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06 February 2003

Rumsfeld Asks $15 Billion Increase in 2004 Defense Budget

(War on terror requires urgent military transformation, he says)
(6760)
Defense Secretary Donald Rumsfeld presented his fiscal year 2004 (FY
04) defense budget to Congress February 5 asking for $379.9 billion -
a $15.3 billion increase over last year - "to set in motion a process
of continuing transformation" and to establish a culture which "will
keep the United States several steps ahead of any adversaries."
Rumsfeld told members of the House Armed Services Committee that
military transformation is more than developing new strategies and
structures. He said it requires changing a pre-existing culture to
encourage new ways of thinking "so we can develop new ways of fighting
and provide our Armed Forces the tools they need to defend our way of
life in the 21st Century."
The secretary said he wants to foster a culture that won't stifle
innovation, but will reward unconventional thinking, where personnel
"have freedom and flexibility to take risks and try new things" and,
consequently, will "behave less like bureaucrats." He said he wants
Congress to work with the Department of Defense (DOD) "to transform
how it moves money, manages people, and buys weapons."
The military of the 21st Century must be "flexible, light and agile,"
Rumsfeld said, so it can respond swiftly to sudden changes. "In an age
when terrorists move information at the speed of an e-mail, money at
the speed of a wire transfer, and people at the speed of a commercial
jetliner," he said, DOD "is bogged down in micromanagement and
bureaucratic processes of the industrial age - not the information
age."
Despite spending an average of $42 million an hour, the secretary
said, "we are fighting the first wars of the 21st century with a
Defense Department that was fashioned to meet the challenges of the
mid-20th Century. We have an industrial age organization, yet we are
living in an information age world, where new threats emerge suddenly,
often without warning, to surprise us."
Rumsfeld said the September 11th terrorist attacks made clear that
America's adversaries "are transforming the ways in which they will
threaten our people," therefore, the U.S. "cannot stand still." Since
9/11, he said, U.S. force protection costs have increased by around $5
billion annually.
The new budget is designed to address three simultaneous challenges,
according to the secretary: winning the global war against terrorism;
preparing for near-term threats that will emerge by the end of the
decade by investing in readiness, modernization and people; and
transforming in a way to ensure military preparedness for the threats
expected in 2010 and beyond. The FY 04 budget includes increased
spending on procurement as well as research and development. Spending
on U.S. Special Operations Forces and Navy shipbuilding is also up.
But, Rumsfeld said, the budget does not include money for a possible
contingency in Iraq.
As an example of how requirements are changing to meet transformation
goals, Rumsfeld pointed to the Army's decision to scale back its
planned procurement of 1,200 Comanche helicopters to only 650 because
it changed the way it planned to fight future battles. As a result,
the Army decided to use the helicopters in a reconnaissance and light
attack role requiring fewer in number.
In another illustration of change, the secretary said instead of
pursuing "someone's vision of a 'perfect' shield" as part of the
missile defense program, the Missile Defense Agency will "develop and
put in place a rudimentary system by 2004 - one which should make us
somewhat safer than we are now - and then build on that foundation
with increasingly effective capabilities as the technologies mature."
Now, Rumsfeld said "we are on track for limited land/sea deployment in
2004-2005."
Following is the text of Rumsfeld's prepared remarks:
(Note: In the text, "billion" equals 1,000 million.)
(begin text)
FY 2004 Defense Budget Testimony (As Prepared)
Remarks as Prepared for Delivery by Secretary of Defense Donald H.
Rumsfeld, For the House Armed Services Committee, Wednesday, February
5, 2003.
INTRODUCTION
Mr. Chairman and Members of the Committee, thank you for this
opportunity to update the Committee on our progress in transforming
the Department of Defense for the 21st century and to discuss the
President's budget for FY 2004-2009.
President Bush vowed that, on taking office, he would order "an
immediate, comprehensive review of our military -- the structure of
its forces, the state of its strategy, the priorities of its
procurement." He warned of new dangers -- of "barbarism emboldened by
technology," the proliferation of "weapons of mass destruction ... car
bombers and plutonium merchants ... cyber terrorists ... and
unbalanced dictators." To deal with these threats, he said, he would
give his team at the Department of Defense "a broad mandate to
challenge the status quo and envision a new architecture of American
defense for decades to come."
