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Off-Camera, On-The-Record Media Availability with Deputy Secretary Shanahan

Dec. 21, 2017
Deputy Secretary of Defense Patrick M. Shanahan

DEPUTY SECRETARY OF DEFENSE PATRICK M. SHANAHAN:  I thought maybe you'd give me kind of the (inaudible) bet on the continuing resolution.

STAFF:  You guys have a scoop on that yet?

Q:  We were hoping you would.

MR. SHANAHAN:  Yes.  No, I wish I did.  That would be the -- my crystal ball.  If I had a crystal ball like that, I'd probably be doing something else for a living.

But I think, you know, we have backup plans.  But we're not planning.  And we're all optimistic that people will sort that out.  And I think as everybody knows, shutting down the government's not a good thing.

So, well, good morning.  And this is probably the last gaggle of the year, right?

STAFF:  Hopefully.

MR. SHANAHAN:  Yeah.

(Laughter.)

Yeah, that's the (inaudible).

So, you know, Jeff said come down and maybe just share some thoughts about, you know, now -- now that I've been in the job, you know, five months, you know, where am I spending my time, what are the things that are important to think about, and really what I thought about was talking about next year.  But I'll maybe frame, you know, the first -- the first five months here.

The -- the secretary brought me in to be his, in effect, chief operating officer.

So if you just thought about it that way, things that have to do with outside the department, in the -- in the sense of we tell -- we would say up and out, that's where he's spending his time.  And, you know, as you can -- you can see, he spends quite a bit of time of the road.  And when he goes on the road, his expectation is that everything here is in order and that we continue to make progress on -- whether it's executing on our commitments or improving operations that are here in the department.  And I'll -- I'll speak to those.

But in the, kind of traditional sense, he wants me to be down and in, and that means stay home more than travel.  It's real easy to go, you know, other places and see things, but his expectation is -- is down and in.

And if he said in -- in -- I'll say calendar year '18, where is most of my time going to be spent, it's on implementation of the National Defense Strategy.

And many of you will probably -- you know, if you were to say, "What does the calendar look like?"  You know, this last week, the president spoke about the National Security Strategy.  I've spent the better part of probably four months working on the National Defense Strategy, with many people here in the building, and the budget.

The -- the secretary said, when it comes to the National Defense Strategy, we need the department here to do the work of a QDR, which has traditionally been two years, do it in five months.

And I -- I really believe the -- the qualitative and quantitative nature of the National Defense Strategy represents the progress that people would have normally (inaudible) the output of a QDR.

The National Defense Strategy is really coupled with the National Military Strategy.  So for those of you that are engineers or -- or scientists, many of us want to make sure that all of these documents, all of these activities, are integrated and coordinated.  So you can reconcile the National Military Strategy that the Joint Staff has put together with the work that we've done on the National Defense Strategy.

You know, if there was a headline to write is, it's not a document that's going to sit on the shelf.  It's a document that's informed the budget, so there is real traceability of the strategy to the budget.

And why that's important is that if real change is going to come about from the National Defense Strategy, and not be something that just sits on a shelf, then you have to put resources against it.  And the real litmus test for whether change will occur is did we put resources against that?

And so the National Defense Strategy has truly led how we put the budget together, which leads to, well, in calendar year '18, where will I be spending my time?  It's actually (inaudible) from it's a really important document that's insightful about the next 10 years, to how are we actually making that come to life?

And the essence of the strategy is that we're restructuring the department.  And the strategy itself is a combination of real-world environment trends across all sorts of different dimensions, whether it's economic or military or social, and the guidance we've received from Congress.

So we -- you know, we talk about restructure, a good manifestation of that would be -- do people here know Jay Gibson -- You guys don't know Jay Gibson, Fox News -- (inaudible)?

(Laughter.)

Yeah, yeah.  So you know, I -- I say that tongue in cheek.

So Jay is the presidential appointee we brought in as the -- I guess it would be the deputy chief financial officer.  So on -- on January 2nd, he gets a promotion, and his promotion is he'll be the chief management officer for the Department of Defense.  And the -- the Congress has written in the law many, many times that we need to have a chief management officer, and this goes to the fundamental restructuring of the -- of the department.

