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Under Secretary Aldridge Interview on Acquisition Budget

Presenter: Under Secretary of Defense Edward C. (Pete) Aldridge
June 30, 2001 3:45 PM EDT

Wednesday, June 27, 2001 - 3:45 p.m. EDT

(Meeting in the Pentagon with a small group of reporters following the budget briefing )

Q: You would be able to talk about -- This is not the first question, but to language, what is going to BMDO [Ballistic Missile Defense Organization] in terms of changing the lending programs into categories. But whatever --

Aldridge: There was a BMDO session you should have gone to.

Q: But it was on background and it wasn't very articulate in terms of what they did.

Aldridge: The philosophy of the ballistic missile defense program is that we are trying to put together a technology program that will allow ballistic missile defense to move from various stages of intercept -- we'll be looking through the entire spectrum of ballistic missile from short range to long range, and design a program that allows us to address the terminal phase, the mid-course phase, and the boost phase. And as you go from terminal to boost it obviously gets harder and harder. Therefore the technology efforts that we have designed, we're not sure we know what the answer is to move through these layers of defense.

So we've laid out a program that really gets started in FY02 to begin to identify those technologies for those various phases of flight. And as we proceed in time and technologies are proven or disproven, we narrow down heading toward a solution.

As we get to a solution if there is a decision to deploy, we do. The first step of that you're seeing in the budget, where the PAC-3 [Patriot Advanced Capability 3] and maybe wide area defense are actually moved from BMDO to the services for them to deploy. That's missile defense and they've made the decision to move out and proceed on.

So as we've laid out a research and development program, as we find those answers with time and we know what the cost is and we know what the time to deploy would be, then we would move it back to the services for implementation.

In the past we've been spending money, but we've been restricted to the assumption that we will do everything within the ABM treaty. I think you've heard the president's said that until we find a solution, if that's the solution we want, we will not be constrained by the ABM treaty. We hope to negotiate that away, but he thinks the decision on how we're going to pursue ballistic missile defense will be based on what's in the best interest of the nation in this world rather than the world of 1970.

As a matter of fact, I was a member of the arms control negotiating team that wrote the provisions of testing in the ABM mode. I was part of the SALT I negotiating team, and I remember writing those provisions down. Those provisions are no longer appropriate for this world. That was 30 years ago. So that's kind of what the plan is and that's what General Kadish has laid out.

The program this year adds roughly $2 billion to begin to lay out these parallel technology paths, and that's where we're heading.

Q: I'll ask this in a philosophical way, but I'm not trying to be sneaky.

Aldridge: Can I give a philosophical answer? (Laughter)

Q: Knowing that you are heading up this panel that is now doing a comprehensive review of the Navy's shipbuilding program, what you see from the Navy regarding their solutions for what to do with the SBN [Ship Building Navy] account money that's provided in this budget, is that satisfactory to you? Are they placing themselves on the right track given what you started to see out of your review?

Aldridge: Let me step back and say what we saw in the review, that's going on in the review in the Navy's shipbuilding program, and what they had proposed in FY02 as we arrived, put the Navy on a declining ship, total number of ship program.

If we did nothing more than what their plan was, we would be doing down over the next 20 years to a 200 ship, 230 ship Navy.

The issue was, I could not answer the question, it was that bad. So we said we need to understand what is the role of the Navy in this new environment. What is the role of the Navy, what is the structure of the Navy we need to pursue to begin to meet our needs for the future as part of this strategy.

I asked the secretary of Defense, I said I believe we need to do an overall Navy force structure review with the programs that we need and the rate of ships we need to buy and the type of mix of ships we need for the future. So the study was undertaken under those ground rules. It just so happened, it was something that I thought was very important.

I happened to have run a Navy shipbuilding study for the former Secretary of Defense Rumsfeld in 1976 and he understood how we do those kinds of things. We look at the world, we say here is what the world looks like, this is the threats and the challenges and the technology of the world and we need to determine what is the role of the Navy in this future world. If you can determine what the role of the Navy is going to be, then you can determine the size and the shape and the technology that it ought to have. We need to do that before we lay out a shipbuilding program. We have to do it for the purpose for which the Navy's being constructed. So that's kind of what we did.

