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Deputy Secretary of Defense Dr. Kathleen Hicks and Deputy Secretary of Energy David Turk On-Record Press Engagement En Route to Oak Ridge, Tennessee

STAFF:  OK, ma'am, if you want to start off.

DEPUTY SECRETARY OF DEFENSE KATHLEEN HICKS:  I’m going to un-mask while speaking, because you’ll never hear me otherwise.

So with thanks to Deputy Secretary Turk for hosting us, we're starting off today at Oak Ridge.  So I’ll focus just this morning on a few comments about what we want to see at Oak Ridge, from a DOD perspective, then I’ll turn it over to Deputy Secretary Turk. 

So obviously, for DOD, how we innovate, creates economic competitiveness for America, it creates national security competitiveness, and the two are very tightly intertwined. 

So at Oak Ridge, we're looking at a series of different investments, R&D approaches, that are directly related to some of the areas where we are really tied into American innovation. 

The first of those is going to be the Manufacturing Demonstration Facility.  You all may know that we focus very much on supply chain security at DOD.  We have said from the beginning of the administration that casting and forging is one of those areas that's a real pain point for national security. The United States has a critical supply chain problem with casting and forging. 

So the Manufacturing Demonstration Facility at Oak Ridge is where we're going to get to see both where some of those more advanced technologies are coming to bear, and that's on composites and materials that can withstand extreme temperatures, which is vital for the types of capabilities that we need, and the investments that DOD has been putting in to creating (inaudible) on innovation on the technology side, and then how we, on the federal government side, DOD, DOE, can work with, you know, everything from small companies to large producers on the U.S. machine tool side, in that sector.

So again, we put about $42 million from DOD into one of the things we'll see there, the America’s Cutting Edge, ACE, which is this national machine tools innovation hub, so we're going to want to get a sense of how well that's working, what we can leverage from this experience, maybe, in other areas, or to expand.

The next area we're going to look at is the Battery Manufacturing Facility at Oak Ridge, and lithium-ion batteries in particular are extremely important for the Department of Defense, just on its existing capabilities, in for instance, the Navy.  We have a very high dependency on those batteries, so making sure we have a secure supply chain going forward- important just for the capabilities we have today. 

As we look to the future, and we try to ensure we can get untethered in our logistics supply chains as much as possible, from fuel, lithium-ion batteries are just becoming more important to our operational capability.  So that's something we're going to want to understand what DOE is spending more and putting forward in this Battery Manufacturing Facility, wherein there are scientists are looking at all aspects of the factory production side.  And on that, we are working closely with DOE on ways to operate together and invest together to better leverage some of this batter manufacturing technology and research.

Last, we'll to go Frontier, which is the first computer to achieve exascale computational threshold, which I believe is 10 to the 18th if I recall my (inaudible).

DEPUTY SECRETARY OF ENERGY DAVID TURK:  A lot of zeros.  (inaudible).

DR. HICKS:  Yeah, don't ask me to count that out.  So we -- you know, it kind of gives you a strong sense just at Oak Ridge, like, for casting and forging and machine tooling, all the way up to, how do we ensure we can get the quantum computing capability that we need in order to execute on some of the concepts that we see as vital to the future, obviously, Joint All-Domain Command and Control being central to that, and all the pieces that go in to how we connect data and A.I. and cloud and Advana into advanced computing for the department.

So let me stop there, and turn it over to Deputy Secretary Turk.

MR. TURK:  Yeah, thanks, Kath, and thanks, you guys, for coming along.  This is great to be able to do this with you.

Just two things to add on the front end, one about our national labs, and maybe a little more on Oak Ridge. So we've got 17 national labs across the country that the Department of Energy administers, but they're not Department of Energy labs that only do Department of Energy stuff.  What we've really tried to do is make sure that those capabilities leverage what Kath and the team needs at DOD and others at the interagency, and you'll certainly see that at Oak Ridge.  These really are crown jewels, and as cool as the facilities are, I'd love for you guys to hear directly from the people.  So thousands of people, literally, at Oak Ridge, people who've dedicated their lives to advanced manufacturing, A.I., materials -- all the stuff you'll see, and a bunch more beyond that.

And so as nice as our facilities are -- and they are cutting-edge -- Frontier will be -- is - the world's most powerful supercomputer.  They also have another supercomputer there that's also in the top 10, and this is investments that the U.S. taxpayers have made for years and years.  Oak Ridge, in fact, comes from 1943 on the Manhattan Project.  So this is a long-standing national asset that we're trying to leverage and utilize to its fullest across a range of the things Kath mentioned, and even beyond that, as well.

