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FY2004 Defense Budget Testimony (As Prepared)
Remarks as Prepared for Delivery by Delivery by Secretary of Defense Donald H. Rumsfeld, , For the House Armed Services Committee, Wednesday, February 05, 2003

INTRODUCTION

Mr. Chairman and Members of the Committee, thank you for this opportunity to update the Committee on our progress in transforming the Department of Defense for the 21st century and to discuss the President's budget for FY 2004-2009.

President Bush vowed that, on taking office, he would order "an immediate, comprehensive review of our military-the structure of its forces, the state of its strategy, the priorities of its procurement." He warned of new dangers-of "barbarism emboldened by technology," the proliferation of "weapons of mass destruction. car bombers and plutonium merchants .cyber terrorists. and unbalanced dictators." To deal with these threats, he said, he would give his team at the Department of Defense "a broad mandate to challenge the status quo and envision a new architecture of American defense for decades to come."

The goal, he said, would be "to move beyond marginal improvements-to replace existing programs with new technologies and strategies." Doing this, he said, "will require spending more-and spending more wisely."

Mr. Chairman, for the past two years, we have pursued the goals he set out. We have:

  • Fashioned a new defense strategy.
  • Replaced the decade-old two Major Theater War approach with a new approach to sizing our forces that allows us to provide for homeland defense, undertake a major regional conflict and win decisively, including occupying a country and changing the regime if necessary, simultaneously swiftly defeat another aggressor in another theater, and in addition have the capability of conducting a number of lesser contingencies.
  • Developed a new approach to balancing risks that takes into account not just the risks to immediate war plans, but also the risks to people and transformation.
  • Reorganized the Department to better focus our space activities.
  • Adopted a new Unified Command Plan, which establishes the new Northern Command to better defend the homeland; a Joint Forces Command that focuses on transformation; and a new Strategic Command responsible for early warning of, and defense against, missile attack and the conduct of long-range attacks.
  • Expanded the mission of the Special Operations Command, so that it can not only support missions directed by the regional combatant commanders, but also plan and execute its own missions in the global war on terror, supported by other combatant commands.
  • Initiated work with Allies to develop a new NATO command structure and begin work on a new NATO Response Force.
  • Took steps to attract and retain talent in our Armed Forces, with targeted pay raises and quality of life improvements.
  • Made a number of tough program decisions, including replacement of the Crusader, B-1 modernization, and the Navy "area-wide" restructuring.
  • Instituted "realistic budgeting," giving Congress more realistic estimates of what programs can be expected to cost, rather than coming back for annual non-emergency supplementals.
  • Reorganized and revitalized the missile defense research, development and testing program, freed from the constraints of the ABM Treaty.
  • Completed the Nuclear Posture Review, with a new approach to deterrence that will enhance our security, while permitting historic deep reductions in offensive nuclear weapons.
  • Moved from a "threat-based" to a "capabilities-based" approach to defense planning, focusing not only on who might threaten us, or where, or when-and more on how we might be threatened, and what portfolio of capabilities we will need to deter and defend against those new threats.

These are important accomplishments. They represent some of the most significant changes in the strategy and structure of our Armed Forces in at least a generation.

But as important as these changes are, they must be only the beginning. Because transforming is about more than developing new strategies and structures-it is about changing culture, about encouraging new ways of thinking, so we can develop new ways of fighting and provide our Armed Forces the tools they need to defend our way of life in the 21st century.

We are working to promote a culture in the Defense Department that rewards unconventional thinking-a climate where people have freedom and flexibility to take risks and try new things. We are working to instill a more entrepreneurial approach to developing military capabilities, one that encourages people to behave less like bureaucrats; one that does not wait for threats to emerge and be "validated," but rather anticipates them before they emerge-and develops and deploys new capabilities quickly, to dissuade and deter those threats.