Q: Based on the reaction yesterday to the play on reducing the B-1s and consolidating them, the general reaction in Congress every time there's a suggestion to cut something almost anywhere, how realistic is it to make those cuts? And how do you go about doing it?

Aldridge: The Air Force, of course you'll have to ask the Air Force for the details of this. I did work with Mr. Roche [secretary of the Air Force] when he was going through the decision process.

We've got 93 B-1s which are not very effective. We said if we're going to keep the B-1 force we need to make it effective. Clearly we don't have all the money in the world and the plan was, from the Air Force point of view, let's consolidate the B-1 into essentially two bases -- a smaller force but use the money to modernize the force to make it operationally effective. And there are some problems they have with the defensive avionics, they need to upgrade the bomber to carry more of the newer class of weapons. So it was a decision which I believe was based on logic and reason. If we're going to keep the B-1s we need to make them as effective as we possibly can. Here's a plan to do so.

Yes, I understand the politics and part of, half of the Air Force that would be reduced are Air National Guard, but we tried not to put politics in our decision. The Air Force tried to be as logical as they could about what is the right thing to do for the B-1 force, to contribute to the bomber force -- being the B-2s, the B-52s -- and make the force as effective as it possibly can be, and it is the right answer.

Q: How do you take the next step? How do you sell it?

Aldridge: Just the way I did. We cannot -- you're going to hear the secretary of Defense say this. We have got too much infrastructure for the force structure we have. The numbers run between 20 and 25 percent. We cannot keep all the things that we have distributed across all the country and run this department in an effective way. It's just not efficient.

Pretty soon one has to determine okay, what makes sense, present the case to the secretary of Defense and then the president and then the Congress and let the chips fall where they may. They may politically say this is too hard. All we can say is this is what makes sense from running the department correctly, and logically, and truthfully -- and you'll hear a lot about the budget, another issue of the budget. We have properly priced the programs that are currently in the budget. We're tired of going over to the Hill and telling what a program costs and knowing it's not truthful. So we have fully funded by several hundred million dollars programs that are currently in the budget, shipbuilding being one of those. We have properly priced the programs and we will continue to do so.

Anybody who has heard me testify to the House and Senate and during my confirmation, I have a goal in my life of establishing the credibility of our acquisition process. And I am determined to make that happen and properly pricing a program is one way. Because we know, there were too many programs all under-priced. When fish comes to bait, when you get to the point of having to really determine the price of a program you're going to have to rob one program to pay another, and it makes everybody, I call it getting all the programs sick as a result of that.

Q: That's the genesis for your PBD [Program Budget Decision] on relative cost --

Aldridge: Yes, correct.

Q: -- $100 million for ships.

Aldridge: Right.

Q: Pete, I want to make sure I'm not mixing apples and oranges, and maybe this was sort of an inference that I leaped to incorrectly, but am I hearing or understanding right when you talk about incentives for the services to create efficiencies and save money, does that also lead over into weapons programs? In other words, the Army can figure out a way to truly -- or the Navy or anyone -- dispose of systems that really aren't efficient and economical and move ahead, then they're not necessarily going to suffer? Is that --

Aldridge: Yes.

Q: Can I --

Aldridge: Yes, you can. In fact if you go back to the Army, a big program that they had, Crusader. They actually give up 25 percent of their artillery pieces to go get Crusader because it had an ability to fire more often. So they actually paid for Crusader with their force structure reduction.

We have set up a committee, a council called the Business Initiative Council, that consists of myself and the three service secretaries. We have a working group formed with the three star level underneath to go identify efficiencies within the services, and the role that I play there is I look across all the services and I see what they're doing. We can comment on their best practices, and we can suggest ideas, that they're not doing things very efficiently.

