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DOD News Briefing with Secretary Gates from the Pentagon

Presenter: Secretary of Defense Robert M. Gates
August 09, 2010

Go to http://www.defense.gov/news/d20100809slides.pdf to view slides associated with this transcript.

                 SEC. GATES:   Good afternoon. 

                 As you know, for the better part of two years, the leadership of this department has been working on reforming the way the Pentagon does business.  These efforts have been spurred by a number of realities.   

                 First, our country is still fighting two wars, confronts ongoing terrorist threats around the globe, and faces other major powers investing heavily in their military.  It is important that we not repeat the mistakes of the past, where tough economic times or the winding down of a military campaign leads to steep and unwise reductions in defense. 

                 The current and planned defense budgets, which project modest but steady growth, represent the minimum level of spending necessary to sustain a military at war and to protect our interests and future capabilities in a dangerous and unstable world. 

                 Having said that, we must be mindful of the difficult economic and fiscal situation facing our nation.  As a matter of principle and political reality, the Department of Defense cannot expect America's elected representatives to approve budget increases each year unless we are doing a good job; indeed, everything possible to make every dollar count. 

                 As a first step, last year we began reforming the department's approach to military acquisition, curtailing or canceling about 20 troubled or excess programs, programs that, if pursued to completion, would have cost more than $300 billion.  Additional program savings have been recommended in the budget we submitted this year. 

                 However, it is clear to me that additional major changes are needed, consistent with the reform agenda laid out by the president. I believe that sustaining the current force structure and making needed investments in modernization will require annual real growth of 2 (percent) to 3 percent, which is 1 (percent) to 2 percent above current topline budget projections.  Therefore, in order to preclude reductions in military capabilities that America needs today and those required for the future, that spending difference will need to be made up elsewhere in the department. 

                 As a result, in May I called on the Pentagon to take a hard and unsparing look at how the department is staffed, organized and operated.  I concluded that our headquarters and support bureaucracies, military and civilian alike, have swelled to cumbersome and top-heavy proportions, grown over-reliant on contractors and grown accustomed to operating with little consideration to cost. 

                 This manifested itself over the past decade in vast increases in spending and staff, by nearly a thousand employees in the case of the Office of Secretary of Defense alone, and in the proliferation of new organizations and senior executives to lead them.  This expansion and its associated habits and attitudes was abetted by a near doubling of the defense base budget since 2001, and further enabled by a steady diet of supplemental war appropriations, both factors that will soon end. 

                 Let me be clear.  The task before us is not to reduce the top -- the department's topline budget; rather it is significantly to reduce its excess overhead costs and apply the savings to force structure and modernization.  Toward this end, starting in June we embarked on a four-track approach to move America's defense institutions toward a more efficient, effective and cost-conscious way of doing business. 

                 First and most significantly, earlier this year the military services were assigned the task of finding more than $100 billion in overhead savings over the next five years.  Unlike budget cutting efforts of the past, the services will be able to keep the savings they generate to reinvest in higher-priority warfighting needs and modernization programs. 

                 This exercise is well under way, as the services are evaluating their programs and activities to identify what remains a critical priority and what is no longer affordable.  They are all planning to eliminate headquarters that are no longer needed and reduce the size of the staffs they retain. 

                 I've also authorized each of the military departments to consider consolidation or closure of excess bases and other facilities where appropriate.  This is obviously a politically fraught topic. Currently, Congress has placed legal constraints on DOD's ability to close installations.   But hard is not impossible, and I hope Congress will work with us to reduce unnecessary costs in this part of the defense enterprise. 

                 Second, we are seeking ideas, suggestions and proposals from outside normal official channels.  This includes soliciting input from experts such as think tanks, industry and the department's external boards. 

                 Within the department, we're launching an online contest for the purpose of soliciting and rewarding creative ideas to save money and use resources more effectively.  And I would encourage all DOD employees to visit defense.gov on the Web to learn more. 

                 Third, I directed a series of assessments of how this department is organized and operated to inform the FY 2012 budget request.  As part of that process, Undersecretary of Defense Ashton Carter has launched an initiative to improve the efficiency and reduce costs in the contracting arena, the goal being to get better buying power for the taxpayer and warfighter in defense goods and services. 