The only other thing I'd like to mention at the top, then, is just how from the Department of Energy perspective, how historic this window of time really is. 

The secretary participated in the bill signing yesterday for the Inflation Reduction Act, and I had a chance to just compare notes with her a little bit about not just that bill, which is $369 billion, the most ever in the U.S., and I think depending on how you add it up, the most ever for climate and clean energy anywhere at any point in a period of history; huge amounts of tax incentives, huge amounts of programs coming directly for us not just to fight climate change, but to build out our manufacturing base, to build out the battery supply chains, and supply chains are something that we spend an awful lot of time on- critical minerals and everything that goes into it.  It allows us a real opportunity to be re-shore some industries that we've lost -- solar P.V. is one of those -- that we did all the cutting-edge R&D and all the cutting-edge technology, a lot of that in our labs, and then we lost the ball on that, and all that manufacturing capability, all that processing capability went elsewhere. 

This bill will allow us to have the tax incentives and the other tools to actually bring that industry back to the U.S., and have a whole series, a whole slew, of clean-energy industries and technologies. 

But it's not just that bill; before that came the infrastructure bill that passed last -- late last year.  That gave us, just at DOE, $62 billion to do all sorts of cost-share demonstration [inaudible], and our loan program -- again, a bunch of monies for battery supply chains, but a bunch of money for grids, a bunch of money for our hydrogen infrastructure, E.V. charging infrastructure, $7.5 billion.  And then on top of that, you had the CHIPS Act, which passed not too long ago, as well -- $52 billion to build up our semiconductor to make sure that we've got the cutting-edge technology there. 

So I'm not sure -- even those of us who work on these issues day-in and day-out appreciate just how significant, how historic this opportunity is not just on climate, not just on clean energy, but supply chains, American competitiveness, building out that infrastructure, having the jobs, having the price pressure go down on all these areas to the benefit of American taxpayers. 

So hopefully you'll get a sense of that.  And again, as cool as the facilities are, they people, I think are going to be even more impressive for you. 

STAFF:  We’ll start with… lets start with Brandi.

Q:  Sure.  Thank you, guys, so much for doing this.  Brandi, again.  I'd love to hear from both of you, what does Frontier really mean for DOD?  What do you see as an early sort of experimentation that the supercomputer is going to bring that you haven't had before?

And then, what does Frontier, in your view, mean to the national security landscape? 

DR. HICKS:  Yes, so it, I think what we're trying to do is go see what the potential is with Frontier.  So, I'll be in a better position to answer where I can see that potential after we visit.  But, I really want to echo kind of first what it is Deputy Secretary Turk said, which is, we -- the U.S. taxpayer has already put substantial R&D dollars down against this problem set.  What we want to see now is a prime example of where that's paying off and where we need to take it from there. 

Obviously, when it comes to quantum, a lot of what we do beyond Frontier is in the classified realm.  And so, just understanding how we're working with the research in the open, if you will, how are we working with the research community, and then kind of pulling that into the national security realm is what I'm going to be looking for.

MR. TURK:  Yes, I think the way to think about this is research, the computations, it would have taken months or days are now going to be hours or minutes or even seconds.  And it's really impressive and we'll get into this when we get to that portion, just how much this really speeds all of that up, incredibly powerfully. 

And we used our supercomputers including at our DOE labs to crack the genome, to do all sorts of things that have fed right into dealing with the pandemic, all the other problems that we've had on that front. 

The part I'm particularly excited about is what these A.I. and the advanced computing and the supercomputers allow us, is to speed up the innovation process.  So, instead of having to build a bunch of prototypes, testing them all out and then spending months and months and years and years you can shrink that time period down, do a lot of that in A.I., so then when you do the prototype you've already done a bunch of experimentation and you're that much further along, so that you have that next battery technology, have that next semiconductor, you have all those other technologies sorted out.  And from a climate change perspective, it allows you to do things that much quicker than it ordinarily, normally takes.

STAFF:  Next we go to Dan Lamothe, The Washington Post.

Q:  Good morning to both of you, thank you.  I was hoping you could give us a big picture a bit.  You come in to this, you've got great power competition with China, you’re concerned with the war Ukraine, and COVID kind of surfaced and problems with supply chain as well.  I guess, as we look at this, to what degree and how quickly can we, do we kind of fix these things?

DR. HICKS:  Since, really the late 1980s, early '90s, on the defense side, we have lost real visibility on the supply chain as it relates to national security.  So, as we look at what our national defense strategy calls for us to be able to do in terms of the recent challenges, with China in particular, we know that that includes making sure we can produce the capabilities that we need and on the timeline we need it. 

