tv Today in Washington CSPAN April 21, 2011 6:00am-9:00am EDT
>> let me take the icrc one most directly and maybe dave can handle the other one. you raised great questions. once we are aware of and addressed, throughout the current war, we haven't even added the spice to the studio have created of an enemy that rejects the principles of geneva. it makes it incredible complex
and, therefore, makes the decisions we make in government very difficult because we were in literally unprecedented areas. i don't have a good answer, but these are legitimate questions that your nation should discuss. i will take have a personal prejudice on my part, they were comes our headquarters routinely to talk about things. it is not useful for other nations, kind of cross their arms, because we can't afford to simply admire these issues. we are involved in the conflict and have to make decisions, imperfect as they might be. rather than merely criticize us, not adhering to some abstraction, to recognize that some things have changed and it requires us to redress what constitutes appropriate behavior. >> just real quick because i
found your articulation of those questions fascinating. i would just throw out there that limitless battle space and global conflict is nothing new. it's not been brought on by remotely aircraft. it's gone on in terms of information. it's had a direct affect. it goes on with respect to operations in cyberspace. it goes on with respect to economic actions. so there's nothing new here. it's just perhaps another manifestation of globalization. with respect to the answers on what are we looking at, yeah, we went to some extensive approaches to how do we characterize the output measures, and quite frankly the edges that's how you do it. what is it that is of interest that you're flying these aircraft for, isn't for you,
weapons delivery capacity? is it for, you know, collection of signals? the output measures are what you want to try to your measure of effectiveness, whatever it might be, and we've got one. i'll be happy to talk to you about off-line. >> which is part of the problem. it's a very complex when you start looking at the panoply of different types of information that can be collected, so how do you do that in a nice concise way that decision-maker. but we've got to move beyond that. >> richard? >> well, i hope the output, this wonderful capability is not the delivery of chemical or biological weapons. uavs are the most efficient way of delivering such weapons, at least a factor of 10 more lethal than other alternatives. so as with space launch
vehicles, the united states on to provide services, share the benefits with other countries, that not provide the hardware. >> i apologize running over a little bit, but i would like to think our three panelists for some very thought-provoking and insightful ideas and proposals and some innovative proposals that were provided by richard. so with that i'd like to thank all three of them. [applause] [inaudible conversations] [inaudible conversations] [inaudible conversations]
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department can save money and become more efficient. mr. carter its acquisition which -- this is an hour. >> good morning. welcome to the heritage foundation and to our lewis lehrman auditorium. i'm pleased to welcome of course those who join us on our heritage.org website on each occasion. we would ask everyone in houston make that courtesy check that cell phones have been turned off as i continue with preliminary announcements. are internet viewers are of course welcome to send their comments to us via e-mail at anytime, simply addressing them to firstname.lastname@example.org. and we will post this program within 24 hours on a heritage website for everyone's future reference. hosting our discussion this morning is mackenzie eaglen. mackenzie is a research fellow for national security studies. she's part of our douglas and sarah allison center for foreign policy studies. prior to joining heritage she was the principal defense
adviser for senator susan collins of maine. she's also serve for two years at the pentagon as a presidential management fellows in the office of the secretary of defense. prior to her fellowship, she was a national security analyst at the association of the united states army's institute of land warfare. she's been a guest lecturer at several locations, participate in defense panels at several universities and received her masters degree in national security studies from georgetown university. please join me in welcoming my colleague, mackenzie eaglen. [applause] >> okay, good morning. thank you for being here today. it's always good to have a congressional recess now and then. get them out of town. it's my pleasure today to welcome dr. ashton carter to the heritage foundation. as the under-secretary of defense for acquisition, technology, and logistics at the department of defense. dr. carter has been working to
implement numerous initiatives to save money during a time of what we all know are falling budget. he has led a sense of acquisition reforms, industry, endorsing the cancellation of over 50 major weapons programs as part of the 2010 budget. prior to his current appointment undersecretary carter worked in a number of defense related positions of great prestige. he served as assistant secretary of defense for international security policy under president clinton and a member of the defense science and policy board. is also serve as chairman of harvard international and global affairs factly at the kennedy school of government. he's received many awards, among them the department of defense distinguished service medal and the defense intelligence and metal. dr. carter has taught in the past about the massive $700 billion portfolio that he helped oversee, of which 400 billion is contracted out on goods and services. we've asked him to come here today to go into more detail about half of the 400 come how
money is spent on services. as we look for a better use of the taxpayers money, we can't just look at programs because the procurement programs are only 100 billion out of that $700 billion defense budget. we have to look at the entire budget when we do that. we need to look at the service accounts. we need to look for better buying power. it is our pleasure to have him here today to discuss these issues outlined by secretary gates and the challenges and acquisitions and all of his work today. please join me in welcoming dr. carter. [applause] >> thank you, mackenzie, for that kind introduction. and let me begin by saluting you for the work that you have done and do our national security which is always very insightful and makes it a contribution. one of the problems with having a talented person and tradition
is they're giving away the punchline of what you're going to say when they have said it. and mackenzie did but i will be elaborate on exactly what she said. i want to also thank the heritage foundation as a whole for the opportunity to speak here today, and for being a regarded convener of the provocative minds, focus on solving a wide range of public policy problems. but especially on how to maintain a strong defense as the defense budget enters a new era. in particular in addition to mackenzie, thank doctor james gargano of baker spring, and others here. i commend your attention to their heritage policy briefs on the budget. so thank you for the opportunity to be here with you today. the main thing i want to do with you today is to share with you some of the things we are doing managerial and to provide the
nation, the military capability it needs for the defense budget they can afford. that's it in one sentence. and let me begin the story with fiscal year 11 budget, just remind you of where we have been in recent weeks. we avoided a government shutdown of just barely. and while that was a good thing, you may not have had the opportunity to appreciate how damaging was the impact, always the impact of a continuing resolution, on the managers in the department. i've called it not just inefficiency that anti-efficiency. each and every program manager in the department has had to upset, carefully calibrated plans, stop or slow activities only to restart them later. before the commencement of important new programs and so
forth. and result of this is not only delay, it's inefficiency. it's in an economical way to proceed in this herky-jerky fashion. i don't know how much this has cost us, billions, to operate in this way. it adds a dollop of cost overhead to everything we are doing, a hidden tax. secretary gates called it a crisis on our doorstep, and i think every program manager in the department experienced that in his or her program. so we are glad it is over, continued resolutions make no mistake, our managerial he disruptive economically. second, the final budget for fiscal year 11 came in $18 billion below the amount president obama requested for the department of defense. looking to fiscal year 12 now i were remind you that we have asked for an increase in the
base budget in fiscal year 12 let's get to the request the president obama made for fiscal year 11. which as i said we did not get all of. so for the base budget, if asked for an increase in fiscal year 12, the overall defense budget, as you know, will go down in 12 relative to 11 because the overseas contingency operations portion of the budget will go down in association with the drawdown in iraq. and so the overall defense budget, which was, it's about $671 billion -- i'm sorry, 690 and 11, including -- we are
asking for about 671 and that does not represent a decrease in the base budget, but it is a decrease in the overall defense budget because of the reduction in spending. so that's where we are. looking forward to fiscal year 13 and beyond, president obama's plant defense budgets are robust, strong and will stay so. we are after all involved into conflict and several smaller ones in the world's dangers. the president obama in the congress of our he made it clear that the national security part of the budget which includes the defense budget and which totals about 20%, about one-fifth of the total of the budget, that the national security part of the budget must be included in the overall deficit reduction equation over the next dozen years. so we cannot and secretary gates says, be exempt from efforts to
bring the federal budget under control. as we access out to accomplish the task, the president laid out, we will need to undertake a comprehensive review of the impact of budget reductions in fiscal year 13 and beyond. on force structure and capability, and ultimately own choices about nations and america's role in the world. but at this point, two things are already absolutely clear. those of us charged with managing the defense enterprise. first, we are certainly not going to have the ever increasing budget of the post-9/11 decade. whatever the budget levels are this will feel very different to a group of government and industry managers and congressional overseers who have grown accustomed to a circumstance in which they could always reach for more money when they encountered the managers are technical problem or a difficult choice. those days are gone.
