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Remarks By Deputy Secretary Shanahan at the Air Force Association's Air, Space and Cyber Conference

MODERATOR:  So welcome back from lunch.  You need to stay awake because this is a really important guest.  This afternoon we have the Deputy Secretary of Defense, the Honorable Patrick Shanahan.

Prior to assuming his current role, he worked for three decades in the aerospace industry in commercial aircraft operations.  As deputy secretary of Defense, he supports Secretary Mattis' priority of improving readiness through increased lethality, expanding and strengthening alliances and partnerships, as well as reforming how the Defense Department does business.

He's an engineer with advanced degrees from MIT.  Prior to joining DOD, Secretary Shanahan worked for the Boeing Company for some 30 years.  While he worked mostly on commercial airliners, he also supervised Ellen Pawlikowski's and my favorite science project, the Airborne Laser.

Secretary Shanahan personally wrote the recent DOD report on space.  And he is known around the Pentagon to have a corporate leadership mentality to include coming in early, staying late and doing whatever is necessary to get the job done.  

Secretary Shanahan gets his work ethic from his father, who served in the Army in Vietnam.  His father then went on to serve in law enforcement for two decades.  Secretary Shanahan views this current job as his opportunity to give back to the country.  

Ladies and gentlemen, with that introduction, please join me in welcoming the 33rd Deputy Secretary of Defense, Patrick Shanahan.


DEPUTY SECRETARY OF DEFENSE PATRICK SHANAHAN:  Wow, that's great.  Can everybody hear me OK?  We forgot to mention one thing.  I have a great mother, so.


MR. SHANAHAN:  Let's see, I think I mentioned this to General Goldfein, the speech I wrote was 60 minutes long.  So I took out all the carbs.  I hope this is all protein.  I'm going to try and do it in 20 minutes and then we're going to do Q&A.  So here we go.

Secretary Peters, thank you for the warm welcome and congratulations on a very, very successful AFA.  And I just want to do a quick shout out here, first to Secretary Wilson, who is an extraordinary teammate.  General Goldfein, I greatly appreciate your support and leadership.  And I didn't see Chief Wright here, but I just wanted to thank him for his service.  And as Secretary Wilson said, he's a real role model for all of us.

It's an honor to be a part of this team.  Prior to joining the Department of Defense, I spent 30 years, as was mentioned, building airplanes, helicopters, missiles, I love my job.  I've been in the Department for roughly 400 days.  I use days as a reference because time passes quickly and each day matters.

I've gotten a glimpse of the missions, a taste of your commitment to your values; integrity first, service before self, excellence in all that you do, and exposure to your devotion to the nation.  I see those values reflected in the excellence displayed by the 12 Outstanding Airmen of the Year, and in the service exemplified by the Medal of Honor recipient Master Sergeant John Chapman.

I'm often asked about the transition to the Department with an undertone, “is it what you expected?”  I tell people, "It's like breaking up with your longtime girlfriend and finding the love of your life."


It really is.  

Let me -- let me start today by saying thank you to all the airmen in the audience today, active, Guard, reserve, civil service.  Thank you for your service.  I'm honored and humbled to serve with you.  

It has been just over a century since American airman first flew into war.  From World War I, through the Cold War, to today's battles in Afghanistan and the Middle East, you have continuously pushed the boundaries of airpower with vision, courage and conviction.  Innovation is in your blood.  Airmen question, break barriers, think outside of the box, push limits and never let the naysayers tell them it can't be done.  It is this pioneering spirit that will fuel our future.

Before I dive into my speech, I want to share the influence that shaped my thinking.  I am an engineer.  I like solving problems.  I like making things work, and work well.  I'm an industrialist.  I've spent my life building large, complex machines with complicated supply chains at scale.  My skills and experience are a strong complement to those of Secretary Mattis.  At the department, I serve as the chief operating officer.  My job is to execute the National Defense Strategy.  I'm product-driven.  I'm focused on performance, and I'm focused on making change at scale.

When I say I'm product-driven, it means I'm focused on the product, or in our case, on the war-fighting capability we need to win.  Based on that capability, you derive process, structure and resources.  That's how I'm wired.  When it comes to performance, the question is not "Are we getting better?"; it's "Are we good enough to win?"  We must win against our competitors.  Every day, wake up and ask yourself, "What will it take to win?"