Most agree that to win the global war on terror, our Armed Forces need to be flexible, light and agile-so they can respond quickly to sudden changes. Well, the same is true of the men and women who support them in the Department of Defense. They also need to be flexible, light and agile-so they can move money, shift people, and design and buy new weapons quickly, and respond to sudden changes in our security environment.

Today, we do not have that kind of agility. In an age when terrorists move information at the speed of an email, money at the speed of a wire transfer, and people at the speed of a commercial jetliner, the Defense Department is bogged down in the micromanagement and bureaucratic processes of the industrial age -- not the information age. Some of our difficulties are self-imposed, to be sure. Some are the result of law and regulation. Together they have created a culture that too often stifles innovation. Consider just a few of the obstacles we face each day:

  • Think of this FY 2004 budget -- It was developed by the Department of Defense from March 2002 to December 2002. OMB considered it from December 2002 to February 2003 when the President presented it to Congress. Congress will be considering it from February 2003 to probably October or November of 2003 -- and, as in the past, making 10-20% changes in what he proposed. DoD will then try to live with what's left during the period October 2003 to September 2004. That means that at any given time during the fiscal year of that budget, it will be between from 14 months to 30 months old while we are trying to implement what Congress gives us. And all this in a world that is changing monthly before our eyes.
  • The Department of Defense spends an average of $42 million an hour-yet we are not allowed to move $15 million from one account to another without getting permission from 4-6 different Congressional Committees, a process that can take several months to complete.
  • Today, we estimate we have some 320,000 uniformed people doing non-military jobs, yet we are calling up reserves to fight the global war on terror.
  • We must prepare and submit 26,000 pages of justification and over 800 required reports to Congress each year-many of marginal value and most probably never read-consuming hundreds of thousands of man hours.
  • Despite 128 acquisition reform studies, we have a system in the Defense Department that since 1975 has doubled the time it takes to produce a new weapons system-in an era when technology moves so fast that new technologies often become obsolete in months and years, not decades.
  • Since September 11th, our force protection costs have gone up by some $5 billion annually. But because we are required to keep some 20% plus more facilities capacity than are needed to support the force, we are effectively wasting something like $1 billion every year on force protection alone for bases and facilities we do not need. We need to follow through with the base closure process that Congress authorized last year without changes.
  • We have to contend with growing micromanagement of the Defense budget, making it increasingly difficult to balance risks. Consider these facts:
    • The last time I was Secretary of Defense, the 1977 defense authorization bill was 16-pages long-in the year 2001 it had grown to 534 pages.
    • In 1977, Congress made a total of 46 changes to Army and Defense Agency research, development, testing and evaluation (RDT&E) programs; by 2001 that number had grown to 450 individual changes. For every change Congress makes in a program, there is a cost elsewhere in the budget-every plus-up in one place means we must reduce funds for something else, be it housing, or spare parts or transformation-making it exceedingly difficult to balance risks.
  • We spend millions of taxpayer dollars training top-notch officers and senior enlisted, giving them experience-and then we shove them out the door in their 40s and early 50s, when they are at the top of their game -- and we will be paying 60% of their base pay and providing them with comprehensive healthcare for the rest of their lives. The loss in talent and experience to the Department and the country is sizable.
  • We bounce officers around from assignment to assignment every 16, 18, 22 months, so many end up skipping across the tops of the waves so fast they don't have time to learn from their own mistakes.
  • We rely on almost 1,800 antiquated legacy information systems to run the Defense finance and accounting systems-ensuring we cannot produce timely and accurate management information.
  • We have the equivalent of an Army heavy division's worth of auditors, inspectors and investigators.
  • We have thousands of people focused on developing and justifying budgets, and a fraction of those focused on ensuring effective implementation and desired outcomes.

The point is this: we are fighting the first wars of the 21st century with a Defense Department that was fashioned to meet the challenges of the mid-20th century. We have an industrial age organization, yet we are living in an information age world, where new threats emerge suddenly, often without warning, to surprise us. We cannot afford not to change and rapidly, if we hope to live in that world.

