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Background Briefing on Status of POM

Presenter: Senior Defense Official
December 20, 2002 2:30 PM EDT

Thursday, December 19, 2002 - 2:30 P.M. EST

(Background Briefing on Status of POM)

SR. DEFENSE OFFICIAL: You said this was going to be a "round" table.

Q: Well, it's kind of rounded.

Q: (Off mike.)

SR. DEFENSE OFFICIAL: This is a square table with all of you out there.

(Cross talk; laughter.)

Q: It's what we call Club Fed.

SR. DEFENSE OFFICIAL: Club Fed?

Q: This is the Club Fed set-up. So --

SR. DEFENSE OFFICIAL: It's pretty pathetic. How do you guys put up with this. (Laughter.) This is bad.

Couple things: Background is where we are, and the reason for it is that undoubtedly, probably the first few days of next week, the OMB half of this process will come to closure. You know, as I've told you, we send the budget over to OMB with the proposals, and they sort of get the last chop on them. So within days this ought to be finished. And so I asked Torie if it was worth taking a few minutes of your time to give you some background on how we reached some of the decisions we did so that as the stories -- as you start running those stories down, and you start getting information out, and OMB stamps the papers and so forth, you have some sense of how we got to where we did. So much is the conversation on the Striker, when I thought a conversation would be better than sitting up here at this silly table. (Laughter.) It's very awkward. So that's what I thought we'd do.

I'd remind you again that we started out trying to do this from a strategy perspective, and we have talked again and again about capabilities-based approaches to trying to decide where we should place the dollars and programmatic influence. And I think that we have come a long way toward that objective. There are inevitably things that one continues to do because it's essential that you keep doing them. So personnel and O&M costs and health care and so forth -- I mean, these are things that are less susceptible to strategy than they are to good business management. But insofar as the emphasis between things like investment in remodeling existing equipment or trying to decrease the level of investment in existing equipment to put into new equipment -- those are things which we have been driving, we think, through the strategy that we have adopted. That's one point.

So that's one point. The second point is I have said to a number of you that the services have been making a significant change in their approach, and I want to say a word or two about that. Each of them has moved a significant fraction of their resources over the FYDP to include in FY '04 into the -- into their -- their investment patterns are shifting from older programs and existing programs into newer programs. The Army will move over the FYDP upwards of over $20 billion. The Air Force will move upwards of $30 billion. The Navy may move upwards of 40. This is a lot of money that they are taking from what we have been doing and trying to begin to make the investments against where we think we want to go. And that is work that was driven by the services as they went through their own budget bill process during the course of the year in response to the guidance that they have been given by the secretary in the course of the previous two DPGs.

So there has been an awful lot of work that has been done by them to accommodate the new guidance that they have been given. A lot of those changes are from their point of view very real. It means that tanks and armored personnel vehicles won't be upgraded at the rate that they might have been. It means that ships will be retired. It means that aircraft will be retired. Some before really it's necessary to do so, but as a way of freeing up those resources to invest in other capabilities.

Secondly, there is a need for us to be looking after some of the nearer-term needs that are generated either by the day-by-day obligations of the force or by the fact that we find ourselves engaged in a war at the moment. So a couple of examples: If you look at the -- and I may have talked with you about this before -- the EA-6B. This is an aircraft that's old, getting older. We are heavily reliant upon it for electronic warfare purposes. It clearly needs to be replaced. Is there an optimum choice for its replacement? The answer to that is, No, not yet, but people are working to come up with better solutions. And so what is it that you do in the interim? Well, we have to put an airplane out there for that purpose, and so you start looking around at your candidates, and clearly something like the F-18 is the kind of airplane that one can imagine fills that role.

