Mr. Bacon: Good afternoon.
First, I'd like to welcome a visitor from Bosnia, Brigadier Veso Vegar who is the Deputy Assistant Minister for Information and Culture in the Ministry of Defense. He is here with one of our old friends spending the day in the Pentagon. Welcome.
Let me bring you up to date on a humanitarian operation that's been going on in Kenya, a disaster relief operation called Operation NOBLE RESPONSE. U.S. Central Command forces are conducting Operation NOBLE RESPONSE to provide relief assistance in Kenya following the recent flooding there.
There is a joint task force of 58 military people working in Mombassa and it's composed primarily of elements from the 1st Marine Expeditionary Force from Camp Pendleton, Calif., but there are also some KC-130 refuelers from El Toro, Calif., run by the Marines, a joint communications support element from MacDill Air Force Base in Fla., and a U.S. Army civil affairs team from Fort Bragg, N.C. They have brought in 534 tons of food, supplies, and disaster relief equipment, and also provided some disaster relief training to the Kenyan forces.
This began in late February and is scheduled to end some time later this month.
Finally, two announcements about the future. The first is that the Ballistic Missile Defense Organization will hold a press conference here at 3:00 to bring you up to date on theater missile defenses, the theater missile defense program.
Second, tomorrow at noon General Kross of the Transportation Command, the Commander in Chief of TRANSCOM, will be here to brief on TRANSCOM's support of the deployments to the Gulf over the last couple of months. As many of you know, TRANSCOM basically moves soldiers and equipment whenever we go and get very little notice publicly. It's absolutely crucial to the smooth functioning of these missions, and General Kross will be here to discuss the 500-odd sorties that they flew in support of the buildup in the Gulf over the last two months or so tomorrow.
With that, I'll take your questions.
Q: You said yesterday that the Department had major reservations, major problems about the Lockheed/Northrop merger in the area of competition. I wonder if you can give us more details on what you meant by that. Also, is the merger picture getting more difficult in the defense industry now as it compresses into fewer firms?
A: First, I'm not in a position to go beyond my statement about our concerns on the competitive effects. This merger proposal is under consideration at the Justice Department right now. We've been meeting with the Justice Department people and we will ultimately give them a letter describing our views on the merger, but we're not at that stage yet. We're not at the stage where we can discuss the specifics of this proposed merger publicly.
Q: How about the merger picture in the defense industry as it is compressed with several mega mergers? Is it becoming more difficult to approve such mergers as it compresses to fewer firms (inaudible)?
A: Well, I've said before, I think it's obvious that we consider each merger proposal on a case by case basis. We look at each case on its own merits. There's still room for consolidation in the defense industry. We think there's still opportunities for cost saving in the defense industry. But we want to make sure that the mergers that do take place preserve an element of competition, preserve companies that are responsive to customer needs, and in that case it's the Defense Department and the taxpayers who pay for the equipment we buy, and also are innovative. And at the same time, look for ways to keep costs as low as possible, the cost of overhead and the cost of production as low as possible, so it's a balance among these four goals -- competition, cost control, responsiveness and innovation -- and that's what the Justice Department is striving for as it evaluates this case, and that's what we're striving for as well as we help them evaluate it.
Obviously there have been $55 billion worth of mergers in the defense industry over the last three or four years, and every big merger does shrink the industry to some extent and makes us pay more attention to competition among the remaining companies, but that's something the Justice Department is struggling with right now as it evaluates this case.
Q: Can you give us a little more idea of what the schedule is now in this building. Are the transactions going to say open 30 more days? Can you give us any sense of at what point the Department then reports to Justice?
A: No, the Justice Department is really the controlling factor here and they should answer questions about the scheduling.
Q: I don't understand after more than a year of this why you can't outline to the American people your reservations about this merger. You clearly define them. Everybody knows in great detail in this building the reservations that are held by the senior people here. Why can't you discuss them?
A: I think that it's inappropriate for me to discuss a case that's primarily under the Justice Department's control. It's their job to make anti-trust decisions, not our job. We're clearly an advisor. At the proper time I'm sure they will be very willing to describe their feelings about this proposal, and I'm sure that we will join them in describing our feelings about the proposal, but now is not the proper time.
We're in the middle of discussions with companies, the Justice Department is, and I think those discussions should continue before people begin talking publicly about specific details.
Q: The one thing they've indicated is, if you do object and Justice does object, they're going to go ahead with the merger anyway, which means a lawsuit and fighting it out in the courts. Will you, as their major customer, continue to finance their legal department's efforts to pursue this merger?
A: We will operate in strict compliance with the laws, whatever the laws are, and I'm not an expert on what we do in terms of financing the legal bills of defense contractors. If you want me to, I'll try to get you the information on what the law is there, but I don't know.
