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tv   Politics and Public Policy Today  CSPAN  November 13, 2015 9:00am-7:01pm EST

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to the men and women who's worn the uniform or presently wear the uniform, thank you very much for your service. as i look out at this room and see all of you, i am filled with a sense of gratitude and appreciation for you and all the work that you're doing to come to the aid of our veterans. i know that many of you have implemented veterans treatment courts, and because you were told and you did it, not because you were told to, but because you saw that it was the right thing to do. you all helped this nation live up to its ideal of leaving no veteran behind. when there is a veterans treatment court within reach of every veteran in need, it will
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be because of you, the pioneers, and the inspired action you took to come to the aid of the veteran in crisis. thank you all for the work that you do day in and day out on behalf of those who have served. a few weeks ago i had the honor of meeting with robert mcdonald, the secretary of the va. secretary mcdonald is a man who has time and again answered the call of duty to his and our nation. he graduated from the united states military academy at west point in the top 2% of his class in 1975. an army veteran. mr. mcdonald served with the
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82nd airborne division, completed jungle, arctic, desert warfare training, earned the ranger tab, that expert infantry men badge. senior parachutist wing. upon leaving military service, captain mcdonald was awarded the meritorious service medal. but mr. mcdonald's expertise as a soldier is equal by his business acumen. he earned a degree from the university of utah in 1978 and has had a storied career in the private sector. before joining the va, chairman mcdonald was chairman, president and chief executive officer of
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procter & gamble, a company where, by every measurable metric, he was an astounding success. but throughout his career mr. mcdonald carried with him the values that he learned from his military service. and when his nation called once again upon him for service, he accepted without hesitation. secretary mcdonald's devotion to country is equal by his devotion to those who defend it. he was confirmed by the united states senate as the eighth secretary of veteran affairs on july 29th, 2014. in the year since, secretary mcdonald has set about restoring the nation's trust in the va establishing the va as the veteran centric institution in
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both that it should be and that it can be. he has established an extraordinary degree of transparency at va so he can bring all state quarters to the table to contribute to help to make the va better. he is putting the needs and expectations of veterans and beneficiaries first. rebranding the va as myva, my va, so that all veterans feel a sense of ownership and empowerment in a system that exists solely for them. and it is working. already this year va has increased veteran access to care and completed 7 million more appointments this year than that of last and doubled the capacity
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required to meet last year's demand. so what does the va look like today under secretary mcdonald? let's take a look. >> the va has agreed to create housing for thousands of southern california homeless veterans. with us to talk about the deal is the u.s. secretary of veterans affairs, robert mcdonald. you've said that you think it is possible to end homelessness for veterans in southern california by the end of the year. >> the big idea here, larry, is the first step to ending homelessness for the community to come together. >> all of you have committed yourselves to not just counting a number but finding each
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individual story. because while this is a city of so much, it is also a place that alongside the l.a. river, freeway off-ramps and underneath our freeways, here on in skid row and throughout the city, there are thousands too many people who are homeless. >> one of the things you learn in the army and you learn in the military service of this country is you never leave a buddy behind. whether the person's alive or they're dead, we never leave somebody behind. well, unfortunately, we've left some people behind. they're our homeless veterans. but i'm here to tell you that we at va are totally committed to helping the city of los angeles, helping the mayor, helping all of you achieve that goal of ending veterans homelessness by the end of this year. ♪
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>> when i met with the secretary, along with the delegation from justice for vets, the buffalo and rochester treatment courts, i was struck by his sincerity and his strong support for veterans treatment courts. i can report to all of you that we have a champion at the va who is committed to ensuring the partnership between veterans treatment court and the va remain strong. as we all know, mentors are the foundation of veterans treatment court success. it occurs to me that during our
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meeting with secretary mcdonald that he is also a mentor for all of our veterans. therefore, i think it is only right that we make him an official member of the justice for vets national volunteer veteran mentor court. what do you think? and you know, we're having our veteran mentor boot camp, and at the conclusion of the boot camp, each of the veteran volunteer mentor participant will receive and wear one of these shirts when they're inducted. when secretary mcdonald, before he leaves today, he will
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receive, also, his shirt. ladies and gentlemen, it is with great honor to welcome to the stage our leader of the united states department of veteran affairs. please, let us welcome secretary robert mcdonald. thank you very much. it is thrill for me to be here this morning with you. as the judge said, i am the biggest believer in veteran treatments courts that there could ever be. i can't think of any better way to keep veterans out of
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incarceration, stop veterans homelessness, and i'm just so thankful to all of you here today for the work that you do to help us care for veterans. one of the things that became very clear to me in los angeles as you may have seen in that film is that we in the va can't do this job by ourselves. we need the help of all layers of government, non-government organizations, businesses and others to be able to care in the right way for veterans. it's important to have collaboration and partnerships. i love this picture of judge russell and myself as we're shaking hands across the table at va, because that's the kind of partnerships that we need to have. that's the kind of collaboration that we need to have. [ applause ] nationally, we've got a monumental task. so it has to really be a community effort.
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we have to work community by community, city by city, state by state. locally it is a huge undertaking. we know that we can't succeed only from the federal government. we've got to make those collaborative connections. 2016 is fast approaching, and we in the va have made a number of commitments for the end of 2015. obviously our goal is to end veterans homelessness, and we have a huge role to play in doing that. but so do you. we're incredibly thankful for your partnership. there's an inextricable link between justice involvement and homelessness. as i looked at all the studies that i looked at when i came into this role, it was very clear that incarceration is like a one-way ticket to homelessness. so if we can work together to end incarceration, we have a great chance of ending
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homelessness. we need to give veterans an off-ramp from that inextricable link. two weeks ago president obama described the united states as a nation of second chances. and i deeply believe that. well, nobody deserves a second chance more than those who have protected our country, the 1% that has protected the 100% of our country. they give us the opportunity to prosper. they preserved our liberty and our freedom. how many of you are veterans here in this room? if you wouldn't mind, please stand up and accept the applause of all of us here. [ applause ] thank you for your service. and how many of you are serving through mentor boot camp?
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i know we have a crew getting ready to do that. anybody here going to mentor boot camp? [ applause ] well, good luck to you and thanks for your commitment. to a commitment to make people's lives even better. i think there's nothing more noble than to live a life of purpose. wouldn't it be terrible to simply meander through life without direction? but all of you have purpose. and that's representing by you being here. let me tell you a quick story. it is probably a story you're familiar with, but it is about an old man and a young man. and the old man is on a beach. the beach is littered with starfish up and down the beach and the tide has gone out. as a result of that, these starfish were kind of baking in the sun and were vulnerable to lose their lives.
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the old man would walk the beach, he'd bend over, pick up the starfish and throw it back in the sea. the young man saw this. as you know, oftentimes when we're young we become cynical. we become iconoclastic and the young men goes up to the old man and says, old man, what are you doing? the old man says well i'm picking up starfish and throwing them back in the sea. but the young man said, yeah, old man, but look down this beach. you see thousands and thousands and thousands of starfish. there is simply no way you're going to be able to pick up all those starfish and throw them back in the sea. so even why bother? and the old man picked up another starfish and he put it back in the water and he said, it makes a difference to just one. and making a difference to just one is really how to measure our lives. do we make a difference in the life of at least one person every single day?
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that's certainly the question i ask myself when i leave my office in the evening. have i made a difference in the life of at least one veteran that day? well, i'm here to thank you for the difference you're making in it the lives of so many veterans through the work that you're doing. we in the va think that we have the most highest order calling in the world, and that's to care for those who have born the battle, their survivors and their families. there's no higher calling. we also think we have the best values in the world, integrity, commitment, advocacy, respect and excellence. if we live our lives according to that mission and according to those values, there is no question that we can make a difference for all the veterans who have served our country. serving justice for all veterans is an important part of that.
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you are embracing that mission. you've got your arms around it. and even as you wrap your arms around it, we have many veterans who need us and who need you. look at the marines in this formation. which would you imagine are going to become involved in the criminal justice system? which would you imagine could potentially be homeless? well, too many have, and more will. but thanks to you, thanks to you, there's an off-ramp, an on-ramp to a second chance. and for that, we thank you deeply. now you've heard the testimonials. charles said veterans treatments courts kept me alive, kept me going. eric said veterans treatments courts offered me the chance of a lifetime.
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nick said -- he told me this story. he said veterans treatments courts saved my life. i heard many of these stories. they start with the criminal justice system. they start with a peer counselor. they start with the veteran treatments courts. then the individual goes on. they use their gi bill. they get community college training. maybe they get a four-year degree. maybe they even go on to law school and maybe they end up paying it forward like many of you here of working on behalf of other veterans. these are the mission of the va. this is the "i care" values at work. no other group of people better personify that mission or these values than you do. so i thank you all and i hope and pray that god will continue to bless you all in your work.
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you're helping one of our priorities. you're helping veterans return or reintegrate with communities and families successfully. you showed us this way. veteran treatments courts is a huge innovation, and since judge russell kicked things off, we now have 351 veterans courts nationwide. we're working every day to increase that number and to increase the number of counselors that we have to work with you. while va leads the way in health care, we've done things like the first liver transplant, the first cardiac pacemaker, the first time that a nurse came up with the idea to use a bar code to connect patients with medicine, with medical records. the first electronic medical record. we invented the nicotine patch.
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we also invented the shingles vaccine. so a lot of innovations have come from the have a, and as a result of that we have three nobel prizes and seven lasker awards. you taught us how to do this. your partnership model, your model of collaboration of a core concept executed federally and locally tailored to meet every specific need. you've taught us this. this is a perfect example at how communities can collaborate in holistic ways. there's the judge, the court staff supervising. there's va and community providers delivering treatment simultaneously. there's volunteer veteran mentors providing moral support, camaraderie and training. this is the best in class kind of collaboration we could possibly have. all of us working together
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synergistically for the benefit of the veteran. let me remind you that we're also working hard in all of this to help families as well. as part of our homelessness effort, of course we have hud vouchers but one of my favorite programs is a program to provide support for families so that we show we're not only caring for the veteran, but we're caring for their family as well. because certainly when a veteran joins the service or when a service member joins the service, the family goes with them. when they deploy, the family goes with them as well. and so we have to care for families. we need more of that kind of innovation. we need more creative solutions that we can use. we in the va are willing to try anything that will work. all we're concerned about is getting the numeric outcome at the end, making sure we get the human outcome of a veteran who is better off.
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we're also working on many technological solutions, things like telehealth and also regional veterans courts. we're committed to creative approaches to make these crucial partnerships work. you all here in this room are at the nexus of justice involvement and homelessness. we want to share where we are with any veterans' homelessness. as you can see from this chart, it's down from 2010 to 2014. down 40% for chronic homeless. this is because of the president's strong support, his focus and the funding that we've received, funding is important for supportive services for permanent and transitional housing, for prevention and treatment, for employment and job training.
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since 2008, funding programs benefiting veterans homelessness have increased 170%. from $2.4 billion in 2008 to $6.5 billion in 2015. but it's about a lot more than just money. we have to know how to spend that money. well, we've learned what works, and importantly -- very importantly, we've learned what doesn't work. we settled on evidence-based strategies. you see them here on this chart. housing first. housing first. what a beautiful strategy. i mean it recognizes the hierarchy of needs. you have to get the lowest level needs out of the way first so we can work on the higher needs. if there's no way we don't get a
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veteran under the roof can we deal issues that may have caused homelessness. second, no wrong door. coordinating assessment and entry systems and providing help no matter where the veteran turns. i love it when i go into a city like los angeles i visited recently. they have an access program where every door you go in leads to the same access to the treatment and the housing. outreach and engagement. seeking homeless veterans getting to know them and their needs, caring and sharing lists with partners. while we in the va are doing a good job to try to hire social workers and counselors, there is no substitute for the peer counselor. for veteran who's been there, the veteran who's been through the need. i was recently in tucson. there were a lot of veterans out in the desert living there homeless.
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and i met one young man, doug was his name, who literally goes into the desert and comes back and brings those veterans in and gets them under a roof. and it's the fact that doug has been a veteran and he's been homeless and he's been in the desert that gives him that ability to build trust with veterans to get them out of the desert. that outreach engagement is so critically important. justice outreach. connecting veterans with services. this becomes critically important. grassroots mobilization. how do we get things mobilized at a local level, get the local government involved, local service providers, local landlords. one of the biggest issues we have in homelessness all across the country and in housing veterans is finding the landlords willing to rent at the hud vash voucher amount. we go into cities, i get with the mayors. we ask all the landlords0&davd in a room like this room here today and we say we would like you to join the mayor's challenge that you rent to
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veterans for the hud vash voucher amount. we will provide the care for the veterans but we need that roof and many, many of the veterans have stood up. in fact, there's an issue mayor lee in san francisco told me that he was so thrilled because the chinese-american community in san francisco saw it as their patriotic duty to rent their spaces to veterans for the correct amount. i can't stress enough the importance of the grassroots effort. only so much can be done nationally. only so much can be done by federal agency like the va. we provide the strategy and support. we provide the funding. but ending veterans homelessness has to happen community by community. as i said, it's so much more than money. it's people like you who are committed to veterans and evidence-based strategies that work. another community strategy which is working is the mayor's
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challenge. phoenix, salt lake city, new orleans, have all reached major milestones over the past year. in 2014, new orleans of course was the first major city to declare that they had ended veterans homelessness. houston recently announced that they've created a system that will help end and prevent homelessness from now going forward. we expect many more cities to declare their results over the coming months. but let me tell you, nobody's done more to help veterans homelessness than first lady michelle obama and the president. they've been there all along the way. they've provided the support, the leadership and the enthusiasm to get this done. partnership is one of our strategies that really works.
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we use the same principles in these partnerships that are valuable to your efforts working within the justice system involving veterans. so far we serve -- we in the va are only allowed to serve those veterans who have honorable discharges. so those veterans who have less than honorable discharges, the 15% of veterans who have less than honorable discharges re-rely on community partnerships to get that done. i was in boston not too long ago. i visited an organization named home base. historically va had seen home base as competition, competition to provide the care for veterans with post traumatic stress or with traumatic brain injury. i don't think that way. we in the va don't think that way. we embrace all organizations trying to help veterans. we want to partner with them because home base not only provides great outcomes for veterans with post traumatic
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stress or traumatic brain injury, but they can serve the 15% of veterans that got less than honorable discharges that we in the va can't serve by law. so these strategic partnerships are not only critical and they're not only smart to achieving our strategy, but in my mind, they're also about ethics and morals because we need to make sure no veteran is left behind. we also work with public housing authorities to set aside section a vouchers and prioritize these individuals. recently i went on a multicity tour with secretary of labor tom perez with secretary of housing and urban development julian castro, because we wanted to demonstrate that we in the federal government are working collaboratively across our departments and that we would like to work collaboratively with the cities and counties that we visited. all of us are adopting a no
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wrong door philosophy that ensure that we can get veterans into care, under roof. in order to do that, we in the va have a strategy called strategic partnerships. we're trying to engage the local philanthropy and landlords, all of us to get this done maximizing our resources. we also want to leverage your political capital. we will give housing authorities committed to providing units. we want to get local veterans service organizations and military bases to donate and to volunteer their time. we need to continue to work to build paths to these stronger relationships. bring people to the table, set realistic goals, make plans and execute as one team with one dream. we in the va are not only trying to improve our numbers as we go -- for example, we're working to improve access to medical care.
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as the judge said, we've had 7 million more completed appointments over the last year versus the previous year. 20% of those have been same-day appointments. the average wait time now nationally is five days for specialty care, four days for primary care, and three days for mental health care. 22% of our completed appointments have been in the community. 4 1/2 million of the 7 million have been in the community. 2 1/2 million have been within va. we also have worked to get the backlog of claims down. those claims over 125 days were down now to about 117,000 from a peak of 611,000 last march of 2014. but we're not going to rest until we get that backlog of claims down to zero. as i've already showed, we're making progress on homelessness. all of those are progress in the right direction.
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but we're not going to get to where we really need to be until we transform va for the long term and we're in the midst of that now. we call it the my va transformation because it is the way we want you to think about va. we want you to think about va as if it were your cell phone -- personalized and customized for you, the veteran. to do that, we've got five strategies. strategy number one is to improve veteran experience. we're working hard to train our organization in what great customer service is. we're working with companies like ritz-carlton, disney, starbucks and others to learn about how the best customer service organizations do it. strategy two is to improve the employee experience. we know we have no hope of improving the veteran experience until we improve the employee experience. because it is the employees who actually care for veterans. so we're working hard to provide the right training, provide the
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right leadership, and do all of the things that we need to do to empower va employees. third, we need to improve our support services. our i.t. systems are often outdated. the scheduling system that got us into trouble in phoenix dates to 1985. when i was in phoenix i sat down and worked on it myself. it is like working on a green scene with ms-dos. and our financial management system is 20 years old and it is written in cobalt, a language i last programmed on the main frame computer at west point. we have work to do to improve our support services. we also need to establish a support network of continuous improvement. we've training in lean six sigma. it is the way employees take
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charge of the systems they work on, they're given the tools to change those systems. as i say to va employees, let's try to be the change we want to see. just like gandhi said. number five, strategic partnerships which i've already talked about. we can't do this job alone. we know we need you. we appreciate you. we embrace you as our partners. remember, your work is purposeful. there is no higher calling than the work you do. your work is monumental. you help veterans. you help families. you make a difference in the lives of others. there's no higher calling in this world. and you, more than anyone else, understands the inextricable link between what we do in the justice system and ending veterans' homelessness. we are committed to ensuring that you have all the services that you need, all the support that you need. we're committed to making sure every veteran has the services
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they need, including those who are justice involved. justice involved veterans are welcome at the va. in fact, they're the ones that we're looking for first. we're seeking them to help them have access to our services and we're trying to make sure that the criminal justice system, the criminal history, probation or pending charge does not affect their eligibility. if there's a va policy or practice that is somehow getting in the way, please let us know. we will find a way to fix it. my e-mail address is bob.mcdonald@va.gov. if there's something getting in your way, please let me know and we will get it out of the way. don't ever settle for the status quo or a believe that you can't create the change yourself, because you can. and you will. and you are. well, i just want to close by saying, you all inspire me every single day.
