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DoD News Briefing: Quadrennial Defense Review

Presenter: Quadrennial Defense Review
May 19, 1997 2:30 PM EDT

[Also taking part in this briefing are Deputy Secretary of Defense John White, General John M. Shalikashvili, chairman, JCS, General Joseph Ralston, Vice Chairman, JCS. and Kenneth H. Bacon, ASD(PA).]

Mr. Bacon: Secretary Cohen and General Shalikashvili will each begin with statements, and then they'll take your questions. We're going to limit questions to the topic at hand, which is the Quadrennial Defense Review. They have to leave at 15 minutes after 3:00 for another appointment, maybe a minute or two before that.

Secretary Cohen?

Secretary Cohen: Now for the moment you've all been waiting for, the unveiling of the secret document that has appeared in virtually every one of your newspapers for the past several weeks. [Laughter]

But let me begin. Last December the Department began one of the most comprehensive reviews ever conducted of our defense establishment, which covered strategy, force structure, readiness, modernization, infrastructure, human resources, information, operations, and intelligence. Upon taking the oath of office I made clear my own expectations as far as how the QDR should be conducted.

First, that the defense strategy developed in the QDR process must be the basis for all other QDR decisions and analyses. The success of the QDR is directly as a result of our ability to adhere to the principle that the QDR be strategy- based.

Second, that we should not make any unrealistic assumptions about the threat, about operations, about support costs which have been consistently underestimated in recent years, and about those program schedules and costs as well, so I wanted realistic assumptions.

Third, I made it clear that we needed to finish on time. It was basically in December when this analysis was undertaken for the first time. There was, as I've explained before, some considerable distress saying there was not enough time to finish this kind of an in-depth analysis. What I insisted upon was that we meet that May 15 deadline because this particular Department has a timeframe in which it has to operate. Four years is not a very long time, and we have to budget in six year time units, as such, so designing systems for our future begins now, so we didn't have a moment to waste.

No other agency is required to think in such strategic and long range terms, and no other agency and no other government officials feel so palpably the consequences of their decisions for future generations.

Last Thursday I met with congressional leaders and I presented them with a copy of the outline, at least, of the report itself. In May 15th, as I promised them, they would have the report. I delayed the formal release of this report until today so that General John Shalikashvili, who was returning from China, could be here.

Let me turn first to the first chart. The first thing that we looked at was the security environment. As we approach the 21st Century, obviously, there are some threats that have been minimized, although not disappeared. But there is an era of change and uncertainty. We have new strategic opportunities and also some new threats. The threat of global war, nuclear war, has receded. Our core values of democracy and rule of law and market economies has been sweeping through much of the world. We have strong alliances, and we're building very cooperative relationships with old adversaries. But there are dangers that remain, and some are changing and growing.

We have regional dangers and the threat of aggression by hostile states against our friends and allies and interests in key regions. I'm speaking specifically, of course, about Southwest Asia and Northeast Asia. We have the possibility of regional instability and also failed states.

We are all witnessing the proliferation of advanced technologies -- missile technology, weapons of mass destruction. Those continue to proliferate at a fairly alarming pace, as well as information warfare. They threaten our forces in the field, and they threaten Americans at home.

We have transnational dangers such as uncontrolled migrant flows, illegal drug trade, and international organized crime.

We also have to be prepared for wild card scenarios. They're of low probability, but high consequence. We may also have to prepare for the loss of overseas facility, unexpected technological threats, and friendly governments falling.

We do not see or expect a regional power or a peer competitor for the next 10 or 15 years, but we have to prepare for that possibility certainly in the years beyond.

Next chart, if I could.

The first task of the QDR was to develop a defense strategy to meet these threats and opportunities. As I've indicated to many of you before, it can be summed up in three words -- shape, respond and prepare.

Shaping the international environment in ways that are favorable to our interests, that would promote regional stability, would prevent conflicts, reduce threats, deter aggression on a day to day basis in key regions. We do this through our forward presence, strong alliances, other peacetime engagements, and efforts such as the cooperative threat reduction, the so-called Nunn/Lugar funds. All of that is part of shaping the environment in ways that are favorable to American interests.

On the respond side, we need to be able to respond quickly to the entire panoply of threats that we might likely face. They can range all the way from small scale contingencies to major theater war. We must be able to respond to asymmetrical challenges such as chemical or biological weapons, terrorism, and also information warfare.

So this ability to fight and win two major theater wars that might overlap, that remains. We still have Southwest Asia, as I indicated before, as well as Northeast Asia. They will be with us for some time, at least in the immediate future, near term, possibly longer. We should reiterate that we have that commitment, otherwise we run the risk of losing the confidence of our allies, being hesitant to respond to a crisis for fear that an enemy in another region might seize that opportunity. So we are prepared to respond to the full panoply of threats.

Also, the third element of our strategy is preparing. We need to prepare now for tomorrow. We have an uncertain future, and it requires that we maintain military superiority. That path is outlined in Joint Vision 2010, which General Shalikashvili will talk about in a few moments, but it's based upon combining modern technology with new operational concepts and we think that this preparation obviously must be an elemental part of that strategy, whether we're talking about 1997 or the year 2010. Shape, responding and preparing is going to be part of that overall strategy. We will constantly have to update and to prepare for tomorrow's threats.

Next chart, please.

We looked at three basic approaches. So-called three integrated paths.

The first option, which is this one here, is to roughly continued doing that which we are doing today. It would allow us to continue our presence globally. It would allow us to deal with the full panoply of contingencies that we currently are confronted with. But the problem with doing business as usual or maintaining the status quo is that it doesn't get us out to modernization and technology. We continue to fall behind anywhere from 10 to 12 to 15 billion dollars depending upon the scale ... but we continue to fail to modernize at rates that we believe is absolutely essential for our security.

So maintaining the status quo is essentially out. That means very little sacrifice in the way of any reductions -- any reductions in infrastructure, cancellation of programs, or cutbacks in programs. We just maintain the existing status quo. We decided we could not do that and would not do that.

The second path was preparing for a more distant type of threat, a more radical approach, namely to have a rather dramatic reduction of our current presence, our current force structure, anywhere from two to three, and possibly five hundred thousand cuts in active forces. To take those savings and put them into research and development funds so that we could develop those leap-ahead technologies at a much faster rate.

This proposal is not without merit. From my point of view it has the merit that you will get to those technologies faster, but you give up a lot. What you do is you have a reduced presence, you cannot be forward deployed, certainly in the numbers that we are currently deployed. We have pledged to our Asian and Pacific allies that we would maintain roughly 100,000 forward deployed in the Asia Pacific region, and roughly 100,000 in Europe to maintain that stability that currently exists. That would have to be reduced and substantially cut back, so we would lose our ability to shape the environment as we're currently shaping it in ways that are certainly to our advantage.

