DEFENSE OFFICIAL'S REMARKS AT CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES

FROM: U.S. DEPARTMENT OF DEFENSE

Presenter: Deputy Secretary of Defense Ashton B. Carter
May 23, 2013
Remarks by Deputy Secretary Carter at the Center for Strategic and International Studies

DEPUTY SECRETARY OF DEFENSE ASHTON B. CARTER: Thanks, Ken, for that introduction, for the opportunity to be in this great organization and forum; for everything you do for the Department of Defense and have done over the years for national defense. Much appreciated.

To Dave Berteau, I know he's not here, but to him and his family, we wish you strength and send you our condolences.

This is really an initiative that is to the credit of Frank Kendall. It's his show and I'm just the warm-up act here. But I'll give you a little background on -- on this. First of all, I'm delighted to see all my colleagues from the acquisition community here -- good friends and very skilled people.

Let me take you back. It was two years ago at the Eisenhower Library that then-Secretary of Defense Gates spoke presciently, it turns out, about the days of ever-increasing defense budgets soon coming to an end as our elected leaders grappled with our fiscal circumstances. What he said at the time, famously, was "the gusher has been turned off and will stay off for a good period of time."

And in acknowledgement of that coming fiscal reality and in an effort to minimize the impact of it, Secretary Gates launched an initiative across the department to ensure that the department would not be forced to sacrifice, wherever possible, an ounce more force structure than was necessary.

Better Buying Power, which was -- now we have to call it Better Buying Power 1.0 -- which was introduced in September 2010 by me and my partner, Frank Kendall, was the acquisition system's contribution to this overall initiative. And it was directed at the approximately $400 billion a year that the department spends in the acquisition of goods and services.

Better Buying Power's goal was, as we said then, more capability for the warfighter and more value for the taxpayer by obtaining greater efficiency and productivity in defense spending -- what economists call productivity growth.

To achieve these objectives, we directed 23 principal actions in five major areas: first, to target affordability and cost growth in our programs; second, to incentivize productivity and innovation in industry through profit and partnership; third, to promote real competition wherever we could; fourth, to improve our tradecraft in the acquisition of services, as opposed to goods; and fifth, to reduce nonproductive processes and bureaucracy in the government, as well as in industry.

And I won't go over each of these areas, but it's worth noting that over the past two-and-a-half years, we've worked hard and with some considerable success in some major programs to implement these directives.

But at the same time, though, we acknowledged at the time we released Better Buying Power 1.0 that we wouldn't get everything right; that we weren't -- hadn't captured every good idea that was out there; that we knew that in some cases, the data sets upon which we were basing decisions were still incomplete; and we knew that we would need to adjust based on initial implementation experience.

We also knew that industry would continue to come to the table with good ideas and constructive criticism. And in in this regard, let me address a few industry concerns that I share and I think our leadership shares that we've learned up front. The first, I recognize that industry needs profits and margins to be successful. While incentivizing cost-consciousness will continue to be centrally important to our work, we need to do also to pay more attention and be attentive to best total value and program risk so that transactions are successful for both parties.

Second, I share industry's concern about an excessive oversight culture. I've long been concerned that the number of approachers was -- I'm sorry -- that the number of watchers was approaching the number of doers in the department. You have the doers in front of you here. And we may in fact be reaching that threshold, especially with respect to things like audits. And we're trying to work internally and work with industry to address these issues.

And third, we've listened to and are addressing industry concerns about contracting practices and so forth, where it's possible for us to do that.

More broadly, a notable feature of Better Buying Power 2.0, as Frank will explain in more -- more detail, is improving the professionalism of the total acquisition workforce, which encompasses program management, engineering, contracting and product support disciplines. We know that the quality of our people is an essential ingredient to our success as an acquisition enterprise.

As we continue to implement Better Buying Power, we look forward to working with our industry partners and our acquisition work force to do more and more each and every year to get more value for the taxpayer and the warfighter. In fact, that's what Better Buying Power 2.0 is all about, just like Better Buying Power 1.0. And I salute Frank, who was my partner then and is now the leader of this effort, and his team, which is here, for their excellent work.