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we will succeed. i know we can. and i know we will. but we will because of all of you. so i'd like to again say, god bless you all. thank you for letting me spend some of your valuable time with you and god bless you and what you're doing. thank you very much. [ applause ] mr. secretary, we cannot thank you enough for your leadership and for your support of veterans treatment courts. good morning, i'm carson fox. i'm the chief operating officer of nadcp and justice for vets. this morning justice for vets has the honor of giving not one but two hank pirowski awards. to give the first award, i would like to invite chris deutsche, director of communications to
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join me and the secretary on stage. >> so, some time in mid 2008, i'm watching mtv. there's a tribute for veterans. they show the story about this young marine in tulsa, oklahoma, who was making it his personal mission to start a veterans treatment court. now mind you, at the time there were only two in operation. through the sheer force of his personality and frankly, his inability to take no for an answer, matt steiner did indeed help create that third veterans treatment court. and then he went to work for it, establishing their volunteer veteran mentor program where he cajoled, schmoozed, networked, harassed every agency,
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department and organization within a hundred miles to show their support. the result was that the tulsa veterans treatment courts would go on to be named a national model. after that matt came to d.c. where he led the newest division of nadcp justice for vets. he was exactly the leader we needed. i worked alongside matt for two years while he traveled the country building the support for veterans treatment courts that would become the foundation of the movement that it is today. matt approached his mission like it was his calling. i'm sure you're familiar with that aspect of his personality. god help you if you got in his way. and i was just grateful to be there to see his boundless energy, to see his tenacity, to experience his extremely unique use of four-letter words on a daily basis.
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>> i can tell you from justice for vets, we could not be any prouder that on matt's pathway that led him to working with the secretary, he made a stop over at justice for vets and helped all of us raise the bar for veterans treatment courts. >> so steiner. where are you, buddy? thank you for all you have done for justice for vets, for veterans treatment courts around the country, for the veterans you serve at the va, and for your service to your country. matt. [ applause ] >> thank you very much. this is really -- wasn't expecting this whatsoever. just thank you for all what you're doing out in the field. like the secretary said, you're the ones making all the magic. you're the ones serving veterans, saving them every day in the court system. it is really an honor to receive an award named after a great marine. he helped start this whole movement with judge russell so
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thank you very much. >> for those of us who knew hank, what we remember first is his infectious laughter. hank lit up a room. he helped people. he was my friend. he was the friend of many of us here. and for those of you who didn't known hank, had you known him, he would have been your friend, too, if he hadn't been taken from us too soon. hank was a vietnam vet and he and judge russell helped establish -- together they built the first veterans treatment court. hank created the role of the mentoral coordinator. he actually brought together the first group of veteran mentors. nothing was more important to hank than his family, his friends and helping others especially his fellow veterans and those people who received this award today carry on his memory.
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i would now like to ask judge raymond reyes, the incoming share of the board of director of justice for vets and nadcp to join me on stage to help present the second hank pirowski award. >> the next recipient is known to most people in this room, and i guarantee you to every single person working in treatment courts in the great state of texas. mary covington is a force of nature. >> i jokingly told mary this morning when we first met, i did not need readers. and now i do so i've known her a while. i will tell you a little bit about her.
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and then become a little bit more personal, because this is a really emotional award and i am proud to be a part of bestowing it upon her. mary covington is a special programs manager for harris county. that is houston, texas. you've already heard about houston this morning from the secretary. she manages the harris county adult drug court success through addiction recovery star program. as well as the veterans treatment court programs. as coordinator in veterans treatment courts she has helped turn the program into one of the preeminent veterans treatment courts programs, even being featured on "60 minutes." in addition to her tireless efforts to ensure each participant receive the appropriate treatment, she has been an incredible advocate at the state and the national level. her efforts have helped spread veterans treatment courts throughout not only the lone star state of texas, but she's recently been in washington, d.c. meeting with members of congress to urge their support for veterans treatment court funding.
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on a personal note, i will tell you, she and i have shared many things as specialty courts have grown in the state of texas. we have a lot of stories that would mean something to us and you guys would just say, okay, get on with it. but i will tell you this. one true legacy for mary covington is that she has helped train more in coming presidents of the texas association, including me. mary, thank you for your mentoring. thank you for your training. and it is with great honor that i bestow upon you the 2015 hank pirowski award.
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>> thank you so much. gosh. judge reyes, you have always been my mentor and my friend ano i'm so thankful to always have you in my corner. i told judge russell last night that when i first met hank in 2003, i had been on my job as the harris county program manager for drug courts for all of 24 hours and, quite frankly, hank terrified me. but i remember thinking at the end of the week if i could ever be half as good as hank, i would have accomplished something. so i'm so honored to receive this award today. i couldn't accept this award without thanking judge mark carter for letting me be a small part of his vision to bring veterans treatment courts to texas. to my team -- thank you to you inspiring me and encouraging me every day. i am only as good as you've made me. one team, one fight. thank you.
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>> march 10th of 2002 i entered the united states marine corps. the day i stepped off the plane in afghanistan people were carrying aks down the middle of a main street. it was a radically different world. once i had realized that, not only my purpose for serving but kind of the purpose of my life changed at that point. it was very hard to reintegrate into the society that i had left. i had done things that many people would never dream of ever having to do. i was really angry.
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the sleeplessness, nightmares, it crippled me. i became addicted to opiates and later heroin. however, they became much more of a problem than i had even started out with. >> i decided to practice law because the law could be used to promote good things. i always talk with my clients because i really want them to understand that i know them and i care about them. i had a young man and he came into court. i said, what's going on? you just don't seem yourself today. and he said, going to his ptsd group sessions made him feel worse. and the next week this young man overdosed and died. and so i said, not on my watch. that's when i began to develop this program that was specifically to save veterans' lives. >> there was a point in my drug use where i didn't care if i lived or died.
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my mother had finally gotten to the point where i came home and she met me half-way down driveway and said that we are always going to love you, but don't come back. i lived like that for about two years. until i was arrested and came in front of a in judge in veterans treatment court. >> the court is a stand-alone court. i have 23 ancillary services right out my courtroom door so when someone's standing before me i can say what more can we do for you? >> that day was the last day that i used drugs or committed a crime. >> they're volunteering to work really hard to profoundly change their lives. >> my story is not unique. there's a lot of places in the united states that don't have this opportunity right now. so a veteran that doesn't have this opportunity doesn't have a future.
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>> we are here to save lives. we are here to restore veterans to those human beings that they were before they chose to serve. >> welcome to the stage, nadcp interim ceo, carolyn hardin. >> good morning. during her 19 years on the bench in orange county, california, judge lindley combined the perfect blend of compassion and accountability. her belief that no individual is beyond hope is evident in the way she treated each and every person who appeared before her. in 2008, her and her incredible team launched the second veterans treatment court in the country.
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immediately after the program started, judge lindley's court became a crucial destination for thousands of people interested in better serving veterans. judge lindley understands the unique needs of veterans and has done outstanding work at bridging the large divide in our culture between civilians and veterans in the justice system. she saw opportunities where others saw obstacles. she sought not just to solve problems, she sought to transform individuals, their families and communities. and guess what? that is exactly what she did. while she is no longer presiding over veterans treatments courts, she will long be remembered for helping to pioneer a program that will also help us with saving the lives of 11,000 veterans this year.
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i can think of no one more deserving to be elected to the veterans treatment court hall of fame. it is my pleasure, my honor to introduce to you my friend and one of my mentors, judge wendy lindley. >> so, thank you, justice for vets. carolyn and all the wonderful people that i've worked with over the years. it is a huge, huge honor to receive this and it was an honor to be one of you and work with you on behalf of veterans. i'm going to be brief, but just starting with long, long ago when i started my first collaborative court, we didn't have evidence-based practices available to us.
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we didn't have research, methamphetamine was a drug of choice at that time. there wasn't much available at all. so what did we do? in these isolated pockets where we were creating these collaborative courts we learned by trial and error. we made lots of mistakes. i made lots of mistakes. until the national association of drug corps professionals came along and changed everything. today we are so fortunate to have justice for vets, who provides us with veteran-based treatment. they provide us with key components that give us practical advice on creating, implementing and improving veterans courts. they work tirelessly to do this.
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i have personally had to put on justice for vets, because they take no personal time for themselves. i hope my latest individual on probation attended the meditation this morning, because she does nothing but tirelessly work for this organization, which truly does create justice for vets. in closing, i want to say that our work is so important. and each one of you in this room is so important to our work. you come in day after day, week after week, year after year, in spite of challenges, and sometimes disappointments, because you know that the work we do save lives, saves families, as we heard today, saves money, and makes our community a better place for all of us. as i look out to the more than 1,000 of you who are here today, i have such hope knowing that you are now armed with even more information to go back to your community and to continue to do
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your good work to bring justice to vets. thank you. [ applause ] thank you, judge lindley. and i have to admit, i'm the one she put on probation. and thank you, everyone, for being here this week. i don't know about you, but after today's ceremony, i feel pretty energized, do you? ready to go for a great conference? and i know that together we'll have an amazing conference. beautiful version of our national anthem performed by tony-award winning actress katie huffman. katie's credits and awards are far too numerous to list here. she has starred on stage, film,
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and television. katie is best known for her tony-award-winning turn in the smash hit "the producers," and she remains one of broadway's shining stars. but she is also a passionate advocate for veterans. when i called katie, and i asked her to come share her talents with us here today, and i told her what you all were up to, katie said, and i quote, if my little voice can help in any way, of course i'll be there. well, after having heard her this morning, we all know she doesn't have a little voice. katie wanted to be here. ladies and gentlemen, accompanied by noona perenton, please welcome back to the stage, my friend, ms. katie huffman.
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[ applause ] ♪ ♪ mine eyes have seen the glory ♪ ♪ of the coming of the lord ♪ he is trampling out the vintage ♪ ♪ where the grapes of wrath are stored ♪ ♪ he hath loosed the fateful lightning of his terrible swift
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sword ♪ ♪ his truth is marching on ♪ glory glory hallelujah ♪ glory glory hallelujah ♪ glory glory hallelujah ♪ his truth is marching on ♪ he has sounded forth the trumpet ♪ ♪ that shall never call retreat ♪ ♪ he is sifting out the hearts of men ♪ ♪ before his judgment seat
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♪ oh, be swept my soul to answer him ♪ ♪ be jubilant my feet ♪ our god is marching on ♪ glory glory hallelujah ♪ glory glory hallelujah ♪ glory glory hallelujah ♪ since god is marching on ♪ in the beauty of the lilies ♪ christ was born across the sea ♪ ♪ with a glory in his bosom ♪ that transfigures you and me
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♪ as he died to make men holy ♪ let us die to make men free ♪ while god is marching on ♪ glory glory hallelujah ♪ glory glory hallelujah ♪ glory glory hallelujah ♪ while god is marching on ♪ glory glory hallelujah ♪ glory glory hallelujah
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♪ glory glory hallelujah ♪ his truth is marching on ♪ marching on, marching on ♪ marching on [ applause ] here is a look at what's coming up live today on the c-span networks. c-span wi the center for american progress wants to talk about what motivated young people to
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action. c-span is live at 10:30 eastern as republican presidential candidates are in florida. c-span will have live coverage when that gets under way tomorrow at 10:00 eastern. c-span2 will be live on a discussion what works and what does not with policing and the use of force. that's hosted by the federalist society. finally, energy secretary ernest moniz will provide an update on the goals for the international climate conference in paris next month. live coverage at 2:30 eastern on
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c-span2. american history tv, this weekend. >> setting out bound dryaries f this territory going forward. >> lec >> lectures in history on the 1787 northwest ordinance, an act to govern newly acquired territory from ohio to the mississippi river. our new series, road to the white house rewind. >> who is on what side? >> senior zip, the senior citizens against the kids? no, no, no, i missed. let them have it. oh, i see. >> i don't know if you rate it special or not. >> you all told me to sit facing the coke machine. that's what she said. i just do what i'm told. >> a look back at the 1992 presidential campaign of bill clinton during a visit to franklin high school in new hampshire. on real america, marking the
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70th anniversary of the nurenburg trials. the 1945 u.s. army documentary on nazi concentration and prison camps. and continuing on oral histories. >> my outfit went over. it was a couple days after d-day when they had enough beach land to justify it. and my captain who was a new captain on that job came and said you stay here. and, again, it was one of those times when somebody reached out. and i was left. and off they went. and it was several days later. it was week or so later before i went across and rejoined my outfit. >> an interview with benjamin firenze, a former chief prosecutor for the united states. born in transylvania to a jewish family, emigrated to america. he reflects on enlisting in the u.s. army after law school and being assigned to set up war
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crimes branch to investigate nazi atrocities. watch american history tv, all weekend, every weekend on c-span3. get our complete schedule at c-span.org. sylvia burwell discussed the suss says of medicaid this month. it took place here in washington, d.c. this year marks medicaid's 50th anniversary. following the secretary's remarks, a panel also talked about the program's successes and what changes can be made to improve it. this is about two hours. >> good morning. good morning, everybody.
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i guess that was my entrance music. i think it's a good way to start the program. good morning, everybody. welcome to the fifth annual national association of medicate directors fall conference. this is the highlight of the year for those of us in the medicaid world. as i said, this is our fifth meeting. and every year we try to do a little better, be a little bigger, outdo ourselves, put together an agenda that is substantive, provocative and keeps people coming back for more. and i think by the fact that i see 900 people here at breakfast, i think we're doing okay. thank you all for coming. my name is matt salo. i'm the executive director here at namd. it's a pleasure to have all of our friends and family here to talk about medicaid for the next couple of days. we've got a terrific agenda.
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a combination of thought provoking sessions as well as the deep dives into the -- in the breakouts where you will hear from medicate directors all over the country on many issues of great import. i like to say -- i like to think that this is our best conference ever. except next year will be even better. and i want to take a moment to stop and say that we should note that this is the 50th anniversary of the medicaid program. let's raise our coffee and say happy birthday. [ applause ] i guess it's also the 50th anniversary of that other program, medicare. but, you know. they have their own thing they can celebrate the way they want. it's really exciting. the 50th anniversary really is a celebration for us of 50 years of innovation.
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innovation at the state level in how the program runs, in terms of improving quality, improving access and improving a program that is the nation's healthcare safety net, that's the largest health insurer in the country and the program that provides health and social and long-term services and supports to all of the nation's sickest, frailest, most medically complex parents. so that 50th anniversary is a theme that we are going to try to weave throughout the next couple of days. i think you will see that, and i think you will be -- you will enjoy that. we are delighted that amongst the 900 people we have here we have medicaid directors and state agency staff from 48 of the states in u.s. territories, which is a terrific turnout. some of whom came very, very far to get here. so we definitely appreciate that. we're very, very excited in a
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couple of minutes to be welcoming back as a repeat visit the secretary of the u.s. department of health and human services, sylvia burwell, to help kick us off. i also want to highlight a couple of the other major things that we've got going on over the next couple of days. after the secretary, we're going to move right into a panel looking at medicaid, the past, the present and the future. and again, on the 50th anniversary, we will have medicaid directors who span the past five decades, talk about where the program has come from, where the program is today and where the program is going. we will also have later this afternoon a fascinating panel that is going to be cms e administrator andy slavit surrounded by a couple of his fairly famous predecessors.
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who i think as you know have -- are never shy about sharing their thoughts and views on the healthcare system. we're very excited about that. and then another bthing for tomorrow morning is an in-depth focus on what i call the willie sutton philosophy of medicaid, which is follow the money. we have a session tomorrow looking at the 5% of the medicaid population that drives 50% of our costs. the dual eligibles, people with co-occurring substance abuse and mental health disorders and the ways we're trying to approach issues around homelessness and justice impacted individuals with social determining of health and other things. terrific sessions. we are closing off the session tomorrow with a closing by -- with vehicl vicki wuchino.
