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Fiscal 2003 Defense Budget Testimony – House Appropriations Defense Subcommittee
Prepared Testimony of Secretary of Defense Donald H. Rumsfeld, Washington, D.C., Thursday, February 14, 2002

Introduction

Mr. Chairman, Members of the Committee.

I join you and this Committee in expressing appreciation for the extraordinary men and women of our Armed Forces. I have visited with them around the world, and most recently in Afghanistan and the surrounding countries. They are extraordinary. They are, as we talk, voluntarily risking their lives in dangerous corners of the world to defend the lives and freedoms of our fellow citizens. They are making us proud in this difficult and dangerous global war on terror.

We can all agree that the best way to show our thanks for their dedication and service is to see that they have the tools they will need to defend against the new and dangerous threats of the 21st Century. Mr. Chairman, I know that you and the members of this Committee have worked hard in the past to do that, and I look forward to working with you in the period ahead to make sure our Armed Forces are the best trained, best equipped fighting force on earth—ready not only for the challenges we face in this decade, but also in the decades ahead.

To do so, we have some work ahead of us. Our challenge today is not simply to fix the under-funding and overuse of the force of the past decade. We must accomplish three difficult missions at once:

  1. To win the worldwide war on terrorism;
  2. To restore capabilities by making delayed investments in procurement, people and modernization; and
  3. To prepare for the future by transforming for the 21st Century.

There are some who say this may be too much to ask—that any one of these three challenges is daunting enough; but that tackling all three at once is impossible. It is not. We can do it.

And we must do it, because our adversaries are transforming. They are studying how we were successfully attacked, how we are responding, and how we may be vulnerable in the future. We stand still at our peril.

We must transform now for the challenges we will face not just in the years immediately ahead, but in 2010 and beyond. Because transformation takes time, most of the new capabilities any President invests in are not available to him during his term in office, but rather benefit the Presidents to follow. And to the extent there is under-funding, it will not weaken the force immediately, but it will weaken the capabilities available to those who follow.

The Tomahawk cruise missile program, the B-52s, F-15s and F-16s aircraft flying today—were all developed before or during my last tour at DoD. The current generation of space satellites was developed in the 1980s, as were many other capabilities that helped us drive the Taliban from power in Afghanistan.

The point is this: One generation bequeaths to the next generation the capabilities to ensure its security. Today we are responsible for the security of future generations of Americans. The choices we make now will determine whether or not our children and grandchildren can continue to live in peace and freedom, whether they have the tools they will need to defend freedom and our way of life in the decades ahead.

The 2003 Budget

That is why President Bush has sent Congress a 2003 defense budget request of $379 billion—a $48 billion increase from the 2002 budget. This includes $19.4 billion for the war on terrorism—a $10 billion contingency fund, plus $9.4 billion for a variety of programs related to the war. That is a great many hard earned tax dollars.

We are accelerating programs we consider transformational, and funding the objectives outlined in the new defense strategy. We have also made program adjustments to achieve cost savings, advance transformation and meet pressing requirements. We were able to do so thanks, in part, to the efforts of this Committee.

For example, members of this Committee have raised questions about the Navy Area Missile Defense program, concerned about chronic cost overruns. We looked at it, and agreed. We terminated it.

Just last session, the Chairman and other members of this Committee raised questions about SBIRS-low. You expressed concern that the time schedule for the program was too aggressive, and the technology was not aggressive enough, suggesting we slow the program down and take a look at some newer technologies. We listened to your concerns, and agreed. And we have restructured the program—slipping it back two years and introducing newer technology.

A hallmark of the President’s budget is realistic costing of programs, which has been a major concern of this committee. For example, this committee rather famously put a halt to the F-22 program some years ago because of concerns about the cost of the program and the adequacy of the flight test program. We listened to your concerns, and we agreed. We extended the flight test program six months. We funded a reduced buy of planes at a fixed price. And we will continue to review the program.

This Committee also was an early advocate of JSTARS. You pushed for the development of UAVs. Our experience in Afghanistan has shown the importance of both programs. In fact, we have too few UAVs, and perhaps the Department should have listened earlier or better.

There is a wealth of accumulated knowledge here on this Committee. We know it—and, as you can see from our 2003 budget request, we are listening.

