United States Department of Defense United States Department of Defense

News Transcript

Press Operations Bookmark and Share

Transcript


DoD News Briefing, Thursday, September 10, 1998

Presenters: Mr. Kenneth H. Bacon, ASD (PA)
September 10, 1998 2:00 PM EDT

Mr. Bacon: Good afternoon. Welcome to the briefing.

First I'd like to acknowledge six visitors from Uzbekistan who are here as part of a USIA project called National Security and Freedom in the Press. So you can talk to them about freedom in the press, if not national security.

Next week on Tuesday General Zhang Wannian, the Vice Chairman of the Central Military Commission of the People's Republic of China will visit the building and meet with Secretary Cohen and others. This is part of our ongoing exchange program with senior military officers in the People's Republic of China.

Also next week, on Sunday, U.S. forces will deploy to Central Asia for CENTRAZBAT 98 which is the second in a series of annual multinational Partnership for Peace exercises. The soldiers come from the 10th Mountain Division in the Army and they'll take part in a peacekeeping training program with members of the Central Asian Peacekeeping Battalion which is comprised of members from Kazakhstan, Uzbekistan, Kyrgyzstan. There will be also participating forces from Turkey, Russia, Georgia, and Azerbaijan. And the exercises will begin in Uzbekistan and end in Kyrgyzstan.

With that I'll take your questions on PFP exercises or anything else.

Q: Ken, the South Korean parliament just said today that that shot from the North on August 31st heard around the world was apparently a satellite launch and not a missile launch. Do you have any more evidence on that?

A: We have not yet completed our analysis on that. I can only repeat the statement that I made on Tuesday which is, we do not have any evidence to confirm a successful satellite launch by the Democratic Peoples Republic of Korea.

We are continuing to look at a fairly large amount of information that was gathered about that launch. That analysis is continuing. I assume that when we reach a definitive statement we'll have something to say about it, but we haven't reached it yet.

Q: Short of dredging it up from the ocean, would there be any way of confirming that it was an unsuccessful satellite launch as opposed to a missile test?

A: Well, my impression from talking to the technical experts is that we will be able to tell with a fair degree of certainty whether they attempted to launch a satellite. So far the Space Command has found no evidence that a satellite is in orbit in the area that the North Koreans said the satellite should be in orbit. They have not found a new satellite in any other reasonable orbit that could have come from this launch. And they have received no radio transmissions... We don't believe anybody in the U.S. has received any radio transmissions in the frequency of 27 Mhz that the Koreans said this satellite was broadcasting in.

So we have a statement by the North Koreans that they launched a satellite. We have no evidence that a new satellite is up there. Our detective techniques are quite well refined. We can spot very small objects in space. The Space Command has been searching over a wide area of space and has not been able to locate anything yet.

Now we're in the process of looking at other information that was gathered at the time of the launch, around the time of the launch, a wide variety of information that has to be analyzed by the proper people. These are on tape and other forms. It has to be sort of pieced together in a way that provides a coherent picture and it may be a picture that is more notable for what's out of it than what's in it. But that's what they're doing right now.

There are ongoing meetings among intelligence analysts, maybe even as we speak, to try to get to the bottom of this.

Q: The intelligence you gathered before the launch, which indicated there was going to be a launch, you said you were aware there was going to be a launch. Did that indicate that this in fact was a Taepo-Dong I that they might have used to try to launch a satellite, or attached a warhead? Could you tell that?

A: I'm not going to talk about the nature of the intelligence we gathered ahead of time except to say that we did have information that a launch was imminent.

Q: Is there enough interest in the hardware to go about recovering it from (inaudible)?

A: I don't know what's being done in that regard.

Q: The information you have, is it consistent with a failed launch of a satellite?

A: I don't think it's productive for me or for you to speculate on the basis of information that isn't complete yet. I think we should just wait for the analysts to do their work. They're working aggressively on this. As soon as we think we have a clear picture of what happened, it will be easier to talk about it than it is now.