The goal, he said, would be "to move beyond marginal improvements --
to replace existing programs with new technologies and strategies."
Doing this, he said, "will require spending more -- and spending more
wisely."
Mr. Chairman, for the past two years, we have pursued the goals he set
out. We have:
-- Fashioned a new defense strategy.
-- Replaced the decade-old two Major Theater War approach with a new
approach to sizing our forces that allows us to provide for homeland
defense, undertake a major regional conflict and win decisively,
including occupying a country and changing the regime if necessary,
simultaneously swiftly defeat another aggressor in another theater,
and in addition have the capability of conducting a number of lesser
contingencies.
-- Developed a new approach to balancing risks that takes into account
not just the risks to immediate war plans, but also the risks to
people and transformation.
-- Reorganized the Department to better focus our space activities.
-- Adopted a new Unified Command Plan, which establishes the new
Northern Command to better defend the homeland; a Joint Forces Command
that focuses on transformation; and a new Strategic Command
responsible for early warning of, and defense against, missile attack
and the conduct of long-range attacks.
-- Expanded the mission of the Special Operations Command, so that it
can not only support missions directed by the regional combatant
commanders, but also plan and execute its own missions in the global
war on terror, supported by other combatant commands.
-- Initiated work with Allies to develop a new NATO command structure
and begin work on a new NATO Response Force.
-- Took steps to attract and retain talent in our Armed Forces, with
targeted pay raises and quality of life improvements.
-- Made a number of tough program decisions, including replacement of
the Crusader, B-1 modernization, and the Navy "area-wide"
restructuring.
-- Instituted "realistic budgeting," giving Congress more realistic
estimates of what programs can be expected to cost, rather than coming
back for annual non-emergency supplementals.
-- Reorganized and revitalized the missile defense research,
development and testing program, freed from the constraints of the ABM
(Anti-Ballistic Missile) Treaty.
-- Completed the Nuclear Posture Review, with a new approach to
deterrence that will enhance our security, while permitting historic
deep reductions in offensive nuclear weapons.
-- Moved from a "threat-based" to a "capabilities-based" approach to
defense planning, focusing not only on who might threaten us, or
where, or when -- and more on how we might be threatened, and what
portfolio of capabilities we will need to deter and defend against
those new threats.
These are important accomplishments. They represent some of the most
significant changes in the strategy and structure of our Armed Forces
in at least a generation.
But as important as these changes are, they must be only the
beginning. Because transforming is about more than developing new
strategies and structures -- it is about changing culture, about
encouraging new ways of thinking, so we can develop new ways of
fighting and provide our Armed Forces the tools they need to defend
our way of life in the 21st century.
We are working to promote a culture in the Defense Department that
rewards unconventional thinking -- a climate where people have freedom
and flexibility to take risks and try new things. We are working to
instill a more entrepreneurial approach to developing military
capabilities, one that encourages people to behave less like
bureaucrats; one that does not wait for threats to emerge and be
"validated," but rather anticipates them before they emerge -- and
develops and deploys new capabilities quickly, to dissuade and deter
those threats.
Most agree that to win the global war on terror, our Armed Forces need
to be flexible, light and agile -- so they can respond quickly to
sudden changes. Well, the same is true of the men and women who
support them in the Department of Defense. They also need to be
flexible, light and agile -- so they can move money, shift people, and
design and buy new weapons quickly, and respond to sudden changes in
our security environment.
