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Deputy Secretary de Leon Media Availability with Trade Pubs and Magazines

Presenter: Deputy Secretary of Defense Rudy de Leon
May 08, 2000

Wednesday, April 26, 2000

(Media availability with Pentagon correspondents from major trade publications and news magazines)

Deputy Secretary de Leon: Welcome, no particular agenda. I wanted this to be as informal as possible.

As I said on the parade field last week with the junior ROTC people present as well as the veterans from the soldiers' home, I'm honored to be in this position. In many respects I have worked with many of you wearing the different hats I have had over the years, whether it was with the Armed Services Committee or in the Air Force or most recently as the personnel chief.

This is a very challenging job and I look forward to serving the President and Secretary Cohen. The other day someone asked well, am I a caretaker. In many respects I have ten months to go with this administration. I hope that on January 20th you will look back on this period and you will conclude that I was more than a caretaker.

I think there are a number of critical issues that remain on the agenda between now and January 20th. Passage of the supplemental dollars, whether it be in the milcon bill or some other vehicle that's critical. The authorizing committees will start their markups in May. There will be issues there. There are industrial base questions associated with the joint strike fighter that we will be working through and giving options to Secretary Cohen in the next four to six weeks.

This will be a critical period of discussing national missile debate in terms of I think three key elements. One element being obviously the diplomatic track which has now started in earnest with the Russian elections being over and with the Russian parliament having approved START II. So there's the diplomatic piece.

There is also the technology piece with a test of the hardware coming up shortly. And then obviously also the steps on the military construction side in terms of the X-Band radar site at Shemya and some of the logistics associated with that.

So joint strike fighter, missile defense will be clear issues to be debated and discussed, really in the May, June, July time period.

And we'll also shortly be receiving the service POMs and starting to at least do the preliminaries of budget presentation and then leading right into the QDR for our successors.

So this is going to be a very challenging time. I will do my best to be accessible, even if there's nothing to say I'll let you know that I have no comment. But working through Admiral Quigley I will make every effort to be available to each of you.

So with that, and with the time we have this morning to get acquainted, I just wanted to open it up to the table. I don't know whether you guys, shy as you are, just want to ask me questions or whether we want to go around the table, whatever way is best for everybody.

John?

Q: Why does DoD release so little data about Kosovo, the air war? To elaborate, the after action report that came out in January was (inaudible) by comparison with Title 5 after Desert Storm. It's normally data-free. (inaudible) is making very little legal for outside authorizers such as (unintelligible) to getting data.

In a general sense, (unintelligible) don't want any factual details to come out. What's going on?

Deputy Secretary de Leon: Having been associated with the proposed Desert Storm studies, both the congressional study and then the follow-on DoD study, those were comprehensive. I think the Kosovo after-action report that was released in January was really a framing of critical questions, and I think that there were expectations that some of the individual components would do, follow up, whether in the intel world, whether on the Joint Staff. So I think that the Kosovo report that was released was to be a broad overview.

I think clearly lessons learned on interoperability, issues of that quality that were incorporated in the budget. I think the document that was released was one that was a product to what are the lessons learned from Kosovo and how do we incorporate those lessons into a budget that we sent to the Hill. So I would put the report in that context.

Q: Do you expect that to lead to individual commanders like the Air Force to (unintelligible) detailed study?

Deputy Secretary de Leon: The Air Force has done a study. I would think after the lengthy discussion that has occurred that there are very few surprises left. I mean if you watch the Front Line interviews, I think for the most part all of the issues associated with Kosovo, whether it's interoperability, logistics, targeting, diplomacy, have been discussed in a fair amount of detail.

Q: An initiative you didn't list on your agenda, space control. There's a lot of work left to be done in this area. I think it was the Defense Science Board or another panel that recently looked at some of these issues that said, among other things, the Pentagon needs to find better ways of doing surveillance in space or of things in space, find better ways to protect Pentagon assets in space and so on.

Can you just talk a little bit about what you think in that regard might happen over the next ten months to help further clarify some of these issues we'll get.

Deputy Secretary de Leon: That discussion on space control, on the security of our systems, is not one that's an isolated segment of ten months. It's really part of a continuum. The marketplace has changed in terms of data that is releasable commercially, so this is having an impact on the kinds of systems that we design for the future.

I think the security of systems is an issue. There are clearly classified discussions on how we preserve and protect the integrity of our systems. But I would put it in the frame of that this is a continuum of discussions, and this is also a time when the technology is changing, when we had clear dominance for many years. The marketplace is now providing a similar kind of capabilities.

