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Department of Defense Press Briefing by Secretary James and Gen. Welsh on the current state of the Air Force in the Pentagon Briefing Room

STAFF:  -- the honorable Deborah Lee James, secretary of the Air Force, and General Mark Welsh, chief of staff of the Air Force. 

As you've probably been told already, today's session will be considered on the record.  We'll start with opening remarks by Secretary James, then we'll fall in -- follow with open Q&A, and then, finishing the -- the Q&A, once the secretary and the chief are complete, then General Bunch, the military deputy to Air Force acquisition, will remain behind to take some of your questions that are more in the detailed area that I know you will have. So with that, ma'am, we'll open with your remarks. 

SECRETARY OF THE AIR FORCE DEBORAH LEE JAMES:  All right.  Well, thank you, General Cook, and good afternoon, everybody.  Thank you for joining us here this afternoon.

A few days ago, I had the opportunity to attend a Women's History Month event on Capitol Hill. It was hosted by the first lady and the second lady, and they -- they honored not only all of the women veterans who have served, but also a real Air Force pioneer, whose name is Brigadier General Retired Wilma Vaught. She was the first woman comptroller to become a general officer, and she's also the recently retired president of the Women in the Military Service for America Memorial Foundation, otherwise known as WIMSA. 

WIMSA, if you haven't seen it, is the only major memorial that honors and tells the stories of our servicewomen and their contributions to the defense of our country.  And so I couldn't help but be reminded by that event on Capitol Hill how far our military has come with respect to women and service. 

And of course this important progress continues today, and it needs to remain strong and moving forward for the future.  As you know, we now have all of our combat career fields opened to women.  We have two female four-star generals in the Air Force, and just last month, Ms. Lisa Disbrow was confirmed as the undersecretary of the Air Force, which I think marks the first time in history that our -- that one of our military services has been led, in the two senior civilian posts, by women. So all in all, it was a pretty good start to the month of March, which, as I said, is Women's History Month. 

Now, thinking back to our last State of the Air Force address, it's been a little bit more than six months since we gathered here together in this forum, and a lot has happened since that time. 

In October, Russia launched its first airstrikes in Syria.  In November, Daesh terrorists attacked Paris again, as well as Lebanon, Mali and here at home in San Bernardino. In January, China landed an aircraft on a newly built runway in the South China Sea, and then in February, they installed a surface- to-air missile system on Woody Island, and then a few weeks ago, North Korea tested a nuclear weapon. 

Meanwhile, in Afghanistan, the Taliban, Al Qaida, Daesh and other anti-government groups continue to conduct attacks, undermine security and create challenges to the people and the government of Afghanistan as they work to develop a more secure and prosperous nation. 

And as I'm sure by now you have heard, on Saturday, we conducted an airstrike in Somalia against an Al-Shabaab training camp.  This strike was in self-defense and in defense of our African Union Mission in Somalia partners. We did use a mix of manned and unmanned platforms, and as more information is available, we will certainly be looking to provide it to you, but that is the only information I'm able to provide at this time. 

So the bottom line to all this is your Air Force has been extremely busy and extremely effective, and all of that is being accomplished with 200,000 fewer people than we had on active duty during the days of Desert Storm. 

We have continued the fight against Daesh.  We're gaining momentum.  In the past year, our coalition forces have upped the ante, flying more than 55,000 sorties in support of Operation Inherent Resolve, and that's a threefold increase of sorties as compared to 2014. So this is from strike aircraft like the F-16, the F-15, the A-10, the B-1s.  They're deliberately and dynamically striking Daesh every day, enabling the Iraqi, Kurd and Syrian partners to recapture territory. 

And then there's the ISR aircraft, like the MQ-1s and 9s, that are developing targets and striking them when they expose themselves.  And then we have our KC-135s and our KC-10 refueling aircraft that are supporting this incredible daily sortie rate in both Iraq and Syria, and, really, all around the world. 

There's more than 16,000 airmen deployed in the region, and they are working diligently to sustain these operations that I've described to you seven days a week.

Now, as you know, this persistent effort against Daesh is taking a toll on our aircraft, our readiness and our airmen, and while we continue to meet the increased demands for combat air power, we must also modernize, maintain, upgrade our aircraft, take care of our people, and I want to now talk a little bit about the B-1.

The B-1, as you may know, redeployed home from CENTCOM in January and while the B-1s will be receiving much needed modernization and maintenance, the -- the venerable B-52, with its similar capacity and accuracy and endurance, remains ready and able to meet combatant commander requirements.  Now, we're waiting for final approval, but there have been recent infrastructure improvements that now allow the necessary support to deploy the B-52 in theater.  So additional details about all of that, should it happen, will be available at the appropriate time.

Ladies and gentlemen, I would ask that we don't forget our airmen serving in harm's way.  In these last six months since we last gathered, we lost 19 intrepid airmen, eight of whom were due to enemy activity, and two of those were lost less than 48 hours after the last time we joined together for State of the Air Force.

On August 26, 2015, most of us awoke surrounded by the comforts of home, but Captain Matt Rowland and special -- who was a special tactics officer and Staff Sergeant Forrest Sibley, a combat controller, woke up a world away in Afghanistan.  And in a sickening twist of fate, at a Helmand Province checkpoint, two men camouflaged as soldiers opened fire on a U.S. vehicle and we lost Matt and Forrest that day.

In their combined 12 years of service, Matt and Forrest deployed seven times, and in addition to the Purple Hearts, Forrest earned five Bronze Stars, including one for valor.  And very, very soon, we will posthumously honor Matt's heroism with a Silver Star, which as you know, is one of the highest medals we reserve for gallantry in action against enemies of the United States.

Now as I mentioned, Matt and Forrest weren't the only airman lost to the hands of our enemies since our August address.  We also bid a painful farewell to Major Adrianna Vorderbruggen, Technical Sergeant Joseph Lemm, Staff Sergeant Louis Bonacasa, Staff Sergeant Michael Cinco, Staff Sergeant Chester McBride and Staff Sergeant Peter Taub. 