So to a -- to a certain extent, we'll bifurcate the -- the operations here, and the -- the -- that's key to having a chief management officer. 

We -- we don't leverage to the fullest extent technology, innovation and our people to the manner that we could fully realize that.  So think about each of the services approaching, solving, really, basic back-office problems, differently.  But they're really important, like all the human resource activity, financial activity.

But we train different people that have the same set of skills to do their jobs differently, so a good portion of Jay's responsibility is going to help us transition organizationally and technically.  So you'll hear things about, like, the cloud.  That's an underpinning of the work that he's doing in his role as the chief management officer.

And also, how do we get more consistency in how utilize the -- (inaudible)?  So if you're out in the -- have a financial role here, how do we make sure there's really a line of progression, so you can develop in your -- in your skill, or in your career?

But for Jay, that promotion starts on the 2nd.  You'll see, probably, it shows up in -- in -- in two ways if -- if you're ready to kind of step back.  The first way is we're integrating -- we're doing a -- a more full integration of the fourth estate into the Department of Defense.  And then the other is shifting from service-led functions into more enterprise-led functions.  And this is in the areas of I.T., H.R., finance. 

So, over the course of calendar year '18, that's Jay's primary responsibility -- is to help us make those structural shifts.  That's why I referred to it as a restructuring at the department. 

The emphasis on the word "restructuring" is that we want to make sure that, with the stroke of a pen or a few clicks of a keyboard, we can't undo progress.  And that's -- you know, when you think about, you know, enduring change, you have to wire or alter the work so that you don't regress.  And that's the hard part about, you know, big bureaucracy -- is making enduring change.

The view here is that the glue tends to be the bureaucracy.  And so, if you're going to have a more performance-driven operation, you have to unwind the bureaucracy and reorganize.  It's not just about moving people.  It's really about how do we step into the 21st century, and stuff like that -- the technology.

So you'll see many different threads.  And, if you looked at each one of them independently, it would look confusing.  But if you were ever to visit a place -- we call it the obeya room -- you'd see how many of these multiple efforts actually integrate and, over time, will create a significant amount of change. 

Because we're so big, it's really hard to see that change.  So that's a significant part of what'll happen on the -- I'll say the business or the commercial side of the department.

Then, on the other side, which is probably where I'll spend most of my time, is the modernization.  So, when you think about the future -- I know a lot of you have written quite extensively on UFOs.  I -- (Laughter.) -- (inaudible) that part -- I've been working on space. 

But, you know, my time will be everything from Joint Strike Fighter, which is a program that exists today -- how do we really leverage up on the -- on the performance there?  You know, they've gone now from a development status to full-rate production.  And so, since we've got this steady state of full-rate production, how do we make that, you know, run like a sewing machine?

And then, as we stand up, you know, all these squadrons of Joint Strike Fighters, how do we make sure that the availability levels that we expect to achieve are higher than anything we've achieved before?  That's kind of what's, you know, near-term to think about. 

So you guys remember Batman and Robin?  So Ellen and I are like Batman and Robin, because that's where we'll spend our time -- is on these major development programs:  Joint Strike Fighter, (inaudible), Columbia class, Virginia class, (inaudible). 

So execute on those, and then, based on what you'll see in the National Defense Strategy, how do we transition from those to new capabilities that give us, you know, an advantage?

So we'll work -- it's almost a duality:  work right to left in terms of the modernization that we need, and then left to right in terms of executing on the things we've already made commitments on.

Jay is on -- I won't step from the -- the commercial side of things, but it's really important that Jay takes ownership of that.  And I would just -- this is more a nod to some of the folks in Congress.  They were -- they've been adamant about that change for, I don't know, what would you say?  Five years, ten years?

STAFF:  I don't know.

MR. SHANAHAN:  All right.  So, you know, we're going to draw a line in the sand, and it's a -- not a strategy anymore.  It's -- it'll become a tactic.  Now, how Jay starts to move the pieces here will be great fodder for stories next year, because you'll probably hear screaming and yelling, because change is bad, but everybody wants it.