Today, we do not have that kind of agility. In an age when terrorists
move information at the speed of an e-mail, money at the speed of a
wire transfer, and people at the speed of a commercial jetliner, the
Defense Department is bogged down in the micromanagement and
bureaucratic processes of the industrial age -- not the information
age. Some of our difficulties are self-imposed, to be sure. Some are
the result of law and regulation. Together they have created a culture
that too often stifles innovation. Consider just a few of the
obstacles we face each day:
-- Think of this FY 2004 budget -- It was developed by the Department
of Defense from March 2002 to December 2002. OMB (Office of Management
and Budget) considered it from December 2002 to February 2003 when the
President presented it to Congress. Congress will be considering it
from February 2003 to probably October or November of 2003 -- and, as
in the past, making 10-20 percent changes in what he proposed. DOD
will then try to live with what's left during the period October 2003
to September 2004. That means that at any given time during the fiscal
year of that budget, it will be between from 14 months to 30 months
old while we are trying to implement what Congress gives us. And all
this in a world that is changing monthly before our eyes.
-- The Department of Defense spends an average of $42 million an hour
-- yet we are not allowed to move $15 million from one account to
another without getting permission from 4-6 different Congressional
Committees, a process that can take several months to complete.
-- Today, we estimate we have some 320,000 uniformed people doing
non-military jobs, yet we are calling up reserves to fight the global
war on terror.
-- We must prepare and submit 26,000 pages of justification and over
800 required reports to Congress each year -- many of marginal value
and most probably never read -- consuming hundreds of thousands of man
hours.
-- Despite 128 acquisition reform studies, we have a system in the
Defense Department that since 1975 has doubled the time it takes to
produce a new weapons system -- in an era when technology moves so
fast that new technologies often become obsolete in months and years,
not decades.
-- Since September 11th, our force protection costs have gone up by
some $5 billion annually. But because we are required to keep some 20
percent plus more facilities capacity than are needed to support the
force, we are effectively wasting something like $1 billion every year
on force protection alone for bases and facilities we do not need. We
need to follow through with the base closure process that Congress
authorized last year without changes.
-- We have to contend with growing micromanagement of the defense
budget, making it increasingly difficult to balance risks. Consider
these facts:
-- The last time I was Secretary of Defense, the 1977 defense
authorization bill was 16-pages long -- in the year 2001 it had grown
to 534 pages.
-- In 1977, Congress made a total of 46 changes to Army and Defense
Agency research, development, testing and evaluation (RDT&E) programs;
by 2001 that number had grown to 450 individual changes. For every
change Congress makes in a program, there is a cost elsewhere in the
budget -- every plus -- up in one place means we must reduce funds for
something else, be it housing, or spare parts or transformation --
making it exceedingly difficult to balance risks.
-- We spend millions of taxpayer dollars training top-notch officers
and senior enlisted, giving them experience -- and then we shove them
out the door in their '40s and early '50s, when they are at the top of
their game -- and we will be paying 60 percent of their base pay and
providing them with comprehensive healthcare for the rest of their
lives. The loss in talent and experience to the Department and the
country is sizable.
-- We bounce officers around from assignment to assignment every 16,
18, 22 months, so many end up skipping across the tops of the waves so
fast they don't have time to learn from their own mistakes.
-- We rely on almost 1,800 antiquated legacy information systems to
run the Defense finance and accounting systems -- ensuring we cannot
produce timely and accurate management information.
-- We have the equivalent of an Army heavy division's worth of
auditors, inspectors and investigators.
-- We have thousands of people focused on developing and justifying
budgets, and a fraction of those focused on ensuring effective
implementation and desired outcomes.
The point is this: we are fighting the first wars of the 21st century
with a Defense Department that was fashioned to meet the challenges of
the mid-20th century. We have an industrial age organization, yet we
are living in an information age world, where new threats emerge
suddenly, often without warning, to surprise us. We cannot afford not
to change and rapidly, if we hope to live in that world.
Some of the fault for this lies with the Executive branch; some lies
with the Legislative branch and some is simply due to the fast pace of
events. But the American people do not care about blame -- for their
sake we need to get to work fixing the problems.
Last year, Congress and the administration did just that, when we
faced up to the fact that our government was not organized to deal
with the new threats to the American homeland. You enacted historic
legislation to create a new Department of Homeland Security and
rearrange our government to be better prepared for potential attacks
against our homes and schools and places of work.
