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Remarks by Deputy Secretary of Defense Shanahan at the Reagan National Defense Forum Followed by Discussion with Ms. Barbara Starr

DEPUTY SECRETARY OF DEFENSE PATRICK M. SHANAHAN: John, thank you. I’ll make sure to get a copy of your book on the way out of town here, but thank you for that warm introduction. Distinguished guests, ladies and gentlemen…

In today’s dynamic world, strong leadership is more critical than ever. I cannot picture a crowd more in tune with the importance of good leadership than this one.

It is my first time here, but many of you have been coming to this event for years. The beauty of the forum is its ability to draw together such invested, knowledgeable, and diverse leaders from the executive branch, military services, Congress, industry, our allies and partners, and the media.

It’s a privilege to speak with you on a topic as vital as national security. And I am mindful that it has been a long and productive day – Roger, not exhaustive – so I will aim to keep my remarks brief.

In my time at DoD, I’ve already interacted with many of you. You are not a passive bunch… The phrase ‘full contact sport’ is definitely not lost on you.

I’ve had the good fortune to interact with President Trump. He has been clear on his expectations: build a stronger military, take care of our men and women in uniform, and excel in the management of our business operations.

Secretary Mattis and I appreciate your endeavors to address a critical facet of our national security – military readiness. This bipartisan effort bridges the political spectrum.

In one ear, I hear Senator Reed rightly asserting our need for “a well-trained, properly equipped military force that can deploy at a moment’s notice.” In my other ear, Chairman Thornberry urging of our “moral responsibility” to meet the “readiness challenge.”

Today it is inspiring to join this large team of sharp minds working to confront reality and identify opportunities. And I look forward to the action today’s discussions will foster.

I’ve been in my role as Deputy Secretary of Defense for four and a half months now. The transition from more than thirty years in the private sector has been surprisingly smooth and seamless. The environment is similar, but with higher stakes – it’s a large organization, tasked with serious decisions on safety and security.

I will say, a couple of the Department’s behaviors strike me as abnormal. First, operating without a budget is not normal. Doing so every year for nine years is really not normal. Next, airplanes are meant to fly. A service with a significant number of its airplanes grounded and awaiting maintenance is not normal.

Part of my job as a leader is guarding against the normalization of abnormal behaviors within the Department. A high level of performance is not only expected of our military, it is essential for America’s security, no matter the constraints.

As Secretary Mattis often says, “there is nothing new under the sun.” And we do not have to look far into the past to find another time when our military faced serious obstacles to readiness and modernization.

Eighty years ago, we faced rapidly evolving threats from across the Pacific and Atlantic. While military leaders sought stable funding, political tensions and budgetary pressures stymied readiness efforts until the Second World War arrived on our doorstep.

In 1938, General George Marshall captured the dangers of unpreparedness in a way that still strikes a chord: “War is a sudden and terrible business… We must be prepared to defend ourselves... [and] almost every War Department problem involves consideration of dollars and cents.”

Today, artificial constraints still hold our national defense hostage, from budget stresses, like continuing resolutions and Budget Control Act caps to disagreements in Congress that affect timely decision-making.

Right now, we have time – one of our most precious resources – but we lack the stable budget needed to prepare for future fights. In a crisis, Congress will undoubtedly fund us for conflict, but we will lack the time to prepare.

Let’s heed General Marshall’s warning… We cannot rely on a crisis to be the catalyst for solutions. The cost of global conflict is simply too high, and we value our men and women in uniform far too much. 

A rapidly changing global security environment and budgetary instability have forced our Department into a risk management posture – the consequences of which are hard to calculate.

For any fellow engineers in the room, let me draw a physics analogy – according to Hooke’s Law, elastic materials bounce back to their original shape after stresses are removed from their environment. But if stress exceeds a certain limit, the materials will fail to regain their original shape. They become permanently deformed.