                 We plan on providing more detail on this effort in early September.  And our intent is for this initiative to begin affecting ongoing programs immediately.   

                 Fourth, even with these DOD-wide efforts under way, I've concluded there are a number of areas where we can take action starting now and not wait for the normal budgeting and program process.   Therefore, today I am announcing an initial set of decisions designed to reduce duplication, overhead and excess in the defense enterprise and over time instill a culture of savings and restraint in this department. 

                 These initiatives vary in size and level of achievement -- of savings achieved, ranging from personnel and paperwork to organizational structures and business practices.  They represent an initial step of a comprehensive department-wide efficiency and savings campaign that will be incorporated more fully into the FY '12 budget request. 

                 I'll summarize them briefly and take some of your questions.   

                 Copies of this -- so y'all don't get writer's cramp, copies of this statement will be available at the end of the session, and General Cartwright, Christine Fox and Bob Hale will brief in more detail and answer further questions. 

                 So to the initiatives. 

                 First, over the last decade this department has seen a dramatic increase in the use of service support and advisory contractors of all kinds, from 26 percent of the total DOD workforce cost in 2000 to 39 percent a year ago, not counting contractors supporting the war effort in Iraq and Afghanistan.   

                 In some cases, contractors may be performing functions that should be done by full-time government employees, including managing other contractors. 

                 Last year the department announced a plan to reduce the number of service support contractors by about 33,000 by 2015, and where necessary to in-source those positions with full-time government employees. 

                 Based on the data available after one year, I'm not satisfied with the progress made to reduce our over-reliance on contractors. Accordingly, to accelerate this process and achieve additional savings, I have directed that we reduce funding for service support contractors by 10 percent a year for each of the next three years. 

                 Furthermore, as I'll explain in a moment, we will no longer automatically replace departing contractors with full-time personnel. 

                 Second, and directly related to contractors, is the issue of the dramatic growth in size and expense in the Office of the Secretary of Defense, the Defense agencies and the combatant command staffs.  Much of this growth came from new missions that emerged since September 11th.  However, there was no commensurate decrease for activities that had become less relevant and urgent. 

                 With additional funds made available, there was not much incentive to do so. 

                 As I've said before, the department is -- department must start setting priorities, making real trade-offs, and separating appetites from real requirements.  Constraining the personnel available is one way to force this painful but necessary process to take place. Therefore, I am directing a freeze on the number of OSD, Defense Agency and combatant command positions, at the FY '10 levels, for the next three years. 

                 With regard to insourcing, other than changes planned for FY '10, no more full-time positions in these organizations will be created after this fiscal year to replace contractors.  Some exceptions can be made for critical areas such as the acquisition workforce. 

                 These measures are just the first step of a comprehensive re- baselining of OSD, Defense Agency and combatant command staffing and organizations.  We will conduct a clean-sheet review to determine what our people should be doing, where, and at what level of rank, in keeping with the department's most critical priorities.  I expect the results of this effort by November 15th of this year. 

                 Third, the proliferation of new staff and more layers of bureaucracy is a natural consequence of the substantial increase in the most senior leadership, general and flag officers, career senior executives and political appointees requiring Senate confirmation. 

                 Over the past decade, the department has added to what was already a high historical baseline for senior personnel.  For example, since September 2001, the number of general and flag officers has grown by more than a hundred, including now 40 four-star positions. And the number of senior civilian executive positions has increased by more than 300. 

                 As a result of the wars, this department has taken on new missions and responsibilities that have required some of these new senior military and civilian billets. 

                 But apart from meeting these genuine war-related needs, we have also seen an acceleration of what Senator John Glenn more than 20 years ago called "brass creep," a situation where personnel of higher and higher rank are assigned to do things that could reasonably be handled by personnel of lower rank. 

                 In some cases, this creep is fueled by the desire to increase bureaucratic clout or prestige of a particular service, function or region, rather than reflecting the scope and duties of the job itself. And in a post-9/11 era, when more and more responsibility, including decisions with strategic consequences, is being exercised by more junior officers in theater, the defense department continues to maintain a top-heavy hierarchy that more reflects 20th-century protocols than 21st-century realities. 