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let me just mention one other thing. then i'm going to introduce the next session. one of the really exciting things, why it's pleasing to have a lot of people show up to talk about medicaid -- in fact, i hear that john oliver had a session on medicaid on his show earlier this week. i have not seen it. i have heard it's a little blue. so perhaps don't show it to your kids. but it's certainly exciting to see medicaid in the mainstream like that. and i think what's really exciting about what we're doing is that in many ways, we're standing on the cusp of a new era. of the program and what the program does. state medicaid agencies and the directors and their staff are ushering in a new dawn of rethinking how the u.s. healthcare system works. you will see that theme throughout the next couple of days. you will see that theme in some of the products that we put out,
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including our fourth annual operations survey, which should go live on the web right about now. with an in-depth look at the issues that directors are facing, the types of projects that they are tackling and the ways that they are trying to quite frankly drag the rest of the u.s. healthcare system into the -- into this new era. how we're trying to take some of the failures of the broader healthcare system, an overreliance on uncoordinated fee for service, silo delivery models and a method of payment that incentivizes volume as opposed to value. what you can see from states all over the country is that these are the things that we are trying to fix. we are trying to improve the healthcare delivery system. we are trying to make sense out of the payment incentives that
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exist. and quite frankly, these things are hard. these are not easy. the healthcare system in this country is 18% of gdp. trying to change that is difficult and it is slow going. but it is vitally, vitally important. so i hope that you will join me in over the next couple of days appreciating and celebrating the work that is going on in medicaid, especially around those patients who just have not been served well in the broader healthcare system and who medicaid is trying and striving to improve the experience of care for. medicaid, as you all know, it's big. it's complex. it is hard to talk about. we cover half the births in this country. we cover a third of all kids. we cover the majority of long-term care. the majority of hiv aids treatment, the majority of mental health in this country. it's a big, it's a complex
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program. we will spend along with our federal partners half a trillion dollars this year. that's just going to continue to go up and up and up. this really is a testament to the challenge of the jobs of the medicaid directors and i think a real testament to the successes they're having that they are able to bring some rationalization to a dysfunctional system and to try to improve the medicaid experience for the consumers who are on the program. so with that, i am going to hopefully, gracefully exit the stage and turn the microphone briefly over to the board president from the great state of arizona who has been as many of you know a real leader in medicaid in terms of leadership, in terms of investing in the program, in terms of thinking about medicaid as a real 21st century solution to healthcare
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issues. so please join me in welcoming tom betlack up to the stage. [ applause ] >> good morning, everybody. on behalf of my peers, i would like to welcome you all to the 2015 namd fall conference. you may notice some new faces amongst medicaid directors. 41% of medicaid directors are new within the past year. the average tenure currently for a medicaid director is one year and five months. but despite that, when you look at the operational survey, you see that states are aggressively pursuing new initiatives to evolution of the medicaid program. and this conference is an opportunity to highlight a number of those areas where we are looking to improve the overall delivery system by
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leveraging medicaid in our local communities. our agenda over the next two days highlights some of the important areas for medicaid directors. progress with the duals. managed care. quality for kids and pregnant women. value based purchasing, i.t. systems and a number of other important topics. one other item that is threaded throughout the agenda is, i think, one of the most healthy things in the medicaid program, and that is the tension of federalism. the role of the federal government versus the states. and it's a conversation that we have had in this country for 240 years, but it's something that plays out on a daily basis in terms of the medicaid program. what's the role of the federal government? and what's the role of the state snz we ha states? we have a number of agenda items
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to continue those important conversations. as we begin this conference, i think it's important to remember at the end of the day why we are here. that is to improve the lives of the members that we serve. and i had the opportunity recently to go out and to meet with one of our non-profit providers and their board. at the end of the meeting, i was walking to my car. an individual approached me and she talked about the challenges when she was trying to advocate for somebody that was facing some significant depression issues, was potentially suicidal. she talked about her struggles in navigating the fragmentation that exists in our delivery system and the story turned out positive in that she was able to get the individual into care and they are doing well. before i could take yet another step, a second individual approached me and they talked about how important medicaid was to them. they showed me their arizona medicaid card, their access
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card. they said they no longer needed medicaid, that medicaid was there when they needed the healthcare coverage, it had saved their life. but now they were employed, they had other coverage. but they kept that card as a reminder of the importance to medicaid in their life. for me, it was a very poignant moment in terms of having this aspect of there's still a lot of opportunity for improvement in the medicaid system for the individuals that are on the program. at the same point in time, medicaid does so much good in our communities in serving individuals that are on the program. so without further adieu, i would like to take the opportunity and it is my pleasure to introduce secretary burwell who was sworn in as the 22nd secretary. secretary burwell is committed to the commission of ensuring that every american has access to the building blocks of
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healthy and productive lives. as a results driven manager, she has led large and a complex organization across the public and private sectors. most recently, burwell served as the director of omb. i'm a former budget director myself. i appreciate that. and a lot of other important roles throughout. secretary burwell was a rhodes scholar. she hails from west virginia and lives in washington, d.c. with her husband and two children. please join me in welcoming secretary burwell to our conference. [ applause ] >> thank you very much, tom. because i know you all are good with numbers, as medicaid directors, i will mention on that ten-year poiure point, it'f
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me. i'm not at one year and five months. it's wonderful to be here today. as you all know, medicaid turned 50 this year. at hhs, we have been spending time looking back at the decades of progress that we have all made together. you all may not know that i also turned 50 this year. and i just hope that i am aging half as well as the medicaid program. and i also want to recognize and thank vicki, who i have had the privilege of knowing and being able to work with in the 1990s. at that time she was a teenager. we were at ombi. we will reflect on your earlier point. since i spoke with you last november, we have continued to make important progress for our nation's healthcare system. last week, the president signed a budget deal that will help states avoid more than $1.5 billion in medicaid costs for
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part b preem miums to support c for older americans and those with disabilities. over this past year, we have seen the expansion of medicaid in pennsylvania, indiana and alaska. i want to congratulate montana who yesterday became the 30th state plus d.c. to take up medicaid expansion. [ applause ] thank you to the leaders of those states who are here today who are also working with us to work on solutions for expansion. last year i talked about the families across this nation, more than 70 million americans, who depend on medicaid. over the last year, i have had the chance to meet more of the americans whose lives have been touched by this program. kina hicks is a single mom who reached out to my office to tell me about her struggle. she's a health aide for seniors, but she herself had no insurance for years.
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she told us about working through persistent leg pains and how she didn't see a doctor because she knew it would mean that she couldn't pay another bill. when pennsylvania expanded medicaid, she was finally able to get coverage. it's a good thing she did. after a screening, she learned her tumors had precancerous cells. she had a hysterectomy. that checkup may have saved her life. when we asked her about her new coverage, what she said was, it means the world to me. i have two sons that really love me dearly, and i know that they depend on me. you all know people like her. people for whom medicaid is a life line. it just isn't about today's checkup or this year's finances. we're actually learning that medicaid helps a long-term course for a healthier life. since we met last year, a number of studied have kwan phied the
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impact that we have always known this program has. there are long-term benefits that can go well beyond health improvements for those who have coverage. children who had access to medicaid and chip as a result of coverage expansions in the 18980s and 1990s were more likely to complete high school and graduate college than similar children who did not have access. they were less likely to be hospitalized as adults. by the late '20s, women who gained coverage as children had higher earnings. another study by economists from yale and the treasury department estimated the federal government will recruit more than half the cost of childhood medicate expansions through larger tax payments associated with higher earnings. medicaid is a key component of our mission to bring affordable,
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quality healthcare to all americans. since provisions of the aca took affect, we brought the uninsured rate to historic lows. in fact, we estimate that 17.6 million americans have found health coverage. many of those have been covered through medicaid. medicaid is good for families and good for communities. there is no greater resource for helping some of our most vulnerable neighbors find quality, affordable healthcare. we know that if every state expanded, more than 3 million additional americans could have access to coverage. these are often working families and many are veterans. we're working hard to make this case and will continue to work with states to find solutions that work for their needs. alaska is one of our most recent examples. to help meet the needs of the state's american indian and alaska native populations, we
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updated our policies at the indian health service and travel facilities. we are working with them to improve access to care by changing the way some services like transportation are financed and to better coordinate care. expansion is a priority because the opportunity it offers is so important. we know that these situations are complex. the people you serve are some of the most vulnerable, most diverse and often have as was mentioned the most challenging health conditions. that's why it's important to get this right. as secretary -- i don't go anywhere between the months of november and january without mentioning the health insurance marketplace. just a few days ago on sunday, we kicked off open enrollment. although people who are eligible for medicaid and chip can enroll and renew through the year, we have the potential to capitalize on the public attention on the
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issues of health insurance right now. i hope you will join us in spreading the word about healthca healthcare.gov and this opportunity for even those in the medicaid and chip space. as we build on this mission of helping more americans find quality, affordable healthcare, there is another role that medicaid needs to continue to play. it was mentioned earlier. that is the engine of transformation. we're an exciting time in healthcare. for years, americans struggled to navigate a healthcare system that has failed to put the patient first. doctors have been paid for the amount of tests that they ordered, not the quality of care that patients receive. over the last few years, there has been a growing consensus to change that. we have a plan to transform our system into one that works better for the american people.
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it's a system that delivers better care, spends our dollars more wisely and puts patients at the center of their care. it builds on three strategies. first, we need to change the way we pay for care. so that we encourage quality, not quantity. second, we need to improve the way we deliver care. that means better coordination and more integration of health services. it means engaging the individual patient and empowering them to take control of their health decisions. it means ensuring beneficiaries can access care so that people can get the services they need to improve their health and well-being. finally, we need to better organize and use data and health information in care settings. we need to increase transparency in cost and quality. and make sure electronic health information is useful. both for the doctors and the
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providers as well as the patients. we are working at the federal level to support these changes. but it's already happening in many of your programs. we have seen health home programs in 19 states and the district of columbia. for example, missouri's home health programs, according to recent analysis conducted by the state, these programs have helped create a 12.8 reduction in hospital admissions and an 8.2 reduction in emergency room use for health home enrollees. five states are leaning on shared savings programs like minnesota's integrated health partnership program. that program aims to improve quality and lower costs through innovative care and payment approaches. in 2014, the program saw a savings of $61.5 million. other states are exploring integrated care models outside of shared savings or
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implementing alternative payment models. we want these innovations to work. we're providing resources and technical assistance through the medicaid innovation accelerator program and the state innovations model program. these programs will help advance innovations in medicaid, to raise health outcomes, lower costs and improve the way that we deliver care. and with new 1115 demonstrations, we can further improve care by supporting an entire continuum of services for fiscal and behavioral treatment. in august, california became the first state to take this step. we're hopeful that other states will follow. many of you have heard that we have set goals with medicare to tie payments for how well rather than how much providers care for patients. we know that many medicaid programs are already leading the way in designing and
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implementing these innovative payment models. some of you have joined us in these goals. we hope all of you will move in that direction. hhs is working closely with namd to chart a strong, ambitious course for tieing payments to quality in medicaid. as we go forward, i hope that each of your states will set and reach your own goals that make ours look downright sluggish. and we will be there to support you. because when you work for a community as diverse and as important as the 70 million americans that you serve, promoting quality patient centered care is more important than ever. that's one of the reasons we created the healthcare payment learning action network and we're bringing public and private partners together to move forward in this transformation. and i want to thank the national association of medicaid directors for your partnership and participation in that
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effort. we will continue to look for opportunities to create a better, smarter healthcare system. i know a lot of you all are thinking about how to foster a healthcare system that supports the development of innovative pharmaceuticals and provides affordable access to medications. to that end, at hhs today, we're announcing that we are going to sponsor a forum late they are month to bring together the stakeholders to share information on how we can address this complex problem. as we move towards a system that is quality driven and patient centered, medicaid is one of our most important drivers of that innovation and transformation. we want to accelerate that progress. frankly, we want to work together to be sure people everywhere understand that medicaid is leading in smarter spending and quality care.
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and that's why your partnership is so important to us. you all are on the front lines of care delivery and the transformation of our healthcare system. we want to hear from you about what works and what doesn't. how we can support your efforts and how we can work together to better deliver impact for all the people that we serve. we won't always agree. but we can always find common ground when working for the american people. i want to thank you all for the work that you do every day. it means so much to so many. i want to thank you for being our partners, because we're stronger with your help. together, we can do more. together, we can help our communities overcome obstacles, chart a better path for wellness and even save lives. together, we can build the kind of healthcare system that the american people deserve. thank you all. and i look forward to hearing what happens over the next few days. [ applause ]
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>> that was fantastic. thank you so much, secretary burwell. i would also like to point out that, you know, in the five years we have been doing this, she is the first hhs secretary to come present to us. and now even though she's been in her position less than the medicaid director tenure of one year five months, she has now done this twice. so it's a testament to her leadership. we very, very much appreciate having her here to kick this off. a couple of quick things before i introduce the next panel. in keeping with the theme of thanks and acknowledgements, there's a number of folks i want
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to make sure we acknowledge. first and foremost, all of the namd staff who are so critical in putting all of this together from soup to nuts in terms of content and everything else. i will ask those of you who are here to stand up. there's a couple of folks who are working back at the office. but andrea moresca, kathleen nolan. [ applause ] lindsay browning. and jack rawlins. [ applause ] and then tess moore is at the office live tweeting everything we are doing and saying. thank you to her for that. i want to thank the team at arb meetings and events who have been i think outstanding in terms of putting -- helping put together the logistics for a 900
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person breakfast and meeting and hopefully making the experience for all of the exhibiters and sponsors and participants as smooth as possible. so ann michaels, marika and victoria, thank you for them. they're out in the lobby there. [ applause ] i want to thank not by name, because i don't want to put a target on your back, but all of the namd board for your leadership throughout the year and throughout all of the years in terms of helping the staff stay focused on what is truly important for medicaid directors and for medicaid agencies. the current leadership with tom and with john mccarthy of ohio has been very, very strong over the past year. we very much appreciate the full board. again, don't want to make you stand up or call attention to put a target on your back. but thank you to all of you. then i want to begin to
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acknowledge some of the many sponsors who help make this conference happen. i will thank a couple now. i will thank some more later. i will thank more. otherwise, i'm standing up here thanking people for 20 minutes. that's not dynamic conference going. i want to thank for sponsoring tonight's reception, which i hope you can attend, rsa medical. i want to thank the diamond sponsor and the sponsor of this morning's breakfast, sentine corporation. maximus. sellers dorsi. well care health plans. and then blue cross blue shield of illinois, montana, new mexico, oklahoma and texas. and then thank the sponsors of today's lunch, which is cgi.
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thank you. again, lots more sponsors who we will acknowledge soon. i wanted to get those folks up there. but now enough of me, and i want to introduce the next panel, which i think you are going to find terrific. let me actually invite up to the stage now i will tell you who they are as they come up, judy moore, who is the co-author of medicaid politics and policy. she literally wrote the book on medicaid. is going to come up here and moderate our session which is medicaid at 50, past, present, and future. and our panelists will be namd president tom betlach and former medicaid directors deb bakrak, chuck milligan and vern smith of michigan. i will turn over the mike to judy. we're having a very relaxed talk
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show format. i will pad for time while vern gets miked up over there. okay. he's good. with that, judy, thank you. we look very much forward to the next session. thanks, everybody. >> thank you. well, i think that we're going to try to have a good time this morning. i think that secretary burwell sort of set us up by talking about medicaid as an engine of transformation. and what we would like to talk to you about this morning is how that engine of transformation might have been running for a much longer time that people give it credit for. i know most of my co-panelists this morning feel as i do that medicaid was really pretty much underappreciated for an awful lot of years. now john oliver is talking about it, we know we're in the mainstream. boy, i tell you, that wouldn't have happened in the '60s and
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'70s or maybe even the '80s and possibly not the '90s. we really have come a long way in that sense. in terms of moving healthcare delivery financing, coverage of people, children, i think medicaid's history is not as bleak as people give it short shift for. she's what we're going to talk about this morning. we're going to this as a facilitated discussion. when matt put this panel together, he thought we would get representatives of all the decades of medicaid. truthfully, i think vern and i have to go back for the '60s and '70s. i don't -- these folks are too young -- maybe the '80s, too, vern. we will try to have a facilitated discussion this morning. you will throw out some questions. and ask one of these folks to give me some impressions and we
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will have a very informal discussion. then towards the end of our time, we are going to turn to you and ask if you have some questions or comments that you want to throw into this discussion. we will try to cover some of the main themes over the 50-year history of this program. look towards the future and what this building over the last 50 years is going to mean for the future. all of that said, you have heard about tom. you know tom. he is the current arizona medicaid director. to my left is deb. i'm not going to tell you a lot about these people because you can read about them in your materials. deb is now a partner in menat, phelps and phillips. this is vern, who was the michigan medicaid director for many years and now a managing partner at health management
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associates. and chuck milligan who has been a medicaid director in a lot of states and a lot of places. is back in new mexico as the director of the united healthcare community plan there in new mexico. we are going to talk a bit about the history of the program. on the slide, which i think that we will have them put up -- >> it's up. >> there it is. i have listed the four kind of eras of medicaid as doctor dr. smith my co-author on this history of the medicaid program and i figured them. '65 to '80 was a period where the program ran on the statute -- the statutory basis. that is the medicaid program represented what was written in the statute pretty much. in the latter part of the those years, there was a little bit of
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waving beginning and changes that were -- of interest to some states. there was a classic approach to implementing that statute. in the '80s and early '90s there was growth and change. there was a lot of legislative change in the program. we started serving children and moms in a much better way. there was some tension, but nothing like the third period which we called in the book c-gen response. a lot of threats to the program. a lot of criticism of the program. a lot of conflict over the program. and still continuing some growth of the program. and a lot of changes and new, interesting things happening in the program. and then from 2009 on with the passage of aca we are moving towards universal coverage and
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continuing that transformation. and many of the other transformations that were mentioned this morning. with that little bit of background, let me go on and start with, everybody's favorite medicaid suggest asubject and e. i would like to throw out particularly to deb who works a lot on these issues, always has in her tenure around medicaid, but is looking with states to the future of what they want to do in eligibility resign and also to vern who saw the very beginnings of this program and had to live with eligibility difficulties in a much more welfare constrained system to start us out and say a few words about that. let's start with you, vern, if you don't mind. >> okay. sure. well, it's great to start with
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eligibility. medicaid is always known as a complex, confusing program. and of all the aspects of medicaid, the one that is the most confusing and complex is eligibility, even to the extent that supreme court justices have weighed in on this going way back, not just the recent supreme court. but justice powell referred to medicaids ab s as biz inteen. berger referred to it as a maze of complexity. that's eligibility. in the beginning, as judy said, medicaid was the health benefit for persons on welfare. and that was pretty much it. you know, as i was looking back through my files, my old files, i have come to appreciate why i'm here because i'm old. >> and you have files. >> and i have files. >> you have good stories. >> that's true. >> so i found a memo from the
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first administrator in 1977. and to secretary cala calafana. it says right here -- this is in 1978. it says, medicaid is a healthcare financing program for the welfare population. that was true, completely true. it goes on to say medicaid embodies the problems of the welfare system and the healthcare system, which is something we have lived with for the entire period of time. just to illustrate this, because it came from welfare, we had all the data, the statistics on the recipients, what everyone on medicaid was referred to as, all the recipients, we knew how many of these mothers were married, divorced, separated or deserted.
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it's an era of the deserving poor. that was what we had through medicaid through the early years. that all began to change in the 1980s. we came up to the point in 1997 when medicaid was delinked from welfare officially. still a work in progress in many ways. but all of these things took place over time to kind of take us from where we were then, a healthcare program for people on welfare, to where we are now, where at least in my state in michigan, just looked it up, fewer than 15% of medicaid beneficiaries are on welfare. and that includes all those on ssi. so the program is completely changed. it's no longer -- it's that but it is way more than that now. >> deb, comment a bit on how you see the program now and into the future in having to live in many
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ways or at least in some ways with the legacy of the welfare roots but what states are doing to address that and what more we need to do to address that in the future. >> so i think judy's question and vern your history reminds us that we do have welfare roots and that fast forward, we really have -- i keep saying we because i think what everyone on this stage would say, once a medicaid director, always a medicaid director. so the we is we medicaid directors. but we're now in the health insurance space. we've moved out of the welfare space. but there's always that tension pulling us back. so let's say on the good side, what did the aca do? it not only gives states the option -- i will use the word option of expanding. we will come back to that later. but it did something equally dramatic. it imposed federal rules -- we can come back to the federalism tension. but it imposed federal rules to
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make it easier for people to get on and stay on medicaid. when i started in medicaid, you needed four consecutive pay stubs in order to get on medicaid. you had to come into a face to face interview and had you to be fingerprinted. we have now shifted out of that mold of we don't trust you, we don't want you on to we want you on. the rules align with the marketplace, not with the welfare program. so we have created a foundation of coverage, a paradigm of coverage which enables us to do the kind of payment and delivery system reform that virtually every medicaid director is now focused on and the secretary talked about. we couldn't do that if we couldn't get our population covered and covered in a stable manner. all of which relates back to the change in the eligibility and enrollment process. i think that's a huge legacy of
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the affordable care act. whether your state expanded or it didn't. >> there's one missing piece in all of that. that is we still have 90 plus percent of the individuals on snap in medicaid and the rules set for medicaid is about 600 business rules. it's about 6,000 business rules for snap. for all of us states that are out there trying to work with partner vendors around building an integrated system, it's very pr problematic to capture the same folks and have these complex business rules that we're still dealing with because there is lack of alignment between snap and medicaid. again, without getting into too much of the weeds, one step forward but i think another significant step that needs to be taken in terms of trying to make this more meaningful and less of a burden. >> judy, do you mind if i jump in? >> absolutely. >> once a medicaid director, always a medicaid director, unless you are tom and you are always a medicaid director.
