Thank you to Rachel [Hoff] and good afternoon to everyone here. I really want to just tell you that by hosting this summit, the Reagan Institute is doing an incredible job helping to bring attention to the importance of the defense industrial base, which is a mission I think we can all get on board with.
Whether in DoD or Congress or beyond, we all have a responsibility to foster a broad national security innovation base. New entrants are vital to that mission, but so too is the health of longstanding partners in the defense industrial base. And I often speak to the former, but today I’d like to focus some of my remarks on the latter.
So to all of those, you who build things primarily for the military, or even that only the military needs, I want to say thank you, and we need you in our innovation base: from aircraft carriers, destroyers, and nuclear submarines, to stealth bombers, tanks, and troop carriers, and machine guns, missiles, and more.
And I’m not only talking about the prime contractors that so often serve as our large-system integrators. I’m also talking about thousands of sub-tier suppliers, many of them small businesses, in communities all over America.
The military and the industrial base are mutually dependent. Without warfighter demand and taxpayer dollars, the U.S. defense industry as we know it could not exist. And without the capabilities that industry provides to support America’s security, then America as we know it would cease to exist.
So we’re in this together. Because wars are fought by militaries, but they are won by nations.
Now, part of being a capitalist system means that businesses should be able to make a fair profit, provided that the customer is getting what they paid for.
Indeed, as we’ve seen with the People’s Republic of China, alternative systems are often rife with corruption, riddled with inefficiency, and better at stealing intellectual property than generating it.
Because ingenuity and creativity thrive the most when they’re enabled and surrounded by free minds, free markets, and free people — not when they’re forced to toe the party line.
In the context of this system, the U.S. defense industrial base has typically traced the ebb and flow of peacetime and wartime: mobilizations, demobilizations, buildups, surges, and peace dividends.
A key trend today is disruption: a new generation of defense-tech startups and scale-ups. And that’s welcomed, we should all welcome that, because competition is good for the taxpayer and good for the warfighter, too.
Think about it: if you’re downrange in some austere location, under fire from dozens of one-way attack drones, you don’t want just one type of system for counter-UAS. That’s too risky. You want as much protection as you can get. So we want Roadrunners and Coyotes, for instance.
We want to see more market competition for defense dollars. More small businesses and suppliers pioneering solutions that can make a difference for the warfighter. More companies that want to work with us, whether for the first time or after doing so for a long time.
And we should expect to see more opportunities for all of that to come together, even within the scope of a single program.
For example, this month the Army awarded a software company the prime contract for a hardware-intensive program, focused on fusing and disseminating sensor data across domains. That alone may be a first, but allow me to highlight what happened at the sub-prime level: it brought together a mix of traditional and non-traditional defense companies, from Sierra Nevada to Northrop-Grumman to Anduril. Hopefully such teamwork is a harbinger of things to come — and hopefully we’ll see the power of continuous, iterative development of software and hardware to accelerate capability delivery.
At the very least, we need everyone designing and building their systems from the ground up to play well with others — leveraging modular, open-system architectures — to be not only interoperable, but also interchangeable, so we can more rapidly integrate emerging technology.
And we mean this both internationally and domestically. Under AUKUS, for example, we’ve worked with Congress to make it easier for our defense industrial base to work closely and collaboratively with industry in Australia and the United Kingdom.
Today, America’s defense industrial base is at a pivotal moment, and not just because of the new kids on the block.
The Covid pandemic revealed how fragile and brittle supply chains had become.
The war in Ukraine has revealed how nation-state aggression is a real threat, requiring information-age ingenuity and industrial-era capacity.
And the need to modernize and stay ahead of our pacing challenge reveals how the DIB had been affected by decades of yo-yo dieting, inconsistent funding, and blinkered demand signals.
Together, our task is to deliver combat-credible capabilities to the warfighter at speed and scale, so they can deter aggression, and win if called to fight. But the truth is, the engines of production never spin up from zero to 60 overnight.
In President Reagan’s time, we could tolerate years- and decades-long timelines, when our main strategic competitor was relatively slow and lumbering; however, this is not the Cold War, or the post-Cold War era. With the PRC we are in a persistent, generational competition for advantage, and we have to double down with urgency and confidence.
That’s why the Biden-Harris Administration’s focus on American innovation, manufacturing, and production has been so important for national security. Because our military strength depends, in part, on our overall economic strength here at home.
So we’ve made serious, significant, and sustained investments — across now four annual defense budget and multiple supplemental funding requests to Congress — to strengthen the health, workforce, supply chains, viability, and productivity of the U.S. defense industrial base, short-term and long-term.
To help prime the pump, our investments since this administration’s first defense budget request have included:
- $2.4 billion for casting and forging, batteries, kinetics, and critical minerals;
- $10.3 billion in microelectronics, augmented by historic funds in the CHIPS and Science Act;
- $12.9 billion for industrial base infrastructure and facilities, including shipyards;
- $9 billion alone in submarine industrial base investments to support both our domestic production goals and AUKUS commitments; and,
- $24.7 billion for multi-year procurement of key munitions, from PATRIOTs to Long-Range Anti-Ship Missiles.