Some of the fault for this lies with the executive branch; some lies with the legislative branch and some is simply due to the fast pace of events. But the American people do not care about blame-for their sake we need to get to work fixing the problems.

Last year, Congress and the Administration did just that, when we faced up to the fact that our government was not organized to deal with the new threats to the American homeland. You enacted historic legislation to create a new Department of Homeland Security and rearrange our government to be better prepared for potential attacks against our homes and schools and places of work.

We must now address the Department of Defense. We are already working with a number of you to fashion legislation to bring the Defense Department into the 21st century-to transform how it moves money, manages people, and buys weapons. We are looking at, among other things, proposals to:

  • Establish a National Security Personnel System, that will give the Department of Defense greater flexibility in how it handles and manages its civilian personnel-so we can attract and retain and improve the performance of our 700,000-plus civilian work force. Today it is managed outside the Department. The unintentional effect has been that the Department uses military personnel and contractors rather than civilians, since they can be more easily managed.
  • A one-time reorganization of the Department, with "fast track" approval procedures.
  • Move a number of the non-military functions that have been thrust on DoD over the years to other Departments that can provide similar or better services, so DoD can focus on the tasks where it must excel: defending our country in a dangerous new century.
  • Transfer some 1,800 personnel who conduct background investigations to the Office of Personnel Management. Since the President has no authority to transfer functions across the Executive Branch, we will urge that he be given that authority.
  • Establish more flexible rules for the flow of money through the Department, giving us the ability to move larger sums between programs and priorities, so we can respond quickly to urgent needs.
  • Streamline acquisition rules and procedures, to give the Department greater speed and flexibility in the development and deployment of new capabilities.
  • Establish a two-year budget cycle-so that the hundreds who invest time and energy to rebuild major programs every year, can be freed up and not be required to do so on an annual basis.
  • Eliminate some of the onerous regulations that make it impossible or unattractive for many small enterprises to do business with the Department.
  • Expand authority for competitive outsourcing, so we can get military personnel out of non-military tasks and back into the field. There is no reason, for example, that the Defense Department should be in the business of making eyeglasses, when the private sector makes them better, faster and cheaper. But we are. That needs to change.
  • Clarify environmental statutes which restrict access to, and sustainment of, training and test ranges essential for the readiness of our troops and the effectiveness of our weapons systems in the global war on terror.
  • Expand our flexibility to extend tour lengths for military leaders, and fully credit them for joint duty assignments.
  • Establish more flexible military retirement rules, so that those who want to serve longer have the option of doing so-so we can retain talent instead of automatically pushing it out the door.
  • Establish sunset procedures for the hundreds of required reports so that we can discontinue those that have outlived their usefulness. We simply must find better ways to exchange data between DoD and Congress, so that you get the information you need to assess performance and we do not have to employ armies of personnel and consultants preparing information you no longer need.

Let there be no doubt, some of the obstacles we face today are self-imposed. Where we have authority to fix those problems, we are working hard to do so. For example, we are modernizing our financial management structures, to replace some 1,800 information systems so we can produce timely and accurate management information. We are reducing staffing layers to increase speed and efficiency. We are modernizing our acquisition structures to reduce the length of time it takes to field new systems and drive innovation. We are working to push joint operational concepts throughout the Department, so we train and prepare for war the way we will fight it-jointly. And we are taking steps to better measure and track performance.

We are doing all these things, and more. But to get the kind of agility and flexibility that are required in the 21st century security environment, we must have legislative relief. We must work together-Congress and the Administration-to transform not only the U.S. Armed Forces, but the Defense Department that serves them and prepares them for battle. The lives of the service men and women in the field-and of our friends and families here at home-depend on our ability to do so.

2004 Defense Budget

At the same time, we are taking steps to implement the changes agreed upon in the defense review. Last year's budget-the 2003 request-was finalized just as that review process was nearing completion. It included a top-line increase, and made important, and long-delayed investments in readiness, people, maintenance, and replacement of aging systems and facilities. And we were able to begin funding some transforming initiatives as the new defense strategy came into focus.

