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"Defense Innovation Days" Opening Keynote (Southeastern New England Defense Industry Alliance)

As Delivered by Secretary of Defense Chuck Hagel, Newport, Rhode Island, Wednesday, September 03, 2014

[Senator] Jack [Reed], thank you.  As Jack noted, we came over to the Senate together, 1996, served on the Banking Committee together for 12 years. My first trip to Rhode Island was with Senator Reed.  We held a field hearing in Providence on housing issues, and then he treated me to some of the Italian cuisine in the state.  And I couldn’t have had a better bridge into, or introduction to, the state, the people, the cuisine, the fiber, the character of this state than with Jack Reed. 

I think this man embodies exactly what’s best about our country – his selflessness, his courage, and how he comes at problem solving, how he represents people.  You all know he’s a West Point graduate; he himself served in the military for many years after he graduated from West Point.  So Jack, for your continued leadership and support, and I think as was noted here a few minutes ago, he is truly one of the preeminent voices in our country on national security and will continue to be a hugely important voice as we deal with some of these great new challenges ahead.

And some of these I will talk about here in my remarks this afternoon, because, as Tom said and others, this is really about innovation, these three days, and everything you all have done and everything you represent, to build on the past, build on to what has been done already, and it is historic, the accomplishments.  So Jack, thank you.

To my friend Governor Chafee, Linc, thank you.  As Linc noted, we served together, the three of us at the same time in the Senate.  Linc and I sat next to each other on the Senate Foreign Relations Committee for many years.  I always admired Linc’s ability to be able to cut through much of the fog, and often ask the questions that no one else would ask, and get to the real essence of a hearing.  I’ve always admired that about Linc Chafee, among other things, so Linc, it’s good to be back with you again.  Thanks for your continued service to our country.

Sheldon Whitehouse and I served together on the Intelligence Committee for a couple years, and not often does a freshman member of the United States Senate get assigned to the Select Committee on Intelligence.  I was probably an accident, an aberration, but Sheldon Whitehouse was not.  And the leadership in the Senate knew exactly what they were doing when they asked Senator Whitehouse to serve on the Intelligence Committee in his first term, and [he] continues to make critically important contributions to our country on that committee.  And good to see you again Sheldon.  Mrs. Whitehouse, nice to see you, and thanks for everything you do and continue to do for our country.

To your two Congressmen – one who serves on the House Armed Services Committee, Congressman Langevin – thank you for what you do, and continue to do.  We are grateful.  I always appreciate your questions.  They are to the point and cogent.  Sometimes they put us in a delicate spot to try to answer them, but that’s your job, and I do very much appreciate your service on the Armed Services Committee.  Congressman Cicilline, thank you for your good work, and what you do.  And I know that [y]our delegation – this delegation representing Rhode Island – is as effective in the business of national security as any delegation in Washington.

To Madam President, thank you for allowing me along with the governor and the speakers to come to your state.  I’ll be out before sundown.  I promise.  And to the other elected officials here, for your service and what you do, and also to our industry leaders – Jack said it, Tom said it, others – the industrial base is critical, and it has always been critical to not just the technological edge and advantage that it gives us, and these men and women that Jack Reed talked about who are in the end what is most important for all of us.  And it is the soldier and the Marine and the airman and the midshipman and the Coast Guardsman that we rely on – those men and women every day who make those sacrifices.  And we’ve got to assure them that they will always have that technological edge, no matter what the challenge.

To the Southeast[ern] New England Defense Industry Alliance, thank you for doing this, for bringing everyone together.  I know many of the people represented here today and will be here the next two days from the Department of Defense are very much looking forward to this.  I know some have been introduced, some of our leaders here today.  Thank you all and please give my regards to all of your teams and the men and women who serve with you and let them know how much we do truly appreciate their service.

This “Defense Innovation Day[s]” really says it all.  And I hope – I suspect, as you all do – it will assure that this will not be the first, nor last, day that you will bring people together.  And it really prioritizes as much as anything else, and share in a value-added way, how we are able to keep that edge in a world – a very evolving and dangerous world. 

Because, as you all know, while we’re grappling with many national security challenges – from the crisis in Ukraine, unprecedented threats and turmoil in the Middle East, uncertainty in Pakistan, change of governments in Afghanistan, to growing tensions in the South China Sea – all we are dealing with today, with this confluence coming together today, we also face a challenge of innovation.

And it’s appropriate that we gather here, especially appropriate on the shores of Narragansett Bay, as an area that’s had a long history of innovation benefiting America’s national security.

It was on Goat Island – not a thousand feet from this building – where, 145 years ago this month, the Navy established its first station for researching and developing experimental torpedoes.