Another development since we last met was the contract award of the LRS-B.  We went through a GAO protest and now work has begun.  We've given the bomber a designation, the B-21, we've shared an artist's rendering, we've given a detailed acquisition approach explanation and we've told you how we intend to hold down costs.  And don't forget, we still need a name.  Airmen and their families can now go to the Air Force Global Strike Command website or they can link directly through and submit their ideas, as well as get more information on submission guidelines. 

Now, all of this is in the spirit of more transparency, even though this is and will remain a highly classified program and we'll continue to be as transparent as possible going forward with, of course, the appropriate oversight, people in Congress being fully read in. 

So today, I have a little bit more information I'd like to share with you on the B-21, specifically the seven major contractor partners who will join Northrop Grumman in building the nation's bomber for the 21st century.

These partners and the primary B-21 work locations are Pratt & Whitney, East Hartford Connecticut; BAE Systems, Nashua, New Hampshire; GKN Aerospace, St. Louis, Missouri; Janicki Industries, Sedro-Woolley, Washington; Orbital ATK, Clearfield, Utah and Dayton, Ohio; Rockwell Collins, Cedar Rapids, Iowa; and Spirit Aerosystems, Wichita, Kansas. 

Now, Pratt and Whitney, of course, is our engine provider, the other six will work on air frame or mission systems. And again, that is the totality of the information I'm able to share on this aspect at this time.  However, as General Cook mentioned, after the chief and I conclude here today, for those who are interested, General Bunch will remain behind, and he'll be prepared to give some additional details on the B-21 contract incentive structure, which I know has been of interest to some of you in the audience today.  So chief and I will defer those questions to General Bunch.

Finally, since the last State of the Air Force, we rolled out our FY '17 budget and we've completed three of our four budget hearings.  To each of the committees, we have expressed our appreciation for the stability of the Bipartisan Budget Agreement, but we also point out that that agreement did leave us somewhat short of our budgetary needs, 3.4 billion to be specific, for the Air Force. 

We've, of course, detailed the investments that we've made and we've tried to detail the tough choices that we made for budgetary reasons, none of which are popular as you know.  They're not popular with us either.  And that's precisely what makes them tough.  And of course, we always remind Congress please lift sequestration permanently so that we can do a better job across all three of our top priorities, which are taking care of people, striking the right balance between readiness and modernization while always making every dollar count. 

So again, we thank you very much for being with us today, and we'll now take your questions.  Bob, would you like to start us off? 

Q:  Thank you.  Madam Secretary, I have a question for you, or either of you, about the modernization of the nuclear force.  The one -- a lot of those pieces belong to the Air Force, and one that critics have focused on seemingly lately is the long-range stand-off weapon, the replacement for the ER cruise missile.  Former secretary, Defense Secretary Perry, for example, has said that he -- has called for canceling it, of course, and he said that canceling it would not diminish deterrence.  I'm wondering if you would give your view on that and, more broadly, why it's needed, given all the other priorities and requirements and so forth that you just outlined. 

SEC. JAMES:  As you mentioned, Bob, the LRSO will be a replacement for an aging component, the ALCM.  It will -- it will fulfill a combatant commander requirement for a stand-off capability, and so I believe it is very much needed for the future.  And maybe the chief can add more context. 

GENERAL MARK A. WELSH:  The requirement, as you know, was established by U.S.  Strategic Command and validated by the Joint Staff, and the services' jobs are to try and fill the needs of the combatant commanders.  And so that's our place in this activity.  I think the discussion of what can we afford over time in the nuclear re-capitalization is a discussion that has to complete.  I don't think it's complete yet.  I think it's a fair question and I think we should be prepared to defend anything STRATCOM identifies as a requirement.  So that's where we are right now. 

Q:  If I could follow-up very briefly, that's -- there have been critics -- criticism of this explanation and the -- essentially, it's a circular argument, saying that it's needed because it is a requirement.  The question is why is it required? 

GEN. WELSH:  Well, I think -- I think the logic actually is in the classified realm, a lot of the logic is.  And that's why you haven't heard a lot of debate about it.  But for example, if we don't have a capable, penetrating bomber in sufficient numbers to conduct a major campaign, should that ever be required, you'd need to have a capable penetrating weapon to hit targets in that campaign. 

And so if you're the commander of STRATCOM, you'd probably want the capability to do both, and the types of targets, the range, et cetera, is really significantly important here.  So I think that's why this requirements debate is very, very important to complete.  We need to get that done.

Q:  Secretary, I want to ask you about the bomber in relations with Congress.  You were on the House Armed Services Committee in the late '80s and into the '90s when both the B-1B and the B-2 were -- you had major battles with the HASC.  You -- you were not in acquisition, you were in personnel, but what lessons do you take away from the -- the battles over the B-1 and B-2 that -- that brought opponents like John Kasich and Dellums together -- Ron Dellums together to stop the B-2?  What lessons coming forward do you want to avoid so that the oversight of the -- of the B-21 is a lot less contentious?

And then I have a follow-up for General Welsh.  Strategic Capabilities Office, what technologies are you eying that could be deployed maybe in the next two or three years?  You talked about swarming the other day as a potential.  They talked about swarming drones, when -- I'd like to get your thoughts on that.

SEC. JAMES:  So back to my memories from that period of time on the House Armed Services Committee.  For one thing, particularly with respect to the B-2, after the fall of the Warsaw Pact and the Soviet Union, I think there were many, many people who were questioning really where is the threat and there was a perceived lack of a threat.  Today, with the B-21, I don't see it that way.  I think it's quite a different environment and I think there's quite a substantial recognition that we do have threats around the world, that we do need this capability. 