The Navy needs airplanes on its decks. One would like to wait, all else being equal, on the arrival of a JSF, but that's not here yet. I mean, that won't happen till the -- it won't begin coming on line until the end of the decade, so therefore you have to put airplanes on those decks in the interim. So we'll try to get those airplanes onto the decks at a reasonable rate of production, which is economical, and doesn't bias as it were so deeply into those programs that we can't bring them to the end -- to an end at the end of the decade, and then make room for the follow-on JSF. I wish Tony were here -- he keeps banging me on this question. But when you take the combination then of shifting resources out of older programs into newer programs, retiring ships, retiring planes, and then put some of these programs on a glide slope that will bring them to a foreseeable conclusion, even as you know about the time when your new equipment will be coming on line, that seems to me to be not a bad position to be in, and that's what we have tried to -- the services have tried to construct. The same is true with the Army. If you -- you know, go talk to them about what they are going to try to do with their tank and armored personnel programs, and then when they think the objective force units will start to come on line, there is a decline in the investment in the one set, even as you start to see an increase in the investments in the other.

So that's an issue of having to manage your way through your present need. I think I've mentioned to you that we have had -- you would begin to see creeping into this budget the requirements that have been imposed by the war -- the EA-6B is an example of that. It flew more hours than might had been anticipated over the last two years. But it's also in readiness accounts. I mean, it's important that those readiness accounts remain at a fairly high level, and where in the past one might have -- remember, last year we put a considerable amount of money into those readiness accounts, and brought them up quite substantially -- under different circumstances you might have said: Well, maybe the margin that I was going to put into readiness this year I would defer. Well, we really can't do that. I mean, we are obliged to see if we can't sustain the readiness accounts as best we can, given the circumstances we find ourselves in. So there are those kinds of real-world requirements that we have to continue to meet.

But then that brings us to, all right, what about new investment and where are you trying to take all that? We talked a number of times about the six operational goals that we set out in the QDR, and let me just sort of go down a list of things that we think match up. Okay?

The president made the announcement the other day about preparing to put a limited capability missile defense in place around 2004, and so that is a major change in capability that we now possess. It is not, as you probably saw on the estimates of the costs, it is not a big investment in terms of the total in that program. The laser satellite communications is a big change. We will have in place a program that will allow us to pursue that technology, to do the kind of risk reduction that we think we need to do in order to be able to be certain that the technology is ready. And in November of '04, about two years from now, we will know whether that technology is prepared to take on board the kind of tasking that we want to give to it, and that is to put essentially fiberoptics in space and get us out of the bandwidth constraints that we are currently operating under.

If we get to November of '04 and find that the technology is not ready, what we have in place is an alternative plan which will allow us to go back to what is called the advanced EHF, which is the current system for modernization purposes. It is much improved over what we have today, to be sure, but it is not going to provide the kind of capability that the laser satellite communications promises us for the future.

Q: Will advanced EHF be put in the band -- (inaudible) -- ?

SR. DEFENSE OFFICIAL: The way it's shaping up is we will go ahead and take the first and deploy the first satellites in that sequence, and then look to see whether -- and the '04 date allows us to default back to that path, if that's the way to go -- or to continue on with the laser communications instead.

The -- I'll remind you that though we made the decision roughly a year ago about the conversion of the four Trident submarines that are being taken out of the strategic ballistic missile force and converted to cruise missile carriers, that begins -- that began in '03 and will continue in through '06. And so that program continues apace as well.

The discussion about the CVN-21 has been around quite a bit, and again reminds you that the Navy was looking to start with what they call CVNX-1 in '07, and then follow that with a second ship in FY '11, that they call the CVNX-2. I think you are all familiar with sort of the general characteristics of it. And we had a long and very fruitful conversation with the Navy leadership on this, and they proposed -- the Navy leadership proposed what we are now calling the CVN-21, which is a ship which will have roughly, give or take -- don't hold me to the number here -- but roughly 80 percent of the kinds of new capability that was anticipated by the time we would have reached the CVNX-2. So that includes crew reductions, new flight decks, and maybe most importantly of all a new nuclear reactor power plant, which will provide upwards of three times the electrical output of the current power plant. And, that being so, it opens up the opportunity to begin experimenting with the kinds of weapons systems that heretofore were not possible with the kind of electrical power available. So whether those are electromagnetic rail guns, free electron lasers -- I mean, there are all kinds of proposals that one has heard in the past which were impractical given the unavailability of power in large quantities that could be focused down for those kinds of purposes.