It was down the road at the budding Naval War College – which I will visit later this afternoon – where Alfred Thayer Mahan conceived, researched, and wrote his seminal work that defined strategic concepts for sea power that are still relevant today.

And it was just across the bay where Rhode Islanders fabricated the Quonset huts that dotted the landscape of U.S. military bases during World War II.

Today, southeastern New England has become the Silicon Valley of undersea warfare.  It’s not only that our submarines are built here.  It’s that their critical underlying technology, capabilities, and future operational concepts are developed here as well.  The close proximity and strong links between academia at the Naval War College, R&D at the Naval Undersea Warfare Center, and industry at regional businesses both large and small – suppliers, design teams, engineers, manufacturers – all have created an innovation ecosystem that’s vital to supporting our national defense enterprise.

It’s also a vital part of America’s defense industrial base, which is a critically important national strategic asset – one that I am determined to preserve as Secretary of Defense.

The businesses that comprise our industrial base are as diverse as the troops they support… and like our armed forces, they are unrivaled around the world.

Private-sector expertise helps give our military its technological edge, and helps drive the economic strength that undergirds our national power.  And the private-sector industrial base has always been there when we always needed it, and we needed it most – and we need it today.

From churning out over 100,000 combat aircraft during the Second World War… to constructing the Mine-Resistant Ambush-Protected vehicles that continue to protect American soldiers and Marines in Afghanistan… our men and women in uniform have been able to count on American innovation, American industry.  We’ve been able to count on them to make the tools we need to win in battle and return home safely.  They can’t do their jobs without them.

As we all know, our defense industrial base just didn’t suddenly appear.  Building it – and sustaining it – took time, and investment, and close partnership between the Defense Department and industry.  It still does, and it always will.

For all these reasons, the health and the vitality of our defense industrial base has been a top concern for all of us at the Department of Defense.  I know it’s a top concern for President Obama.  And that concern only grew as we weathered last year’s damaging effects of sequestration.

The deep, steep, and abrupt cuts of sequestration took a toll on the force by cutting into the readiness of all our troops.  But we were also mindful of the harmful impact on American industry, and the ripple effects it caused up and down the supply chain.  And while the budget agreement reached last year lessened the impact of these cuts for Fiscal Years 2014 and 2015, we still face the reality that sequestration is the law of the land and will return in 2016 if Congress does not change the law.

This creates uncertainty for DoD, and for industry as well.  No organization, whether a government agency or a for-profit business, can plan for the future without being able to make some basic assumptions about resources.

So we will continue to press Congress to lift this irresponsible cloud of uncertainty, but DoD and industry must prepare to operate in a world of shrinking budgets.

What makes this especially challenging, and what makes our close partnership even more essential, is that resources for defense are declining even as the threats to our national security are becoming more sophisticated, more deadly, and more diverse.

And while we face a multitude of threats and sources of instability in the world, I am greatly concerned that our military’s technological superiority is being challenged in ways we’ve never experience before.

As the United States emerges from more than 13 years of grinding warfare and large-scale counterinsurgency operations, we’re seeing first-hand that the rest of the world has not stood still.

Disruptive technologies and destructive weapons once solely possessed by only advanced nations, have proliferated widely, and are being sought or acquired by unsophisticated militaries and terrorist groups.  Meanwhile, China and Russia have been trying to close the technology gap by pursuing and funding long-term, comprehensive military modernization programs.  They are also developing anti-ship, anti-air, counter-space, cyber, electronic warfare, and special operations capabilities that appear designed to counter traditional U.S. military advantages – in particular, our ability to project power to any region across the globe by surging aircraft, ships, troops, and supplies.

All this suggests that we are entering an era where American dominance on the seas, in the skies, and in space – not to mention cyberspace – can no longer be taken for granted.  And while the United States currently has a decisive military and technological edge over any potential adversary, our future superiority is not a given.

If we don’t take these challenges seriously, now, our military could arrive in a future combat theater facing an arsenal of advanced, disruptive technologies that thwart our technological advantages, limit our freedom of maneuver, and put American lives at risk.

As Chairman Dempsey and I have said, we will not send our troops into a fair fight.  A world where our military lacks a decisive edge would be less stable, less secure for both the United States and our allies, and the consequences could ultimately be catastrophic.

We must take this challenge seriously, and do everything necessary to sustain and renew our military superiority.  This will not only require active investment by both government and industry – it will require us to once again embrace a spirit of innovation and adaptability across our defense enterprise.

