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DoD News Briefing, Thursday, July 16, 1998

Presenters: Mr. Kenneth H. Bacon, ASD (PA)
July 16, 1998 1:40 PM EDT

Mr. Bacon: Good afternoon. I see we are all here.

First I'd like to welcome to the briefing room the California writer Brandon Barker, who is probably finding that he can find more strange facts in the real life of the Pentagon than he can find in the fiction of California. So we welcome him.

Second, I'd like to bring you up to date on the meeting of the group that I announced on Tuesday, that is the Threat Reduction Advisory Committee that was set up to monitor the creation of a new Defense Threat Reduction Agency. It met for the first time yesterday. Its purpose is to review our progress in dealing with ways to stop the proliferation of weapons of mass destruction, and they looked at the policy and they set up three sub-groups. One is reducing the threat from biological weapons; the second is developing integrated weapons of mass destruction threat assessment techniques - (inaudible) sustaining our nuclear deterrent.

[Audio is lost momentarily]

Maybe this is the right time to ask me a lot of tough questions on North Korea. Mr. Lambros?

Q: Anything on today's elaborative ceremonies and meetings here at the Pentagon with the Turkish General Ismail Karadayi? And could you please be more specific on the discussions on the Aegean/Cyprus issues?

A: The answer to the second question is no, I can't be much more specific on that. On the Aegean part of it, as you know those confidence building measures are being shepherded through by Javier Solana, the Secretary General of NATO. He's in town today. He met with Secretary Albright this morning and he'll meet with Secretary Cohen this afternoon. He's here to talk about a number of topics. One is Kosovo, one is NATO, the accession of new members in 1999 in the Washington Summit, where the expansion of NATO will take place. He'll talk about Bosnia, and I would expect that he will also talk about his plan to encourage more confidence building measures in the Aegean.

Today the Secretary and Gen. Shelton did meet with Gen. Shelton's Turkish counterpart and they discussed a wide range of issues including peacekeeping in the Balkans, in which both Greece and Turkey had been participants. They talked about the importance of progress on the confidence building measures in the Aegean. They also talked about the very dramatic need for further progress in reducing tensions on Cyprus, and our views on that are well known. We've stated them many times. I don't think there were any breakthroughs on that, but it was certainly one of the main areas of discussion.

Q: Who is the employee you mentioned the other day who makes a kind of moratorium or mechanism over the airspace of the Republic of Cyprus?

A: I think you're combining two things. We have now, in Turkey or coming back from Turkey, Jan Lodal, who went over for a previously scheduled meeting. He had hoped to stop in Athens on the way, but was unable to. But he does visit Athens frequently.

Separately, we have been talking with Greece and Turkey about a number of possible ways to reduce tensions on Cyprus. One of the proposals that the U.S. has made is a voluntary moratorium on military air flights on that island.

Q: Did they talk about S-300s today?

A: I don't know specifically if they did. I'm sure they did because it comes up in nearly every meeting we hold on Cyprus. It clearly is a problem, the potential deployment of S-300s, and we've been very clear about that. We think this will increase tensions at a time we believe the parties should be working to reduce tensions.

Q: Why did DoD try to impose such a mechanism over Cyprus instead of a no-fly zone against finally the civil defense sovereign right?

A: First of all, I don't think we're trying to impose anything. What we're trying to do is get the parties to look at options for reducing tensions. This is on a list of possible options. Last week, Secretary Cohen spoke here with the Greek Defense Minister Tsokhatzopoulos and he said that we are discussing a range of options for reducing tensions on Cyprus. This is among those options.

We're trying to encourage both the Greek side and the Turkish side to step back from potential conflict, to step back certainly from the current confrontation, and to look for more peaceful, more stable solutions to the problems. We have proposed some options that are under discussion. One of them is this idea of a voluntary moratorium.

Q: Yesterday - official here at the Pentagon presented a kind of scenario on a Greek/Turkish war in the Balkans. Any DoD scenario to prevent such a war between your two allies Greece and Turkey in that area?

A: What was discussed yesterday dealt with Kosovo and the spillover problems of refugee flows from Kosovo. That was much more limited than a broader issue.

Greece and Turkey are NATO allies. We expect that they will operate and act as NATO allies who will step back from confrontation and look at the broader need for stability in the alliance. I think both Greece and Turkey understand, as do the other allies, that we need an alliance that's stable in both the north and the south and the east and the west corners, and that requires cooperation by all members.

Q: The Lockheed/Northrop issue. Can you brief us on how far along you got in the talks, what kind of a proposal you were reviewing which has come to naught?

A: No, I can't.