We would also have to place a greater reliance upon the reserve, coalition and swing forces. We wouldn't have the capability to respond to the full panoply of contingencies that we currently have, but it does accelerate, as this green chart here would show, it does accelerate preparations.

So we looked at that carefully and asked whether or not we should give up our ability, or at least reduce our ability, I should say, our ability to shape the environment on a day-to-day basis and run the risk that we might not have as great an influence on stabilizing regions that we currently have very good relations in favor of moving forward into the future with more funds coming out of those cuts.

We, instead, chose a more balanced approach, and the balanced approach was to make some modest reductions in our force structure. Also some modest reductions in some of the programs that we have underway, in order to carry out what we believe to be the appropriate strategy, to be able to shape the environment as we're currently doing, be able to respond to the types of crises that we are likely to face in the near-term, mid-term, and ultimately long-term. And also be able to prepare for the future. We would not prepare quite as dramatically as this option, but we would be able to increase our ability to modernize in a satisfactory fashion. So we chose this particular path because we think it represents a more balanced approach. Some have inquired, couldn't you be more bold? My answer has been, I was not seeking to be bold, but to devise the best system for us, the best strategy, the best method we might have to in fact accomplish the goals we believe are valuable in setting and accomplishing.

Next chart, please.

This chart basically explains the dilemma that we've had for several years. We have been on a procurement holiday. When people talk to me and they say isn't this simply the Cold War strategy, don't you have Cold War mentality? You're struggling to fight yesterday's wars, the answer is clearly not. There has been a dramatic reduction since the height of the Cold War in our force structure. The force structure is down by at least 40 percent. Our procurement budget is down 67 percent. In terms of the budget itself, we've had a... Excuse me. A one-third cut in our force structure. We've had about a 40 percent cut in our budget, and we've had a two-thirds reduction in our procurement. This chart demonstrates that.

This is where we used to be in terms of procurement. We have been coming down to the point, we are right here. The Bottom-Up Review projected we should be right about here. Now we are striving to get up to close to that $60 billion goal. That has been the modernization goal which has eluded us in the past, and it has eluded us because we've had a migration of funds coming out of procurement, moving over into the operation and support accounts. So we have been deficient, have been on this procurement holiday, which we've been allowed to take by virtue of the buildup we started in the late '70s or early '80s. We have been living off that capital for the past 15 years or so. That has to end. So we have to start building that procurement budget back up.

Next chart, please.

We've made a number of decisions in order to meet our goals. To exploit the revolution in military affairs as quickly as we can with a modernization program that we believe is realistic and executable. This chart gives you some indication of the kind of choices we've made.

With respect to the F/A-18E&F and the Joint Strike Fighter, we have reduced the buy from 1,000 F/A-18E&Fs to 548. I, again, explained this to some of you at least when we had a chance to meet earlier this past week. That essentially puts the F/A-18E&F in somewhat of a creative tension with the Joint Strike Fighter. To the extent that the Joint Strike Fighter can come on faster, and certainly within acceptable cost limitations, we will build fewer F-18E&F models. So we will strive for 548. It could be more in the event that the Joint Strike Fighter doesn't come on- line as originally projected.

This will serve us well, it will serve the taxpayers well, it will serve our warfighters well, in addition. So the sooner we can get the Joint Strike Fighter into the fleet, we believe, the better. To meet that strategy we have allowed the F-18E&F model to build up to 548, and it could to higher in the event that the Joint Strike Fighter doesn't come on as early as we would like to see it.

F-22, we've reduced the buy from 438 to 339. In other words, we've reduced the four wings to three wings, and we've slowed the ramp-up to full production, thereby decreasing concurrency, and hopefully to have a more stabilized approach to it.

National Missile Defense. We have reaffirmed the three-plus- three and we have fully funded it as far as the research and development. I believe Dr. Kaminski has testified as recently as a few days ago, indicating that it still remains a very high risk program, but that was a pledge that President Clinton made to the Congress last year, we intend to keep that pledge, so the three- plus-three rule will still apply.

The MV-22, we are going to accelerate the production rate for the Marine Corp's V-22 tilt rotor, and given its greater capability, we've also reduced the buy from 425 to 360.

With respect to Force XXI, this is the Army's revolutionized land warfare concept, it would link commanders and planners and shooters with digital information and technology, and it would help cut through that fog of war. We are going to add funds to accelerate the fielding of the first digitized Force XXI Corps.

We've also added about a billion dollars to the chemical weapons and biological weapons protection for counterproliferation purposes with a near term emphasis upon the protection against chemical weapons for our troops.

So the bottom line, essentially, is we've delayed modernization for too long. We have to modernize if we're going to meet our strategy, and by moving forward with this revolution in military affairs, we hope to do so.

Next chart, please.

What we need to have as well as a revolution in military affairs, we need a revolution of business affairs. That means we have to slough off excess weight that we still carry from that long winter of the Cold War. This is going to free up resources that we can then use to modernize the force. It will make our support organizations more responsive to the warfighters they support. We can sharpen the blade and shave the hilt and give America a sword that's far more lethal and more agile.

With respect to infrastructure personnel, the modest reductions in active forces that we have proposed will be targeted upon supporters and not shooters. We'll reduce roughly 109,000 civilian and military infrastructure personnel.

The subject matter of BRAC. Even after four BRAC rounds, we still have excess facilities. Our force structure is down roughly 33 percent. It will be down to 36 percent as our plans proceed, but over the same period, infrastructure has been reduced roughly 21 percent. So I think the QDR analysis confirms that we're still carrying some excess weight.

Yesterday on one of the television programs I tried to compare it to, for example, our participation in the Olympics if one is a decathlon contender. Yes, you can have speed and strength and you can run the 100-yard dash, but you also have to do the pole vault and the high jump, and perhaps even do some swimming and other contests to show that you have the all-around capability. If your professional coaches too you that you're carrying roughly 15 pounds too much weight, you have a choice you can make. You can either carry the weight and not be able to compete effectively, or you can reduce the weight. That's essentially what we're talking about here. We've got a little bit too much weight that we're carrying. We can use that money by slimming down our operations and to plow that into the kind of modernization that we believe is necessary for the future.

I know the word BRAC strikes terror in the hearts of many. It used to strike terror in my heart, as well. Having been on the receiving end of a BRAC round, I understand about the anxieties that it does, in fact, cause. But a number of communities have fared quite well. Some have been in rural areas, many have been in urban areas. Perhaps that's a factor that future rounds should look at.