the second thing that's absolutely clear is that the president, secretary of defense, and the taxpayer are going to expect us to make every dollar we do get count. in short, they want better value for the defense dollar. getting that better buying power for the warfighter and taxpayer is the subject of my remarks today. this is what the country should expect no matter what size its defense budget is. it was, in fact, in may last year well before the current budget debate got underway the secretary of defense gates in his speech at the eisenhower library begin to signal loud that we're entering a new era in defense. he launched something that he called the efficiency initiative at that time to ensure that the department was managing the budget in a manner that was, as he put it, respectful of the
taxpayer at a time when economic and fiscal distress. as one of the parts of his efficiency initiative, he casks me as the acquisition executive for the department to devise a plan for the 400 billion, out of the approximate 700 billion, defense budget, that's base plus, that is contracted out. in other words, $300 billion of $700 billion defense budget is spent on people, uniformed and civilian, their pay, benefits, and so forth. the other 400 billion is spent on contracting, goods and services that's how the math works. i have set aside the $300 billion spent on people, though that can't be set aside in larger discussion, compensation and health care and
so forth are going to be part of the equation. but let me focus on the $400 billion part, which led to better buying power and was introduced by secretary gates september 4 last year. it takes the form of guidance from me to our acquisition logistics workforce in the department on how we can get, as i put it, more without more. let me back up a little bit and give you the logic of this and some context for it. as you know, as mackenzie mentioned, over the last couple of years we've canceled many acquisition programs that were either not performing or whose time had passed, or were we had enough of the capability they represented. altogether, more than $300 billion worth. this was the presidential helicopter, for example, the
airborne laser which we turned into a testbed. the future combat systems, truncating from seven to three ships, the transformational satellite system, c-17, f-22 and so forth. the expeditionary fighting vehicle, and there will undoubtedly be more cancellations of that time, but we're getting to the point where most of the programs we now have underway or which are getting underway our military capabilities we do need and do you want. and we need to get them for the money the country can't afford to give us. moreover, while acquisition programs are visible and easy to identify and name, they are not what most of the money is. mcentee made this point already.
about $100 billion is procurement of weapons systems. acquisition, but remember that 70% of the costs of weapon system is not acquiring. it is sustaining it. it's not buying it. it is having it where most of the money is. said differently, most of the money in budget is spent on sustaining weapons systems that were procured in the past rather than per se, and we can't leave that much money out of the equation. about $75 billion, three quarters of it is spent on acquisition, spent on research and development. so we need to look at that and ask ourselves whether we can get better value for that part of
our spending. $200 billion is spent on logistics. 100 billion on maintenance, mentioned that earlier. maintenance of equipment. about $70 billion on supply, which ranges from fuel to spare parts and other things we buy. $20 billion on transportation lift, and so forth. and finally, and very importantly, and i have more to say about this later, and again, something that mackenzie mentioned, $200 billion on services, acquisition of services. everything from lawn mowing and dental services to repair of things to professional services. acquisition, $200 billion. so my point is that we need to take a comprehensive look at our spending, including but not
limited to acquisition programs. that's exactly what better buying power does. better buying power is summarized in a chart that i think they are prepared to project for you. you have probably seen it before. it has 23 points, which were devised with input from the dod acquisition and logistics workforce and also from a partners in industry, is appointed secretary gates and i introduced last september. win out implement each and every one of them. these points cover the ways that government can't improve its own performance and incentive us better performance in industry. i don't have time to go through all these to i'm just going to pick a few of them out and give you some illustrative examples so you will get some idea of how we're trying to apply the. the first category is targeting affordability and cost growth. we are going to be starting some
new programs that we need. we're not going to start anything that we can't finish. we going to start anything that we can't prove to ourselves will be affordable in the timeframe when it will be bought. let me give you an example. example i usually use at this point is a good one. it is the ohio class replacement missile submarine. this is a nuclear missile submarine that would be built roughly between 2020, and 23. it is now in the design phase. when that design was first made and brought to me, the projected unit cost for that design was about $7 billion per submarine. which, were we to pay that ends the period between 2020, and 2030, would displace most navy ship building. or said differently, that's not
happening. so we're not going to start something that is so obviously not going to happen. and what you do in that circumstance, you look at the design and what is driving cost in design, and you look at those aspects of the design, in this case to diameter flanks speed, degree of stealth and so forth, that you can change without compromising critical military capabilities in the interest of getting a design that you can afford it. and we've done that and driven the projected cost down and will do so further to a goal of about 27%, less than that initial design. we will be doing the same thing with a new bomber for the air force for long range strategic strike at the army's ground combat vehicle, presidential
helicopter, the new presidential helicopter, and so forth. you see that philosophy reflected in the new tanker, for which we completed the competition a short while ago. that tanker is now on contract for engineering and manufacturing development, it is a fixed price contract which means that week, the government, are insulated against cost growth in the tanker program, both in development and production. so we assure that we will have an affordable tanker. so for programs already underway, we can't start all over again even if we wish we could. and for those that are experiencing cost growth in midlife, which the joint strike fighter and global hawk and others, we have to manage some of the cost out of those
programs. we are doing that very vigorously in both of the cases i mentioned, j. s. f. and global hawk. and i'll say also that it's not too early to begin thinking about sustainment for the joint strike fighter. i mentioned already the cost of our programs is inhabited, not in acquiring the. we're at the point now where we have wrestled with the development issues in the technical baseline review. we are trying to manage down some of the cost structure associated with production, and it's not too early to begin to look at the state. the projected bills, they have also increased and we need to get a sustained bill for joint strike fighter like everything else we can actually pay. so affordability, the first item up there, is in everything we do. the second was in incentivizing productivity and innovation in
industry. i would just give an example, productivity to the economist, many of them here at the heritage foundation, is what you have when you go to best buy and you buy a computer, going to get a computer this year and compete on the show is better than last year's and cheaper, too. so why is it that i had to go to the hilt with the tank, plane or ship that's the same as last years and cost more? where is productivity in what we do? and we need to reward cost reduction and innovation. we are doing that in several ways. one of those is the contract type in which the contract provides incentive to the performer of the work to reduce overall cost by offering what's called shared line where is the cost goes down, the government
and the producer of the work that reduced the costs get to share in the savings. that's an inducement to both sides to control costs. we will be starting something we call a superior supplier incentive program this year, which will reward and recognize superior performers in the defense industry. making technology investments including through independent r&d to reward and incentivize innovation. this idea of incentives is very important, and it brings up another important point i should make. which is that what we're trying to reduce your, these ongoing activities, but that the be procurement of goods or services is cost. it's not about profit for those performing the work. that's not only wrong, it's sort of backwards. we use profit as an incentive to
cut costs. the next item on there is promoting real competition. real competition, the real in real competition comes from secretary gates himself was contrast real competition with what he calls washington competition, which is, he said the competition and which everybody wins. real competition is the kind that we had in tanker. it's the kind that we had in the combat ship. just to remind you of the history of lcs, lcs we had not real competition. we get bids last summer which when we look at them, suggested that the two offers of that figure that they were entitled to make their ships for us. the bids were too high. not affordable. so we set all right, timeout, go back new bid. this time only when he is is going to make those ships.