In fact, the budget that we released last week, for FY25, increases LRASM procurement quantities by over 70 percent compared to FY24, taking advantage of newly-expanded production capacity.
Of course, we’re investing in many other areas, as well: from quadrupling production of 155mm artillery shells, to expanding co-development, co-production, and even co-sustainment with key allies and partners.
Our procurement budget has been consistently more than our R&D budget — we buy a lot of things. $167.5 billion in procurement requested in our fiscal 2025 budget.
All of these investments and more have been aligned with the needs of our National Defense Strategy, and the National Defense Industrial Strategy that builds upon it.
The latter, which we released in January, is the first of its kind in DoD — born of a recognition that our defense industrial base is something we must actively and strategically shape, to meet this generational strategic moment.
Because production matters. Production is deterrence.
Now, the military may be a singular customer for the defense industrial base, but we are not a unitary actor. We have to succeed through teamwork, with both industry and Congress. And while I believe we all agree on the urgency to innovate, I must say one of the most serious obstacles to doing so has been the lack of stable, predictable, timely funding.
For the 11th time since I became Deputy Secretary, DoD is operating under a continuing resolution (CR), and we look to be headed toward a 12th time. As many here know, these stopgap measures are really half-measures.
They inhibit us from starting new programs. They compress our time to do talented acquisition work with our professionals who have to award contracts, ensuring taxpayer investments are safeguarded.
And they rob us of critical momentum, forcing us to stand still while Beijing, Moscow and Tehran move to modernize their militaries, coerce their neighbors, and work to outpace us.
Shutdowns are even more damaging, so we need Congress to pass bipartisan FY24 appropriations as soon as possible. We’re almost six months into the fiscal year, so it’s long overdue. And the delay has already been devastating.
It wasn’t always like this. For all eight years of Ronald Reagan’s presidency — and even when Roger’s father was DoD Comptroller, in the early 2000s — (Laughter.) — DoD on average spent 45 days a year under CRs, about six weeks. Not great, but doable. Some years it was less. But over the last three years, that number has more than tripled: DoD has operated under CRs for an average of 143 days a year.
Since 2010, we’ve lost nearly five years in total to CRs. No amount of money can buy that time back. It’s impossible to compete, and outcompete the PRC, with one hand tied behind our back three, four, five, or six months of every fiscal year.
Washington has to do better. And I know it’s possible. Just think, for seven presidential election years in a row — 1984, ’88, ’92, ’96, 2000, 2004, and even 2008 — Congress passed DoD’s base budget before Election Day.
We hear the right words, but actions matter most. In Congress, industry, and even in the Pentagon, we need everyone to set aside differences, come together and work together around our shared recognition that we are in a generational era of strategic competition with the PRC. And central to that competition is investing to take care of our troops and their families.
Let me get to a concluding message.
To have a healthy, resilient, dare I say thriving American arsenal of democracy, we also need a healthy, resilient, and thriving American democracy. The two cannot be separated.
Because enforcing contracts and protecting IP depends on upholding the rule of law.
Hiring a talented workforce depends on good schools and universities and immigration.
The prosperity of all Americans depends on ensuring equal rights and equal opportunity for all.
And starting a business, investing in others, inventing a product and taking it to market depends on safeguarding the institutions that provide the blanket of liberty under which you do so.
If we want to keep changing the world, then we have to strengthen the democratic principles that make this nation so worth defending, and make changing the world even possible.
Our country is not immune to the authoritarian winds that sweep the globe. We have seen America routinely tested. And while she has withstood, we cannot take that for granted.
Institutions can be degraded. Belief in institutions can fade. Both endanger the health of our nation, and our industry’s success.
We want private-sector innovation to succeed. We need the private sector to feel the same about American democracy. Because neither can thrive unless the other survives.
How we do this matters. Our ends and our means for achieving them are intertwined, because the end we seek is for American democracy, and industry, to continue to long endure.
I want to thank all of our workers across the defense industrial base. American ingenuity and hard work are why U.S. military equipment is the best in the world, and why Foreign Military Sales requests continue to increase to all-time highs.
You will remain one of our greatest enduring advantages, long into the future.
Forty years ago this fall, then-President Reagan visited Palmdale, California, and spoke to some of the many defense industry workers building the B-1 bomber — and, secretly, multiple stealth aircraft.
There, he recalled a pledge he’d made a few months earlier, at Omaha Beach, to “always remember, to always be proud, and to always be prepared, so that we may always be free.”
And he said there was “no higher responsibility to honor that pledge,” because, “No one, absolutely no one, should ever ask the sons and daughters of America to protect this land with less than the best equipment that we can provide.”
That responsibility guides us still today. And it always must and it always will. Thank you.