We must now address the Department of Defense. We are already working
with a number of you to fashion legislation to bring the Defense
Department into the 21st century -- to transform how it moves money,
manages people, and buys weapons. We are looking at, among other
things, proposals to:
-- Establish a National Security Personnel System, that will give the
Department of Defense greater flexibility in how it handles and
manages its civilian personnel -- so we can attract and retain and
improve the performance of our 700,000 -- plus civilian work force.
Today it is managed outside the Department. The unintentional effect
has been that the Department uses military personnel and contractors
rather than civilians, since they can be more easily managed.
-- A one-time reorganization of the Department, with "fast track"
approval procedures.
-- Move a number of the non-military functions that have been thrust
on DOD over the years to other Departments that can provide similar or
better services, so DOD can focus on the tasks where it must excel:
defending our country in a dangerous new century.
-- Transfer some 1,800 personnel who conduct background investigations
to the Office of Personnel Management. Since the President has no
authority to transfer functions across the Executive Branch, we will
urge that he be given that authority.
-- Establish more flexible rules for the flow of money through the
Department, giving us the ability to move larger sums between programs
and priorities, so we can respond quickly to urgent needs.
-- Streamline acquisition rules and procedures, to give the Department
greater speed and flexibility in the development and deployment of new
capabilities.
-- Establish a two-year budget cycle -- so that the hundreds who
invest time and energy to rebuild major programs every year, can be
freed up and not be required to do so on an annual basis.
-- Eliminate some of the onerous regulations that make it impossible
or unattractive for many small enterprises to do business with the
Department.
-- Expand authority for competitive outsourcing, so we can get
military personnel out of non-military tasks and back into the field.
There is no reason, for example, that the Defense Department should be
in the business of making eyeglasses, when the private sector makes
them better, faster and cheaper. But we are. That needs to change.
-- Clarify environmental statutes which restrict access to, and
sustainment of, training and test ranges essential for the readiness
of our troops and the effectiveness of our weapons systems in the
global war on terror.
-- Expand our flexibility to extend tour lengths for military leaders,
and fully credit them for joint duty assignments.
-- Establish more flexible military retirement rules, so that those
who want to serve longer have the option of doing so -- so we can
retain talent instead of automatically pushing it out the door.
-- Establish sunset procedures for the hundreds of required reports so
that we can discontinue those that have outlived their usefulness. We
simply must find better ways to exchange data between DOD and
Congress, so that you get the information you need to assess
performance and we do not have to employ armies of personnel and
consultants preparing information you no longer need.
Let there be no doubt, some of the obstacles we face today are
self-imposed. Where we have authority to fix those problems, we are
working hard to do so. For example, we are modernizing our financial
management structures, to replace some 1,800 information systems so we
can produce timely and accurate management information. We are
reducing staffing layers to increase speed and efficiency. We are
modernizing our acquisition structures to reduce the length of time it
takes to field new systems and drive innovation. We are working to
push joint operational concepts throughout the Department, so we train
and prepare for war the way we will fight it -- jointly. And we are
taking steps to better measure and track performance.
We are doing all these things, and more. But to get the kind of
agility and flexibility that are required in the 21st century security
environment, we must have legislative relief. We must work together --
Congress and the administration -- to transform not only the U.S.
Armed Forces, but the Defense Department that serves them and prepares
them for battle. The lives of the service men and women in the field
-- and of our friends and families here at home -- depend on our
ability to do so.
2004 Defense Budget
At the same time, we are taking steps to implement the changes agreed
upon in the defense review. Last year's budget -- the 2003 request --
was finalized just as that review process was nearing completion. It
included a top-line increase, and made important, and long-delayed
investments in readiness, people, maintenance, and replacement of
aging systems and facilities. And we were able to begin funding some
transforming initiatives as the new defense strategy came into focus.
But it is really this year's budget -- the 2004 request before you
today -- that is the first to fully reflect the new defense strategies
and policies.
We submit this budget to you at a time of war. Our experience in the
global war on terror has validated the strategic decisions that were
made.
When our nation was attacked, there was a great deal of pressure to
put off transformation -- people cautioned, you can't fight the global
war on terrorism and simultaneously transform this institution. The
opposite is the case. The global war on terror has made transforming
an even more urgent priority. Our experience on September 11th made
clear, our adversaries are transforming the ways in which they will
threaten our people. We cannot stand still.
