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Remarks at Defense One Tech Summit

Thanks very much, Kevin. Thanks for having me here, for organizing what is really an extraordinary gathering. And for riding on the airplane with me all over the world, which we do. I very much appreciate that, admire your work. And I want to thank all of you - all of you attendees here and participants from what is America’s wonderfully innovative, open technology community, which is one of our country’s greatest strengths.

I am committed to building and rebuilding the bridges between our national security endeavor at the Pentagon and innovators throughout the nation, from the tech innovators in Silicon Valley, yes, but to many, many other hubs and places around the country.

I've visited Silicon Valley four times as Secretary of Defense. But a week before last, was up with the submarine engineers I met with last month at Electric Boat in Connecticut. So it's very widespread. It's the pride of the country and it's the strength of the country, our entire technology base. And as we continue building these bridges, I’m also focused on promoting the great innovators who are within our Department, at our labs, in our schools, and on the battlefield.

You heard from some of them today, our many of our senior leaders involved in both of these critical and interconnected missions. Alongside the many technology, business and academic leaders who’ve joined the discussion today, they play a critical role in accelerating the spirit of innovation that we need to maintain our edge in a complex and changing world.

So what I wanted to do is describe the logic of my commitment to this agenda and the actions we are taking to pursue it, and describe how these efforts – and the continued creativity and engagement of so many of you - will enable us to meet the challenges of today and tomorrow.

Now, when I began my career, as Kevin pointed out, in physics, most technology of consequence originated in America, and much of that was sponsored by the government, particularly the Department of Defense.  Now today, we’re still major sponsors, but much more technology is global, and the technology base is commercial.

Indeed, today’s security environment is dramatically different from the last 25 years, requiring new ways of investing and operating in its own right.  

We have today, as you all know, no fewer than five major, immediate and evolving  challenges: countering the prospect of Russian aggression and coercion, especially in Europe; managing historic change in the vital Asia-Pacific region; where China is rising, which is fine, but behaving aggressively, which is not; strengthening our deterrent and defense forces in the face of North Korea’s nuclear provocations; checking Iranian aggression and malign influence in the Gulf; and confronting terrorism, including accelerating the defeat of ISIL in its parent tumor in Iraq and Syria, and wherever it metastasizes in places such as Afghanistan and North Africa.  And since, moreover, we have a pretty good record of never predicting the successfully the strategic future, we must also be flexible and agile in preparing for it, for unknowns that we can’t anticipate today.

So in the Department of Defense, we don’t have the luxury of choosing between these challenges, or between acting in the present and investing in the future.  So we have to accommodate both these changes in the technological landscape and changes in our strategic landscape. We have to do it all. To stay ahead of those challenges, and stay the best, I’ve been pushing the Pentagon to think outside our five-sided box, and invest aggressively in innovation…from innovative technologies, to innovative practices, to innovative people.

And let me address each of those in turn.

First, we're investing aggressively in high-end innovative technologies to enhance our own asymmetric and hybrid capabilities. Overall, our budget invests nearly $72 billion in R&D. Now, to give you a little context, that's more than double what Apple, Intel and Google spent on R&D last year combined.

That includes $12.5 billion specifically invested in science and technology to support groundbreaking work happening in our dozens of DOD labs and engineering centers across the country, as you just heard about from Mary Miller.  It also includes investments in work happening in innovative companies and at universities, and at DARPA to develop and advance some of the disruptive technologies and capabilities that Steve Walker talked about with you earlier today. We’re making groundbreaking advances in areas like undersea systems, hypersonics, electronic warfare, big data analytics, advanced materials, energy and propulsion, robotics, autonomy, and advanced sensing and computing.

Those funds also support our growing nationwide network of public-private Manufacturing Innovation Institutes, where we’re working with companies, universities, and research labs to fund technologies like 3D-printing, advanced materials, integrated photonics, and digital manufacturing and design.  We announced the newest one earlier this spring, which is focused on revolutionary textiles that combine fibers with electronics to create fabrics that can sense, communicate, store energy, monitor health, change color, and much more.  Another we announced last fall is focused on flexible hybrid electronics…which makes it possible to shape lightweight, flexible structural integrity sensors right onto ships, bridges, cars, aircraft, and so on.

And meanwhile, we’re also investing to continue to make DoD a leader in innovation and investment in cybersecurity.  The Department of Defense has three missions in cyberspace.  First, our highest priority is defending our networks and weapon systems. That’s  job one – they’re no good if they’ve been hacked.  Our second mission is to help our partners across the government defend the nation against cyberattacks from abroad.  And the third mission is to provide offensive cyber options that can be used in a conflict, as we’re doing now against ISIL in Iraq and Syria.

In our latest defense budget, we’re investing more in all three of these missions, a total of $35 billion dollars over the next five years – with a great deal of that to help modernize and secure DoD’s hundreds of networks.  And all the while, we’re continuing to push forward new breakthroughs in cyber technology, like creating network defenses that can swiftly adapt to threats and self-patch practically in real time.