Now, achieving Better Buying Power would, of course, be an important goal in any budget environment, but its importance has only grown given the strategic and budgetary challenges we now face. Since Better Buying Power was first unveiled, Congress passed the Budget Control Act, which required the department to cut $487 billion from our defense plans over 10 years.

A year-and-a-half ago, we did that, first by devising a new defense strategy to guide us as we turn a strategic corner from the post-9/11 era dominated by the wars in Iraq and Afghanistan, to an era defined by new challenges and new opportunities.

While the budget that we derived from our new strategy absorbed significant reductions in defense spending, it made important strategy-driven investments in the Asia-Pacific region, where so much of our future economic and political interests lie; in special operations forces; in future-focused domains such as cyber and space; in countering weapons of mass destruction; and in certain areas of our science and technology portfolio, including electronic warfare and command and control.

It's still true today, as it was then, that every dollar not wasted is a dollar that can be invested in these new capabilities.

At the same time as we have made reductions to our base budget spending plans, our overseas contingency operations funding, which is not included in the base budget and which is largely for Iraq and Afghanistan, is also decreasing. Taken together, these reductions in base and OCO compare in pace and magnitude to historical cycles in defense spending the nation has experienced in the past, either after Vietnam or after the Cold War.

However, as this audience well knows, due to the collateral damage of political gridlock here in Washington, we are now also operating under sequestration, which requires us to subtract an additional $37 billion from our budget for the remainder of fiscal year 2013. Sequester presumes that we take equal or proportionate share from each and every part of the budget, which is the worst managerial approach possible.

Sequester is not only regrettable in its own right, but it distracts from the true strategic and managerial tasks before us. Secretary Hagel and I and the entire leadership of the department are doing everything we possibly can under this deliberately restrictive law to mitigate its harmful effects on national security. But as the Joint Chiefs have emphasized repeatedly, the impacts on our readiness are real and in many cases irreversible.

Now, while the sequester for F.Y. '13 ends October 1st, there's no way to know for sure what's next here in Washington. Virtually no one believed that sequester -- sequestration would actually go into effect in the first place. Now, we in DOD can adjust and adapt to a wide range of contingencies, but this will be easiest if we have stability, time and flexibility.

The president has submitted a budget that meets these goals, as part of a balanced deficit reduction plan. For defense, it contains $150 billion more in 10-year cuts compared to last year's plan, in addition to the $487 billion reflected in the Department of Defense's fiscal year 2013 budget. Most of these cuts occur beyond 2018, which gives us time to plan and adjust.

While no agency wants to cut its budget, the president's plan is much more practical than the cuts that could occur under persistent sequestration -- cuts that could amount to $52 billion in F.Y.'14 alone and could cost $500 billion over 10 years.

We urgently need Congress to grant us stability, time and flexibility. The House budget resolution, the Senate budget resolution, and of course, the Budget Control Act actually have a wide range of future scenarios for our budget, not the stability we seek.

For this reason, in March, the secretary asked me -- Secretary Hagel asked me, working with Chairman Dempsey, to conduct a strategic choices and management review, to examine the choices that underlie our defense strategy, posture and investments, including all past assumptions and systems. The review will define the major choices and institutional challenges affecting the defense posture in the decade ahead that must be made to preserve and adapt our defense strategy and the department's management under a wide range of future circumstances that could result from a comprehensive deficit reduction deal, or the persistence of the cuts that began with this year's sequester.

Everything's on the table: roles and missions, war planning, business practices, force structure, personnel and compensation, acquisition and modernization investment, how we operate, how we measure and maintain readiness.

We plan to complete our work and tee up decision points and recommendations to Secretary Hagel and the present -- and the president in the coming weeks and months. The choices that are made will inform how we execute our F.Y. 2014 budget, our F.Y. 2015 budget submission, and will serve as the foundation for the Quadrennial Defense Review due to Congress next February.

And I hope that one of the principal benefits of the review for our acquisition programs and correspondingly for industry will be to bound the uncertainty that we currently face.