Q: Regardless of whether or not you ultimately conclude there was an attempt or not to launch a satellite into space, has that in any way changed your assessment of what was going on with this event? Whether or not it was to launch a satellite, wasn't this in fact a test of a new two stage missile that could be used to carry weapons?

A: That is beyond doubt, and that is one of the reasons that we're worried about this and it's one of the reasons that we're working aggressively to continue our missile talks with the North Koreans. I believe the State Department had an announcement, or will announce today, the results of some discussions we've had with the North Koreans that deal with the missile talks among other topics.

Q: Is the United States ready at present or thinking about cooperating with the Japanese or aiding the Japanese to build their own anti-missile system, indigenous system? And how does this relate to reports yesterday that the THAAD system could be downgraded or dropped?

A: Let me separate those two questions.

First, the Japanese have been considering a theater missile defense system for some time. We've had extensive and continuing discussions with them about theater missile defense work or research, cooperation over some time. And this remains a concern to the Japanese. It's understandably an issue that is for them to decide. They have sought advice from us. We have offered it. We have offered a certain degree of cooperation. But the Japanese must make a decision to do this, and you should ask them whether they've made such a decision in light of what the North Koreans did. But this is a decision that has been on the front burner in Japan for some time...

Q: Can the U.S. help by funneling technology and experience...

A: We're talking about ways to cooperate, but they have to make some fundamental decisions about what they want to do and what sort of program in which they might want to be involved -- whether they're willing to undertake the cost of a program at this stage. I think these remain fundamental issues under consideration in Japan. I can't give you any insight into where they stand right now on the theater missile defense issue. But clearly it has been for some time, long before this launch, a matter of some concern to the Japanese government.

Q: Isn't the THAAD even more greatly needed than before in view of the Taepo-Dong test?

A: No one questions the need for improved theater missile defenses, and no one should question the commitment of the Pentagon leadership to develop better theater missile defenses. We're working very hard on that. I think we're spending about $4 billion a year on this.

The problem we've had with the THAAD is making it work. We are now working very hard looking at the entire theater missile defense program to find the best way to proceed, and our goal is to develop, as quickly as possible, a theater missile defense system that is both effective and affordable. Work on that continues, but I have nothing more to say about it right now. It's continuing in the context of not only the THAAD program, but in the context of the year 2000 budget and what our spending priorities are going to be in the future.

Q: When is the next test of THAAD?

A: There's a test I believe scheduled before the end of the year. I think it's toward the end of the year, but I don't have a precise date on it.

Q: Can we get a date?

A: I don't think there is a precise date right now. There's a planned test before the end of the year. I don't think we have a precise date.

Q: Can you address the (inaudible) from yesterday about the possibility of downgrading or eliminating THAAD?

A: No decisions have been made about that. It remains under consideration along with other parts of the theater missile defense program which are the Navy Theater Wide, the PAC-3, the MEADS program, the other Navy program. We are looking at the entire program not with an eye to saving or killing off any particular part of that program, but with an eye toward devising, developing, and building the most effective program in a reasonable amount of time at reasonable cost. That's what we're working on now. No decisions have been made about any particular element of the theater missile defense program, and my guess is there won't be decisions in the next few days or even weeks.

Q: Have there been any new talks between the U.S. and Japan since the North Korean tests came to issue?

A: We have continual talks with them. There certainly have been talks leading up to a very important meeting in the next ten days which is the 2+2 meeting, the meeting of Secretary Cohen and Secretary Albright with their Japanese counterparts in New York. I believe that meeting is currently scheduled for September 19th which is a week from this coming Saturday.

This meeting traditionally occurs in New York in connection with the UN General Assembly meeting. I'm not aware of specifically the contents of the discussions leading up to that meeting. It could well be that we've discussed theater missile defense with the Japanese. It's something that we frequently do discuss with them when defense officials from the United States meet with defense officials from Japan. This has been an ongoing and serious matter of discussion between our governments for some time.

