 

            But in the cyber world, it's often very difficult to identify the actual origin of attack.  And we need to understand how cyber attacks affect the legal framework for conflict.  When is a cyber attack an act of war?  What kind of response to an attack is appropriate and justified?  What role does sovereignty play when computer networks cross multiple borders?

 

            These issues are made even more complex by the fact that the cyber domain is largely owned by private entities.  So in the cyber domain, we face enormous foundational challenges.  We must not only develop a coherent military doctrine, but also answer these complex legal questions.

 

            DOD is working hard on the doctrinal issues, but the legal questions require collaboration with other parts of the government and the private sector, which is now well under way.

 

            Our ability to adapt to the cyber threat and to respond to the other security developments I have outlined depends on something else of great interest to many of you, an acquisition system that is as flexible and effective as the force it supports.  This is especially important in a time of constrained resources.

 

            A modern, effective acquisition system should deliver savings and speed—savings to the taxpayer, speed for the war fighters.

 

            As we all know, today's acquisition system often does neither.  Despite repeated attempts at reform by smart, dedicated people, core problems persist.  In fact, more than 130 commissions and studies have examined the acquisition process.  These past attempts to reform the acquisition process make us cautious about the prospects for meaningful change.

 

            But we have some advantages our predecessors did not.  For the first time in decades, the political and economic stars are aligned for a fundamental overhaul of the way the Pentagon does business.  We have a President who is firmly and publicly behind our efforts.  We have a Congress that has passed landmark acquisition reform legislation.  And we have a department that is determined to work harder and closer with our industry partners to achieve acquisition reform.

 

            An overhaul has already begun.  Our efforts to improve acquisition fall into several areas.  We are dramatically increasing our acquisition workforce, hiring 9,000 new employees and converting 11,000 contractors to federal workers.  This will strengthen our in-house expertise and cost estimation, systems engineering, and program management.

 

            We are bringing more discipline to the front end of the process, the requirements process, so that we better understand and can balance performance needs with schedule and cost limitations.

 

            We are reducing the risk of cost overruns by relying more on independent cost estimates, as Congress and the President have directed.

 

            We have also strengthened the execution phase with a greater use of fixed-price contracts, contracts that share the risk more equally between government and contractor.

 

            Finally, acquisition reform in the end requires the discipline to cancel failing or misdirected programs, programs that either aren't working or aren't needed.

 

            Doing this is not easy, but we have a Secretary who is committed to making those hard choices.  Programs in fiscal 2010 that we retired or reshaped included the Army's future combat system, the transformational satellite program and the VH-71 presidential helicopter.  So we've made an important start on major reform.  And we're going to keep making tough decisions every budget, every year.

 

            And before closing, let me speak briefly about the industrial base.  I realize that the reforms that I just described, as well as the broader budget climate, have raised questions.  I look forward to discussing those during the Q&A.

 

            But let me address two concerns directly.  First, I know that some have argued that DOD takes our industrial base for granted.  Nothing could be further from the truth.  Our military depends on our industrial base, and we fully understand that.  We see an industrial policy that is sustainable and effective, stemming from a top-line DOD budget that, last cycle, the President and the Congress modestly increased, even in these fiscally difficult times.

 

            And although our commitment to institutionalize irregular warfare is strong, we have not neglected conventional force modernization.  Roughly speaking, our budget is about 10 percent for irregular warfare, 50 percent for traditional conflicts, and 40 percent for capabilities that span the two.

 

            Second, the second question that's been raised is the question of the QDR.  Let me state at the outset, the QDR is focused on the impact of strategy shifts on the industrial base.  Our industrial policy office is raising issues sector by sector, program by program.  We are striving to understand what skills need to be preserved, and we are asking how to balance the advantages of a global marketplace against the risks inherent in having crucial inputs come from overseas.

 

            Having the strongest defense, industrial, and technology base in the world is not a birthright.  It requires government and industry to be good stewards of the knowledge and skills resident in our defense workforce.  Our inclusion of industry dynamics in the scope of the QDR is an important recognition of this reality.

 

            The relationship between our military and the defense aerospace sector is now more than a century old.  Indeed, we meet on a remarkable anniversary for military aviation.  It was 100 years ago this summer that the Army Signal Corps purchased its first airplane, the Wright Military Flyer. 

 

            The story behind the acquisition of the Wright Military Flyer is worth telling.  It turns out that the first collaboration between an aviation company and the military is marked by familiar dynamics.  The Army Signal Corps was skeptical of Orville and Wilbur Wright's planes, of what two brothers from Ohio, running a start-up business, said their flying machine could achieve.

 

            So the Army Signal Corps did what we do, it advertised for bids.  The design and performance specifications were such that the Wrights were the only viable bidder.  The prize, if they could meet those terms, was $25,000.  But the procurement story doesn't end there.

 

            Even in 1909, acquisition officials understood the importance of incentives.  Hoping to raise the Military Flyer's top speed, they wrote a 10 percent bonus into the bid for every mile an hour the Flyer achieved above 40 miles per hour.

 

            Then as now, there was significant Congressional oversight.  Nearly the whole Senate turned out to watch the demonstration flight, held where the Pentagon stands today.  In front of this august crowd, the Wright brothers delivered.  Orville and Wilbur met each requirement set forth in Signal Corps specification number 486.

 

            Their 30 horsepower engine even powered the Military Flyer to a brisk 42.5 miles per hour, netting the brothers 5,000 (dollars) in incentive fees, a princely sum in 1909.

 

            The Army went on to field the first aviation squadron, beginning a transformation of military affairs that is still ongoing.

 

            What I find instructive about this story is how modern the tensions in it are.  The give and take between the cautious buyer and the enthusiastic seller—between those reluctant to risk innovation and those daring enough to try.  Ultimately the acquisition of the Wright military flyer is a story of our own time, how commercial activity, when properly channeled with the appropriate incentives, can spur extraordinary technical innovation and, ultimately, battlefield success.

 

            For 100 years, a partnership between the U.S. military and the defense industry has secured our dominance of the skies and of space beyond.  We are here today to ensure this partnership endures, even as the nature of war evolves.

 

            Thank you very much.

 

            (Applause.)

 

           

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