At the same time, there is a legacy of past distrust that we must deal with. In the 2002 budget, for example, Congress made changes to 2,022 individual programs and line items. Now, any one of these individual earmarks may be quite reasonable, and many are made with the best intentions in mind. But in the aggregate, the effect on the Department is sizable.

Undoubtedly the Executive Branch did things that caused legitimate concern in Congress, which then responded by putting a growing number of restrictions on the Department’s ability to manage its affairs, which in turn caused more inefficiency, which in turn caused more distrust in Congress, and so on. And here we are with 2,000-plus changes and earmarks.

Mr. Chairman, at some point we need to break that cycle. Now--with the nation challenged by new threats in the war on terrorism--is as good a time as any. We need to work together to rebuild trust between Congress and the Department. I know that is your desire as well and I look forward to working with you to do so.

New Defense Strategy

We spent a great deal of time last year engaged in several defense reviews. Together, the civilian and military leaders of the Department took a long hard look at the new security environment of the 21st Century, and how we need to refashion our forces, our strategy and our organization to meet the new threats and challenges.

 

When one thinks about it, it is remarkable what the people of the Department of Defense—military and civilian--have accomplished in so short a period. In one year—2001—the Department has:

    • Developed and adopted a new defense strategy;
    • Replaced the decade-old two Major Theater War construct for sizing our forces, with a new approach more appropriate for the 21st Century;
    • Adopted a new approach for balancing the risks relating to war plans, and the failure to modernize, to transform and/or to invest in our people.
    • Reorganized and revitalized the missile defense research and testing program, free of the constraints of the ABM Treaty;
    • Reorganized the Department to better focus on space capabilities;
    • Through the Nuclear Posture Review, adopted a new approach to strategic deterrence that increases our security while reducing our strategic nuclear weapons;
    • Presented to the President our thoughts for a new Unified Command Structure;
    • We recruited, the President nominated and the Senate confirmed 42 senior DoD officials to serve in the Bush Administration;
    • And much of this was accomplished while fighting a war on terrorism.

Not bad for a Defense establishment–military and civilian, executive and legislative, public and private—that is supposedly impossibly resistant to change.

In January of last year, we initiated a series of informal strategic reviews. We found a Department filled with dedicated men and women—uniformed and civilian–who were doing their best under difficult circumstances to maintain the readiness of our Armed Forces. We also found that the pressure to prepare for near-term risks was crowding out efforts to prepare for longer-term challenges. While we found some transformation underway (such as development of the unmanned combat aircraft employed in Afghanistan), we also found some efforts were without clear goals, measures of success, or the necessary resources. We found chronic under-funding of procurement and infrastructure, and a culture that did not seem to embrace or reward innovation.

These reviews helped pave the way for the Quadrennial Defense Review (QDR), during which the senior civilian and military leaders of the Department came to the unanimous conclusion that a new approach was needed for the 21st Century. The President’s budget has been designed to fund the priorities we identified in the QDR process.

In the QDR, we made three major decisions:

First, we decided to move away from the two Major Theater War (MTW) construct for sizing our forces—an approach that called for maintaining forces, capable of marching on and occupying the capitals of two aggressors at the same time and changing their regimes. That approach served us well in the immediate post-Cold War period, but after a decade it threatened to leave us too narrowly focused on preparing for two specific conflicts, and under-prepared for other contingencies and 21st Century challenges.

To ensure we have the resources to prepare for the future, and to address the emerging challenges to homeland security, we needed a more realistic and balanced assessment of our near-term war fighting needs. Instead of maintaining two occupation forces, we will place greater emphasis on deterrence in four critical theaters, backed by the ability to swiftly defeat two aggressors at the same time, while preserving the option for one major offensive to occupy an aggressor’s capital and replace his regime. Since neither aggressor would know which conflict would be selected for regime change, the deterrent is undiminished. But by removing the requirement to maintain a second occupation force, we can free up resources for the various lesser contingencies that face us and be able to invest for the future.

Second, to prepare for the future, we decided to move away from the old "threat based" strategy that had dominated our nation’s defense planning for nearly half-a-century, and adopt a new "capabilities based" approach—which focuses less on who might threaten us, or where, or when, and more on how we might be threatened—and what capabilities we need to deter and defend against those threats.