With that, I'd like to offer my perspectives on a few topics today: our operating environment, the National Defense Strategy, the window of opportunity available to us, and the work we need to do to seize it, the nuts to crack and the performance gaps to close.

We live in an era of great power competition.  That's a muscle we haven't used in a while.  In contrast, our great power adversaries have studied our way of war for 30 years and built systems and doctrine to thwart it.  We continue to deal with North Korea, Iran and violent extremist organizations, and there are two new war-fighting domains, cyber and space, for which we are developing doctrine and capabilities. 

The character of war is changing rapidly, dangerously blurring the line between competition and combat.  Adversaries increasingly leverage media and hackers instead of fighter jets to achieve their ends.  And as always there's a bill to pay.  No country in history has maintained its military power that did not keep its economy strong and its fiscal house in order.  

Each year, the average U.S. household contributes about $2,000 to Defense, less than the insurance on my son's car.  And he's a good driver. 

Think about this.  If interest rates rise much over three percent, our nation will spend more on debt service than it does on Defense.  

Last year we released the National Defense Strategy, our plan to win in this environment, characterized by three lines of effort, which I'll dive into later in reverse order:  build a more lethal force, strengthen our alliances and attract new partners, and reform the department. 

I deliberately use the language of the NDS today and every day because it is so important that we speak a common language when describing our plans.  Only then can we implement it. 

Communication is critical in an organization as large as ours.  If all three million of us aligned, we are unstoppable. 

The National Defense Strategy was broadly communicated earlier this year.  Now it's no longer about what the NDS is.  It's year two, and that means execution.  We have a unique window of opportunity.  Congress is firmly behind us and has given us the money we need.  

However if we don't deliver results, Congress won't lift the budget caps in 2020 and we won't have the money to fully implement our strategy.  Congress won't be impressed because we tried hard.  They judge -- they will judge our output.  So we need to get to work. 

So let me start with everybody's favorite topic, red tape.  Let's talk about reform.  I don't need to sell you on the need for reform, you're too smart and too experienced for that. 

The need and opportunity are self-evident.  We must concentrate on developing reform habits, habits of doing, habits of performance evaluation, habits of working as an enterprise, habits of achieving scale. 

Although cost savings make the headline, reform is first and foremost about giving our team the tools it needs to perform at a higher level:  faster down-range support, making it easier and faster to hire new employees and conduct background investigations, and paying what things should cost rather than what has been paid historically. 

When I interviewed with Secretary Mattis, he shared with me that we should aspire to be benchmarked, not to be benchmarking.  That is my goal.  

Within reform, logistics, health care, information technology are priorities by virtue of size and function.  Each year, we spend approximately $150 billion on logistics, $50 billion on health care and $35 billion on I.T.

Take logistics.  It's transforming daily.  You don't have to look past the packages at your doorstep to see the change.  Autonomous delivery by drone or ground vehicles is only a matter of time.  

Selection, availability, ordering, fulfillment and distribution are all miraculously getting easier, faster and cheaper.  Can you imagine the burden we would lift from our teammates if we could be a part of the logistics revolution?  

Healthcare is similar, and I want to make sure the message is clear.  Reform is about delivering better care and doing it at a lower cost.  

Information technology -- any COBOL programmers in the room?  We could use your help.  That was my attempt at I.T. humor. 


You know, there is a lot to modernize in the department, but I'm very encouraged by the plans in the fourth estate and the services.  And I'd urge this audience to embrace enterprise solutions and speed.

Many of the back office H.R. and material management systems that industry has deployed over the past decade are ripe for our adoption.  It's what I call R&D:  rip-off and deploy.


A custom federated approach is a trap.  I'll say it one more time.  A custom federated approach is a trap.

Our teammates deserve a modern environment, the department deserves standardization, and the taxpayers deserve the corresponding dividend.

For the second line of effort, we are strengthening alliances and attracting new partners because we are more lethal when we fight as a team.  

Relationships aren't monolithic.  They're complex.  We will agree in some places and disagree in others.

Secretary Mattis has travelled to nearly 60 countries so far.  That's what I call commitment.

Strengthening relationships is a responsibility we all share, but I don't need to tell that to the Air Force.  Our allies and partners study with you, they train with you, they buy and fly your aircraft, and you have fought together from before the service was born up until today.  Simply put, the Air Force is an example for other in how to do alliances right.