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so i just -- the point i want to make is that employer sponsored insurance really took off in world war ii. employer sponsored insurance, so unions had gotten strong. there were wage controls in world war ii. employers couldn't raise wages. health benefits became a way of attracting workers as a loophole for wage controls. so there was a very strong bias toward employer sponsored insurance at the time in 1965 that medicare and medicaid came along. it came along as, who doesn't have access to employer sponsored insurance? so for medicare, it's retirees and people with a long work history and became permanently disab disabled. medicaid, it's a lot of the welfare families. there was a social judgment made that the typically moms of these afdc households shouldn't be working. they had kids to raise.
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there were people with disabilities that didn't have work history that should be on medicaid. so it really became -- medicaid became a health benefit attached to a government pay benefit. sort of an esi analogy, with employers, your salary and health came with it. with medicaid, you got your welfare check or your ssi check, medicaid came with it. then there was this judgment, this very strong social judgment that if you were just simply a poor adult, not a welfare household, not a permanent disability, you ought to be working. that was the social judgment. get your health benefits through esi. that cohort of low income unemployed not permanently d disab disabled, not ssi over the years becomes the medicaid expansion population. part of the origin of medicaid as a benefit was, it was always
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an ancillary benefit to some form of a cash benefit modelled analogous to esi. that framework that it's -- that's the kind of -- it's the trailing benefit. it's not a benefit in itself. it's tied to a cash benefit was a long part of that early period of medicaid really as an adjunct to a dominate esi model at the time. >> ladies first. >> go ahead. >> this is going to be like the republican debates. >> beauty before age, please. >> what does that say about judy's moderating? >> i was thinking of us as the candidates grabbing time. so i think that -- it comes back to the question judy asked and awe le you alluded to which is the work requirement. we talked about that the system
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is moving towards medicaid as health insurance. on one side we're aligning with the marketplaces. we recognize that a lot of our beneficiaries are in snap. we're in snap. so we are trying to align across. but the weightier history comes back to haunt us with calls for work compliance. or calls that people should be on medicaid no more than five years. peurpblly i think we have to resist those calls. i do think they undermine the far reach of medicaid into the future as health insurance and driver of health system reform. >> so can i jump in on that?
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well, i think that one of the aspects that medicaid as part of the evolution needs to look at, for states who expanded, like arizona, we have 50% of our population in the age bracket 19 to 64-year-old adults, which is relatively a new population in terms of who we are serving. medicaid has historically done a great job of care for newborns, low birth weight babies. we really have to take a closer look at what are we doing to engage folks in the 19 to 64-year-old. sit here and debate around that. but part of the evolution of medicaid post aca, what can we do to connect those to other social services and broader care fort population.
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>> as we got into the middle, you know, after 20, 25 years, around 1980, people began to look at what this program was doing and what it was serving and with pregnant women. >> that's where i want you to go. >> this really began in the 1980s with this literature that says we have kids that aren't faring so well. women are bearing children who aren't doing so well. infant mortality in this country was high. and there was a lot of concern about that. and one vehicle for doing that was to provide medicaid coverage for women who are pregnant and infants. so begins in 1986, it became
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mandatory up to 133%. and then children ages 0 to 6. this is all kind of congressional action. 86, 87, 88, 89. and then it was optional for states to extend coverage for kids above age 6 at the poverty level. and then very significantly and this is just a stroke of genius that the congress, congressman waxman in particular, said, you know, this is a time when we can coverage -- we don't want these kids of age 6 to age out of medicaid coverage. and made it such that every child born on or after october 1st, 1983 would continue to have coverage. kids no longer aged out and new kids came on every year.
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and as a result of that we reach add milestone which for me is one of the significant milestones of medicaid. october 1st, 2002, we reached the point where every child up to age 18 in america had been born on or after october 1st, 1982 and on that day america covered every child in america that was poor. up to the federal poverty line. an underappreciated milestone in the program but i think very significant along the road as we go. >> and as vern points out, medicaid's got a lot of years to perfect the coverage of children and moms and kids and that's partly reflected in the numbers that people have spoken about today, the number of births and children that are covered. does anybody want to weigh in on what the future holds for medicaid and kids' coverage? do you think we have still got lots of interesting things to learn? do you think we just need to consolidate our gains and keep doing this work? >> i think one of the discussion points is what's the future of chip?
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and so in arizona, you know, going back to the great recession we have had a freeze in place and when you look at our marketplace enrollment numbers we have the highest percentage of children in the united states by far enrolled in the marketplace coverage and there's the discussion around family continuity and other things like that that are important so i think that's part of the policy debate going forward is what happens with chip. >> and i would say part of it, too, and i know we'll be talking about sbre gags a little bit about immigration a little bit laon. but a lot of the kids that are in the most severely emotionally disturbed or juvenile justice involved or in special ed have individualized education plans, part of the school systems, i think part of where things are going to continue to go is how medicaid can relate to a lot of other safety net programs for kids that are in state custody
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and in special ed and what's the meaning of a medical home if you've got a lot of school-based therapists and nurses touching a child as well as you've got a pediatrician and how do you link care at a more cross program level? >> actually, i think it would be a good place to move on to integrated services. and i think this is another area where medicaid in the past has not given credit for having pioneered some of these approaches, not that they have been universal, not that they have perhaps continued, but a lot of states even as far back as the '70s have tried to integrate services with housing and with mental health and so forth. i think it's being done on a much more systematic way right now and therefore that means it's more likely to really move the way we deliver care. tom, do you want to weigh in on this one?
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>> sure. i can sort of start it out but i'm sure everybody has thoughts and opinions around this. i think the challenge around integration goes back to state governments had in place programs to serve mental health, to serve the elders, those with developmental disables and we medicate and the silos and the structures without thinking 0 of a broader system perspective and how we want the delivery systems to look and what makes sense and so you still see today where many of those populations and services sit outside of the per view of the medicaid director and starting to see i think robust conversations around what makes sense from a delivery system perspective and where you do you look at integration and the statewide policy level and the integration to do there and then a payer schedule, fee for service or managed care and what
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can you do to integrate the payment streams and seeing that across the continuum of services and populations and what can we do to incentivize integration at the provider level? to improve the delivery system for individuals. i look at it as three tiers and this continual evolution of going back to sort of a
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it's -- arizona is exemplary. and there are 49 other exemplary states also in terms of what they're doing in this regard. it is amazing what states are doing now and if you want to look at one place where medicaid is a leader in the health care system, you can look at medicaid. it is definitely, definitely leading. trying things that other folks haven't tried. states are focused and they have the ability to be flexible and one state learns from another. leapfrogs past it. does something new and different and it's truly remarkable. >> so i do want to comment about this. so i want to just contextualize it for a second. a lot of the -- because of the population medicaid serves with a lot of as i said kids with various forms of, you know, they've been through abuse, they have severe and emotional disturbances a lot of adults, the highest rate of severely mentally disabled adults and there's integration.
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some is medicaid maximization and how to get the federal medicaid funds in to serve needs that maybe the state was picking up entirely through a state safety net program. but there are and there's been a lot of work to integrate services at the medicaid beneficiary or the medicaid member level. but i want to i guess sort of couple of comments. one of there's a lot of real and ongoing challenges in this area. a lot of state and local agencies that their core has always been getting grants. they haven't had a claims-based insurance-based system. how they -- how our state agency partners get engaged with medicaid when they're more accustomed to giving a grant to, for example, a core service agency or working sort of more autonomously of an insurance model or medicaid model. how those come together is an
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ongoing discussion. from a governance point of view, a mission culture point of view. but i think the second point i want to make is the trend for those of you who have -- kind of trying to kind of guess where the puck is going with all of this stuff, the trend clearly is integration. it is integration at -- i want to mention three levels. one is at a clinical level so that you have if there's psychiatrist or if there's a nutritionist or a school-based iep that they're integrating at a clinical level with the child's pediatrician, their care coordinators, their other systems so that there is one treatment team. there's one treatment plan. everybody knows what's going on across payer sources, across agencies, across sites of care so at a clinical level there's that piece. there's integration at a provider level which is coming along more.
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you're seeing the centers focus on integrating behavioral health and schematic care and seeing hospitals get very engaged as they have readmission and other standards that they're learning more about for medicaid and medicare. they're identifying that fully 50% of the emergency room department visits have an underlying condition and shocking news for a lot of hospitals that haven't paid attention and so you've got at a provider level greater emphasis on integration and then at the payer level how you finance it to drive those incentives. and it is clearly the trend and there's clearly room to go. but medicaid is driving those trends. >> so, may i jump in?
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i have two points i want to make. first is both tom and chuck alluded to this. in some sense we have met the enemy and it's us. right? because at the state level we have got these silos that we have been living with. we have the medicaid director with the authority over physical health. then we have a substance health agency, mental and then probably developmental disability agency and then we often have the counties who had a level of responsibility on mental health and substance abuse and now we want to integrate. so we start with we have to work across our own agencies and agree on how we purchase and deliver care and i think we see it playing out most particularly in medicaid managed care and i
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want to shift us a little bit, judy, if it's okay to medicaid managed care because that is the dominant delivery model in states. not in every states but it is increasingly the dominant delivery model and when we started out, say in the '90s we were serving moms and kids. we carved out substance abuse. we carved out mental health. and we delivered physical health care to moms and kids. and then that took us through the '90s. our rate setting wasn't that sophisticated. by the early 2000s that's starting to change. we are getting better at it. we can focus on more than of the network adequacy and marketing tactics and starting to think about how do we set rates to ensure a continuum of care, comprehensive care and actual care management by our health plans so then we start to move in the populations that have mental health challenges, substance abuse disorders. our elderly. right? and now we have to move in the services they need. a-ha. integration becomes critical. what do we do about social
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determinance of health when we're moving the homeless into managed care and we're moving more people in if we're an expansion state. and so, we now really for the first time i would say in the last few years are using the contracting power to say to plans, this is what we want. and to impose on plans the requirements that will enable them to hopefully successfully serve individuals with serious behavioral health problems so that we're now in a better position. we still have the silos to some degree at the state level. we still have the counties. we still have mental health agencies not adept and starting to integrate at the plan level and requiring it at the provider level. i bet tom could speak to this. >> let me say -- >> first judy is going to speak. >> i have to be the older historian here because i go back further than tom in arizona. because actually, in my opinion, medicaid really invented managed care in this way that we know it
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now. there was an hmo bill in the '70s and there were long standing prepaid health plans but medicaid through some extremely bad decision making and some very bad plans in the '70s really set the stage for what happened in the '90s and in the more recent years. and arizona bears a lot of the respect and responsibility for having invented a lot of how we do managed care in this country in my opinion, especially in medicaid, but in other places, as well. so, now, that said, i'm happy to turn it over to tom to talk about the medicaid managed care system in arizona which really has taught us all how to manage and contract and provide services in a way that makes sense.
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>> well, as the last state into medicaid, you know, we came in with sort of a fresh look at how we wanted to deliver services and that included really leveraging 1115 waiver authority through very broad flexibility and established mandatory care that was an integrated delivery system for individuals like the elderly and the physically disabled which really at that point in time was early innovation in medicaid managed care and we learned a lot of lessons along the way in terms of what not to do and we really tried to share some of those lessons with states as they're looking to roll more frail and challenging populations into managed care. but what's really been i think wonderful to watch is the evolution of medicaid managed care from moving to prior of and strict um requirements to discussions talking about value-based arrangements, we're having conversations about the
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social and economic determinants health and we have equity to keep on reserve with us saying that they want to invest those dollars into buying homes for -- not homes but, you know, being able to partner with non-profit organizations to provide housings for individual that are homeless. and so you really see this significant shift i think in managed care that's part of the evolution of dealing with, you know, not just moms and pregnant women but looking at more challenging populations and it's really been something that's been really fantastic to watch in arizona but now also national. we have 70% of the medicaid population in managed care represents about 45% of the dollars and the dollar amount continues to grow and i think what's interesting, as well, is not only has the approach around medicaid managed care had a
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positive impact for those states that have rolled that out, i think it's also changed the dynamics for state that is have relied on fee for service because you see states like oklahoma and connecticut taking approaches around managed fee for service programs and coming up with care management strategies, as well. so, it really has been something that when you look back at the history of medicaid, you've seen an evolution of managed care and it's a platform. >> i think there's been a lot of good but there's been a lot of bad and ugly in managed care and vern can maybe reflect back on some early managed care -- >> the ugly. >> activity that is he remembers and then i'm going to call on chuck so we'll all get our chance. >> managed care really is the platform on which a lot of system reform is happening right now. but -- and a lot of the experience of managed care in medicaid and began in the '70s. michigan signed a contract with an hmo in 1972 before the federal hmo act and by 1980 i
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think 90% of all medicaid beneficiaries that were in managed care were in just three or four states. so but california and florida in particular, new york maybe to a certain extent, but there were certain things that happened that were highly visible and highly negative. there were people who enrolled or were enrolled in managed care and received no services, systematically denied services. mlrs less than 50% and other scandals also that came out. that resulted in some initially some basic -- i mean, it's funny to look back on this now. 1976 social security requirements put basic requirements, there were three on hmos. no discrimination based on medical need, records to show
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which provider provided a service and the state had -- was given the authority to inspect the records. that's it. >> that was it. >> that's it. so we have come a long ways now. learning from that experience and, you know, some of us in the states were happy to, you know, share that experience with arizona so you can benefit from that. >> appreciate that, vern. >> the federal government was a very big part of some 1115 work with california in the '70s. and in designing and developing actuarial systems and a lot of things that still form the basis for a lot of the contracting of -- between states and managed care organizations. chuck? >> so, vern having just pointed out that michigan was doing stuff before arizona even had a medicaid program, in 1982,
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arizona i guess the wagon train took 17 years to get out to arizona. i am going to resuscitate arizona in my comments for a second. so there were abuses as a lot of states got into managed care early and the ones we haven't mention reasonable doubt the marketing abuse where is the plans really try to cherry pick members and weren't doing -- they were doing direct outreach and calling people at the home dinner tables and misleading folks about enrollment and led to federal oversight activities but the thing to point out why i think medicaid was a leader in driving quality and driving real think triple aim before it was defined as a term is that in medicaid states did not have the ability to really kind of narrow networks the way even early employers did. states did not have the ability to use cost sharing, the try to deal with utilization and dealing with quality. states couldn't say, you know, we're going to -- if you want to
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hit the e.d. for an inappropriate use, you will have an out of pocket. and so, states had to really focus on this is your provider network. this is the benefit design. you don't get to play around a lot with the benefit design. there's mandatory benefits an you can't say like carriers say to an employer next year to keep this price point, you know, you have to put all of these new benefit design requirements and cost sharing requirements and narrow network requirements so medicaid very early on focused on how do you get the most value for a benefit package that you don't get a ton of play with, cost sharing that you can't really engage the members that way with that kind of hammer. so what that meant was states
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really early on was focused on measures, ncqa, looking and using counter data before other payers looking at counter data, to look at access, volume of services, mix of services, outcome of services. states were very early on requiring their health plans to get ncqa accredited and now and this is the part i want to give a shout out to arizona, one of the things that arizona is leading the country in right now is saying, okay, if the managed care organization is getting capitation, what are you doing downstream to have the providers similarly focus on outcomes? about preventive services, about care coordination, about linking, making sure people get their meds, making sure people avoid readmissions. and so, arizona is really requiring their managed care organizations to have value-based contracts downstream so that providers have skin in the game about outcomes that -- in other words, it doesn't look like managed care simply on the capitation payment from the
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state to the mco but all the way down to every provider, the provider has a pay for performance shared savings type of incentive to get good outcomes and to drive provider engagement in delivery system reform and quality and this is another example where arizona's leading the way. >> there are many states involved that conversation around how to really leverage value-based arrangements. i think another interested aspect of managed care and fee for services, not only quality but developing networks in areas where networks didn't exist. home and community based services, behavioral health services and so you really see this array of service that is evolved over time that were created by medicaid to help meet the needs of our members and i think that's an important aspect out of the managed care space and out of the broader -- >> right.
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as we take the contracting requirements which you both talked about and states are starting to say to the plans, we're going to give you the capitation rates and we want to see how you pay providers. we want value-based purchasing. i think the next step is how do we align our requirements with those imposed on the qhps? the qualified health plans in the marketplace. and why shouldn't we be requiring through our state-based exchanges or through our insurance agencies some of those same requirements on the qhps because they're contracting with the same providers and our impact is that much greater if we start aligning across medicaid managed care and qhps and i think as medicaid gets smarter that's where we're a driver. >> and if i can just say one thing. we have come so far and medicaid has come so far. they have been so much more sophisticated in
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what they ask for and what they put in the contracts for managed care. and i just point to my own state of michigan. >> michigan. >> now the most advanced rfp procurement for health plans in the history of medicaid in my judgment on this. i don't think there's ever been a time before when health plans required as part of the proposal process to commit and describe how they would address social determinants of health, population health. how they incorporate the value-based purchasing you are talking about. it's really a model and sets the bar at a higher level and other folks find a way to build on and improve on. >> i want to bring us back to the thought that these kinds of innovation that we have been discussing here go way, way back in the medicaid program. of course we're more sophisticated of how we do these things now but before medicaid managed care contracting and quality measurement and value-based contracting and all of that appeared on the scene
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and was developed at arizona or wherever, it didn't exist other places. so we really have as a program, the medicaid program, has been very innovative starting in the '70s and going forward and we are still on the cusp of doing more in the future. so i don't want to beat this dead horse too much. it is my belief, my strong belief, that this program has been very innovative, has led the way over the years in many, many ways and then we'll discuss a few more and then turn to you all and ask if you would like to say something. one of the ways that medicaid has driven data which the secretary mentioned and which is always been a serious, serious problem in the program but -- and systems work is through i.t. and i think that, frankly, the whole world of health care and health care delivery has suffered except for medicare.