Q: You mentioned that the Department believes there is still room for mergers within the defense industry. Would you tell us what segments of the industry you still see room for merger in?
A: I'm not a security analyst and I'm not up here to encourage or discourage mergers at this time. We'll let the juices of the competitive marketplace figure out where to go beyond this case.
Q: Can you give us any indication of price savings or cost reductions in the major acquisition programs that have resulted from these mergers?
A: I don't have those figures at my fingertips. I know that the company, Lockheed/Martin, has put out some estimates of its own in the past, and they clearly had estimates for proposed savings from this merger as well.
There have been a series of reports that have been done and I'd be glad to get them to you. We sent them to Congress. But I just don't have them right now.
Q: When we asked Secretary Cohen the other day at his breakfast, he had no idea that there had been any savings.
A: I think he said he didn't know what the savings were.
Q: Right. Well, I'm in the same boat. I don't know...
A: We can send you reports that we've done.
Q: You do have reports of savings.
A: Sure. I just don't have them here, but we do have reports and we've done them in the past. In fact you've written about them in the past.
Q: Well, it's claimed savings, right? Any real...
A: I think that all savings are the product of accounting skills to a certain extent. Accountants evaluate the savings and they decide what they are. Somebody has to be a judge of these savings.
Q: Is the Department suggesting any particular divestitures by these companies in order to...
A: I don't think it's appropriate for me to discuss details at this time. It's an open case and I think that I'll just stick with what I've said.
Q: Was the $55 billion stock value, assets, earnings? What was the $55 billion that you mentioned?
A: It's actually a figure I read in a newspaper this morning. I hope it's right. I trust everything I read in the press. [Laughter]
Q: So it's not a DoD estimate.
A: It's not an official DoD figure.
Q: Regarding the accident involving the Marine jet and the Italian cable car, the Italian government has asked for jurisdiction to prosecute the U.S. crew under Italian law. Is there any chance that that's going to happen?
A: First of all the investigation is not officially complete. Secretary Cohen has not been briefed on the results of the investigation yet. I think it would be premature to comment until the entire investigation is over.
In the past, under the North Atlantic Treaty Organization status of forces agreement, we have not agreed to local jurisdiction. But as I said, this case is still under review.
Q: Do you have any indication of a timeframe for when we might get the results of that investigation?
A: I think it will be relatively soon.
Q: Any news on the possible redeployment of troops that are in the Persian Gulf now?
A: No. That's a decision the President will make in due course, and right now the troops are staying there. In fact there's been a rather significant but temporary surge in the number of troops there. I think we're up to about 40,000, 44,000 troops there now because the STENNIS Battle Group has entered the area of operations, and the GEORGE WASHINGTON has not come out yet. That's the ship that the STENNIS is relieving -- the GEORGE WASHINGTON. So there's been a temporary surge in numbers, but that will go down to about the new standard level which is about 36,000, when the GEORGE WASHINGTON leaves.
Q: With the current violence in Kosovo, is there any consideration to either deploying or redeploying or returning to their original deployment any U.S. ships, planes, or troops in order to be in a better position to deal with any contingencies there?
A: Not that I'm aware of. No.
Q: About that man who was found shot outside the Pentagon at the same time that the security guard's gun was found to have been discharged. Have you been able to make a connection yet between those two...
A: First of all, I'm not making that connection and the Pentagon isn't making the connection. The FBI is evaluating the case. They're handling this case. My understanding is that the person found dead is being autopsied today by the D.C. Medical Examiner, and I don't believe... I just talked to the Chief of the Defense Protective Service, and I don't think that autopsy is complete yet. So we may have a better idea after the Examiner and the FBI finish their studies. Right now we don't have any connection that's been made.
Q: I don't understand why there should be a mystery at this point. Does the Guard say that he fired his gun at this man or not?
A: The FBI has not shared its information gathering with me, and I think we just have to wait for the FBI to finish its examination and then we'll know what happened. Right now it would be speculative until they finish the ballistic analysis of the bullet, until they finish interviewing the guard who is being treated as a witness in this case, according to the FBI, so we'll just have to wait until they complete their work. I assume it will be done relatively quickly.
Q: What is the name of the firm that has contracted with the Pentagon for... Evidently he was a contract employee?
A: Yeah. Let me explain that.
Most of the security work around here is performed by the Defense Protective Service. These are the people you see out at the Mall entrance when you come in or at the Metro entrance when you come in. There are 230 uniformed DPS officers on the force.
In addition, we supplement the DPS force with some contract security guards, and these come from an outfit called Elite Protective Services, Inc. in Wheaton, Maryland. They basically provide security services on a permanent basis at one site on what's called the Pentagon reservation, the 534 acres that surround the Pentagon and the parking lots, etc. The permanent site where they provide security services is the power plant.