On the first line of effort, building a more lethal force, it is fundamental to our mission and anchors the National Defense Strategy to the essence of warfighting.  It is our lethality the deters our adversaries, and enhancing it should drive everything we do.

Enhancing lethality has two parts:  restoring readiness and modernizing capabilities.

Readiness is about being combat-credible, having the capabilities and capacity to win and -- to fight and win.  Generating that readiness has many different elements:  people, training, munitions, equipment and sustainment.

Strong work is being undertaken.  The Air Force has shed layers of approval to accelerate acquisition; reduce the maintainer shortage from 4,000 to 400, and is on track to hit zero by December; and begun to explore ways to leverage big data, 3D printing and other technologies in sustainment.

I'm encouraged by your progress, but there is so much we can do, particularly on sustainment, which, as we all know, is the biggest portion of life cycle cost.

We also know that similarities between operating and maintaining aircraft in the military and commercial worlds are remarkably high.  The similarities in performance are not.  Much like the NFL compares running backs and tests athletes' performance on the 40-yard dash, we should compare ourselves to commercial analogs in order to guard against insularity.

I wonder what our 40 time is for engine overhauls, depot throughput, and asset utilization?  I wonder what we would learn if we compared our times?  Would we deploy different funding process, supply chain management techniques or organization structures?

The U.S. Military is world-class in many areas, but where we aren't, we should be humble and learn from those that are adopting -- we should learn from those who are adopting what they do well.  

We did this to great effect in the rapid ramp up to World War II, when FDR recruited "Big Bill" Knudsen, a Danish immigrant and mass production ace to lead the government's war mobilization effort.  Knudsen, having spent his career perfecting mass production techniques on Henry Ford's assembly line, knew exactly what to do.  If you broke complex manufacturing processes into simple discreet steps, any factory could build any piece of machinery at extremely rapid pace.  Within months, Knudsen had car companies churning out a thousand tanks a month.  

Copying industry techniques and equipment might not be quite as simple and easy as going to the hardware store, but it's faster and cheaper than recreating the wheel.  And more importantly, it's an important -- it's important -- it will lift the enormous burden we have unnecessarily placed on our maintainers.  Think of the Airmen First Class turning a wrench in 100-degree heat, moving heaven and earth to get that plane back in the fight.  Let's rip off and deploy the tools and systems they need to succeed.  

Let's talk F-35.  I think we can all agree that it is a remarkable aircraft, with eye watering capabilities critical to the high end fight.  And I tip my hat to its broad team of government, industry, and international partners.  Having worked on programs of similar size and complexity, I have enormous respect for your talent and commitment.  

There are three segments to the F-35: sustainment, production, and development.  Each is distinct and critical and when properly integrated can achieve extraordinary results.  

Let's talk first about sustainment.  Unlike the F-22 or the F-15, we're at the front end of the program, which means we can still set the bar high when it comes to sustainment.  But the time is now; it's tonight, not next year.  We need to formulate plans to significantly and continuously improve combat mission capability rates, operating costs, and depot supply chain performance.  It's vital we set performance goals with timelines for their achievement and evaluation.  

Second, production.  With years of stable production in front of us, a stable design, a talented workforce, and capable supply chain, we must significantly increase productivity.  Having built and delivered thousands of airplanes, I can say authoritatively that we have the environment to have a very, very long production run and achieve significant cost savings.  We know the 40 time possible in the commercial setting.  I think we can beat it.  

Development; General Goldfein coached me here.  He said the F-35 is the quarterback.  We must improve our software development and hardware integration skills so we can continually upgrade the capability to outpace and outperform our competitors.  I'm encouraged by the team's ambition to collapse software development flow time.  We need a similar mindset and ambition for test and certification.  

The F-35 is our future.  The standards of performance we set today and the improvements we make will ensure its lethality and affordability for years to come.  We owe it to the Air Force to do both.  

Now, I'd like to address the second part of lethality, modernization.

Modernization is about retooling for great power competition, something we haven't done since President Reagan was in office.  Just as we needed stealth bombers to penetrate advanced air defenders, and precision guided missiles to increase lethality during the Cold War.  We need a next generation of weapons to counter Chinese and Russian threats.

The next critical step is to build the F.Y. 2020 strategy driven budget.  But it's more than a budget request.  It captures programming.  It integrates plans to transition from technology demonstrations, to development, to fielding without outcomes and timelines necessary to dominate a new of great power competition.