Q: I just want to follow-up. You said there won't be a decision for the next few weeks on THAAD?

A: Certainly the next few days, and maybe not in the next few weeks.

Q: I was asking if you could say what the venue of the decisionmaking is. Is that because of budget discussions or what is happening that would put that decision off?

A: Well, part of it's budgetary, part of it's technological. There's a great deal of interest in this program in this building, and in the executive branch generally, and in Congress. We're trying to do the best we can to get this program right and to get a program we can proceed with. The issues are complex, and it takes awhile to sort them out, so that's what's happening. This is not something that began yesterday or the day before yesterday. It's been going on for some time. It's been a fairly intense review. But it's not over and there's still more work to do.

Q: Has that report on THAAD gone to the SECDEF's office yet? It's due by the end of this month I believe, is it not?

A: Well, the end of this month is 20 days away.

Q: I think it was due maybe earlier in the month. Has it gone to the SECDEF yet?

A: We have continual discussions about this and the discussions are continuing. They involve the Secretary, they involve the Deputy Secretary, they involve members of the Joint Chiefs, and they obviously involve Lieutenant General Lyles and others who are involved in this program. They involve Under Secretary Ganzler.

It's been receiving a lot of scrutiny at this stage, but we are not on the brink of a decision.

Q: Isn't the U.S. enthusiastic about Japan's idea to have her own reconnaissance satellite?

A: I assume we are, but I don't have anything... I'd have to check on that. It's just not something that I've looked into. We clearly are, under the defense guidelines, are working together on ways we can cooperate in the defense field and a wide variety of areas. But I can't comment specifically on that satellite. In principal, I'm sure we're enthusiastic, but I'd just have to check on the details.

Q: Are there any indications that North Korea is preparing for another missile launch of any kind?

A: That's something we're watching very closely. I really have nothing to say beyond that at this stage.

Q: What is the United States and NATO planning to do, or are there plans to do anything about what may be up to 40,000 ethnic Albanians trapped in Kosovo between Serb military forces and Serb police shelling and attacks?

A: First of all, there is increased humanitarian aid being sent into Kosovo. President Clinton announced $20 million of humanitarian aid yesterday, I believe, to go to Kosovo.

Second, we are still working hard, led by Ambassador Chris Hill, on efforts to produce a diplomatic resolution to this problem. We think that a diplomatic resolution is the best way to solve the problem and to disengage the forces and allow Kosovar Albanians to go back to their houses, which is the issue.

Third, NATO has on the shelf a series of military plans that can be taken off and put into action if necessary. We have not ruled out the use of force in this tragic situation. But we would prefer to find a way to solve it diplomatically. We're dealing with a problem where people are being displaced from their houses and their houses are sometimes being destroyed, and we would like to find a way to deal with this that doesn't increase destruction but rather decreases destruction.

Q: Isn't it true that Serbian forces, Serbian police, Serbian leadership, have no reason whatsoever to negotiate without an active threat of force from the West? These are civilian refugees being pummeled by the military.

A: They're being pummeled by the military. The military is continuing to respond to insurgency operations by Kosovar Albanians. It's a complex situation. We're appealing to both sides to stand down. We've made it very clear to the Serbs and to Mr. Milosevic that we think his actions have been disproportionate, that he's gone too far. The fighting continues. Ambassador Hill's efforts to end the fighting continue.

The European community is getting more involved both in humanitarian actions and they've spoken recently about the need for greater diplomatic involvement, and we welcome that.

Q: Does this action by the Serb forces of shelling homes and driving people out of their villages amount to ethnic cleansing?

A: I don't think I want to get into legal definitions. It amounts to a bad, unacceptable set of actions by the Serbs, and they should stop doing it.

I think the tragedy of Kosovo will become more apparent as the summer ends and winter begins. That's one of the reasons that non-government organizations and humanitarian organizations are becoming more concerned and more involved in trying to help the displaced people in Kosovo.