Uncertainty is anathema to good management. In our -- in -- for us, and also for our partners in industry, it discourages investment, it causes the hording of capital, prevents the national -- natural rationalization of our industrial base, and harms growth.

I should also mention that in conducting our review, we have been very mindful of how the choices we are considering will affect industry, which is the basis of the CSIS forum we speak to today.

As I've said many times before, the success of our Better Buying Power effort, and the Defense Enterprise, for that matter, is clearly dependent on having a healthy, robust, and vibrant industrial base as dependent upon that as it is getting best and superior value for the taxpayers' dollar and for the war fighter.

Let me close again by congratulating Frank, the entire acquisition team that has worked so hard for the taxpayer and for the war fighter, does it every day, and so hard on this important effort.

Frank, especially to you, my friend, my partner for a long time -- he's done a tremendous job of implementing Better Buying Power 1.0, and a fantastic job of moving beyond that to an improved version of Better Buying Power, which he'll outline today.

Frank and the rest of the team here, you've made a tremendous difference.

Thank you.

ASIA-PACIFIC REBALANCE

FROM: U.S. DEPARTMET OF DEFENSE
Carter Details Services' Roles in Asia-Pacific Rebalance
By Cheryl Pellerin
American Forces Press Service

WASHINGTON, April 9, 2013 - U.S. allies and partners in the Asia-Pacific are seeing more Army, Marine Corps and special operations forces as they "come home to the Pacific" from Afghanistan and as the Defense Department enhances its forward presence across the region, Deputy Defense Secretary Ash Carter said here yesterday.

In remarks at the Center for Strategic and International Studies, the deputy secretary said the Defense Department is focused on delivering capacity, managing resources and following through on its investments in the region.

"We're watching every dollar, every ship and every aircraft to implement the rebalance successfully," Carter said. "We also recognize that as the world is changing quickly, our operational plans need to change, and we're changing them accordingly. We are therefore taking into account new capabilities and operational concepts, advanced capabilities of potential adversaries and global threat assessments."

Carter described the rebalance in terms of initial force structure decisions, presence and posture, investments, and innovations in operational plans and tactics.

"As we draw down from Afghanistan, the Navy will release naval surface combatants and eventually carriers," he said, "as well as naval intelligence, surveillance and reconnaissance, [or] ISR, and their associated processing capabilities."

EP-3 signals reconnaissance aircraft already have moved from U.S. Central Command's area of responsibility to that of U.S. Pacific Command, Carter said. The Navy also will release Fire Scout unmanned aerial vehicles from Afghanistan, and several electronic surveillance aircraft are available for redeployment.

Navy P-3 maritime patrol aircraft that have conducted surveillance missions in the Middle East for a decade will return to Pacom, he noted, and the Navy is adding a fourth forward-deployed fast-attack submarine to Guam in fiscal year 2014.

By 2020, 60 percent of naval assets will be assigned to the Asia-Pacific region -- "a substantial and historic shift," Carter said, which the Navy is accomplishing in three main ways:

-- The Navy will permanently base four destroyers in Rota, Spain, to provide ballistic missile defense to European allies. This mission had been performed by 10 destroyers that rotated from the United States to the Mediterranean Sea, and now six will be released to shift their deployments to the Asia-Pacific region.

-- Destroyers and amphibious ships that have conducted security cooperation and humanitarian assistance missions in Africa, South America and Europe will be replaced for the missions by new joint high-speed vessels and littoral combat ships under construction. The destroyers and amphibious ships will deploy to the Asia-Pacific region.

-- The Navy will generate more forward presence by fielding ships such as the joint high-speed vessel and littoral combat ships, along with new mobile landing platforms and float-forward staging bases that use rotating military or civilian crews.

The Navy also is fielding the broad-area maritime surveillance sensor called BAMS aboard the Global Hawk unmanned aerial vehicle to expand the range and capacity for ISR in the region, Carter said, and the EA-18G carrier-based next-generation jammer aircraft will boost electronic warfare capability.