and when you come back in addition to having a new bid, 10 ships, also as part of your bid must be the technical data package which will allow someone else to make the same ship, according to the same design because we're going to compete, even if you win this round of competition we're going to take you down the road against other shipbuilders with the same design. will have to stage a competition. guess what happened, new bid came in and they were substantially lower. so low that we bought from both this time. the deal was so good we bought 10 from each side and got there by 20 ships which is well on our way to the 55 ship lcs flip -- fleet that is our objective. we can't have competition head-to-head but to require
program managers now starting out to have a competitive strategy. that is, an explanation of how they are using competitive energy to reduce cost in their program. you can't always have head-to-head competition. we can't afford to buy two of everything. we made that point with respect to a second engine, x. engine as a secretary says the joint strike fighter. but even in situations where you can't have head-to-head competition you can have a similar competition, competition itself, competition for profit. there's lots of other ways have competition. one analogy, think of marathon runners. most marathon runners are not racing against anyone else. they are racing against the clock, racing against themselves. they are trying to do their personal best and you can have that same situation. that's what a shared line uses, it raises for cost savings which will be rewarded in profit.
so there are other ways we can have competition precise head-to-head competition. we need to use that because that's probably our strongest managerial lever in the interest of better buying power. next on this chart is a big one, and mackenzie started here and it is a pretty our trade craft service acquisition. i could go on all day about this, just remind you it's $200 billion, and unignorable amount of money, expenditure. up until recently we didn't even have a standard taxonomy for talk about how we would be spending this portion of our budget to we didn't have senior managers in charge of overseeing this part of our state and as part of better buying power, we are taking care of both of those problems. there are many ingredients that go into the improving tradecraft
and services. they are frequency we compete market surveys and knowing how to specify requirements properly and so forth. there is, so to speak out a textbook of good tradecraft and services acquisition. we choose to follow a. if you look at how we acquire services around the department, everybody does it differently. everybody can be right. most of our services acquirers unlike a weapons systems acquirers, are amateurs. that is, that's not what they do for a living. they do something else and they buy the services to help them do that. so acquisition of services, the collateral duty for them. is not surprising they are not very good at it. i do not intend to make them into experts at it. i intend to help them get better at it. and i believe that mostly
because we haven't done that yet, that we will be able to realize some great productivity in the acquisition of services. the last item on the is reducing nonproductive process and bureaucracy. and those who know me know we are really ferocious on that subject come as secretary gates biggest such as the internal paper we are imposing on ourselves, its paperwork impose on us by the congress. the secretary has us now putting how much a report to congress costs on the cover of the report. when we send it over now. the real losses there are paperwork we impose on industry which has two costs. first is of course we impose paperwork cost in industry and then they bill us for it. end up paying for it. secondly,
japanese effort and so forth. in afghanistan this is going to be a very important spring and summer for us. last summer was the summer of the uplift where we brought in a larger force of, rotate the force that was there and rot in a much richer set of enablers. it was a logistics miracle last summer, so that we achieved what the president wanted us to achieve which is the acknowledgment of the uplift by august. that force has not been there for several months, and is by far and away the most capable force that we've had in afghanistan and the time, the years that we have been there. it is a daily challenge for those of us to make sure that the needs of those warfighters
are met very rapidly. that means understanding what they need to figure out what to do about it, getting funding which is a struggle. and i think those in congress who agreed recently to reprogramming some funds for us. we need that done. we need it done quickly. and then we need to field and sustain the equipment we put it out just give you some examples. people think of me as a ship, plane, and tank fire. out for a great clear i'm a services buyer also. but we are now a talk by her, too were buying lots of dogs for afghanistan. that's a whole different art for those of you who haven't gotten into that. we knew we would never have enough creditors, fixed wing isr, never ever enough to satisfy the requests of units
for overhead, persistent surveillance, and that's why we begin last year to introduce error that to afghanistan. now if you go to afghanistan, maybe some of you do from time to time, i started to, you will see our fobs, aaron stancil that allow the unit to look down the road and see whether the market is open in town, when anybody is putting an ied in the road, look around the perimeter, and short of total situational awareness of their own persistent isr has made huge different. initially we put some standard whether -- or traffic helicopter type balls on the. now we are putting wide area sensors on them, take large number of pixels fairly rapid frame rate. many more than you can look at what you can always replace the
tape. pm wraps which we started to build summer or a year ago and have now not only built, equipped in charles with the raiders and everything else, shipped to afghanistan which is if you like a glove, almost unfortunate conceivable place to be starting a war, shipped and fielded 7000, more than 7000 mrap all-terrain vehicles for the afghan fight. and you can go to the hospitals here in town the weekend, and i do and talk to soldiers who are alive because of that vehicle. so i just mention all that because that's a fast lane that is, you know, different from worrying about the fy 13 budget and all the debates we have here which about the out years. i have to live in that world, but job one for me is to live in the world the next few weeks and
months and years. and that requires a fast lane that we don't have and that we managed in an ad hoc fashion. that's something we need to fix. we need a fast lane on the hill so that we can get funding in here and execution and be the kind of agile military that is necessary to have at a time of war. i just wanted to close with that reminder that's where my mind is or where my heart is every day when i wake up, even as we struggle with these other challenges. so with that i'm prepared to take some questions but i thank you for your attention and once again i think mackenzie for her hospitality. [applause] >> we will bring you a microphone. let us know your name and affiliation. >> tony with bloomberg news. quick question.