Another thing, my memory with the B-2 was that requirements changed, and when requirements changed, that in part drove costs increases.  In the case of the B-21, we are having a very specific discipline to keep requirements stable, and this is the chief requirements control officer sitting right here to my left.  So any proposed change in requirement would have to go all the way to the chief of staff of the Air Force, and there haven't been any, at least not so far.  So stable requirements is very different. 

Number three, when it came to the B-2, everything was new, meaning it was a new airframe, new components were going to go into that airframe and the integration challenge was enormous.  So it was the equivalent of a miracle a day had to transpire.  In the case of the B-21, we do have a new airframe.  Integration is always a challenge, but we are using a mature technology, so the risk is more bounded, I think. 

Number four, I think looking back on it, perhaps for the best of reasons, the B-2 remained in the shadows for too long.  It remained classified -- too many details remained classified too long.  And as you've heard me say, in the case of the B-21, we're leaning forward and we're trying to be more transparent and we're going to continue to do so.


And then the fifth aspect I would give you is when the -- the information was finally revealed on the B-2, there was sticker shock in terms of the dollars involved, and the dollars kept changing.  So in our case, remember, cost has been built in from the very beginning, starting with Secretary Gates and the price point that he established right from the beginning, and we're going to keep tracking with that.

We budgeted to an independent cost estimate which is higher than we believe we'll need, which will give us some margin there, and we have an incentive structure in the EMD phase, which requires the contractor to meet milestones and performance and cost parameters, and assuming those things happen, they get fee.  If they don't, they will lose some or all of the fee and it's backloaded to the point whereby they're incentivized to get through the EMD phase as soon as practical and not drag it out. 

Again, I think you can get some more information from General Bunch on that.  So we think there's a lot of differences here and we're very committed.  It comes down to human beings ultimately to keep track of this, but we're committed.

Q:  Are you committed to give the so-called then-year dollar that tax payer pay -- (inaudible) -- this year and going forward, rather than the 2010 dollar that doesn't have a lot of relevance to most people? 

SEC. JAMES:  Well, this is where we -- we have to keep working for more transparency and get to where we can talk more about the dollars.

Q:  Fair enough.  General?

GEN. WELSH:  On the -- whether it's a strategic capabilities officer, anybody else, we're looking to find anybody who is interested in helping work on effects that we can create in the future.  You mentioned swarming.  Just as an example, one of the key components -- attributes of military power is massing effects of some type.  Swarming gives the ability to mass ISR, to mass electronic attack, to mass effects from kinetic activity or non-kinetic activity.  It also, in the service, is worried about capacity because it does have -- you know, quantity has a quality also in this business. It gives you the chance to create more capacity for less cost in some scenarios and some capability areas.  So anybody we can find that will work with, we want them.  Yes, sir?

Q:  Hi, -- (inaudible) -- I want to ask you about -- I've got two questions.  So one is about not selecting GE for the engine.  So you've essentially locked in Pratt and Whitney to build the F-135 engine for the F-35.  That doesn't leave a lot of workaround for GE.  Are you worried about backing yourself into a corner with one engine supplier for your high-performance military engines?

Second thing.  You just named a list of suppliers.  Are you worried about cyber infiltration of those buyers now that you've named them, people going after those contractors to try and get B-21 information?


SEC. JAMES:  So I'll take the second part first.  The companies are required to have protection plans in place, and what allows us to, you know, tell you this today is those protection plans are in place.  But of course, this is why these things remain in the classified world until we're able to reveal them to make sure that those protection plans have been developed.  These are always concerns and this is what -- always the balancing act that we go through between -- between wanting to be more transparent, but also wanting to protect very important data.  And as to the first part of your question, we're -- we're comfortable with the choices and the strategy that we -- that we selected.

Yes, please?

Q:  Yes -- (inaudible) -- Air Force.  You mentioned last week that you've liked to move that timeline ahead for the JSTARS recap, but that the risk still remains as far as radar integration.  I was just wondering, again, if you could elaborate a little bit on why there's so much risk with integrating radar on these business jets? 

And then I believe you also mentioned that one of the snags in the program, General Welsh, along with selecting what kind of platform that was going to be, was a few issues in the TMRR phase.  If you could mention maybe what some of those issues are?

GEN. WELSH:  Certainly.  The money we have in our budget for FY 17 is actually in that area.  It's in the actual TMRR and radar risk reduction.  So we believe that there is still some tech maturation that has to be done.  We believe that by the end of this year, we will have a really good feel for where we stand going forward so that by the time we're ready to release some RFP, we'll be confident this program can stay on track and be executed properly. 

We have the funding in the budget throughout the life of the program to do this and our intent is as soon as we understand completely where we are in that tech maturation and radar risk reduction that we can then do whatever we can to accelerate the program. 

Q:  Again, can you talk about what those issues were --

GEN. WELSH:  No, I can't.

GEN. WELSH:  Yes, ma'am?

Q:  General Welsh, two questions for you, sir, on two completely different subjects, if I may.  On drones, can you bring us up to date since your last discussion here about how you view the drone inventory and the availability of active duty Air Force crews?  Has that situation improved at all?  Do you still have the equivalent of a shortage?  How are you working that? 

Completely different subject, as the head of the service, as a member of the Joint Chiefs, do you believe at this point that there is any military utility for Congress to repeal the law banning enhanced torture techniques which is currently banned under the so-called McCain Law?  This is a question of national conversation, and I'm wondering what your thoughts are.  Do you see any military utility in reversing that law and going back to making enhanced interrogation techniques, including waterboarding, legal? 

GEN. WELSH:  Yes, ma'am.  My view on the second one is that's a topic that I am not qualified to comment on.  The -- there's military utility -- the military is not directly involved in using enhanced military techniques in the conventional military, and so Air Force forces are not involved in using them at all.  So from my perspective, the policy as it stands is acceptable and I think changing them is a very, very large debate that has to occur in the policy arena, and then the military will execute as directed in that regard.  It involves a lot more people than the Department of Defense as you well know. 