Innovation was a key emphasis throughout DoD’s 2014 Quadrennial Defense Review, which focused not only on new technologies, but also on developing innovative ways to leverage our current capabilities.  And in the President’s budget for Fiscal Year 2015, DoD prioritized key investments in submarines, cyber, next-generation fighter and bomber aircraft, missile defense, and special operations forces – putting a premium on rapidly deployable, self-sustaining platforms that can defeat more technologically advanced adversaries.  Undersea capabilities that can deploy and strike with relative freedom of movement and decision will continue to be a vital part of the mix.

To realistically sustain these critical investments while keeping our commitments to our people, we had to make tough but necessary choices, and tough but necessary tradeoffs.  These included reducing the overall size of the force, divesting unneeded infrastructure, phasing out aging and less capable weapons platforms, and modestly adjusting military compensation.

While we hope Congress will soon realize these choices must be made – these hard choices must be made – DoD and industry cannot afford to putter into stagnation.  We must do more.  We must do better.

One of the many reasons I wanted Deputy Secretary Bob Work as a partner in helping lead DoD was his thorough understanding of the operational and technological challenges facing our military.  He also has a deep knowledge of the “offset” strategies developed by national security thinkers in the 1950s and 1970s to ensure our military’s superiority – first the New Look, which prioritized nuclear deterrence, and then the Long-Range Research & [Development] Planning Program, which shaped future investments in leap-ahead capabilities like standoff precision strike, stealth, wide-area surveillance, and networked forces.

As we see those advantages begin to erode, I’ve asked Bob to move forward with an initiative to develop a third, game-changing offset strategy.  As a key part of this endeavor, DoD’s Under Secretary of Defense for Acquisition, Technology, and Logistics, Frank Kendall, will soon convene a new Long-Range Research & Development Planning Program aimed at assuring our technological edge through the next several decades.

Bob and Frank will be the key drivers of DoD’s efforts in all of these areas.  They have my full confidence and my full support, and I will be personally engaged in these efforts.  Given the current budget environment, innovation will be critical.  We must be innovative not only in developing the technologies we buy, but also how we buy them, and how we use them in order to achieve our operational and strategic objectives.

Although history is our guide, we are mindful that the 21st century provides new challenges.  We cannot assume – as we did in the 1950s and 70s – that the Department of Defense will be the sole source of key breakthrough technologies.  Today, a lot of groundbreaking technological change – in areas such as robotics, advanced computing, miniaturization, and 3D printing – comes from the commercial sector.  DoD must be able to assess which commercial innovations have military potential, rapidly adopt them, adapt them, and then test and refine them, including through war-gaming and demonstrations.

For a third offset strategy to succeed, industry must also have the right opportunities and incentives to develop and operationalize the kind of innovative technologies that our military will need in the future.  That’s why DoD’s next round of improvements to the acquisition system, which I am previewing for the first time today, will be focused on innovation and accelerating the flow of technology to our people.

As you all know – everyone in this audience – attempts at defense acquisition reform have been plentiful over the last half-century.  As the largest steward of taxpayer dollars, DoD must always strive to make every dollar count – and we must do better.

We all agree that DoD needs to be smarter in what we buy and how we buy it.  We all want to reduce schedule slippages, curb cost growth, and get better performance to keep our military edge.  The question is, how do we do that?  Declining budgets won’t allow for repeating past mistakes.  We have to be creative and innovative.

Frank Kendall has helped pioneer a process called Better Buying Power.  It identifies where in acquisition we can have the biggest impact, capitalize on opportunities and fix the problems, measure and evaluate how our initiatives are working, as we continue to refine them and look for more opportunities.  There have been two stages of Better Buying Power.  Given the need to maintain our technological edge under constrained budgets, I’ve asked Frank to develop a third stage, which will be formally released in the coming weeks.  Frank will provide more details when he speaks to you tomorrow. 

Better Buying Power 3.0 will ensure that our acquisition system helps achieve dominance through technical excellence and innovation – getting the best and most critical technology to our people, at the best cost to the taxpayer, and as quickly as possible.  It will strengthen our efforts to incentivize innovation in both industry and government – recognizing that there are barriers to innovation, but we have the power to remove many of them.

Examples of new initiatives include:

  • more use of modular and open systems architectures;
  • providing industry with draft requirements earlier;
  • removing obstacles to procuring commercial items; and,
  • improving our technology search and outreach in global markets.

 

These initiatives and others will strengthen our defense industrial base and help both the U.S. and our allies and partners maintain our technological edge.