Q: Can you give us any more details than you had in yesterday's...

A: I cannot. There have been discussions that have stretched over a series of weeks. Both sides have proposed conceptual solutions. The Department decided that there was not a conceptual solution, it did not see a conceptual solution that would work from the corporate side and therefore right now those discussions are over and we're preparing and planning to litigate this case in court starting in September.

Q: Are you ruling out any further talks?

A: I'm not ruling out anything. It's always possible for the companies to come back with another proposal, but what we found, what the Department found when it looked at the proposals in front of it was that we could not simultaneously meet two demands. First was maintaining a certain amount of competition -- both in terms of price and technology; and second, maintaining our commitment to smarter, less intrusive buying practices. The point there is that it would be possible under some circumstances perhaps to maintain a certain amount of competition if we had armies of auditors going into the companies. We didn't think that was an acceptable solution.

Q: The Department's reaction to the Rumsfeld panel report that the missile threat to the United States is broader and probably more imminent than intelligence agencies had thought?

A: There was a briefing at the CIA yesterday afternoon that responded in great detail to that report. Obviously this was a very important, knowledgeable panel that took a hard look at this. We are worried about the threat of new missiles, new weapons of mass destruction facing the United States. I think there will always be debate inside the intelligence community and outside the intelligence community about how much warning we'll have, but the Defense Department's program and the Administration's program here is clear.

We are working to develop the structure of a national missile defense system, a limited national missile defense system that can protect us against a modest attack by the year 2000. Then we'll be in a position to, under our current program, to deploy that system and have it operational by 2003.

In the mean time, and even after that, we will depend on what we have for the last 50 years which is a very substantial conventional and nuclear deterrent force to discourage anybody from taking action against us.

Q: Doesn't that pose a problem in terms of relying on our nuclear shield and our large conventional forces in that defense groups have said that the biggest challenge that's facing the United States military in the years ahead is the asymmetrical threat. How do you react to, say, one missile attack by rogue states? How forcefully do you come down and risk a spread of...

A: You're asking me to talk about sort of a hypothetical. I think the first answer is that anybody who thinks of attacking us should realize that we have the means and the will to strike back quickly and aggressively. We have both conventional and other ways of doing that.

The second is that we are working very aggressively to build a theater missile defense system and a national missile defense system. It's, as you know from the briefing held here last week, a very complex problem and it does not lend itself to easy solutions but we're trying to resolve those technological problems as quickly as possible and move ahead.

The third point is that we are improving our intelligence capability so that we do have a better look at what potential adversaries are doing around the world, and the earliest possible warning.

Q: Do you have an update on the Department's view of the status of North Korea's No Dong missile? The Rumsfeld Commission said, and I quote, that "the No Dong was operationally deployed long before the U.S. Government recognized that fact." Last week Secretary Cohen declined to confirm that the No Dong had been deployed. Is there any change in your view of this?

A: No. I have nothing to add to what Secretary Cohen said last week.

Q: Lockheed. Can I get you to go back one second? How far apart was the government and the companies when talks ceased?

A: That's a judgment call that I can't give you any light on.

Q: Can you give me a sense of how hopeful you are that talks could resume? Is there any optimism here on the Department?

A: Not hopeful or unhopeful. We're planning to go to court. We and the Justice Department have been preparing -- the Justice Department, of course will try the case -- have been preparing to go to court since the day the decision was made and those preparations continue.

Q: Did you say earlier, I'm not sure I heard you right. Did you say that in addition to the companies making proposals to the government, the government presented proposals on how the merger might be acceptable to it, or did you not say that?

A: There was a discussion of conceptual plans or options, and I think that both sides talked a little bit about what they thought might work. There was not agreement. We didn't get close enough to make the government believe that an agreement was possible.

Q: But in the minds of the government there is a way to do acquisition reform and maintain price competition and technical competition. It was just the method that you proposed was not acceptable to the industry.

A: Without getting into specifics, obviously a merger proposal that does not present threats of unacceptable vertical or horizontal integration would be acceptable to us, but we have not seen such a proposal that satisfies our concerns about both vertical and horizontal integration.

Q: Have you developed a proposal to present to them?

A: We believe it's up to the people proposing the merger to come forward with an acceptable proposal.

Q: Back in '96 DoD asked for and got from Congress money to revitalize military housing. Can you tell me, and I have a couple of follow-ups, why there's been no actual construction started under that program?

A: First of all, there has been. We have, under that new program, constructed 404 housing units in Corpus Christi, Texas, and another 185 units at the naval station in Everett, Wash. The government put up about $9.5 million for the Corpus Christi project and got $30 million worth of housing. In Everett, Wash., the government put up a total of $5.9 million and got housing units worth $19 million. That illustrates precisely why we are changing the way we buy housing.