The reality is that while the global war on terror is an impetus for
change, it also complicates our task. Balancing risk between near- and
long-term challenges is difficult even in peacetime. But today, we
must accomplish three difficult challenges at once:
(1) successfully fight the global war on terror;
(2) prepare for near-term threats by making long delayed investments
in readiness, people, and modernization; and
(3) prepare for the future, by transforming for the 21st century.
The 2004 budget request before you today is designed to help us do all
three.
Our defense review identified six goals that drive our transformation
efforts:
-- First, we must be able to defend the U.S. homeland and bases of
operation overseas;
-- Second, we must be able to project and sustain forces in distant
theaters;
-- Third, we must be able to deny enemies sanctuary;
-- Fourth, we must improve our space capabilities and maintain
unhindered access to space;
-- Fifth, we must harness our advantages in information technology to
link up different kinds of U.S. forces, so they can fight jointly; and
-- Sixth, we must be able to protect U.S. information networks from
attack -- and to disable the information networks of our adversaries.
The President's 2004 budget requests funds for investments that will
support each of these. For example:
-- For programs to help defend the U.S. homeland and bases of
operation overseas -- such as missile defense -- we are requesting
$7.9 billion in the 2004 budget, and $55 billion over the Future Years
Defense Program (FYDP).
-- For programs to project and sustain forces in distant theaters --
such as new unmanned underwater vehicle program and the Future Combat
Systems -- we are requesting $8 billion in 2004, and $96 billion over
the FYDP.
-- For programs to deny enemies sanctuary -- such as unmanned combat
aerial vehicles, and the conversion of SSBN to SSGN submarines -- we
are requesting $5.2 billion in 2004 and $49 billion over the FYDP.
-- For programs to enhance U.S. space capabilities -- such as Space
Control Systems -- we are requesting $300 million in 2004 and $5
billion over the FYDP.
-- For programs to harness our advantages in information technology --
such as laser satellite communications, Joint Tactical Radio, and the
Deployable Joint Command and Control System -- we are requesting $2.7
billion in 2004 and $28 billion over the FYDP.
-- For programs to protect U.S. information networks and attack those
of our adversaries -- such as the Air and Space Operations Center --
we are requesting $200 million in 2004 and $6 billion over the FYDP.
Over the next six years, we have proposed a 30 percent increase in
procurement funding and a 65 percent increase in funding for research,
development, testing and evaluation (RDT&E) above the 2002 baseline
budget -- a total investment of around $150 billion annually.
In addition to these increases, RDT&E spending will rise from 36
percent to 42 percent of the overall investment budget. This shift
reflects a decision to accelerate the development of needed next
generation systems, and by accepting some near-term risk.
Among the more important transformational investments we propose is
our request for funds to establish a new Joint National Training
Capability. In the 21st century, we will fight wars jointly. Yet our
forces still too often train and prepare for war as individual
services. That needs to change. To ensure that U.S. forces train like
they fight and fight like they train, we have budgeted $1.8 billion
over the next six years to fund range improvements and permit more of
both live and virtual joint training -- an annual investment of $300
million.
The total investment in transforming military capabilities in the 2004
request is $24.3 billion, and about $240 billion over the FYDP.
But even as we continue to transform for the future, we must also
recognize that new and unexpected dangers are waiting for us over the
horizon. To prepare for the threats we will face later in this decade,
the 2004 budget requests increased investments in a number of critical
areas: readiness, quality of life improvements for the men and women
in uniform, and increased investments to make certain existing
capabilities are properly maintained and replenished.
Over the next six years, the President has requested a 15 percent
increase for Military Personnel accounts, above the 2002 baseline
budget, and an increase in funding for family housing by 10 percent
over the same period. The 2004 budget includes $1 billion for targeted
military pay raises, ranging from 2 percent to 6.25 percent . Out of
pocket expenses for those living in private housing drop from 7.5
percent to 3.5 percent in 2004, and are on target for total
elimination by 2005.