congress approved reprogrammed for afghanistan about a month and half to $600 million. when will those systems go on contract? >> many of them are on contract already. we were primed and ready to go. this is an example of the rapid acquisition -- by the way, and maybe a longer answer to question than you want, but it's a very important point. because we have to wait some weeks and months for reprograms in congress and you can't steal that time from the warfighter, we have to cash flow some of these activities so we started that even before we got to reprogramming. we are asking this year to have a fund to do that so that we can get started on fulfilling urgent warfighter needs before we have gone through the entire process of reprogrammed. at the end of the day, the congress gets the last word on the budget we will be fully
accountable for them for every dollar we spent. we're only asking for that time. i mean, on all these activities, every one of these contracting, every one of these, all day, it's wednesday, why did this take until wednesday? what do you mean it will be monday come a week before you get it? you can't allow that to happen because it's april now in afghanistan. every day something is sitting in some guys inbox, some contract audit hasn't been accomplished is a day stolen from the fight. and that is outrageous and unreasonable that we allow that to happen. >> the second place on the $400 billion deficit, the review you are looking at, you mentioned america's role for structure capability what is the implication for the modernization program? i think you hinted at it. undoubtedly there will be more cancellations. is that an accurate way to look at what you just said? >> that's only a piece of what i said. obviously, we will be
scrutinizing all of our programs and activities for those that are not needed, but one of the major points i was making, tony, is that while that is an important part of seeking economies, it is only a piece of the defense budget. so what i was trying to do is draw people's attention to the other six, seventh of the defense budget other than that which is tied up in programs that very easy to pick programs because they all have a name and they are discreet so they are easy to identify, easy to write about. it's not where the money is. >> thank you. >> mori, jewish institute for national security affairs. you spoke about the erosion of taxpayer confidence. recently we are seeing some erosion of confidence among those of us who support defense budget because of our lack of success in libya.
could you comment on that? people are saying $700 billion defense budget and we can't take down a dictator like moammar gadhafi. are you getting any blowback on that? >> well, i think a couple of things to say about that. the performance of our forces, given the task that they have been assigned, and the role that they play relative to the nato alliance, has been entirely what we expected. and we have not had any difficulty, logistical or otherwise, in a publishing that part of our role. so i think our forces are performing very well. >> john with congressional quickly. back to the $400 billion. are you driving some sort of guidance to tell the services and defense agencies how they can begin to make suggestions along those lines like you did
in the last go around we ask each of the services to come up with some suggested cats? and to what extent are you going to let them keep savings, and why do you have to let him keep any of it? >> well, the secretary has indicated, and the president has indicated it will will be undertaking a comprehensive review going for that has not begun yet. but will begin in the department and will cover all of those dimensions. for that part which is associate with deficiencies, what the secretary indicated this year, which we were successful in doing, in reallocating with in each of the services, essentially funding from lower value added activity to higher value added activity, so the objective there was not just,
was not in the first instance to reduce the budget, although we were able to give back as you know 178 billion, to the treasury. but the principle purpose was to reinvest $100 billion of identified savings back into capability. and the services that found that money within their own budgets were allowed to reallocate it within their own budget, and that rewarded them for finding it. and that's also where we want the money to india. we want to reinvest savings in military capability. that's what you want. that's what a more efficient defense budget is all about. >> when and how are you going to start this review? surely you have an idea of how it's going to unfold. >> secretary is decided that right now, and i'm sure he will make that clear and he has it figured out.
>> can you talk a little bit about the supply or incentive program? i do know if there is an acronym for yet, but elaborate more about what you're going to try to publish. i believe it's a pilot program but where would you apply it initially? >> good question. it does have an acronym. sf ip. severe supplier incentive program. two parts to incentive program. first of all, is how do you recognize as a performer, and second of all, what do you get. is like your frequent flyer card. how did your frequent flyer card and in what you get with difficult lifeguard. both of those are part of the design. model we're using is one that the navy was about to begin. and i decided to make departmentwide, and there is, we do keep track of, certain
database throughout the performance of our suppliers. and that will be initially the metric we use to identify superior performers there and then what they get will be post-award, this figure in source selection. it will figure in things like performance payments and other things that are real incentives and real rewards. in addition to the simple nonmaterial recognition that goes with having done a good job and being recognized as a good job and by implication, those are not on the list, not doing well, we are asking. >> have you been given any indication of how much of data i'll start again. had he been given any indication of how much of the $400 billion
that president obama wants to take out of national security related spending by 2023 fiscal year is taken by the defense budget, strippers big? >> the only thing the president made clear was that he was speaking of the national security part of the budget, which is predominantly but not exclusively the defense budget. so obviously all parts are included. >> but you haven't been given a target within that? >> no. we just me but everything is on the table, the entirety of the national security portion of the budget. >> and the other thing is, when you said that there will undoubtedly be more cancellations of the type that you were referring to when you mentioned, do you mean starting as soon as 2013? >> yes, for sure, as we prepare
the fiscal year 2013 budget. i'm going to give you the same, go back year, make the same point i made with tony, which is, you know got it easy for you all to keep track of programs and that's an important thing to do. and we do, too, and that is one of the places where we seek a better buying power. i just will say it one more time, which is, that is a very important portion of the budget. but it's only a portion of the budget. if you're managing the defense budget you have to look at the whole thing. if you expect us to look at every dollar in the defense budget and ask whether it is being well spent, not just the dollars that are being spent on acquisition programs. >> thank you. i wanted to touch on something you mentioned earlier about the acquisition workforce going forward and has secretary gates has exempted it from the general freeze on hiring.