It's like the old adage, don't tell me your strategy, show me your budget and I'll tell you what your strategy is.  Now is the time to make choices about what we will and won't do.  Those choices, as reflected in this budget, will determine what our military looks like for the next 50 years and we've got 10 weeks to complete it.

Today, we are working across the services, and with industry, to demonstrate and test technologies listed in the NDS before we move rapidly to field them.  Hypersonics is a good example.  In June, the Air Force signed an agreement with the Army, Navy, research and engineering outlining a consolidated cross-service approach to hypersonics.

And forming a national team to collaborate on design, development, and testing, and production including, both, near-term prototyping and long-term acquisition of operational systems.  The department is ripe to realize the same level of integration and collaboration across the modernization priorities listed in the NDS.

To scale them up, we need additional industrial expertise inside the department to compliment the enormous military acquisition policy and technical talent.  If we were a basketball team, I would say we have too many guards and not enough centers.

For industry leaders in the room, I encourage you to, seriously, consider joining our team.  Individuals can make a significant difference.  Dana Deasy is one of them.  Dana used to be the CIO at J.P. Morgan Chase Bank where he led 43,000 people, and prevented one of the biggest banks in the world from being robbed in cyberspace.  Not an easy feat.

As we know, those hackers are relentless, almost as relentless as they are against us.  Now he's our Chief Information Officer and we're benefiting, enormously, from his deep experience with cybersecurity and artificial intelligence, and having the knowledge and experience from operating at massive scale against committed adversaries.

It's really fun to watch him perform.  How are we doing?  Are we on track for 20 minutes?  OK.  How about space, think we should cover space?  There we go, all right.  Space has been in the news lately, so I thought it would be useful to offer my perspective.

Over the last year I've worked with Secretary Wilson, General Goldfein, Dr. Mike Griffin, General Hyten, General Raymond, Generals Thompson, east coast and west coast, and so many others with tremendous talent and expertise.  

Together, we're working to create a Space Force which, as you might imagine, is a complicated process.  But while there's plenty of debate about the how, we are united by the why: protecting our economy and deterring our adversaries, and focused on delivering more capability faster.

My approach to this effort ties back to my introduction of my roots.  What products, capabilities do our war fighters need to defend our interests in space?  Once we determined that, we can organize around them.  Accordingly, we've identified capabilities we need, as outlined in the 1601 Report to Congress, and we are rapidly setting up the structures best suited to develop them.  

Space Command will develop space war-fighting doctrine, tactics, technique and operations, and improve integration across combatant commanders and services.  The Space Development Agency will support rapid product development and leverage the commercial space industry.

In February, we'll submit a legislative proposal for the Space Force.  Its headquarters will be lean, with every possible resource devoted to enhancing our capabilities.  Along the way, we will do no harm to existing missions, create no seams between the services, and remain laser-focused on our war fighters and the capabilities they need to win.

As we move forward, we will build upon incredible ingenuity and a good amount of blood, sweat and tears of a generation of airmen.  We need your expertise, passion and creativity to succeed.  Help us break new boundaries and continue to dominate in the space.

Down the final stretch here.  Hang in there.

To every airman, military and civilian serving today, you are writing the next chapter in your legendary history.  As you push forward, remember the values that have served you so well: integrity first, service before self, and excellence in all that you do.  Remember the countless pioneers who have come before you, the Wright brothers, two bicycle mechanics, tinkerers, doers whose technical excellence and willingness to experiment beat organizations around the world with money and process in the race to fly; Bernie Schriever, the architect of ballistic missiles and our military space program; and Chuck Yaeger, who broke the speed of sound. 

You are the pioneers.  If anyone can generate the ideas and capabilities we need to win the wars of the future, it's you.  And as Yaeger said, "You don't concentrate on risks; you concentrate on results."  No risk is too great to prevent the necessary job from getting done. 

I'm impatient, aren't you?  Let's get after this.


MODERATOR:  Please continue to text your questions in, if you have them.  I want to say first of all, I can program in COBOL, and I have my punch cards, too.

MR. SHANAHAN:  Oh, very good, yeah.


MODERATOR:  In fact, that's what I spent four years in the Navy doing, so they -- they still had sails on the ships back then. Let me -- we had a lot of questions this week about the Space Force, and I'm sure that it's not fully cooked yet in your own thinking, but a lot of the folks who are impacted by a potential in the organization want to, you know, what's going into the Space Force?  Is it Army and Navy as well?  Is it NRO, National Geospatial?  NOAA?  