For years the military has constructed, managed, repaired military housing. It's built it, it's owned it, and it's taken care of it. We've decided that we can no longer afford to do that and meet the need to renovate and build new military housing. There are currently about 300,000 military housing units; we reckon that as many as 200,000 of them may be substandard, in need of repair or replacement.

If we were to follow our normal procurement techniques it would cost at least $20 billion to make those repairs or replacements and it would take 30 to 40 years to do that. So several years ago we got Congress to accept a proposal we made for a five-year experiment to test housing privatization techniques. These are ways to bring the private market into the construction, ownership, and management of military housing. We think we will get much more leverage, and by bringing in private money to do this we should be able to solve our housing problem by as early as 2010. In other words, we would cut the time by at least half required to deal with this housing problem.

It turns out that this has been an extremely complex undertaking, and one of the reasons is that the government and private business operate in entirely different ways when it comes to building housing. We didn't have to worry about questions of title, we didn't have to worry about financing, we didn't have to worry about designing mortgage documents and lease documents that could support resale in the secondary market. We didn't have to worry about credit rating because we just got the money from Congress and we contracted with builders and they built the houses.

Suddenly in the world of private building and private mortgage finance we had to develop whole new ways of dealing with contractors. So that's what we've been working on. We've hired some consultants in the real estate industry and in Wall Street and elsewhere, the mortgage banking industry, to help us do that. It's taken longer than we'd hoped. But the fact is we already have the benefit of nearly 600 units that have come out of this new program. We're going to let a contract at Lackland Air Force Base in Texas I would say in the next month or so for another 420 units.

We have had a disappointment at Fort Carson, Colo., where we had hoped to have a contract completed for 2,600 units of military housing to be financed privately. We'd hoped to have that contract completed around this time. Unfortunately, there was an imperfection in the way the contract was let; it faced a legal challenge... I don't know if it was an imperfection, but it faced a legal challenge at any rate, and as a result of that the military decided that we would wait another year and we would have to rebid the contract, so that will run a year later than we had anticipated.

Q: Do you also have another nearly $40 million spent or committed for consultants? What's that going for?

A: Well, we actually don't. We so far have spent, as I understand it, about $7.5 million on consultants to help us sort through the private contracting, leaseholds, etc., that we need to do.

Q: Do you have another $30 million committed for consultants?

A: There is a possible $30 million that we could spend over the next five years. That's not saying that we will spend that. I anticipate that as we get proper financial instruments negotiated and gain more experience with the private sector in housing and develop a system of standard operating procedures, that we will spend decreasing amounts of money on consultants.

Q: So you've gotten so far about 600 units of housing in a couple of years. Is that a good enough pace? You have 200,000 units...

A: I wish we could go faster, but basically, as I said, this is a new direction for the Department of Defense. It's going to be a bargain for the taxpayers. On the units we've bought so far we have gotten a leverage of three to one for the government money we put up, versus one to one in the past. I think that leverage ratio will improve for the military and for the taxpayers as we go forward.

Every new program takes some adjustment time, and this has been one. But I think that we are proceeding at a faster and faster rate and I'm confident that this program will be a major contributor to help us in solving the housing program.

Q: When you say that you're getting a three to one ratio for your money, what is the benefit that goes to the private companies that prompt them to put up the rest of the money? Do they have...

A: Profit.

Q: The profit in... Oh, you rent back the housing?

A: Basically what happens is that instead of the military building, owning and managing these houses, they're being built by private contractors. Now there are a whole variety of methods for doing this. Some of the houses are being built by private contractors on military bases. Others are being built on land that's outside the military bases. There are lease arrangements, there are all sorts of other arrangements that we're in the process of developing.

The benefit is that a contractor comes in and builds, owns, and manages the houses, and what the person gets is a steady stream of rental from people in the military.

Now one of the complex issues we've had to deal with is how to make sure that over a 40 or 50 year period this housing could be in existence, or even a 20 or 30 year period that it might be in existence, to make sure there is a steady stream of rental income coming into those houses, given the fact that we do have base closures from time to time, that groups go on deployments, that there's rearrangement of military units from place to place. So we have to work out loan guarantees and we have to work out other sorts of security arrangements for the private sector here. That's taking a lot of time.

Q: Can you describe any more, when you say 200,000 of 300,000 units are substandard, what do you mean by substandard? Are we talking about...