                 For example, unlike most other commands, four-star service component headquarters remain in Europe, long after the end of the Cold War and long after the vast majority of their fighting forces have departed. 

                 We need to create a system of fewer, flatter and more agile and responsive structures, where reductions in rank at the top create a virtuous cascading downward and outward.  In addition to the number of senior positions, there is also the question of their allocation, and whether our distribution of rank by geography or function reflects the mission -- missions and realities our military faces today. 

                 Therefore, I am directing a freeze at FY '10 levels on the number of senior civilian -- of civilian senior executive, general and flag- officer, and PAS positions.  Furthermore, a senior task force will assess the number and location of senior positions, be they old or new vintage, as well as the overhead and accoutrements that go with them. I expect the results of this effort by November 1st. 

                 At a minimum, I expect this effort to recommend cutting at least 50 general and flag-officer positions and 150 senior civilian executive positions over the next two years.   

                 These reductions would represent 50 percent of the total growth in senior military and civilian positions since 2000.  That's the minimum. 

                 Fourth, there are great benefits to be gained in cost and efficiency from taking advantage of economies of scale.  The problem is that too many parts of the department, especially in the information technology arena, cling to separate infrastructure and processes.  All of our bases, operational headquarters and Defense agencies have their own IT infrastructures, processes and application ware.  This decentralization approach results in large cumulative costs and a patchwork of capabilities that create cyber vulnerabilities and limit our ability to capitalize on the promise of information technology. 

                 Therefore, I'm directing an effort to consolidate these assets to take advantage of the department's significant economies of scale, thereby creating savings in acquisition, sustainment and manpower costs.  This action will allow the increased use by the department of common functions and improve our ability to defend Defense networks against growing cyber threats. 

                 Fifth, this department is awash in taskings for reports and studies.  In 1970, the Pentagon produced a total of 37 reports for the Congress, a number that topped off at more than 700 reports in last year's cycle. 

                 Consider that as of 2009, the department had nearly a thousand contractors working in some capacity producing reports for the Congress, of which more than 200 were working full time.  Reports directed by the Congress are effectively beyond our control.  But a good number of these reports are also internally generated, including by my own office.   

                 At this time, nobody knows what they cost; and thus there is little basis to determine whether the value gained is worth the considerable time and resources expended.  Therefore, I have directed that, starting now, we will freeze the overall number of DOD-required oversight reports.  We will immediately cut the dollars allocated to advisory studies by 25 percent.  And henceforth, we will publish the actual cost of the preparation of each report and study prepared by DOD in the front of each document. 

                 By October 1st, we will conduct a comprehensive review of all oversight reports, and use the results to reduce the volume generated internally.  In addition, we will engage the Congress on ways to meet their needs, while working together to reduce the number of reports. 

                 Sixth, the department has set up numerous outside boards and commissions -- 65 in the case of OSD alone -- to oversee our activities and provide independent advice.  Some of these entities provide real value; others less so.  Even if their members are unpaid, these bodies still require substantial support -- $75 million for OSD alone -- in the form of staff and indirect costs. 

                 Therefore, I'm ordering a review of all outside boards and commissions, for the purpose of eliminating those that are no longer needed, focusing the efforts of those that continue to be relevant, and cutting the overall funding available for studies tasked by the remaining boards and commissions by 25 percent in FY '11. 

                 Seventh, it's no great secret that, since September 11th, the U.S. Government has seen a proliferation in new intelligence organizations and operations.  This was partly due to the war on terrorism and partly due to massive intelligence requirements associated with fighting two wars. 

                 Even so, in the defense arena, large and well-staffed intelligence structures now exist in the services, the defense agencies, the combatant commands, and in the war theaters. 

                 To some extent, we're still struggling to find the right balance between the value of centralizing intelligence functions versus distributing or embedding them closer to the -- to the front.   

                 Nonetheless we should not flinch from eliminating unnecessary redundancy and directing more resources to places where they are needed, such as certain specialties in short supply in theater.   

                 I'm thus directing an immediate 10 percent reduction in funding for intelligence advisory and assistance contracts and freezing the number of senior executive positions in defense intelligence organizations.   