But the past BRAC rounds are now breaking even, and by the year 2001, they'll pay back over $5 billion annually, year after year, money that we can again use to equip our troops with the most advanced weaponry. So we believe what is needed is to take the next step, so we're asking Congress for the authority to conduct two additional BRAC rounds.

In addition to the BRAC rounds, we need to reengineer and streamline. We're making some real progress in some of the reengineering aspects of our business operations. I've spoken about this before, but travel reimbursement is now being revolutionized, as such, and we will save something in the neighborhood of about $260 million dollars this year. We hope to triple that in just a couple of years and perhaps go much further than that as far as just travel reimbursement savings.

We will also make some achievements in financial management and acquisition reform for large programs. But we need to have a much more extensive revolution in business affairs. We need to have more outsourcing and downsizing. We need more privatizing. We will be requesting some relief from the current level of regulations that we now have.

It's interesting to note that Congress has, in fact, deregulated the travel industry; trucking; airlines; and others, but the Department of Defense remains one of the most heavily regulated operations in the world today. So we need some relief. That's going to take negotiations. That means it's not going to be easy or simple, but if the Congress wants us to become more efficient and to become more streamlined in our operations, we're going to need some help from the Congress itself.

I've appointed a Defense Reform Task Force overseen by Dr. John Hamre. We hope that that task force will be able to work very closely with the National Defense Panel in the coming months and by next December be able to present to the Congress recommendations and ways in which we can, in fact, become far more efficient in the way we operate here at the Office of the Secretary of Defense and the defense-wide agencies. We don't have much time to waste, so I'm asking them to complete their analysis and recommendations by the end of next November.

The bottom line is that we have to deregulate the Department so we can become as efficient and agile as our warfighters. The American people have indicated they don't want to tolerate waste and inefficiency, whether it comes from tradition or legislation, so I'm hopeful that in the coming weeks and months we'll be able to work with Congress on some very contentious issues, but develop a consensus that will sustain us over the long term.

When I was appointed to serve as Secretary of Defense, I indicated that it was my hope to build a long term consensus and a bipartisan consensus on what we needed to do to have a solid support for defense strategy and national security strategy. It's not going to be done in one step. I see this as the first step in a fairly extensive process. It's going to take several years in which we finally reach that consensus on where we have to go and how we have to get there. I see this QDR report as being the first step. Next will come, obviously, the National Defense Panel which will provide a second opinion to the Congress. We will also, as we have been, work with the National Defense Panel to see if we can't reconcile whatever differences we might have, and then present that to the Congress by next December and then from that point work with the Congress to see over the next several years whether we can't build that strong bipartisan consensus for what needs to be done to keep us as having the best military in the world.

That's the one final comment I want to make before yielding to General Shalikashvili. We do have the finest military in the world. Every other country that we have been meeting with envies us. They come over here asking how can we be more like you. So while there are some negative stories that we focus on from time to time, we have to keep in mind that the overwhelming majority of the men and women who are serving us are doing so at extraordinary levels of proficiency and excellence, and we owe them a great deal of gratitude.

I'm going to yield now to General Shalikashvili. He'll make a presentation and then I'll come back up.

General Shalikashvili: Let me begin by outlining just how extensive has been the involvement of the Service Chiefs and our combatant commanders, their staffs, and of course OSD and the Joint Staff in this defense review. In fact the level of CINC and Service Chief involvement in this process, some would say has been unprecedented and has been a major strength of this review. In dozens of briefings and scores of meetings, their insights and their perspectives have informed our analysis every step of the way.

From the beginning, we were in fact determined to conduct a strategy-driven review, and we've done just that. But we have also learned an awful lot during the last four years. We learned that the strategy requires us to look at much more than just major theater wars beginning from a cold start, so we undertook an assessment across the entire spectrum of anticipated operations -- from specific military tasks to do the shaping of the strategy, through small scale contingencies, to major theater wars.

We used a broad array of different analytical tools from seminars, wargames, and computer modeling, to intensive sessions where senior civilian and military leaders involving hundreds of people over a period of well over four months. We examined a series of 45 plausible scenarios describing future security challenges. We brought in CINC war planners and service war planners as well as other experts, more than 200 professionals to wargame the forces necessary to meet our future requirements. Then we met face to face with the Deputy CINCs to validate the findings that we came up with.

We now understand very clearly what demands are placed on our force. The force is, in fact, working hard, as you well know and as you have reported -- working hard to protect America's interests and to prevent regional crises from escalating.

But we also learned what part of the force is busier from another. We learned also where we have the opportunity to thin out the force. We drew upon this vast analysis conducted by the CINC staffs in preparation of their own major theater war plans that they have conducted over the last four years.

Based on this strategy and this most rigorous and comprehensive examination, the Joint Chiefs, the combatant commanders and I believe that the force that you see on this slide depicts the force that America will, in fact, need as we enter the 21st Century.

While maintaining a 10 division force, the Army will accelerate, as the Secretary already mentioned, Force XXI modernization plans. Also a reduction of some 15,000 active duty personnel will be carried out in the Army by deactivation, consolidation and realignment of headquarters and support facilities. The Army will also restructure its reserve component. It will shed some Guard combat structure that provided for strategic depth during the Cold War, but which is now no longer needed. It will also accelerate conversion of some units from combat to combat support roles -- relieving an important warfighting shortfall. These adjustments will result in a Reserve and Guard end strength reduction of some 45,000 personnel.

The Navy, in turn, will retain 12 carrier battle groups and 12 amphibious ready groups, but it will reduce the number of surface combatants in a fleet from 128 to 116 to reflect the more capable ships now coming on-line. We also, in our analysis, revalidated that our submarine force can be reduced from 73 to 50 boats. These fleet reductions, combined with streamlining of overseas infrastructure and a transfer or some combat logistics functions to the Military Sealift Command, will allow the Navy to reduce active and reserve end strength by 18,000 and 4,100 personnel respectively.

The Air Force will maintain 20 fighter wings, but will consolidate fighter and bomber units to streamline its command structure. This will result in a force structure of just over 12 active fighter wings and eight reserve wings. The Air Force will pursue an aggressive outsourcing plan. It will reduce its force structure for continental air defense and handle the U.S. air sovereignty mission with other forces. These initiatives will allow the Air Force to realize the reduction of approximately 27,000 active duty personnel.

The Marine Corps will maintain a three Marine Expeditionary Force capability to support the strategy, but will take modest reductions in end strength through restructuring.

We, of course, also examined our nuclear force posture. Until START II is ratified, we will maintain the START I force as mandated by Congress. However, we remain committed to START II and START III and plan to use the savings from these reductions possibly to further our national missile defense program.