The more important stories and the work is around the modernization and the work we're going to be doing with the different services, and then the integrated work that we'll do there -- space, cyber, many of the things that have to do with missiles, missile defense.

So, if you were to kind of think about the rollout of all of this, we've got the National Security Strategy, then the National Defense Strategy, which will probably be sometime in January.  And then, in February, we'll go into the details of the Nuclear Posture Review and the -- and the BMDR.

The intent -- and I think you'll -- there's one part of next year that'll become extraordinarily boring in your jobs -- is that we'll probably talk about the NDS, I don't know, maybe 100,000 times, so -- because, if we don't -- if we don't talk about it 100,000 times, then it will just become a document that lives on a shelf.

And the difference between strategy and real outcomes is when you marshal resources, your critical resources, against those things written in the strategy.  And that's why this budget is very important.  When I think about the budget itself, and then us having to explain the budget, is -- there is real traceability to -- what we've said is in the strategy, to what's in the budget.  

But we're now starting the new POM-20 cycle in January.  Probably the other big portion of my time in the next 12 months will be to make sure POM-20 is the masterpiece.  So it's the -- probably the next biggest step we can take to make sure we can't unwind the strategy.  And this is where many of the bets, in terms of innovation and some of the new technology, will take place.

There's a part of what I'll be spending my time on that is super interesting, but it'll be a grind, and that's readiness.  So we -- in the time I've been here, it's one of these things where, when you ask the question about readiness, you have to ask the perfect question in order to get the right answer, and then to understand readiness.

We've identified -- I think it's five critical areas where we have a microscope out and we're really at the subatomic level.  And the goal isn't to be able to say, "Hey, here's where we need more money."  We were given more money.  Now we need to show and demonstrate that the money's been spent and we're getting the performance that is expected for the -- for the money.

And, you know, for us in the department, the balance right now is generate the readiness and consume it wisely.  We want to be very prudent in how we consume the readiness.  And I think as you all understand, it's an unpredictable world and there's all sorts of unplanned events, but that's where we have to decipher how to take risk and -- and where to take that risk so that we're constantly generating more and more readiness, because that's where we said we'd need it.

So, maybe I'll pause there.  Let me check my secret list.  Last time I did a hand write.  This time I wrote it out.

Maybe the other one that -- just to touch on that I've spent a little bit on time -- more time in the last couple month's, foreign military sales.

It's a real key part of -- if you talk to the -- to the secretary about his lines of effort, it's been a steady drum beat; you know, let's make sure that we're strengthening the relationships with our allies and partners.  And one way to bring us together is with foreign military sales.  

And as many of you well know, it's a very complex process.  So working with General Hooper or Ellen Lord we've really, I think, rallied an interagency team to be able to focus on what are the priorities?  So very close to the team in Japan.  You know, we're focused on South Korea.  We're very focused on the Middle East.

It's not that there's just this giant hopper of foreign military sales.  There's line of sight to what's important.  There's prioritization from the combatant commands.  There's real integration with industrial base.  And then, you know, within the government what we can control, making sure we're not standing on the air hose waiting for some paperwork or -- or a signature.

That's been getting time and attention.

Getting smarter on safety, making sure that we really follow through on the actions that I think were identified by Secretary Spencer, but it's broader than that.

Spending time on cyber-security, because it's -- we'll never -- we'll never defeat all the -- all the risks, but there's certain risks that we understand and that we have vulnerabilities, and the task is to really mitigate that. 

So, maybe I'll stop there.

(inaudible)?

Q:  (inaudible).

You mentioned JSF briefly.  I just wanted to ask -- they're not quite up to full-rate production yet and part of that is the budget requests by previous administrations and this administration and congressional budget cuts.  And additionally, aircraft availability is not where it should be either.  They're having a lot of problems with spare parts.

So, can you tell me how you plan to fix these problems?

MR. SHANAHAN:  Personally, right?

Q:  Yes.

(Laughter.)

MR. SHANAHAN:  Yeah. No.  I'm ordered all the (inaudible)--

(Laughter.)