COVID, and then Ukraine, are both strong exemplars of where some of those pain points are in the system.  And what it will take to get us in a place we need to be, so we’ve will see things like the leveraging, for instance, of the Defense Production Act, we've seen shifts in manufacturing, we've seen the value of a market signal, whether it's on the medical side with COVID, for instance, or it's been on the supply chain side with munitions in Ukraine.

The ability to tell the market in a clear way what it is we see with our dollars more than anything.  That's the signal we send in our budgets.  That's really important.  I'll use the example of the hypersonic systems where we have signaled very clearly in our budgets to date, the '22 or the '23 requests, that the Department of Defense is really interested in counter hypersonic and hypersonic capabilities. 

I mentioned castings, and again, going from one (inaudible) to the other, casting and forging we identified pretty early as one of those other critical supply chain issues that we want to get after and we're putting money against. 

And then I'll name probably the premier one, which is microelectronics.  And then the CHIPS+ Science act- that is incredibly helpful to us to go after some very distinct pain points with microelectronics being the biggest pain point issue as we both look at how we sustain our capabilities today and going into the future.

I'll just add into that, that's sort of the on I guess I would call supply side.  The cybersecurity side is also really-- security in general--that cybersecurity of that supply chain is also really important. 

So, that's a whole set of activities that we have underway to make sure we [inaudible] innovators who are often small companies that can't spend a lot, if you will, who don't think they can spend a lot to compete in the defense space. 

We want to attract those companies, but we do also want to ensure we can provide for the level of security that we need, cybersecurity and otherwise, just like we would want them to lock their front door, you know, we want them to be cyber secure in a way that we can work with.  So, those are some of the ways we are looking at the overall challenge set.  And we need to do all of that in order to compete effectively with China. 

Q: In terms of a sense of urgency, are there any deadlines that have been set that you can share?  Anything that would kind of help us make sense of it? 

HICKS:  Yes, microelectronics front and center.  So, getting the CHIPS act passed- we worked very, very hard on that.  Very pleased to see it passed and in a bipartisan way.  And we think the national security case was a key component of doing that. 

You may know I went up and did some closed briefings with the whole House and all Senate member briefings with DNI and the secretary of commerce, to demonstrate this intersection of the supply chain concerns that we have, and our need to be able compete effectively.  So, that's a deadline that I think we've met, moved forward on, and now it's about setting up implementation or execution as Deputy Secretary Turk referenced in a different context. 

We put out right away in both following on the president's executive order on the supply chains, DOD put out a report on its critical supply chain, so naming these areas, put forward investments in the budgets.  Again, I think those are deadlines met. 

So, I don't think there are going to be out -- I guess I would say outstanding deadlines -- other than making sure we get the resources that we've requested in the budget in a timely way.  We'd like on-time appropriations for ‘23.  There are some key supply chain investments in there, which we will provide you guys a laydown of what those are.  Getting them passed on time for October 1 helps us stay on top. 

Q:  Deputy Secretary, do you want to add to that?

MR. TURK:  Yes, maybe just real quick on the energy side.  I think COVID and the Russia-Ukraine war really exposed supply chain challenges, exacerbated them certainly in the energy space that we track so clearly.  But a lot of the problems were there, a lot of the challenges were there.  We spent a lot of time thinking of critical minerals and what that means to the clean energy future and all the additional amounts, not just the mining piece but the processing piece. Which right now China has a real strangle-hold on a lot of the processing pieces which are not, which poses challenges from our end.

So I think with all of these tools that CHIPS-plus Science Act, the Infrastructure Bill we've got cost share 50/50 to do a bunch of demonstration programs.  We've got our loan program now back up and running and a bunch of additional funding authority for that. 

We've got an opportunity, I think a historic opportunity to do the kind of public/private supply chains, all the analysis and actually execute it.  And I think it all comes to executing and catalyzing, right?  Executing on what we've been given.  Of course having that Congressional regular budget process and all that that is, that's an incredibly important part of having [inaudible], as Kath was mentioning, but then catalyzing as well.

We feel a huge sense of responsibility and urgency I know at DOE, to execute and to make sure that everything we're doing catalyzes so it's not just a nice program here or there, but the whole thing makes sense as a part of an overall strategy.

STAFF:  Idrees, we've got about five minutes left.

Q:  Really quick.  I think last time we spoke the war in Ukraine was just beginning, money was flowing.  How should we be thinking about the future of - especially maybe just on the acquisition of weapons side for Ukraine, once the current supplemental runs out?  And then for you, on DOE specifically, are you concerned that gas prices could rise again once you're done tapping the SPR?