I think on the other side of the house, for the -- for the drone training and crews, the issue -- the issues there have not changed.  We have been making progress.  We just started about a month-and-a-half ago our first class of 24 pilots in a class as opposed to previously it was always 12 per class.  We expect that in FY '17, we will train -- or, excuse me, in FY '16, we will train about 334 remotely piloted aircraft pilots; attack pilots as we call them now.  Those pilots will actually now -- remember, in the past, we were training about 180, so we think will break 300 this year and we think by the end of '17, we'll be at 384.  If we can get to 384, we will be making a big dent in the availability of pilots to fully man our crew force. 

Now there's still all that other work to do which is equally as important, getting organizational structures right, expanding the basing, figuring out how to develop a new infrastructure, another wing needs to stand up.  We think we need to stand up a new disassociated operational group somewhere in the very near future so we can give another basing option to the folks in this career field.  The career tracks need to be finalized.  All those things are still working, but on the training pipeline, we're making progress. 

Q:  Is there any extent to which the actual missions targeting and the carrying out of missions are constrained or limited by the current force you have available?  Are there times when the Air Force has to say sorry, we just can't do it, we don't have the assets? 

GEN. WELSH:  Other than -- no.  Right now, no.  We are flying 60 CAPs, we are actually in the process of procuring aircraft to add 10 government-owned contract operated CAPs to do ISR only, and our -- this is one of the great things about our workforce in this mission area.  They expand to meet the mission need.  They work as hard as they need to to get the job done, and that's been the problem for the last eight years; they're working too hard.  Their battle rhythm has been unlivable over time. 

We have got to get the manning right in this career field, we've got to get the organizational structure right), we've got to get the training right.  We've got to make sure that this is a career fair where people can excel and endure over the long-haul and be very, very proud members of a -- of a professional mission area because they deserve that.  Over here.  Yes, ma'am. 

Q:  (Off mic.) So Senator McCain has threatened to block the bomber because it's being procured using a cost-plus contracting structure.  You've been to the Hill several times to defend acquisition strategy, but McCain doesn't really seem to be backing down from what I've seen.  So have you had reassurances from him that he won't block the bomber maybe that we haven't seen in the press yet?  And what more can you do to convince Capitol Hill to support the B-21? 

SEC. JAMES:  The approach that we are taking is we are continuing to communicate, to provide briefings both in a classified and unclassified session.  As you mentioned, we -- we had both earlier -- about a week ago.  And we just continue to tell the story. 

So I don't have any assurances of -- of anything, other than this is a capability we need for the country.  We put a very thoughtful process together, looking to both successes as well as to programs that were not successful in the past, and we have crafted a good strategy, we believe, going forward. 

Q:  (inaudible) -- the contracting structure now?  Or is that just set in stone if he won't support cost-plus? 

SEC. JAMES:  Well, the -- the -- the contracting -- the contract has been let.  So it is always possible to terminate a contract -- you terminate, you pay fees to terminate, you can rebid it, which of course takes more money and time.  So these things are always possible.  We certainly hope it won't come to that. 

Please, Colin.

Q:  Secretary, my name's Colin Clark, Breaking Defense.  How much does maintaining strategic ambiguity govern the release of information on the B-21, as opposed to the completion of the security plans and such? I mean, I would assume you're letting this information out in bits and drabs so that Russia, China and others can't go, "a-ha, that's what we need to build against."

SEC. JAMES:  Strategic ambiguity is important.  The technology is important.  So I don't foresee that you're going to know, for years, very much more about the technology.  As I mentioned earlier, this is a balancing act. This is -- I -- a desire to share information with the public, but also protect that information, and not to put out so much information that a possible adversary can connect dots in ways that we don't wish those dots to be connected.  So ambiguity is -- is certainly part of this. 

Yes, please, Pat. 

Q:  Yep.  Pat Host from Defense Daily.  You mentioned the current-year price.  Is there anything else about the new bomber that you would like to talk about, that you perhaps don't have the clearance to talk about now? 

SEC. JAMES:  I don't have anything else to share on the bomber today, Pat. 

Q:  Thanks. 

SEC. JAMES:  Let's go over this side, please. 

Q:  Yes, Madam Secretary and General Welsh, almost since you came in, we've heard from you, "we don't tell the Air Force story very well." When you first started out, there were problems with the Guard and Capitol Hill, and as -- as, General Welsh, you come to the end of your tenure, more problems with Capitol Hill -- you got beat up pretty hard last week.  I feel bad for you. 

What is the problem with telling the Air Force story?  Is -- is it that you're not putting the right people in legislative liaison, or enough people?  Are you not talking enough to the staff on the Hill?  Are you not talking enough to us?  What do you think the problem is, and how do you fix it? 

SEC. JAMES:  I will just say that I think -- you know, the -- in periods of rising budgets, and when there is more for programs and more for all parts of the budget, that's just, as a general proposition, an easier sell than when you are in tougher times, when budgets are either leveling off or decreasing, because it's very, very difficult to make these tough choices. 

All of these programs are good programs. They all impact the national security.  They all impact different parts of the country.  It's very difficult to reduce.  And so I think this is in part what we are -- what we are facing -- all of the services are facing. 

GEN. WELSH:  Yeah, I -- I -- I think, actually, our relationship with Congress, in many ways, is very good.  I'm -- I don't -- I don't think there's a -- a real problem, overall, that we see -- at all. 

Q:  Senator Graham was saying it seems to be always you guys, not the other services, so much.

GEN. WELSH:  Yeah.  I do wish we had heard that in some form other than a hearing because that's the first we heard that.  So -- but we'll keep working this.  You know, every now and then, it's good to remind myself that it's good to be more empathetic with my pet’s chew toys. 


Yes sir, in the back. 

Q:  Madame Secretary, General Welsh, given the recent statements from North Korea and its government, how concerned are you that a North Korean ballistic missile can be launched at the continental United States, and how confident are you that you could take that out? 