Q: You said the use of force hadn't been ruled out. What would trigger the use of force?

A: Well, certainly more aggressive action by the Serbs would trigger it. If we reach the conclusion that the Serbs are not at all serious about a diplomatic settlement that could trigger it, but I don't think -- this is going to be a NATO issue. NATO has come up with the military options, and NATO will have to make a decision about what triggers the use of force.

Q: Has anyone in the building had any military-to-military contact with the Russians? Is there any reaction to Primakov (inaudible) here...?

A: I'm not aware that the Secretary has spoken with General Sergeyev recently, Marshall Sergeyev recently, his counterpart in Russia. Obviously we had people from the Pentagon in Moscow during the Summit and they participated in the early warning talks and had some dealings with members of the Russian military, but I'm not aware there's been any direct, top level contact recently.

Q: Is there a concern that Primakov appears to be a very close friend of Saddam Hussein and often is on quite different sides of issues than the Pentagon and the United States?

A: As Foreign Minister, we got to know -- Secretary Albright in particular got to know Minister Primakov very, very well; worked with him successfully on a number of issues.

My guess is that as Prime Minister he's going to be concerned primarily with economic reform and maintaining social, political, and economic progress in Russia and not have a lot of time to worry about other issues. My understanding is that the Prime Minister deals primarily with domestic issues and the President deals primarily with foreign policy and diplomatic issues. So my guess is that the new Foreign Minister will deal primarily on issues involving the Middle East, and Mr. Primakov will be dealing with the very pressing domestic reform agenda of the Yeltsin government.

I might say that the Russians did vote for our resolution in the Security Council yesterday to stop the periodic sanctions reviews of the Iraqi sanctions until Iraq complies with the UN mandates to disclose information about its weapons of mass destruction program. So we are working together in the belief that it is up to Iraq to live up to its agreement with the UN and to meet the terms of the mandate which require full disclosure of what it's doing in its chemical, biological, nuclear, and missile programs.

Q: Can you confirm that the Defense Investigative Service has been involved in an investigation of fraud and (inaudible) involving Navy ships that are repaired, Navy ships...

A: Yes.

Q: Can you give us any details as to whether there are going to be any indictments coming down on this or...

A: There is a sealed indictment which has not been unsealed yet. I can tell you that this... Let me just tell you what it involves.

It involves an investigation -- a fairly massive investigation of contracts among private companies to service and maintain ships under the Military Sealift Command which carries supplies around the world for the Navy and helps resupply Navy ships.

In June of 1994 the Navy Criminal Investigative Service gathered evidence suggesting that there were bribes, kickbacks, and other fraudulent contract-rigging activities taking place between a major contractor, a private company, and a bunch of subcontractors. Some of these activities took the form of request for bribes from subcontractors who were providing services such as painting, cleaning, delivery, etc. In other words for them to get a contract they would have to pay a bribe to an official of another company. So we're dealing with a whole lot of little companies here. A lot of these contracts were small -- $3,000, $5,000 contracts. Some were much bigger, obviously.

Then sometimes there were just fraudulent contracts altogether. Contracts were written to say that we're going to hire the XYZ Fast Truck Delivery Company and there would be no such company, and somebody would just pocket the money rather than paying it into a legitimate contract.

So the Naval Criminal Investigative Service went to the FBI in 1994 and gave them some information about this. The FBI and Navy and Defense Department investigators then set up a shell company which was called Coastal Marine Engineering Group. This company has operated in five cities and it has actually let over 400... It has bid on and received over 400 contracts. Actually, although this company was set up purely to smoke out criminals, bribers, government defrauders, and other petty thieves, it actually made a profit of $1.6 million for the Treasury in the course of doing this.

This is small time stuff, but $1.6 million is $1.6 million we didn't have before this took place.

Working as sort of a sting operation, they stung a lot of people. Over 100 subpoenas have been issued. As I say, there's a sealed indictment. The FBI announced today that it's in the process now of negotiating pleas with a number of people and there will be public indictments at the appropriate time, but those indictments haven't been issued yet.