A: One example might be lead paint. There are military housing units that still have lead paint. In many states that would qualify as substandard housing. It might be perfectly fine housing in every other way, but it has lead paint and it costs something to go in and take out the lead paint, burn it off, and replace it with another type of paint.

Q: Are military personnel at any of these facilities living in slum-like conditions?

A: I hope not, but I can't answer that question because I haven't made a comprehensive survey of military housing. Certainly there are people living in housing that should be improved, and the goal of this program is to allow the government to improve the housing at a faster pace but at lower cost than we would be able to if we followed the normal military construction process.

Q: On most bases there are areas that are kept up pretty well. Why has housing fallen by the wayside in two-thirds of the housing?

A: This is something that has obviously been a long term problem. It hasn't happened in the last year or even the last five years. In the past, base commanders have frequently, in allocating their resources, put money into other areas than housing. Starting several years ago, Secretary Perry decided this was a mistake, that it was going to make it more difficult to retain highly trained people in the military; that quality of life was a very important consideration as to whether people extend for another term or more, and he set out aggressively to improve quality of life, and housing was one of the main tasks he undertook.

He realized we would never be able to conquer the problem if we were spending money at the standard military construction rate. The problem was much bigger than the resources. The only way to succeed was to tap what must be a trillion dollar or more private housing market when you look at the Mortgage side and the Mortgage Guarantees, etc. So that's what he set out to do.

Secretary Cohen is committed to making this program work. The problem we've had is it's taken a little longer to get it off the ground than we'd hoped. But I think we are making, accelerating, progress now.

This is going to be a bargain for the taxpayers; it's going to be a boon for the military; and it's also going to be a great benefit to the housing industry around the country.

Q: Perry started this, $37 million, ended up as a Beltway bandit. The APP, John Diamond, he's out at Fort Carson. This guy is saying they're living in a ghetto. 200,000 of the 300,000 units are substandard. This is after three years of looking at this issue. Hasn't it been a mistake to try to go this route?

A: Absolutely not. It's exactly the right way to go. I found in this job that one of the few institutions in the world that believes in instant solutions is the press. Most people understand that it takes some time to make a transition from an old way, an old traditional sort of regimented way of building housing to a new market oriented approach. I've admitted we wish we could have done this faster. The fact is we've had some glitches. I believe we are on the way to solving those glitches and I believe this will be of great benefit to the military and to the taxpayers.

Q: We're on the way to solving these glitches? By 2010 did you say?

A: That's compared to 30 or 40 years that it would take if we followed the old process.

Q: This has been a key reason a lot of senior NCOs are leaving the military.

A: Which is exactly why we're fixing it.

Q: If you're not going to fix it until 2010, it sounds to me like there's a lack of priority and attention that Perry once promised when he was Secretary of Defense.

A: Well, I think that's untrue. We invite you to come down to Corpus Christi, Texas, particularly in July or August, and look at the housing down there and tell me if you think the new housing isn't an improvement over the old housing.

Q: But doesn't this benefit contractors and the market and the real estate developers? It benefits everybody except the military and their family who are living in substandard housing.

A: I think you had it half right. It benefits everybody. When this program is up and running it's going to benefit the soldiers, sailors, airmen, and Marines who live in the new housing or the renovated housing; it's going to benefit the taxpayers who will end up paying less for the housing; and it's going to benefit the private sector that now has a new market to work on. So I think that this is a triple win.

Q: The Marine housing, of course, is a scandal.

A: That's why we're trying to make it better.

Q: I wasn't here when you went over what Mr. Solana was going to be doing here with Secretary Cohen. What is the priority for this visit to the Pentagon and what else will they be talking about?

A: I thought I explained it. They're going to talk about NATO expansion; going to talk about Bosnia, talk about Kosovo; probably talk about the confidence building measures in the Aegean, particularly because the Turkish general was here earlier today and that will be on Secretary Cohen's mind. But they'll talk about a wide range of issues.

Basically I think this is one... Secretary General Solana makes a series of visits here every year, and talks about whatever issues are on his mind when he comes.

Q: So this is a routine...

A: Yeah. I think he was last here a couple of months ago.

Q: ...sharing.

A: Right.

Q: The Senate Armed Services Committee is having a fairly contentious hearing today on the nomination of Daryl Jones. The Senate members themselves brought up three areas of concern. One is that Jones has lied regarding his flight service; that he pressured junior colleagues in the Air Force to buy Amway products; and that he took a $90,000 fee for one day of employment with a Florida bond firm. Given all of that, why does the Secretary still think he's the best nominee to be the next Secretary of the Air Force?

A: Daryl Jones has addressed all of these issues. These are not new issues.