The Department of Defense has its limits to elasticity. Excessive pressure in the form of budgetary instability has the potential to permanently distort our Department’s character and lessen our lethality.

I know from my experience in industry just how long it can take to build a culture of excellence. Therefore, as a Department, we must shift our focus from risk management to seizing opportunities in order to remain competitive.

A risk-balanced, opportunity-driven approach will spark innovation and help protect our hard-earned culture of excellence from the unintended distortion of budgetary instability.

To address these challenges, our forthcoming National Defense Strategy – nested under the National Security Strategy – and our Fiscal Year ‘19 budget are designed to sustain long-term readiness and modernization.

We are building alignment across the Department, the interagency, with industry and other partners and allies. We all view these efforts through the critical lenses of lethality and affordability.

After all, we must remember – the Department’s primary purpose is to be as lethal as possible, ensuring our diplomats continue to speak from a position of strength. This is only possible when enemies know with certainty that we are ready to fight and win our wars, and allies know that America stands steady alongside them. A stable budget is essential for this.

As I alluded to earlier, I’m struck by the talent in this room. As individuals, you possess no shortage of skills and resources. Our challenge, then, is harnessing individual talent into one team effort – embodying the true nature of our nation’s guiding principle, e pluribus unum – out of many, one.

I know we can succeed if we stay focused on our goal: winning against any adversary to keep America safe.

I close with General Washington’s wisdom: “To be prepared for war is one of the most effectual means of preserving peace.” This belief drives us and will continue to drive us in all we do.

Thank you.


MODERATOR:  Thank you, Mr. Deputy Secretary.  Let's welcome CNN Pentagon correspondent Barbara Starr for a discussion with the secretary -- Barbara. (Applause).


BARBARA STARR:  Thank you, gentleman. I just want to take two seconds and say this is my fifth time here, and I always (inaudible).


MODERATOR:  (You're not live yet ?).




MODERATOR:  You probably started pushing some of those buttons.  (Laughter.)


MS. STARR:  I’m on TV. I’m supposed to know how to do this.

I honestly enjoy coming out here because I just have to say my very first newspaper job way too many years ago, I’m not going to admit to, was just down the road at the Thousand Oaks News Chronicle.  I was the city planning commission reporter.  (Laughter.)

I worked for about $86,000 a year.  And my big goal was to be promoted to city council reporter.  It never happened. (Laughter.)

So you see what happened to me.  I also briefly want to say to the Senators in the audience, I think everyone at this forum -- I was privileged a couple of years ago to host a panel with Senator McCain -- we always want to make sure we send all of us our very best wishes to Senator McCain. (Applause).

And now let the interrogation begin. (Laughter).

So, you know, let's face it, not a lot of people, you know, know anything about you yet.


DEPUTY SECRETARY OF DEFENSE PATRICK SHANAHAN:  That's good. (Laughter.)  Surprises, yes.


MS. STARR:  So talk to us a little bit about how you got here in terms of “what now.”  Talk to us about being the chief operating officer essentially.  Talk to us about how you and Secretary Mattis divide up the Pentagon, divide up the job, the priorities...


MR. SHANAHAN:  Sure, sure.


MS. STARR:  ... what he wants you to accomplish.


MR. SHANAHAN:  Well, absolutely.  So it's probably last February, I get a phone call and it's Kevin Sweeney.  He's the chief of staff for Secretary Mattis, and I think it's a fraternity friend of my son.  It's like, why would the secretary of defense's chief of staff be calling me?  And it's for a job interview.  And I went to the Pentagon, and I went to the Secretary's office, and he has this round desk, and it was General Sherman's desk, and we were doing a job interview, and we were going back and forth, and I asked him in the job interview, what is it that you'd like to accomplish in your time as secretary of defense so that I can understand if I have the skillset to complement what it is you want to achieve.  And the first thing he said was, "I want to make a more lethal force, and I think you have the background of developing major weapon systems to help lead the department."