So, maybe, could you talk about the first part of your question again, in terms of the --

Q:  Full-rate production.  Just getting back up to -- getting up to where they want to be, in terms of ramp rate and -- because that will bring the cost down --

MR. SHANAHAN:  Right.

Q:  -- getting up past 60 a year.

MR. SHANAHAN:  Yeah.

They're -- they're -- so the task -- the task we have is to climb that hill very smoothly.  And thinking about my last job, did about 20 of those, so, you know, part of -- part of the work, both Ellen, myself, (inaudible), (inaudible), has been focused on is how do we take the risk out of that and concurrently drive enormous amounts of productivity.

And so, the short answer to that is we have a plan that we're working with them, the issue on sustainment.  And the spare parts are -- whenever you start up a new line, you're going to have issues.  I think, for us, it's, how do we make that system work? 

So the piece that I've been working with Ellen and Admiral Winter on is how are we looking at the performance of the system, because it's easy to -- when we're missing parts, you know, we refer to that as "whack-a-mole."

It's really easy to go like, "We're missing these parts.  We'll go order those parts."  But it's, "Do we really have a comprehensive approach, as we field all these aircraft, to stand up the capability?"  And I can't say that we have the complete understanding of that yet.  But, to my earlier remarks, now that the budget and strategy are behind us, it's -- that's where Batman and Robin will spend a lot of time.

Q:  (inaudible) request additional F-35s, and then -- than the previous administration has requested, to get up to that ramp rate?

MR. SHANAHAN:  I think we're at that ramp rate, right?  This would be incremental to that.

(inaudible)

MR. SHANAHAN:  (Laughter.)  Yes, yes.  I don't -- I don't -- I don't know which quantities you're talking about.

Q:  Okay~.

(inaudible)

Q:  (inaudible) -- from Ukrainian television. 

Sir, you mentioned the military sales.  How can you comment on that?  A recent Washington Post article of that -- their decision of the -- providing M107 to Ukraine was possibly adopted.  Does it mean that this long discussion of the -- providing the lethal arms to Ukraine is ended already, so the decision was approved?

MR. SHANAHAN:  As you -- as you probably realize, those types of decisions come through the State Department, and then, as soon as they've formalized their decisions, we transact on behalf of the State Department.  So we're standing by, waiting for guidance from the State Department.

Q:  What does the DOD position -- your position?  Are you supporting this process?

MR. SHANAHAN:  I support the State Department. 

Okay.  Thank you.

Q:  Can we expect the F.Y. '19 budget to come out on time in early February? 

And, also, can you just give us a little bit of a flavor of what might come out of the missile defense review in terms of what might be emphasized or, you know, what technologies you're going to focus on?  Is it tilted more towards homeland defense or regional defense?  Anything you can sort of preview from that would be great.

MR. SHANAHAN:  So I expect the budget to come out on time.  I mean, that's the plan that we're on track to perform to.  So that's early February, right?  And I know -- I can't remember what the statistic is, but it's happened less often than more often.  But I think we're on -- we're on track for that.  We're hoping that the '18 budget comes out before the '19 budget.  But, you know, we'll see how that plays out. 

I think what you'll see in the -- in the BMDR is emphasis on the capabilities that we have and how we're making that robust, and then, where you'll see investments.  And I would -- I would say it's in the, you know, traditional domains of -- you've got homeland, you've got regional, theater and strategic.  So it will be, you know, more depth around those categories and what we're doing to expand our capability.

Q:  Mr. Deputy Secretary, if you don't get these budget caps repealed, if Congress doesn't repeal them and you aren't going to get the billions promised, certainly the $700 billion promised by Congress, what specific impacts will that have on the U.S. military when it comes to rebuilding the military, as the president's stated promise?

MR. SHANAHAN:  Well, I mean, this isn't -- at least to my knowledge -- if we don't have the money, just slows things down, right?  I mean, just by -- just by definition, it slows things down.  And I think that's -- that's the real risk is -- (inaudible) -- the pace of which we would expect to be able to bring on new capability gets retarded, and then how quickly we can generate readiness gets delayed.

So it's -- it's more, you know, pace.  And if this were -- if this were a business, then, you know, the market'll get away from you.  In our case, it's really about how we make sure the priority investments are (inaudible) to what we can -- (inaudible).