The Navy also was working -- has worked very hard to get what amount to four new classes of surface ships into the fleet between their littoral combat ship, the new DDX, the new CGX, the destroyer and the cruiser respectively. They are looking at a new maritime positioning ship. When coupled with the changes they have suggested in the carriers, and when you think about the proposals they have also made for changing their own concepts of operations such that they will have more of what they are calling expeditionary strike groups available, when you think about the potential for vertical take-off and landing ships -- aircraft rather -- the possibility to modular decks for the --

Q: (Off mike) -- transformational?

SR. DEFENSE OFFICIAL: Yeah, would -- modular decks for the maritime positioning ships, such that you could put a temporary platform on them from which you could operate, 20 vertical take-off aircraft -- the possibility -- for a short period of time -- I mean, you're not talking about extended appointments, but you know staging and things of that sort -- the flexibility that that may bring -- and underscore "may," because we're early in this -- that could bring to expeditionary warfare is just enormous. And they've done a marvelous job with this, the CNO, and Secretary England and their staffs are the motive forces behind this. When I said that the services were being very responsive to the kind of proposal, guidance that they have gotten, that's what we are talking about. So when CNO did his Seapower 21, I think is what he called it, it was an effort to start to operationalize, institutionalize, to change the culture surrounding naval operations, which is absolutely fascinating, and the potential is enormous out over time.

You know, another piece of that puzzle that they went through was the integration of Navy and Marine Air. And if you want to talk about a real culture shift, that integration is the kind of thing which while it saved money and didn't require the purchase now of a few hundred additional aircraft, what it really -- the lasting effect will be its impact on the cultures of the two parts of naval aviation over time.

Again, with the TAC air programs -- I mean, we have got three of them en train. We have got the 18, which is in full production; the 22, which is sort of in the very earliest stages of coming up in production; and then the JSFs, which are going to come on toward the end. And you can see those three beginning to phase such that by the time we find ourselves at the end of the decade you will see the JSFs sort of moving off, the 18s and 22s ramp down. And if we can move the UCAV programs that you've heard us talk about forward with some success, you can see them beginning to be able perhaps to take on some of the load that we have currently given to manned aircraft. And when I say beginning, I mean, you know, at the end of the decade we are talking about the early stages of getting capability. So we have talked here about seeing the real fruits of these kinds of investments in the middle of the next decade. For those of you who are going to look for it in the next two or three years, it will -- you know, in big equipment, it will be hard to find. In culture it will come quicker -- more quickly. Modification of things take a little longer, but massive changes in equipment -- you know, you're talking about a considerable period of time.

But with the onslaught, the oncoming of the UCAVs, what you get is the opportunity now to think about some competition among your airframes for the missions, both short range and long, for attack as well as strike, for reconnaissance and the kind of flexibility when coupled with the expeditionary strike groups I talked to you about a few minutes ago. You can see the growing possibility for different modes and methods of conducting warfare than we have been able to do before.

The Army is working very hard. As you know, the Crusader was replaced with a new family of precision artillery. The Army has made an enormous investment. It exceeded what we asked them to in terms of these new artillery systems. They have adjusted the IOCs for their objective force now to 2010. And coupling their activity -- and let -- their changes, which will allow them to become lighter and quicker and more lethal as they bring those new capabilities online.

Let me step back to the naval forces for the moment and say that both the Army and the Marine Corps, along with the Navy and the Air Force as supporters, are going to look at what we're calling forcible-entry operations and ask ourselves how are those services going to array themselves over time so that the kind of expeditionary warfare one can anticipate being more the norm in the future, how do we get those forces arranged, to include looking at both the Marine Corps and the Army and how they're organized and equipped and what relationship with the naval and air forces.

We'd like to see, for example, the Army practice and exercise more closely with the Air Force and associate themselves with the notions that the Air Force has about their -- yeah, they've got 10 of them, expeditionary air groups. What do they call them?

Q: AEFs.

