It is a pleasure to be here this evening at my alma mater, and I am pleased to have an opportunity to talk about my own public administration challenges. As the chief operating officer of the Department of Defense, the largest organization in the world, I eat, drink and sleep public administration.
What makes me lose sleep is the fact that many people in Washington have strong and divergent opinions about how to administer America's national security. Some say the Cold War is over and ask, "Why are we spending so much on defense?" Others say the world is a dangerous place and ask, "Why aren't we spending more on defense?"
I say they're both partly right -- the Cold War is over; we do need a smaller defense. And the world is a dangerous place; we still need a strong defense. Bringing those seemingly divergent mandates together represent one of the most challenging public administration jobs in the country. It is particularly challenging because the world is presently a moving target.
This is an unusual time in history. Many institutions are undergoing major changes. The global economy has altered the way business is done throughout the world. The collapse of communism has opened new opportunities for the spread of democracy and the growth of market-oriented economies. Politically, people around the world are seeking a greater degree of freedom and self-determination. Many governments are being asked to do things they aren't used to doing, like holding free elections and opening their economies to foreign investment.
Our own nation, of course, has not been immune to these forces of change. We, too, are re-examining our institutions -- even the size and role of government. Administration and congressional efforts to reduce the size of the federal government and increase the flexibility and authority of state and local government are part of the political trend toward smaller, more effective government, greater fiscal discipline and balanced budgets.
From a national security perspective, new realities present challenges that are different and sometimes more complicated than those to which we became accustomed through decades of bipolar confrontation. Fourteen new nations emerged from the former Soviet Union, and all are undergoing difficult economic and political transitions. In Eastern Europe, former Warsaw Pact nations are making great strides toward democracy and integration with the rest of Europe, but they still face huge economic and political challenges. Their successful integration is one of our national priorities, as we seek an undivided and democratic Europe.
In Asia, China maintains an authoritative regime. Yet a strong, prosperous and stable China is important to us and our allies in Asia. On the other hand, the faltering regime in North Korea remains a threat to peace and stability in the Asia Pacific region.
Ethnic and civil unrest continues in Africa. The most recent example is the civil war in Liberia that is causing enormous destruction and dislocation of people. Thanks to America's ability to project power, we evacuated almost 2,200 Americans and citizens from 68 other nations. You probably take such a flawless rescue effort for granted. You shouldn't. It took thousands of highly trained personnel deploying from Germany, Italy and the United States to accomplish this dangerous but important mission.
And of course, militant, rogue nations such as Libya, Iraq and Iran are a destabilizing influence in a region of the world that is critical to our own security and that of our allies.
We are threatened with the proliferation of weapons of mass destruction -- from both rogue nations and nonstate entities seeking to obtain them. Terrorism and drug trafficking are everyday concerns that recognize no national boundaries and make no distinction between combatants and noncombatants.
This world and the threats it presents to America are different from what we are used to. So we need innovative approaches to defending our country, our citizens and our allies.
The Clinton administration's defense program is built on innovation. It can be summed up in three words: prevent, deter, defeat. That is, we strive to prevent threats from emerging; deter threats that do emerge; and if deterrence fails, we must be able to defeat any adversary who threatens our nation, allies or interests.
These concepts are not new. But today, we have placed a new emphasis on preventive defense, because there are now opportunities to prevent the threat of conflict by promoting stability, security and democracy around the world. Preventive defense requires a relatively small investment of defense dollars. But it requires a large investment in terms of energy, time and innovation. These investments stand to pay large dividends.
What does preventive defense mean in real terms? It means reinvigorating historic alliances to deal with new security challenges; forging cooperative relations with former adversaries; reaching out to newly independent nations that are striving for democracy, stability and prosperity; and promoting openness, trust and cooperation among nations in troubled regions. It means engaging, peacefully, with nations all over the world.
Earlier this week, USA Today published a chart listing the most traveled secretaries of defense. The current secretary, William Perry, came in first, with 60 nations in two years. In all 60 countries, he met with defense leaders, military officials, members of parliaments and other groups, promoting democratic military reforms and security relations with the U.S. and their neighbors.