But it is really this year's budget-the 2004 request before you today-that is the first to fully reflect the new defense strategies and policies.

We submit this budget to you at a time of war. Our experience in the global war on terror has validated the strategic decisions that were made.

When our nation was attacked, there was a great deal of pressure to put off transformation-people cautioned, you can't fight the global war on terrorism and simultaneously transform this institution. The opposite is the case. The global war on terror has made transforming an even more urgent priority. Our experience on September 11th made clear, our adversaries are transforming the ways in which they will threaten our people. We cannot stand still.

The reality is that while the global war on terror is an impetus for change, it also complicates our task. Balancing risk between near- and long-term challenges is difficult even in peacetime. But today, we must accomplish three difficult challenges at once:

(1) successfully fight the global war on terror;

(2) prepare for near-term threats by making long delayed

investments in readiness, people, and modernization; and

(3) prepare for the future, by transforming for the 21st century.

The 2004 budget request before you today is designed to help us do all three.

Our defense review identified six goals that drive our transformation efforts:

  • First, we must be able to defend the U.S. homeland and bases of operation overseas;
  • Second, we must be able to project and sustain forces in distant theaters;
  • Third, we must be able to deny enemies sanctuary;
  • Fourth, we must improve our space capabilities and maintain unhindered access to space;
  • Fifth, we must harness our advantages in information technology to link up different kinds of U.S. forces, so they can fight jointly; and
  • Sixth, we must be able to protect U.S. information networks from attack-and to disable the information networks of our adversaries.

The President's 2004 budget requests funds for investments that will support each of these. For example:

  • For programs to help defend the U.S. homeland and bases of operation overseas-such as missile defense-we are requesting $7.9 billion in the 2004 budget, and $55 billion over the Future Years Defense Program (FYDP).
  • For programs to project and sustain forces in distant theaters-such as new unmanned underwater vehicle program and the Future Combat Systems-we are requesting $8 billion in 2004, and $96 billion over the FYDP.
  • For programs to deny enemies sanctuary-such as unmanned combat aerial vehicles, and the conversion of SSBN to SSGN submarines-we are requesting $5.2 billion in 2004 and $49 billion over the FYDP.
  • For programs to enhance U.S. space capabilities-such as Space Control Systems-we are requesting $300 million in 2004 and $5 billion over the FYDP.
  • For programs to harness our advantages in information technology-such as laser satellite communications, Joint Tactical Radio, and the Deployable Joint Command and Control System-we are requesting $2.7 billion in 2004 and $28 billion over the FYDP.
  • For programs to protect U.S. information networks and attack those of our adversaries-such as the Air and Space Operations Center-we are requesting $200 million in 2004 and $6 billion over the FYDP.

Over the next six years, we have proposed a 30% increase in procurement funding and a 65% increase in funding for research, development, testing and evaluation (RDT&E) above the 2002 baseline budget-a total investment of around $150 billion annually.

In addition to these increases, RDT&E spending will rise from 36% to 42% of the overall investment budget. This shift reflects a decision to accelerate the development of needed next generation systems, and by accepting some near-term risk.

Among the more important transformational investments we propose is our request for funds to establish a new Joint National Training Capability. In the 21st century, we will fight wars jointly. Yet our forces still too often train and prepare for war as individual services. That needs to change. To ensure that U.S. forces train like they fight and fight like they train, we have budgeted $1.8 billion over the next six years to fund range improvements and permit more of both live and virtual joint training-an annual investment of $300 million.

The total investment in transforming military capabilities in the 2004 request is $24.3 billion, and about $240 billion over the FYDP.

But even as we continue to transform for the future, we must also recognize that new and unexpected dangers are waiting for us over the horizon. To prepare for the threats we will face later in this decade, the 2004 budget requests increased investments in a number of critical areas: readiness, quality of life improvements for the men and women in uniform, and increased investments to make certain existing capabilities are properly maintained and replenished.