Q: What were the five cities?

A: I believe the five cities were New Orleans, where the company began its operations, Houston, Norfolk, San Francisco, and Jacksonville. That's where this company ran undercover offices.

Q: To make $1.6 million in profits, what did Coastal Marine Engineering do?

A: They did actually provide the services. But what they did was legally contract with real people -- painters, delivery companies -- to do the work. So they were like a clearinghouse. I gather that a lot of this business is done by that. It's done by sort of umbrella companies that... They're like contractors who then deal with subcontractors. Contract managers.

Q: The alleged criminal activity, if I understand the way you described this, was mostly done by private companies?

A: There were no military people involved as targets in this operation. These are all civilians. No Navy officers, no Navy enlisted people. We should be very clear about this. This is something that involves fraud and bribery and criminal activity among civilians, not between military and civilian people.

Q: (inaudible) the government.

A: To the best of my knowledge these are all private employees, they're employees of private companies. They don't work for the government. And they're not members of the uniformed Navy. Now that's what I've been informed by the Naval Criminal Investigative Service.

Q: You did say that kickbacks were requested...

A: In some cases. Fraud comes in many flavors and in some cases there were kickbacks requested. In other cases bribes may have been offered and paid in order to get contracts; rather than a kickback being requested a bribe was aggressively offered. And in some cases the contracts were phony from start to finish and they didn't exist and the money was just pocketed by some fraud artists.

Q: People working for larger companies would demand kickbacks from smaller companies in order to let them have contracts.

A: That is one of the patterns of fraud that took place here.

Q: It's multiple subcontractors, right?

A: Yeah. Many subcontractors.

Q: Is it one prime contractor or do you think there's more than one prime involved?

A: The main company they've been dealing with is a company called Bayship Management, Inc., of Englewood Cliffs, New Jersey. On August 11th, in fact, there was an announcement about this. The FBI announced on August 11th that it had executed a search warrant for evidence at Bayship Management of Englewood Cliffs, New Jersey.

Q: So that is the only prime contractor you believe was involved?

A: Bayship Management holds a $200 million contract with the Military Sealift Command which is basically a ship management contract. They manage ships for the Sealift Command.

Q: Did it work both ways? Was it the subs asking the prime...

A: First of all, I haven't obviously read the indictment because it's sealed, so I don't want to talk about any particular details. My understanding is that this activity, the alleged activity involved mid to lower level people in Bayship Management dealing with contractors to Bayship Management. That's my understanding of what went on here.

Q: Does Bayship hold any U.S. Navy contracts, or any Pentagon contracts?

A: Yeah, it holds a contract from the Military Sealift Command.

Q: Aside from that. Do they hold any other military contracts?

A: This is the only one I know of. We will try to answer that question, but the only one I know of is this...

Q: Have they officially been disbarred yet, or are in they in abeyance...

A: I do not know the answer to that. I'll check with the Navy to find out if that's the case.

Q: Can you describe the magnitude of the malfeasance here? Thousands of subcontractors, hundreds of millions of dollars in bribes?

A: No. I think it's probably much less than that. First of all, the whole contract was for approximately $200 million. We're dealing basically with small subcontractors dealing with this one company, and, I think, the indictment when it becomes unsealed will make clear exactly who was involved in this alleged criminal activity that will be outlined in the indictment. So far that indictment remains sealed.

I think what we're dealing with here is basically relatively small alleged bribes, kickbacks, and other types of possible fraud and among a number of companies but I don't know the exact number. I do know that approximately 100 subpoenas have been issued, but that doesn't mean that all those people will be targets. Many of them may be witnesses. In fact if past patterns hold, probably more have gone to witnesses than to targets, but there will be, I would assume, more targets than you can count on two hands.

Q: No one's been arrested yet to the best of your knowledge?