But the key is not to rush.  So when, you know, we look back and we do -- I don't know how many acquisition studies have been done, where we look at failure, it's -- on every one -- (inaudible) -- innovative (inaudible) drive a lot of change, where we've gone too fast, we've failed.

And so I think, you know, this step up in the budget right now, what's important there is that we have time, if we, you know, mature this at the appropriate rate.  If we delay this, then we're going to take risk on a development, and usually that's where we fail.

Q:  You mentioned five critical areas, right?  (inaudible) name those five critical areas?

MR. SHANAHAN:  I won't name them today, but I've got -- they're in (inaudible).  And so, if I name them, you'd go, "Well, that's obvious."  So they're the obvious ones.

Q:  But can you talk about the specific impact?  Is it jets not flying?  Ships not sailing?  What will be the impact on the U.S. military if you don't get the promised billions of dollars to modernize and to rebuild the military?  Specifically, Mr. Secretary.

MR. SHANAHAN:  Yeah, so you can imagine what the definition of specific means, right?  You know, $700 billion, 2 million person organization, it's hard to get into the -- the real specifics.

I'd say certain missions won't be performed.  So you have to -- by definition, we make choices about when -- (inaudible).

So the one that worries me the most is that -- because you start to reduce spending, is that you accumulate risk.  And the hard part of that accumulating risk in large, large organizations that have complex systems and do complex missions, is you don't see how that risk accumulates.

And the way I've been able to characterize it to people is there's this thing called Hooke's Law.  Hooke's Law says that things that you can apply stress to a material and it'll deflect and then when you remove the stress, it returns to its original shape.  But then the point at which you go into what's called the plastic region, you go from elastic to plastic -- and that's where something gets permanently deformed.

And we tend to dial risk up and down.  And we -- we do things like manage risk -- the risk that we can manage is -- tends to be in training or in maintenance.  And you're not sure where that plastic, that deformation can show up.

And I -- to me, that's the -- that's the danger of not making these investments and not staying on top of (inaudible).

Q:  So you think more people could be (inaudible)?

MR. SHANAHAN:  No.  I think you just end up making mistakes, right?

Q:  Sir, quick follow-up.  (inaudible) -- climate change was removed from the National Security Strategy, even though Secretary Mattis -- (inaudible) -- as a national security threat.  Is the NDS going to make reference to it?  And if not, has there been a change in position about how this department sees climate change in terms of a national security threat?

MR. SHANAHAN:  We don't specifically address climate change in the NDS.

Q:  Is that because you don't believe it's a threat?

MR. SHANAHAN:  No.  I think we didn't address it in that the strategy -- (inaudible) so much, you know, depth and breadth.  You know, think about it as -- it really reflects the high priorities of the department.

Q:  But your predecessors did.  President Obama's Defense Department did specifically name it.

MR. SHANAHAN:  I don't think they did a National Defense Strategy.

Q:  The NSS did it, however.

MR. SHANAHAN:  I'm referring to the --

(inaudible)

Q:  Sure, but it does flow from that, right?

MR. SHANAHAN:  Well, there's (inaudible).  And think about the National Defense Strategy as the DOD portion of the security strategy.

Q:  So you're downgrading, sort of.  Do you not see national --

(inaudible)

MR. SHANAHAN:  No, I think you're trying to say that.  I'm saying the NDS was written without that in there.

Q:  Because?

MR. SHANAHAN:  Because we concentrate on certain things that are priorities to the building.

Q:  It's a top priority?

MR. SHANAHAN:  No, you're -- imagine having a limitation on how many words you can write in an article.  And so that's a little bit of the way the strategy works.  There's only so many priorities you can have.  

So there are many, many priorities to the department, but we had to distill them into that critical few.  So it doesn't mean that it's not a priority, or that it is a priority.  What it says is, in the national defense strategy, we don't address it.

(CROSSTALK)

Q:  (inaudible) give one example from the National Security Strategy that's traceable to the -- making budget through your defense strategy?  The way to quantify is backing from one (inaudible) -- (inaudible) one example of a traceable (inaudible).