But the four of us have a goal that we want to be able to -- and it's a goal, whether or not we'll achieve it or not -- take $15 to $30 billion a year out of the infrastructure and overhead of the Department of Defense. Now it's going to take us a while to get there, but we believe we have this incentive to the Army, Navy and the Air Force that if you can find things you're doing that are not very smart and you can get rid of that, you can keep the money to pay for things you really want. That avoids having us to increase the budget to pay for those things like people. We can put money for people in the budget now. If we can find these savings we won't have to increase, they can put their own money into people. That's our goal, and that's the purpose of that counsel.

Q: Can you do this infrastructure reduction without a BRAC?

Aldridge: I think we have to do a BRAC to get the infrastructure down, yes. But there's other things you can do without a BRAC.

There is some discussion within the Army of why are they involved with prisons? In fact they just built a brand new prison at Fort Leavenworth. A question mark. Maybe we can outsource that.

Well, if you outsource it and you save some money you can use it for other things. Things the Army really does need. Family housing and their infrastructure and their bases and so forth.

We believe there's a lot of things like that. We have a lot of overhead for things in the United States and people are used for things we probably could outsource.

Now I know we get into the issue of the depot lobby and we have to be fair and objective as to how we approach that. But look, the incentives before were not there. Any time the services saved some money, the comptroller took it. Here, with the commitment of the secretary of Defense, and a handshake of that kind, that if they can find efficiencies they get to keep the money to pay for things we want them to do, and therefore we will not have to add money to their budget to achieve it.

So if we can get savings in the $15 billion a year, we can start the process of doing the transformation that we really need to do.

We may fail. We are optimistic at this point we will not because the incentives are there for the services to pursue.

Q: A quick follow up to a question and then a separate question.

You talked about the B-1 decision in terms of infrastructure, but [DoD Comptroller Dov Zakheim] was saying that these bases have other airplanes, they would not be closed.

Aldridge: That's true. That's true. No, I was thinking more from the logic of it was to consolidate the B-1 into two bases, put an optimum number of aircraft on each base, and to use the money then, the savings you would get.

But yes, there are. The C-130s, C-135s would still be left on those bases, yes.

Q: If you take everything that was said in the presentation about ten years from now the force is going to be 85 percent of what they are today. The amount of money you need to spend on O&M [Operations and Maintenance] and other readiness things. And some of the problems are so (inaudible) it's going to take a long time to get out of the problems that have accumulated over the years. That suggests that even the transformation budget, the '03 budget, is not going to be hugely different from '02. Is that --

Aldridge: That's probably premature. Because if we can do some things in '02, for example if we do get some kind of decision on a base closure package, we can start the process in '03, even though it takes up front dollars. And if we can get some of these initiatives from the services as we go through the next fiscal year, I'm going to be optimistic that we can start showing some savings that will offset the beginnings of these transformations.

But you're right. We've got to be able to show some savings to get some of this transformation as quickly as we can. Of course we're trying to do that as fast as we can.

But there are lots of bills to pay. The secretary's talked about medical care. That's a huge bill for the Department of Defense. We have to do more in family housing. We've got something like 160,000 substandard family housing units. We're trying to get on a trajectory to get those removed in the next decade. We're trying to get on a trajectory to get the infrastructure recapitalization rates back to something that's reasonable. We talked about 67 years and we're not at 98 years. We've got a lot of readiness problems both in our facilities as well as the military. We've made a major strike to getting most of that done in this fiscal year, in FY02.

We're going to have to continue it. It's a bill that doesn't go away. You don't buy infrastructure, fixing it one year, and forget about it the next because the problems continue on.

And really, we hope that the way we're going to get the transformation budget up is to try to get it through savings. Infrastructure savings or efficiencies that we can find, and hopefully we will do that.

Q: I'd like you to expand a little more on his question. I was just at the Air Force briefing on their budget, and they were saying it's people and readiness. That's really all we can afford right now. And most of the new money is because of [cost growth]. To stave off cost growth sometimes you need to invest in (inaudible) things to get in the pipeline. And if transformation is going to be as transformational as some people expect, one would think you'd need to start investing now. And there isn't a whole lot, at least in the Air Force budget, for that right now.