Over the next six years, we have requested a 20 percent increase for
Operation and Maintenance accounts above the 2002 baseline budget. We
have added $40 billion for readiness of all the services and $6
billion for facilities sustainment over the same period. These
investments should stabilize funding for training, spares and OPTEMPO
(Operations Tempo), and put a stop to the past practice of raiding the
investment accounts to pay for the immediate operation and maintenance
needs, so we stop robbing the future to pay today's urgent bills.
This 2004 budget does not include funds for operations in the global
war on terror. Last year, we requested, but Congress did not provide,
the $10 billion we knew we would need for the first few months of the
global war on terror. Because of that, every month since October 2002
-- October, November, December in 2002 and January and now February in
2003 -- we have had to borrow from other programs to pay for the costs
of the war -- robbing Peter to pay Paul. And that does not include the
costs of preparations for a possible contingency in Iraq. This pattern
is fundamentally harmful to our ability to manage the Department. It
causes waste and harmful management practices which consume management
time that we cannot afford in a time of war and which are unfair to
the taxpayers.
In our 2004 request:
-- We increased the shipbuilding budget by $2.7 billion making good on
our hope last year that we could increase shipbuilding from five to
seven ships.
-- We increased the Special Operations budget by $1.5 billion, to pay
for equipment lost in the global war on terror and an additional 1,890
personnel.
-- We increased military and civilian pay by $3.7 billion.
-- We increased missile defense by $1.5 billion, including increased
funds for research and development of promising new technologies, and
to deploy a small number of interceptors beginning in 2004.
The President has asked Congress for a total of $379.9 billion for
fiscal year 2004 -- a $15.3 billion increase over last year's budget.
That is a large amount of the taxpayer's hard-earned money. To put it
in context, when I was in Congress in the 1960s, the United States had
the first $100 billion budget for the entire U.S. government.
Nonetheless, for 2004, the DOD budget will amount to roughly 3.4
percent of GDP (Gross Domestic Product) -- still historically low. In
the mid-1980s, for example, the U.S. was dedicating around 6 percent
of GDP to defense.
Nonetheless, it is a significant investment. But compared with the
costs in lives and treasure of another attack like the one we
experienced on September 11th -- or a nuclear, chemical or biological
attack that would be vastly worse -- less than 3 1/2 cents on the
dollar is a prudent investment in security and stability.
But even that increase, as large as it is, only gets us part of the
way. Our challenge is to do three difficult things at once:
-- Win the global war on terror;
-- Prepare for the threats we will face later this decade; and
-- Continue transforming for the threats we will face in 2010 and
beyond.
Any one of those challenges is difficult -- and expensive. Taking on
all three, as we must, required us to make tough choices between
competing demands. Which meant that, inevitably, some desirable
capabilities did not get funded.
So let me state it straight out:
-- Despite the significant increase in shipbuilding, we did not get
the shipbuilding rate up to the desired steady state of 10 ships per
year. Because of planned retirements of other ships, we will drop
below a 300-ship fleet during the course of the FYDP. The Navy is in
the process of transforming, and has two studies underway for
amphibious ships and for submarines -- we have increased shipbuilding
in 2004, but we do not want to lock ourselves into a shipbuilding
program now until we know precisely which ships we will want to build
in the out-years.
-- We have not been able to modernize our tactical air forces fast
enough to reduce the average age of our aircraft fleet.
-- We have had to delay completing replenishment of all inadequate
family housing by 2007 -- though we got close!
-- We have not fully resolved our so-called "high-demand/low density"
problems -- systems like JSTARS(Joint Surveillance Target Attack Radar
System), which, because they have been chronically under funded in the
past, will still be in short supply in this budget.
-- We opted not to modernize a number of legacy programs -- taking on
some near-term risks to fund transforming capabilities we will need in
this fast moving world.
-- We did not achieve the level of growth in the Science and
Technology (S&T) accounts we had hoped for. Our request is $10.2
billion, or 2.69 percent of the 2004 budget. That is below the goal of
3 percent .