MR. SHANAHAN:  Yes, let me process that for a minute, (inaudible).  I'm trying to -- yes, no, no, I will.  I'll come back to it with an example.

Q:  All right.  Let me ask you a tangible question.

MR. SHANAHAN:  Yes.

Q:  I don't want to correct you, but you were wrong about the F-35.  It's not at full-rate production now.  It's not scheduled until mid-2020, after it goes through -- 

MR. SHANAHAN:  No, I -- 

Q:  -- operational testing.  But, since this is a transcript, people are going to read it and think, "Oh."  So --

MR. SHANAHAN:  Yes.  Yes, okay~.

STAFF:  Let the record stand.  (Laughter.)

MR. SHANAHAN:  Yes.  No, Tony's correct.  In my mind, we're at full-rate.

Q:  Yes, but your mind doesn't translate into billions of dollars in --

MR. SHANAHAN:  No, I know, I know.

(inaudible)

Q:  -- as good as your mind is.

MR. SHANAHAN:  I know.  Yes, no, no, no.  But -- (Laughter.) --

Q:  Nice.

MR. SHANAHAN:  -- see, this is why I love Tony.

STAFF:  We all love Tony. (Laughter.)

MR. SHANAHAN:  Yes, no, no, no.  No, see -- so Tony doesn't want to let my -- 

Q:  I (inaudible) into the transcript.  

MR. SHANAHAN:  No, no, no.  Technically, you're correct, okay?  But I don't see it that way, okay?  And here -- and here's why.

Q:  Okay, I want to hear this.

MR. SHANAHAN:  Yes, Tony -- and this is -- this is -- this is more my mindset than anything else.  When you look at the volume of work that we're doing, we're not at low-rate production.  We should be translating, in terms of processes and capability, to the mindset of "We're at full-rate."

You know, we can get into the technicality of, well, the numbers.  You know, we can -- we can wait two years from now to get to the technical standpoint.  When I look at the factory and I look at the supply chain and the decisions, we need to make the move now.

Q:  That's before the operational testing that proves it's operationally effective and suitable.  That's going to begin a year later, next year.  You're going -- (inaudible) -- this is -- seems like you're putting that way -- the cart before the horse type thing here.  It hasn't proven itself in the combat testing yet.  So you're, like, signaling here that --

MR. SHANAHAN:  Yes.  I was looking more at the production rate.

Q:  So you're not going to go above 55 aircraft a year?  Is that what we're -- you're saying?

MR. SHANAHAN:  No, we'll go above 55.

STAFF:  Okay, so that's -- so we're not at full production then.

MR. SHANAHAN:  Yeah.  So again, you guys are working off a -- probably a (inaudible) definition, right?

Q:  The law says you can't go beyond, like, full production until it passes -- (inaudible) -- benchmark.

MR. SHANAHAN:  Yeah, okay.

(inaudible)

MR. SHANAHAN:  Hold on, hold on.  I'll -- I'll translate for (inaudible).

So technically Tony is correct, right?  And so, if we wanted to wait until 2020 to start behaving differently, I think we've missed an opportunity.

Q:  Okay.

MR. SHANAHAN:  So if we were -- if all of us ran down to Fort Worth, we'd say the transition from "developmental risk," to "here's how we should be cautious," to "We've got enough volume" at six -- 60, in my mind, is full rate.

You're going to a definition of what we're going to get to at the top of the jar.  I'm talking about the behavior and the mindset of the production system we have put in place.

So we should be thinking about the -- the mindset and the behaviors, and how we're leveraging productivity of a full rate environment.

Q:  Lockheed Martin still has a long way to go before getting to that 80 or 100 a year that they want to get to.  They -- it's not like there aren't obstacles.

MR. SHANAHAN:  It depends.  I don't think it's a long way to go.

Q:  Mr. Secretary, can you tell us -- can you give us a little update on -- on the standup of Cyber Command, and whether or not you're having trouble getting some of the resources for the standup, and how the services are doing in, I guess, supplying and switching over some of their resources?

MR. SHANAHAN:  I -- I -- I don't have a -- a detailed response.  I have it -- in the discussions we've had with Admiral Rogers, we haven't had real transitional or (inaudible) -- you know, risks or issues that -- that he's said has been a problem in getting to (inaudible).