This next slide provides a summary of our end strength adjustments. The total active duty end strength will be adjusted to 1,360,000, down 36 percent from 1989 -- with 835,000 in the reserve forces, down 29 percent from 1989; and civilian personnel will decline to 640,000, down 42 percent from 1989. We believe we can make these reductions and still support the strategy.

Let me point out that while these reductions are essential if we are to meet our modernization goals, these reductions will not be easy. These are not positions or spaces that I'm talking about. They are people. Every man and woman who leaves the service is a unique story in his or her own right. To keep faith with our people, our most precious resource, we will offer a wide range of programs and services as we did during previous drawdowns. These will include early retirement and voluntary separation programs; selected continuation of benefits for separated members; and comprehensive transition support assistance.

Some of these tools will expire at the end of fiscal year '99, and we will ask Congress that they be continued beyond then so that we can implement these reductions fairly and compassionately.

Throughout the QDR process we attempted to minimize the impact of force reduction on those who will be leaving and on those who will stay. As I have said many times before, our major strength is our men and women. They and their families must remain our highest priority, and we must continue to provide for their quality of life.

From the beginning of this process we were very conscious that we must balance the requirements to invest in a force of tomorrow with the requirement to field a trained and ready force today.

Of course it would make very little sense to break the force today to pay for tomorrow's. Consequently, we looked for other ways to generate the resources for modernization, and avoided options that would unacceptably degrade readiness, and readiness is already challenged by the high operating tempo we face in every one of our services.

We believe we can reduce the stress on the force in a number of ways to improve time at home for our servicemembers with their families, and still maintain a high level of operational readiness.

First, we will continue to fully fund current readiness. Next, we must look more closely at how we employ units which are in high demand such as our Patriot air defense units and electronic warfare aircraft or air and military police units -- just to name a few. We have also made prudent man-year reductions in major service and joint exercises.

Our business is all about making tough choices. About who goes where and when and for how long, and the overall impact on readiness and quality of life is a very big factor in those decisions. Let me be clear on this. Ready forces will always be our top priority.

But as much as we emphasize today's readiness, our eye was always on the future, on a vision to guide our modernization effort and our future development, to assure our military excellence well into the 21st Century. Last year we introduced Joint Vision 2010, our unifying vision based upon revolution in military affairs technologies and on new operational concepts as shown on this chart behind me.

Dominant maneuver, which will emphasize mobile and agile organizations to rapidly and decisively employ widely separate forces to attack enemy weak points throughout the full depth of the battlefield.

Precision engagement, which will enable our forces to better locate the targets that count, to strike with decisive results, and with minimum effort.

Full dimensional protection, which will rely on active and passive measures to protect our forces.

And focused logistics, which will feature fusing information, transportation, and other logistics technologies to allow the precise delivery of "just in time" support.

Undergirding these concepts is information superiority -- the ability to collect, process, and distribute vast amounts of information to our forces while denying that same capability to a potential enemy. In effect, Joint Vision 2010 captures the revolution of military affairs and it is the umbrella concept for bringing together service vision and service experiments that will lead to our force for the 21st Century.

To realize our vision for the future, we must take steps to free resources for investment in modernization. Our challenge is to capture this potential for tomorrow, while preserving a healthy force for today. We believe the QDR balances these competing requirements.

For the near term, the QDR concludes that we can move towards a leaner force by reorganizing headquarters, trimming support functions, improving our ability to manage OpTempo and PersTempo, and realigning reserve forces.

But that will not be enough. The revolution in business affairs which has catapulted the U.S. economy back to world leadership must be applied to the business of the Department of Defense. Implicit in this effort must be additional base closures. As unpleasant as this may be, I do not see how we can get there from here without shedding the unnecessary infrastructure capacity. This will require sustained, genuine collaboration and cooperation among the Department, the services, and the Congress.

Along the way we must never lose sight of our bedrock commitment to our people -- both uniformed and civilian. Keeping faith with them is good policy and it is the right thing to do.

The QDR provides a rational, prudent, and well thought out approach to keep our armed forces strong, and America's interests protected well into the out years.

This has been a major effort for all of us, and it encourages creative thinking and cooperative solutions. Most importantly, it set as its standard whether the recommendations would lead to a better, more effective joint force, best suited over the near term, mid term, and long term to protect America's interests.

I'm very confident that we have chartered the right course. I fully support the recommendations of the Quadrennial Defense Review

Thank you very much.

Secretary Cohen: Before we entertain your questions, let me take this opportunity to express my deep appreciation to Deputy Secretary John White and to General Joe Ralston. They have been deeply involved in this process from the very beginning. In fact it was Deputy Secretary White who undertook this analysis and then handed it to me as I came in, and we've worked together for the past four months on this project, along with General Ralston and General Shali. Also John Hamre, and I want to thank Ted Warner and Bill Lynn. They have been deeply involved in this process, and they will be available after General Shali and I depart to answer any other questions you might have. But now we'll entertain your questions.

Q: Regarding your recommendation to add a billion dollars in chemical defense, I'm curious. That effort's been going on for years now. What did you see when you came here that you were dissatisfied with that led you to recommend a billion dollar increase? And why in chemical defense when the CINCs recently said the top priority was biological warning and the ability to attack underground targets.

Secretary Cohen: Because I think the threat assessment has changed in recent years. There is greater emphasis placed today on the need to develop protective measures against chemical weapons. I could point, for example, to South Korea. In my own judgment, I believe there is military support for this assessment, that we have underestimated the capacity for the launching of a chemical weapon attack by the North. I think we are deficient in many respects across the spectrum as far as dealing with chemical weapons. I think the chemical weapon threat is proliferating far beyond North Korea. They are being manufactured by a number of countries and are spreading. So we think that is a very serious threat to our troops, as well as to our people here at home. That's one of the reasons, for example, in the Cooperative Threat Reduction II, the Nunn/Lugar/Domenici approach, that we're now examining ways in which the Department of Defense can cooperate and help organize and consolidate some of the activities dealing with states and local communities. By being engaged with FEMA, EPA and other local organizations, we think that chemical weapons, as well as biological weapons, will be the threat not only of tomorrow, but of the very near today.

Q: Mr. Secretary, as someone who has fought in the past to keep bases open in your own state and have not always been happy with the BRAC process, do you have any qualms about saying to people who thought their fight was over, that you may well be vulnerable again?

A: Obviously, as I indicated before, I understand, having been through four rounds of BRAC proceedings, they're not pleasant. But in my position I have to take a look at what's in the overall national interest, and if we look at what needs to be done as far as slimming down, becoming more agile, using those funds that are currently being devoted to excess capacity, using that for modernization, I really have no option but to say that these are the choices.