So what the next steps look like I think are under discussion, and how you protect these systems. But it's more than just space control. It's also UAVs, what are the follow-on systems to U2 for the tactical data. I think there's a fairly healthy continuum that is ongoing.

Q: I guess what I'm asking is do you foresee any sort of policy clarifications or any new policy statements over the next ten months, or any other sort of things like that?

Deputy Secretary de Leon: I think in terms of new statements, I'm not sure there will be new statements. I think there will be a continuation with the debate upon the architectures for the future and what directions we go, and then what the security environment is for our system.

Q: Mr. Secretary, I'd like to bring it down to earth. Food stamps. The turn-around last week by the secretary in terms of what Bernie Rostker said and then in terms of what the secretary said. You sort of bridged this, having just had the personnel job yourself. You also I guess were here when Secretary Aspin had to slam dunk Carl Mundy on the issue of first term Marines, can they be married or not. This has some echoes of that.

I'm just wondering if you can walk us through the food stamp situation in the U.S. military today. How much of a problem is it? The consensus has to be it can't be that much of a problem if Secretary Cohen is willing to see those numbers rise by the proposal he's now floating. Is that correct or incorrect?

Deputy Secretary de Leon: Food stamps, and we've said a lot of times on this issue, certainly during my tenure, and we're concerned about every member of the force, whether they're on food stamps, whether they're a family, whether they're single servicemen. Our record over the last two years is one of really trying to invest in quality of life, whether it was the pay reforms, the pay increases, the retirement changes, the new housing initiatives, and also the discussions we're having with the Hill on medical. It's really to improve compensation and the elements that contribute to qualify of life.

Food stamps is one component. I think that the first statement I would make is that it's critical that we continue on the path of pay raises for our force in general, but particularly on the enlisted side. We want to have a clear career path for the enlisted which means financial incentives so that if you're an E-5 you see the advantages of moving as rapidly as you can to use the training and education opportunities to go from an E-1 to an E-5 through the system, and then even further up to senior NCO positions.

Specifically on food stamps, anything that... First, I think the secretary did address an equity issue. That is we've got to make sure that we have mechanisms to help those that need help. There's a correlation between family size and food stamps, but that really has not been I think our major focus. There are plenty of kids that come in when they're 18 and are single and use the educational opportunities; and there are other kids that come in when they are 21 years old and they may have more dependents. But they're going to be hard working as well.

I had lunch a year ago in Korea with a soldier that had four dependents, and he was 22 years old, and he was just starting to climb the ladder of promotions, things like that.

So one, we really want to continue the progress that we're making on compensation generally, to better reward the entire enlisted force.

Second, we want to make sure that with whatever changes we make that there is equity, that we are treating people equitably which means both those who live on base and off base, those that are junior, that the integrity of the pay scales are maintained, things like that. So we're looking at a host of options, largely along the lines of how do we support families, and particularly how do we support our most junior families. I think there is where we are focusing right now. I think that's where the secretary has helped guide us in the last week.

But Mark, in a broader sense the key is for us to continue the positive trend on pay and quality of life, the quality of life program.

Q: Going back to the sky, missile defense. Can you sort of react to the CBO report on the cost? I know Ken Bacon said that it was kind of an apples to golden apples comparison, but you've got to be troubled by the increasing costs, and what do you think can be done to sort of contain them and deal with this issue?

Deputy Secretary de Leon: I think as with so many of the programs I've worked on over the years, you've got to know what is the baseline that you're looking at. I think the CBO numbers, and I haven't had a chance to do any side by sides, but the CBO numbers themselves are looking from today out two and a half decades. So the numbers are going to be highly dependent upon what is the time period that you're looking at.

I think in the short term what we need to be focused on is the baseline, and are we controlling costs as an element of the program. I think cost is one of the five pieces of the DRR. So we'll be looking at all of these issues comprehensively later in the summer.

But I think you really have to look at the time period that the CBO numbers put on the table, and I think they're looking at a 25-year period. So I think there's more analysis that's required of the CBO numbers.

But I think the CBO will be part of the debate. As I said, there are three tracks to this debate. There is a diplomatic track, a technology track, and then a geographic track in terms of the site preparations. Congress will be debating arms control as well as their commitment to deploy a missile defense, so I think you've got to look at all of these issues in total. So I think CBO is an interesting data point. I think that the program office is working hard to stabilize the acquisition costs. In terms of the long-term life cycle of the system, we can construct different numbers, whether we look at 10 years, 15 years, 20 years, 25 years. So that I think is the new dimension of some of the CBO analysis yesterday.