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medicare did have a data system. it did know more about its people and that's unfortunate because then we always got compared to medicare. but in terms of processing claims, for example, and the development of technology and that area, medicaid was way ahead of medicare so i'll ask vern to say a few words about that and then i think we could look at where we are headed in the future on this subject as well. >> well, it's really true. medicaid was more sophisticated than almost any health insurance payer or purchaser early on. in the beginning, of course, medicaid piggybacked on whatever -- whoever could be the intermediary, blue cross plan or whatever as it came on. but states began to look at what they could do and it's so interesting to compare where we are now in terms of performance me tricks and focus on outcomes. in the '60s and '70s the
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performance metric is how fast you processed a claim and what your overall administrative costs were and we knew to the tenth or the hundredth of a penny what it cost to process a claim, how fast we paid that claim. it was -- i remember before the medical society health delegates one time being paul allen and the medicaid director at the time introduced as medicaid doesn't pay much but you pay fast. we were the best. and the reason was -- and that was really significant in terms of fostering provider participation and access to the program to have a program that paid very well. but medicaid decided to develop its own claims payment system. and built a model, an exemplary system, that had the largest computer system in the country save the pentagon at the time. it was the first -- >> michigan. >> -- in michigan's system. developed a system that, oh,
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claims came in by paper in those days but usually keyed in. michigan had the first optically scanned system. every claim form came in. we were able to process like six claims a second. a million every 48 hours. those were statistics before every legislative session. and really drove down the cost of processing the claim by half. it was so significant, paul allen, bless his heart, invited to go speak everywhere in the country on this. so much so that after he said one more thing about how michigan was doing at medicaid state-only meeting chair of the medicaid directors association said at the time do you know how many people it takes to change a light bulb in michigan medicaid? two. one to change the bulb and the other to go around the country telling how well you did it. >> where are we in terms of systems at this point? it's a much bigger question now because we really need to be integrating and looking at the
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marketplace. you brought up some of those kind of things. the feds have got tm coming out. there's more data and helpful and we need that to run the kind of program we're running now but where do you think we need to be going now in this area? >> sure. so there ae of things that i think medicaid and public sector's purchasers are driving a lot. one is i do think that as medicaid becomes part of a more seamless insurance model one of the -- the push for health information exchanges, the push for more adoption of electronic health records providers' offices and meaningful use, i think that part of where medicaid is going to help drive
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and medicaid part of the innovation center part of this and where i think things are really going now is how to drive delivery system improvement where medicaid is really largely kind of -- the venture capital, if you will, of driving provider changes and behavior more realtime data sharing about when people hit the e.d. what their electronic health record looks like so i think a lot of where medicaid is pushing in terms of technology is how that 70 million person program that have a trillion dollar budget is going to drive adoption of better clinical care through the use of health id and then a stand alone basis, i think the
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data is going to be used more for health outcomes, how we really look at change in health status over time, how we use more of the diagnostic data, more of the -- are we helping people maintain their functional status? are we helping people maintain their chronic illness? and so i think it's going to be much less about claims payment, much more about health outcomes but again i think the bigger trend, honestly, is how medicaid's going to tie to other -- how it's going to link to other payers through hies and hir to drive real practice transformation. >> two comments if i can, judy. we had our state only day yesterday and hear from the medicaid directors. the mmis process and standing one up is still a struggle. after so many years -- >> so many years. >> decades. >> the traffic for medicaid programs and so, you know, even though i may have been a
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medicaid director forever or whatever you said, chuck, i have vowed not to stand up at mmis at arizona and i'll time limit and somebody else will have to take that on but you see more states moving to a partnership model. we have provided hawaii for a number of years. you have michigan and illinois partnering. west virginia and the virgin islands. and so there's abilities to try to get some economies of scale through a partnership like that. it takes a lot of work in terms of working between two sovereign states how that evolves but it is still a challenge on the mmis and medicaid directors are frustrated by that. it consumes too much time. in terms of standing up that basic infrastructure. and the second point i make is just following on a comment you made, chuck. that is the hie. we spent billions of dollars putting electronic medical records out there and there's a significant lack of connectivity around that and having viable
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hies in a region or a state are incredibly important and medicaid has a role in that. but that also is a challenge. for medicaid programs and opportunity but it's a challenge in terms of seeing that connectivity that we all desire within health care. >> deb, can you play-off of this idea of the systems aspects of moving forward and delivery system reform and speak a bit about your work with disrip and whether that does become a package that needs to be looked at together? >> well, and i think yes it does and i think it even goes much broader than the i.t. system support and i picked up on something chuck said. he said medicaid is the venture capital of venture capital reform. disrip is that. >> in a few states and in more. but that's the problem. that's only one source of the capital.
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if you don't have a disrip, which is the capital? where is the dollars to invest in delivery system reform? so let's look at what disrip is bringing to the states and as tom rightly says some states. more probably in the future and nowhere near 50 and through this waiver, this disrip waiver, the federal government is matching costs not otherwise matchable. you know, those cnoms and disbs and allowing states to bring in additional federal dollars a in some sense cms is smarter over the years and not just allowing states to take the money with a promise of we're doing good things, a promise of supporting safety net hospitals and what the disrip has required and we always start with new york but we're seeing it play out in other states now is the state needs a concrete vision for delivery system reform. delivery system reform in medicaid that will drive system
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wide reform and starts with medicaid. these are medicaid dollars. what is the core of your vision? what's that integrated delivery model? pps, aco, rco? that is the integrated model that is bringing new partners together, hospitals, maybe health plans, community health agencies, social services agencies as the super piece, the funding stream for testing new initiatives, funding the ehr where necessary, funding community health workers, testing those new models. meeting metrics and then what's the key? sustainability. here's the capital dollars but at the end of the day the state has to show a sustainable plan and of course as states that's what we want. we want it to be sustainable because like it or not that disrip dollars will go away at some point and then we come back
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to the operating dollars. can they sustain the new delivery models? i think disrip is hugely important and a last comment. sort of to tom's point. not every state is going to get the dollars but they're important learnings from the states that do that can be used across the country. the challenge then is where are the dollars to implement the learnings? >> anybody else want to weigh in on this subject?ñ"btñ it is an important one for the future for sure. you know one thing we have not talked about this morning that i think we really need to talk about. did you want to say something else? >> no, no, no. >> long-term supports and services. you know, it's kind of interesting as i sit here and think over the 50 years of this program that it has changed in the long term supports and services but it's changed way more slowly i think than other parts of the program. i think we're on the edge of much more meaningful change. calling it long term services and supports instead of long
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term care for starters. would somebody like to talk a little bit about this where we have been and where we're going? >> sure. i'm happy to start. so let me just define a couple of terms first. you know, long term supports and services is really the spectrum that includes nursing facility care, includes institutional care in places like intermediary care facilities for people with intellectual disabilities, includes a lot of in-patient psych and other kind of places but it mainly now includes a lot of home and community based services and so there has been i think -- there was a very, very strong institutional bias in medicaid going back a long way and some of it's policy related going back a long way.
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nursing facilities were mandatory. the care was a mandatory benefit and home and community services was not. the way the financial eligibility rules worked for medicaid, if somebody was spending money or would be on a nursing home care you could count that as a medical expense and so states that had spend down rules to say i'm spending it on medical care and then eligible for medicaid and can't spending money empty community on room and board, you can't get an eligibility card. you are not eligible. and there were lots of other sources of bias. there has been a very strong trend in recent years to move toward community based long-term care and long-term services and supports. it has a lot of drivers, one of the drivers is the ohm stead decision of 1999 which made it a civil rights issue to be able to go into the community and be integrated into the community so that people weren't segregated in an institution just with other people who looked like them and had the same disabilities but to be in the community where they could see friends, greet friends, go to
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church, work if they could work, be part of, you know, in the neighborhood. there were other drivers related to a lot of advocacy. there were a lot of advocate groups that also viewed this as a civil rights issue to be able to be treated like other people, to be in their own apartment, their own home, they wanted to have self direction, self determination. one of the advocates that i talked to in my first stent as a medicaid director said, and this is not a new slogan, but he said, don't design anything about me without me.
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because this is my life. and so, where we have seen it go and i want to sort of tie a couple of things together n. the development of community-based home and community-based services, medicaid has really -- this was to me one of the early places where medicaid was driving on social determinants because the services were often nonmedical services that were dealing with somebody's challenges that were -- that had a medical outcome if they were not met but it was really more about housing. and homemaker care and meal preparation. and so, there has been a very strong push and i think olmstead was a big driver, i think advocacy from a lot of community advocate drivers were a big driver and the baby boomers ageing into the programs and they are not shy about advocacy in general.
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has led states to be really innovative in moving more long-term service and support financing and design into the community where you have got a lot of money going toward really non-medical services. building environmental modifications. people hear about wheelchair ramps and grab bars. there's a lot of work going into buying microwave ovens and window unit air conditioners to keep somebody at home instead of going into a nursing facility. you hear about attendants helping people with bathing and dressing and using the toilet or homemaker services about just keeping the home clean. and dealing with housing issues. nutrition and food issues. but it has been a very slow trend over the years. partly because the nursing home lobby is very strong.
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partly because there's a lot of bias in the law toward institutions about financial eligibility rules and covered benefit rules. but you see more and more for all populations that have ltss needs, whether it's seniors, younger adults with physical disables, individuals with intellectual disabilities, people with mental illness, much more focused on doing design to address social needs that avoid medical costs in the community. so, i think the trend is in the right direction. a lot of states are picking up the pace. but it's been to me one of the earliest places where medicaid really saw a connection between avoiding a nursing home cost or a hospital cost if you just help somebody get their meals at home safely. >> what a great summary by chuck and two points quick to add on top of that. we have reached a milestone spending more money on home and community-based care. that was just achieved this past
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year so i think that's an important milestone. and i think the dynamics around the politics can't be understated enough. my friend john mccarthy talks about more nursing facilities in the state of ohio than high schools and hard to overcome that dynamic as you look to transform a delivery system. >> but yet, another place where medicaid innovations way, way back in the program which weren't widespread and which weren't universal but helped us learn and helped get us to where we are today. which is where people think we ought to be moving, i think. >> judy, can i just -- one really quick shout out.
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so waivers began in the early 1980s and part of the history we are talking about, and it came about largely because in iowa a young girl katie beckett was in a hospital and there was no way to go home and retain eligibility and get services. senator grassley and others got advocacy from katie's mom julie beckett and hcbs waivers created because there was a need. there was good congressional action and then states in varying rates picked it up but this is a trend that as tom said we just finally crossed the milestone that more than half the funding is going to the community. but this is a trend that started in 1982 i believe. >> it did. o brady 1. >> yes. i neglected to pick up the gizmo to give us a couple of slides. when i walked by this podium. so now i'm going do get that. one of the ways that these changes and invasions are made in the medicaid program is through people like yourselves who are dedicated to running an
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excellent and ever-changing program. so, i want to do a quick commercial for matt and his staff and the namd 4th annual medicaid operations survey because in order to accomplish the things we have talked about here today, and that the past has been setting us up for, you need to have a lot of people and a lot of administrative capacity and i want to quickly go through these and then a brief conversation about administrative capacity before i turn it over to you all for questions and comments from the audience. these are the -- just a few slides from a study that is on the internet this morning and you can go and look at it if you want to see the whole thing.
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it's interesting to note first that aca implementation is not at the top of everyone's list right now. they're moving on to some other things. these are new strategic directions. they have, in fact, developed in most state agencies new strategic directions for -- overwhelming number for the coming several years. payment reform and delivery reform are at the top of the list. and you can see the different kinds of payment and delivery system reform efforts that the states that you all are engaging in. and ltss is a major priority, obviously, for the reasons we have been discussing. this one's kind of sad. this is the list of barriers that exist to implementing reform and look how many have to
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do with resources, people resources, obviously, are a very, very big deal. so with that as background and with you all having run medicaid programs and tom in the enviable position of still running medicaid program, i'd like to wrap up our conversation before we turn it over to the audience with some comments about what you think the future holds for medicaid in the management and administrative world. who wants to start? >> i'll be happy to start. first of all, these slides are very dramatic, especially that last one. you know, medicaid has always been under appreciated for the role it plays in the lives of so many americans, especially vulnerable americans, those with real serious health care needs. but in the same way, the staff of medicaid programs have been under appreciated for what they do to make this all happen. and i really do think that tribute has to be made to the staff, the directors, the leadership in the state for all that has been done along this line. you know, medicaid -- there is no program in all of state government or maybe all of government everywhere that provides better value for taxpayers than medicaid does. serves a very vulnerable
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population. the cost per care is less than anyone. rate of growth is less than anyone else. serves the population in a way that really, really provides great, great value. and, you know, the folk that is do it all don't get the credit that they really should. you know, in our office, i thought of the sign that said, you know, nothing quite focuses the mind as facing the gallows. and you know, medicaid is a financing system. medicaid, you know, spends a lot of money. there's always one of the constants is fiscal pressure and states have responded to that by developing these programs, getting better value for all of the state dollars that they send. in the process of doing that, state medicaid programs have saved the federal government
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hundreds of billions of dollars because medicaid at the state level is really driving these processes. these programs. to provide such great value. >> i'm glad you brought up the budget issue because we didn't get to money here and that's really not acceptable when you're talking medicaid. >> so i just despite -- i agree with everything that vern said as i suspect all of you do and we provide tremendous value but what were the two biggest obstacles to running medicaid well in new york and i suspect in other states was staffing and procurement rules. staffing not enough staff. i had 700 people reporting to me. the medicaid inspector general had 700 people reporting to him. what's wrong with that picture? procurement rules which also go to some of our i.t. issues, right, in new york if you could get a procurement through in 12 months it was a bloody miracle. 18 to 24 was more likely. so and those issues aren't going
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away quickly although i do think medicaid is more appreciated now, certainly with the expansion. it's more appreciated. medicaid directors are more valued but that's not going to change our staffing and procurement rules. i think one shot we have is with our systems. if we can start to align medicaid on one end with the snap program and shared dollars, share system and on the other end with the exchanges, and look at a system that supports exchange eligibility or marketplace eligibility and medicaid eligibility, if we could start to use those systems well, i think we can be more efficient which will be helpful. >> so folks are interested in this topic, we have a special breakout session dealing with medicaid leadership and we're
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going to delve more deeply into this and a paper done by andy alison and other thoughts around medicaid leadership but at the end of the day medicaid organizations are mission driven organizations, people in medicaid because we have the ability to make a difference in the communities in which we serve. and it's part of what makes coming these meetings invigorating is meeting with peers and talking about what's going on within our states. it is exciting to see all the innovation but i know what drives us also at the end of the day is not only the ability to improve outcomes but to deal with that sustainability issue. you know, for those of us that lived through the great recession and we had to cut provider rates and eligibility, there's got to be a better way to manage a system longer term than having to go through those very difficult decisions. and, you know, we are going to go through those cycles again and we'll have to face difficult decisions but hopefully we are making investments now in terms of modernizing the system and evolving it so we can have a more sustainable system.
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i speak lot to college groups. how has medicaid impacted your world? and they say i really don't know. and then i say in arizona tuition doubled in the last six years because of the costs of health care and how it squeezes other state priorities and so, you know, looking forward, sustainability is one of the significant overarching issues of medicaid that directors face. >> so i want to actually i want to put out a little bit of a call to action to all of you. the last time i left a medicaid job was about a year and a half ago and what happens in a lot of states is at a state personnel classification system, the people in medicaid are kind of compared to people doing health related jobs in other agencies and state government. might be a health department or some place else. and what is happening in
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medicaid and i think you have learned some of this in this morning's session is complexity of the program is growing. there's a lot more work about data analytics and quality measurements. there's a lot more need for health care economics, for actuaries, there's a lot more need for people who can really manage very, very complex contracts and complex vendors such as me. and i think that what that means is that the skill set is changing over time. it's not -- the people who are needed by state medicaid agencies to help run the programs, to drive value, to look at the data, to do clinical work about, you know, when's the right hepatitis c coverage policy, to help drive the right
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payment levels, the right payment incentive design, these are actuaries, chief medical officers, these people with really high skills dealing with big data sets. they're compared in state governments to job descriptions in other agency that is are not like that. you might have a contract manager, a health care contract manager role and looking at somebody in one agency managing a $1 million hersa grant and the same person in the the same classification on the medicaid side managing a $500 million mco contract with complexity of requirements and hetsa measures and pay for performance. and so from state budget departments, from state legislatures, they're kind of reluctant to take on mucking around with state classifications systems. but i think that that's needed. and so, as all of you do your own kind of government relations work, government involvement
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work with legislatures, governors offices, state budget offices, help them understand that your success, the state's success, medicaid's success, beneficiaries' success depends on the states following through on the requirements of the programs in these complex times and you would be well served helping carry some of the water for your state medicaid agencies, to help them drive a sustainable, effective program because that's in their interest, it's in everybody in the room and really quickly. i'm going to botch this quote i'm about to try to do this. teddy roosevelt had a quote of the man in the arena and it was a quote about how, you know, for critics to stand on the outside of the arena and look in and say i could have done better, i should have done better, that
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the credit belongs to the people in the arena. the ones who are doing it. sweating it out. sometimes they win. sometimes they lose. sometimes they do a great job. sometimes they fall on their face. but the credit goes to the people in -- in the arena and that is certainly the medicaid agency staff. that is certainly all of you. and so, help the people in the arena. so that's my call to action to all of you this morning. >> with that, let us go to you in the audience. do you have questions or comments or do you want to share a good story? we -- i have to say we could go on for hours and hours and sharing good stories. not even really trying to keep this on track. >> david. >> i see the hands of two former medicaid director association chairs. david, you want to defer to don or take it? >> there we go. >> thank you. well, that was a great panel. i'm donna checker, recovering missouri medicaid director and now with etna and the greatest
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job with a big emphasis on the had. but terrific panel. i'm so amazed that you all didn't talk about provider taxes, voluntary contributions in terms of great trends. it was, you know, the '90s and " a great panel. you all didn't talk about voluntary contributions. great trends, it was the '90s, and there are many stories that would have to be handled after hours, in a bar. but i would love to hear, in particular, vern, because i know he was a major leader in that, and anybody to comment. the serious question, there's lots of fun stories about it, but really, i think it really goes to the key questions about long term financing of the program, federalization, and when we have states continue actually trying to keep a critical program like medicaid going. >> and the downside of federalism issues. >> exactly.
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so i'll turn it over to you all. thank you for a great panel. >> thank you, donna, former chair of the medicaid director association. and a pioneer in the use of provider taxes. broke a lot of ground, among the many ways medicaid has been a trailblazer, that would be one. but i would say medicaid is sustainable in many states now because of the use of provider taxes. even though in some ways they're controversial, a state that doesn't doo these things that ae completely legal, you have to do it, and without the use of these, and every state now except one doesárfrz a provider or fee of some kind, the medicaid program could not be sustainable with the funds that are available at the state level.