That's preventive defense in action, and it has paid off by enhancing U.S. security all over the world. For example:
This week we renewed and reinvigorated our alliance with Japan to deal with the challenges we all face in Asia and the Pacific. Ironically, the tragic crime last September when three U.S. servicemen raped an Okinawan school girl refocused both nations. We had let the alliance drift.
In the post-Soviet Union era, many on both sides of the Pacific felt the alliance had lost its purpose. The tragedy last September, however, provoked a re-examination, and both countries were reminded of how much our prosperity and well-being depends on the security fostered by the alliance. Both countries were reminded that it is the U.S. forward presence that gives the alliance its reality and muscle. President Clinton's visit this week has set the stage for another 50 years of security cooperation with Japan and stability in East Asia.
The importance of that alliance was driven home a few weeks ago when China began military maneuvers in the Taiwan Strait. The aircraft carrier Independence and its battle group, home-ported in Japan, was one of two carriers moved to the area to demonstrate that the United States had interests at stake, that the tensions that developed between China and Taiwan concerned us. That kind of presence is critical to preventing an international crisis from developing into a full-blown conflict. Our actions received the endorsement, many of them private, from countries throughout the region.
We have developed a close working relationship with Russia and other former Soviet states. Through this relationship, we are helping the nuclear successor states, namely Russia, Ukraine, Kazakstan and Belarus, dismantle and safeguard their former Soviet nuclear arsenals. Already they have destroyed 4,000 warheads and 700 strategic bombers and launchers. We are literally turning missile fields into wheat fields and turning missile factories into commercial enterprises. Thanks to these efforts, Ukraine, Kazakstan and Belarus will be nuclear-free this year, and Russia is keeping pace with our own nuclear arsenal reductions under the START I treaty.
President Clinton is attending a multilateral summit in Moscow this weekend to continue the cooperative effort to strengthen the safety and security of nuclear installations and materials in Russia and around the world.
Meanwhile, U.S. troops are holding joint peacekeeping exercises with Russian troops, including one last fall in Kansas. They give our militaries an opportunity to build U.S.-Russian security ties from the ground up. This cooperative relationship is paying off in Bosnia, where U.S. and Russian troops are helping to build peace.
More importantly, Russia's role in Bosnia is helping to build trust between Russia and NATO. Gen. [Leontiy] Shevtsov, the deputy commander of the Russian brigade assigned to the American sector in Bosnia, serves as liaison with Gen. George Joulwan, our NATO commander. He has an office at NATO headquarters with a secure phone on his desk. We used to use secure phones to prevent the Russians from listening to us. Now, we give them a secure phone so we can talk to them.
The newly independent nations of Eastern and Central Europe are striving for democracy, security and prosperity, and they are reaching out to the West for inspiration and assistance. We have responded with a NATO program, the Partnership for Peace. It invites the militaries of these nations to train with, learn from and conduct peacekeeping and other exercises with U.S. and Western European militaries.
Twenty-seven countries in Eastern and Central Europe participate in this program. This builds trust and understanding between East and West and promotes military reform. And because Partnership for Peace is the training ground for nations that want to join NATO, it is also spurring these nations to accelerate political and economic reform. Several of these nations also have joined the peace implementation force in Bosnia. Hungary, for example, made the airfield at [Taszar] available for use as a staging area. Who would have thought six years ago that more American than Russian military personnel would be in Hungary?
For the first time in history, every nation in our hemisphere but one -- Cuba -- is a democracy. Peace, stability and economic success are ascendant. So is cooperation on mutual security challenges such as drugs. The U.S. responded first when President Clinton hosted the Summit of the Americas in Miami, promoting a hemispheric approach to economic and political progress.