Q: I have a question on a different subject. Dave Oliver said that reform of export controls should be a, if not the top priority for the Pentagon.

Deputy Secretary de Leon: I agree, this is an area that John Hamre invested much time in. It's an area that I have worked vigorously to get up to speed and have been representing the department in the interagency.

If you look back at it as a concept, there are three elements of it. One is interoperability. I think the Kosovo after-action report told us interoperability with our allies is still a critical vulnerability. Admiral Gehman in his new hat as the Joint Task Force commander really looking and making sure that we're joint has raised interoperability as an issue.

So I think one key element of our export policy has to be make sure that we're interoperable with the allies.

Second is to control the spread of technology that has an impact in the proliferation of weapons of mass destruction, weapons delivery systems, et cetera.

The third is to maintain our industrial base.

I think there are opportunities to enter into partnerships with our allies in Europe in ways that are advantageous to both sides consistent with wanting to protect the export of technology to places that may use the technology in a hostile way. So I think there are at the heart of the interagency discussions between the Department of Defense, State, Commerce, and with the Congress as well. So I can see this being a major issue in the next month, but I would agree with Dr. Hamre that this is a priority for us.

Q: Can I draw you out a little bit on the joint strike fighter, a comment that you made. Unless I'm missing something all the signs I'm getting is that this winner take all strategy is pretty much dead. Can you speak a little bit about where you're going with that, and then put it in the context of a larger issue of the health of the defense industry, and what you may do in the coming months about that.

Deputy Secretary de Leon: I think first, in terms of force structure, the joint strike fighter is critical to the Marine Corps and the Air Force in the short term, meaning the next decade. Then in the next 15 years it is equally critical to the Navy.

So it's absolutely essential that the joint strike fighter be affordable and that we be able to procure it in sufficient numbers to maintain our warfighting force structure.

We are looking at options other than sort of winner take all. How do we preserve elements of competition, how do we maintain industrial base. But I think more focused on competition and making sure that the joint strike fighter is affordable so that we can procure it in the numbers that we need for our force structure.

So there are options that are under review. I would not say the options are formal enough to be taken to the Secretary of Defense. There's a vigorous discussion, Jack Gansler, Dave Oliver, as well as the senior acquisition and operational people in the Air Force, Navy and Marine Corps are very much engaged in this. We've all been talking to the Hill in terms of just the criticality, though, of the joint strike fighter in terms of its role in the warfighting force structure.

On the industrial base, we have a Defense Science Board report that will be coming in shortly. It's focus is really looking at both the business side of our industrial base, but also the fact that procuring the next generation of technology is going to determine whether we are dominant in the battlefield of the future. I think one key piece that the discussion on industrial base points us toward is that the Department of Defense needs to have a dialogue with Wall Street in terms of the criticality of defense technology to our country's security, and that the systems are critical to our security, and that these companies have great value for the country. And that the value of the companies may be the C-17 or F-22 or missile interceptors that are being developed, but also the criticality of the engineers that work for these companies, the investment in tooling, things like that.

So just as a year ago Secretary Cohen had us reach out to Madison Avenue to rethink how we connect with the youth in terms of our recruiting advertising program, I think one of the key elements that comes out of the industrial base discussion that's ongoing is how we reach out to Wall Street. You may see us discussing that more vigorously.

Q: What does that mean? Bringing Wall Street analysts...

Deputy Secretary de Leon: It may mean we go to Wall Street or bring Wall Street analysts in to the department.

Q: Do you really think, sir, that that kind of patriotism and almost sentimentality is going to be a substitute for returns?

Deputy Secretary de Leon: No, I don't think it's going to be a substitute for returns, but I think that is an environment that is dominated by young, vigorous people that really may not see the element of the defense debate. And the $60 billion in procurement is moving up towards $70 billion in procurement, is a substantial investment during the next five years. So I don't think we're going to merely focus on the criticality of U.S. national security to the marketplace, but I think also talk about our level of commitment as measured by our level of investment.

Q: They see a risk/reward ratio that doesn't work. They see insufficient demand, even if it's ratcheted up a bit. And if there continues to be unexpected deployments, it gets pared back. So there's no certainty. There's this huge risk in banking on that kind of procurement.

The rewards, you're not going to get margins like you have at Microsoft, are relatively slim compared with other types of investments.

When you add on pressure, when boomers start to retire and this jockeying for the money between retirement kinds of things, domestic programs, and the Pentagon, they just don't see a favorable outlook, no matter what you do. As a pure investment.