DR. HICKS:  So let me start on resourcing.  We are expected to fully expend the funds that Congress has provided.  That's in two basic forms, one is USAI, which is the purchasing of new capability.  And those are the demand signals that I was referencing to industry.

And then to that to also fully expend the Presidential drawdown authority that we've been given.  We are working now across the administration on what our ask will be to follow on.  We do anticipate having a next ask.  And then what vehicle makes sense for that is - becomes a separate conversation back to - if there is not going to be, for instance, on-time appropriations, and we very much hope there is, then it might attach itself to a CR.

So we're really looking at a fall timeframe and thinking through what are those next steps that we need both on USAI and on PDA.

Beyond the just the strict dollar piece, we're working very closely with industry.  We now have on board our Undersecretary for Acquisitions and Sustainment, Bill LaPlante, and he's working closely with most notably the Army, a number of different supply chain pain points and trying to see where we can move the needle on those to provide the capabilities that Ukrainians are especially desiring. 

And then also to think toward backfill for the United States in some of those areas.  That is not always a one-to-one, we don't necessarily want to backfill exactly what we're providing to the Ukrainians.  So there's an industrial base conversation to be had there about how to prioritize.

And then I think what I would say is the next big piece, and by the way that piece is also working with allies and partners and the secretary has this monthly UDCG- the contact group.  And they have one coming up in September and they're going to bring in those armaments directors. They’re meeting the Bill LaPlante’s—of you know, to meet -- to also touch base.  Once again, they’ve met before, to make sure we understand how the systems looks across the whole international community in terms of acquisition and sustainment.

The last piece I would just say is we're trying to think ahead to what is it Ukraine, a free and sovereign Ukraine, as we have today, what are the kinds of capabilities it needs, in order to defend itself for the longer term.  Again, that's an international conversation.  But one we're trying to think ahead on, and in the mid- to longer-term what the types of capabilities that Ukraine should have; the kind of training it needs.

And as we look ahead to the back to the resource piece to the Hill, we want to be mindful that we need to have an eye toward those kinds of capabilities and assistance, sustainment, for instance, is a big piece of that of course- maintenance and repair, training.  And so those are all the types of things we can already cover in USAI and we want to make sure we're thinking about what our midterm Ukraine support approach look like in those areas.

MR. TURK:  And then on gas prices and SPR, our strategic petroleum reserve, COVID and Russia – a one, two double-whammy on prices, right?  That's been the upward pressure for many months now.  And President Biden has made it incredibly clear affordability -- doing everything we can to try to have downward pressure as much as we can.

Part of that was our strategic petroleum reserve -- largest release ever.  Historic release [inaudible].  We describe that as a bridge, right, a six month bridge between where all that upward pressure was, and then where production can come on line domestically and more of a supply and demand could be back more in line with each other.

So gas prices at the pump have decreased over $1 just over the last couple of months period of time.  So there has been some downward pressure.  The SPR was a part of that downward pressure.  And so what we're going to do is keep our eye on the ball, keep focused.  Whatever tools we have in the tool belt, not everything is in our control when it comes to the global oil price which determines then what price we all pay at the pump. 

So we'll keep working with our allies in addition to our own strategic petroleum reserve, we work through the international energy agency, countries around the world also released stocks to put more into the market at that time where supply and demand were out of whack.

So we'll keep working with our allies.  We'll keep working with our own tools to try to keep that downward pressure.  But the President has made it clear, like, this is job one and we got to make sure we take care of American consumers.

STAFF:  We are about out of time.  Jenna didn't get an opportunity if you don't mind taking another.

MR. TURK:  No, that's great.

Q:  Thank you so much for doing this (inaudible).  (Inaudible) get to whatever we can get to.  But being the cybersecurity reporter I wanted to follow up briefly on your point previously.  I'm curious what sort of specific cyber threats you are thinking about when it relates to sort of these innovations and key supply chain elements?  And if you could address maybe how the department is thinking about defending those areas in terms of cybersecurity?

And then I wanted to ask briefly how you're thinking about [inaudible] innovation legacy systems?

DR. HICKS:  Yes, so on the first piece, we are thinking about cybersecurity in a 360 degree way.  So in other words, there are multiple entry points for cyber threats.  And particularly when we're now talking about in the private sector and those who connect to DoD, we're thinking about theft - everything from theft of I.P. to penetration of systems that get information both directly from the company but might also have government information in it.

We're thinking about adversaries who might seek to alter information, which could erode U.S. competitive advantage even maybe -- and then obviously, even ransomware, where it's just simply that we can't access the capability or (inaudible) or exposed publicly.  So there are lots of different approaches that we are thinking about. 