Over the next six years, the President has requested a 15% increase for Military Personnel accounts, above the 2002 baseline budget, and an increase in funding for family housing by 10% over the same period. The 2004 budget includes $1 billion for targeted military pay raises, ranging from 2% to 6.25%. Out of pocket expenses for those living in private housing drop from 7.5% to 3.5% in 2004, and are on target for total elimination by 2005.

Over the next six years, we have requested a 20% increase for Operation and Maintenance accounts above the 2002 baseline budget. We have added $40 billion for readiness of all the services and $6 billion for facilities sustainment over the same period. These investments should stabilize funding for training, spares and OPTEMPO, and put a stop to the past practice of raiding the investment accounts to pay for the immediate operation and maintenance needs, so we stop robbing the future to pay today's urgent bills.

This 2004 budget does not include funds for operations in the global war on terror. Last year, we requested, but Congress did not provide, the $10 billion we knew we would need for the first few months of the global war on terror. Because of that, every month since October 2002 -- October, November, December in 2002 and January and now February in 2003-we have had to borrow from other programs to pay for the costs of the war-robbing Peter to pay Paul. And that does not include the costs of preparations for a possible contingency in Iraq. This pattern is fundamentally harmful to our ability to manage the Department. It causes waste and harmful management practices which consume management time that we cannot afford in a time of war and which are unfair to the taxpayers.

In our 2004 request:

  • We increased the shipbuilding budget by $2.7 billion making good on our hope last year that we could increase shipbuilding from five to seven ships.
  • We increased the Special Operations budget by $1.5 billion, to pay for equipment lost in the global war on terror and an additional 1,890 personnel.
  • We increased military and civilian pay by $3.7 billion.
  • We increased missile defense by $1.5 billion, including increased funds for research and development of promising new technologies, and to deploy a small number of interceptors beginning in 2004.

The President has asked Congress for a total of $379.9 billion for fiscal year 2004-a $15.3 billion increase over last year's budget.

That is a large amount of the taxpayer's hard-earned money. To put it in context, when I was in Congress in the 1960s, the United States had the first $100 billion budget for the entire U.S. government. Nonetheless, for 2004, the DoD budget will amount to roughly 3.4% of GDP -- still historically low. In the mid-1980s, for example, the U.S. was dedicating around 6% of GDP to defense.

Nonetheless, it is a significant investment. But compared with the costs in lives and treasure of another attack like the one we experienced on September 11th-or a nuclear, chemical or biological attack that would be vastly worse-less than 3 ½ cents on the dollar is a prudent investment in security and stability.

But even that increase, as large as it is, only gets us part of the way. Our challenge is to do three difficult things at once:

  • Win the global war on terror;
  • Prepare for the threats we will face later this decade; and
  • Continue transforming for the threats we will face in 2010 and beyond.

Any one of those challenges is difficult-and expensive. Taking on all three, as we must, required us to make tough choices between competing demands. Which meant that, inevitably, some desirable capabilities did not get funded.

So let me state it straight out:

 

  • Despite the significant increase in shipbuilding, we did not get the shipbuilding rate up to the desired steady state of 10 ships per year. Because of planned retirements of other ships, we will drop below a 300-ship fleet during the course of the FYDP. The Navy is in the process of transforming, and has two studies underway for amphibious ships and for submarines-we have increased shipbuilding in 2004, but we do not want to lock ourselves into a shipbuilding program now until we know precisely which ships we will want to build in the out-years.
  • We have not been able to modernize our tactical air forces fast enough to reduce the average age of our aircraft fleet.
  • We have had to delay completing replenishment of all inadequate family housing by 2007-though we got close!
  • We have not fully resolved our so-called "high-demand/low density" problems-systems like JSTARS, which, because they have been chronically under funded in the past, will still be in short supply in this budget.
  • We opted not to modernize a number of legacy programs-taking on some near-term risks to fund transforming capabilities we will need in this fast moving world.
  • We did not achieve the level of growth in the Science and Technology (S&T) accounts we had hoped for. Our request is $10.2 billion, or 2.69% of the 2004 budget. That is below the goal of 3%.
  • We have delayed investments to completely fix the recapitalization rate for DoD infrastructure. We are reviewing out worldwide base structure, and starting the basic steps to prepare for the 2005 BRAC. We want to think carefully about how best to match our base structure and force structure. We still intend to get the rate down from 148 years to 67 years by 2008, and we expect to accelerate facilities investments in 2006 after we have made the needed decisions with respect to our base structure at home and abroad.