                 We must also take further steps to end needless duplication within the department's intelligence community.  Accordingly I've directed a zero-based review of the department's intelligence missions, organizations, relationships and contracts to be completed by November 1st.   

                 While these steps will only apply to the Department of Defense intelligence organizations, the new director of National Intelligence, Jim Clapper, has indicated an interest to me in pursuing a parallel and coordinated effort using the same business rules for the National Intelligence organizations.   

                 Eighth, the last decade has also seen a significant growth of new offices and organizations including two new combatant commands and five new Defense agencies.  So in addition to flattening and trimming structures, we also looked to eliminate outright organizations that performed duplicative functions or outlived their original purpose.   

                 The Office of the Assistant Secretary of Defense for Networks and Information Integration or NII was set up in 2003 when policy, oversight and advocacy functions for command, control and communications split off from intelligence.   

                 The resulting arrangement for dealing with enterprise IT and hardware issues, which includes a similar function for the J-6 on the Joint Staff, has since become redundant, costly and cumbersome.   

                 Therefore, I have directed the elimination of NII and the J-6 organizations.  Their operational functions will be assigned to other organizations, and most of their acquisition functions will transfer to AT&L.  We will stand up a refashioned and strengthened chief information officer, or CIO, and under its umbrella responsibility for daily operations will be assigned to the Defense Information Systems Agency. 

                 The Business Transformation Agency was formally established in 2006 to foster the reform and modernization of this department's business practices.  Since its creation, BTA, an agency that now employs approximately 360 people and spends $340 million a year, has shifted more of its focus to day-to-day oversight of individual acquisition programs, a function that can be performed by a number of other organizations.   

                 Furthermore, the mission assigned to BTA has largely been legislatively assigned to other elements of the department. Therefore, I have directed the elimination of the Business Transformation Agency and shifted its responsibilities largely to the deputy chief management officer. 

                 Finally, the Joint Forces Command was originally established to infuse and to some degree compel jointness into everything the military does, especially through training, doctrine development and the provision of forces for operations.  It was understood at the time that JFCOM created an extra layer in the force-management process. But the benefits of improving jointness were deemed to outweigh the resulting extra bureaucracy. 

                 Since then, propelled by decades of operational experience, the U.S.  military has largely embraced jointness as a matter of culture and practice, although we must always remain vigilant against backsliding on this front. 

                 Training joint forces, generating joint forces, creating joint doctrine and experimenting with that doctrine are all valuable tasks. However, they do not necessarily require a separate four-star combatant command which, in the case of JFCOM, entails about 2,800 military and civilian positions and roughly 3,000 contractors of all kinds, at an annual cost of a least $240 million to operate. 

                 Therefore, I'm recommending the closure of JFCOM and the assignment of its force-management and sourcing functions to the joint staff.  JFCOM's remaining responsibilities will be evaluated, and those determined to be essential and still necessary to protect and promote jointness will be reassigned to other entities. 

                 All told, as a result of closing or consolidating these three organizations over the next six months to a year, a substantial number of full-time employees will have to find other positions or no longer work for this department.  Like millions of Americans affected by this tough economic climate, I know these changes will likely mean real hardship for displaced employees and their families.   

                 Accordingly, I've asked Dr.  Clifford Stanley, the undersecretary of Defense for Personnel and Readiness, to work with the leaders of the affected organizations to do everything possible to assist their employees in what may be a difficult transition.  I do so with great appreciation and admiration for the service these employees have rendered, and with the hope that we can help them find new ways to offer their expertise and experience in service to our nation. 

                 The ultimate success of these initiatives as well as the other reforms under way, in the end, will depend on a fundamental change in culture and attitude across our Defense institutions.  The culture of endless money that has taken hold must be replaced by a culture of savings and restraint.   

                 Toward this end, I am directing that any new proposal or initiative, large or small, be it policy, program, or ceremony, come with a cost estimate.  That price tag will help us determine whether what we are gaining or hope to gain is really worth the cost, either in dollar terms or in the diversion of limited manpower and resources from other missions.   

