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National Security Telecommunications Advisory Committee

Thanks, Mark. And, to the panelists, I heard the first two-thirds of that, or so, and just wanted to commend you all the ways you're thinking about the future, the ways that we're trying to think about the future as well including the FireEye question. Maybe I'll come back to that one a little bit later. Very much concerned about vulnerability in the long haul.


I second Penny's thought, of just a moment ago, and Jim, you started with it, but that relationship, that's the theme of today's meeting, in essence. The earlier, and more out in front of things we all get, the better we have. It may not be 100 proof, probability of 1, but we have a much higher probability of solving problems if we start early and do it together.


I'm all in. We're trying to do that in my own world, but it's a bigger world, and Penny, I fit in.


Mark, thanks. Mark's an old friend and colleague. I'm pleased that the nation's benefits from him, that the President benefits from him taking this job.


This is my fourth visit to Silicon Valley as Secretary of Defense. I only note that because when I became Secretary of Defense I learned that no Secretary of Defense had been here in 20 years. So, I've been here four times this year. I think that's appropriate, and my purpose is exactly the purpose for which NSTAC was created -- more about that in a moment, which is to build and rebuild the bridges between our national security endeavor. In my case, in the Pentagon.


My friends and colleagues here, the country's real lucky to have these two, by the way, doing what they're doing. I say that not only as a friend, but just the sheer competence there.


For me, it's the Pentagon, and bridges between that that our national security mission, and the wonderful, open immensely creative innovative technology community, which is one of our other -- our countries other great strengths. It's been bringing those two great strengths together, which has protected us and helped us make a better world.


This is an interesting body for me to address, and I'll tell you the reason. I worked for Casper Weinberger way back, early in my career on nuclear command and control. Some issues at that time. That happened, my time, doing that happened to coincide with the issue of the break-up of the Bell system, for those of you who can remember that. I certainly remember it.


One system, Universal Service. It was Caps view that this was a risk to the national command and control system which was carried on the backs, in those days, of the public switch network. There were just a very few common carriers, they were all heavily regulated, and things like putting classified switches in a Faraday Cage, and grounding ductwork that carried cables and so-forth was paid off the rate base, and that was an important subsidy to national security.


With the breakup of the Bell system, that issue became urgent, and when the dust settled -- and there was dust then too in the air, but the dust was settled through dialogue, through working together. Solutions were worked out, and NSTAC was the mechanism for doing that.


If I remember it -- I remember it very vividly, and I'm glad. Now, it's moved on.


It's moved on technologically, and you do a lot more than the public switch circuit switched voice telephony system of those days. But, it was President Reagan, actually, at the time that brought these two communities together to solve a problem that was urgent at the time. I just thought I'd note that because that was three decades ago, but it signifies the importance of this kind of mechanism, and as the world changed -- as I indicated, NSTAC has changed too to its great credit.


It moved from DOD to the Department of Homeland Security. It moved from voice telephony to the Internet, and everything else that goes on it, and with it. And, I think it has more of a focus now on emerging technology, and the future, and being anticipatory. It was a little more reactive at that time. All of those good, all of those good, appropriate migrations.


I wanted to talk a little bit about our approaches in the Department of Defense to innovation generally. And, the private-public cooperation as an instance of that, but we're trying to do a lot more than that even as the companies you invest in, and the world represented by the companies here try to do a lot of things all at the same time.


When I began my career in physics, most technology of consequence originated in America, and it originated in one way or another in close connection to the government, frequently the national security community. We're still a big sponsor in DOD, but the technology base is much more commercial, much more global now than it was then. We need to take that into account in how we can port ourselves as the national security community.


We also have a very different security world than we had then. We were really focused on one thing primarily, today we have -- the way I say it is, five major immediate and evolving challenges that our soldiers, sailors, airmen and marines are involved with every day. They're working with a global coalition each and every day with more, and more ingenuity, and more, and more power every day to accelerate the defeat of ISIL, which we will do. We will surely do, but we want to do that as soon as possible.


They're training with our NATO allies in Europe to deter Russian aggression. They're sailing the waters of the Asia-Pacific ensuring that the most consequential reason for America's future remains stable, secure, and prosperous for all nations. They're standing guard on the Korean peninsula day and night, every day, every night. And, countering Iran's malign influence against our friends and allies in the Middle East. All the while they're helping protect the homeland.


In the Department of Defense, we don't have the luxury of choosing among these five challenges, or between acting in the present, or investing in the future. We have to do it all. To stay ahead of those challenges, to stay the best, I have been pushing those in the Pentagon to think, as I say, outside of our five-sided box. Invest aggressively in innovation, innovative people, innovative technologies, and innovative practices, and I want to tell you some of the things that we're doing so that you'll know but you can help us, and give us yet more ideas.