And he said, "We can't be the policeman to the world.  I need to have a partner who understands, who’s worked at a global company, that has those kinds of perspectives and understands the value of international relationships."

And the third one is, the one that surprised me the most, he said, "One of my goals is that when I leave the department, that people will want to come and benchmark the Department of Defense because it has best practices," and when he described it that way, I said, "I think I possess the skillset.” It was never intended that I would be his policy deputy. It was always let me restructure the Pentagon.  Your job is down and in, and his is up and out.


MS. STARR:  You got right to it, because in the press corps we hear Secretary Mattis talk about he feels his job is making sure the U.S. military is the most lethal force in the world.  Lethality takes us right to the very, perhaps, key question:  Does that necessarily mean a bigger military?  Is a bigger military the only route to lethality?  Let me just say, you know, help people understand, is the thinking, yes, we need more nuclear weapons; we need more aircraft, more ships, planes, satellites?  Is that the route to increased lethality?


MR. SHANAHAN:  Well, I think that really – as I’m thinking about increased lethality, it's size and capability.  It's both.  How you use your force structure, how you use the capability.  It can be a multiplier.  There's all sorts of ways to create different types of effect.  There's not a magic answer as to what the mix is.  You can generate more capability from what we already have today, and things that we can do with innovation and technology, can really hold those forces to do even more.


MS. STARR:  So, if a service comes to you, if a major contractor comes to you, somebody comes to you with an idea, and they say, it's innovative, and it just means -- I'm just hypothesizing here -- we need, you know, another, 200 fighter jets, that might not be just more, might not be the answer?


MR. SHANAHAN:  Well, more of the same means more of the same.  And we need more better.


MS. STARR:  Talk about lethality and innovation together, because I know that's where you're looking.


MR. SHANAHAN:  Yes, the really unique part about this job is that we get to set the future, and it will be much different than what we've done for the last several decades.  It's kind of back to the conversation -- I think when John was doing his introduction, we're looking at one of the biggest changes since the Reagan years, all right.  I worked on the Chinook that came into production the same year I was born.  The Apache was -- there was really a lot of really great legacy equipment.  The B-52, think of the missions we've been able to enable – to enable there.

I think we're in an interesting period of history with innovations like computerized, talk about things like machine learning or artificial intelligence.  They have fundamentally changes decision making, so the systems that we have in the future will take advantage of that.  Autonomy I think you'll see brought to a much greater degree. 

There are very few people in this room that would've predicted a few years ago that the automotive companies would be getting out of combustion engines at the turn of the next decade, or that people wouldn't want to own cars because they'll drive themselves.  I think we're at the same point that we’ll usher in a new age of technology.

It's not about a company or a person coming forward with a few new idea.  We have to harness the industrial base so that innovating on those ideas and scaling those ideas becomes a natural act, and making that shift right now will be difficult.


MS. STARR: And why is that, in your view?


MR. SHANAHAN:  Because many of these technologies are at the infancy.  You see that in cars.  You see that in, you know, autonomous aircraft, but this will change very, very rapidly, and we're seeing with robotics, we're seeing it with manufacturing.  What's hard for people today is because we haven't had experience using these technologies as to envision how you might do things differently. 

So that the trick with innovation is to use it, and then to fail a thousand times quickly, and I think that's where human being struggle, they're desire to fail is uncomfortable.


MS. STARR:  Do you see more opportunity in commercial technology for the department?


MR. SHANAHAN:  I -- so I think about commercial technology this way -- so before the commercial market leveraged government investment.  Now because the commercial segment is investing so much money, it's time for the government to do the opposite.  I call it a new form of R&D -- rip off and deploy. (Laughter.)

So let's leverage somebody else's investment.  Our real challenge is that we've created a really neat acquisition system that says we have to go through a whole bunch of extra hoops to prove that something that already works works, under our standards.  That's -- the big opportunity for us it to be able to take all of that and show the big portion of it, and then leverage somebody else's money.