-- We have delayed investments to completely fix the recapitalization
rate for DOD infrastructure. We are reviewing out worldwide base
structure, and starting the basic steps to prepare for the 2005 BRAC
(Base Realignment and Closure). We want to think carefully about how
best to match our base structure and force structure. We still intend
to get the rate down from 148 years to 67 years by 2008, and we expect
to accelerate facilities investments in 2006 after we have made the
needed decisions with respect to our base structure at home and
abroad.
That's the bad news. But there is the good news as well: in making
difficult choices between competing priorities, we made better choices
this year because we followed the new approach to balancing risks that
we developed in last year's defense review -- an approach that takes
into account not just the risks in operations and contingency plans,
but also the risks to people, modernization and the future-risks that,
in the past, had been crowded out by more immediate pressing demands.
The result is a more balanced approach and a more coherent program.
While we are requesting increased funds, the services have stepped up
to the plate and will be canceling, slowing or restructuring a number
of programs -- to invest the savings in transforming capabilities. For
example:
-- The Army came up with savings of some $22 billion over the six-year
FYDP, by terminating 24 systems, including Crusader, the Bradley A3
and Abrams upgrades and reducing or restructuring another 24 including
Medium Tactical Vehicles. The Army used these savings to help pay for
new transformational capabilities, such as the Future Combat Systems.
-- The Navy reallocated nearly $39 billion over the FYDP, by retiring
26 ships and 259 aircraft, and merging the Navy & Marine air forces.
They invested these savings in new ship designs and aircraft.
-- The Air Force shifted funds and changed its business practices to
account for nearly $21 billion over the FYDP. It will retire 114
fighter and 115 mobility/tanker aircraft. The savings will be invested
in readiness, people, modernization and new system starts and cutting
edge systems like unmanned aerial vehicles (UAVs) and unmanned combat
aerial vehicles (UCAVs).
In all, by retiring or restructuring less urgent programs, we have
achieved savings of some $80 billion over the FYDP -- money that will
be reinvested by the services in capabilities necessary for the 21st
century.
Finding those savings is important, both in terms of freeing up
resources for more urgent priorities, and because it is respectful of
the taxpayers' hard-earned money. We feel a deep obligation to not
waste the taxpayers' dollars. We need to show the taxpayers that we
are willing to stop doing things that we know we don't need to be
doing, and take that money and put it into investments we need.
Some critics may argue we cut too deeply. We did cancel a number of
programs that were troubled, to be sure, but also others that were not
troubled -- but which simply did not fit with our new defense
strategy. In a world of unlimited resources, they would have been nice
to have. But in a world where needs outstrip available funds, we
cannot do everything. And something has to give.
Still others argue from the opposite direction -- saying that we did
not cut deeply enough. They ask: what happened to your hit list? The
answer is: we never had a "hit list." What we had was a new defense
strategy, and we reviewed all the programs in the pipeline to see if
they fit into that defense strategy and the new security environment
we face.
Some were eliminated. In other cases, it made more sense to scale them
back or change them. For example, the Comanche helicopter program was
born in the 1980s, and the Army planned to buy around 1,200 of them.
But in the interim, the Army decided to change its structure. In the
way the Army plans to fight in the decades ahead, the role of the
helicopter changes -- it will be used more for reconnaissance and
light attack. And for that mission 1,200 helicopters weren't needed --
so we brought the number down to about 650.
In still other areas, we set up competition for future missions. For
example, in tactical aircraft, by 2010 the F-22 will be nearing the
end of its planned production run, the Joint Strike Fighter (JSF) will
be coming on line, a number of UCAVs will be ready, and hypersonic
systems could be within reach. As a result, future Presidents will
have rich menu of choices for strike operations we don't now have.
We are transforming the way we develop new systems. The old way was to
develop a picture of the perfect system, and then build the system to
meet that vision of perfection, however long it took or cost. The
result was that, as technology advanced, and with it dreams of what a
perfect system could do, capabilities were taking longer and longer to
develop and the cost of systems increased again and again -- Time is
money.