We start with the people because they, more than anything else, are the reason why our military is the finest fighting force the world has ever known. Our people. and, that's why it's so important to do what I call building the force of the future to ensure that amidst changes in generations, in technology, and in labor markets, we're always postured to recruit, develop and retain the best young men and women that America has to offer for what it, after all, an all-volunteer force.


Part of that, we're creating various -- I call them on-ramps and off-ramps for technical talent to flow between the DOD and the tech sector in both directions. That way more of America's brightest minds can contribute to our mission, and our outstanding military and civilian leaders, and technologists across the DOD, and the innovative defense industry that supports us already, we'll be able to interact in new ways with our countries hubs of innovation.


Take, for example, our new defense, Digital Service, which brings in technologists from larger companies like Amazon, startups like Shopify, for a tour of duty, as we call it. These are really talented people, and we've got a bunch of them now, who come into DOD just to just a year or two. Sometimes just a project, but make a lasting contribution to us, and our mission, one they'll never forget. They can tell their kids about it when they have kids. And, also experience being part of something bigger than themselves. That's just one example.


We have a career intermission program which lets people take a sabbatical from military service while they're getting a degree, or learning a new skill. We're bringing in entrepreneurs and residents to work with senior leaders like me on challenging problems for, again, a short time.


We're going to hire a Chief Recruiting Officer to bring in top for stints in civilian leadership roles, not unlike HP co-founder, David Packard, who served as Deputy Secretary of Defense and was one of the first people I was associated with in this business of defense.


One area that's particularly important here is our cyber mission force. These are of necessity very talented people. Some active duty, but also reservists and guardsmen who hunt down intruders in our networks, perform the forensic that help keep our system secure and combat our adversaries in the cyber domain. We need to be able to bring in the best talent we can and that's why we're using these folks who in many cases serve us on the weekends, and during the week are network defenders in some of our leading companies. How else are we going to have access to that kind of talent, except through the reserve and guards? It's an amazing opportunity for us.


We also have an accept service civilian personnel system that is going to allow us to augment these forces. That way if security, cyber security experts in the private sector, or even elsewhere in DOD want to come to work at Cyber Command, the hiring process will be more competitive with the private sector, and we'll have a lot less red tape. That's going to be necessary to have some good people.


In addition to people, which is critical, but we're also investing in technology itself. All the ones the three of you named, were involved in every single one of them, pushing the envelope as much as we can.


The budget I've Been defending before Congress for the last few weeks, we're proposing spending nearly $72 billion dollars next year on research and development. For context, that's more than double what Intel, Apple, and Google combined spent last year. So, it's a lot of money.


Among other things, that money funds groundbreaking work happening in the service, and DARPA, and our dozens of DOD labs, and engineering centers across the country. A wide range of technologies -- undersea systems, electronic warfare, big data analytics, energy and propulsion, robotics, A.I., advanced sensing and computing, the whole gamut.


These funds also support our nationwide network of public-private manufacturing innovation institutes, which are an interesting thing. We're working with companies, university research labs, to fund technologies like 3D -- actually create ecosystems surrounding technology core. 3D printing, advanced materials, integrated photonics and digital manufacturing and design are some we've done already. We announced the newest one last month in Boston, I did, focused on revolutionary textiles that combine fibers with electronics to create fabrics that can sense, communicate, store energy, monitor health, change color, much more.


Another we announced last fall, I did right here in the Valley actually, that aims -- last year, was focused, and is focused on flexible hybrid electronics which would make it possible to seriously print lightweight flexible structural integrity sensors right onto ships bridges, cars, and aircraft.


Meanwhile, we're also investing to make DOD a leader in cyber security. The Department of Defense has three missions in cyberspace, and defending our networks, and weapons systems is job one. It's my highest priority to Mike Rogers. That's job one for you.


Our second mission is to help our partners across the government defend the nation against cyber-attacks. We're a part of that. And, we try to help the best we can.


The third mission, which we do ourselves, is to provide offensive cyber options that can be used in conflict as we're doing now in ISIL -- against ISIL in Iraq and Syria. We will isolate, and blackout, disrupt, fool, their networks there even as we attack them from the air, and the ground, and everywhere else we go until we've destroyed them.


Our latest defense budget, we're investing more in all of these missions. Our total for cyber in the next five years, $35 billion for innovation in cyber. A great deal of that to also support the modernization of DOD's hundreds of networks. Terry's here, that's his responsibility.