Under the new approach, we will develop a portfolio of military capabilities that not only help us fight and win the wars of the 21st Century, but also help to prevent them. Our goal is to influence the decision-making of potential adversaries— to deter them not only from attacking us with existing capabilities, but by demonstrating the futility of potential military competition, to dissuade them from building dangerous new capabilities in the first place.

Third, to put our capabilities-based approach into action, we identified six key transformational goals around which we will focus our defense strategy and develop our force. These are:

    • First, to protect the U.S. homeland and our bases overseas;
    • Second, to project and sustain power in distant theaters;
    • Third, to deny enemies sanctuary—so they know no corner of the world is remote enough, no mountain high enough, no cave or bunker deep enough, no SUV fast enough, to protect them from our reach;
    • Fourth, to protect U.S. information networks from attack;
    • Fifth, to use information technology to link up different kinds of U.S. forces so they can fight jointly; and
    • Sixth, to maintain unhindered access to space—and protect U.S. space capabilities from enemy attack.

We reached these conclusions well before the September 11th attacks on Washington and New York. Our experiences that day, and in the course of the Afghan campaign, have served to validate those conclusions, and to reinforce the importance of moving the U.S. defense posture in these new directions.

In the 21st Century, new adversaries may not to be discouraged from attacking us by the traditional means of deterrence that kept the peace during the Cold War—namely, the threat of nuclear retaliation. The terrorists who struck us on September 11th certainly were not deterred.

This is why the President concluded that stability and security in the new Century require a new approach to strategic deterrence that enhances our nation’s security while reducing our dependence on nuclear weapons. With the Nuclear Posture Review, we have proposed deep cuts in offensive nuclear forces, combined with strengthened conventional capabilities and a range of new active and passive defenses against WMD and all forms of delivery—to be supported by a revitalized defense infrastructure and improved intelligence. This new triad of nuclear, conventional and defensive capabilities will help deter and defend against the wider range of threats we will face in the decades ahead.

The 2003 budget request is designed to advance each of the six transformational goals. It does so by accelerating funding both for the development of transformational programs—programs that give us entirely new capabilities—as well as by funding modernization programs that support the transformation goals.

The budget requests $53.9 billion for Research, Development, Test, and Evaluation (RDT&E)--a $5.5 billion increase over FY 2002. It requests $71.9 billion for procurement ($68.7 billion in the Procurement title and $3.2 billion in the Defense Emergency Response Fund). It funds 13 new transformational programs, and accelerates funding for 22 more existing programs.

We have established a new Office of Force Transformation to help drive the transformation process, and have tasked each of the services to develop Service Transformation Roadmaps by the summer of 2002.

All together, transformation programs account for roughly 17% of investment funding (RDT&E and procurement) in the President’s 2003 budget request–and will rise to 22% over the five year FYDP.

This is a significant investment in the future. However, the investment in transformation cannot be measured in numbers alone. Transformation is not just about new weapons–it is about new ways of thinking and new ways of fighting. In some cases, it does not involve new capabilities at all.

In Afghanistan, U.S. Special Forces are using a mix of capabilities in ways that had never been tried before, coordinating air strikes with the most advanced precision guided weapons, with cavalry charges by hundreds of Afghan fighters on horseback. The effect has been devastating—and transformational.

The goal is not to transform the entire military in one year, or even in one decade. That would be both unnecessary and unwise. Transformation is a process, and, because the world is not static, it is a process that must continue. In short, there will be no point where our forces will have been "transformed." Rather, we aim to transform between 5-10% of the force, turning it into the leading edge of change that will, over time, continue to lead the rest of the force into the 21st Century.

We cannot know today precisely where transformation will take us. It is a process that will unfold over time. But we believe we know the directions we want to take the force. Our goal is to move our military from service-centric forces armed with unguided munitions and combat formations that are large and easily observable, manpower intensive, earth-bound capabilities, and transform a growing portion into rapidly-deployable joint-forces made up of less manpower intensive combat formations armed with unmanned, stealthy, precision-guided capabilities and unmatched space capabilities.