They, in addition, are now working at eight temporary sites which are construction buildings that have been erected in the course of the massive Pentagon renovation project.
When the renovation is over -- if it's ever over -- presumably these buildings will be dismantled and these guards won't be needed any more to protect them. But there will be, I assume, continuing contracting services provided at the power plant.
Q: Is there any review going on of the type of training that these individuals receive?
A: That will, I assume, be part of what happens, but the question you just raised presumes a finding that the FBI hasn't made. There's no...
Q: It presumes that an individual had a gun that discharged, and no one seems to know why.
A: That's one of the things the FBI will try to find out. But they actually do have to meet a number of requirements. They have to pass a state gun test, they have to have a high school education, they have a certain amount of classroom training about how to be an effective security guard, they have various... They have to pass a medical examination, and this fellow had passed all of those checks and examinations and was fully qualified for his job according to the certifications.
Q: There's a report that Scott Ritter and 50 of his team members have exited Iraq. They apparently visited eight sites and the U.N. has said that all sites were searched to the satisfaction of the inspection team. Is this the readout that the United States government has, that in fact Saddam is living up to the agreement he made with Kofi Annan?
A: A couple of points. The first is that since the agreement with Kofi Annan, inspectors have gotten into sites they have never been able to inspect before and that is a very positive development. It has expanded the reach of the inspectors and therefore, made it easier for them to do the job that they set out to do starting in 1991.
Having said that, there are still many unanswered questions because Iraq has made a number of declarations and has been unable to satisfy the U.N. Special Commission or UNSCOM that it has in fact lived up to these declarations. Let me give you an example.
Iraq has declared that it filled 25 SCUD warheads with biological agents. Under the U.N. Security Council Resolution 687, they're required to destroy all of their weapons of mass destruction including, especially, biological weapons. They have provided no firm evidence to UNSCOM That they have destroyed these 25 warheads filled with biological agents.
They also declared to UNSCOM that they had filled 50 warheads with chemical agents, and they have said that they destroyed all those warheads, but UNSCOM has not been able to confirm the destruction of more than about half of those warheads.
So, Iraq really faces a responsibility here if it wants to live up to the terms of the U.N. Security Council Resolution 687, and that responsibility is to provide unambiguous proof for the statements it's made about the destruction of its weapons of mass destruction, specifically the deadly chemical and biological weapons and the missiles they have to deliver them.
So the mere fact that the inspectors go in and report that they were able to inspect fully, or perhaps report that they didn't find anything doesn't mean that Iraq necessarily is moving closer to compliance, because Iraq still has a lot of unanswered questions that it has refused to allow the inspectors of the international community to sort out at this stage. That's because Iraq has not been able to provide the information necessary to convince people beyond a shadow of a doubt that it really has destroyed some of these weapons.
Q: Was Ritter allowed to work unimpeded, without trickery and harassment? And why is he out? He's not finished.
A: I think he came out, and these are questions you should ask UNSCOM. This is not a U.S. inspection team, this was a United Nations inspection team that went in to do the work and these are questions that you should direct to UNSCOM or to the UN. But my assumption is that he came out because he had completed the particular task he went in to do.
He, like many of the inspectors, go in and out of Iraq on a fairly regular basis. The teams, I gather, are comprised of experts in certain areas. When a team is going off to look at chemical sites you have one type of expert. If it's going off to look at biological sites you have another. If you're going off to look at delivery vehicles or missiles you'd have experts on missiles on the team.
Q: Regarding Kosovo, have there been any discussions with the U.N. that runs the Macedonia operation, I believe, or any requests from any commander for additional assets to beef up that mission in Macedonia? Either in the numbers of people or types of equipment.
A: No. But there has been discussion of that among the countries in the contact group yesterday. What they decided was that... They asked that consideration be given to maintaining international military presence in the Former Yugoslav Republic of Macedonia after the current mission expires.
As you know, Task Force ABLE SENTRY, as that operation is called, at least the U.S. part of it is called, is now supposed to expire at the end of August this year. So they have asked for consideration that the mission be extended.
Q: Consideration by Macedonia.
A: No, I think the Macedonians have made it clear on many, many occasions that they would very much like the mission to stay there. There are 750 soldiers there, 350 from the United States and the rest from about half a dozen or fewer other countries, namely Nordic countries, but I think there's some Indonesians there as well. The issue is whether the U.N. wants to extend the mission and whether the countries involved in the mission want to remain there. And the contact group has recommended that the international community and the U.N. consider extending that mission.
Q: Has the Department ever taken a position on the argument between the Marine Corps and the Air Force in terms of the memorial and the establishment of a new Air Force memorial near the Marine Corps memorial? Did the Department ever take a stand on that at all?