That's the bad news. But there is the good news as well: in making difficult choices between competing priorities, we made better choices this year because we followed the new approach to balancing risks that we developed in last year's defense review-an approach that takes into account not just the risks in operations and contingency plans, but also the risks to people, modernization and the future-risks that, in the past, had been crowded out by more immediate pressing demands. The result is a more balanced approach and a more coherent program.

While we are requesting increased funds, the services have stepped up to the plate and will be canceling, slowing or restructuring a number of programs-to invest the savings in transforming capabilities. For example:

  • The Army came up with savings of some $22 billion over the six-year FYDP, by terminating 24 systems, including Crusader, the Bradley A3 and Abrams upgrades and reducing or restructuring another 24 including Medium Tactical Vehicles. The Army used these savings to help pay for new transformational capabilities, such as the Future Combat Systems.
  • The Navy reallocated nearly $39 billion over the FYDP, by retiring 26 ships and 259 aircraft, and merging the Navy & Marine air forces. They invested these savings in new ship designs and aircraft.
  • The Air Force shifted funds and changed its business practices to account for nearly $21 billion over the FYDP. It will retire 114 fighter and 115 mobility/tanker aircraft. The savings will be invested in readiness, people, modernization and new system starts and cutting edge systems like unmanned aerial vehicles (UAVs) and unmanned combat aerial vehicles (UCAVs).

In all, by retiring or restructuring less urgent programs, we have achieved savings of some $80 billion over the FYDP-money that will be reinvested by the services in capabilities necessary for the 21st century.

Finding those savings is important, both in terms of freeing up resources for more urgent priorities, and because it is respectful of the taxpayers' hard-earned money. We feel a deep obligation to not waste the taxpayers' dollars. We need to show the taxpayers that we are willing to stop doing things that we know we don't need to be doing, and take that money and put it into investments we need.

Some critics may argue we cut too deeply. We did cancel a number of programs that were troubled, to be sure, but also others that were not troubled-but which simply did not fit with our new defense strategy. In a world of unlimited resources, they would have been nice to have. But in a world where needs outstrip available funds, we cannot do everything. And something has to give.

Still others argue from the opposite direction-saying that we did not cut deeply enough. They ask: what happened to your hit list? The answer is: we never had a "hit list." What we had was a new defense strategy, and we reviewed all the programs in the pipeline to see if they fit into that defense strategy and the new security environment we face.

Some were eliminated. In other cases, it made more sense to scale them back or change them. For example, the Comanche helicopter program was born in the 1980s, and the Army planned to buy around 1,200 of them. But in the interim, the Army decided to change its structure. In the way the Army plans to fight in the decades ahead, the role of the helicopter changes-it will be used more for reconnaissance and light attack. And for that mission 1,200 helicopters weren't needed-so we brought the number down to about 650.

In still other areas, we set up competition for future missions. For example, in tactical aircraft, by 2010 the F-22 will be nearing the end of its planned production run, the Joint Strike Fighter (JSF) will be coming on line, a number of UCAVs will be ready, and hypersonic systems could be within reach. As a result, future Presidents will have rich menu of choices for strike operations we don't now have.

We are transforming the way we develop new systems. The old way was to develop a picture of the perfect system, and then build the system to meet that vision of perfection, however long it took or cost. The result was that, as technology advanced, and with it dreams of what a perfect system could do, capabilities were taking longer and longer to develop and the cost of systems increased again and again -- Time is money.