The first of four Navy littoral combat ships will arrive in Singapore later this month, he added, providing a key capability to work bilaterally and multilaterally with partners in the region.

New investments will help the Navy sustain undersea dominance in the region and elsewhere, Carter said. These include a Virginia-class nuclear-powered submarine, including the submarine itself and a new payload module for cruise missiles, as well as the P-8 maritime surveillance aircraft and the anti-submarine MH-60 helicopter.

For its part, the Air Force will capitalize on its inherent speed, range and flexibility in the region and shift capacity from Afghanistan to the Asia-Pacific region, including ISR assets such as the MQ-9 Reaper, the U-2 reconnaissance aircraft and the Global Hawk, Carter said.

The Air Force also will allocate space, cyber, tactical aircraft and bomber forces from the United States to the Asia-Pacific region with little new investment, because 60 percent of its overseas-based forces are already stationed there, he added, including 60 percent of combat-coded F-22 fighter jets.

"Our ability to strengthen the ongoing continuous-bomber-presence missions in the region will also benefit from reduced presence in Afghanistan," the deputy secretary said. "As operations in Afghanistan end, for example, more B-1 [bombers] will become available, augmenting the B-52 continuous rotational presence in the Asia-Pacific region. The ability to provide forward strategic presence with round-trip missions by the stealthy B-2 will remain a valuable option."

Some reductions have been made in tactical air squadrons worldwide by removing older or single-purpose aircraft to make way for newer aircraft, the deputy secretary said, "but we have made no changes in our tactical air posture for the Asia-Pacific region."

"We have continued to invest in the fifth-generation joint strike fighter, a new stealth bomber, the KC-46 tanker replacement and a host of ISR platforms," he added.

The Army and Marine Corps also have important roles in the Asia-Pacific rebalance, Carter said.

The Army has about 91,000 soldiers and civilians assigned to the region and maintains a forward presence of eight active-component brigade combat teams, 12 batteries of Patriot missiles and many theater-enabling units, Carter said.

"The Army is ensuring that after a decade of using Pacom assets in the Centcom area, the Pacom commander regains command control of the other 60,000 soldiers assigned to the broader Asia-Pacific region," he said.

As part of the regionally aligned rotational concept, Army units assigned to Pacom will focus during their training cycle on specific Pacom mission areas, Carter said, including participating in bilateral and trilateral training exercises and building partnership capacity.

"I should add that during the months of [severe budget cuts represented by] sequestration and beyond, the Army is preferentially protecting the readiness and modernization of more than 19,000 soldiers we have in South Korea so they are able to decisively respond to any North Korean provocation," the deputy secretary said.

Carter said the Army also continues to invest in ballistic missile defense capabilities that are being deployed and improved.

"And at the DOD-wide level, we are protecting investments in future-focused capabilities that are so important to this region, such as cyber, certain science and technology investments, and space," he added.

Also in the region, roughly 18,000 Marines are forward deployed, Carter said, split among Air Station Iwakuni, where a fighter squadron is based; Okinawa, from which the 3rd Marine Expeditionary Force operates; and Darwin, Australia, which has a new rifle company. Another 5,000 Marines are on Oahu in Hawaii, he added.

The Marines have three infantry battalions on the ground in Okinawa and will put another there later this year, he said.

"These are rotational battalions that will move in and out of the Western Pacific every six months," the deputy secretary explained. "All of this will be accompanied by an EA-6 Prowler squadron in Iwakuni this fall, along with more heavy-lift and attack helicopters in Okinawa."

In Australia, he added, the first company of Marines rotated through Darwin last year, a key first step toward using their presence to engage in bilateral and multilateral exercises as partners in the region.

"With regard to our military installations, we are making critical investments in training ranges and infrastructure, including in Guam, which we're developing as a strategic hub, as well as in Marianas, Saipan and Tinian," Carter said.

"In addition to investing in technical capabilities," the deputy secretary added, "we are also investing in our people, in language and culture skills and regional and strategic affairs to ensure that we cultivate the intellectual capital that will be required to make good on our rebalance."