In January 2001, the Bush Administration entered office committed to the goal of restoring the strength and vitality of the Armed Forces. After a decade of declining readiness, the new administration was determined to reverse these trends, to rebuild U.S. military capability, and to invest in preparing for future challenges. As President Bush said in his Inaugural Address, "We will build our defenses beyond challenge, lest weakness invite challenge."

The Department has accepted the President’s challenge to fashion a new approach to defense. It has thought anew about how to protect the nation and its interests, reassessing the challenges and opportunities inherent in a changing international security environment, and developing a new defense strategy to cope with those changes. During the past year, the Quadrennial Defense Review (QDR) and the Nuclear Posture Review, as well as informal policy review processes, were the vehicles for this strategic reappraisal. The attacks of September 11 did not deflect the Department’s efforts to chart this new course. In fact, the challenge of the war against terrorism confirmed many elements of the Department’s analysis and created a new imperative to fight the war against terrorism while transforming the Armed Forces.

This section of the Annual Report to Congress summarizes the conclusions of the Department’s efforts to respond to this twin imperative. Chapter 1 provides the findings of the Department’s reassessment of the security environment. It highlights the fact that geopolitical and military-technical trends create greater uncertainty, unpredictability, and potential for surprise. Chapter 2 provides an overview of the new strategic course charted in the Quadrennial Defense Review. The new course calls for the United States to change its approach to structuring its global presence, current defense planning, transforming the force, and managing the various risks that affect the ability of the Armed Forces to protect the United States, its allies, friends, and interests. Chapter 3 provides a report on the war against terrorism, including an early assessment of lessons learned from the first phase of the conflict.