We can continue doing what we're doing, we can carry the excess weight. We won't be able to run as far or as fast or to jump as high as we need to in the future, but if that's the choice Congress wishes to make, then obviously it still has the power to do that.

My hope is that over a period of time we can reach a consensus on what has to be done as far as reducing these facilities. It's going to be, obviously, a difficult subject to come to grips with because local jobs are at stake, economic considerations are involved.

What I hope to do is to present a number of success stories. I will do that tomorrow. I will release a list of those bases that have been closed, that how have been converted into very viable commercial enterprises to show that yes, the pain is difficult in the short term, but in the long term, the benefit may be much greater.

It's never pleasant to deal with these BRAC rounds, I know.

Q: Do you think it's too political?

A: We hope that politics should be excluded from this. In the future, as in the past, we've tried to minimize that. As I've indicated before, I was not happy with the way in which one BRAC proceeding was conducted, but in the future years we were able to modify that, and we learn as we go along. We're learning as we go into the conversion process. We're shortening up the timeframes on which we're able to get the domestic agencies involved, provide the kind of funding, the economic assistance. All of that has come about through an evolutionary process, and I would expect that we would have that in the future as well.

Q: You have a process here that raises two words to many of us. It will be, perhaps, a decade or more before you get your new tactical aircraft on-stream in the numbers you want. We don't know about the Joint Strike Fighter yet. The Army's maintaining ten divisions, yet you're cutting 60,000 people. The two words are "hollow force". How do you prevent that from happening?

A: I would yield to General Shalikashvili to give you a more detailed answer, but we have talked and worked closely with the Chief of Staff of the Army. He found that some of his units were, in fact, not well rounded out. That he could make these reductions in combat force structure, as such. They are modest in nature. That he could round out his ten divisions more capably, and that he feels that he can accomplish his assigned objective. So it was something we looked at very closely to make sure that...

We tried to minimize the cutting of any of the teeth, and to take as much as we could out of the support elements to make sure that... In the past we've taken too much out of the teeth and left the support. We're trying now to reduce the combat support elements and keep the teeth as sharp as we can. So we feel we can carry out that mission adequately.

Q: Mr. Secretary, you started by saying that you had determined that this would be based on no unrealistic assumptions. There are those who say that within the next three years, given balancing the federal budget and the population getting older, that assuming a $250 billion defense budget beyond the year 2000 is simply unrealistic, unless some major event occurs and the world rallies around the flag. How would you answer that?

A: It all depends on what the American people want for this country. If we intend to remain a world super power, shaping and influencing events that will work to our advantage, then we will maintain a budget that is roughly 3.2 percent of our total overall national domestic product, as such. The GDP, when measured against this defense budget, I think our budget's about 3.2 percent of GDP and may go down below that three percent. That will be the lowest it's been since prior to World War II. We think that prudence requires us to maintain a level that is about 15 percent of our overall spending in our budget, that that's not too much for the American people to bear for the benefits that we get out of having a stable, relatively peaceful, prosperous world in which we're sharing in that prosperity.

So it's an issue, obviously, which can be decided by future Congresses, and will, but we think it's important to make this effort to persuade the American people that this is the amount of money that will be necessary in order to keep us free and strong and prosperous.

Q: You said prior to the release of this that there were going to be some tough decisions, and that some people were not going to like some of the tough decisions you had to make. Yet as you, yourself, mentioned, a lot of the criticism is that there weren't any tough decisions, that not enough was done.

What do you identify as the toughest recommendations in here? And number two, were there any recommendations that you recommended specifically, in other words, that weren't in what was presented to you by subordinates, but that you made an executive decision and said I want this.

A: First of all, I would invite you to follow General Shali and myself up to Capital Hill tomorrow. If you think there were no tough decisions, I want you to listen to the questions that will be directed at me with all of the force of this full spectrum dominance. (Laughter) I expect quite a few arrows that have a steel shaft to come, and I intend to deflect them to General Shali, as a matter of fact. [Laughter]

But questions dealing, obviously, when you're talking about cutting personnel, that has a major impact upon families, whether they' in combat or combat or support or civilian. That certainly is going to be very difficult for them.

If you're talking about cutting virtually in half the F-18 proposed purchase, that is not without some pain and anxiety on the part of the Navy. If you're talking about reducing the F-22 buy by a full wing, that doesn't come without, certainly, questions and objections from the manufacturer, not to mention the Air Force. We've also reduced other... We've had to cut back the total purchase of the V-22. We have reduced the number of our JSTARS in terms of what our proposed purchase is. There are a whole variety of programs that we've had to moderate in terms of the purchase in order to be able to sustain them at an affordable rate. So there are a number of items in the budget that will certainly be difficult for many people, but the personnel, the base closures, the other activities we're recommending that need to be addressed, the change in legislation, the 60/40 rule and others, all of those will be painful, I think.

Q: Can you follow up on your speaking with Congress specifically, the members of the congressional delegation from your own home state, three out of four say absolutely no more base closings. (Laughter) How are you going to get the Congress to go along with this? You want two rounds? How can you get them to even go with one?

A: I've indicated before, I intend to present the Congress with options. If you want to keep bases, then you can't expect to modernize. If you want to hold onto facilities, then you will not protect your forces as well. These are not choices that I make individually or the Chairman makes, this is a collective effort. The Congress of the United States represents the country, and if the country wants to make those kinds of decisions, they have to also be willing to live with the consequences. What we're doing is saying here's the best possible military advice we can give you. It's a blueprint that we think will get us to where we are today, to where we have to be tomorrow. If Congress disagrees and has better options, we're willing, obviously, to listen to them. If the National Defense Panel has a better alternative, obviously, we will take that. For everyone who has constructive criticism, we will listen to it and try to work together to say here are the options. If you don't want to cut back on this excess capacity, then I can't get from here to there. I can't buy as many systems. I can't put this new technology in the hands of the warfighters.

So we're making a choice. We're compromising the ability of the warfighter to fight those kinds of adversaries who will be well armed in the future, in order to maintain facilities that we have deemed to be excess. Those are the kind of choices that I can't make alone, the Chairman can't make, that the President can't even make as the Commander in Chief. We have to do that collectively as a Congress, a Pentagon, and the Presidency. So it's a collective effort. What I'm saying and have been saying all along is here is the first step. Obviously, there will be disagreement about it, but we want to make you aware of what the options are so that you also can accept the consequences and not have it both ways.