how much of that, how much making a process that are more efficient is adding people and just restoring capacity? and how much will be restructuring and even changing the cultures of the way the services by things? can you just hire your way to a better process? >> no, it's not principally about numbers. it's principally about the skill sets. and as i said these are not overseers. these are the executors of work, and it requires excellence on their part to have excellent outcomes. they are the managers of our programs of these good people. in certain skill sets, we just became very, very short, and that's where quantity matters. but over all the focus has got to be on quality and that they're doing the right thing, which is what's on, projected on
the screen here it as far as quality is concerned, we are lucky in that we have in the new hires we have made been fortunate in getting lots of very good people. and for chili part of that is the state of the economy, but it's a labor market that is a good one from our point of view. and the other thing is that when you're recruiting people for these jobs, you know, the mission is what really gets people. they are being part of something that is bigger than themselves. and makes all the difference. >> i was director on the joint staff from the second reagan administration. i run the community learning and information network which deals a lot with national guard. i've been wondering how you feel
about all of iraq going on today because they're moving around a lot of pieces of the network organization, moving forward monuments, and moving this over, and this is like changing the wings on an airplane in flight. how does it appear to you from -- >> it appears awfully tough. i realize that we are in pursuit of the promised land of a better footprint. but boy, it is tough on people. my missile defense agency is moving to huntsville. my defense contract management agency is moving from one place in virginia to another place in virginia. so you're asking people who are part of, get back to the previous question to part of the solution here and who need to either relocate or you're going to have to find somebody else. to do that job. aberdeen is a beehive of new
construction, a lot of stuff moving and so forth. i think it is true that a third of the department of the army is changing locations within a two-year period eric so it is really a very substantial, difficult migration. >> mr. secretary, thanks for your comments. you mention in the opening about the containing resolution being an anti-efficiency. we are seeing in the market place more and more companies as programs are being hung up, stopped and restarted based on the inability to gain timely audits and reviews by dcaa. could you comment on that and the efficiencies that are coming from? >> well, odd at times are one of the things that i need to address and are addressing. the new director of the defense contract audit agency, pat fitzgerald, very attentive to
those issues. and they affect not only, so to become ordinary programs, programs are of record, frank, but i want to see in particular the rapid acquisition where time means so much, and so we understand -- i hasten to say the defense contract audit agency does not report to me because they don't let the auditors report to higher civil thing. that said, i do have an interest in the improvement of their performance. as importantly does the comptroller to whom they do report them is very aware of. part of that is more auditors, but that's not really the key. they key to improving our performance is to not serially
process every single audit entry debate and a small and the urgent and the non-urgent all as the same thing. as the taxpayers money so people want to be very careful, and we do, too, about making sure that audits are done properly. at the same time, when you process everything as though it is equally important, you can't keep up, which means that something is falling off the table without you really having any control over how important it is. so we have work to do to improve that. and we know that we do. >> mr. secretary, you mentioned the services, get to keep the savings, that they found. paranoia being rampant in dod, the services are this new round of efficiencies will take that
away. do you guarantee them that they'll get to keep those in reprogrammed that it is because i think in the large, we were talking about efficiencies, and the large, those who find efficiencies in the activities that will have an opportunity to get more capability as a result of. you know, it's going to be, if it is pure efficiency it's going to be spent somewhere on capability, and it's natural that it will be in the immediate environment of for the savings are found. ..
the commercial industry finds a lot of your communications and also possibly provide center packages posting cables. a you going to look at the use of commercial? >> absolutely yes. on a couple points. he spoke of hosted payloads as an opportunity for those who don't know what that is, there is a commercial satellite operator who is planning on putting up some satellites anyway and is offering real-estate on satellites for some of our payload's which obviates the need for us to have our own space craft. that is an opportunity for efficiency and to look at more generally on the space program's work we are paying too much.
you will see us doing a lot with the management of space programs coming up because there is too much cost structure to our space programs. you will see that on a each age f, satellites looking aggressively at the cost structure in that program including but not limited to or even centrally the possibility of -- likewise for the launch systems. e lcs performing well but costing too much. these are the situations of what started with. you can look into the future and it is apparent that costs projected these are not affordable.
>> very last word? >> i am still not clear on this. maybe i am slower than everybody else. definitely a possibility. i will ask as simply as i can. does dod get to keep any of its portion of the $400 billion? >> savings over the next ten to 12 years the president spoke of the other week are intended to be deficit reduction savings. that is what he was talking about. that is what the subject of a strategic review is. some of those can be identified through efficiencies. some have to be identified in
another way. >> on that note i want to thank you for being a most gracious guest today and taking time to answer our questions and volunteering to speak to an audience about other pieces of the budget about which we care so much as we are grateful. thank you. [applause] >> thanks for joining us. there are refreshments available in the lobby. [inaudible conversations] >> newly elected president discusses his nation's future
and ongoing recovery from the earthquake that struck a year ago. live coverage of president martelli in washington begins at 9:00 eastern on c-span2. >> tonight un c-span a look and the news industry. you will hear from a panel of journalists as they discuss the current state of news and commentary and what happens when they converge. >> most smart people i know are not listening to nancy pelosi for their world view or to john boehner. most smart people don't go home at night and talk about continuing resolutions to fund the united states government. maybe it is different in room. [talking over each other] >> we forget that. the people you know, you are probably conservative about some things. you want your taxes to be low but if a couple gay guys want to
get married what do you care? isn't that where most people are? why is it in the media we have to be red teamed tour. teen? >> watch this event at the new orleans literary festival tonight at 8:00 on c-span. >> tonight on c-span2 a discussion on education reform with reverend al sharpton and assistant to education secretary for civil rights rosalyn ollie. they will talk about academic disparity between children of different races and districts in the country as well as how they think student achievement can improve. >> we use to hear debate about affirmative action and people say why do we need a program because we have a program to exclude people. you have to have a program to counter the program you have. not like some osmosis that excluded people. it was intentional.
you must intentionally correct what was wrong. >> watch this event from the aspen institute at 8:00 eastern on c-span2. >> two thirds of the american people depended on the network news, bose three networks as their primary source of news and information about the president of the united states and were hostile to richard nixon. >> coincide pivotal moment in american history online at c-span video library. search, watch. the clip and share with every c-span program 1987 through today. is washington your way. >> federal communications commission julius genachowski answered questions yesterday about issues before the sec. the topics included the
at&t/t-mobile merger. this event is 50 minutes. >> we are going to start. thank you. we're thrilled to have as our special guest at the economic hub of washington julius genachowski who is chairman of the fcc. julius genachowski has had distinguished career in government and business. in the government world he has served as a law clerk in the judiciary branch for a number of prominent justices. after law school and also justice brennan and justice souter. he worked from capitol hill for chuck schumer and worked on the iran-contra investigation as well. in the business sector he has been involved with a senior business executives that i ac interactive and was there for nine years starting as general counsel and became head of business operations. he was a venture capital investor and had his own incubator fund operating out of
washington d.c. to nurture a number of small and young digital related companies. he is also somebody with a distinguished education background. he graduated magna cum laude from harvard law school. at harvard law school u.s. senior editor of the law review of the same time as president barack obama was president so he met president obama there. he became chairman in june of 2009 and was nominated by president obama in march of 2009 and confirmed in june of 2009 and since that time has done an outstanding job as chairman and i would like to ask him a number of questions relating to what he has done as chairman. i would like to ask a couple personal questions. you worked for a lot of smart people, some people with high iqs. you worked for chuck schumer and barry diller and justice souter,
barack obama. >> they have three kids. >> they are all smart. >> i share some attribute finest overtime. relentless curiosity, a real energy for interactive exchanges you are dealing with and ideas and enters come out of this. and willingness wherever they come from. some attributes i tried to answer. >> when you first met barack obama you were a harvard law
school student. was getting easy way ups or was a good basketball player and did you think he was the president of the -- he liked this word. >> it is known by youtube he has a terrific jump shot. he can go to his left as well as his right. people ask me, he knew he was going to become president and, of course i do. i knew how incredibly talented. extraordinary leadership and commitment to legal making a
positive difference for the country and i didn't know if he would do that in government service or the private sector. he would make a real contribution. >> when he was elected president he considered you the chairman of the sec and you excepted. why did you want to be chairman of the fcc? you were chief counsel under a previous chairman but why did you want to be chairman? >> i really enjoyed what i was doing. i had a terrific stint in government awhile ago. i like my life lot. it was one of those single island as a kid that you get the question you are not allowed to say no to and public service is important and it is important people from business background from lots of disciplines come to government. the fcc is an exciting place
because it is about our future. communications technology that the fcc is in gauge with her such a vital platform to our economic growth in the twenty-first century. our global competitiveness, job creation, productivity. it is as exciting a place to be. >> the fcc has five commissioners. only three can be from one party. typically three democrats and three republicans and two on the other side that you are not allowed to have more than two members talking privately. is it hard to get decisions worked out in advance? or you do everything in public? >> it really is john noble. there have been proposals to change the staff works together
and that is fine. peoples think that everything we do at the fcc is on a party-line basis and nothing could be further from the truth. 95% of our decisions have four five commissioners supporting them. i don't think that should be surprising. heart is in communications technology to compete globally. >> one of the large issues. i don't know if it was unanimous. win the contest nbc universal deal took a year to resolve, did you have any doubt that that would be approved? was it not inevitable? when you got a large acquisition it was difficult to say no to the two parties involved?