The DoD followed up with the Defense Ministerial of the Americas at Williamsburg, Va. There, defense leaders met and adopted a set of principles on how militaries should function in democratic societies. That 34 nations in our hemisphere agreed on anything is historic enough. That we are putting these principles into action is a monumental achievement. (Example: The Peru-Ecuador agreement, brokered by [the] U.S., Argentina, Brazil and Chile ended protracted fighting.)
These preventive initiatives and others are designed as an integral part of the defense program that the U.S. will need to meet as yet unknown threats and ensure its national security as we enter the 21st century.
Though additional emphasis has been given to preventive defense, we still maintain strong forces ready to deter aggression and defeat any adversary. This is also where we invest the bulk of our defense dollars.
The challenge for me and for the rest of the department has been to ensure that we keep a robust capability and to size and cost it correctly in an era of reduced threat. We used to base our force structure on what was needed to defeat the Warsaw Pact. Today, our force structure is based on the capability and force size needed to take on Iraq or North Korea-sized threats while deterring any other aggressor from taking advantage of that conflict. We have to have a force that can dominate any battlefield and win decisively.
The world changes have allowed us to reduce our force structure. At 1.4 million men and women, the force is 33 percent smaller in size than at its peak in the 1980s. Yet in terms of its combat capabilities, the quality of the people or its readiness to take on any mission it is assigned, this force has no equal anywhere in the world. Under the Clinton five-year program that we submitted to Congress this year, it will stay that way.
But it would be irresponsible for the department to ignore opportunities to be more efficient while maintaining our effectiveness. As the chief operating officer of the Defense Department, it is an area of major concern to me.
The keys to maintaining that force are readiness, quality of life and modernization, my highest priorities. Readiness means our troops should be highly trained and well supported with spare parts, maintenance, adequate ammunition and the like.
We are going to continue to recruit the best and brightest into the military services. Fifty-five percent are high school graduates. When we get them, we give them the most realistic training we can provide and the tools they need to meet any challenge. We work hard to keep them by ensuring they receive adequate pay and housing and that their families have the support services they need. I should note that this quality is in large measure the result of the all-volunteer force, clearly one of the most successful public policy innovations of the last 40 years.
Quality forces are not cheap. Our budget for next year requests more than $240 billion for defense. That is a lot of money, but adjusting for inflation, it is 40 percent lower than what we spent on defense in 1985, the peak year of our defense spending.
Many believe that even this amount of defense spending is not enough. What you frequently hear in Washington these days is that we should be spending more -- sooner -- on new plants, ships and tanks. This argument has some merit.
We do need to replace older equipment as it ages and wears out, and we do need to make sure that our forces have the latest technology -- that we preserve our crucial technological edge on the battlefield. And we have been able to keep our modern edge during the drawdown of our forces because we could discard older equipment as the forces shrunk. That "reprieve" on modernization is now over, and our budget recognizes these facts.
We will spend nearly $40 billion next year on modernizing equipment for our forces, and we will increase that amount steadily. Over the next five years, we will spend nearly $250 billion on new equipment for our forces.
Still, some argue that even this is not enough, and you may have seen news accounts of politicians and others in Washington urging large increases in defense spending. The debate I mentioned at the beginning of this talk will be loud and long during the next few weeks.
My position is clear: I believe further large increases next year are not necessary, because we have proposed a balanced program that will meet our security needs now and in the future. We will protect military readiness, preserve the quality of life for our men and women in uniform and modernize the forces as required.
It is also important to place the defense budget in the overall context of our federal spending. The days are gone when we could simply spend more on defense while ignoring the impact on the rest of the federal budget, and if we are to achieve a balanced budget -- something I believe we must strive to do -- then we cannot pretend that defense spending is immune to the discipline we impose on other federal programs.
Making these trade-offs is what public policymaking is all about. Anyone who has studied here at the Maxwell School or who has served in government knows how complex and challenging these issues can be and how important it is to address them seriously. And while it may often seem that the debate in Washington is only about how much money to spend, students of public policy will recognize that there is another, equally important set of issues we must confront: It is not just how much we spend, but how well we spend and manage.