SEC. JAMES:  Well certainly, the actions of North Korea are very worrisome, which is why we have everything from our presence in the Pacific as a general proposition, why we have an alliance with South Korea, why we work very, very closely with them on our defense posture.  So North Korea is a -- is a very big concern. 

GEN. WELSH:  And the commander of U.S. Northern Command spends a lot of time worried about how we can be sure to take it out if they ever did develop the capability to combine a long-range missile with a warhead that was operable. 

Q:  Are they at that stage now? 

GEN. WELSH:  North Korea?  I don't think they're at that stage yet. 


Q:  Just to follow up, given North Korean provocations, China militarizing the South China Sea, Russian aggression in Syria, has the world become a more dangerous place since you all have assumed your positions? 

SEC. JAMES:  I would say it certainly is a more complicated place than just a mere, for me, two years ago, two years and a couple of months.  A lot of complexity, a lot of ambiguity, a lot of situations that it is different in terms of deterrence, and maybe deterrence doesn't impact the way traditional deterrence of years ago impacted.  So there's an awful lot of complexity, that's for sure. 

GEN. WELSH:  The range of threats has certainly increased, and I think we see that in the headlines every day.  Yes ma'am? 

Q:  (Off mic.) with Inside the Air Force.  There's been some interest in Congress on potentially funding the B-21 and the Navy's Ohio class programs through a joint fund, and I wonder if -- what is the Air Force -- Air Force's position is on that.  And then also what other options are you looking at right now specifically? 

SEC. JAMES:  Well, certainly if there is to be a fund for nuclear modernization, it seems to me appropriate that it be for all three legs of the triad and not just for one leg of the triad.  So if indeed that is the approach that is selected, it seems to me that ought to be a joint fund. 

I think the key question, though, is where will the money come from, and this is where we're simply going to have to have a national debate.  It's probably not going to be settled this year, but it needs to be settled in the next few years.  Are we or are we not going to modernize these forces, and if we are, we must have the appropriate resources to do it. 

If we have to live within the existing toplines, this is going to create problems because here we're talking about how many of these choices that we've put forth in the budget are not popular.  Well, if we suddenly had to modernize the entirety of our triad within our existing toplines, think of all of the reductions that would have to occur.  And so we're going to have to get this settled over the next couple of years. 

It's a question of what kind of a military do the American people want going forward.  I believe we need these programs and we're just going to have to get this squared away.  Let me go back here to Pat -- I'm sorry, Mr. Losey.

Q:  Steve Losey, Air Force Times.  Secretary James, in Orlando, you discussed your desire, given everything that's going on in the world, to increase the end strength of the Air Force, but one of your caveats was if you can find the right people.  Now, of course, you singled out battlefield airmen, ISR, maintenance, those guys don't exactly grow on trees.  They require lots of time to develop, so what I'm wondering is where are you going to be looking for these airmen to fill these crucial roles?  Are you going to increase retraining opportunities, are you going to increase opportunities for Guardsmen and reservists to go active duty?  I have a follow up after that.

SEC. JAMES:  All of the above, but the real crux of the matter is that after 20 some years of downsizing in our Air Force, in order to now grow modestly we needed to infuse resources into both the recruiting force, and into the technical training base so that we can go out and attract the right kind of talent and get them trained in the appropriate skills.

So, we had to ramp up, to a certain degree, recruiting and the training aspects in order to be able to bring in those additional new people. The other piece of this, of course, is to have the types of incentives to try to retain at a higher rate the key types of people that we want to retain.  So, when you're recruiting more, and retaining more, together that is how you grow.

That's the approach that we're taking, and again, we hope to reach that 317,000 number on the active duty side by the end of this fiscal year, FY 16, and provided we can get that right talent between the retention and the recurring aspect, we could grow some more, and I think we need to in FY 17.  At which point we would go back and ask congress to consider a reprogramming option.

Q:  And, my follow up question, can you talk a little bit about the strain that some of those career fields you singled out are operating under with the pace -- the fight against ISIS, etcetera.  General Welsh mentioned the ISR a little bit, but can you talk a little bit more about some of these other career fields and what they're dealing with?

SEC. JAMES:  A lot of these career fields are high demand, low density.  One that we didn't mention a moment ago is the maintenance career field, so in the maintenance arena because we have aging platforms and whatnot, the maintenance needs are going up.  So we have thousands of maintainers in the force, but we actually need more maintainers going forward, and this is another focus area for us in the next few years.

GEN. WELSH:  You have six fleets of airplanes now over 50 years old, 21 or so fleets are over 25 years old.  It just gets tougher to keep them flying, and we see that all over the Air Force.  Our maintenance folks are working hard, and when they get undermanned and tired of this kind of work, retention rates start to drop.  You got to accelerate retention training to refill the pot.

STAFF:  We have time for two more questions.

SEC. JAMES:  Okay, let's go over here to this gentleman.

Q: (inaudible) At the opening you spoke about the attack -- strike in Somalia.  You said it was in self-defense.  Could you just, I know you can't go into a lot of detail, but could you give us a sense of why that was in self-defense?  What was al-Shabab planning to do, and why was it important for the United States to stop that?

And, General Welsh, today we had a promise from the White House for increased transparency on all these strikes that are taking place outside of areas of active hostilities.  Could you speak just a little bit about the balancing act there, about providing transparency in places where there isn't an active conflict, an on-going conflict.  How difficult is that for the military to do?


SEC. JAMES:  My understanding is that there was intelligence that this was a training camp, and that these fighters would soon be embarking upon missions that would directly impact the U.S.  and our partners.  And, so that is why it was a self-defense matter. But as to what that information was, this is what we simply cannot discuss.

GEN. WELSH:  Yes, the authorities to conduct the things outside areas of active hostility are beyond DOD authorities.  So, DOD personnel who are included in that activity really have no authority to discuss or become more transparent. We just heard this from the White House as well, so we'll have to see what the details are and how this affects everybody inside the Department of Defense.  I just don't know the answer yet.