                 As I've said a number of times, the way to make something -- make sure something gets done in this building is to set short deadlines and provide visibility and oversight from the very top.  To see these initiatives through from announcement to action to measurable results over the next 90 to 120 days, I have appointed a task force chaired by my chief of staff.  This task force will develop action plans and oversee their implementation and eventual transition to the appropriate department leadership. 

                 Taken together, these initiatives, in the context of the four major tracks I described earlier, represent an aggressive effort, not only to reduce cost but also to reform the culture of this apartment. This effort will not end this fall, or with the FY '12 budget submission next February.  Instilling habits of restraint -- of subtracting as well as adding, of elevating affordability on a par with desirability -- is a project of years in the making. 

                 This will reflect itself in ways large and small, substantive and symbolic.  My hope and expectation is that the efforts we have launched will lead to the kind of cultural changes that over time become a part of the department's DNA and institutional memory. 

                 In closing and in summary, I want to reemphasize that this agenda is not about cutting the department's budget.  It is about reforming and reshaping priorities to ensure that, in tough budgetary and economic times, we can focus defense resources where they belong:  in America's fighting forces, investment in future capabilities and, most important, on our men and women in uniform. 

                 And let me just -- let me just add, before turning to your questions, to see these initiatives in context, I think you need to step back and see them as the next move in a process that has been going on for two years.  It began at the National Defense University with my speech in September of 2008; the far-reaching decisions on programs for fiscal year '10 that were made in April of 2009; the decisions on the alternate engine and C-17s earlier this year; and the Eisenhower Library speech in May. 

                 I am determined to change the way this department has done business for a long time.  Earlier decisions in the four tracks I've identified are part of a broad campaign that will be ongoing.  Today's announcement represents a down payment to demonstrate that I intend to continue to move aggressively to achieve the broad goals of making this department more efficient but also ensuring that we put our resources where they are the most needed. 

                 Anne. 

                 Q     Mr. Secretary, you mentioned some of the other big high profile cost-saving efforts you've tried over the last couple of years.  Given that several of those, including the engine one, you -- so far have failed to convince Congress that this is the way -- the best way to save money. What confidence do you have that the Virginia delegation, for example, which stands to lose multiple thousands of jobs and lots of money plus all that real estate, is going to go along with this? 

                 SEC. GATES:  Well, first of all, in April of 2009, most people were deeply skeptical that I would be successful in getting the Congress to go along with a number of the program cancellations and changes that we made, and yet we were successful.  A position that I've made clear and to which the President has spoken, on the alternate engine and C-17s, is also clear.   

                 That bill, I'm confident, will be vetoed.  Any bill that takes the alternate engine and more C-17s to the president, I am confident will be vetoed. 

                 I think you have to have some perspective here.  Just to take the example of the Virginia delegation, if as a result of these efforts I am able to add a billion or two billion dollars to the Navy's shipbuilding program of record, Virginia may well come out with a lot more jobs than it loses. 

                 This is why the point needs to be emphasized again and again, this is not about cutting the defense budget; this is about a reallocation internally.  The issues are not as clear-cut in terms of people affected as when you're talking about a big acquisition program, I think that the chances for being successful in these efforts are actually very good. 

                 I think, for one thing, there are two things that make this different than past efforts. One, this is not a budget-cutting exercise.  And second, the services get to keep the savings they identify and invest them in higher priority things. 

                 In the past, monies that have been saved have been called off -- or that have been cut have been called off, and so they've lost programs.  Here, they have the opportunity to add to the investments they're making in their highest priorities.  So I -- for all these reasons, I think that the Congress and this building, under the current economic circumstances and budgetary pressures, will see this as an opportunity to protect our force modernization and our force structure. 

                 Q     Do you fear -- you made some comments earlier --  

                 SEC. GATES:  And I -- and I would just say, I've talked to the leadership of both the authorizing committees and the appropriations committees.  And while I sketched this in broad terms, I did talk about the eliminations and so on.  And the people that I've talked to were supportive. 

                 Q     You made some comments earlier that you were warning against unwise cuts in the Defense Department budget as the United States maybe draws down in Iraq or as we move away from certain conflicts.  Is that a fear that you have right now? Are you feeling that if these steps aren't taken fully, that there will be pressure to do -- to take much more drastic actions? 