A: To the best of my knowledge, but this is clearly ongoing today, and my understanding is that the federal law enforcement officers, the FBI, is concentrating on negotiating pleas right now, but they do say that there will be indictments issued in the course of this.

Q: Not meaning to cast disparagement on the state of New Jersey, but does organized crime have any part of this?

A: I think I'll let the FBI answer that question.

Q: Where would the sealed indictment end up being?

A: I'm afraid I don't know that. What I have here is... I don't know where the sealed indictment was handed down. We'll try to find that out. It might be best to call the FBI on this. The number is 324-3691.

Q: (inaudible)

A: They put out a two page press release, so they're handing out a fair amount of information on this.

I'd like to just point out one other aspect of this. The possibility of bribery or kickbacks in the ship maintenance business has been known for some time. There have been congressional hearings on this -- I see Otto smiling. He's probably been to hearings on this. There's been congressional hearings on this, there have also been GAO reports about this in the past. What's different here is that the Navy found evidence of this on its own in June of 1994, went to the DoD Criminal Investigative Service as well as the FBI, turned over the evidence, and then working together these agencies conducted the sting operation that has led to the point we discussed today where they're actually negotiating pleas with alleged wrongdoers and on the brink of issuing indictments.

Q: Did you say it was the Naval Investigative Service or the FBI that set up the shell company?

A: The Naval Criminal Investigative Service went to the FBI and I think they worked together to set up this company called Coastal Marine Engineering Group. I think the Defense Criminal Investigative Service, the Naval Criminal Investigative Service and the FBI worked together on this. There was also involvement of the Department of Transportation in this investigation.

Q: So are you going to sell this shell company? It sounds like it was a very profitable...

A: I think we already sold it to Disney. (Laughter)

Q: (Inaudible)

A: This is what the FBI says. Besides the search warrant executed in New Jersey, court approved subpoenas for evidence were executed in five cities where federal grand juries have been convened. These cities are San Francisco, New Orleans, Norfolk, Houston, and Jacksonville, Florida.

I understand from talking to investigators that eventually there may be involvement in several other cities as well.

Q: The latest piece of anecdotal evidence that we have of the declining state of military readiness is this memo from General Bramlett to the Army Chief talking about problems in maintaining training. I'm just wondering if we can get some sort of reaction to how serious the readiness problem is getting to be?

A: Since we last talked about readiness there's been no appreciable change. The situation is this. The forces at the tip of the spear are ready to do their job, and in fact are doing their job in Korea; they're doing their job in Operation SOUTHERN WATCH in Saudi Arabia; they're doing their job in Bosnia; they're doing their job in Macedonia; they're doing their job in the Sinai; they're doing their job in Haiti; they're doing their job where they've been deployed to do their jobs.

There is growing concern in the military and among the civilian leadership about some readiness problems with follow-on forces. Each service tends to have different concerns.

In the Air Force the concern is primarily pilot retention and spare parts. In the Navy there is some concern about pilot retention, although it's not as bad as in the Air Force, and there is concern about recruiting shortfalls for this year in particular. In the Army there is concern about being unable to invest adequately in quality of life and to maintain enough training days or enough training for some follow-on units.

We believe that the forces are ready to execute the nation's military strategy, and that includes the ability to fight two multi-theater wars simultaneously, or nearly simultaneously. But as a result of the readiness strains the risk of executing this strategy has increased somewhat.

I think the force is -- what you tend to see in the military today, you might have three groups of people, three distinct groups of people. You have a group of senior officers who came into the force in the 1960s and '70s. They came in during the Vietnam era. They lived through the post-Vietnam drawdown and all the problems that the military incurred after Vietnam. They lived through the transition from the draft to the all volunteer force. They lived through what was then called the hollow force.

You have a second group, and this group realizes that although there are reasons to be concerned about readiness in some areas and although there are some strains, that the force today is better educated, better trained, better equipped and better prepared by far than the force 20 years ago. There's no comparison between the force today and the force of 20 years ago.