Daryl Jones went to the Air Force Academy; he served in the Air Force for a number of years. When he got out of active duty flying, he joined the Reserves in Florida and he flew in that unit for a while, while he was building a law career and beginning service in the Florida legislature. He found that he did not have enough time to maintain his flying proficiency and to build a law career and a political career at the same time. So unlike many people faced with a choice of giving up flying and getting out of the Air Force, he decided to give up flying and not get out of the Air Force; to remain in the Air Force. He's committed to the Air Force.

The other issues, Amway and the bond deal have been addressed and investigated -- one by the SEC. The Secretary has been following this case and he thinks that Daryl Jones is a good nominee and should become Secretary of the Air Force.

Q: His former squadron commander this morning told the committee that no, Jones did not decide to stop flying, that he was grounded and removed from flight status against his will.

A: I have not had a chance to review the documents. At one time I was fully conversant with all the documents. At one time I had read his performance reports and a series of letters.

I think the fact of the matter is that nobody denies that Daryl Jones is serving well in the Air Force Reserve today. He's been chosen recently to become a lieutenant colonel, so he's being promoted in the Air Force Reserves in a non-pilot job now. And he has the full confidence of the Secretary as the nominee to be Secretary of the Air Force.

Q: The Washington Post reported last Sunday that U.S. military forces from Germany and Turkish security forces from (inaudible) were targeting facilities of the Kurdish Liberation Front, PKK of Abdulla Ocalan in Southeast of Turkey. Do you know what it was about?

A: Repeat that, please?

Q: American forces from Germany in cooperation with Turkish forces from (inaudible), Turkey were targeting Kurdish facilities in Southeast of Turkey, and I would like to know what it is all about.

A: Are you talking about the article about the Special Forces Joint Combined Exchange Training Program?

Q: [Off mike]

A: It's not my recollection that that's what the article said. It's my recollection that the article described a training operation in Turkey and it's one of a type of training operations that we hold all around the world in more than 100 countries last year to introduce American forces to new working relationships with forces all around the world, and also to help our forces stay current on language ability and their training abilities.

Q: But they were focusing on Kurdish targets...

A: I'll have to go back and check but that's not my... Well, I'll go back and check that.

Q: Could you say whether Secretary Cohen's made a decision yet on whether to return the Medal of Honor to Lieutenant Blassie's family, or whether to keep it at the Tomb of the Unknown?

A: I think what he said on that was that he's asked the Air Force to review that, and I'm not aware that the Air Force has completed that yet, but I'll check.

Q: What's the status of the Department's inquiry into the release of that information about Linda Tripp's security application?

A: I have no idea. I'm the last person to ask.

Q: That's with the Inspector General, and that's the only inquiry into that that you know of?

A: My belief is that's correct, yes.

Q: Are you glad that it's all over?

A: Well, it isn't quite over yet. But I think it's nearing the end. The end is near. [Laughter]

Q: Can you comment on comments today by the commander of the U.S. Special Forces Command that some future joint training with China would be desirable, he said. Is the Defense Department involved in promoting any such future linkup?

A: In a broad sense we're looking at future military exchanges with China. I'm not aware of any specific look right now at Special Forces operations, but that certainly would be a type of military exchange we would consider.

We have agreed since 1996, December of '96, to explore new ways of improving cooperation between the United States and China; new ways of getting our militaries to work together more smoothly in training or other types of missions and we will continue... I mean basically what we've done so far is focus on a very limited number of types of missions that have to do with search and rescue, a provision of humanitarian aid.

As you know, the Chinese have sent some observers to look at this huge naval exercise taking place in the Pacific, RIMPAC '98 that's ongoing now. I think we would look at exercises in that spirit, sort of humanitarian, search and rescue, etc., for future possible exercises if we could agree.

Q: And can you update us on the status of the Joint Chiefs exercise in Pakistan? Yesterday there was supposed to be an interagency meeting to review...

A: I'm not aware of whether that happened or what the decision was if it did happen.

Q: Can you get that for us?

A: I can try.

Q: Anything to the press reports that a missile test is planned or... The Indian government denies that. Can you add anything to that?

A: I find it best not to speak for the Indian government. [Laughter] We'll let them address that issue.

Q: (Inaudible) the U.S. may have (inaudible). Can you give us your understanding of the deployment of (inaudible)?

A: We know that they are working on longer range missiles. I don't have at my fingertips right now where that project stands.

Q: And the other one is, again, the same report because North Korea is the major proliferator of the ballistic missile capability to countries like Iran, Pakistan, and others. Do you have anything on this?

A: It's true and it's unfortunate.

Press: Thank you.

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