                 SEC. GATES:  I think -- I think that if we are to make a -- if we are to make a compelling argument for sustaining the top line of the Department of Defense to the Congress, we have to demonstrate a compelling argument that we have, in fact, tackled the things that worry them -- poor acquisition practices, poor business practices, excessive reliance on contractors, waste, abuse.  We need to be able to show that we are actually doing something about these programs in a systematic way that affects every part of the department.  I think under those circumstances we have a pretty good opportunity to make our case. 

                 But there isn't -- my greatest fear is that in economic tough times that people will see the defense budget as the place to solve the nation's deficit problems, to find money for other parts of the government. 

                 My responsibility to the President and to the Congress is to present them with a program that I believe is necessary to defend this nation.  

                 And as I look around the world and see a more unstable world, more failed and failing states, countries that are investing heavily in their militaries -- as I look at places like Iran and North Korea and elsewhere around the world -- as I look at the new kinds of threats emerging from cyber to precision ballistic and cruise missiles and so on -- my greatest worry is that we will do to the defense budget what we have done four times before.   

                 And that is, slash it in an effort to find some kind of a dividend to put the money someplace else.  I think that would be disastrous in the world environment we see today and what we're likely to see in the years to come.   

                 If you were to graph the defense budget going back the last 40 or 50 years, it would look like the EKG of a fibrillating heart.  What we need is modest, sustainable growth over a prolonged period of time that allows us to make sensible investment decisions and not have these giant increases and giant decreases that make efficiency and doing acquisition in a sensible way almost impossible.   

                So my hope is that through all of these efforts, we will make a persuasive case to the Congress and through them to the American people that we are spending tax dollars wisely in the Department of Defense and in areas where they would like to see it spent.  And that is in capabilities and in our force structure and investment for the future, as well as our troops.   

                 Q     Mr. Secretary, you said that you're not happy with the results that you got from the direction you gave last year on the 33,000 contracts, cutting 33,000 contractors over five years.  What makes you think you'll be any more successful in driving through some of the changes you want to make between now and November 1st during the coming few years? 

                 SEC. GATES:  Well, I think part of the problem was that we were -- as we were reducing contractors, we weren't seeing the savings we had hoped from insourcing.  And -- so the way to get at contractors -- the problem -- the problem with contractors is, and what we've learned over the past year, is you really don't get at contractors by cutting people, because you give the contractor a certain amount of money and they go hire however many people they think they need to perform that contract.  So the only way, we've decided, that you get at the contractor base is to cut the dollars. 

                 And so if you -- if you add it up, we're looking at cutting a third of the budget for services and support contracting over the course of the next three years.  That -- that, we are convinced, is a way to get a handle on this problem. 

                 Q     Can I ask you about contractors in the war zone?  You go to a place like Afghanistan, there are thousands and thousands of contractors.  There are 2,000 private contractors training Afghan security forces, as opposed to 900 from NATO, and then thousands of other contractors doing jobs that used to reside within the U.S. military. 

                 Talk about that as being a problem, with the allies not pulling their weight and then contractors doing the jobs that used to be done by a soldier. 

                 SEC. GATES:  Well, I think -- first of all, I think that's kind of mixing -- mixing things.  NATO -- our partners have -- have done a lot.  And if you had asked me a year ago if we -- if we would have nearly 50,000 partner troops in Afghanistan by this summer, I would have thought that a very tall order. 

                 So I think they have come through.  There are still shortfalls, and the --but the primary shortfall is about 750 trainers.  And we're -- and we're continuing to work on that. 

                 Personally, I think that the use of contractors-- there are a lot of things contractors do that soldiers used to do -- peel potatoes, do the dishes.  I think contractors ought to do that stuff.  If I've got a highly trained combat infantrymen, I don't want him spending his time doing that stuff.  And so I think there are a lot of functions that soldiers once performed that should -- can and should be done by contractors.  I think it's -- I think it's sensible and, frankly, in some respects it's cheaper. 

                 So I think that the other aspect of it is, with respect to contractors in Iraq and Afghanistan, is that I see that as a transitory issue.  I mean, the number of contractors in Iraq has already come down pretty dramatically.  And at some point, we'll see that happen in Afghanistan. 