How are you going to contain those costs, and are you sort of taking a gamble in waiting until '03?

Aldridge: '02, you see the budget. What you see is what you get. There are no major force structure reductions other than what we saw, the restructuring of the B-1. We haven't, we've made a decision on missile defense and we've made a decision to phase down the Peacekeeper. Those are really the only force structure things we've got.

There's a lot of things still on the plate as we go through the QDR process, we get ready for FY03. If we see things that result from the QDR that either we don't need the force structure -- We can make those adjustments both for '02 as well as getting ready and offsetting anything for '03. This is a continuum. It doesn't stop at any one place.

I'm hoping, again, somewhat optimistic, but our BIC, the Business Initiatives Committee [Council], will be able to identify some things, and the QDR will begin to identify some things maybe we don't need. Everything is on the plate at this point in time.

We were not prepared to make any of those decisions for '02 because we don't have all of our, the QDR is really going to give us the direction for the next step.

Q: I wanted to ask (inaudible). One, kind of a macro sense, since you haven't made any major decisions here, all the programs have been pretty much steady state, as a (inaudible) process.

Aldridge: Right.

Q: Do you share the view of the train wreck in tacair [tactical aircraft] that's been talked about now for so long? Basically we can't afford the three programs, or the three plus V-22 if you want to, and --

Aldridge: I think I'd take the V-22 out of the tacair equation at this point in time. That program is being looked at and restructured, getting back into a test program that can get the reliability and maintainability up. So that's, put that in one sense.

The problem with tacair is that it's aging too quickly. And in spite of the F-22 and the JSF, it's still aging. The F-22 helps bring the average age of the air superiority fighter down, but we've got tacair aging, we're not buying enough aircraft to keep the average age where we'd like to keep it, which is somewhere around a half-life, like 10 to 15 years.

So I wouldn't call it having a train wreck. We've got an aging problem. And if you look at the aging problem the only way you can fix it is to get rid of the old stuff or to buy new stuff, and in some cases you've got to do both.

So we are looking at the whole tacair issue as part of the QDR of what, one, what's the force size we need to have, and once we get the force size we need to have we can kind of determine whether or not we want to get rid of some of the older aircraft and allow the new aircraft to come in, and what is the mix and how many do we want to have.

I talk about the train wreck -- I don't call it a train wreck, but it's being the age problem. That's what we have to do. What is the role of the tactical air force? What mission do you want it to perform, and then what is the mix of aircraft you need.

Q: Can I follow up on the same topic?

Aldridge: Sure.

Q: Joint Strike Fighter specifically. The budget was pretty much seen as coming in where it was supposed to come in. Your thoughts. Does that budget allow you to do anything but a winner take all? Would you be willing to change strategies? Willing to find money to do that?

Aldridge: Our plan right now is that we're going to down-select around the first of October. We have to think about the industrial base implications of that. We've not made any changes to our plan right now. The airplanes, both airplanes as you know, are performing exceptionally well. Over the weekend, in fact the last couple of days they've done hover tests on both aircraft which is a major technological breakthrough -- both takeoff and landings, in the vertical takeoff mode.

So the cost of the program still looks okay. The schedule of the program still looks okay. The performance is tracking right on track. So right now we're heading towards the plan that we've laid out for ourselves, and that's down-select to the winner take all on the first of October.

As you know there's a tremendous international implication in this program as well. The U.K. actually being part of the team with other countries considering joining the team. Of course they're a little worried about the future and they're a little hesitant until they get a different direction. And hopefully by this summer we will have that direction. With our QDR process done we'll have a handle on where we're going in tacair and we can then lay out a plan to get there.

Q: Joint Strike, just broader, there's been this cottage industry in Washington saying (inaudible) kill the Joint Strike Fighter. If I hear you, the decision's been made to somewhat go forward --

Aldridge: I didn't say that. I said we will continue with the program until we have a decision. The decision is really based on what the QDR, how is it going to come out. But in the mean time, the program is proceeding. There's no reason to turn it off at this point in time because there's no rationale to turn it off.