You have another group of soldiers who came in, soldiers, sailors, airmen and Marines who came in in the 1980s during the Reagan buildup when the money was flowing freely, when the forces were growing. We were buying ships, we were buying tanks, we were buying new planes. They came in in the time of plenty, it was during the Cold War, the end of the Cold War. There was an emphasis that ultimately led to help win the Cold War. They obviously came into a different military than the people who came in in the '60s and '70s. They have a different perception of what adequate resources are.

Then you have another group who came in after the end of the Cold War and after Desert Storm when the drawdown began. As you know, the force has been reduced by 36 percent in terms of personnel since the end of Desert Storm. So these people have lived primarily during an era of drawdown.

Now during that period the operation and maintenance funding per soldier, per capita spending on readiness basically, has risen pretty steadily. It's certainly higher today than it was in 1990 and 1991. It's not as high today per capita as it was a year or two ago.

So you have three generations of people in the military who have different experiences with spending and probably different views of what constitutes readiness.

I think everybody agrees now, and certainly the reports show this, certainly the Chairman's analysis and the Chief's analysis show this, that we believe that the first to deploy forces are well trained and ready and able to do their job. There's some growing concern about the follow-on forces. That is an issue of great concern to Secretary Cohen who has invested in the last few weeks a fair amount of personal time in visiting airmen and soldiers and plans to do more. He's spent a lot of time talking about this with the Chiefs. This will be a primary issue at the CINCs conference next week here in Washington. The CINCs have been preparing readiness assessments in preparation for that conference.

Q: Did you say the first to deploy forces are ready to go, but the forces cited by General Bramlett are the first deployed -- 3rd Mech and 82nd Airborne, part of the contingency forces; and the folks at Fort Irwin are the Pacific reenforcement forces. They are the first to fight.

A: The memo by retired General Bramlett was a memo written by him as the FORSCOM commander for the Army to the Army Chief of Staff. He is fighting, as all commanders should be fighting, for more money as part of an internal budget battle within the Army. It's not surprising that a commander would provide a hard hitting analysis seeking more money. He did, I think, highlight real problems in that memo. One of the issues he identified was that he was taking money from property accounts or infrastructure accounts and quality of life accounts to pay for readiness, and it was getting harder and harder to do this.

I might point out that we do believe that throughout the military we are spending too much money supporting infrastructure we don't need. That's one of the reasons we asked Congress to give us authority for two more BRAC rounds, and it's one of the reasons we need more BRAC rounds so we can cut back unnecessary infrastructure and the cost that that infrastructure imposes on the military. We would like to redirect money from unnecessary or overly costly infrastructure into readiness and into procurement.

But the Bramlett memo was one of a series of memos that were produced during the budget season that lay out problems. They're done to catch the attention of senior people in the service. This one happened to catch the attention of the press as well, and of me as a result. But this is something the Army is sorting out. The Army will now, based on this and other memos, have to make a decision about how much money to request from the Secretary of Defense and ultimately from OMB and the budget deliberations which are ongoing.

Q: The General's memo says funding in fiscal '99 will be below survival. That sounds like more than quality of life. Are you saying that's exaggerating the problem?

A: I don't know whether it's exaggerating the problem or not. I'm saying this is a document generated during an internal budget process. I'm not trying -- I think I've made it very clear that we are not denying that there are readiness issues that have to be addressed. The Secretary is doing that, the Chairman is doing that, the CINCs are doing that and based on the assessment that's ongoing today, decisions will be made about how to allocate money in the next budget cycle to address readiness issues.

We do not deny that there are some readiness strains. We do deny that the readiness strains have reached the point where the U.S. military cannot do its job. We think the U.S. military is well trained, well equipped, and ready to do the job that it's required to do, and in fact is doing that job day in and day out on the seas and in the air and on the ground around the world.

Q: Are you saying then that the Pentagon will be allocating more resources to combat this declining trend in readiness?