                 What I'm looking at, though, here in this department, is a phenomenon that started a long time ago but has accelerated significantly over the last 10 years.  That is not a transitory phenomenon, and it's once we need to act to reverse. 

                 Q     Mr. Secretary, you listed some of the threats you see in the world.  Which ones do you think you need to address particularly with some of this money that you hope to free up for what you call priority programs?  What are the key things to put the money into? 

                 SEC. GATES:  Well, I think, first of all, the services get to keep -- as I said, get to keep the savings they find.  My intention is to take the savings that we find from other parts of the department and provide those also to the services.  In other words, the defense agencies, OSD and so on, the savings we find there they don't get to keep.  Our intent is to take provide -- take that money and provide it to the services. 

                 I mean -- and I used an example earlier.  I mean, I think everybody realizes that we probably need more money in shipbuilding. So that would be an area that I would certainly look to when it comes to the Navy in terms of not only letting them keep the money they identify for that purpose, but perhaps if I could provide some additional resources for them to help them in that area.  Each of the services has that in that respect. 

                 Q     Is this about preparing for the next wars? 

                 SEC. GATES:  This is -- what I am trying -- you know, we've had this conversation before.  Of the overall procurement budget -- and I confess I get a little impatient that everything is about providing for today's wars -- out of the overall procurement budget, about half goes for modernization programs:  the Joint Strike Fighter, the new ballistic missile submarine, new ships, the tanker, the next-generation long-range strike.  This list -- the new ground-combat vehicle for the Army that they are going to be starting on.  So all the services have these modernization programs, and half the procurement budget goes for those modernization programs.  About 40 percent of it goes to dual-purpose things like C-17s that are used in whatever the spectrum of conduct -- conflict, and only about 10 percent for the kind of wars we're in. 

                 The cost of the wars we're in is fundamentally paid by the overseas contingency operating funds and by supplementals.  So this isn't about finding money for the wars we're in today.  We've got that money.  It's about protecting the money for the future. 

                 Q     Sir, when you talked about, like, reducing intelligence contracts, are you -- do you have concerns that the intelligence -- that there's redundancy and duplication on the military intelligence side as well as the civilian agencies?  Has it grown too large? 

                 SEC. GATES:  Let's just say I'm -- it's hard for me to believe that in these -- in all of these different elements -- the services, the defense agencies, the combatant commands and the theater -- that there aren't redundancies and duplication, and it has grown by leaps and bounds over the past decade.  You've read about that in The Washington Post series.  But I think the thing that people haven't focused on is that that wasn't just about terrorism and the war on terror.  A lot of that was the intelligence requirement to fight these wars that we're in, Iraq and Afghanistan. 

                 So I think -- I think we just need -- I don't think anybody's stepped back and looked at all of this, from sort of soup to nuts, in a very long time, if ever.  I can't remember it ever being done.  And if -- and if Jim Clapper does it on the national side and we do it side by side, I think that there are almost certainly some savings to be found. 

                 And what I'm really after are people.  And not to fire people, but rather the reverse -- to take people who may be doing a redundant job here in the U.S. or at a combatant command and, if we're short that kind of a specialist, intelligence specialist in Afghanistan, to provide -- to cover the shortcomings, the shortfalls in staffing in Afghanistan, with some of the savings we find in people who are not in theater.  But I also think, you know, leaving aside the money and the people, it's just hard for me to imagine in all these big organizations that there isn't a lot of duplication. 

                 Q     If you are eliminating the Joint Forces Command, what's going to happen to General Raymond Odierno? 

                 SEC. GATES:  I've talked to Ray -- General Odierno about this. He supports the decision to eliminate JFCOM.  As I indicated in my remarks, I expect that it will take about a year to carry out this change, and I've told Ray that his assignment at JFCOM is essentially the same -- been the same as his assignment in Iraq, and that is to work himself out of a job.  And then I'll find a new -- a new and better one for him. 

                 Q     Mr. Secretary, there's one expense you didn't mention, and that's health care, medical costs.  How much longer can you see these growing costs before you really have to pass on those expenses in terms of increased TRICARE premiums or reduced coverage? 