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i agree with that. itgs and governmental transfers sit alongside them, very important revenue stream. they bring up the question we will have to look at in the near future, is supplemental pages. how they are used to fund dish and upl payments and how those fit into value-based purchasing will become an issue that all states will have to look at going forward. >> and i'm currently involved in litigation with 36 legislators. so my attorneys have told me not to comment at all on things relating to assessments. >> so you'll listen to them. >> yes. >> one of the areas of integration that we didn't cover that much this morning was integration between medicaid and medicare. and personally, i think that
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until the federal government moves far enough to allow the states to fully manage an integrated, funded package of care for what we call the dual eligibles, all these experiments we are putting out there are going to fail, that there's not enough flexibility for the states to fully manage that benefit. i would be interested in your reaction to that controversial statement. >> i certainly agree that it's a topic we should have covered in our time up here. it's a very important topic, given the population served and the complexity of the delivery system for those that have to navigate medicare and medicaid. there is some phjb)e in the fact that just the fact that states and the federal government are partnering to try and take this on, after 50 years that we actually have some demonstrations in place. it's a been an issue that medicaid directors have highlighted for decades and really had no progress. so let's at least appreciate the fact that some states have been able to stand something up. it's far from perfect. it is a struggle as a state that
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made the decision not to pursue the demonstration but to go a different route where we mandate our organizations. it's an important issue for many states. it's trying to figure out what the right path forward is. but it's clearly something we need to have continued conversations around. what is the solution for duals to come up with a model that's going to best serve their needs. >> other questions? we definitely did not cover everything. those are not the only two things we wrote down. >> a couple of things, vern. one in terms of the provider taxes. i agree that it may be a sustainability issue. i think it also leads to questions whether the whole financing mechanism is a sustainable mechanism in terms of the state financing of an ever-growing program. but the other thing i wanted to
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say, and i hate to sound too negative, but lots of great information, none of which i really disagree with, but over the last few years, i hear more and more and more about -- from the political side, about how medicaid is a broken program, which i don't think it is, but that's certainly a perception out there, or at least the rhetoric. how do you all thing we can get the message out in a way to the public, outside of this room, about all the great things that medicaid really does do and the importance of the program to the whole healthcare system? >> good point. good question. anybody want to start? >> mike, i wanted to pick up on the two parts.
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i think i agree, with respect to the provider taxes, i would agree with donna and what vern said. it was an essential part of financing and helped with the sustainability. i think that in some ways a lot of reliance on provider taxes can chill delivery system reform, because a lot of providers that are receiving the benefits of the taxes they're generating are harder to engage because they feel that they're a different kind of partner with the state, and that they have veto powers in some markets, in some situations. but i think with respect to the comment about medicaid being broken, i'm reminded almost of the yogi berra comments about restaurants, nobody goes there anybody because it's too crowded. one of the things that managed care has done is dramatically reduced the stigma of medicaid.
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people are in mainstream delivery systems now. i don't think that medicaid is broken. i think that what that is a proxy foris a comment about financial sustainability over time. i think what that's a proxy for is, can we sustain, whether it's federal funds or state funds, a coverage program like medicaid. i think that's playing out with a lot of the 1115 waivers. i think we should all continue to work on a sustainable model for value-based purchasing, essentially. >> i think it goes partly to the complexity of medicaid. we have providers who still confuse medicare and medicaid. part of it is when you're having to explain this
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we're waiting for a forum hosted by the lexington institute. we're live on capitol hill for this event. the lexington institute organizing today's forum to discuss ways of improving management and procurement at the defense department. we expect to hear from matt c carey, who is the ceo of the lexington institute. on our companion network c-span today, we're covering the florida republican party's sunshine summit, and speeches by a number of gop presidential candidates, marco rubio speaking right now. we expect to also hear today from ted cruz, lindsey graham, mike huckabee, jeb bush, donald trump, and ben carson. that's all live today on c-span as our road to the white house coverage continues. and that event continues in florida tomorrow as will our live coverage on c-span. here on c-span 3, we're live on
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capitol hill, the lexington institute, a forum on ways to improve management and procurement at the defense department. it should be getting under way in just a few moments.
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ladies and gentlemen, thank you all very much for joining us. my name is merrick carey.
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we appreciate everybody taking time from their schedules today. we have a great roster of speakers. this is part of our series of on defense acquisition reform. it's become a very important, focused, and intense effort in recent months thanks to the ndaa and other developments out there. we're glad to have such a great group of speakers and such a good audience. if you don't mind, please turn your cellphones on silent for the remainder of the forum. please keep your side conversations to a minimum, that would be most helpful. we're going to do a series of back to back speeches from our experts. i think you'll like to forum, if you haven't been to one of ours before.
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we'll just go boom, boom, boom, through the speeches. phil jasper from rockwell collins. he has multi-decade experience in bomber, helicopter, and other important aviation programs. we are glad to have you here and look forward to your remarks. >> thanks, mac, for the introduction, although the multi-decade part, i'm not sure, makes me feel a little bit old. thanks for the privilege of being a part of this event. i'm here because i believe defense acquisition reform is ultimately all about working together to help the war fighter and to keep our countries safe. and while we may have delivering viewpoints on how to intrusimpre system, i think we can all agree that when people's lives are on the line, they should have access to cutting edge, affordable, effective
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technology. for decades we've been working together to improve defense acquisition. some of you may say that we've seen little success. but i would like to think that we've been moving in the right direction. however, i am concerned that we're starting to move backward. to explain why, i would like to share with you a case study about our company. if you worked with my company a few decades ago, you quickly learned that rockwell collins was split into two completely separate different businesses. largely due to the imposition of government-unique terms and conditions, audits, cost accounting, and other costly tracking and reporting requirements. one business served the government customers and the other business served the commercial customers. this separation included duplicating all functions and establishing separate production, research and development, engineering, and administrative functions. the reality was the cost of
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compliance with government-unique terms was such a burden, that it couldn't be supported in the commercial marketplace. the result was that our company wasn't efficient, our military products were unique and expensive, and our dod customers were not getting the latest, most innovative commercial technology they needed to be successful. but in the 1990s, that all changed due to the enactment of the federal acquisitions streamlining act, the federal acquisition reform act and other initiatives. through these reforms, the federal government reached out to the commercial industry and was able to reduce the barriers to enable them to provide their innovative and cutting edge products and technologies. from our perspective, the reforms enabled rockwell collins to leverage our commercial innovations and eliminate overhead redundancies, which in turn reduced costs. under the annual created f.a.r.
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part 12, we brought forward our technology in which our businesses invested heavily. we streamlined our operations so our corporate and shareholder goals could be achieved while satisfying our dod customer needs for affordable and effectivev1,d technology. the advantages have been profound for our government customers. for example, using commercially available technology, our precision lightweight gps receiver or plugger saved the dod over $300 million. over the past decade, rockwell collins has invested $200 million to build and support 17 gps product lines. these receivers are all of a type available in the commercial marketplace, and yet still meet the government's security and unique military environmental requirements. the use of commercial-based technologies on the kc-135 global management upgrade program enabled the air force to
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leverage hundreds of millions of dollars of company-funded commercial investment and resulted in completing the upgrade in less than half the time of previous programs. we saved the dod more than $160 million in development costs for the common avionics architecture system, an open architecture system that was incorporated in the black hawk and shnook helicopter fleets. the displays on the tanker are state of the art because they were first developed commercially for the boeing 787 and then modified for military use. secretary carter has made it clear that the gap between the defense and commercial marketplace must be bridged. as you can see from the examples i just mentioned, we understand both worlds and are in a great position to provide more innovative commercial technology to the war fighter. and this is why we've been a long time advocate of commercial
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f.a.r. part 12 contracts. we have seen and have experienced the mutual benefits. our military customers save on expenses for development. they don't have to worry about managing obsolescence costs. and they have access to the latest commercially developed technologies in a more timely manner. our company can leverage our commercial investments and innovations and eliminate redundancies. but the problem for commercial companies like rockwell collins is that acquisition processes and regulations are ever-changing and are often in direct conflict with providing commercial technology to the government. despite the rhetoric of breaking down barriers to commercial companies, it feels like the acquisition system is resisting allowing companies such as ours to provide modified commercial technology to the department of defense. for example, a decade ago, we received a commercial item
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determination for our commercial displays with slight modifications to be used on a military helicopter program. that is precisely what far part 12 envisioned, to facilitate dod's access to innovative commercial technology that could be slightly modified to enable the war fighter to use it. in the case of our displays, that meant doing things like ruggedizing the box or enabling filters for use with military night vision systems. in the acquisition world, these are referred to as commercial items of a type. they're not exactly the same as the commercial product, but they're pretty close. now, even though we have been providing those displays for more than ten years as a commercial item, last year the government challenged that determination. it took nine months to successful resolve that
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challenge, to reaffirm that they are indeed commercial items. but there's more. just earlier this month, the government has again challenged the commercial position of those displays. here we go again. this is not a good formula for the long term success for either party, and it's certainly not a formula to entice commercial companies to want to do more business with the dod. and ultimately, it's not good for our war fighters, because it delays our ability to deliver the technology they need in a timely manner. while i'm encouraged by the direction of secretary carter and the legislative improvements in the fy '16 ndaa, there are roadblocks that still exist and are preventing greater success. now is the time to take steps to remove those roadblocks. and i see four steps that should be taken immediately.
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first, regulations and interpretations around what products and services are commercial items are getting more restrictive, not less. and that needs to change immediately. the commercial item procurement reforms in the recently-passed national defense authorization act are a good start. that act clearly recognizes the value of commercial of-a-type products and the fact that prior commercial item determinations should be allowed to be carried forward. second, to ensure consistent alignment with rule interpretation and leadership expectations, the dod and the defense acquisition university must train contracting officers on what commercial items are, how commercial business cases are established, and how to acquire and value commercial items. in the example i highlighted previously, well-meaning individuals are focused on comparing sales of the exact same item in the commercial
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market. but by definition, there often aren't sales of the same item because it's been slightly modified for military use. rather, the proper comparison was with the price of similar items in the marketplace. understanding and appreciating that distinction, which the law recognizes and provides for, is important and simply a matter of effective training. it is not enough to rely on centers of excellence. we must train the acquisition workforce. third, we need greater dialogue between industry and the government around intellectual property protection. in many cases, the current approach creates big barriers, when we invest, take all the risk, then have to give our ip away to our competitors. this is an area the defense business board has identified as needing improvement. and i hope industry and the dod
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can focus on ip protection in collaboration with one another over the next year. and finally, the broader discussion needs to shift towards the value of commercial item procurements and away from restricting the profit level contractors make. look, the industry wants to ensure the taxpayer is getting value for their dollar as much as the government does. at the same time, commercial businesses invest huge sums of money over long periods of time in the name of technical innovation. they, along with their shareholders, expect to receive a reasonable return on that investment. focusing on profit level instead of value and price ignores the substantial investments that have been made as well as the other tangible benefits of commercial procurement, such as the costs and risks of
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obsolescence, which are expenses borne by the contractor and not the taxpayer. focusing on profit level also ignores the fact that the vast majority of commercial items are fixed price arrangements. commercial companies are generally not in the cost plus business where taxpayers bear the risks of overruns. under fixed price contracts, the commercial company bears the risks. it is in their best interests to control costs, become more efficient, and deliver on time. those are the four areas that i believe we should work on in the coming year. now, while there are areas that i just highlighted where we need continued improvement, we have made great progress since the passage of the fasa in 1994. but by continuing to eliminate the barriers that stand in our way, we can better access commercial technologies and provide our war fighters the capability they need to keep our nation safe. thank you. [ applause ]
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>> thank you very much, phil. our next speaker is former senator jim talent from missouri. while in the senate he was in the senate armed services committee and the chairman of the sea power subcommittee of that panel. he's also been a key adviser to governor romney on his two presidential campaigns. welcome, sir, thank you very much for coming. >> thank you, mac. i appreciate the opportunity to be here. and thanks to everybody here who works in this field, which i assume is just about everybody here. you know, these are difficult times for the united states. and i think there are more difficult times coming up. but one of our great strengths is america's innovative and
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productive capability which has expressed itself through partnerships between the federal government and defense industrial base. and you're the people who make that partnership go. and i appreciate that. and the chance to talk about acquisition and learn about acquisition from others here today. this is one of these substantiates where the challenge is to say something without trying to say everything in ten minutes. so i'm going to kind of take an overview about where i see the problem is and why i believe the latest steps that the congress is taking, that many of you all are taking, are good steps and are the beginning of the path out. so when you focus on the proud -- and i'm going to focus on the external source of the problem, and then the internal one. most people don't focus on the external. so i do try and talk about it. the external problem, and the reason for many of our acquisition issues, is 20 years of inadequate and unstable
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funding for procurement modernization. it's gotten a lot worse under the sequester. but it goes back to the 't90s. i remember it vividly because i was a kid congressman at the time. we were closing the force, first with the bush base force and the bottom-up review, cut it 40%. you could argue that was too much in some areas. that was also the time when we took the procurement holiday and cut procurement and modernization. i say "we." some of us screamed bloody murder. my first speech on the house floor was about this. we cut procurement much more. so examples, helicopter procurement went down 90%. shipbuilding, by two thirds. fighters for the air force by 80%. and i say this -- you know, i talk to lay people on this subject, i say, what would happen if ups just decided to stop buying trucks for a few
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years. you would end up with a huge capital bow wave. the longer it took you to deal with it, the further you push it out to the future, the bigger it would be when you final do deal with it. that's what we were dealing with. it was compatible e exacerbated replacing of inventory at much higher rates. that's caused issues with the acquisition process. it weakness the industrial base, there were a lot of consolidations, fewer competitors, harder to hold down prices. it's had an impact on the human capital in the defense industrial base. there was one year joe lieberman and i put money in the budget just to allow the shipyards to sustain the human capital so that they could design the next submarine, if and when we got around to design the next submarine, because we didn't want those people to go away,
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it's very hard to reconstitute. you try and stuff as much into the few platforms that you can build. and i think it's contributed to and exacerbated interservice rivalries over the years. part of the solution is i think a sufficient and stable funding like going into the future, which is one of the reasons why the last independent panel strongly recommended returning at least to the gates budget baseline that secretary gates proposed before he left office in the spring of 2011. i think it's going to take more than that going forward. now, internal problems. a lot of people have written about this. i really got into this from a different perspective than my congressional service when i served on the first independent panel. that was the perry hadley panel in 2010. we studied this extensively, reported on it, and those who had dealt with this in the past and worked with it, you know, concluded that the major problem
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was, and this is not going to surprise any of you, we said the fundamental reason for the continued underperformance in acquisition activities is fragmentation of authority and accountability for performance. and it went on to make a number of recommendations. i still believe that that's true. you need a tight chain of command where people know, they have authority commensurate with the responsibility, and that allows you to hold them accountable for performance. that's why i liked what the ndaa is doing. i think it's pursuing the right line and the right principle, and it's trying to do so in real but modest ways. so i like the redefinition and reinforcing of the authority of the chiefs and the secretaries going forward. we have slipped into a situation where it's too much like having two bureaucracies in the department trying to do the same thing. and that's always a mistake. oversight is one thing. supplanting execution is another.
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and i think it makes sense that the services, who are, after all, constituted for that purpose, should be the ones going forward who have the responsibility and therefore the accountability. it comes down to, this would appeal very much to me if i had still been in the senate. if you think the chiefs and the secretaries aren't doing the job, the answer is not to create a competing bureaucracy which will try to do it at the same time they're doing it. the answer is to work with them, help them, and if that doesn't work, get people to do the job. so clear responsibility, clear authority, and then clear accountability i think is the path forward. i liked the features of the bill providing for alternative pathways at the discretion of the secretary. i do think the chiefs tend to be focused by the nature of their job either on the here and now, on satisfying the immediate needs of the combatant commanders, or on envisioning what the next generation, what
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the future ten, 12, 15, 20 years is going to look like for their services. and there is a tendency to give a little short shrift to the programs that you want to design and build in an intermediate time frame. it makes sense for the secretary to have some discretion to assign management for those programs to other agencies, or entities, not that he has to do it. i like the provision in the bill that emphasizes regr grogrowing acquisition capabilities. we have to consider in the future beefing it up so that we can recapitalize the services when we get an adequate top line to do it and real purpose and will both in the executive and the legislative branch, to do it. and that has to come. we're at the point where we have to recapitalize these inventories going forward. i'm deeply concerned, as we
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said, in the second independent panel, that we're going to very quickly have a force that's at high risk of not being able to carry out the national military strategy. i'll just conclude with one other point that i always try to emphasize to my colleagues about, that i think we have to avoid, as we go through this process, unrealistic expectations that are inevitably going to be disappointing. i used to have this conversation with senator coburn all the time, he was a good friend of mine. my issue with the department was primarily defense funding and tom's was primarily defense waste. as any of you who know tom know that, he was very effective, a great senator, and a good friend. and i conceded the points that he was making. but i always tried to tell him that you have to consider the context. the department is a part of government, okay? and so it is going to respond to
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legal dynamics, which the last speaker talked about, policy dynamics, and yes, some political dynamics, and bureaucratic dynamics, which means it is anever going to operate the way a well-run private business operates. it can and often does operate better than the rest of the government. but a plan that assumes it's going to run like a free market entity in a highly competitive part of the economy that's very well managed is a plan that is designed to fail, and all we're going to get is a lot of disappointment. i like what you all are talking about. i like what the senate is done, and the house. we're going to move step by step forward, making it better one step at a time. i think that will work. and i appreciate you all working with the congress on it. we do need to continue promoting -- the last speaker was right about this -- an
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atmosphere of partnership and teamwork whenever possible, rather than an adversarial atmosphere or a hostile one. and i think we can get this job done. i did that in ten minutes. that's not bad, given my background. so thank you all very much. [ applause ] >> our next speaker is dr. michael hanlon of the brookings institute, a senior fellow. michael is a long time friend of ours and has been a featured speaker at a number of our hill events. we always appreciate him coming out. he's a visiting lecturer at princeton university and johns hopkins university. thank you so much. >> good afternoon, everyone. it's an honor to be part of this great lexington event. i'll try to do my remarks in seven minutes. and i just really want to try to
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drive home a couple of central points that ultimately get to this issue of which kinds of technologies within the broader department of defense portfolio should we be trying to acquire in fundamentally different ways than we have been. the way i'll begin is by telling an story about an event we had at brookings in the spring where i asked the same question to the undersecretary and to bill lynn, who had been deputy secretary of defense. the question was how good of a grade would you give to american defense acquisition policy and process today. and secretary kendall, who was just putting out better buying power 3.0 at that time and obviously has been a big advocate for improvement and therefore hardly collapmplacent about this issue, said, when we go to war we have by far the best stuff in the world, i say
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we deserve a b plus, maybe a little better. i asked the same question to bill lynn a little later in the setting, in the forum. bill said, i don't disagree with undersecretary kendall, but i think that i would make that grade for specific. for major platforms, traditional systems, i think we do buy those pretty well, and yes, there are some overruns and inefficiencies and we have all these bureaucratic issues to content with, but nonetheless we do pretty well. but anything touched by moore's law, we tend to do less well, and i'll give that a c minus. we convened another discussion group in october. this one was off the record, everyone was speaking freely, just as secretary kendall and lynn had been earlier in public. but nonetheless, the consensus there was if we're going to look for certain areas to take bill lynn's idea and push it one step further, which areas of defense technology should we be trying to bring in new players? and should we be wondering if the whole system of highly regulated acquisition is perhaps
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too onerous? there's a lot of room for reform, even within traditional platforms, but this group emphasized that information technology systems, autonomous systems, robotics, unmanned systems, these were the areas that were probably most promising, because they tend to have a high content of cyber technology and software, and because they're relatively less expensive in terms of the platforms, the engines, the metal. in other words, these were areas where the traditional defense , the dustrial base is doing a pretty good job, and it's hard for new entrants to compete anyway, where is in the areas of information technology and robotics and autonomous systems, we all know it's hard to actually draw some clear lines. there's a lot of cyber infrastructure inside the biggest ships and planes. and there are some pretty important issues with engines and structure and metal inside of drones.