SR. DEFENSE OFFICIAL: Air expeditionary forces, AEFs, and trained a little more closely, not just in transport, which is the way people think about it, but also in reconnaissance and ground support and strike on behalf of land forces, to include, which we talked about here, the Stryker brigades as they mature and their capabilities are enhanced.

So those are, you know, sort of the kinds of investment opportunities that are being pursued as a way of moving us into the capability we're going to need for the next decade and beyond. They are the kind of programs -- and not all of the programs, by any means -- into which that shift in resources that I talked about, these are the beneficiaries of those shifts in resources.

You know, the carriers and the F-15s and the laser satcoms and the space-based radars, I mean, these are all investments whose numbers are higher than they were, in the case, for example, the SSGNs didn't exist two years ago.

So those are the handful of things that I wanted to kind of bring to your attention. I, again, made mentioned of the fact of the movement of the resources within the services. I've touched on the need to meet those near-term risks that we have in readiness and modernization.

A word about retention. It seems to have sort of stabilized, but that is a subject you probably ought to take up with Dr. Chu, who can wax eloquent on that subject and the progress that he has been making in not only that but quality-of-life issues, the housing and the pay and the benefits and things of that sort that you may want to take up with him.

So, in the end, what have we tried to do? We've tried to keep our eye on the strategic objective here, and that is to be able to operate jointly and to do so not just at the command element but to try to have that notion of operations -- that is, of joint operations -- inculcate the entire force the way we plan and the way we fight.

And we also want to be certain that we have a force which, once the president decides it needs to be engaged, can move swiftly to that engagement, and, once engaged, bring the conflict to a quick conclusion. And we think if we can do it jointly and do these things in a way that allows us to bring about a swift conclusion to a fight, I think we will have succeeded in that transforming process that the secretary has been talking to very much about.

So there you are. That's sort of the background highlights.

Q: The shifting of the resources, over what time period was that? (Inaudible.) Is that 2004 or 2005?

SR. DEFENSE OFFICIAL: They're a little soft. It's '03 and '04. That's why I say it's upwards of. The numbers are probably a little higher if you go back to '02, in the Army's case. In the Air Force there's been more of a shift.

Q: (Inaudible) -- do they have more money to play with? What are your budget assumptions for those out years?

SR. DEFENSE OFFICIAL: Budget assumptions for the out years. They will --

Q: (Off mike.)

SR. DEFENSE OFFICIAL: Huh?

Q: Let's start with '04.

SR. DEFENSE OFFICIAL: What about '04?

Q: What are you adding?

SR. DEFENSE OFFICIAL: What are we adding?

Q: Top line.

SR. DEFENSE OFFICIAL: I'm not sure I'm -- I can tell you that there was enough added to get us so that we got it all balanced. (Laughter.)

Q: Are you satisfied with the $17 billion? Do you need more? And how did you come to that figure? What were you told? Is that what the top figure would be?

SR. DEFENSE OFFICIAL: Well, you know how that process works. There is, you know, a back-and-forth between the department and the Office of Management & Budget, and that top line gets settled, you know, way above my pay grade.

Q: You said you'd have closure in it. Do you mean by that that -- has the budget gone to the White House?

SR. DEFENSE OFFICIAL: No.

Q: And you expect it to be --

SR. DEFENSE OFFICIAL: No, we're in the last stages of doing this.

Q: (Inaudible.)

SR. DEFENSE OFFICIAL: So my point being down here is these things are going to start to unfold over the next few days. And I just wanted to make sure that you had some sense of kind of how we got to where we did, so as those authorities start falling out the doors and people start going on about it, you have some sense of how we got to it.

Q: Is the top line pretty much set in concrete now, or could that change, I mean, after it gets there?

SR. DEFENSE OFFICIAL: (Inaudible.)

Q: After it gets there?

SR. DEFENSE OFFICIAL: Nothing's ever done till it's done. Is it set? I mean, we know what we're working against, and we're doing our best to make sure that we stay within the boundaries of what we need to do.