I mean how do you see Space Force being built and when do you think you'll have any idea of the -- that level of detail?  

MR. SHANAHAN:  Sure, sure.  You guys want to hear about Space Force? 


Yeah, it's pretty exciting.  The -- you know, I'll just maybe kind of walk -- walk through some general remarks.  

So it's really encouraging that, from the highest levels of the government, people are interested in space.  And their appreciation for the risk in space and our need to go faster and to do more.  I think at the -- at the end of the day, that's what's -- is most important.  

Over a very short period of time, it's been thrust upon us to create and grow a new organization.  And it's been -- since 1947 that an exercise like this has been undertaken. 

So the -- the playbook is out of date.  And so we don't really have something we can go and pull off of the shelf. And I think for a lot of us that don't have the -- the deep appreciation of -- of how the department is wired, it's -- you know, it's -- it's intimidating. 

I think for other folks, it's "How do we make sure we preserve the important capability that we rely on every single day?"

So the -- the process that we're going through is -- is not that it's awkward.  There's a lot of really serious thinking and important trades to -- to conduct. 

What does happen is that it's very interesting, you know, topic of discussion everywhere you go, people are talking about it.  And, you know, unfortunately sometimes more energy is spent on "What are the uniforms going to look like?" -- or the rank structure -- than "What are the capabilities that we're going to deliver and how do we go about that?'

So what I can tell you is that, you know, if we were to say, "How does the space and missile command, you know, fundamentally change?"  It doesn't tonight.  I mean, I think that looking right now at General Thompson, I mean, it's like, "How do we go faster on SMC 2.0?"

I mean, I think the -- and I'll get back to some of the work we're doing with -- with Secretary Wilson and General Goldfein and General Hayden and others.  

But, you know, the -- the most exciting thing in all of this is that there are amazing colonels that have so many ideas, where we're standing on the air hose and we have to break that loose. 

I mean, if there was a way to replicate, you know, the RCO, put it on steroids, scale it, that would be, you know, in my mind, the Space Development Agency. 

But, you know, the process that we're going through is to put together a plan that we can carry forward.   You know, legislate a proposal. 

And what I would tell you is, there is no groupthink in the Pentagon.  So it's not like we've all come together and said, "You know, this is really pretty straightforward.  We're just going to copy the old playbook here and we'll write this legislative proposal and send a bill with it." 

We're really wrestling with, you know, the how.  If we drew a Venn diagram on what it is we want to accomplish, you know, everything lays on top of -- of one another.  

The how we come at these, at the Space Force, you know, from a lot of different directions.  I know, you know, if I look down the -- the front row here, many of the people are on the -- the governance committee that we have in place. 

You know, one of the things that -- well, first of all, I'll say that some of the things I really appreciate in working on the Space Force. 

Secretary Wilson is brilliant on, you know, how do we put together a legislative proposal.  You know?  General Hyten, General Goldfein, General Raymond.  You know, these are the things we have to protect.  These are the -- the capabilities. 

And we get into these arm-wrestling contests where there will be no separation between the fighter and the acquisition process.  And then you have some people like me that are saying, "well, I don't know.  Maybe we should have separation."  You'll see that's kind of where the debate is.

I've lived on the other side where I was on the program when we canceled the Comanche, because the warfighter kept changing the requirements, and we have this fantastic aircraft.  I can't tell you how many programs I've done where the requirements and the customer kept changing, and we lost the program.

So when we think about the Space Force, we spend less time on the structure around it, like the headquarters, and it's all about how do we deliver the capabilities?  So if you get a chance to read the 1601 report, there's a list of capabilities.  I sleep with it under my pillow at night.

You know, it's mission focus.  We're going to go do this the best way.  We're going to find the best way, and that'll come from the governance committee that we've put in place.  And there'll be some hand ringing and arm wrestling, but one thing I can say about working in the Department of Defense, it's the best team I've ever been on, and we're a team and we'll solve it as a team.

Q:  Thank you.  There were a lot of discussions and questions with our industry partners about how to get acquisition to the speed of relevance.  I think there's a feeling the top of the department has clearly moved there, but as you go down into the actual contracting process the DoD 5000 series without wavers continues to be the key.

Is there any plan to try to re-educate the acquisition professionals to try to get them to be more interested in doing prototyping and rapid development?