So when I come up to testify next January or February on the budget and I show the line doesn't start climbing any more, it starts to level off, and they say where's the modernization? I'm going to say it's in a warehouse. I'm going to say it's in a facility that's been declared to be excess. I'm going to point that we didn't get the changes necessary to allow us to do what corporate America has done, and that is to downsize and to outsource and privatize. We're not allowed to do that. Therefore, we're going to carry too much weight; therefore, we won't be able to compete at the Olympic level that we need to compete if we're going to remain a world power.

Q: What has been your initial reaction from the Congress? What reaction have you been receiving from the Congress initially?

A: The reaction has been polite... (Laughter) It's been mixed, as one would anticipate. Many have said it's a good first beginning. Some have said we think you should go further.

It's always interesting to see how one approaches this. Some would say that it's a strategy-based analysis you've made if you cut somebody else's programs. It's a budget-based decision if you cut my programs. (Laughter)

I think you can say it's been mixed, it's been polite. I think I can work with the Congress. Obviously it will be very contentious on some areas. We have to deal with the Guard and Reserve issue -- that will be an area of great controversy. But that's what a democratic society really, the essence of it is, is that we have the ability to debate these issues and arrive at a consensus in some fashion.

Q: If I could ask General Shali on his trip to China, specifically General, how was your warning to the Chinese about the instability and the famine-driven desperation in North Korea? What was their reaction?

A: This relates to the QDR, right?

Q: Well.... It's one of the emerging tiers.

General Shalikashvili: Let me very brief about it. Certainly, as you can imagine in almost all of my discussions with my military counterparts we did discuss North Korea -- as much me trying to gain an insight that they might have that we don't have about the situation.

We share the fact that hunger exists there, that fuels instability, that that's a situation that has to be watched very carefully. However, the Chinese military leaders I spoke with do not think that the conditions are yet such that they could spill over into a conflict. They are less concerned about it than I would be, but that's generally, if I were to summarize, their view.

Mr. Bacon: We're going to turn this over now to General Ralston and Deputy Secretary White.

Thank you very much.

They'll take your questions. We also have Ted Warner here, and Bill Lynn.

Q: The far term force that you're aiming at, you seem to be very precise in the degree you want to bank on technology. You want it all, and that drives the acquisition budget requirements.

The report seems less precise in the extent to which you want to gamble on new organizations which would save money. Nothing about reducing the echelons of command and so forth.

Is that a fair take, that you're much more precise on the hardware than on the organization...

Deputy Secretary White: I think what you're seeing is that as you go out into the out years of the program, we're going to have to learn, as is reflected in the report, from the experiments, from the simulations, from the tests that are going on now. Only then will we be able to say what organizational changes there will be. We've leaned into those in terms of some of these manpower reductions which you see.

Q: In the past one of the main problems in the procurement accounts has been that that money originally slated to buy the weapons is gone elsewhere -- to pay for Bosnia, etc. How can you guarantee that that will stop?

A: We can't guarantee it at all, but much of this exercise, once we've matched up and had the new strategy and matched the strategy to what we wanted, was making sure that we made changes in efficiencies in the operation and support accounts so that, in fact, we saved the money there to put back into requirements there so that, in fact, we wouldn't each year have to turn to the modernization accounts in order to cover unpaid bills.

Q: You said you were going to save an estimate $3 billion by reducing the buy of the Ospreys and accelerating the production. How much are you going to save by cutting the buy of the F-22 and the F-18E?

General Ralston: We're looking across the board, the TacAir planes, about $30 billion. It's a substantial amount.

Q: For two planes, the 18 and the 22?

A: And the JSF.

Q: On the National Guard, I can't figure out from reading your report, you say you want to cut Reserve and Guard by 45,000. Could you tell us the time table, what percent is Guard and what is the Army Reserve? And what gives you confidence that you'll be any more successful than General Powell was when he tried to climb that mountain?

Deputy Secretary White: I can't give you the precision because it hasn't been formulated yet. As I think is reflected in the report, we've asked the Army to go off and conduct a so- called off-site review in order to figure out how to do that.

So in the numbers that are identified there, we've not tried to make it any more fine than it is. We've turned it back to the Army. This is an issue the Army has to deal with. They will deal with, and they will refine it and come back with a recommendation.

Q: Are we talking about next budget cycle, or when?

A: We're talking about in a matter of, in time for the coming budget cycle. So in a matter of a couple of months.

Q: How will this review affect the U.S. force current level in the Gulf region? Will it increase or decrease the level...

A: We've examined our requirements in the Gulf. Those requirements do moderate somewhat over time as we see the need for them to moderate. We don't see any change in our policy with respect to deployments in the Gulf.

Q: The report mentions a bigger emphasis on smaller [tail] operations. How is that going to be reflected in the future budget requests?

A: It's already reflected in the budget. The real issue here is to recognize what is going on in reality. That is that our forces today are conducting large numbers of contingencies and other activities around the world, if we look just over the last four years. We want to reflect that in the strategy, as we have done; and we want to reflect that in the capability as we have done, by calling out this requirement and making sure that we train to it, that we resource for it, and that the forces are ready to conduct these various operations.

Q: What specifically do you have planned for the $15 billion healthcare program for the military?

A: When you say the $15 million...

Q: The $15 billion healthcare plan. There's very little specifics in here...

A: I'm sorry, I didn't understand your question.

Q: ...user fees or...

A: No, we do not plan any user fees. There are no fundamental changes here in terms of where we have been going with respect to our healthcare programs, in terms of benefits.

Q: Do you believe that if you can reach some accommodation with some of the lawmakers on the Air Force maintenance depot issue, that the Congress might be more receptive to more base closing rounds? A number of them have that expressed opposition have raised that issue, what was done at the Air Force maintenance depots.

A: We know we have followed the law with respect to all of our actions with respect to BRAC, and that includes McClellan and Kelly Air Force Bases. Those processes are going forward. The competitions are going forward. We'll determine whether or not the public sector wins in terms of a depot or whether the private sector wins. We'll determine where those sites will be.

I think we can get that behind us and focus on the future in terms of, as the Secretary said, the need for these reductions of excess bases in order to pay for modernization.

Q: Does this plan envision more privatization like is going on at Kelly and McClellan? Does it envision more at the maintenance centers?

A: This program envisions more privatization and outsourcing in general; that is by the services. And it also envisions, as the Secretary said, two more BRAC rounds. So you don't want to mix those two. So we have two more BRAC rounds proposed. In those BRAC rounds we'll follow the rules under the law.

Q: Can you explain the F-22 three-plus-two plan a little bit? And if the Europeans don't pony up for Joint Stars, is there any chance that we could reinstitute the JSTARS cuts in the out years?

General Ralston: Let me take the F-22 question first.