Q: I know it's kind of a minor point, but in the past you've been accused of boosting readiness at the expense of MilCon. And that has sometimes led to tit-for-tats, well, on the Hill and all. And it's interesting, in the context of BRAC. So I wonder if we should expect to see some trimming of MilCon again. And how do you think that may play out?

SR. DEFENSE OFFICIAL: That's a question I did not come prepared to even think about. I can't answer that question for you, to tell you the truth. MilCon -- I hadn't thought about that one. That's not one I --

Q: It's gotten Chairman Hobson a little bit hot under the collar from time to time. That's why I asked.

SR. DEFENSE OFFICIAL: I'll go back and do my homework.

Q: What did the budget do for the special operations community? You haven't mentioned that. Are they going to get more money, more people?

SR. DEFENSE OFFICIAL: Yes to both.

Q: Can you give any --

SR. DEFENSE OFFICIAL: They will be provided with the resources that will allow them to add the capacity at their headquarters to do the kind of operational planning -- operations planning -- that their current ceilings in manpower allotments haven't really allowed them to do.

I mean, they have a fair amount of people down there and they do a lot of resource things for the command as part of their major force package sort of things but didn't have as many people as they probably needed to bear the burden for the kinds of missions that they've been performing.

So they'll get some relief for their headquarters. They'll get some relief for some of their forward headquarters so that they can do the planning in situ that they need to do for their various operations. Each of the services has put an increased number of people into the billets associated with the command. We'll also make sure that they are able to -- and those are the kinds of things that will take place not just in one year but are intended to be across -- for however long it seems appropriate.

We will take the measures -- in fact, beginning in '03 we're trying to take the measures to replace some of their combat losses with respect particularly to their helicopter fleet. And then there'll be an effort to get them a bit of a reserve in terms both of helicopters and fixed-wing assets.

Q: What about buying more AC-130s? Is that in the plan?

SR. DEFENSE OFFICIAL: Last I looked, but that is not at the high end of the command's need. I mean, they needed the helicopters, the CH-47s and the tanker aircraft and so forth to replace those combat losses is sort of where the focus is.

And then what we'll do is we'll spend a bit of time here at the beginning of this coming year to map out some other issues that the secretary has to take a look at. And they'll sound again familiar to you -- speed of mobility, appropriateness of the equipment, whether they got the right communications gear, whether they are based in the right places; I mean, all of those kinds of things which, you know, we're looking at with respect to the air forces.

Q: Can you give us kind of a baseline where you're starting from --

SR. DEFENSE OFFICIAL: (Inaudible.)

Q: -- in personnel and perhaps a percentage increase --

SR. DEFENSE OFFICIAL: I don't have those numbers with me. I can get you a percentage number or something, I guess. Give me a call later and let me see if I can find it for you. [Answer provided later: Personnel increase of about 8%, funding increase of about 20%]

Q: All right.

Q: Why isn't headquarters getting more people? I thought it was a problem that the foot soldiers were so taxed?

SR. DEFENSE OFFICIAL: They'll get more folks throughout the command. I didn't mean to say that was only for headquarters. There'll be a number of folks down on the front end of the effort who will be plused up as well. But one of the problems they've had is at their headquarters in terms of how many separate operations they can plan and execute simultaneously. And so we need to get them a little more support down there to do the things they need to do.

Q: You mentioned EA-6B in plans for follow-on aircraft. But GAO criticized the program as focusing only on airplanes and not on other things.

SR. DEFENSE OFFICIAL: Which program?

Q: For EA-6B replacement, jamming, that sort of thing.

SR. DEFENSE OFFICIAL: That may have been true in the past. My point about the UCAV is that that is a mission which it might be able to perform under certain circumstances. There's been some look at alternative approaches to jammers as well as standoff jammers. But all of that is, as I said, in the earlier stages of its development. And that leaves you with a need for some kind of interim capability in light of the EA-6B's age and capability.

Q: You've mentioned some examples to support your proposition that the services are getting the message and they're internalizing the change. But even so, it was jarring to hear you say that the culture will change pretty quickly in the turnover of hardware service.