>> i made it a policy not to talk in detail about merger review. i think it is important the agency -- an important responsibility when it comes to merger review together with the justice department or federal trade commission or government reviewing transactions as well. it is important that we not prejudge transactions, follow an honest and efficient process and meet our statutory duty. >> you don't want to give us a hint on at&t/t-mobile? let me ask you about mergers. china you can't comment specifically but so much of what you have done and others are trying to do is speed up the decision process and information flow more rapidly yet we are still making large decisions like this in a very slow process. take a year or more to get these decisions through the fcc. any way to speed up the process
so someone who wants to merge will know it less than a year-and-a-half? >> we have been doing that. historically many cases there was a gap that could be very long between the time there was a ruling on a transaction or the state government does it and the fcc. we brought that gap weighed down. my time in the private sector is the kind of thing that can legitimately drive a company crazy and you end up with inconsistent decisions from different agencies. we work very hard to make the process more efficient and we have. >> there are three democrats on the commission, two republicans. the fact that you're a democrat means the president can call you and say here's what we think on
something? or they don't do that in terms of telling you what to do? >> there are walls governing exchanges. >> let me ask about that neutrality. can you explain what net neutrality actually is? >> the term we use is open internet. it is a more descriptive term. fundamentally it is the right and ability of people individual speakers and businesses to send and receive lawful content on-line. whether you are a person with a point of view and want to put it on the internet for an audience to receive for an entrepreneur or small company or a large company that you can innovate, put something on the internet,
have the market decide whether it wins or loses, that is fundamentally what open internet is about. in a different context someone said to be everything else is commentary. >> let me give you some commentary. you have proposed rules the house of representatives didn't support in a resolution and people on the other side don't like. conservatives and liberals left and right don't like your proposed rules. is that a surprise for you come up with a good solution? >> we adopted rules. when i became chairman we inherited a real mess. there was uncertainty and confusion, war going on among companies in the broadband economy. preserving the fundamental free-market open character of the internet was very important and we need to bring the end to
this work, put in place a framework that makes sense and move forward and tackled a series of other issues. >> you proposed the rules? they are subject to litigation? >> we adopted a light touch framework a little more than a page in a land. they didn't get their bonus. [talking over each other] >> i can't read the smaller finding. it was widely supported by stakeholders throughout the eco system. from early stage entrepreneurs and investors and larger technology companies as well as larger and smaller -- it is generating investment and creating jobs making sure innovation is in the u.s..
i hope everyone uses the devices and have this wonderful circle of driving innovation and investment. >> host: you have a cellphone and blackberry and ipad? >> guest: i have tried over time to use all of the above. something i have been thinking about is it is important for the staff of the fcc to have hands-on exposure to the cutting edge technology that staff is working on. not everyone can have multiple devices. we are working setting up a technology experience under at the fcc. first a lending library for cutting edge devices so we can make sure the staff of the fcc has firsthand experience with
the kinds of devices -- >> when you use a cellphone you worry about cancer or you are not worried about it? you don't text -- >> guest: distracted driving is an incredibly serious issue. my hat is off to the transportation secretary for being a real leader on this but we do have to get a message and have smart policies around making sure people don't text and drive. i am sure i would feel this way even if i didn't have a 19-year-old. it is very serious. >> host: you are not worried about the health effects of using cellphone? >> guest: no. for years the fcc sets standards working with the fda who has done a lot of studies. who. the standards the fcc sets are based on the health studies
agencies do but i am not worried. >> guest: >> host: you have a proposal that when someone wants to call 911 they call them but you have a proposal that you can text them. what would that be better? >> a lot of people don't realize they can't text 911. we saw this at virginia tech in the terrible tragedy couple years ago when students tried to text 911. there was no one on the other side of that text. you can't right now as a general matter very small number of exceptions you can't send a photo from your smartphone to 911. if you are outside of burning building and send information that would be helpful to a firefighter or you see a robbery or something. it is crazy. this world has moved so quickly that this has gone from something where three years ago people would say you can't text
911, ok to world where it troubles more people and it should. so it is not a simple problem to solve like making sure our first responders tour firefighters or police officers have and noble broadband public safety net work which they don't. all these are ideas first identified by the 9/11 commission report. even in this economic climate and deficit climate they all cost money. .. and a deficit climate, they all cost money. but this is an area where we have to make the commitment, find the most efficient way possible to make sure that our first responders have the tools they need. >> you're doing something about this now in your proposal? >> we are doing a few things on 911. we're working with other agencies here. one of the obstacles to having what people call e-911 is having
a set of standards were it will be a significant efficiency driver, cost-producer. we are working to accelerate those standards. we're working on another thing that people do not realize that the location accuracy of a wired 911 call is close to 100%. the location accuracy of a wireless 911 is much lower. in some cases, it is really problematic. if you are in a skyscraper, we often we will not know what floor you're in. if you are in a rural area, they could not know where you are within a mile. it is important to incentivize innovative ideas for these things. there is a lot of work that we need to continue to work to get
our public safety infrastructure into the 21st century. >> what about other countries? other countries seem to have mobile devices that are more advanced than ours. they have a spectrum that is less of a problem than here. what are you try to do to make us more competitive to larger and emerging markets, china, brazil, and india. why are there technology's more advanced than ours? or maybe they're not. >> our spectrum agenda is a high priority for us for this reason. other steps that we can take to liberalize the rules in spectrum used to get more from mobile broadband, working on getting secondary markets in spectrum going -- there is a whole series of ideas. the reason it is so important is that, around the world, it is not our little secret of that mobil is the future. countries around the world
understand that there is economic growth. there is job creation. there is innovation in the future of mobile. many see it as possibilities to technology.'ve talke my counterpart in other countries, i see real focus on the mobile future. it is one of the reasons we spend so much time on the incentive optiauctions. the cost of delay is very high, not only in consumer frustration and a break in investment in the united states, but because we're playing with fire. we're playing with the fire that we could see the great american- based innovation companies that right now are doing so much in the space decided that the opportunities for developing and rolling out new products is somewhere else. a company called applied
materials, a very important american technology company in silicon valley, decided a little less than a year ago to move its chief technology officer and its cto operations from silicon valley to beijing. my question is how many times does that have to happen before we declare a real crisis? to me, the single biggest risk on something like that is not taking advantage of the incredible momentum we have on wireless. we have this wonderful market- based solution called incentive optioauction. >> people are buying things on their mobile device now. do you think there should be a tax on internet purchases? >> we do not deal with internet tax issues at the fcc. >> your personal view.