Deputy Secretary de Leon: As a pure investment we're probably not going to be as lucrative as dot coms.

Q: I'd say Microsoft as opposed to dot coms.

Deputy Secretary de Leon: Well, if we look back over the last three or four years dot coms generally, the market is sobering up and changing. At the same time, our level of investment is considerable. We are moving to plus up in terms of the competition between O&M dollars and procurement dollars. I think if you look at the budgets over the last two years, we are really not sacrificing procurement dollars to pay for the deployment bills that Secretary Cohen has been vigorous in his advocacy of supplementals. In fact he's up on the Hill right now talking about the '00 component of Kosovo, and that if Congress moves to, they've committed to paying the O&M bills, so if those dollars come in in a timely way then there will be a negligible impact on the investment program. I think also the Secretary has demonstrated that the Department is prepared to start a reinvestment program, whether it's reinvesting in people, reinvesting in procurement.

Again, $60 billion moving towards $70 billion is not an insignificant investment. At the same time, there are choices and decisions that have to be made, whether the Army moves forward with a transformation strategy or whether it procures its legacy systems. That's an internal debate. Probably there aren't investment dollars to buy both a legacy Army and a transformed Army, but there are tradeoffs to be made there.

But back to the marketplace, I think that there is a level of predictability to the procurement budget, that it is increasing, that Secretary Cohen has demonstrated that capital investment will continue and that he has moved to protect the capital investment budget from the operational and other O&M costs.

So I think those are messages to the marketplace and to the financial community.

Q: Can you give some idea of when the JSF winner takes... When you'll have some kind of decision about that?

Deputy Secretary de Leon: I think we're working it. I could envision some time in the next six to eight weeks coming forward with concrete options rather than sort of the discussion items that we're having right now.

Q: Mr. Secretary, are you seeing a decline in quality in defense companies as a result of their market difficulties? Presumably that's what you're trying to offset here.

Deputy Secretary de Leon: I wouldn't put it in those... I mean the quality in terms of the product, each of the services are very much engaged. You're pressing technology to get the maximum capability and sustainability out of these systems.

I think we want to make sure that the marketplace understands the level of commitment in the Department of Defense to capital investment. I think it's reflected in many respects in fighter aircraft, fighter modernization, because that is the largest component of the modernization budget. And there is a ten-year cycle of moving forward with aircraft development.

I remember sitting in the Armed Services Committee during the 1989 markups talking about the F-22 procurement schedule and talking about the initial dollars going into EMD. Here it is 11 years later and we're only in the initial stages of production, so these are extremely long developmental cycles. I think everyone is frustrated with that.

But I think the key issue for us is to make sure the marketplace knows that the Department is serious about the modernization effort.

Q: I'm wondering if I can ask you about Vieques. Will the George Washington battle group train in Vieques before deploying?

Deputy Secretary de Leon: I think it's preferable if I don't really engage in operational discussions right now other than to say there is a healthy and vigorous debate with the law enforcement community relative to implementing the agreement that the administration and the government of Puerto Rico entered into.

Q: Can you say whether there is a decision that will move the protestors and reopen the range for training?

Deputy Secretary de Leon: I've always found it useful not to talk about operational things. I'm happy to talk about policy issues.

Q: Mr. Secretary, a question about the anthrax vaccine program. Maybe you'll feel a little bit more comfortable with that. (Laughter)

Two Air Force JAGs last week, as I'm sure you know, released a legal memorandum sort of challenging the legality of the program. I'm wondering if you think there are any further certifications or more legally based certifications that FDA needs to make to indicate that the anthrax vaccine for use against inhaled anthrax is not an IND.

Deputy Secretary de Leon: We testified to the Senate on this topic a week or two ago. FDA is the preeminent organization in America, perhaps in the world in terms of the safety of medicines and vaccines. I think the department is content to go with their record in terms of the safety and effectiveness of the vaccine. I am personally between shots number four and five.

There is a phenomenon, and that is the closer you are to the DMZ in Korea or the Kuwaiti border with Iraq, the troops that are deployed there fully understand what the threat is, what their risk is that they face and why the vaccine is important to them.

Right now our program is one, to vaccinate those that are going into the high threat areas, and this includes pilots who have to fly in and out of the theater. So if you look at the vaccine in conjunction with the biological detection equipment that we have deployed that are in our reserve units, the pre-positioning of antibiotics, protective gear, and aggressive intelligence effort to essentially locate threats, that this is a part of a comprehensive approach.