SR. DEFENSE OFFICIAL: No, not quickly. It's just that if you're going to measure things, the fact that the Army is prepared to make the shifts, that Navy was ready to make the change in the integration of those air elements, those are -- what I meant to say is that those are important changes in culture that are now underway. I mean, culture evolves over time.

Q: I agree, they're important changes. I was just talking about why you think they're happening now. It's 60 years since, you know -- what's his name -- Fletcher bugged out on the first Marine division with his carriers and stranded them. And ever since then, Marines have believed that they were untrue to the troops if you didn't have Marines in those cockpits.

SR. DEFENSE OFFICIAL: I think it has to do in part with the complexity of modern warfare and the need for the sum of the total to be much greater than its parts if we are going to be able to fight with the speed and the lethality and the agility that we want. It is going to have to be a joint undertaking. No one of the services can acquire nor ought to be expected to acquire all of the kit and all of the particular capabilities that are going to be needed for those kinds of fights.

So if we look at the way in which the -- you know, you look at the Army's problem on a future battlefield. You know, there's this theory, the empty battlefield, which people began noticing, believe it or not, in the Civil War, despite the massive casualties and the movie pictures of everybody lined up. In fact, the battlefield got emptier and emptier and emptier.

And if you think now to the battle in Afghanistan, I mean, that's a next-to-deserted battlefield. And so in order to be able to bring your military power to bear, you have got to be able to bring together your air-land power, your sea power.

Remember, those guys came off carriers in the first instance. You've got to be able to bring the guys to do information operations, ISR. All of that has got to be brought together in a combination that is able to concentrate its effect in a place and time where you want to do it.

And no one service is able to do it, in part because not only have the battlefields become sparse; the front over which you operate is equally large. We had carriers 600 miles away from where the bombs were being dropped. We had a CAOC a thousand miles away, people operating at hundreds of miles apart from one another.

That is a very different environment than even going back, you know, to Vietnam and back to Korea. So it has evolved in a way that characteristics and nature of warfare demanded. It's not -- it's almost not a choice.

Q: When all is said and done, the budget is finalized, goes over to the White House, do you feel -- how comfortable do you feel that the Navy will be able to afford the number of ships it wants to buy at the rate it wants to buy them over the FYDB?

SR. DEFENSE OFFICIAL: They are doing what they can to balance all that out, to make sure that they can get -- I mean, that's part of what the last stages of getting this done are. You know, somebody said to me the other day he's just waiting for someone to come in saying, "You know, we forgot" some huge bill that someone just didn't put into the --

So that's why I say, I mean, it's going to be -- we're in the last stage of this. They are working very hard to get there. The Navy has done what it thinks it can to ensure that they can get there, and we'll -- when they get it all summed up we'll know the answer.

Q: You had talked about tactical aircraft in the last couple of these things that you'd done. And you mentioned again today that one of the fallouts of the Navy and Marine aviation coming closer together may be they buy fewer tactical aircraft. Can you help me understand please the ramifications on -- I don't know if you have the numbers on the specific systems, but do you mean that the Navy will buy, for example, fewer carrier birds and JSFs in favor of the Marines buying more STOVLS?

SR. DEFENSE OFFICIAL: I don't know that they have worked their way all the way down to the bottom of that calculation. That's a question you ought to take up with my Navy counterparts. The -- but the reason for the ability to bring down those numbers is kind of an overhead issue. The -- there aren't as many aircraft required to have both services full up in their squadron strengths as when you take squadrons of, Marine squadrons, and put them on Navy carriers. You end up with the ability to be more efficient in the distribution of those forces, without a diminution in the actual combat power of the force. And that is a big deal.

Q: That's where you come up with the idea of a hundred fewer aircraft may be needed, but not necessarily which aircraft?

SR. DEFENSE OFFICIAL: Yeah, and they're sort of working their way through that, because that again gets you to the point of what kind of fights, under what set of circumstances, and so on.

Q: On combat aircraft, can you walk through the thinking on the F-22 that will let essentially the program of record has continued with some puts and takes in the outyears -- but what happened that will allow the Air Force to essentially walk away with the program of record at this point?