(inaudible)

Q:  Do you think postponing the military exercises with South Korea will help reduce tensions during the Olympics?

MR. SHANAHAN:  I don't -- I'll look -- looking at Sally or Jeff, can you --

STAFF:  We can -- I'll help you with that later.

MR. SHANAHAN:  Yeah.

STAFF:  I might not be the best person to take that.

MR. SHANAHAN:  Right.

(inaudible)

Q:  -- possible C.R. until January 19?  And then if the government does shut down, what, you know -- what -- what is DOD going to feel?

(inaudible)

Q:  -- any anomalies?

Q:  Can you actually get the budget out on time, if -- (inaudible) -- that long?

MR. SHANAHAN:  (inaudible)

Q:  So if -- if the C.R. goes to 19, what effects are you going to feel?  And also, if there's a shutdown, you know, what -- what effects will you feel at that point, just as a department?

MR. SHANAHAN:  You mean, if we don't get an '18 budget in '18?  Is that --

Q:  No, I'm just saying if -- if -- if the government can't be funded -- or it is funded until January 19 under C.R., right, what effects are you going to feel, just until January 19th?  And then --

Q:  Do you need anomalies?

Q:  What's that?

Q:  And would you need anomalies?

Q:  Right, yeah.  Do you need anomalies?  And then also, you know, if the government shut down -- shuts down, what are you going to feel?

MR. SHANAHAN:  Yeah.

It's a -- it's a little bit of an academic question, in the sense of, let's say you're having to do more, and someone who said, "Operate at the budget you had from last year," you're just going to defer as many choices as you can, you know, whether it's military construction, maintenance -- you'll just, you know, kick the can down the road on as many of those things.

And, I mean, look, if you don't have the money, then you have to find workarounds.  It's just -- that's what happens, and that's a -- that's a fact of life.  It's painful.

I think the -- you know, the challenge -- we get this question all the time:  "Describe how much pain it is."  It's not really worthwhile, describing the pain.  It's just -- it's bad.  

So -- but the other side of this is, we will be able to do our job.  "That's the thing about the Department of Defense.  They'll always be able to do their job.  We're just going to make it harder for them."  And I think that's what -- you know, we're trying to, you know, not always be in that situation where (inaudible) make things hard.

(CROSSTALK)

Q:  Yes, a couple follow-ups on things that have been said here, I guess.  One, you said -- so if we do have a C.R. through January 19th, which appears to be where Congress is heading right now, does that affect the ability to get a new budget out, '19 year, in February, on time?

MR. SHANAHAN:  (inaudible). 

Q:  Okay.  

MR. SHANAHAN:  Yes.

Q:  And then you mentioned -- you said, you know, POM-20 is going to be the masterpiece.  We've heard previously that POM-19 was going to be the big military buildup that was promised on the election trail in '16.

MR. SHANAHAN:  Yes.

Q:  Is that -- the buildup's going to be coming in '20 now?  Is that a fair characterization?

MR. SHANAHAN:  Well, '19 is a step up.  But, when you think about threading the national defense strategy into the details of the POM, you'll see it much more (inaudible) in POM-20.  We had to do -- we had to build up '19 concurrently with doing the NDS.

So, you know, imagine trying to do those in parallel and adjusting in real time.  So we did -- we did a lot of that.  I would say the -- '20, from the -- from the start in January, it'll be with the NDS, you know, firmly planted on, you know, the front of our brains.

Q:  And then, on POM-20, it's also going to be after the AT&L split happens.  So should we expect to see more kind of new high-tech researching programs in there, things from prototyping programs you're looking at really getting going in '20?

MR. SHANAHAN:  You'll see that, independent of the split.  So you'll probably see, with the split, them going faster.  But they'll be in place in '20, regardless of, you know, how we (inaudible) that R&E from the acquisition and sustainment.

Q:  Any particular programs you're really looking at going in POM-20?

MR. SHANAHAN:  There are.  They're really cool.  We'll save that for, you know, our next gaggle.