  1. Protecting Bases of Operation /Homeland Defense

Even before September 11th, the senior civilian and military leaders of the Department had concluded that defending the U.S. homeland from attack, and protecting U.S. forward bases, should be our top priority. For most of our history, thanks to favorable geograhe goal is to find new ways to seamlessly connect U.S. forces—in the air, at sea and on the ground—so they can communicate with each other, instantaneously share information about their location (and the location of the enemy), and all see the same, precise, real-time picture of the battlefield.

The opportunities here to give U.S. forces unparalleled battlefield awareness are impressive—if they can "see" the entire battlefield and the enemy cannot, their ability to win wars grows exponentially. But as our dependence on information networks increases, it creates new vulnerabilities, as adversaries develop new ways of attacking and disrupting U.S. forces—through directed energy weapons and new methods of cyber attack.

The President’s 2003 budget funds a number of programs designed to leverage information technology. These include:

  • $172 million to continue development of the Joint Tactical Radio System, a program to give our services a common multi-purpose radio system so they can communicate with each other by voice and with data;
  • $150 million for the "Link-16" Tactical Data Link, a jam-resistant, high-capacity, secure digital communications system that will link tactical commanders to shooters in the air, on the ground, and at sea—providing near real-time data;
  • $29 million for Horizontal Battlefield Digitization that will help give our forces a common operational picture of the battlefield;
  • $61 million for the Warfighter Information Network (WIN-T), the radio-electronic equivalent of the World Wide Web to provide secure networking capabilities to connect everyone from the boots on the ground to the commanders;
  • $77 million for the "Land Warrior" and soldier modernization program to integrate the small arms carried by our soldiers with high-tech communications, sensors and other equipment to give new lethality to the forces on the ground;
  • $40 million for Deployable Joint Command and Control—a program for new land- and sea-based joint command and control centers that can be easily relocated as tactical situations require.

The 2003 budget requests $2.5 billion for programs to support this objective of leveraging information technology, and $18.6 billion over the five year FYDP (2003-7)–an increase of 125%.

  1. Conducting Effective Information Operations

    As information warfare takes an increasingly central role in modern war, our ability to protect our information networks—and to attack and cripple those of adversaries—will be critical to America’s success in combat.

    To do so, we must find new ways to more fully integrate information operations with traditional military operations, while developing new computer network defenses, electronic warfare capabilities, and the ability to influence an adversary’s perceptions of the battlefield.

    Many of the programs supporting this objective are, for obvious reasons, classified. But the President’s 2003 budget funds a number of programs designed to provide unparalleled advantages in information warfare, such as $136.5 million for the Automated Intelligence, Surveillance and Reconnaissance System, a joint ground system that provides next-generation intelligence tasking, processing, exploitation and reporting capabilities.

    The 2003 budget requests $174 million for programs to support this objective--$773 million over the five year FYDP (2003-7)–an increase of 28%.

  2. Enhancing Space Operations

From the dawn of time, a key to victory on the battlefield has been to control the high ground. Space is the ultimate "high ground."

One of our top transformational goals, therefore, is to harness the United States’ advantages in space. Space can provide an ability to see what enemies are doing, anywhere in the world "24-7-365"—and to ensure global secure communications for U.S. forces.

This will require moving operations to space, improving the survivability of U.S space systems, and developing a space infrastructure that assures persistent surveillance and access.

As we become increasingly dependent on space for communications, situational awareness, positioning, navigation and timing, space will necessarily become an area we have to defend. Adversaries are likely to develop ground-based lasers, space jamming and "killer" micro-satellites to attack U.S. space assets.

They will do so whether or not we improve U.S. space capabilities—because the U.S. economy and our way of life are growing increasingly dependent on space—making U.S. space assets inviting targets for asymmetric attack. Consider for a moment the chaos that would ensue if an aggressor succeeded in striking our satellite networks: cell phones would go dead; ATM cards would stop functioning; electronic commerce would sputter to a halt; air traffic control systems would go offline, grounding planes and blinding those in the air. U.S. troops in the field would see their communications jammed; their precision strike weapons would stop working.

Today, in so far as we know, no nation has the capability to wreak such havoc. We must make sure no one can. Our goal is not to bring war into space, but rather to defend against those who would. Protecting U.S. military and commercial assets in space from attack by foreign aggressors must be a priority in the 21st Century.