[laughter] >> anything that discourages innovation and private investment in this space, we have to really look at it before we make any decisions. >> if there are payment methods when you buy, is that something that the sec will regulate -- that the fcc will regulate? >> we do not have any open proceedings on that. the premise of your question is one that i agree with. this area payments is a tremendous economic innovation opportunity. it fits into a bucket where there are a number of agencies that are like people filling the elephant. in government, we have an obligation to coordinate and make sure that, to the extent that rules and policies are
required, that they are smart and be efficient and coordinated and helping global payment takeoff. this is another example where, if we do not get it right, we will see the leading innovators in mobile payments developed in other countries. >> right now, you have a lot of proceedings in front of the fcc. you want to be as technologically efficient as possible. why do you not say no more paper filings and that everything has to be electronic? >> it is a question we wrestled with last year. we put together a strategic plan for the country on broadband, put it on line, made it interactive, and ran the process online for input. we did print books -- a couple of hundred pages. how many was it? 267 pages.
people ask, it is a broad band plan. why are you printing it? the answer is that the percentage of americans that are on line is much lower than in needs to be. colic the broadband adoption rate -- 67%. one-third of americans are not online. 67% compares to 90% in singapore and south korea. we need to pursue a set of strategies to increase broadband adoption in the u.s., but the thing that we realized, as your question pointed out, once we move to full e-government, it will save a tremendous amount of money for taxpayers and ron government more efficiently. the problem is, until we do that, the government has to run two infrastructures. until the government serves all of its citizens, and until we
get all citizens online, we have to do paper and electronic. it is crazy. it is why taking real measures has a double payoff. >> 20% to not have access to broadband at all. >> a little less. >> what percentage? >> it is under 10%. 25 million people live in areas there have no broadband infrastructure at all. >> what are you doing about that? >> all of these topics that under the heading universal service. we did a good job in the 20th- century doing universal service for telephone service. the problem is, our universal service programs are still telephone programs. they have also become inefficient, wasteful, and they're not allocating funds very wisely. this is a core recommendation of the broadband plan, as long -- along with incentive options and
other spectrum issues. we need to transform this $9 billion a year fund for universal service into one that is efficiently focused on the next generation of infrastructure that is using market-based mechanisms to disburse funds. it is efficient, fiscally responsible, accountable, and i think we will get there. predecessors have tried, and i understand why it is so hard. it is complicating and challenging. schematically, why these issues are so challenging and what i think we are wrestling with a high level -- many of the people here probably read a book called "innovators dilemma." it analyzes why market-leading companies -- reading companies can sometimes succeed and
sometimes fail when faced with destructive technologies and competitors. it is a good framework for thinking about where we are when it comes to technology. we are the market leaders. we do the great job. like some of the market leading companies of the trouble adjusting, the reason they have trouble adjusting is they are not operating on a blank slate. they have to make transfers -- transitions from legacy his infrastructure, older policies and processes, and this is what we have to do in number of areas. spectrum, universal service -- we have to recognize that we have real issues. it is actually coming out of a series of positives for the u.s., whether it is but broadcasting -- so many successes have made this harder. that is a good thing, but also a challenge.
the same thing with universal service. if we do not tackle these in the way that the great companies tackle their disruptive competitors and technologies, the risk we face as a country is we will end up what the companies that do not make the turn and compete in a new era. >> why should the government not do the same? the fcc was set up in 1934, five members. why not have one administrator, and met him or her decide the policies without going through votes. >> i will tell you one thing that is interesting historically. it is an accident, but it gives us a competitive advantage if we get our job right. in most competitive countries there are multiple agencies that do with the fcc does. there is an agency that does wired communications. if there's one that does wireless, another for international and satellite. thanks to the accident of
history and herbert hoover, we have had from the beginning what are around the world they call a converged agency. for many years you would wonder why these things were put together, but now it makes a lot of sense. all of these different means of communication are basically different mechanisms for transmitting digital bits. it should give the u.s. advantage am looking holistic lead at policies that relate to each other. there are global competitors that want to move to a converged agency. one of the things we focus on is taking advantage of this competitive advantage, making sure we are adopting rules and policies that make sense across multiple platforms. >> you think this is more efficient than other countries? >> i think a converged agency makes sense absolutely. >> traditionally, i would guess fcc commissioners would say it is competitive, not competitive, the pro-technology,
or not, but do you weigh in what the impact is another country's from the globe? >> absolutely. we cannot disentangle what happens with our economy from what happens in the global economy. 25 years ago, when congress authorized the fcc to conduct auctions, at that point there was a delay. there should not have been, but there was pure the cost of the delay was much lower than now. back then, countries for not waking up every day and saying we want to take the lead in innovation and have identified spectrum mobile as an opportunity. today, the fact is that all of the major economies around the world, as i said before, they understand the. which can now look at our own economy, what we need to do to make sure the u.s. takes
advantage without paying attention to global competitors. >> since we started selling spectrum, the u.s. government has brought in $50 billion. how much more money is there to be broad index is in another 50 billion, or is that too high? >> -- broadband -- brought in yet another $50 billion, or is that too high? >> it is something we should move forward on and do as a bipartisan, strategic issue. >> do you think you have to be a lawyer to be the chairman of the fcc? >> no. it gets at another thing that i try to focus on in running the agency. there are very few issues that we work on where you would want only lawyers to work on them. i am a lawyer. i was trained as a lawyer.
i've nothing against lawyers. the best work that is done by the agency his work that is multi-disciplinary -- where we get in a room and talk about an issue. it will sound like a joke, but i do not mean it this way. a lawyer, an economist, an engineer, people with real world investing experience, or people with experience in education or health care -- this is the most fun i have. we get people from multiple backgrounds together and have been tense, vibrant discussions about what the right thing is for the country. this is where i learned from the people you mentioned at the beginning -- encouraging those kinds of conversations and the intense back-and-forth, but also respect for multiple disciplines. it is important that the fcc has all of them represented. >> are you influence by grass- roots letters? are you in france by members of congress when they sent letters?