I think the key takeaway is for the private sector – you’ll recall the Defense Industrial Base is many hundreds of thousands of companies, and that's just what we think of as a formal Defense Industrial Base. The reality is the Department of Defense, you know, buys commercial-off-the-shelf for all kinds of things.  So our approach to cybersecurity isn't one-size-fits-all.  You know, how we think about cybersecurity from companies that provide paper towels is very different than how we think about cybersecurity from companies that are contributing to directly to our nuclear deterrent. 

And as I mentioned before, I think the key tension point we're always working through as it relates to innovation is making sure that folks who are innovators want to work with DOD, that they don't see cybersecurity as an example -- as an impediment, that our requirements don't impede our ability to work with them, but instead, that they see it as a normal cost of doing business in this century, and that they have an understanding that they have a target always on their back if they’re working with DOD, and we want to make sure we're working with them.  So there’s a whole series of efforts that we have underway in how we work with the private sector right now and there are multiple entities inside the defense department working with them, but our chief information officer, the CIO, is at kind of the top of that list, working on this problem set.

You had a follow-up question that I’ve already forgotten.

Q:  (inaudible) the focus on...

DR. HICKS:  On domestic and legacy versus…

Q:  Yeah.

DR. HICKS:  Yeah, so we have made clear to the Congress that we believe there are some capabilities that are no longer optimal to the force that we need for the future. We recognize that we need to ensure there's confidence on Capitol Hill that we understand what our capabilities are and how we’ll fill the gap as we come away from some of those older capabilities. 

The most obvious example is the A-10 for the Air Force with its -- you know, it's just one of several examples where it's an older system.  It's performed well, you know, but it's not where we need to be invested, and the sustainment cost – this is the part, I think, we really want to make sure is understood on Capitol Hill.  It's not just that the system itself is older; it's that the cost to sustain it is prohibitive and directly impacts our ability to sustain other capabilities.  So the same mechanics, if you will, that same workforce is diverted over from the capabilities we need them to be working on, for instance, advanced 5th generation tac-air, to work on these older systems.

So we've been pleased with some of the advances we made in the '22 budget, where we were allowed by Congress.  They supported the president's budget with regard to some divestment areas.  We think those would help.  We have, we know, in the '23 cycle, some more challenges there, and you know -- but it's always going to be a mix of capabilities we have on hand today.  We need to be able to deter today, and we know that. 

So investments in areas like space, cyber, munitions, in making sure we're able to operate well with our allies, our posture -- those are things that can be delivered now or in the very near future, even if we're working from platforms that eventually we might want to transition out of.  So that's kind of how we think about it over time: deter today, and look ahead to the future, and we’re hoping in time over the future, you have your shift in the platforms themselves.

Q:  Deputy Secretary, do you have anything to add?

MR. TURK:  Yeah, maybe just a few things from my end.  One, going into these jobs, you sort of know what you're going to get into, and then there's other things you underestimate the amount of time.  And cybersecurity, for me, was one issue that I spent much more time on than I thought I might spend coming in. 

And we sort of break it up into two buckets.  One is our own internal cybersecurity, all the things that we're doing, including in our national labs.  We've hired a terrific CIO, Ann Dunkin, to come in and make sure that we're doing everything -- we've got increased budgets, and trying to deal with all the challenges on that front.  And then for us, the other part is the critical infrastructure and energy, and making sure we're working with the private sector to do all that we can do to help shore up and make sure that we're as protected as we possibly can.  The guy who leads that effort for us, Puesh Kumar, comes from the industry, comes from the utility field.  If you want to talk to Puesh, or if you know Puesh, a phenomenal resource.  And you've got to be creative, right?  Like, there are some authorities that we can do directly from the government side, but we've got to work with the public/private side.  So we've brought in utilities CEOs, and actually did classified briefings, so that they understand the threats, not just ransomware and private actors, but the public threats as well, so we have a shared understanding of what we're facing, and then we make the investments that are appropriate.

And then we also have try to do creative things in our national labs.  Oak Ridge is a good example.  We've got several other labs with really interesting cybersecurity stuff.  One example is our National Renewable Energy Lab out in Colorado.  That's a new facility – it just launched, I think, about six months or so ago which allows the private sector energy companies to come in and test their products, their energy products for cybersecurity at our facilities, in a secure environment, and make sure that they learn lessons from others so that we can have that cybersecurity by design right from the get-go.  Incredibly interesting, and a good example of creativity from the government.

STAFF:  All right, guys.  We’re all done. Thank you very much.