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so it's not as if you can neatly divide the world into these categories. this is what i would submit to you today. if we're looking for new entrants, and this is one particular element of the broader acquisition debate we're having this afternoon, so i'm not trying to cover the whole landscape, but if one question before the jury this moment is, which kinds of procedures do we need to fundamentally reravamp d look for new ways of doing business, it's probably true that in general in the areas of smaller robotics and information technology, we have the most to benefit from encouraging new entrants. using some of the other kinds of authorities, using some of the models we learned in the wars with, lets say, the joint ied defeat organization that built the mrab and other things, some of these less formal acquisition probably applied best in certain technology-specific domains. the last point, since i'm trying to hit this one specific area
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and then leave to others to increase -- to address the broader subject where we did a very nice study on acquisition reform which you can find at our website, brookings.edu, we know a lot of very good defense firms are not in silicon valley, and are doing very well without the help of silicon valley, at least not in a direct sense. but nonetheless, we know that in some of these areas that i've been discussing today we would like to see new entrants, former timbers, high tech firms, complement the existing industrial base. there's sometimes this sense that silicon valley doesn't want to interact with washington, they got frustrated by it, they find it bureaucratic, burdensome, they don't like the whole edward snowden revelations, privacy issues are hurting their ability to sell technology. what jason found is in fact a
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lot of firms in silicon valley are as patriotic as the next guy and would like to get into this business, not necessarily because they want to make a ton of money, because in contrast with traditional defense platforms, the kinds of information systems you'll sell to the defense department will probably be at a smaller kalesc than what the commercial marketplace is offering, it's patriotism and the technology challenge challenge. these are the areas we have to reach out. ash carter is doing a good job in this regard. it's going to take a while. i'll finish on the happier note that as much as all the reform ideas we're talking about today are necessary, i still come back to secretary kendall's thought that at least for most traditional platforms, the current base is doing a pretty good job. and so we should begin from a premise that the system is sort
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of three-fourths strong, one-quarter broken, instead of throwing the baby out with the bath water. i'm not suggesting the people here are trying to do the latter, but sometimes the dialogue trends in a direction that suggests that the system is fundamentally broken. there are a lot of problems, a lot of issues, we need three hours today. i'll now defer to others for the other issues. but overall we're doing pretty well. let's try to get those new entrants in, especially in areas of i.t. and robotics. thank you. [ applause ] our next speaker is john etherton, president and other than of etherton and associates. he was a staffer on the senate armed services committee, also a former vice president of the aerospace industries association and a long time acquisition reform activist and advocate.
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thanks for coming, nice to see you, john. >> thank you, mac. we strive for an acquisition process that produces value for all the parties involved in it. both the government and industry must understand and work with knowledge of the other's imperatives and the political and business environment in which they make decisions. industry seems to have a much better sense the government's operations and objectives than the government has of the environment in which industry has to operate. over the years of working on the industry side of this divide, i have been repeatedly impressed by the range of complex factors that gao into producing shareholder value, rather than merely focusing on single elements like contract profit. i believe a deeper appreciation on the part of the government of industry's imperatives could lead to a pentagon customer better able to use incentives to get its products and services in a most effective manner while
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attracting a much broader segment of the private semiconductor to national security business. once again, we point to timing, decisionmaking, predictability in functioning business terms and conditions, especially around the treatment of intellectual property, transport yet flexible methods of determining value. these are the essential features of a well-functioning process, yet they seem over and over again to kind of elude our grasp. the degree of consensus among reasonable people about what a more effective acquisition process should look like has been repeatedly amazing to me, every time we have a study on the topic. given our long experience with the power of this intractable equilibrium that seems to persist in the current system, and this was very well described by paul francis over at gao, the real question is how do we start toward a different outcome. ultimately, in my view, we need to get beyond clever problem statements, colorful band-aids, and a lot of vigorous hand
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waving to identify and go after the route causes of the dysfunction in the current acquisition process. in my opinion there are several very difficult things we need to take a look at. first start with the budget process, including the congressional budget office, the authorizers, omb, the other agency financial managers. we need to be looking at this process with all of these folks in a comprehensive fashion for objective consideration of major changes that probably would upset a lot of very heavy rice bowls. in my opinion, the current budget and resource allocation process probably drives more stakeholder behavior in the current acquisition system than any other single factor. we also are in a situation, and others have already commented on this, where the oversight community is defining the rules for standards and success in the system, not merely enforcing what congress has mandated in terms of its standards. and i think here of the disconnect i see between where
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the ig seems to be on the issue of price versus what congress has mandated for the same commercial item. many of these organizations like the dod office of the inspector general, the office of testing and evaluation, are independent by statute and have no real institutional responsibility in the larger enterprise for individual program more procurement outcomes. the influence of the oversight community has caused a culture in acquisition, and the leadership that everyone seems to crave doesn't grow out of this current environment. oversight organizations cannot play more constructively in an enterpris enterprise-focused process, in my view, without candid discussions about balancing priorities and perhaps consideration of changes to statutory mandates for these organizations. our people are key. the federal acquisition workforce needs to be transitioned from the current compliance based transaction by
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transaction culture, fostered by the current budget and oversight approaches that we have, to looking at things from an enterprise view and with a capabilities to effectively apply value approaches on behalf of the taxpayer across an entire acquisition life cycle, and even multiple acquisition program life cycles. however, we have to recognize and look, and considering what we do, these people only have so much time and attention. they're really burdened right now. there's a lot of work that we have to do. the workforce we have now is the one with the current rules where we're primary acquisition tools for the next five to ten years. we won't just be able to wipe the separate clean and start offer. effective education and other support as well as change management will be essential in this effort. if the provisions of the fy '16 ndaa with the workforce with the defense acquisition workforce development fund, changes in some of the other authorities
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are any indication, congress appears to be willing to provide any reasonable authorities and funding to help achieve a move in this direction if dod will but request them and use them. we also need better data capture and analytics as these are the only ways i can see for understanding the costs, including opportunity costs, the system that we have now in all of its elements. conclusive evidence of the cost of missed opportunity and the cost in lost time and dollars could drive deep changes if all of the stakeholders were willing to collect and look at the information and follow where it leads. while i agree with secretary kendall on many issues, there's one that i disagree, and that is that i do not believe we will make any progress thinking about acquisition and the issues and trying to transform the system if we view our mission as continuous improvement. the current system at its most improved would still be too slow, too cumbersome and too costly to meet our emerging
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national security challenges. we must be intent from the start on driving foundational transformation and doing so for at least the next five to six years in order to force the acquisition system into a new equilibrium state. thank you. [ applause ] >> thank you, john. our next speaker is byron cowan. a long time financial market portfolio manager and analyst. he's previously worked at lions path capital as well as prudential equity group. he always brings a very good and unique financial market lens to this debut. we're looking forward to your remarks. thank you. >> thanks, mac. and it's good to be back in another lexington event.
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at the last one of these events in june, i talked about why i thought this time was really different for acquisition reform. and this time mac's charge was to talk about, you know, what could the dod do to be a better customer. i would like to point out that the comments i'm about to make are really aimed at the shorter cycle, kind of more technology, dynamic parts of the dod's portfolio, not necessarily the major platform programs, nuclear submarines or aircraft carriers. and i want to be encouraging here because i think there is a lot that's going on on. the dod does recognize some of these issues. and i think the ndaa embodied a lot of very important steps that are certainly going to be taken further in fy '17. but i think as this event exemplifies, there is certainly more that needs to be done. so, you know, on the first point, i think there's got to be a recognition that time is money.
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you know, we've got product development times that would kill most commercial companies. and i think along that same line, we're aware of the valley of death concept, this idea that these lengthy acquisition cycles, they just add costs to payrolls. companies have to pay for people, maintain facilities, keep assets busy. and without recognizing that time is money, you're incurring costs on companies, particularly some of the smaller ones that are going to keep them out of this market. i think kind of related to that second point, the concepts of time really need a reset. i was at the reagan national defense forum this past weekend in simi valley, and i heard twice the mrab program held up as a model for how quickly the dod could acquire systems. i've got a friend, jim hasic who is doing a ph.d. thesis on this,
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depending on where you start, it could be three to seven years for the mrab acquisition, from the identification of the first requirement to when the production really took off. and i just don't think that the mrab program should be an exam example of, you know, how quickly the acquisition system can respond to urgent needs. someone else at this same conference made the comment that only in washington, dc would 18 months be considered a short time. so keep that in mind. and again, just because of the pace at which technology is moving, this concept of time i think very much needs a reset too. third point, i think it's important here not to create false expectations. specifically, i look at diux, which was launched with a fair amount of feianfare at stanford university back august. in my personal view that effort is probably going a lot slower
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than most people would imagine in terms of staffing and engagement and how they're actually working this on the ground right now. it may have changed a bit, but the army i think, you know, with its network integration evaluation system that they had at fort bliss, had a series of events, encouraging companies to bring their best and brightest down, let their soldiers play with it. one ceo said we got tired of doing science projects for the army because there wasn't anything coming out of this. so put some money behind where some of these acquisitions are going to go. if there is going to be something there and people will get a return for it, again, that's part of not creating the false expectations part. the third point, really the fourth point, i guess, phil touched on this, and i think it's important, is really offer appropriate returns for appropriate risk. i do a lot, you know, looking at defense contract margins,
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looking technology company margins. i point out, you know, in some of the cyber companies, for example, publicly traded ones, palo alto networks, these companies,statements, they're basically -- they're not reporting any profit right now but if you drill up into their gross margins, which is really the cost to deliver their product, it's not the marketing and the research and development cost, they're earning 70% margins but they're also putting 20% of their sales into research and development and if i were d.o.d., i'd like to have the advantage of that investment in the type of people that, frankly, are attracted to that sort of investment. so i really do think that this whole debate -- look, everything shouldn't get the same uniform of the areas where d.o.d. has to compete against the commercial sector and bring in the commercial sector, the margins will matter. another point -- i don't think, you know, the non-defense sector
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should be treated as foreign territory. i've heard people talk about diux as an embassy in silicon valley and i don't know if any of you have seen embassies lately the u.s. has put in different countries but, you know, walmart, general electric, they don't talk about embassies in silicon valley, they talk about their offices for outreach so that may be a little bit of semantics but kind of related to that i think probably d.o.d., instead of just relying on federal business opportunities to explain what they're up to maybe there's more translation that can be done to translate what kind of problems, big picture problems the d.o.d. has and how that might bring in some of the people in the valley and, frankly, the rest of the country to work on this. final thought here, i think d.o.d. probably has more of an agility problem and not necessarily an innovation problem. a lot of the technology is in there, the in the lab system, in the heritage defense
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contractors. the trick is just getting it quickly enough into the department of defense so, you know, as phil pointed out in this introductory remark, you've got something that will make the war fighter more effect i have. there are two things in conclusion that i don't see as important and maybe these strike a kind of mom and apple pie issue that i here a lot in the acquisition discussions. the if irs is i don't necessarily think that d.o.d. as the to be more stable and predictable compared to other commercial enterprises. yes, that's true for big long production timelines for major weapons platforms but stable and predictable is kind of contrary to innovative and agile. as a thought, i'd highly recommend a book called "the anti-competitive advantage" by rita mcgrath, a professor at columbia university. this is written about how companies responding to this quickly-changing world. but i think it's worth the read for anybody this the room who's
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interested to think about this in a defense content. finally, i don't think the d.o.d. necessarily has to be a fair buyer. mr. kendall made ma that remark at the reagan national defense forum last week. personally, look, if a company brings a great idea or product and it meets an urgent need or unrecognized requirement i'd reward them and i very much appreciate a comment that peter made recently, he was the former head of the army rapid equipping initiative, he noted that the last time i was shot at being fair wasn't the first thing that came to mind. [ applause ] we are always fortunate to have phil o'dean join us as a featured speaker in our forum.
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phil is the former chairman and ceo of trw and bdm, two terrific defense companies. he's now currently on the defense business board, chief of naval operations executive panel and we look forward to your remarks. thank you, sir. >> thank you. it's a pleasure to be back and i've talked to these groups a couple times in the past and enjoyed today, especially the early speakers and i'm sure i'll enjoy the rest. i do plan to hang in here and listen to all of them. my theme today is that acquisition reform is not just important but i think it's essential to the future capabilities and u.s. technology in our military dominance, we simply have to get this right. every year the hill or pentagon or somebody comes out with a new agenda for defense reform. yet if i look back over my years i'm not sure we're more effective today than we were back in the time of the pack
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around commission or bill perry's initiatives in the 1990s and, phil, i think your comments were a real case in point for that particular point. and others have talked about many of the other problem we face. so let me just talk first very briefly about some of the challenges facing the traditional acquisition system then i want to shift to the real focus of my talk which is reaching out to the small innovative rapidly moving technology companies across the country. first in terms of the current system, and i think jim talent made this point as well, there's a real lack of clear lines of authority and responsibility. you know the old too many cooks spoil the broth thing is applicable here. you've got to know who's in charge, who's responsible then you have to hold them accountable and if you don't hold people accountable you're never going to have good results. and if you look at the turnover in program managers and people
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that are responsible, it's not a very pretty picture. secondly incentives are misaligned, affordability is not incentivized. it should be very high. the focus is on getting the program under way, getting the dollars flowing, et cetera. third, few big programs are started off right, costs and schedules are unrealistic. technology is often immature and there's excessive con currency. this leads to change order, delays and cost growth and finally related to this operational requirements are seldom well-defined and the performance expectations are often very unrealistic. lacking these, you won't have a good outcome and, again, you'll have more change orders, schedule slippage and cost growth. given these factors and others have talked about this, probably no surprise that we've had many disappointments in large programs, although as i think the point was made, many have
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been successful and have worked well in combat. but let me refocus and talk about another challenge and that's d.o.d.'s limited ability to reach out to the rapidly-moving high technology companies all around the country that are really changing the landscape. the moore's law company as somebody said was a nice way to define it. d.o.d. has limited capacity to tap into these companies for a lot of reasons. i think everyone would agree that d.o.d. lags the commercials sectors in a bunch of areas, whether it's cyber, whether it's robotics, whether it's rapid innovation, whether it's use of big data, internet of things and on and on and on. these are areas where the commercial sector dominates and d.o.d. simply has to access this technology if we want to make our forces capable and effective as they should be. and i think we recognize potential enemies are often more
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agile than we are in tapping into this sort of thing. i don't want to say that d.o.d. has not no cutting edge technology, they have, and this was mentioned in talking about major systems. if you're looking at nuclear propulsion, stealth, supersonic aircraft, these areas, d.o.d. has great technology and something that has, in fact, been effective over time. but even in these areas, access to commercial technology would help them as well in the future. the intelligence community recognize this is and they've tapped out -- reached out to the technology community and they have a vehicle called imputel that's been quite successful in a relatively narrow set of areas but it has worked. on the other hand, it serves a unique set of customers. they tend to be more open to new technologies, they're not as risk averse as the pentagon tends to be and because of the nature of the mission they're not as open to criticism,
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oversight and so forth so they can make things happen sometimes that would be difficult elsewhere. as you may know other parts of the pentagon areto emulate this. i think it's a good move, it may work but i'm not sure it can be successful simply because they don't have the same attributes the intelligence community has in terms of the willingness to take risks and to incur risk and move quickly like intelligence community has been able to do. the other point brought up was secretary carter's silicon valley initiative. what was that byron said? the embassy in silicon valley, which is a good way to look at it. i think it that has potential to make a difference. but it's very early, we don't know how it will work out. we are hopeful it will work but let me suggest a few reasons why
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i think we should temper our enthusiasm for this effort. first, small innovative companies may well want to work for d.o.d. but unfortunately they don't trust the department of defense. they see far more down side than upside in working for the department of defense. tales of d.o.d. bureaucracy, worries about intellectual property, all of these stories are legion and they hear them and know about them and are concerned about them. and another factor is these companies do not need capital. most of them are well capitalized so they're not desperate for d.o.d. dollars in order to be successful. and if they are successful, the markets -- they're going to appeal to commercial markets include manager international markets and these markets will dwarf until dollars the department of defense can put in their pockets over time and they simply don't want to put these potential markets at risk by dealing with d.o.d. another factor, this has been
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mentioned, if d.o.d. is to exploit this new technology, they have to streamline their acquisition policies. there are plenty of potential in the far. the defense authorization bill gives additional authority and capability but these things have to be used and not simply be part of the -- in some's abwe sigs bookcase, and the work force has a lot of trouble dealing with this type of supplier. they simply are not trained, you go to the defense acquisition university, there's almost no training in using far part 12 and these other flexible uses, ways, fast track, kind of flexible policies. and i think the work force is also risk averse and stepping out and using the policies, taking creative approaches does incur risk and people for good reason worry about that.