A: I certainly haven't taken a stand, and I do not wish to take a stand today.
Q: Have they provided anthrax shots yet to those American forces in the Persian Gulf?
A: The answer to that is yes, the shots have started. I think they started today in the theater, and because of the time difference that means they already have started giving the shots.
I think they started with the Air Force and the Navy people and those shots will continue.
We anticipate that the first round of shots will be completed by the end of this month.
Q: How big is that first round? Is that for everybody?
A: Well, the first round is the first shot, I guess, and that's everybody. We're only doing it in theater. The people in Saudi Arabia and Bahrain began their vaccinations today. The sailors aboard ships will start their vaccinations on March 15th. The soldiers in Kuwait will also begin their vaccinations on March 15th. The goal is to have the first shot given to everybody by the end of this month.
The pilots who fly for the Air Force rotate in and out every 45 days, so they will, I gather, get their shots when they arrive in theater, as soon as possible after they arrive in the theater and start their vaccination programs. Presumably they'll be completed when they come out, since they won't be there long enough to complete the whole sequence.
Q: With the hunger problems in Korea, have you had any reports of disturbances or any change in the U.S. status of forces in the area?
A: I'm not aware of any changes in the United States' status of forces and we have not had any firm or verifiable reports of disturbances.
Q: Back to Iraq and this question of the smuggling. Have you got an answer yet on whether the administration has any military or diplomatic or other measures under consideration to try to reduce that smuggling?
A: We are, as a matter of fact, in the middle of working with our allies, both in the region and elsewhere, to try to reduce the smuggling. We estimate that about $18 to $20 million a month is smuggled out of Iraq and we do have a force there to intercept ships when we can. It's not always easy because they creep along the Iranian coast in Iranian territorial waters. We try to get them when they dart out into international waters.
At any given time there are probably three to four ships involved in the maritime interdiction force. It can go up or down a little depending on who's there. Usually two American ships, and we're supported by ships from other countries -- New Zealand, Australia, the Netherlands, for instance. The English are frequently there with a ship on station. But we are trying to work with other countries, basically countries in the area in two ways. One is to find places to bring in captured ships. One of the problems is that after they capture a ship they have to find a port to bring it into so they can seize the goods and get rid of them, and...
Q: Crude oil?
A: Yeah, it's basically oil. Oil is what's coming out. And so we're looking for ports in which to bring these ships. Secondly, we're working with countries in the area to make sure that they bolster their anti-smuggling defenses so that it will be more difficult for these ships to find places to unload and sell their cargo. That's what we're doing.
Q: Are we working at all, you said other countries in the region. Does Iran come into play in any of these conversations?
A: Iran comes into play in many conversations about the region, but we're not dealing directly with Iran about the functioning of the maritime interdiction force.
Q: What about through Turkey?
A: The main routes for smuggling out of Iraq are principally Jordan, Turkey, through the Gulf, and sometimes there may be some overland smuggling into Syria, but we think that's a very haphazard and generally insignificant basis.
Q: There's a pipeline through Turkey.
A: I don't know whether there is one or if there is, whether it's working.
Q: There is one, and my understanding was that they're getting some through in the pipeline. That's why I was asking.
A: I'll try an get details for you on that. I just don't know.
Q: This smuggling concern, is it a two-way concern? Are there things smuggled into Iraq as well as oil smuggled out?
A: Any attempt by Iraq to violate the embargo against it is of concern to us and of concern to many other countries as well. You know there have been some cases where we found them trying to bring in some gyroscopes which could be used in missile guidance systems which would have been one, against the economic embargo, economic sanctions; and two, would have violated U.N. Security Council Resolution 687 because it would have allowed them to continue work on their missile programs. So yes, we and other countries are very alert to attempts to bring in items that aren't allowed under the economic program.
As you know, the United States has been in the forefront of trying to get food and medical supplies into Iraq in a way that does not support Saddam Hussein's war efforts or repression efforts but meets the legitimate needs of the people of Iraq. It is he that has rejected or held up the so-called oil for food program for years and years. Now it's going forward and it's been recently increased by the UN, although I don't think the new amounts are flowing in yet.
Q: What my question really should have said is, is there new or recent concern about things being smuggled into Iraq? I know there's a continuing concern, but...
A: Not that I'm aware of. No.
Q: You seem to imply that you [are] increasing the number of ships trying to interdict the stuff, that you're working with countries in the area to help.
A: We're working with countries in the area to help in the two ways that I noted. And in addition, I think the maritime interdiction force may have just gone up by one because of a Dutch ship in the area, but Dutch ships go in and out and other allied ships go in and out, but the Dutch did send down a frigate, as I understand it, or a destroyer, and that ship is there now participating in the MIF or about to participate.
Press: Thank you.