Thank you, Mike, for that kind introduction. I am honored to address the Navy League. For over a century your organization has played a special role in advocating a strong U.S. Navy, Marine Corps, Coast Guard, and Merchant Marine. With 60,000 members worldwide, you are a powerful voice for the sea services that are so critical to ensuring America’s security and freedom.
The American people are more aware of our maritime forces now than they have been in a long time. Piracy off the Horn of Africa, and the actions of our skilled and brave Navy SEALs, have reminded us why we have sea services: The United States must be able to project power, protect trade routes, and deter potential adversaries near and far. I’d like to speak this afternoon about how we are addressing the challenges facing our sea services in preparing the Fiscal Year 2010 budget request and the Quadrennial Defense Review. I would also like to talk about our approach to reforming the acquisition process.
The first thing to acknowledge is how grateful we are to the men and women of the Marines, the Navy, and the Coast Guard since September 11, 2001. They have been engaged in operations around the world to defeat terrorist groups and fight the wars in Iraq and Afghanistan. The progress we’ve made owes much to their skill, their devotion, and in too many cases their sacrifice.
To better meet the needs of today’s conflicts, while positioning our force for the future, Secretary Gates last month announced a reshaping of the budget and priorities of the Defense Department. As is often the case when bold action is required, some people may not agree. The decisions were based on three strategic objectives:
• First, take care of the all-volunteer force. Our budget will provide more funding for medical and psychological health programs, and for programs devoted to military spouses and children. Many of these programs have been funded in the past through supplementals. We need to move away from ad hoc funding of long-term commitments. Accordingly, the funding we have added in each of these areas is in the base defense budget for Fiscal Year 2010 and will be carried through the length of the Future Years Defense Program.
• The second objective is to establish an institutional home for the warfighter in the base budget. We need to rebalance toward forces dedicated to irregular warfare, while still hedging against the longer-term risks of larger, more sophisticated adversaries. This means increasing ISR support for the warfighter, especially through unmanned aerial vehicles. It means growing our special operations forces. And it means boosting our global partnership capacity to train and equip foreign militaries to undertake counterterrorism and stability operations.
• The third objective is a far-reaching reform of our acquisition system, starting by making the tough decisions to end programs that are not performing. I will say more on this subject in a moment.
Before doing that, let me highlight some Navy-related aspects of the budget. The United States today stands unsurpassed on, above, and below the high seas. In terms of tonnage, our battle fleet is far larger than any potential adversary. And, no other fleet has anything like the reach or combat power of a single American carrier strike group. One consideration, as we rebalance the department’s priorities, is that the military dominance we enjoy is greater in some areas than others. We looked for ways to strengthen irregular-warfare capabilities while maintaining the overwhelming edge we enjoy in conventional capabilities.
The Navy must be ready for counterinsurgency and other irregular operations, which means dealing with non-state actors at sea or near shore, or with a swarm of speedboats sent by militia groups or countries like Iran. The requirement is for numbers, speed, and the ability to maneuver in shallow waters.
The craft that best fills that bill is the LCS which, despite its past development problems, is a versatile ship that can be turned out in quantity and go places that are either too shallow or too dangerous for the big, blue-water surface combatants. As we’ve seen off the coast of Somalia, it does not take a large ship to carry out antipiracy missions. The budget provides for increasing the buy of Littoral Combat Ships from two to three in FY 2010. Our goal is to eventually acquire 55 LCS-class ships.
The budget also adds funding for our inter-theater lift capacity. Specifically we will increase the charter of Joint High Speed Vessels from two to four until our new production program begins deliveries.
In missile defense, we need to shift the balance more toward theater protection. We need to better protect our forces and those of our allies from ballistic missile attack. Accordingly, we have added funding to accelerate our most capable theater missile defense systems – the THAAD and the sea-based SM-3 program. We also propose converting six additional Aegis ships to provide ballistic missile defense capabilities.
Recalibrating our conventional and irregular warfighting capabilities does not mean under-investing in the conventional side. Even after the changes that we made in this budget, the conventional and strategic modernization programs still take up most of the procurement and R and D budget.
The healthy margin of dominance at sea provided by America’s existing battle fleet, however, makes it possible and prudent to slow production of several major surface combatants.
We will put the Navy aircraft carrier program on a five-year building cycle. This more fiscally sustainable plan will lead to a long-term force structure centered on 10 carrier battle groups after 2040.
With regard to surface combatants, we will delay the Navy’s next generation cruiser program so we can revisit both the requirements and the acquisition strategy. At the same time, we will buy the third DDG-1000 and build all three at Bath, while restarting the DDG-51 Aegis program.
We will also review our overall amphibious warfare strategy before making decisions on the 11th LPD or initiating the Mobile Landing Platform ship.
The Quadrennial Defense Review which has just gotten underway will review how each of these programs fits into our national security strategy.
In the QDR, we will be assessing the nature of the security threats we will face in the future. While few nations today want to challenge our military power directly, we need to understand what might change this calculus in the future. Further, some trends suggest that certain nations could seek to develop disruptive means to blunt the impact of American power, including our naval forces. They will seek to deny us freedom of movement and action and thereby narrow our military options. We need to use the QDR to develop a strategy and program that ensures the U.S. military can deter aggression, project power, and thereby protect our interests and those of our allies.
Let me turn to the subject of acquisition reform. As the Department of Defense’s Chief Management Officer, I have primary responsibility for ensuring the smooth functioning of the department: which technologies we use, which weapons systems we buy, and which business operations are employed. This includes acquisitions. I don’t need to tell you that this is an area that needs reform. Citizens have lost faith in our ability to ensure that we receive a full dollar of capability for every defense dollar we spend on new technology.
Unfortunately, the entrenched attitudes that one finds throughout government are particularly pronounced in acquisitions: a risk-averse culture, a litigious process, parochial interests, excessive and changing requirements as well as budget churn and instability.
The result, as Secretary Gates has said, is a defense establishment that habitually “[adds] layer upon layer of cost and complexity onto fewer and fewer platforms that take longer and longer to build.” What we need is an acquisition system that prepares for and quickly responds to today’s battlefield and evolving adversaries.
The Department is working with Congress to implement five initiatives to reform its acquisition and requirements processes:
• One -- A larger, better trained acquisition work force;
• Two -- A more disciplined requirements process;
• Three -- A greater reliance on independent cost estimates;
• Four -- A tighter execution focus that includes more use of Fixed Price development;
• And five -- A greater willingness to cancel poorly performing systems.
Acquisition reform is not easy. It is an enormously complex and large undertaking. Many smart people have tried, only to meet with limited success. We need to be sure not to make the system worse in our efforts to achieve reform, as has happened sometimes in the past. We need to be careful not to take away critical capabilities or add new burdens that lengthen an already too-lengthy process. Keeping that in mind we must move forward, and continue to improve our acquisition workforce, our procurement and acquisition processes.
Every one of you here today appreciates that the sea services are constantly deployed, whether America is at peace or at war. Moreover, in our current situation – with U.S. ground forces focused on the campaigns in the Middle East and Central Asia – the weight of our conventional and strategic strength has shifted to our air and naval forces. We must and we will keep them strong.
If America is going to continue to lead and prosper in the 21st century, we must have the ability to back up our words, meet our commitments, and defend our values and interests against those who would do us harm.
There is much work to be done. But I am confident that we can make progress and continue upholding our responsibility to keep all Americans safe and free.