Our approach is to start with the basics, simpler items, and roll out
early models faster -- and then add capabilities to the basic system
as they become available. This is what the private sector does --
companies bring a new car or aircraft on line, for example, and then
update it over a period of years with new designs and technologies. We
intend to do the same.
Take, for example, our approach to ballistic missile defense. Instead
of taking a decade or more to develop someone's vision of a "perfect"
shield, we have instead decided to develop and put in place a
rudimentary system by 2004 -- one which should make us somewhat safer
than we are now -- and then build on that foundation with increasingly
effective capabilities as the technologies mature.
We intend to apply this "spiral development" approach to a number of
systems, restructured programs and new starts alike over the course of
the FYDP. The result should be that new capabilities will be available
faster, so we can better respond to fast moving adversaries and newly
emerging threats.
As a result of all these strategic investments and decisions, we can
now see the effects of transforming begin to unfold. Consider just
some of the changes that are taking place:
-- Today, the missile defense research, development and testing
program has been revitalized and we are on track for limited land/sea
deployment in 2004-5.
-- Today, the Space Based Radar, which will help provide
near-persistent 24/7/365 coverage of the globe, is scheduled to be
ready in 2012
-- In this budget, we believe SBIRS (Space Based Infrared System)-High
is properly funded.
-- Today, we are converting 4 Trident SSBN subs into conventional
SSGNs, capable of delivering special forces and cruise missiles to
denied areas.
-- Today, we are proposing to build the CVN-21 aircraft carrier in
2007, which will include many new capabilities that were previously
scheduled to be introduced only in 2011.
-- Today, instead of 1 UCAV program in development, the X-45, which
was designed for a limited mission: suppression of enemy air defense,
we have set up competition among a number of programs that will
produce UCAVs able to conduct a broad range of missions.
-- Today, we are revitalizing the B-1 fleet by reducing its size and
using savings to modernize remaining aircraft with precision weapons,
self-protection systems, and reliability upgrades -- and thanks to
these efforts, I am told the B-1 now has the highest mission capable
rates in the history of the program.
-- Today, in place of the Crusader, the Army is building a new family
of precision artillery -- including precisions munitions and
Non-Line-of-Sight Cannon for the Future Combat Systems.
-- Today, we have seen targeted pay-raises and other reforms help
retain mid-career officers and NCOs Non-Commissioned Officers), so
that fewer of them leave the service while still in their prime, so
the country can continue to benefit from their talent and experience.
These are positive changes that will ensure that future
administrations will have the capabilities they need to defend the
country, as well as a menu of choices which they can then select from
to shape the direction of the Department a decade from now, as the
21st century security environment continues to change and evolve.
CONCLUSION
Finally, I believe that the transparency of the process we have used
to develop this budget has been unprecedented. For several months now,
we have been providing detailed briefings to those interested in
defense here on Capitol Hill, so that Congress is not simply being
presented with the President's budget today, but has been kept in the
loop as decisions were being made. Our goal was to ensure that Members
and staff have had every opportunity to better understand the thinking
that lies behind these proposals. I am told that the extent of
consultation from the Defense Department to the Congress this year has
been unprecedented.
I hope you will take this as evidence of the fact that we are serious
about our commitment to transform not only our Armed Forces, but to
transform DOD's relationship with Congress as well. Whether each
member will agree with each of the individual decisions and
recommendations that have been made in this budget, the fact is that
it has been developed in an unprecedented spirit of openness and
cooperation.
We hope that this spirit of openness and cooperation can continue as
Congress deliberates this year both the President's budget and the
legislation we are now discussing with you and will be sending to
transform the way the Defense Department operates. We must work
together to bring DOD out of the industrial age, and help get it
arranged for the fast-paced security environment of the 21st century.
I close by saying that transformation is not an event -- it is a
process. There is no point at which the Defense Department will move
from being "untransformed" to "transformed." Our goal is to set in
motion a process of continuing transformation, and a culture that will
keep the United States several steps ahead of any potential
adversaries.
To do that we need not only resources, but equally, we need the
freedom to use them with speed and agility, so we can respond quickly
to the new threats we will face as this century unfolds.
Thank you Mr. Chairman.
(end text)
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