The President’s 2003 budget includes funds for a number of programs designed to provide unmatched space capabilities and defenses. These include:

  • $88 million for Space Control Systems that enhance U.S. ground based surveillance radar capabilities and, over time, move those surveillance capabilities into space;
  • $103.1 million for Directed Energy Technology to deny use of enemy electronic equipment with no collateral damage, to provide space control, and to pinpoint battlefield targets for destruction.

The 2003 budget requests about $200 million to strengthen space capabilities--$1.5 billion over the five year FYDP (2003-7)–an increase of 145%.

***

Of course, many of the programs I have described support several transformation goals. For example, the Trident-SSGN conversion will help support our goals of operating in access denial environments and denying enemy sanctuary. Together, they represent an emerging portfolio of transformational capabilities that should enable us to defend freedom in the dangerous century ahead.

Again, it is important to emphasize that transformation is not an event—it is an ongoing process, a journey that begins with a transformed "leading edge" force, which, in turn, leads the U.S. Armed Forces into the future.

Moreover, it is not only about changing the capabilities at our disposal, but changing how we think about war. Imagine for a moment that you could go back in time and give a knight in King Arthur’s court an M-16. If he takes that weapon, gets back on his horse, and uses the stock to knock his opponent’s head, it’s not transformational. Transformation occurs when he gets behind a tree and starts shooting.

All the high-tech weapons in the world won’t transform the U.S. Armed Forces, unless we also transform the way we train, exercise, think and fight.

***

As we transform for the wars of 2010 and beyond, we must also prepare the forces for wars they may have to fight later in this decade, by improving readiness, increasing procurement and selective modernization.

To advance transformation and deal with the backlog that resulted from the "procurement holiday" of the last decade, we have requested $71.9 billion for procurement--$68.7 billion in the Procurement title (an increase of 10.6% over FY 2002) and $3.2 billion in the Defense Emergency Response Fund. Procurement is projected to grow steadily over the five year FYDP to $98 billion in FY 2007, and will increasingly fund transformation programs over time.

We have requested $140 billion for operation and maintenance (O&M) accounts in 2003. This includes substantial funding for the so-called "readiness accounts"–tank miles, steaming days and flying hours for the Army, Navy and Air Force—with only minor shortfalls. Funding includes:

  • Aircraft operations/flying hours: $11.8 billion, up from $11.3 billion in FY 2002
  • Army OPTEMPO: $3.7 billion, up from $3.3 billion in FY 2002
  • Ship operations: $2.4 billion, up from $2.3 billion in FY 2002
  • Depot maintenance: $4.8 billion, up from $4.5 billion in FY 2002
  • Training: $10.0 billion, up from $9.4 billion in FY 2002

People/Military personnel

If we are to win the war on terror, and prepare for the wars of tomorrow—in this decade and beyond—we must take care of the Department’s greatest asset: the men and women in uniform. They are doing us proud in Afghanistan and around the world—and today, thanks to their accomplishments in the war on terrorism, morale is high.

But if we want to attract and retain the necessary force over the long haul, we need to know we are looking for talent in an open market place, competing with the private sector for the best young people our nation has to offer. If we are to attract them to military service, we need to count on their patriotism and willingness to sacrifice to be sure, but we must also provide the proper incentives. They love their country, but they also love their families – and many have children to support, raise and educate. We ask the men and women in uniform to voluntarily risk their lives to defend us; we should not ask them to forgo adequate pay and subject their families to sub-standard housing as well.

The President’s 2003 budget requests $94.3 billion for military pay and allowances, including $1.9 billion for an across-the-board 4.1 percent pay raise and $300 million for the option for targeted pay-raises for mid-grade officers and NCOs. It also includes $4.2 billion to improve military housing, putting the Department on track to eliminate most substandard housing by 2007—several years sooner than previously planned. It will also lower out-of-pocket housing costs for those living off-base from 11.3% today to 7.5% in 2003—putting us on track to eliminate all out of pocket housing costs for the men and women in uniform by 2005. The budget also includes $10 billion for education, training, and recruiting, and $22.8 billion to cover the most realistic cost estimates of military healthcare.

Together, these investments in people are critical, because smart weapons are worthless to us unless they are in the hands of smart, well-trained soldiers, sailors, airmen and marines.