STAFF:  Last question.

GEN. WELSH:  Let's go to the back corner.

Q:  For both of you, if you could focus a little bit more on drones.  You said there was 60 CAPS  now, you hope to have 10 more contractor CAPS for ISR.  Give us a time table when that will happen for the new ones, and with such a demand from all the combatant commanders, and a lot of talk about providing more CAPS for the Afghan troops during this fighting season, do you expect, or hope for, want to accelerate that?

GEN. WELSH:  We’d like to get the government owned contract CAPS up as soon as we can.  We're actually, in our budget this year, have been given approval to use OCO money to buy 24 more MQ-9's, which will help with this effort. There's also a decision in the department to go at a 90 total CAPS, the Air Force will provide 70 of those. And, so we will expand the ability to help the combatant commander, and the joint force commander using assets from the Army, contractors, and the Air Force, and we're trying to get there as fast as we can.

Q:  (inaudible)

GEN. WELSH:  I don't know the timeline for the Army.  Another year to 18 months for the Air Force.  I don't know the timeline for the Army.

STAFF:  Alright, thank you.  Thank you very much. As we said before, now Lieutenant General Bunch will answer some questions on the B-21 if you'd like.

LIEUTENANT GENERAL ARNOLD W. BUNCH:  Okay, ladies and gentlemen.  Let me start by saying thank you.  I thought the secretary was going to defer a lot of the questions to me, but she answered them really very well.  So, let's start off with just a couple of simple things.  Our goal is to get a bomber in the field to fill a documented capability need, and we want to acquire it, sustain it, and operate it to support combatant commanders in the national military strategy in a cost effective manner.

That's how we set up the contract structure.  That's how we've set up what we're trying to do.  The secretary's made a commitment to you, and we've made a commitment, that we're going to share more information and this is another step in that.

I'm going to start with saying it's not going to be everything you want, but it is a balance between transparency that we need for public trust and protection of critical capabilities so that our adversaries have less insight into what we're trying to do.  I'm not going to give you contract value today, I'm not going to give you incentive value today,

Okay?  I'm just being upfront and letting you know those are not going to be things that I talk about, but we are working through the process and briefing all the parties on the Hill, and everyone else.  We'll try to provide you more information as it becomes available.

You've heard me talk about the program office assessment, you've heard me talk about our independent cost estimate, and the redistribution of funds, and you've heard me talk about the Cost Plus contract.  I'll take any questions you want in those areas in just a minute.  Let me finish up.

I've also talked about why this is different than previous contract types.  Secretary stepped through a lot of different things there that are right on track with what we're doing.  I am going to take just a minute to go a little more into the incentive structure that we have on the contract because a lot of people have asked about that.

There are two components in the incentive structure for the contract.  One of those is cost, and one of those is performance, and the performance piece is really based on schedule.

And, the contractor, the way we've structured the incentives, must focus on both of those throughout the program in order to capture the amount of incentive fee which turns into profit for the company.

The schedule incentive is actually the more heavily weighted of the two.  It is more focused on schedule, and that schedule incentive is not just based on -- it's based on meeting event dates, and it's based on delivering capabilities, and meeting requirements.  Not just getting to a date.

If a contractor doesn't meet it on the expected date, or the set date, then the incentive fee or the profit goes down until it goes to zero, that's the way that it's structured.  But, the next schedule incentive date it's still out there on the calendar, and they have to march to that date.  So, it is definitely incentivized to meet those criteria, and meet delivery on those capabilities across the whole program.

Additionally, the schedule incentives increase toward the end of the program.  So, the contractor must have more heavily weighted toward the EMD effort.  So, the fee early on the schedule piece will be lower, it will be dramatically larger as we get more toward the end and we start trying to deliver the aircraft, and we start doing the test program.

If Northrop executes to the proposed cost and schedule, they'll earn all of the incentive, and there's various different formulas that go in there, into the equation, but that's generally to give you an idea.

It is cost, it is schedule.  Schedule is the heavier weighted of the two, and the schedule is more toward the end.  So, when I've said before, it's back end, loaded, it's delivering capabilities, meeting the requirements in the end.

Again, we'll share more information with you as we move forward, as we can, and we're going to continue to be transparent with Congress, as we have since the program started. And, we will continue to share information, and work with them.  And, with that, I'll open it up.

Yes, ma'am, you were trying early.

Q:  Thank you, Lieutenant General Bunch.  Sandra Erwin, National Defense News. I wanted to ask you about the thinking on why this is not a fixed price contract.  In the tanker we're hearing that Boeing is absorbing, like, a billion dollars in losses under the fixed price contract which makes people think, why wouldn't you want to do that with a bomber, and just have the company take all the hits initially in the EMD.  What is the thinking behind that?

GEN. BUNCH:  Yes, ma'am.  Our thinking on that, and the KC-46 is the program that many people focus in on right now because that's our big EMD effort that we have going on.  The KC-46 is, in my mind, completely different than the bomber.  The KC-46 is a derivative aircraft off of a commercial line that was already hot.  They were already producing 767's and they had to do a derivative of that to be able to provide it as a tanker.  Boeing is able to keep a commercial line open so that they can continue to do commercial sales, and Boeing has the opportunity to, with the KC-46, to be able to do foreign military sales.

On the case of a B-21, which is a -- you do not have the possibility of commercial sales.  You do not, at this time, nor do we anticipate the ability to do foreign military sales.  You're building an aircraft that has never been built before, and you're integrating, yes, mature technologies but you still have to integrate those into a never before built platform.

When we got into the discussions about contract type there were multiple factors that were weighed out, and multiple discussions about contract types, but the milestone decision authority at that point decided that a Cost Plus contract based on the risk was the more appropriate.

And, again, the risk predominantly is technical, and the other risk is the ability or desire of the contractor to continue to perform in the event that they get into a loss situation where they can make it up through other means.