MR. SHANAHAN:  No, I -- the acquisition side of this is always, you know, a big puzzle for me.  It's a great group out here, you guys


So this is the part that's always -- I have like have these out-of-body experiences all the time in the Pentagon.  I don't know if any of you have, but -- (Laughter.) -- they're not that -- I always come back, but -- (Laughter.) -- the -- a lot of this game I play with Secretary Mattis, who can come in earlier in the morning.  I know it's kind of twisted, but I'm ahead this week.  But we spend so much of our time in the Pentagon talking about acquisition, and this was the kind of reference back to, I think we have too many guards and not enough centers.

I spent a lot of time in -- industry is different.  I'm not going to try to make it sound like industry and government are the same.  They're very different.  But there are aspects of each that, you know, there are overlaps in terms of how to do things successfully.

And so when it gets back to the things that we want to develop and field, in industry, you spend all your time on what is it that you want to do.  And you concentrate heavily on what the product is or why you think it'll work well.  

We spend an inordinate amount of time talking about which process to use or what the acquisition strategy will be, and I think -- you know, I have all sort of different hypotheses, but we've been in the acquisition mode for the last 17 years in a fairly consistent environment, and now we're making a big shift to doing, you know, a whole new level of modernization.  And that's why I would offer we need a few more folks from industry so that we don't get caught up in the process.

We -- I haven't found significant limitations in the acquisition process.  I've found limitations are in how we use it and having people with the skill to deploy it.  So I'm more about, how do we get the right leadership in place?  How do we stay focused, as Secretary Mattis always says, on defining the problem?

That's -- that's the biggest, you know, challenge for all of us, how do we define the priorities and then -- or define the problem and then work the priorities.

Q:  This is a -- yes, a question for you.  You're preaching to the choir, with respect to the national defense strategy.  How can we sell the American people on this strategy and looming threats, short of existential crisis, on the order of Sputnik or another 9/11?

MR. SHANAHAN:  You know, I made the reference earlier today.  I don't know if you did kind of the math, but you know, a lot of times you feel guilty about having such a big budget, you know, compared to, you know, other parts of the -- of the government.  But when you break it down and it's per household, it's really $2,200 -- it's at about 2,000 -- it's $2,000 a year.

And so, if you just said, "Well, it's cable and cell phone for a family," would you pay $200 a month for what we have?  And I just don't think people want to appreciate the men and women that serve.  And I know I didn't, so I fall under that category.  That's what it's -- I found the love of my life.  

I was like, "Wow, this is the most amazing place ever."  America just, I think, doesn't appreciate.  I don't -- I wouldn't want to venture into that space, but I think -- I just -- you know -- you know, I pray every day that it's not a crisis that gets people's attention.

I -- I do believe that our ability to perform will convince Congress that it's worth the tradeoff to give us what we need.  And so, you know, it's people like Secretary Wilson that get our message sold.  I mean I think all of us have to do our job.  

I would -- I would make a big shout out, though, to the -- the Congress, so you know, think about -- think about this and the president.  A year ago, we'd be standing here, in this -- in this forum we'd say, you know, "It's going to be impossible to get the caps lifted.  Oh, it's going to be impossible to get any -- any real growth."  

Well, we got the caps lifted and we got the biggest growth that we've had in, you know, in decades.  And if you look at what Congress has done this year with the NDAA, you know, it was -- it was put forth in the fastest time since 1977.

You look at the appropriations bill that just went through -- I mean we're on track if -- in this environment, we're on track for regular order.  So you know, if you just look at money and support, you know, we're in a really good place.  I think if we really demonstrate that we're making progress, we'll bring more and more people along with us.

Q:  Congratulations on regular order.  I think it's the first time in a decade, isn't it? 

MR. SHANAHAN:  Team support.  I have a great -- great team.  

Q:  So let's switch to cyber for a minute, if we could.  A question from the floor, what is the department doing to increase or enforce cybersecurity standards across the services to include the industrial base?  

MR. SHANAHAN:  That's a small question.

Q:  Easy -- easy question.

MR. SHANAHAN:  Easy question, OK, all right.  Let's see.  You know, I would -- I'm trying to give a really simple answer to a hard problem.  The first is we've worked up -- up our talent.  I made the reference earlier to having Dana Deasy come onboard.  So we've worked up -- up our talent.