We're continuing to push forward new breakthroughs in cyber technology, like adaptive network defenses that swiftly adapt to threats, self-patch in real-time, self-diagnose, do forensics, and so forth.


Now, innovation in people and technology are necessary, but they're not sufficient. We have to have innovative processes too, and let me close on that. The world we live in demands it. While the Cold War arms race was characterized by strength, with having more, bigger and better weapons, today's era of technological competition in our field is characterized by the additional variables of speed and agility such that leading the race now depends on who can out-innovate everyone else. It's no longer just a matter what we buy, it is a matter, therefore, of 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 to stay ahead of future threats.


This is a particular focus of the Strategic Capabilities Office, an organization I created back when I was Deputy Secretary of Defense in 2012, whose job was to reimagine systems that were already in our inventory because we have tens, probably a couple hundred trillion dollars of installed base in our aircraft fleets, ship fleets, vehicles of all kinds.


His job, a guy whom I got to do that, a young guy, is to reimagine existing systems in our inventory, giving them new roles and game changing capabilities. One example that -- give you a lot of them, examples. One is the arsenal plane which takes one our oldest aircraft platforms and turns it into a flying launchpad for precision conventional weapons of all kinds. Any ship, air-to-surface, air-to-air, and so forth.


Another innovative practice we're pursuing, this one is thanks to the Defense Digital Service who helped us do this, by the way, is inviting vetted hackers to test out cyber security under a pilot program we are calling, "Hack the Pentagon".


You probably heard about in the press. This is similar to the bug bounties that lots of leading tech companies have. It's the first one ever in the federal government. It's ongoing, as we speak, but it's already exceeded all our expectations. Over 1,400 hackers registered discovery, and so far, more than 80 vulnerabilities that qualify for the bounty so far. All of this helping us to be more secure at a fraction of the cost that exhaustively diagnosing ourselves would take.


We believe this approach effectively crowdsourcing cybersecurity has great potential for us, as it does for a number of you around the table.


To stay innovative going forward, DOD has to continue to be open to new ideas, and new partnerships. That's why we embarked on initiatives like our start-up here in the Valley. I did it shortly after I became Secretary of Defense, the Defense Innovation Unit Experimental, DIUx, over at Moffett Field. I was there this morning to announce that we're (integrating?), we're taking this effort to the next level. I call it DIUx 2.0, nothing original about that, but it does signify that we learn, adjust, restart things. So, we're doing a, kind of, new release of that to reflect in part what we've learned over the last year.


We're going to have a second such office. This one in Boston. A little bit different center of gravity, technically, there. A little bit more bio-tech and engineering, although everybody has everything.


The new DIUx, or widen DIUx is going to have more processing power, we're going to have more money behind it. More money of all kinds. Faster money.


We have a new leadership structure, a new partnership-based leadership. Again, trying to flatten ourselves, which we think would be more effective, underneath Raj Shah. I think Raj Shah is here. Raj, are you here? National Guardsman, F-16 pilot -- there he is. Combat veteran, co-founder and CEO of a successful technology start-up, everything you want in somebody who can see both sides of the equation.


I hope you'll get a chance to meet with him and his team in the future. And, we're going to keep integrating together, keep learning from each other.


That's one reason why I created a Defense Innovation Board, also, which I'm very pleased that Alphabet's Eric Schmidt agreed to Chair. He's doing a great job of putting together the rest of the board. We're going to have our first working session next week, so stay tuned for who else will be joining that board. I'm looking forward very much to what they'll be doing.


I've asked them to help us stay imbued with this culture of innovation. It's one of the enduring characteristics of our institutions, one of the things that makes us the best. It's not surprising that the most innovative society in human history also has the finest national security structure of any society.


It's an exciting time. It reminds me of the collaboration between companies, universities, and government that built the Internet, and GPS. I remember that. Before that communication satellites and jet engines, and I'm happy to say I'm not that old, but I read about it.


Those interested in foreign policy and national security, there are lots of interesting challenges and problems to work on. And, that's also true for those interested in technology, but the intersection of the two, that is really very interesting, and many opportunities for partnership in everything we face.


These issues, as you know, because you've taken the time to sit here today, these really matter. They have to do with our protection and our security in creating a world where our fellow citizens can get up in the morning, take their kids to school, go to work, live their lives, dream their dreams, give their children a better future. You can't do that without security.


Helping defend your country, helping defend all this, and make a better world is one of the noblest things that a business leader, or a technologist, or an entrepreneur or young person can do, and we're grateful to all of you for doing that with us. Thanks.