As the Secretary mentioned, when you bring a more capable airplane like the F-22 on board, rather than having a one for one replacement for the F-15C air superiority airplanes, i.e., the four wings that we have now; we would replace those four wings with three wings of air superiority F-22s. As you know, the F-22 from day one will have an air to ground capability as well.

The QDR also will task a COEA, or a cost and operational effectiveness analysis, to look and see what should be the right replacement for the half a wing of F-117s and the two wings of F- 15Es as they get older. It's quite possible that a derivative of the F-22 may be the solution for that.

Back regarding Joint Stars, it's something we feel would be of great benefit to NATO. That obviously is a NATO decision. We'll just have to let that work through the process.

Q: General, can I follow up on your answer right there? When the Bottom-Up Review was done four years ago, the projected capabilities of F-22 were pretty well known, and as far as I know, they haven't increased very dramatically. At that time it was two wings for each of the two MRCs. You absolutely had to have four wings of F-22s. What has changed in the four years since, now that we only need three wings? Has the second MRC gotten 50 percent smaller, or have just the dollars shrunk?

General Ralston: No, this is a combination of many things. We have done more analytical work since the Bottom-Up Review as we went through this time. We also have the realism of the other modernization that we need to do. We have to look at the constrained resources that we've got. So it's a combination of many factors that we have to look at. We continue to update our plans. We believe the F-22 will be a very effective airplane in the air superiority arena, and that's why our warfighting community believes that was a reasonable trade to make.

Q: The Secretary mentioned real briefly about the end of the Post Cold War dividends. Just a point of fact, is he basically saying the peace dividend is spent?

Deputy Secretary White: The Secretary was focusing on the fact that, as he showed on his chart, that as we went through the drawdown, we in fact markedly, by two-thirds as opposed to about a third, reduced our modernization program. His point was that that so-called procurement holiday is over, and we're going to have to now have a robust modernization program.

Q: You remain strikingly conservative with the platforms, even though you talk about the revolution in military affairs. What makes you think, given the proliferation of imaging satellites, precision strike weapons -- which in other parts of this review you foresee around the world -- what makes you think the large platforms like the carrier battle group will remain viable after 2010?

A: We have looked carefully at both the offense and the defense in all of this and we spent a lot of time on these technologies. We're confident with the defensive systems that we have on these modern platforms that they will survive the battlefield, including the carrier task forces as they evolve out into the future.

So we're very confident, given where we are, that in fact with this rate of evolution in terms of the threat, that in fact these capabilities will survive.

Q: Does your confidence drop off a cliff after 2010, or do you think they just continue...

A: The point of the confidence and the stress in the report with respect to the emphasis on the Vision 2010 and everything that we are trying to do in terms of the experiments and simulations, what the forces are doing, what the services are doing, reflects just that concern. That is high rates of technological change, and therefore, possible rapid changes, and we're going to have to adjust to them.

Q: ...in the future, do you anticipate any change in the military assistance program in the Middle East like for Israel and Egypt?

A: No, we do not anticipate those kinds of programs in this review.

Q: ...modernization funding. In '99 and '00 there's the drop again within the QDR from the budget request before they go up to the notional $60 billion level. Why that drop in the two years?

Deputy Secretary White: Simply because we have done a much more fine scrub of where we are in terms of programs and making sure that we have a program that we can execute. In doing that, therefore, we thought it was prudent to make those kinds of adjustments.

Q: How much money specifically are you adding to the acceleration of Force XXI?

A: About a billion dollars.

Q: The Secretary has mentioned that the Guard might take on the mission of protecting from biological and chemical attack at home, and it was mentioned in Korea. Is it perceived that there's a greater threat now from chemical and biological than there might be from nuclear?

A: I wouldn't try to make that choice. The point is that in our concern, the threats from chemical and biological warfare have clearly risen. That's been reflected in the analysis we've done, and it's been reflected, of course, in our intelligence assessments. And as a result of that we, of course, are spending a good deal more money on those programs.

Q: The 123rd Air National Guard in Louisville, Kentucky, apparently is looking at some cuts. Senator Wendell Ford has said he's going to hold up some Air Force generals' promotions on the Floor to keep those cuts from happening. He said he's made that happen before in 1994. Will he be successful this time?

A: I have no idea what your comment means, so I don't know.

Q: The JSF numbers, they cut JSF numbers at the same time, I believe one of the viewgraphs said the Navy numbers will go up. Could you explain how we end up breaking down the JSF numbers to the services?

General Ralston: When we looked at the JSF numbers overall, we did a pretty thorough analysis on what factors were looked at for attrition, for depot, and so forth. The numbers that we reduced were a result of looking at those attrition numbers and depot numbers.

With regard to the Navy buy, if JSF comes on early, looks good, and the Navy is satisfied with that, then you would have an increase in the numbers of JSF with a corresponding decrease in the numbers of F-18E&F.

Q: Sorry, an increase beyond the new 2000-something number? What I don't understand is you cut the F-18E&F numbers from 1,000 to 550, basically. There's no corresponding increase in JSF numbers to make up the force difference for the Navy.

A: When we did the numbers...

Q: [Inaudible]?

A: There was an increase in Navy numbers

Q: [Inaudible]?

A: The reduction in overall numbers...

Q: [Inaudible] can you now breakdown within that total.

General Ralston: We will be happy to get with you and give you a detailed breakdown on that. But basically, it is a reduction in the pipeline numbers, the attrition numbers, the depot numbers.

Q: Secretary White, Can I follow up on that aircraft decision? It doesn't compute for me that the Navy's building the F-18E&F for roughly $80 million an airplane; and the Air Force is building the F-22 for roughly $160 million an airplane -- your figures -- both to face the same threat. Now both the Navy and the Air Force cannot be right. Isn't one of those planes wrong? Why don't you cancel one or the other?

Deputy Secretary White: They're for quite different purposes. I'll let General Ralston elaborate, but they're for quite different purposes, and they obviously are substantially different sizes in terms of the buys, for different missions in terms of the maritime aviation mission and in terms of the air superiority mission for the F-22.

General Ralston: I think that's exactly right. You have to look at the airplane and the concept of operations that goes with it. In the case of the F-18E&F, it will be operated off of carriers, to be used close in, to use a roll-back concept of rolling back the defenses. Whereas the F-22 primarily goes much deeper. It is anticipated it would be used over enemy territory by itself. So there's a difference in operational concept. They are very compatible.

Q: Either you need stealth or you don't. An enemy can knock down either plane if they've got the same weapons, right?

General Ralston: If you are operating close enough to your carrier battle group that you can do the roll back concept, all you want to do is defeat the defenses. You can either do that by taking the defenses out, or you can do that by a higher degree of stealth. So it depends on where you're using the airplane and the concept that you're using it in.