Now, technical innovation and investment is necessary, but not sufficient – we have to pursue innovative practices and organizational structures, also.  The world we live in demands it.  While the Cold War arms race was characterized by strength, with the leader simply having more, bigger, or better weapons, today’s era of technological competition is characterized by the additional variables of speed and agility, such that leading the race now depends on who can out-innovate faster than anyone else.  It’s no longer just a matter of what we buy.  What also matters, it matters a lot, is how we buy things, how quickly we buy them, whom we buy them from, and how quickly and creatively we’re able to use them in different and innovative ways, all this to stay ahead of future threats.

Our DoD labs and engineering centers are embracing new methods and practices to meet the needs of the warfighter faster, more efficiently and more effectively. We have encouraged this  - I’ve encouraged this - through persistent reforms such as Better Buying Power 3.0. Six years ago when I was Undersecretary of Defense for Acquisition, Technology, and Logistics, DoD began what I called Better Buying Power, an initiative to continuously improve our acquisition system.  And under the current Undersecretary, Frank Kendall, we’re now on the third iteration, Better Buying Power 3.0, focused on reducing cost growth and cycle time through greater use of prototypes, modular open systems and open architectures, and on accelerating the‎ integration of commercial technologies.

It all comes down to meeting the needs of the warfighter faster, more efficiently, more effectively in what is an intensely competitive world. This is a particular focus of DoD’s Strategic Capabilities Office, which you heard about from Will Roper a brief time ago. I created SCO in 2012 when I was Deputy Secretary of Defense, I did that to help re-imagine existing systems in our inventory by giving them new roles and game-changing capabilities to confound our enemies.  We're building fast - I think he may have mentioned this - resilient microdrones that can be kicked out the back of a fighter jet moving at Mach .9 in heavy winds. We're developing an arsenal plane, which will function as a very large airborne magazine with different conventional payloads, networked to fifth-generation aircraft that act as forward sensors and targeting nodes.  And these are just a couple of examples of what Will’s shop is doing – stay tuned.

To stay innovative going forward, DoD has to continue to be open to new ideas and new partnerships.  That’s why we’ve embarked on initiatives like our start-up in Silicon Valley, the Defense Innovation Unit-Experimental, or DIUx.  I was there last month to announce that we’re iterating, and taking this effort to the next level by launching DIUx 2.0, if you like, with several new features.  First of all, it’s a nationwide release, with a second DIUx office to be located in Boston – you’ll hear more about that in July.  It has more processing power, since our budget request includes $30 million dollars in new funding to direct toward non-traditional companies with emerging commercially-based technologies that meet our military’s needs.  And of course it's purpose, which is to connect innovative companies with that $72 million of annual funding.

And we’ve also upgraded the operating system, with a new partnership-style leadership structure led by Raj Shah – a National Guardsman, F-16 pilot, combat veteran, and co-founder and CEO of a successful technology startup. Great guy. And we will keep iterating together and learning from each other going forward. That's the point.

And that’s also a reason why I recently created a Defense Innovation Board, to advise me and future defense secretaries on how to continue building bridges to the technology community, and on how we can continue to change to be more competitive.  And I’m pleased that Alphabet’s Eric Schmidt is serving as the board’s chair . He’s doing a great job putting together the rest of the board.

And today I can tell you this board will include, for example, Reid Hoffman, the head of LinkedIn; former SOCOM Commander Admiral Bill McRaven - great thinker about innovative and operational approaches; and the noted historian of innovation, Walter Isaacson.  And we’ve got some additional amazing innovators lined up,  so stay tuned for who else will be joining Eric and the board. 

They're going to begin their work over the summer, and I expect to receive their first recommendations in the fall. Among other things, I’ve charged them with keeping DoD imbued with a culture of innovation in people, organizations, operations, and technology …to support people who innovate; to support those creative figures in the Department who are willing to try new things, fail fast, and iterate; and to ensure we’re always doing everything we can to stay ahead of potential adversaries.

And I stress innovation in people because as good as America’s technology is, it’s nothing compared to our people – they’re the key reason why our military is the finest fighting force the world has ever known.  And in the future we must continue to recruit and retain the very best talent for our All-Volunteer Force. 

That’s why we’re building what I call the Force of the Future, to ensure that amid changes in generations, technologies, and labor markets, we’re always postured to bring in, develop, and retain the best young men and women that America has to offer. As part of that, we’re implementing several new initiatives to give some of our own people, military and civilian, the opportunity to get out and to learn how the rest of the world works outside of our walls.

For example, we’re expanding and broadening the Secretary of Defense Corporate Fellowship program, including by opening it up to qualified enlisted personnel.  Another example is the Career Intermission Pilot Program, which lets people take a sabbatical from their military service for a few years while they’re getting a degree, or learning a new skill, or starting a family. 