                 SEC. GATES:  Yesterday.  Health-care reform is on my agenda, as is -- some of these efforts are part of the third track that I was talking about that grew out of the QDR and the other reviews.  And so we have studies going on now, as I said, that will help shape our FY '12 budget submission.  They involve logistics.  They involve health care and personnel policies, more restructuring and organizational changes, continued acquisition reform. 

                 I think it's safe to say that, as far as I'm concerned, in this effort there are no sacred cows, and health care cannot be excepted from that.  Everybody knows that we're being eaten alive by health care.  I believe there is a growing understanding on the Hill about this.  It cost us 19 billion dollars in 2000 or 2001.  It'll cost us over 50 billion in FY ‘11.  And will cost us about 65 billion in FY '15.  And particularly when the top line is only growing at a percent or thereabouts, it's unsustainable, and therefore it has to be a part of our effort. 

                 Q     You're not exactly working yourself out of a job by coming up with all of these initiatives.  Have you made a decision about how long you're going to stay?  Because I think publicly you're still only committed to the end of this year. 

                 SEC. GATES:  Well, first of all, I think it's important to stress that I believe that this isn't just about me; that I believe the service secretaries, the chiefs, Ash Carter, the comptroller, the director of Cost Assessment Program Evaluation (CAPE) -- I believe the senior leadership of this department and this administration is committed to all of these activities. Admiral Mullen, General Cartwright, as you'll hear, very supportive. They're doing some things in some respects in the joint staff that are even more far-reaching than some of the things that I've talked about. 

                 So I think that there is broad support in the -- and, of course, the deputy, who on a day-to-day basis will end up managing this whole thing.  So all of the senior leadership of the department, from the -- from the deputy and the chairman on down, is supportive of this.  So I have every reason to believe that, whenever I leave, that these efforts will continue.  The president is committed to it.  The Congress is committed to it.  So I think -- I think a lot of this will continue. 

                 As far as I'm concerned, all I will say is that I'm going to be here longer than either I or others thought. 

                 Q     Mr. Secretary, these are major changes that you're discussing today.  To what extent are they just the tip of the iceberg of what you have planned?  Do you see, beyond what you're announcing today, the need for a further tightening between OSD and the joint staff, or looking at eliminating other major commands? 

                 SEC. GATES:  I think that this, as I -- as I said at the very end, I think that this is a -- this is a dynamic process.  I expect it to continue.  It's not the work of one year or of one budget cycle. So I wouldn't -- I wouldn't necessarily describe it as the tip of the iceberg, but if 90 percent of an iceberg is under water, then this is a pretty good percentage of it, but not all. 

                 I expect -- you know, as I say, we've got four tracks under way. And I would tell you that the services are thinking about some pretty dramatic things.  They're not ready to talk about it.  They haven't made any decisions yet.  But the kind of options they're looking at are pretty impressive. 

                 So I think that -- I think that there's -- I think this will be an ongoing process, and I think we'll learn as we go along.  I think, as we get into these things, do these zero-based reviews with short deadlines, I think we're going to learn some things that then give us future opportunities or targets or whatever you want to call them. But I think -- I think we have to keep after it. 

                 Last question. 

                 Q     You mentioned reports.  I'm just curious about the QDR.  The recent report of the QDR independent panel has sparked discussion about the value of it.  And it sounds like -- even though it's congressionally mandated, it sounds like it's the kind of thing you're describing as maybe could be a cost-cutting place to look. 

                 SEC. GATES:  I actually think -- I actually think that the QDR has value.  I think that the outside -- and what I told both Bill Perry and Steve Hadley is that I think the outside review of the QDR, if you will, actually would be better before the QDR is written, to have them assess the world and assess the kind of agenda that QDR looks at, because then it can -- then it can actually inform the preparation of the QDR with an outside perspective that may allow it to look more broadly at things.  Having it come afterward is of limited value because the QDR's already done; it's printed; people are, you know, doing all kinds of things with it.  So I think that -- I think the QDR is one of those that does have value, but I think the outside review would better be done on the -- at the front end of the process. 

                 Thank you all.

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