STAFF:  We can do a couple more, then we've got to cut it off here.

MR. SHANAHAN:  Yes, sir.

Q:  Yes, could you just -- you had talked about South Korea and Japan earlier.  You know, when we were in South Korea with the -- with the secretary, there was an announcement about bigger payloads, more systems going to South Korea.  You mentioned that.  What are these systems, and why haven't we seen the announcements yet?

And then, on Japan, to what extent is the -- the delay?  Because we've also been hearing for months, all year, about new systems for Japan.  Is the delay budget-driven, or do they perceive the threat differently?

MR. SHANAHAN:  Let's see.  On the -- on the -- Japan, it's not -- it's not a threat issue.  It's availability.  I mean, it's just pure physics, money and contracts.

Q:  For what systems?

MR. SHANAHAN:  I think there are hundreds of contracts in terms of FMS, so that (inaudible) -- covers the whole waterfront.

Q:  And then for South Korea?

(inaudible)

STAFF:  What specifically are you asking about?

Q:  He said that they were working on getting FMS as one of the priorities.

STAFF:  Right.

Q:  FMS for South Korea -- I'm just sort of wondering, when we were in South Korea with the secretary --

STAFF:  I think, just as an example of FMS writ large.

Q:  -- they announced that they were going to do more payloads, and now I'm just wondering, you know --

STAFF:  What is an FMS, though? 

Q:  Yes --

(inaudible)

STAFF:  That's just a large -- that's a policy decision on (inaudible).

MR. SHANAHAN:  Right.  Exactly. 

Q:  So are there more systems headed to South Korea?  Or --

MR. SHANAHAN:  We're constantly in discussion with them about procurements.  I think you've, you know, seen, you know, the president emphasize that -- their need to procure more systems.  So those discussions are ongoing.

STAFF:  And one more, guys.

Q:  Sir, I have a question on space.  The NDAA gave you the responsibility for executing a lot of the changes to space organization.  And I wonder, first, if you can just give us a sense of what opportunities those -- that language creates for the department to manage space better. 

And, also, specifically, one of those changes is to re-delegate the PDSA responsibilities, and I wonder where you think it makes sense to give that authority.

MR. SHANAHAN:  We never -- we haven't laid flat the final responsibilities there.  But what's really exciting about next year -- we've got Mike Griffin on board.  So, when you think about somebody who has a lot of experience with space and (inaudible), he'll be a grand addition to the team. 

The whole space arena -- so that's been an area where I've spent quite a bit of time with Dr. Wilson, General Goldfein, General Raymond, General Thompson and the -- and with Chairman Rogers and Representative Cooper. 

I think where we're all triangulating is we need a different structure, but our energy is being spent on -- to do (inaudible)?  Most of it's on the "to do (inaudible)?"  And the -- you know, Chairman Rogers has been really good on "We need to do better."  And that's why we're really going to "to do (inaudible)," rather than redraw the lines and boxes right away.

That doesn't mean we won't end up with a different structure.  I don't want to read too much into that one.  What I read into is -- I owe them a couple of reports.  Those reports will really get at how we're going to do better at the -- at the "what." 

And we've all, you know, stayed really close together in how we're going to use our time.  And we're not -- I mean, some people can read that we're at odds about this; it's actually very -- really collegial about "How do you do this better and faster and really get at some of the new capabilities that we know will make us very competitive?"

Q:  Do you see Mike Griffin potentially taking on the PDSA responsibilities?  It seems like it would make sense (inaudible).

MR. SHANAHAN:  It's a -- it's a possibility. 

Q:  Okay. 

MR. SHANAHAN:  I mean, I think that was -- whether he takes on the PDSA responsibility or not, each one of the, you know, finer minds and experienced leaders in space -- (inaudible). 

STAFF:  All right. 

MR. SHANAHAN:  Okay.  Good, everybody?

STAFF:  Thanks, everybody.

(inaudible)

Q:  Thank you.  Happy holidays.

Q:  So who's Batman and who's Robin in (inaudible)?  (Laughter.)

MR. SHANAHAN:  I don't know.  We'll have to find out, right?

STAFF:  And who's the Joker?

(inaudible)