A: We already have dedicated more resources to deal with readiness problems. We increased in the QDR readiness spending by a billion dollars. There was another billion dollars added for spare parts after that. We have been addressing readiness problems.

The issue we have today is whether there's enough money to go around to address readiness problems and procurement demands for modernization and quality of life issues and what's become increasingly clear, issues dealing with pay and retirement and medical benefits as well.

So it's a question of figuring out what the priorities are and addressing those priorities in the most rational way.

Q: If the United States military had to mount Operation Desert Storm today, wouldn't there be serious problems doing that?

A: First of all, I think that the person who would have the most serious problem, again, would be Saddam Hussein. His military is sharply much weaker today than it was in 1990 and we are in a much better position to act with strength and speed in the Gulf than they were in 1990. We have, as you know, almost 20,000 people in the Gulf today. We have a very large and robust cruise missile force on station and Navy ships. We have a division's worth of prepositioned armor equipment in the Gulf, and we have planes flying over...

Q: (inaudible)

A: No, but this is an important point. It's an important point that one of the changes that's been made, not just since Desert Storm but also since the Korean crisis in 1994, before we reached the framework agreement, is that the military has taken aggressive actions to increase its ability to respond quickly and with great strength in both the Korean Peninsula and in the Gulf. So we're not talking about the same situation we were talking about in 1990. We have taken a number of steps that make our response much faster and will require much less lift in the early days of any potential conflict than we would have had to do five or eight years ago. So it's comparing apples and oranges.

Q: But the two war strategy is not based on two specific wars, it's based on two unknown contingencies.

For instance, if you had to flow 600,000 troops and a number of ships in Desert Storm, say to handle a contingency in Asia, could you do that today or wouldn't there be problems trying to mount that kind of a force?

A: We do have a much smaller force today. Our force is 36 percent smaller today than it was in 1990 and 1991. But our planning and our exercises show that we can carry out the two war scenario, two nearly simultaneous war scenario, but there is some increased risk. The issue always is how do you balance risk with cost, and that is exactly the question that's being asked by the leaders of this department today.

Q: How would you characterize the Secretary's position on making the case for adding more money to the top line and maybe breaking out of the balanced budget agreement?

A: I'd say he's reviewing what the appropriate budget is. That's what every Secretary does at this time of year.

Q: Is it fair to say he's open to that idea?

A: It's fair to say he's committed to making sure that the military is able to do its job today and in the future.

Q: If I might revisit the North Korean missile threat, specifically how the Secretary and Joint Chiefs view... In view of the defector Huang, Mr. Huang, the North Korean defector that said that the strategy of the North Korean military was to hold Japan hostage with missiles. Now, in view of the Taepo-Dong test does North Korea now have the capability of an offensive missile launch against Japan and U.S. assets there that indeed could be used to deter U.S. actions in South Korea?

A: Our main concern about North Korea remains the same today as it was last week and last year. They have nearly 800,000 forces deployed along a heavily fortified border with South Korea. They have massive artillery forces and they have policies that to us are frequently opaque. Seoul is very close to the DMZ and very close to the North Korean forces. Our main concern remains the infantry and artillery and armored forces of North Korea.

It is clear that North Korea, while its people starve, is doing its best to develop militarily even greater power. Why they've made that decision we don't know.

We are very convinced that we have a significant force, a U.S. force, on the South Korean peninsula; that the Republic of Korea has itself a very significant force. We train together constantly, we train together well. We have taken a number of very specific actions to improve our forces since 1994. We've improved counter-battery radar, for instance, we've improved our air forces in the area, we've improved our armor forces. We believe that our forces are up to any challenge that they would face and in the end we would prevail against North Korea.

I don't think that anything that's happened in the last month or so has significantly changed that threat or has significantly reduced our ability to prevail.

Q: But you don't believe there is an increased or new missile threat by North Korea to Japan? You don't think that has changed significantly?

A: I do not think there has been a significant change in that threat.

Press: Thank you.