There will also be new initiatives focused on helping small businesses and start-ups succeed.  These firms are more than just the engine of the American economy – as you all know, many are represented here today – they help drive American discovery, creativity, and innovation.  There’s proof of that here in Rhode Island with companies like Rite Solutions, which developed a groundbreaking Command Decision Support System that gives sub commanders more situational and operational awareness.  About 20 percent of DoD acquisition dollars go to small businesses, a number that has been increasing steadily for the past few years.  When they have new ideas or create new technologies, we want to be helping, not hindering their potential for success.  Small businesses are also an example of niche areas within industry that can be particularly vulnerable when production rates decline.  Given today’s budget environment, we need to maintain the skills, the talents, the knowledge, and expertise that vulnerable firms bring to the table.

Another important part of Better Buying Power 3.0 will expand DoD’s use of prototyping.  In times of reduced budgets, prototyping furthers technical advances in R&D, it helps keep us ahead of the threat, and reduces risk by lowering lead times in the event we go forward with production.  Importantly, it also allows us to preserve design teams during any long periods between new product development programs.  This will be vital to preserving a robust, capable defense industrial base.

Our acquisition improvements are not restricted to how we buy weapon systems; they also pertain to how we support and care for our people.  Last week, DoD released a request for proposals to restructure and modernize our electronic health records system, so it is capable of meeting present and future national healthcare data standards, and the quality and timely services we must provide to our veterans and service members.  It will allow DoD to do a much better job with sharing information with both the VA and private-sector health care providers.  These issues will continue to be a high priority for me.

DoD will never corner the market on good ideas for improving defense acquisition.  We know that.  That’s why we’ve been reaching out to hear from everyone – industry, trade groups, think tanks, and Congress – and finding ways to work together to make the improvements we need.

As you may know, both the House and Senate Armed Services Committees have been working this year on acquisition reform initiatives; in particular, we very much appreciate the leadership of Congressmen Mac Thornberry and Adam Smith and Senators Carl Levin and John McCain.  I appreciate the bipartisan attention they’re giving – we all are – this effort in particular, as well as their sense of urgency, which I share.  And your two members here from this Rhode Island delegation, who are here with us today, both on the House and Senate Armed Services Committees, are vital to this effort as well.  And I share their belief that we must reduce duplicative, complex, and overly burdensome statutory and regulatory requirements that, while well-intentioned, have made managing an acquisitions program harder, much harder than it needs to be.

Over the past several months, DoD has been working closely with Congressional leadership and Congressional leadership staff in developing a legislative proposal to streamline these requirements to focus more on principle rather than process.  Our goal is to reduce unnecessary paperwork so that acquisitions professionals can spend more time doing their most important job – getting the best equipment and best technology to our troops at the best value to our taxpayer.  We hope to submit our proposal to Congress by the end of this calendar year, and look forward to building on this collaboration as we go forward.

Throughout all these efforts – ensuring a strong industrial base, sustaining our technological edge, and improving defense acquisition – we won’t always get it right, especially early on.  We recognize that.  We could easily allow our time and our energy to be consumed by the crisis of the moment, or the day, or the crisesof the week, which as we know are abundant… but we must also stay focused on laying the groundwork that will define the future.  We can’t focus only on where we are today.  We must also think through where we’re going tomorrow and why.

In order to continue to maintain our technological advantage and stay on the cutting edge of technology, we must be willing to take risks in our innovation and creative thinking.

We’ve seen that here again in Rhode Island, where in the lean, uncertain interwar years between World War I and World War II, thinkers and strategists at the Naval War College had the foresight to analyze whether aircraft carriers could be used more effectively than battleships.  With more than 300 simulated war games that sought to anticipate future threats, they developed the tactics and operational concepts that would establish naval aviation as an offensive force.  Their innovative work proved decisive throughout World War II, and beyond – enabling countless victories in the Pacific Theater, and shaping the doctrine that put aircraft carriers at the forefront of our military projects, and our ability to project power all over the world.

Today, given the breadth and the magnitude of the challenges we face, DoD and industry – including those in this audience, particularly including those in this audience, and throughout southeastern New England – must once again all work together to harness that innovation, and apply it effectively.

Though our challenges are great, and are many, so is our capacity to meet them: historical opportunities, historical capacity to meet these great challenges.  History shows us that America has always risen to this challenge, no matter how daunting, thanks to the drive and entrepreneurial spirit that is the hallmark of America’s national character.  The stakes are too high, the consequences too dire for us to stand by and let other nations challenge our dominance.  To retain our superiority in the future, our thinking and our actions must be relevant to tomorrow’s challenges.  We will not fail this historic charge.

And I am grateful for the opportunity to share some of these thoughts with you today, and thank you, thank you for what you do for our country.

Thank you very much.

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