Q:  But, secretary, when Tony asked about the lessons from the B-2, she said one of the lessons is that this program is technologically more mature, and that the risk is much lower.  But, you're saying that there is quite a bit of risk.

GEN. BUNCH:  That's not exactly what I said, ma'am.  So she did say that, and she was correct.  I was a B-2 test pilot, so I can relate back to what we were trying to do at that timeframe, and there was more risk involved. 

We still have risk here, but the risk -- I do not equate to the same level of risk we had in the B-2 program.  In this case, what we have done is we're using mature technologies to meet the requirement and deliver the capability that we need. 

But we're still building a brand-new airplane, so that carries risk.  And we're integrating the mature technologies into a never- before-built airplane, and that also carries risk.  So would I equate it to the same risk as a B-2?  No.  Would I believe the risk is low enough that we would want to go to a fixed price?  I wouldn't.  So it's somewhere in between. 

Yes, sir? 

Q:  Hey, general.  Pat Host from Defense Daily.  I was wondering if you could get into a little more detail on what, specifically, each of the contractors will be performing, because mission systems and airframes sounds kind of vague. 

GEN. BUNCH:  It is kind of vague, and I won't go into any more detail. 

Q:  And I'm glad you brought it up, because that's what I asked Secretary James, is what else would you guys like to be more transparent about, about the program?  Is what you have talked about today the extent of what you're prepared to release?  Or are there some other things you will eventually roll out? 

GEN. BUNCH:  I think there'll eventually be more things we'll roll out.  There are a couple -- there is one thing that I'll go into.  Some people have asked about life cycle costs, have we factored any in. 

We have factored life cycle cost in from the very beginning.  When we built the team, we brought in operators and maintainers from the field.  We rolled in the depot team to look at depot maintenance and look at supply chains. 

We have reached out to the test organizations, to make sure that we have the right test structure set up.  We are looking at all the things you would consider for putting an aircraft out in the field, to make it sustainable in the long term. 

Those are all factors that have gone into our key performance parameters and our key system attributes, and we're making sure we're focused on life cycle costs from the very beginning so that we can not only get it out in the field, but we'd also be able to support it and sustain it. 

Q:  Thanks. 

GEN. BUNCH:  Yes, sir? 

Q:  Colin Clark, Breaking Defense.  If you had the chance to sit down with Senator McCain and explain why the current contract setup makes sense, what would you tell him? 

GEN. BUNCH:  It would be -- and -- so it would be similar to the lines that we've already -- that I already explained.  I believe it's a weighing of the risk, and there is no one-size-fits-all contract type. 

Most studies have shown, if you go look, you can have overruns on fixed-price, and many of us can go back and we can look at the A-12, we can look at TSSAM.  We can look at some of those programs that didn't go so well in a fixed-price development, and you can go look at cost-plus ones that didn't go so well, either, and we've tried to apply the lessons learned. 

So there is no one-size-fits-all, and they're -- were all passionate about national security.  We all have ideas on what we're trying to do, and we'll just go through, and we'll continue the dialogue. 

Q:  Maybe you should send him the RAND study on fixed cost. 

GEN. BUNCH:  We -- we will continue our dialogue, Colin.  Yes, sir? 

Q:  General, James Drew from Flight Global

GEN. BUNCH:  Yes, sir. 

Q:  It's believed that the bomber will be built out at Palmdale, they're where the B-2 was originally integrated -- at least that would be the final assembly.  Do you have any comments on final assembly, and -- and where that will be?  And -- yeah, we'll start with that. 

GEN. BUNCH:  No.  No comments on where it'll be finally assembled. 

Q:  Do you have an initial operational capability date? 

GEN. BUNCH:  What we've released so far has been mid-2020s.  The initial operational capability date and requirements is something that we will work with Air Force Global Strike Command, General Rand's team, to establish those criteria.  But that's not been completed just yet.

Yes, ma'am? 

Q:  The Air Force has talked about B-21 being a cost-plus contract type, you know, for a while now.  Why is this issue so contentious right now, and was there some sort of change in strategy that has kind of led to this point, or --

GEN. BUNCH:  No.  We've -- we haven't changed our strategy.  We've been very transparent with all the parties involved, we've been briefing for many years since the inception of the program the staffs to keep them in the know and -- in a classified environment where we could lay all the cards out on the table.  We've been transparent with multiple meetings over the last few years where we've outlined our strategy and our way forward, and we've been consistent with our message even before we released the request for proposal which outlined how we were going to do the source selection, which outlined how we were going to do the contract. 

So we've been very transparent with what we were trying to do and now we'll -- we will communicate as the -- as we have the discussion about what contract type vehicle we may -- should have used. 


Q:  (Off mic.) Congress in those earlier discussions similar to what you're hearing now? 

GEN. BUNCH:  We believe we're executing in alignment with what we've told everybody from the beginning, and we didn't anything that would cause us to stop and change our course at this point.  Yes sir.

Q:  General, Philip Swarts with the Air Force Times.  Please forgive me if this is a bit of a stupid question, but when the secretary showed the image of the B-21, I think the thought that a lot of people had was that it looks a lot like a B-2.  And I'm just curious, is this an airframe that's -- you know, air frame shape that's held up over the last 20 years?  Have there been any changes to the shape of an aircraft that's needed for stealth operations? 

GEN. BUNCH:  Well, when you have a requirement and a blended wing meets that requirement, and there's not a lot of -- I mean, if you go back and look at some of the early Northrop products of flying wings, they look very similar to what the B-2 did.  You can go back to the late '40s and the '50s and you look at that, and its looks similar to what the B-2 was.  So there's no really -- nothing special there, it's just say -- it's worked, it's been successful and it continues.  Tony? 

Q:  (Off mic.) a couple of questions here.  A lot of story have it's a $23 billion contract.  Can you delineate that? 

GEN. BUNCH:  So we've not -- we're not telling you the contract.  What we have released is the service cost position and the independent cost estimate in base year '16 dollars was $23.5 billion.  That's the number we gave you the day we did the announcement, and we haven't given any number other than that, Tony. 