SR. DEFENSE OFFICIAL: What happened there? What do you have in mind?

Q: The guidance talked about potentially cutting to 180 -- you remember the language, the PDM allows roll-off to be continuous up to 36 a year later in this decade. But it seems to be the program of record of 295 is continuing at the OSD level --

SR. DEFENSE OFFICIAL: Well, they -- what happened there? They are at this point operating under a -- roughly a $43 billion production, committed out through 2010. They will take whatever -- Secretary Roach has said that they will take whatever cost overruns they may have inside that program. And it will -- and the secretary will review that program year on year. So that's how we will proceed.

Q: I came in a little later, but you mentioned this $17 billion top-line increase?

SR. DEFENSE OFFICIAL: No, I didn't say that. Charlie said that.

Q: Oh, so that's not. (Laughter.) You nodded. (Laughter.)

SR. DEFENSE OFFICIAL: I acknowledged that you said -- (laughter) -- listen, I watch television, and I watch the guy that's up here all the time. I know how this works.

Q: Well, just be clear. You didn't say that --

SR. DEFENSE OFFICIAL: I didn't say that. No, he did.

Q: Well, that doesn't mean anything. (Laughter.) In order to make investments in the laser communications satellite, space-based radar, just as you talked about some aircraft and tank programs maybe going away a little earlier than planned, are there any space programs that you are going to spend less on than planned, go away earlier than planned, say SBIRS-High?

SR. DEFENSE OFFICIAL: Well, SBIRS-High will come on through -- on the plan, we hope -- through the course of the decade. It is needed to replace the defense support program satellite that is up there, the series of them that's there. So that program will continue. I made the point about the ADHF, right, and we have that as the current program of record while we do the risk reduction on the laser satellite communication system. If the new laser satellite system proves to be technically feasible, and within boundaries on cost and so forth -- you know, all those things that one checks off -- the AEHF program will end, and this will take its place. If the satellite, the laser satellite communications program doesn't pass the check marks, we will continue with the AEHF program and the laser satellite will probably go into the continued risk reduction mode to see what we can generate later in the program.

Q: So then other than that there aren't any other space programs?

SR. DEFENSE OFFICIAL: Well, we are on for the most part in kind of a -- you know, kind of the replacement mode for these things. I mean, there's the INPO (ph) satellite and there's MILOS (ph). I mean, there's a series of them that will be coming to the end of their service lives, and these will be used to replace them. I mean, there is sort of a constant level of capability there.

Q: Speaking generally, without going to specifics, is there a significant increase in funding for space programs in this budget?

SR. DEFENSE OFFICIAL: I don't know. What do you think is significant? I mean, I'm not trying to be coy. I mean, I don't know. There's -- in this budget, in '04 against '03, in the way that you are thinking about it, I don't think so, because in '03 -- and I can check I guess -- but in '03 we laid in some of these programs in the first place, so there are adjustments to the laser satellite, to the space-based radar. I mean, so you know puts and takes to align them with their program status.

Q: It will remain fairly consummate with 2003? ?

SR. DEFENSE OFFICIAL: Yeah, I -- you know, I'm hesitating to say yes or no, because I don't know where the markets are going to go when I say yes or no, without having looked at the numbers. So I -- so, anyway, I don't think there's a big change between '03 and '04, is what I am trying to say, in that projected growth in those programs as they were intended.

Q: Talk about CVNX. I heard you talk about the new power plant --

SR. DEFENSE OFFICIAL: Yes.

Q: That was always going to be part of the first CVNX. I was wondering what did the Navy come back with specifically that made you say, Aha, this is really transformational now, and we want to do this?

SR. DEFENSE OFFICIAL: There are changes in deck spacing, and they were going to put the catapults on the first one, but the new deck arrangement was intended for the second. The interior spaces are to be redesigned. There are changes as a result of the power plant and some other things that they are going to do in the internal spacing with in the ship, which in turn has the effect of reducing manpower levels. So we are down. They may take the manpower numbers down, five, six, seven, eight hundred people -- other than the air wing -- I mean the crew. Sortie rates are up. The change in the aircraft sort of contributes to that. So there's a series of those things, and you really ought to get the Navy to take you through in detail the kinds of changes that they proposed.