Let me talk about some of these management challenges in the Department of Defense. These are issues that every senior government official and CEO [chief executive officer] must deal with, and the Defense Department is no exception. We too must be more efficient, innovate in the way we operate, streamline our organization and reduce excess overhead and capacity.
The corporate world has been going through this streamlining and downsizing process for years. So we're going to adapt their best ideas. In fact, like them, we are focusing on our core competencies and streamlining our organizations. Let me share with you a few examples of what we at DoD are doing.
We are cutting excess overhead by closing military bases. After four rounds of base closings under the process Congress adopted, we expect to save $17.8 billion over the next five years.
This has been painful to the department and to the affected communities, and it costs money to close facilities. For example, we couldn't just walk away without cleaning up the land so it could be put to productive use. Communities across the country, with assistance from DoD, have embarked on a number of vigorous and successful reuse projects. On the cost front, savings from base closings this fiscal year will exceed the costs of closing bases for the first time.
We are also overhauling our massive procurement system to be more like the commercial sector -- partly because their system is more efficient and partly because we're going to be buying more off the shelf. Defense acquisition reform is a big deal, because we buy billions of dollars of systems, services and supplies. In the past, we forced companies to meet our own military-unique product standards in order to sell to us and adapt to our own complex paperwork and processes. In the future, we will rely mostly on commercial specifications and adapt to the private sector's way of doing business.
One example: The Army is going to save $100 million by buying commercially available Global Positioning System [sensors]. Not only will they save $2,700 per unit, the commercial model is one-third lighter and comes with a six-year warranty.
We have just embarked on a major program that emulates the private sector and some public sector organizations who have turned to competition from outsourcing and privatization to find efficiencies, improve the focus of their management team, improve quality, obtain access to new technologies and lower their costs. DoD can achieve the same objectives.
Our core competency is to conduct military operations, and all of our effort should be focused on doing that better than anyone else in the world. We can turn to others to provide support services necessary to our operation but not at the heart of what we do. That means that we can get the private sector to do much of our equipment maintenance, transportation, data processing, finance and accounting and training.
This is not a new concept for DoD. Some of that work is already being done in the private sector. What we are attempting to do is expand the use of outsourcing in all areas except policy and combat operations.
We have a sound strategy that seeks only to improve the effectiveness of our force and the efficiency of our operations. Savings can be substantial. A Center for Naval Analyses study of cost comparisons conducted between 1978 and 1994 reduced annual operating costs of the competed functions by 31 percent. But it will not be easy. We must convince Congress and our middle managers that there is a better way.
We in the department's leadership have a responsibility to not only ensure that our military force is capable and ready, but to also exercise responsible stewardship in the management of the resources allocated to provide for the national defense. Outsourcing is one tool that can contribute to fulfilling both of those responsibilities as we near the 21st century.
It is impossible to predict where the world may be in 10 years. We can look at a number of analytical tools in an effort to predict the future. The only sure conclusion we can draw is that whatever scenario we may construct, we will be wrong --- we may not be 100 percent wrong -- but we will be wrong.
But we can't afford to be wrong when we are formulating national security policy. To do so places our nation at risk. That reality requires us to construct a national defense program that will retain the capabilities we need for the foreseeable future, with the flexibility to adapt to unforeseen challenges.
We have constructed such a program; a program whose highest priority protects the capabilities that have made our military forces so successful in preventing, deterring and defeating adversaries throughout the world.
While we have committed the resources necessary to maintain a strong, ready force, we have used innovative strategies to build relationships with other nations to protect our own interests and those of our allies, maintain peace and stability, and advance the principles of democracy throughout the world.
Published for internal information by the American Forces Information Service, a field activity of the Office of the Assistant Secretary of Defense (Public Affairs), Washington, D.C. Parenthetical entries are speaker/author notes; bracketed entries are editorial notes. This material is in the public domain and may be reprinted without permission. Defense Issues is available on the internet via the World Wide Web at http://www.defenselink.mil/speeches/index.html.