The other thing is really understanding where our big risks are in the -- in -- in our defense.  The DODIN, the -- the Defense Network.  We know where they are and we have -- and I -- and I would just offer to everyone here in the room, we've got plans to address the vulnerabilities.

And then, as a matter of fact, this month we'll have the Defense Industrial Base in and we'll share with them probably three things that we're going to do.  One is -- and, maybe this is just -- this is a public service announcement for those of you from industry, especially for you -- those of you that are in the -- in the, I'll call it, higher tiers.  

Cybersecurity is, you know, probably going to be what we call the, you know, fourth critical measurement.  You know, we've got, you know, quality, cost, schedule, you know, but security is one of those measures that we need to hold people accountable for.  And I'm a real strong believer that the Tier 1 and Tier 2 leadership has a responsibility to manage the supply chain.  And that's where we have real gaps.  

And this is where we're going to work with our -- our industrial partners to help them be as accountable for security as they are for quality.  And it shouldn't be that being secure comes with a big bill.  It's just like we wouldn't pay extra for quality.  We shouldn't pay extra for security.

So part of this is just to recognize we're in a new world.  And security is the standard.  It's the expectation.  It's not something that's above and beyond what we've done before.

Q:  Let me -- talking about supply chain, a number of the industry folks are here.  I know you point out with all of these C.R.s and turmoil in funding over the last decade, they have lost of their smaller suppliers.  What's your sense of the health of the industrial base and is it something we need to build or rebuild?

MR. SHANAHAN:  Well, this is a great industry to work in.  So I mean, it's not that I'm unsympathetic.  This is a great environment.  

So I mean, that's the -- the nature of being a big company is develop the strong supply chains.  I mean, that's -- that's what I did in -- in my time in the commercial world.  It's -- responsibility is to develop strong supply chains.

Now, as a -- as a -- I know it's easy to say.  But you know, with the cyclicality that we've experienced, there are some real deficits.  We put together, I think the president will sign this out in short order, but it was a study on the Defense Industrial Base.  

We came up with 300 recommendations.  And it ranges from everything to some, you know, point failures where we have suppliers of certain materials that we need to just, as a Department, write checks for.  So we've got a -- a list of things to go secure the Defense Industrial Base.  

But we also have systemic issues we need to work.  And that's really going to be about a partnership with our industrial partners.

Q:  So now I have what's got to be the easiest question of the day.  Last year when Secretary Mattis was here, he pointed out his real nickname is not Mad Dog.  It's Chaos.


Q:  And the question is what's it like working for somebody whose -- whose nickname is Chaos?

MR. SHANAHAN:  Well, it's not chaos in the building.  So you know, the -- working in the Pentagon is remarkably stable.  You know, when you -- when you, you know, just take a look at all the things that are going on in the word, you know, all the things that we're trying to do whether it's reform, or partnerships, or all this modernization work or recovering readiness, it's -- it's remarkably stable.

You know, he always reminds us, "This is eyes on the boat."

And I would just say, in terms of working for him, you know, from a personal standpoint, it's like getting a PhD in world affairs.  So you know, most people kind of think of him in the context of being a, you know, supreme, you know, military leader and, you know, motivator.  But where I've found, you know, is -- or I've appreciated his real strength: he understands how to govern.  He understands how government should work.  He understands policy.  He understands the law.  He understands the value of -- of relationships.

So you know, for me, working for him is a -- is a privilege.  I try to, you know, outrun him, and -- and work more hours, but, you know, it was like...

This is what it's like working with Secretary Mattis, because I -- I really do want to beat him.  I'm competitive.  So he comes in and he says, "Well, I had breakfast in New Delhi, lunch in Kabul, dinner in Dubai, got off the airplane and had -- at four in the morning and was in the Pentagon," and that was on his birthday.  So I mean, what are you going to do?  You know, so...


Anyway, so this is a great guy to work for.

MODERATOR:  He is.  I want to say thank you very much for coming today.  We have a lithograph of the Air Force Memorial which we present in this form, but we actually give you in the form of a rolled-up object which will fit in the small bomb bay of an F-35.

MR. SHANAHAN:  Oh, great.  OK.  

MODERATOR:  Thank you.


MR. SHANAHAN:  All right, OK.  

MODERATOR:  Thank you very much.

MR. SHANAHAN:  All right, great. Thanks.  All right.  Take this with me?  OK, good, thank you.  Thank you very much.