I read your article, so I was interested in their comments. But I think as a department, and I think our surgeon generals are really willing to accept the independent judgment of FDA on this question. I think their credentials and bonafides are clear going back to their creation by Theodore Roosevelt after he read the Upton Sinclair book "The Jungle" back at the turn of the century.

So I think FDA has said that this is an approved vaccine. Secretary Cohen and the Joint Chiefs have looked at the threat. When the Joint Chiefs and the two CINCs asked the Secretary for the okay to immunize their force I think the Secretary agreed with the Joint Chiefs' proposal.

Q: A question on the industrial base. As you come into the job a number of things have happened relatively recently on the international scene, bringing companies closer together overseas. I just saw a recent press release from Northrop Grumman I think yesterday on ways that they're looking at overseas teaming.

Do you see that as being a major issue that you'll face within the next ten months? Where do you stand on U.S./European, U.S./foreign defense cooperation in that respect?

Deputy Secretary de Leon: I think it's an interesting proposal that both Northrop Grumman and Daimler/Benz, those discussions in EADS and that whole group is looking at.

I come back to what I think are the three pivotal points on exports. Do we stay interoperable with our allies? Second, do we make sure that we have the right safeguards in place to protect the re-exporting or the proliferation of technologies that could hurt us? And then third, do we have a healthy industrial base?

So going back to the Nunn/Warner amendment of the '80s, we've said it's critical for procurement to be a two-way street between ourselves and our NATO allies. I think the forming of the European Union and the European defense initiatives raise new complexities. So in turn that I think requires America to be very engaging with our allies, to make sure that we stay interoperable and to make sure that we stay connected to each other.

So I think we're going to look at each of these joint initiatives on a case by case basis, but I think they do move us in the direction that we need to go with respect to staying interoperable.

Q: What's the sense of your declaration of principles with Germany and France, where [they've outrun] the U.K.? Where do things stand now...

Deputy Secretary de Leon: I think where we're at right now is we're really focusing on completing our discussions with State and Commerce and bringing that process to an agreement. I think that's the next step and then we'll continue to stay engaged with our allies.

Q: And you'll have (unintelligible) first the State and then you'll turn to our other allies?

Deputy Secretary de Leon: Correct. We're very engaged and those are ongoing discussions.

Q: Mr. Secretary, you mentioned NMD in your opening statement as something that you'll obviously be dealing with in the next ten months. Given that that is arguably the most strategic issue that's on the table right now, can you talk a little bit about where you personally stand on this?

There seems to be more and more support for pushing this thing off until after the election. This is such a major decision. Would you... Doesn't that make sense? I mean we've waited all these years to build one and we haven't. What's another year?

Deputy Secretary de Leon: You could argue what's another year or what's another two years.

I think we are engaged, as I said... There is the philosophical and abstract policy discussions and in one form or another we have had those since 1983.

The decisions really come down now to technical assessments in those three areas that I outlined. Where are we in terms of the diplomacy, which are our European allies as well as the Russians. Where are we in terms of validating the components of the technology. Then obviously, what are the actions you need to take with respect to preparing the sites in Alaska that are impacted by climate.

It is going to be a formidable task because of the climate of the island at the end of the Aleutians. So that I think is a pacing item right now to, looking at that as contrasted to more time in the schedule for testing the interceptors.

But I think from the Department's point of view we're really focusing on the technical issues in each of those three tracks, that ultimately it will be a a decision, a recommendation that the Secretary of Defense will make to the President. Congress will be part of this discussion. But I think our role here is to make sure that we do our work not in the abstract, but in those three pieces. I think the substantive outcome of each of those three tracks will have a major impact on the debate.

Q: So it's more the technical issues from your view than sort of the political implications of this.

Deputy Secretary de Leon: Again, I think we're...

Q: ...arms race. That's something that others have to worry about?

Deputy Secretary de Leon: I said one of the tracks is the diplomatic track. That's our relationship with our allies, that is the ongoing discussions between Strobe Talbott and the Department of State and the Russians, members of Congress, and the Russian parliament. So this is a discussion and debate that we've had for many years. Again, I think each of these three components has critical pacing issues. And that's where the substance and the policy really need to come together.

Q: On the pacing issue being the weather in Shemya, what legal judgment have you received in using the weather, whether and when the ABM treaty is breached by construction?

Deputy Secretary de Leon: I'd say that is still an issue under discussion between the interagencies. I think there are different views in Congress. So I think this is going to be part of the summer debate.

Thank you.