Q: You now consider that ship transformational?

SR. DEFENSE OFFICIAL: Do I consider it to be transformational? I guess. Why -- you mean relative to the dash-1 or the dash-2? Does it -- the question between the old dash-1 and -2 business was why did we need to wait till '11 to get the benefits of this design if we could get them sooner?

Q: And you can pay for them sooner?

SR. DEFENSE OFFICIAL: And pay for them sooner. And so therefore why not bring them in sooner rather than later, and start moving us in the direction of exploiting the capabilities of that ship four years earlier than we otherwise might have been able to do. And then as next ones come on line, back fit into the first of those classes the kinds of other changes that might be there.

Q: And how much more money you had to add into that first ship to make that?

SR. DEFENSE OFFICIAL: Some. (Laughter.)

Q: Roughly. And along the same lines, you talked a minute ago about the design of that ship allowing you to test certain new technologies, the extra power. Is there any thought that at least in its initial life this ship is not going to be fully operational, it's going to be some sort of a test bed that you will use or experiment?

SR. DEFENSE OFFICIAL: I think there's a recognition that electromagnetic rail guns are not ready for deployment with a ship in FY '07. They are still in the state of being developed so that they are not as test articles but as deployable systems. And so the notion that we would back-fit into this first hole or into its next iteration those capabilities as they come on line is very much a part of it, and it has to do with the interior space that is freed up, okay, and volume in a ship that you otherwise wouldn't have. And so the potential is there to do those kinds of things. And that's what makes it attractive -- rather than staying with the current whole configuration.

Q: But there isn't some -- just to clarify for me, there isn't some plan to build this ship and then not use it or only use it as a test bed for some period of time?

SR. DEFENSE OFFICIAL: No, no. But, you know, would -- could it -- if we had the luxury at some point of putting experimental systems aboard it for testing, certainly we would want to do those kinds of things.

Yeah?

Q: The cost of the F-22 is a little bit unsettled right now, but it appears what's going to happen is the Air Force is going to be able to buy fewer F-22s for the same amount of money, while at the same time it's going to defer at least some of the planned upgrades for the plane. Does than any of this affect the way you evaluate the failure of the F-22 compared to some of the alternatives that might be out there?

SR. DEFENSE OFFICIAL: Secretary Roach has said that he will deliver the FA-22 with the capabilities that he has said it requires for it to be effective, and that he will do it within the constraints of the budget he has, and that's where we are.

I've got one more. Who -- did I miss anybody? Make it an easy one.

Q: (Inaudible.) Could you pin it down to -- well, this'll be kind of easy. Could you pin it down to numbers on the FA-22, what you're looking at?

SR. DEFENSE OFFICIAL: I mean, they are on a -- you know, they've got an arrangement on the budget, divided by cost.

Q: Can I stick in a V-22 question now --

SR. DEFENSE OFFICIAL: V-22? Sure.

Q: How does it fare in this process?

SR. DEFENSE OFFICIAL: V-22 is to have its test about its vortex ring state and all those kinds of things in the spring. May is when it is said to be ready, you know, and we have got a situation where if it is unable to perform then we are going to have to look for alternatives. If it can perform, then we have to now sit down and start doing the hard work about the schedule for its integration of the fleet. Now, it will have to go through continued operational tests. I mean, May is not the end. There are another 15 months after that of operational testing. But we will have a perspective then on its utility, and we can start then to think through whether early units need to get into the hands of the special operation forces, whether the Marines ought to be flying them alone, what relationship between the Marines and the special operators. I mean, we will have more flexibility at that point in thinking through both its roles and its inventory numbers.

MODERATOR: Let me remind folks that there are some other briefings -- one tomorrow. There's an infrastructure question that came up. Ray Dubois will be here tomorrow, and he'll talk about some infrastructure streamlining. This defense official talked about some good initiatives in personnel and readiness. Dr. Chu will be here on Monday, and he will walk you through some of those things that he's doing.

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