We’re also looking for ways to allow more of America’s brightest minds to come into DoD maybe just for a short time, maybe just for some - one project, but to contribute to the great mission of protecting America and making a better world. We're bringing in resident entreprenuers who will work with senior leaders on challenging projects for a year or two. And we’re going to hire a chief recruiting officer to bring in top executives for stints in civilian leadership roles as we had in the past with people like Dave Packard, co-founder of HP, who also served as Deputy Secretary of Defense. He's one of the people who got me into this business.

We’ve also created the new Defense Digital Service, which you heard about from Chris Lynch earlier today. He’s helping us bring in coders from companies like Google, Palantir, and Shopify for what we call a “tour of duty.”  And they’ve solved some really important problems for us, like improved data sharing between DoD and the VA, to make sure our veterans get access to their benefits. We’re also nearing completion, as I stand here today, of our pilot program called Hack the Pentagon, where we invited vetted hackers to test our cybersecurity.  This is similar to the “bug bounties” that many leading tech companies have. It's a widespread best practice in the outside world, but we're conducting the first ever one done by the federal government.

It’s again exceeded all of our expectations – over 1,400 hackers registered. They discovered more than 100 bugs so far. And their help - so they're helping us to be more secure at a fraction of the cost, and in a way that enlists the brilliance of the white hatters rather than waits to learn the lessons of the black hatters.

Another example that’s having a real impact is our Cyber Mission Force.  These are talented people– some active-duty, but also Reservists and National Guardsmen – who have saved networks by hunting down intruders in our networks, performing the forensics that help keep our systems secure, and combating our adversaries in the cyber realm. 

So these are just some of the actions we’re taking to build the Force of the Future. We’ve also announced actions to help retain talent within the military – helping us retain experienced service members by helping them balance their commitments to the force and their families through expanded maternity and paternity leave, extended childcare hours on bases, and by offering military members with families the possibility of some geographic deployment flexibility in return for additional service commitments.

And yesterday, I announced the next two links to the Force of the Future to expand our ability to attract, train and retain the best talent American has to offer. On the military side, we’ve proposed changes to the promotion system to allow military officers to pursue broadening opportunities, like earning their doctorate, or pursuing other advanced training, or doing a tour with industry, to temporarily defer when they’re considered for promotion, without being penalized by timeline restrictions - a very big move. 

We’ve also moved to allow civilians with very specific skill sets, such as cyber and other scientific and technical qualifications, to enter the officer ranks at a level commensurate with their experience. We currently permit this for doctors, but not for other jobs that are not only high-skill, but also hard-to-fill, rapidly changing, and in high demand by the private sector.

We’re proposing changes that would foster innovation in our civilian workforce. For example, we’ve proposed allowing recruiters to hire top talent directly from college campuses. Again, for the first time for us. A kid graduates, he isn't going to wait around for an offer from the government, from DoD, that doesn't ripen for six months. That's not the way they're going to act and we're going to miss the good ones.

We’re also expanding DoD's STEM scholarship-for-service program, building two-way talent exchanges with the private sector. And we’re going to better leverage our existing authorities to directly hire Highly Qualified Experts into jobs across the department.  Today we only have about 90 such experts onboard across the department.

You've heard from two of them today – Chris Lynch and Will Roper. I’m sure you’ll agree that we’re better off for their service. And we’d be well served to include more incisive thinkers like them directly contributing to our mission of national defense. Competing for good people for an all-volunteer force is a critical part of our military edge, and everyone should understand this need and my commitment to it.

We’ve always been able to out-innovate our enemies, because we have our people – the builders, the operators, the innovators from our military and civilian force as well as our contractors and our nation’s overall wonderful strength, which is its technology base – people who think creatively, who are flexible, and who’ve always been able to combine our advanced technology with creative practices to solve the problem at hand.  In order for our people to continue accelerating the breakthroughs and progress that ensure our continued dominance, we must back them up with the freedom to innovate and take risks, and with a stable and secure funding environment. 

This last is why I remain concerned about proposals in the draft defense bills in Congress that would undercut the bipartisan budget agreement reached just last year, and that was supposed to guide our budget for two years.  The unraveling of bipartisanship could end up in a return of sequester, which our great risk as a Department.   Also objectionable in time of war are provisions cutting the overseas warfighting accounts.  And there are also some new and unstudied managerial proposals – adding and moving boxes here and there – that the Department’s leadership has not recommended.  I hope that such micromanagement will not be a feature of any enacted NDAA.

We all play a role in ensuring the success of the national security mission. For those interested in foreign policy and national security, there are lots of interesting challenges and problems to work on. This is also true for those interested in technology. But the intersection of the two is truly an opportunity-rich environment.

So I want to thank you for being here today, and for considering the words of all of the forward thinking individuals from government, business and academia who’ve shared their thoughts today. My pledge to you is that you will always have strong and willing partner in America’s Department of Defense.  We may not do it perfectly, but we're always trying to do it better. Helping defend your country for you, helping to defend your country and making a better world is one of the noblest things that a business leader, a technologist, an entrepreneur, or young person can do with their life.  And we’re grateful to all of you for the passion, the interest and the spirit of innovation that makes us all stronger.  So thank you.