Q:  Do you plan to give the contract dollar value at some point? 

GEN. BUNCH:  I believe we will.  I just can't tell you exactly when it's going to be, Tony.  But that will be something that we eventually will talk about. 

Q:  What about the incentive fee?  You've hung your hat on this today, you've -- if it's $2 million, people are going to say who cares.  If it's 200 million, that's a different issue.  Can you give some range here? 

GEN. BUNCH:  I believe it's a significant enough number that the contractor will be paying attention to it, Tony.  That's all I will say. 

Q:  When do you think you could release --

GEN. BUNCH:  Hopefully, we'll release it all at the same time, Tony, but I can't swear to that. 

Q:  When, like two weeks from now or --

GEN. BUNCH:  I'm not going to commit to a day, Tony.  I can tell you that we are looking at it, it is something we're discussing and we're trying to make sure we've got all the right protections and everything in place to make sure we're doing it the right way. 

Q:  One more.  The GAO's decision, the -- you guys are trying to redact the -- (inaudible).  What's the status of that, the GAO's decision?  It's in your court right now. 

GEN. BUNCH:  Well, it's who you talk to depends on whose court they tell you it's in.  So the -- we are going through the reduction right now, and I don't -- I don't have the latest status on when they think that'll be done, but it is being redacted right now by the GAO and by everybody that has to look at the security aspects. 

Q:  (Off mic) Defense News. 

GEN. BUNCH:  Yes ma'am. 

Q:  When you released the bomber contract, I think a lot of us were surprised that there wasn't a contract value attached to that.  So can you kind of break down why you're not telling -- giving us the number on this?  Is there -- are there concerns of hacking?  I just -- I can't -- I can't really

GEN. BUNCH:  It's all part -- I understand, Lara.  It's all part of the balancing that I talked about, we're trying to do, with the transparency that we need to do to get the public's trust, and what we're trying to do to ensure that we are protecting enough critical information. 

Initially, one of the big drivers was we were going into -- we were worried about whether there -- not worried.  We thought there may be a protest, and we didn't want to do anything like that at that timeframe. 

And now that we're past that -- and we're working our way through the security implications more, to see when we can release that information. 


Q:  But why -- why is the -- why are the -- sorry.  Just following up -- what are the security concerns with releasing the figure? 

GEN. BUNCH:  It goes back to what Secretary James talked about.  If I give this data point and I give that data point, and I give this data point, and you link all those data points together, then we start worrying about what can everybody piece together of what we're trying to do.  That's really what we're trying to balance out. 


Q:  Sir, John Tirpak, Air Force Magazine.  Early in the program, the comment was that, when the first article was delivered, it would be a usable article.  Is that still -- 

GEN. BUNCH:  Yes, sir. 

Q:  -- the plan?  And the second question – Dr. LaPlante used to say that, in order to avoid some of the pitfalls with the B-2 and F-22, there would not be a big ramp-up.  It would be a slow and steady -- maybe a small number per year.  Is that still the -- the plan? 

GEN. BUNCH:  Yeah, we -- we factored in the APUC value, which we gave you before, and made that fit within the Air Force.  We've tried to make it at a quantity that, if the budget went up or down, we could still fit it within the Air Force TOA.  That was a focus item of what we were looking at so that we didn't expect to go to huge economic order quantities, where we had to get tons of money that would tie us up.  So we're actually factoring that into the longer term so that we can have stable production. 

Okay, just a couple more.  Yes, sir. 

Q:  General, can I ask you -- what's -- what's to become of Lockheed's -- Lockheed-Boeing -- the Lockheed-Boeing offer, led by Boeing, obviously.  I've got to get that one right.  What's to become of that offer?  And then also, you mentioned a little bit about allies and -- and potential FMS -- not imagining potential FMS cases for this bomber, but there's a few key allies, like -- I'll mention Australia and the U.K. -- who have been beside the U.S. in every major war. 

GEN. BUNCH:  Yes. 

Q:  This bomber also seems to be at a price point where it almost would be exportable, it seems. So would this be a discussion that would happen in the future? 

GEN. BUNCH:  We've -- first off, we're not going to do anything special with the Boeing offer.  That's -- it is an offer, then it was not the winning offer, and we've -- we're -- that's where we're at.  That is something I guess we could open the door to later on, with those key allies, but it's not one that we're considering at this point. 

Yes, sir? 

Q:  Sir, let me preface this by saying I don't pay -- as closely -- attention to Navy programs as I do aircraft programs. But I believe that aircraft carriers and nuclear submarines are unclassified programs, correct?  Now, what makes the new bomber any more worthy of being all the way in the black, or any more important than a nuclear submarine or an aircraft carrier? 

GEN. BUNCH:  We -- we believe we're taking the appropriate security measures to protect the capabilities so that our adversaries don't get undue -- unnecessary belief in where we're trying to go and where we're driving, so I'll leave it at -- 


Q:  Fair enough. 

Q:  Mr. Kendall said at one point that there would be an upgrade of the bomber, and he seemed to indicate that this would be open to competition.  Do you know -- would this be after the 100?  Could it be during the 100? 

GEN. BUNCH:  So I -- I don't know exactly what Mr. Kendall's -- referred to, so I don't have that one.  What I will tell you is we have -- and when I talked about we had a life-cycle focus on the -- life-cycle cost focus from the very beginning, one of the things that the bomber has is the open mission systems architecture.  That's a fundamental requirement. 

And what that allows us to do is, as technology changes and the threat evolves, which it will -- it will adjust -- we will be able to, more cost-effectively and in a more timely manner, integrate new technologies into the bomber so that we can address. 

And on those, we can do competition, because it will have that open mission system, and it will have a common interface so that we can compete components.  So that is what I believe drives competition and helps us keep the cost down for the longer term. 

Okay?  Thank you, ladies and gentlemen.  Everybody have a great day.