MS. STARR:  You and I have talked about this, this whole issue of risk and elasticity.  Let me come to it from just a very opposite side.  Yes, it's takes the Pentagon a long time to develop things.  Is (inaudible) to decide?


MR. SHANAHAN:  It's too long.



Where is your thinking about where risks crosses the line into being too risky, not appropriate risks, either because you put troops at risk or it’s a waste of money, then, you know, where -- help people understand what your thinking on this?


MR. SHANAHAN:  So let me just -- a couple of examples come to mind.  The easy one is this, like an autonomous aircraft, all right, so how comfortable -- how much risk would you be willing to take on an autonomous aircraft that would haul material for logistics, that won't have a person in it?  You'd take a lot more risks than if there was a person, you know, in that vehicle. 

I think when people's lives, you know, are at stake is probably where you have a greater degree of conservatism.  When I think about risk, there's, like, three dimensions to it -- there's technical risks, there's costs risks, and schedule risks.  And so you have to understand which piece of this you're trying to exploit.  So the (inaudible) is when you do all three. 

And technology risks, I mean, this is the one that excites me the most, is that we have some of the smartest people in the world in our country, in our industrial base, in the Department of Defense.  We're talking about why things take too long.  It's because of the way we hand things over.  It's much like if we were a baseball team and we have this farm league, and people go from single-A to AA to AAA – I know you love my sports analogies -- but we would find a person who was in high school who could throw a 100-mile-an-hour curveball with each hand, and then get to the big leagues when they're 40. (Laughter.)

Our challenge isn’t that we don’t have good ideas.  Our challenge is that process makes it go really slow, and this goes back to this notion of innovation and risks.  Nobody wants to make a mistake in public.


MS. STARR: So when the services either the secretaries of the chiefs comes to you as work through the next budget cycle, as you work through various efforts, what do you want to hear from them when they come talk to you about their programs, what they're trying to achieve, what kind of funding they're looking?  What are the primary things you want to hear from the services and the chiefs?


MR. SHANAHAN:  Well, we've already had those discussions, so they're ongoing all the time.  It's...


MS. STARR:  Well then, tell everybody else.  We don't know any of that.


MR. SHANAHAN:  No, it's pretty exciting.


MS. STARR:  It’s obvious you’re not willing to just look at some piece of paper with, you know, a spreadsheet and a bunch of numbers on it; you want to hear some stuff.


MR. SHANAHAN:  You think (Laughter.)


MS. STARR:  Which one in the front row is looking at you?


MR. SHANAHAN:  (Inaudible).  Chief of Staff of the Army, yes, yes, yes. (Laughter.)


MS. STARR:  Do we need to explain this?  (Laughter.)




MS. STARR:  What do you want to hear from them, as the services pitch to you and the secretary about where they want to go?


MR. SHANAHAN:  It's not so much what we want to hear from them; it's how we're going to partner together to achieve these results.  (Inaudible) whether it's General Goldfein or General Milley, this notion that we're going to take all these authorities and say, General Milley, go develop the next combat vehicle; you've spent your whole life doing military operations, now we want you to design the future of military vehicles for the Department of Defense.  You know, my role is to help us not be insular, but to be able to almost take all those ideas.

But I think what I'm looking most for is not just the ideas.  They have the authority and (he position to change how people think about the future, and if they possess that, they're going to extend the status quo.  Then those meetings will be uncomfortable.  If the meeting is, here's how we're going to fundamentally change, then we get into this discussion of experimentation, and no one is reckless.  I think it gets down to, how do we get the right people in the room and do the right level of experimentation?


MS. STARR:  And to begin to wrap up, maybe this of course is done in a vacuum, because you planned against essentially a threat.  You planned against the fact that something out there may do something bad.  So how do you view right now the threat, but not getting so caught up in the day-to-day threat that it hinders the innovation, which is the longer view?  So how do you view -- I mean, we've talked about it all day here -- North Korea, Russia?  What concerns do you have that you can get position for those kind of threats and the threats that nobody of course sees coming.