Q: On the BRAC round, we've heard numbers of about 46 major facilities that need to go out, and the QDR document says two BRAC rounds of about the same equivalent of '93 and '95 which would be a little below that number in major facilities. What is the target number?

Deputy Secretary White: We don't have the precision of a number because we haven't done the analysis. Remember the way BRAC is done, you have to get the legislation, then we have to do the analysis, then we have to make the recommendations. So all we have done here is provide some notional sense of how large these are by relating them to the past so people understand roughly what we're talking about.

Q: On the National Guard issue, I'm a little confused. The report says you're going to take away low priority combat brigades and replace them with combat and combat service support units. Now you're saying the whole thing is up in the air and can be resolved by this off-site conference between the active and reserve components.

A: No. What we are talking about is changing some of the Guard units from their combat role to their CS/CBS role, and we are talking about some reductions in other Guard units.

Q: Reductions that the Army has to resolve with the National Guard?

A: Yes.

Q: I wonder if you could briefly describe the lessons learned from the [inaudible] commitments, and how those tracked with the reductions that you're making in ground forces in Army (inaudible)?

General Ralston: The dynamic commitment is a series of wargames that was designed using various scenarios in the world that we see ahead. Then we took various force levels and brought in the planners from our warfighters. We brought in the DCINCs, and we allowed them to try to employ their forces against those various scenarios.

It turns out that that is a very demanding case to do that, and in many cases drives the force structure, the size of the force structure.

So when we did the analytical work and then applied the military judgment from our warfighters to that, that's where we had one choice of taking down more combat units or taking down a greater number out of the tail side, out of the support side. The warfighters were unanimous that they believed it should come out of the support side of the house. And that's what we have done with regard to the force reductions.

Q: I'm looking for a hard number for the amount you want to save by cutting infrastructure, and which the biggest elements of the savings will be in that overall total? What do you want...?

Deputy Secretary White: We would like to be saving somewhere on the order of $12 to $15 billion.

Q: ...anticipate or...

Deputy Secretary White: Where we will get the savings? First of all, we think we can get in the steady state about seven plus from what we've identified so far in just the operations and support accounts. Secondly, we think we can get about three-plus from the BRAC. That leaves us short. Hence the discussions that the Secretary made in terms of the Defense Panel and in terms of reengineering and other changes in the future. It's a big number. It's farther out than some of the immediate issues, so we've gone a long way, but we recognize we're not there yet.

Q: ...steady state, you reckon you might [inaudible]. I mean BRAC takes a long time to...

A: Steady state, we're saying that in fact we can do something on the order of ten-plus billion steady state with what we have identified to date, and we think we'll be able to do more later.

Q: Given that there's already been four BRACs, why do two more? Why not just do it in a single installment and...

A: It's a question of just the planning and the process and how much you can do in one. These are very complicated process that you have to go through. You're far better off structuring it over time, just in terms of the burden of managing it.

Q: Given Congress' increasing reluctance every time to get a BRAC going, though, wouldn't it be easier to try to get it through one more time than...

A: No, I don't think it's feasible. Given the magnitude that we think we need, to try to do it all at once.

Q: The extra billion dollars for digitization, is that solely to accelerate the schedule for fielding the corps, or is there something else involved in...

A: Mostly accelerating the fielding for what's already been planned.

Q: How did you decide to reduce the submarines -- attack submarines especially -- under the circumstances of the [inaudible] and submarines worldwide?

A: The point is, if you look at the actual chart, the plan for reducing the submarines was down to 52 as it was. The Navy did the assessment. They came back and said they thought they would take out another two. So it's a very modest reduction.

Q: Mr. Secretary, to follow upon the medical question, you said you won't change the way the hospitals operate, so that means no access fees or, I presume, pharmacy charges and so forth. How about the infrastructure of the military medical system? Will you be reducing hospitals to clinics and medical centers to hospitals?

A: There's nothing in this QDR that has to do with substantial changes in the medical program.

Q: The report calls for a force that has fewer people, fewer airplanes, fewer ships. What are you going to say to people in uniform, men and women, who say that the inevitable result of that, if we're going to keep up with the commitments we already have, is you're asking us to work harder.

A: We spent a lot of time in the QDR, but more importantly, we're doing a number of very specific actions in terms of making sure that that's not the case. First and foremost, the Chairman has said and it's reflected in the report, we are reducing exercises, consciously reducing exercises in order to make sure that we don't stress the force too much. Secondly, we're increasing our analysis with respect to how we utilize scarce assets, measuring them more carefully, expanding that analysis further into the force so that in fact we can measure the tempo and control the tempo as we do on a whole set of scarce platforms today such as AWACs.

General Ralston: I'd like to add just a bit to that. There was a question earlier on that was somewhat related that says how can you make sure you don't have a "hollow force" that we have encountered before. One of the things that we looked at in the readiness part was to make sure that we, in fact, funded our readiness accounts properly. We have learned in the past that we have got to have the flying hours, the steaming hours, the tank miles that's necessary to keep your force truly combat ready. That's important across the board.

Q: On the BRAC, the startup costs of the past BRAC round were high enough that we've just now broken into the black on that whole process. I've heard that the up front costs of two more BRAC rounds could be in excess of $15, $18 billion.

Deputy Secretary White: More like ten. About half a billion dollars a year.

Q: How are you going to eat that?

A: It's in our program. We've made that in our program. If we didn't have the BRACs, we would have more savings up front than we have.

Q: Does the Navy get it's money for the P-3 AIT upgrade? Twenty five percent of the fleet?

General Ralston: That was not a QDR decision. We'll work that through the budget process. [Laughter]

Q: How do you respond to people who say that essentially the revolution in military affairs and the QDR is buying weapons that we were already planning and developing years ago, with the exception of the Force XXI stuff you just mentioned.

Deputy Secretary White: It's not exception to the Force XXI. If you look at what the services are doing across the board as is laid out in the report in terms of experimentation, if you look at what we are doing in terms of thinning the force, which is what is going on, and if you examine where we're going, I think you will find, particularly with respect to munition buys and low visibility platforms and so on, that we are, in fact, implementing the revolution in military affairs.

Q: Did the services offer up these manpower cuts, when you said 'fella's you've got to get your money from somewheres,' or did you impose the manpower cuts?

A: We did this, as the Secretary and General Shali said earlier, we did this collectively, with the services, with the Joint Staff, with the CINCs. We all agreed what the magnitude of the problem was. Once we got to that, then we discussed and worked out what the magnitude of the solutions ought to be in order to achieve our goals and make sure that we've got a balance between current forces and modernization.

Press: Thank you very much.