-- influence by members of congress when they send letters? how you treat the letters? the members of congress lobby you? >> we spend a lot time talking to members of congress. it is very important on issues like broadband, which is sold important to our economy. public safety, spectrum -- the fcc has a real obligation to be a resource to congress, the administration, and it is incredibly important. we run open processes. we are required. we pay all lot of attention to the input we get from all stakeholders. when i tell the scene is, again, this is where i started. great ideas can come from anywhere. bad ideas can come from anywhere. let's make sure we know what we are trying to accomplish, what the shortest distance is to get there, in the sensitive about the different perspectives that
we have coming in. >> the white house does not call up and say what their position is on net neutrality and other things? >> we are an independent agency. we do what we believe is the right thing for the country, and almost everybody you could mention, we have agreed and this with them. >> there was a story where a former chairman of the fcc was doing something under the reagan administration that president reagan did not like, or some of his advisers did not, so they brought in all of the movie studio heads who did not like the proposed regulation, and all were in the oval office. the president says if i could've gotten a meeting with you if -- when i was an actor, i would not have to go into the political world against the fcc chairman was not in that meeting. -- world. i guess the fcc chairman was not
in that meeting. you cannot have that kind of situation now? now the you know that it is -- what it is like to be the chairman of the fcc, knowing very thing you know, would to a taken the job again? [laughter] >> yes. the issues that we have talked about, they're very, very important for the country. they're both interesting, exciting, and if we get the right, they will really matter to the economy and ordinary americans. they're things like digital text books that we did not talk about triplex digital text books -- the idea is that -- talk about. >> digital text books, is that going to happen or not? >> i think it will happen. anything we can do to accelerate it will be a good thing. it is not just about heading off shoulder problems for young people. it is that technology here can
be a real opportunity equalizer for students all over the country, and a force multiplier for teachers. when you think about the power of these devices to help on an individualized basis students wherever they are, learn geometry fester, science, math, all of these subjects -- i think the opportunities are immense. we should be the first country in the world to move from paper textbooks to digital text books, and i think we should lead the world in innovation. i think we of the chance to do it, but there are obstacles to overcome. >> there have been some rumors you would take another position in this administration. are you planning to stay as chairman of the fcc for the foreseeable future? >> i am very focused on what i'm doing every day. the agenda, the things i have described to you, i will keep
waking up every day working on that, and i enjoyed. >> we have some time for some questions from the audience. raise your hand. i think there should be a microphone. you can identify yourself if you are not afraid to do so. no lobbying bill. questions? there is one right here. >> thank you i am with -- thank you. i'm with bank of america, mr. chairman. as we all know, our computer and communications instructor nationally is under constant threat of cyber attacks. just about one year ago, the fcc issued a notice of inquiry about the possibility of developing a cyber security standards and certification for communications service providers. what'd you learn through the process, and what is the status? >> i am glad you mentioned that.
the security of our broadband and structure is vital for our economy, from large possesses to small. people need to be able to trust their information is secure and protected. debris will points in response -- 1 -- two point in response -- one is there are agencies that have some expertise and resolute -- relevance to the solution. it is important in this area, as was the other one, the government as a whole act in a smart, coordinated, efficient way. that is why a cyber security advisor was appointed in the white house. it was the right thing to do. the inter-agency task efforts to tackle this our on going, very important, and they're not easy. there are some steps that we could take. i'll give you one example.
there is an incredible opportunity in small businesses going on line, taking advantage of the opportunities the internet, wired-to-wireless allows to expand market, and lower-cost its. -- costs. broadband adoption around small businesses is not as high as it should be to fully take advantage of these opportunities, and we looked to why that is. there are number of different reasons, but part of it is concerned about the infrastructure. next month, we will launch an initiative together with other agencies and companies in the private sector to increase the level of education, knowledge, and awareness among small businesses of the basic steps that could be taken to protect themselves. there are a lot of things i suspect many people in this room take for granted.
did not click on a link in an e- mail from people that you do not know. is not common knowledge, but it should be. we will launch an initiative to focus on small business and security. as we continue to work on the note that you mentioned, and is a part of the process to make sure the country gets this record >> other questions? -- gets this right. >> other questions? identify yourself. >> mr. chairman, i am which j.p. morgan. with the low usage of internet technology in the united states relative to appear countries, how much is driven by the cost of the individual consumer? >> we figure in our work that there were several different contributing reasons. in some cases, they are independent, and in some cases they relate to each other.
affordability is a reason. for some people, it is the dominant reason. we also found that relevance was an issue. there are some people that do not appreciate the value of been online. if there are steps we could take to accelerate that. digital literacy is an issue. there are some people that do not have the skills to be online. there are steps we could take to address digital illiteracy. trust is the fourth step. we need to work on all of these. here is something that people -- well people, should know this. the cost of digital exclusion is much higher than it used to be, and it is getting higher. i will give you one example. think about jobs. it used to be if you were looking for a job, you would get the newspaper, a look at the
help wanted ads, and if you saw something, you would call up, and maybe schedule an appointment or an interview, where you would fax over an application or a rise in may. we know that is not our works anymore. overwhelmingly, the job postings are moving online. in fact, more than three- quarters of fortune 500 companies do all of their job postings on line. if you are not online today, you cannot even find the job. i also talked to a lot of people on the other side that say that we need to create a lot more jobs in this country, obviously, but there are also jobs that do exist that require basic digital scales, and some employers are having trouble finding people with basic digital skills to fill jobs that are available. in both respects, the cost of digital exclusion is much higher than it used to be. it is why it is such an imperative to bring up these numbers.
>> speaking of new technology, president obama recently said that he found that the telephone system in the white house was kind of antiquated and he was surprised compared to what he expected. have you been asked for any advice of how to improve the telephone system there? >> unfortunately, the fcc is not in that business spread across the board, i would say this -- >> are you happy with your phone service at the fcc? >> we've taken a number of steps over the last year to take -- to make better and more efficient use of communications technology. it is really important, not only to lower the cost of government, because we could lower the cost by using cloud computing smartly, and other new technologies. we could generate more efficiency. to come back to the adoption point, there is the double bottom line that by accelerating the move to e-government and
generating the use of new technologies across government, it will help increase our adoption rate because it is often the people that most interact with government that are the ones that are, the least. thinking creatively about bringing these things together, we can get the government to operate more efficiently and do it in a way that brings more people online. it is like incentive options, if i could -- auctions, if i could plug them again. we need to do some of these things, and we are doing a lot. there are terrific examples in the space where we could do things that have wins on multiple levels -- for our economy, education, raising revenue, and a boring costs. >> we have time for one more question -- lowering costs. >> we a time for one more
question. anyone else? i will ask the last question then my question is today, when somebody wants to influence the fcc, an average citizen, what is the best way? write a letter, send an e-mail, come to washington? how can an average citizen actually effect with the fcc does? >> for people that live outside of washington, online is the best way. we have made it very easy for people outside of washington, whether you are an ordinary citizen, a teacher, a small- business person, an engineer, an economist and a large company, someone at the university, and you did not have to hire a lawyer to present your facts, data, and ideas, but to do it directly online.