Our approach is to start with the basics, simpler items, and roll out early models faster-and then add capabilities to the basic system as they become available. This is what the private sector does-companies bring a new car or aircraft on line, for example, and then update it over a period of years with new designs and technologies. We intend to do the same.

Take, for example, our approach to ballistic missile defense. Instead of taking a decade or more to develop someone's vision of a "perfect" shield, we have instead decided to develop and put in place a rudimentary system by 2004-one which should make us somewhat safer than we are now-and then build on that foundation with increasingly effective capabilities as the technologies mature.

We intend to apply this "spiral development" approach to a number of systems, restructured programs and new starts alike over the course of the FYDP. The result should be that new capabilities will be available faster, so we can better respond to fast moving adversaries and newly emerging threats.

As a result of all these strategic investments and decisions, we can now see the effects of transforming begin to unfold. Consider just some of the changes that are taking place:

  • Today, the missile defense research, development and testing program has been revitalized and we are on track for limited land/sea deployment in 2004-5.
  • Today, the Space Based Radar, which will help provide near-persistent 24/7/365 coverage of the globe, is scheduled to be ready in 2012
  • In this budget, we believe SBIRS-High is properly funded.
  • Today, we are converting 4 Trident SSBN subs into conventional SSGNs, capable of delivering special forces and cruise missiles to denied areas.
  • Today, we are proposing to build the CVN-21 aircraft carrier in 2007, which will include many new capabilities that were previously scheduled to be introduced only in 2011.
  • Today, instead of 1 UCAV program in development, the X-45, which was designed for a limited mission: suppression of enemy air defense, we have set up competition among a number of programs that will produce UCAVs able to conduct a broad range of missions.
  • Today, we are revitalizing the B-1 fleet by reducing its size and using savings to modernize remaining aircraft with precision weapons, self-protection systems, and reliability upgrades-and thanks to these efforts, I am told the B-1 now has the highest mission capable rates in the history of the program.
  • Today, in place of the Crusader, the Army is building a new family of precision artillery-including precisions munitions and Non-Line-of-Sight Cannon for the Future Combat Systems.
  • Today, we have seen targeted pay-raises and other reforms help retain mid-career officers and NCOs, so that fewer of them leave the service while still in their prime, so the country can continue to benefit from their talent and experience.

These are positive changes that will ensure that future Administrations will have the capabilities they need to defend the country, as well as a menu of choices which they can then select from to shape the direction of the Department a decade from now, as the 21st century security environment continues to change and evolve.

CONCLUSION

Finally, I believe that the transparency of the process we have used to develop this budget has been unprecedented. For several months now, we have been providing detailed briefings to those interested in defense here on Capitol Hill, so that Congress is not simply being presented with the President's budget today, but has been kept in the loop as decisions were being made. Our goal was to ensure that Members and staff have had every opportunity to better understand the thinking that lies behind these proposals. I am told that the extent of consultation from the Defense Department to the Congress this year has been unprecedented.

I hope you will take this as evidence of the fact that we are serious about our commitment to transform not only our Armed Forces, but to transform DoD's relationship with Congress as well. Whether each Member will agree with each of the individual decisions and recommendations that have been made in this budget, the fact is that it has been developed in an unprecedented spirit of openness and cooperation.

We hope that this spirit of openness and cooperation can continue as Congress deliberates this year both the President's budget and the legislation we are now discussing with you and will be sending to transform the way the Defense Department operates. We must work together to bring DoD out of the industrial age, and help get it arranged for the fast-paced security environment of the 21st century.

I close by saying that transformation is not an event-it is a process. There is no point at which the Defense Department will move from being "untransformed" to "transformed." Our goal is to set in motion a process of continuing transformation, and a culture that will keep the United States several steps ahead of any potential adversaries.

To do that we need not only resources, but equally, we need the freedom to use them with speed and agility, so we can respond quickly to the new threats we will face as this century unfolds.

Thank you Mr. Chairman.