Cost Savings

While this budget proposes increases in a number of important areas, it also includes a number of terminations. We have proposed terminating a number of programs over the next five years that were not in line with the new defense strategy, or which were having program difficulties. These include the DD-21, Navy Area Missile Defense, 18 Army Legacy programs, and the Peacekeeper Missile. We also accelerated retirement of a number of aging, and expensive to maintain capabilities, such as the F-14 and 1000 Vietnam-era helicopters.

We have focused modernization efforts on programs that support transformation. We restructured certain programs that were not meeting hurdles, such as the V-22 Osprey, Comanche, SBIRS programs. Regarding V-22, the production rate has been slowed while attention is focused on correcting the serious technical problems identified by the blue ribbon panel and a rigorous flight test program is to be conducted to determine whether it is safe and reliable. The restructured programs reflect cost estimates and delivery dates that should be more realistic.

We are working to generate savings and efficiency by managing the Department in a more business-like manner. For example, today, the B-1 bomber cannot operate effectively in combat environment where there is a serious anti-aircraft threat. So the Air Force is reducing the B-1 bomber fleet by about one third, and using the savings to modernize the remaining aircraft with new precision weapons, self-protection systems, and reliability upgrades that will make them suitable for use in future conflicts. This should add some $1.5 billion of advanced combat capability to today’s aging B-1 fleet over the next five years—without requiring additional dollars from the taxpayers. These are the kinds of practices we are encouraging throughout the Department.

We are also proceeding toward our goal of a 15% reduction in headquarters staffing and the Senior Executive Council is finding additional ways to manage DoD more efficiently.

The budget reflects over $9 billion in redirected funds from acquisition program changes, management improvements, and other initiatives—savings that help to fund transformation and other pressing requirements.

Trade Offs

After counting the costs of keeping the Department moving on a straight-line, the costs of the war, and the savings generated, we were left with $9.8 billion. That’s a lot of money. But nonetheless, it required us to make a number of difficult trade-offs.

  • We were not able to meet our objective of lowering the average age of tactical aircraft. However, we are investing in unmanned aircraft, and in the F-22 and JSF, which require significant upfront investments, but will not be coming on line this year.
  • While the budget funds faster growth in Science and Technology (S&T), we were not able to meet our goal of 3% of the overall budget (though we are slightly higher than the President’s 2002 request).
  • And clearly we were not able to fund shipbuilding at replacement rates in 2003, as we must in the future. As with each department, the Navy had to make tough choices.

The FY 2003 shipbuilding budget is $8.6 billion, and procures 5 ships. This is for several reasons. First, there are a number of problems, including some contractor problems, but also past shipbuilding cost estimates that were too low and which we have no choice but to fund.

Second, the Navy made the correct calculation that, in the short term, we can maintain the desired force level at the proposed procurement rate because of the relatively young average age of the fleet—and that it is more important now to deal with significant needs that had been under-funded in recent years, such as shortfalls in munitions, spare parts, and steaming hours, which are fully funded in this budget. Further, we are investing significant sums in SSGN conversion, which, while they do not count in ship numbers, do provide new capabilities.

To sustain the Navy at acceptable levels, the U.S. needs to build eight or nine ships annually. The Navy’s Forward Year Defense Plan budgets for 5 ships in FY 2004, 7 ships in 2005, 7 ships in 2006 and 10 ships in 2007.

Conclusion

The $379 billion in the budget request is a great deal of money. But the President’s proposed budget amounts to about 3.3% of our nation’s Gross Domestic Product. Compared to the cost in lives and treasure if we fail to stop another September 11th, it is cheap at that price.

Throughout history free nations have tended to recognize the need to invest in their Armed Forces only after a crisis had already arrived at their doorstep. In 1950—just five years after the allied victory in World War II—General Omar Bradley recommended $18 billion for defense. The Chiefs gave an even higher estimate at $23 billion, and the Services’ estimate was higher still at $30 billion. But the country decided that $15 billion was as much as we could "afford."

Six months later, the country was suddenly at war in Korea. And just as suddenly we found we could "afford" not only 18 billion, but $48 billion—a 300% increase—because the war was on.

In this time of crisis, we need to work together to see that our country makes the investments necessary to win this war—but also to deter the next one. Let us do so with the experiences of September 11th in mind, and with a renewed commitment to our national security.

Thank you.