MR. SHANAHAN:  Well, so if you're in the Department of Defense, you live in this duality, so you have, you know, one eyeball that’s in front of you and one that’s down the road.  The reason I mentioned in my speech about time is if we're going to develop these new capabilities we're not going to do them in two, or three or four years; they'll take more than five years.  And the ones that I -- and this is from working in industry -- the ones that I apply to -- I call threats or competitions is, it's not about beating your competitor; it's really about can you do the mission?  Can you service your customer?  Can you create the value? 

Your competition tells you how to -- where someone else is in their capability, that I think, Chairman Thornberry, you said it best this morning -- it's all about us.  What are we doing?  What do we have to do to be better?  So our time is being really spent evaluating those threats, but then coming up with, I'll call it, the surprise.  It's not about how I’m going to beat you, it’s understanding what we're capable of, but how do I do something even greater than that. 

But if you don't focus on what -- if you're focused on your competition, you'll fail in your mission.  That's what drives my thinking as we go through and assess the roadmap for modernization.


MS. STARR:  Interesting.  I think we're running close to the end here.  If you weren’t at the morning session, the new chief of staff of the Army appears to be General David Goldfein.  I just want to (inaudible). (Laughter.)


MR. SHANAHAN:  Yes, yes.


MS. STARR:  (Inaudible) when he was introduced (as that ?).  No one's exactly had the nerve to call General Milley yet and tell him.  (Laughter.)  But General Goldfein might (inaudible).




MS. STARR:  Thank you.  I know that we have time for one question.  I believe -- yes, there you are, sir.  As a native of California, growing up here, it's a real honor.  I -- it's nice to meet you, and I know you have a question for the deputy secretary.


Q:  Thank you, Barbara.

Mr. Secretary, at the National Defense Forum last year, the question was raised by -- in one of the panels, that rather than being concerned about the building of the Department of Defense, the department's reformers should be concerned primarily with reforming it.

They posed it as a choice.  I don't know that you would want to treat it in that way, but would you care to tell us what is the Trump position on rebuild on reform?


MR. SHANAHAN:  The conversations I've had with Secretary Mattis, it's a simultaneous thing.  We can -- we can lay the foundation for the future, and we can rebuild, because we have the time and we have the smarts.

The beautiful thing about the Department of Defense is when kind of just look at the scale, people have stayed in the military -- you -- I mean, General McMaster you talked about this -- that depth of scale and experience from war is tremendous.  So we have to extract that knowledge and build on that.

And the reform piece is, you know, to me hygiene.  We just have to -- it's matter of any successful organization must be in a continuous -- must be continuously the (inaudible), always have to improving.

If I had -- I talked to Secretary Mattis about this quite a bit -- our goal -- the big worry is, you can bring people in, but they leave.  How do you make sure that the changes are enduring?  How do you make sure that they sustain themselves?  So part of -- part of what we've been working on are these reforms, and then to put the management system in place that ensures that we continuously improve.

So I'm bullish on the fact that we can walk and chew gum.  I'm bullish on the fact that there's a lot of opportunity on the reform side that'd pay for the modernization efforts that we're going to undertake.  Thank you, sir.


Q:  Thank you.


MS. STARR:  Well, thank you.  I think I'll leave you with this last thought, if you’re going to have one of those cool meetings on experimentation and innovation with the chiefs.




MS. STARR:  ... you feel like inviting the Pentagon press corps. (Laughter.)


MR. SHANAHAN:  OK, yes, we know who you are.  Yes, yes, take notes.  Yes, record this.  Yes, absolutely (Laughter.)


MS. STARR: All right, we promise to behave.

Listen, thank you so much.


MR. SHANAHAN: Absolutely, I appreciate it. (Laughter.)