Q: What must change between now and the end of the year to possibly change that conclusion?

Aldridge: If the QDR, for example, decided that the force structure is significantly smaller. If the QDR decided that the threat to the tactical air force was significantly different. Those are the kind of things that might turn it off.

Q: Is the QDR where you expect to come up with the numbers on the F-22?

Aldridge: Yes. Yes. The QDR is the first time that we have, when this administration came on board we had to go fix some problems immediately such as the FY01 supplemental. We had to revise and amend the FY02 budget submission that had been sent to the Congress to reflect the new thoughts and ideas of this administration in terms of both the readiness account, as well as any new things we wanted to pursue. Ballistic missile defense is obviously one of those.

So we've been focused on that. The FY03 is the first time we've taken the strategy and integrated it completely with the budget. So QDR is the result of all these strategy reviews, transformation studies, and the budget process which is the normal process, the bottom-up process that goes on in the military services.

The QDR has been given out to OSD and the military departments. They're coming back in with their analysis. Once that analysis is done the defense planning guidance will be formulated. It goes back to the services. That's where the budgets now get built from the bottom up.

So now you will have a strategy QDR defense guidance and a budget which is fully integrated. And '02 is the first time that's going to come together.

Q: Secretary Rumsfeld and other political appointees have said that they were surprised by some of the problems (inaudible).

Aldridge: Right.

Q: Were there any pleasant surprises? For example, that what had been going on for the last eight years wasn't totally irrational, and some of the programs, some of the force changes actually made sense, they were just underfunded?

Aldridge: Yeah, I would think there's a lot of things in information technology, space. We found the space program, while needing a lot of things, but generally in fairly good shape. Some of the technology advances we've had in directed energy, in nanotechnology, UAVs, some very good work underway.

The morale of the military -- in spite of the fact that they're overworked and they get deployments and unreasonable things, you will never find any finer people in the world than the U.S. military. As I think about it, I'd put that on the top of the list. It's magnificent and we ought to be proud of them.

Q: I wanted to ask, there's also a lot of talk about (inaudible), making things into a silver bullet. A silver bullet buys this. B-2s (inaudible), turned into silver bullet buys. Philosophically, what do you think about that? (inaudible) small number. And then the (inaudible) assets.

Aldridge: The B-2 is quite capable. But if you think about what other things might be called silver bullets, is that what you're looking for?

Q: Well, just generally do you think that's an approach one can live with, or do you think that's a pretty dumb way to do business?

Aldridge: I don't think you can point to any one thing as a silver bullet. I look across, one thing that I think, a tremendous advantage the United States has is space and information, surveillance, and reconnaissance. We've got enormous leverage of our ability and information operations, information warfare, information dominance. There's no country in the world that can match us. No adversary can match us. I think that's an advantage we have for any of the military. If you look at undersea warfare, no Navy in the world can match our Navy. There's very few people, very few nations that can match our air-to-air capability. UAVs and unmanned combat air vehicles, the new technology is going to give us tremendous leverage.

Our industrial base is a tremendous capability. There's no nation in the world that can match us in any of our industrial capacity. Our training, the ability to train and exercise our troops no other country can match. We have an existing global command and control structure. No nation in the world has that. They talk about the unified CINCs and basically we have regions all over the world.

You put all that together, we've got a tremendous advantage, so it's not in any one thing. We have the capability to go long range. Strike anywhere in the world in a few hours. We can deliver any equipment anywhere in the world in a few hours with our airlift capability. No other nation has that.

Surveillance -- our space surveillance system. We have basically a global space surveillance capability. No other nation in the world has anything like that. Just look at our space program.

If you look at these things they're all silver bullets, and they're all unmatched. I'm glad it's that way.

Q: What's the status of your review of (inaudible) unsolicited proposal to build 40 more --

Aldridge: As part of the QDR there is a long-range strike study underway. That's one of the options, along with some other programs to fix the current B-2 and B-52 force. But it's about six or seven options that are being looked at for a long-range strike and that's in the equation.

Thank you.

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