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in addition you have to worry about the technical work force of the department of defense, its labs. if we're going to adapt this technology, the lance are going to have to play arole incorporating into our weapons and equipment and the work force has aged. a lot as has atrophied and because of hiring and other problem there is's been very few infusions of young people with fresh technology, fresh ideas and fresh ways of thinking. i'm sorry to be negative about this because i'm hopeful that initiatives will succeed and i'm encouraged by the passion and energy that secretary carter is putting behind this initiative. if he has the time to sustain this effort and he only has another year, year and a half to go but if he has the time to sustain it and he can get the full support of other parts of the pentagon which may be a challenge, there are also rumors floating that there's opposition down in the weeds to these initiative bus if he has that time and the ability to really
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get the full support of the pentagon behind him i think it can make a difference but it won't succeed business as usual. i think the best hope would be to put a senior person, somebody with the clear support of secretary carter and secretary of atnl to push this effort. he's got to ride herd on the acquisition work force, make sure they'll use these flexible acquisition policies when roadblocks appear, and they will appear, he has to step in and break them down and if you can do this i think there's a fair chance that this initiative can succeed. but it's not going to do it unless you have some particular focused effort by people at very, very senior level. if this does work, and i hope it will, we ought to look beyond silicon valley. there are a number of other areas in the country where very outstanding technical expertise
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in the academic community in particular. think of boston with the m.i.t. culture, robotics, fast data. all of the things that are being done in that area could be of great help to the department of defense. another important area is san diego which has become the center of biotechnology research in the country and, again, areas of interest to the pentagon and they should think about reaching out to those areas as well if they can find a way to make these initiatives work. so let me close and say thank you for the time today. appreciate the chance to be here and i look forward to hearing the other speakers as well. [ applause ] >> thank you very much, phil. folks in the back, we have seats up here if you want to have a seat. you can ignore the signs of the seat and come up and have a seat if you'd like. our next speaker is our very own vice president of the lexington institute.
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dan has the lead for us on acquisition reform issues, he's done a fabulous job in recent years on this issue. he is a former -- had key positions at the office of secretary defense as well as csis and several other important organizations and, dan, looking forward to your remarks. >> thank you, mack. it's an honor to be here associated with such marvelous speakers and experienced people. i'm not sure if i paid you enough for the ability to be on the stage of this group. as i'm listening to everything that's been said and thinking back over the stuff i've read and the work i've done, i don't get it. i don't get why d.o.d. has such a problem getting what it wants a president price it wants and the quantity it wants. it runs the show. it's the 800 pound gorilla in the defense marketplace, not just in the united states obviously but globally. moreover, it writes the rules. it defines the terms of the
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engagement, it does the oversight. it has excess data. if you were a private company competing in the park place for -- pick your product, and you were going to go out and buy it and you had access to the kind of preferential rules, regulations and the rest and information, first of all, you'd be in jail because it would be considered to be illegal but you know i mean talk about the art of the deal to bring it into modern political terms. wow. it's a puzzle here. i've been thinking about it. why is this the case? yes, you know there were problems of miscommunication or differences of interest that exist between the department and the providers of services there are examples of waste, fraud, and abuse although one would haveto point out given the magnitude of budget, the number of contracts, the incidents, demonstrated incidents of real waste, fraud, and abuse other
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than programs that go south which is not quite the same thing, that relatively rare. moreover one would have to assume that if, in fact, more oversight, more intervention more agencies, more assessment, all of that stuff, more rule, right? the increase in the number of regulations were, in fact, the answer then there had to be at this point 30 years -- almost 40 years after the packard commission a direct correlation between the rise in those input factors if you will and better performance, right? you would have to assume you could watch the number of regulations go up and the cost or the per high team cost of defense goods go down. there's no relationship. in fact, there's even been an ida study done for the undersecretary of defense that says there's no correlation.
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the only correlation we can figure out -- i'm being very simplistic but none of the way the programs eventuate and their ability to keep closer or farer from scheduling costs is a function of the budget situation when they started. if you had a kind of rich budget situation that everybody didn't lie as much about schedule and cost, to put it bluntly, and if it was a tight competitive budget environment they tended to guild the bill by and therefore you had a chance of things not lining up. but all the precise navigational. so it struck me here at this point that we're not just talking about sort of the problem of acquisition reform and making d.o.d. a better buyer. i'm all for efforts to do that but with this focus of the last seven years on better buying power, version one, version two, verse three, we've tended to forget the other side of this which is d.o.d. is not merely a
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buyer, it's also a customer. there's a difference between a buyer and customer. and it's also a difference between being a good customer and a bad customer. in the business management literature there's stuff about good customer service and how you deal with customers. how you improve service and the work and how you deal with bad customers but it's interesting i came up with -- there was a defined characteristic of bad customers and let me give you a couple of those. this was a list put out by one article. first, data point, if you meet these criteria you're a bad customer. swaps vendors in industry and boasts about it. the staff complains about him. and it's the staff of the service provider. on the other hand, the customer is abusive to the staff or complains about the people they're being serviced by.
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payment issues. late payment, nonpayment. changing payment rule, etc., etc., etc. adding or changing the scope of work during a project. this is on the commercial side. nothing to do with defense. look of availability. two sides. customers who are constantly in your shorts and constantly hectoring the provider for all kinds of things, couldn't think for themselves but the other case was customers where you couldn't communicate. and the last one on this list was tries to game the system. now other articles have added things like, for example, always assuming that the service provider is wrong. that the problem is never on the side of the buyer or customer. always the provider that gets it wrong. second one, which is related is always assuming a victim's status and i've heard a lot in the last several years about
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this adversarial relationship between d.o.d. and the private sector. it can be overblown but i think it's real. it's not just adversarial. some is probably good but this notion that the government is being victimized in many respects by an industrial base. somehow it's only the defense industrial base and all the commercial items that come in from much larger pens to socks and all kinds of other things that's okay and everybody in that industrial base is honest and okay and somehow the defense industrial bases are not. the sense of victim hood not only means you don't look at your own part in the problem but it also means that you are establishing a relationship where communications become more and more difficult. there's an analogy here. i was thinking of a tv show, a great tv show i watched a couple
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times about a bridal boutique, all the problems they have. . the would be bride comes in and brings in the mother-in-law and the mother and then the bridesmaids and a sister or two and they're going back and forth and everybody has an opinion. and if you go from one fitting to the next the cast of characters behind the bride will change and then it was washington you have 535 friends of the bride who all come into the room who want to say something about the length of the sleeves or the back and all the rest and oh, by the way, between the first fitting and the last and without telling the bridal gown designer, the bride puts on 30 pounds and can't understand why she can't fit into the dress she ordered. so there's a piece here which is about being a good customer. on a number of issues, we're talking about timelines. this was an interesting thing about timelines which really matters. when it takes you years to formulate a requirement because
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of the laboriousness of the process you are -- as we've had examples of -- likely to be out of date not just with technology but within the world stage as things are moving more rapidly. and when you're talking about can't write a contract for software in less than 18 months to two years when the technology is changing on the level of six months there is something wrong and it's not with the vendor. this is not about money, it's not about price, it's not about margins. we're simply here talking about things like timelines. companies are ready to go on something and they wait. they wait for the rfi, the rfp, the final. they wait for the award. you can spend six months past the promise date waiting for an award. if time is money or time is lives when it comes to the military this, too is
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unacceptable. and then you have problems where we haven't factored in issues on the customer side of the cost as well as the lethality of things we do not only post-award but into production. for example, operational tests and evaluation. got to have good test and evaluation, no question. but at what point does it become an interference with schedule? at what point does dotting that last i and crossing that last t, particularly on major programs that you know will be around for 50 years and you know are going to go through endless cycles of upgrades that will correct whatever deficiency you find on the first go around, at what point does that become not just counterproductive but a threat to national security? so all this is a way of saying yeah, you have to think about buying power, there has to be an ability of the government to have some reasonable confidence it's getting a fair deal. maybe you want to argue on
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military items the best deal possible but the government also needs to recognize that it determines to a large extent the nature of the playing field, at least for defense goods and services. and if things are too slow, cost too much, don't come out the way the government wants it, the first place the government needs to look is not at industry but at itself. thank you. [ applause ] >> thank you very much, dan. our next speaker is ken miller, terrific friend of the lexington institute for many years. thank you very much for come, ken. ken was an aerospace engineer for naval air systems command for most of his career. he fought his way all the way up to the senior executive service where he provided by advice on acquisition-related issues for a variety of aircraft and weapons systems and finished off his
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federal career as a special assistant for acquisitions for the united states air force. he's president of kem and associates and it's great to see you. thanks for coming, ken. >> good afternoon, everyone. thanks for having me. like max said, i've worked in government for, like, 35 years and then i got out and i worked in the private sector for about six years. so for me to be listening to everybody talk about improving the acquisition process, to me it's kind of interesting because in my view i don't think there's anything new out there. i don't think there's any silver bullets to solve any problems. i think that what we really need to do is think as to whether or not the process we have right now really needs to be improved or just do we need to execute it
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better? in my view, you need about four things to kind of make the whole acquisition business process work, you need to have the requirements sorted out. you need to have a good sense and a good infrastructure on the acquisition side, you need to be able to have the great interface with congress and the budget side and you also have to have the right alignment with the private sector. my view is that improving this whole process is improving the con groupcon groupsy and harm anization of all four of those sectors. i can spend hours talking about all four of those areas but since i have about nine minutes left i'll probably just spend a couple minutes on each one and give you what i think are the key highlights from my experience to be successful in
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those areas. on the requirements side, you must clearly understand what is required, why, and when. you need to know what performance is wanted and have a clear requirement analysis to be able to identify where the good enough break points are. more than the today's threshold and objective process. i also think one of the things we do is we always come up with solutions that are point solutions. there is a lot of opportunity to do more analysis on looking how we can look across applications sveore than one problem in my experience, when you get requirements right you have a better chance of program success. no one of my favorites,
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acquisition. having a better-trained and experienced acquisition work force is probably one of the most important things using the right type of contract for the right type of program. here's another big one -- clear accountability for program managers, peos, and saes. when y have success, reward them. when you don't, change them out. here's a little anecdote. when i was working in nav air a thousand years ago as a program manager it was incumbent upon us to always make sure you were on a program that was executing well because if you didn't execute well you'd probably be replaced. you could get replaced in those days because we had a strong
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acquisition pipeline and you had a lot of other people experienced to take your place, now days we're just getting by. the third area, the good old budget in congress, we never seem to have enough money for everything, but there's some things we can do probably a little differently and here's one that i used to do and i regret doing it when i was on the budget side and that was provide better program budgeting stability by getting away from death by a thousand cuts. also embrace more block buys on large capital investment programs. and then here's another one that i think is also very important. allow for the ability for the program manager to budget at a higher confidence level and allow them to use and keep some
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of their management reserve. now days if your program comes in and you try to put in management reserve, that's probably the first thing you take. i know when i was in the budget community that would be the first thing i would take. if i didn't take it, somebody else was going to take it after me. so finally, in the private sector -- and i've had a very interesting opportunity to work in this area for about six or seven years so i now have a broader view of this probably from that standpoint. you need to have better discussions during draft rfp stage between the government and private sector. i've seen some scenarios where the government has got on the the point where they're afraid to talk even in a draft rfp stage so we don't have enough clear communication back and forth i also think there needs to be better alignment up front
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between the private sector and the government in the r&d world. right now the requirements get totally mismanaged. here's my favorite one before i get off the stage. i think it's probably the most important one. i think we've lost the meaning of best value. best value in my opinion is now driven by the austere budget requirements to a selection process where lowest cost has become by default the primary and in some cases the only selection criteria. when you do that, you're defeating the entire purpose of best value and you're cull separating an environment of behavior resulting in suboptimized selections. so in conclusion, after 40 years, i can find of throw rocks at a lot of dferent areas
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because i've been there and i've seen it so i have advice for you all. so in conclusion, no new ideas nor a single bullet but really take solid execution of all the communities i've talked about. thanks very much. [ applause ] >> thank you very much, ken. our next speaker is pat tracy from hewlett-packard kper prize services. spat a retired vice admiral and in her distinguished navy career she had many terrific jobs including director of the navy staff and we are looking forward to your remarks. thank you very much. >> thanks, mack. i'm not going to pretend to be as much of a student of acquisition history orring ary sigs reform as most of the people in this room. i draw from three perspectives
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when i think about what ought to change in the realm of acquisition. i was asked to lead a review of the sufficiency of acquisition authorities in connection with a 2006 qdr. a qdr that took place as d.o.d. was ramping up its use of rapid acquisition authorities. second, in my current role, success depends on helping to lead teams to navigate this acquisition system to earn the opportunity to deliver services and later to sustain the ability to deliver to the actual versus the competed requirements and i'm doing that inside of an organization that is a silicon valley-based company, that is a largely commercial company. and where the packard of the packard commission designed the governance process so keep that in mind. third, i was the director of the navy staff at the beginning of the navy's large transformation program, the navy marine corps
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internet program mr. that role, in that seat i got to see firsthand how important senior leader engagement on all four corners of the acquisition process are important to the success of any complex program. i come at acquisition reform with a lot more questions than i do answers. there's absolutely no doubt that a successful acquisition outcomes are more important today than they have been any other time in our lives. threats and potential adversaries are proliferating. technology disruptions are happening at an accelerated pace and they advantage us and confuse us and they are lowering the thresholds to entry to sophisticated operations that were once thugt the purview of only a few nation states. budgets leave very little room for sustaining d ining duplicat capabilities and end orderifest
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themselves more rapidly. the acquisition process that is speedy, flektable and predictable with regard to its outcomes, attributes that compete within each other and not in meaningful ways. as we contemplate reforming the acquisition system it's not clear to me that the most important changes can come we they are legislative or regulatory changes. are we confident that both government and industry participants understand all of the authorities that exist in the far? all of the flexibility that exists in the star in do they understand the scenarios under which they are most applicable? is there a shared understanding among the acquisition practitioners amongst the contracting officers, amongst the requirements writers and amongst the program managers so that they can work together to achieve the real end users' requirements? are we encouraging industry to
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be similarly familiar with those authorities so that they can understand what flexionabilities exist and how to let their customer understand how to exercise those flexibilities that matter? more than knowledge and exercising those authorities, it takes courage and it takes senior leader engaged involvement to enable the practitioners to actually navigate the kinds of processes that are departing from the norm industry as well needs to re-evaluate our risk equation to know that we can be ready to perform in a government in an era of profound and continuous uncertainty. the system today is characterized by deep distrust and chronic defensiveness at every level and at all sides. are the leaders today visibly
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engaged throughout the life cycle of the programs to support innovation and cross discipline collaboration so petitioners can build confidence in using these unusual and more fluid acquisition processes? are oversight processes engineered to encourage purposeful creativity or are practitioners motivated to find the best way to acquire that will i limb nate the made the to escalate to the next higher level for approval of something that is a little bit different, a little bit harder, a little bit more comprehensive? courage and cross discipline engagement by leaders are more important here than are regulatory and legal changes. it's exciting to see some of the changes that are happening in some areas to enable the rapid acquisition of important i.t. capabilities, the ways in which some contract contracting shops today are exercising some of the
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unusual aspects of the far. are all government parties aware of what it takes to be successful under those circumstances? are we helping industry to understand what success and goodness will look like under those acquisition processes? what can we learn from the ongoing proactive collaborative oversight aimed at accelerating outcomes that characterizes those kinds of unusual acquisitions? my experience is that both government and industry would benefit from reviewing our procedures to know we can be successful in those engagements. second, acquisition domains drive really different measures of success. acquiring the next offset capability for defense is really different from acquiring a multiyear services contract. acquiring lawn and facilities mand innocence is really different from acquiring it services at an enterprise scale.
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acquisitions that depend on or will generatorsal or behave yorlg changes require a very different kind of engagement by the acquiring organization and those buying commodity services. is it time to think about emphasizing individuals and oversight processes that are specifically tailored to comprehending the unique aspects of each of those categories of acquisition? is it sufficient for the members of the -- the key members of an acquisition team to only comprehend general make measures of cost, schedule and performance and not understand what external factors might actually affect the performance of a program to the end user's benefit or to theirisk? would it be beneficial to encourage outreach and collaboration between government contracting experts in both industry and government? third, does there's widespread agreement that we do better when
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we have open dialogue about what the requirements actually are. that every acquisition would benefit for -- from more though roe communication between those who wish to bed and those prying to procure. should the government make more use of down selects in order to be able to sharpen the dialogue with those bidders whose proposals appear to align the best with government requirements? is industry ready to accept that dialogue won't be even and equal under those circumstances? would it be helpful if leaders reviewed hard the decisions that are made about government members participating in industry forums where current and future trends are discussed? where government might have a chance to influence those trends if they were free to participate. is the policy interpretation as it's being applied today suited to the government's need to reach out to more providers? to have a bigger influence around the technology trends that are under way.
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taxpayers deserve an acquisition system that will, with high probability, put the right capabilities into the hands of the men and women charged to execute the missions they are assigned on their behalf at the right time and in the right quantities to be successful. they deserve that such a system will pay only what's necessary to produce that outcome with high probability. law and regulation alone will not achieve that outcome. it does take courage and it takes senior leader involvement on all four corners throughout the life cycle of our programs. thank you. [ applause ] >> our next speaker is steve mccarthy from the uk embassy here in washington. he's the minister of defense material. that's a huge ocean between the united states and the uk and on
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procurement issues there's a bigger golf between the way your government conducts and our government does. and we're looking forward to your remarks. thank you very much for coming, steve. >> thanks to mack and the lexington team for inviting me back again. my job is twofold, one to give you a funny british accent to break up the day. [ laughter ] secondly to reassure you that you are not alone and that acquisition problems in defense are not a feature unique to the united states. in the uk we've had a long history of just as many problems. it's sames said samuel peeps started procurement reform in the 17th century. we're expecting results any day soon. [ laughter ] >> so our history has been one of an apparent endemic sense of overruns of costs and long delays and that's the impression many people in the u.s. have about the way in which we do
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defense procurement, just like some speakers have said you have here. but as others have said, the facts are slightly different in my country thanner in the public rhetoric. our national equivalent of your gao recognized that progress is being made with the costs of our top 20 programs reducing by $600 million and our best performance on time a lack of slippage since 2001. that means we are making progress, finally, it doesn't mean everything is bad. but what i thought i'd do for the rest of my time here which i thought would be most useful is to say as well as the same problems we have with the things you struggle with is what things we do have that are more different than happens here in the u.s. the first of these is one that's been referred to by a number of speakers and that's the issue of budgetary discipline. in 2010 when then new british government arrived it carried
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out its major defense review and as part of that and development of the longer term economic plan made very serious decisions on major reductions in future programming in order to do one thing and one thing only and that was to balance the budget we had between our former program and the catch we had to spend. there were painful decisions in there. we had risk and capability gaps in a number of areas but what it meant is that today we now have a programmed and formal and conserved connive the generalsy provision around $7 billion and $12 billion worth of head room later years for the forward program. that contingency is fundamentally important to us because all programs eventually suffer some form of risk and slippage and the ability to deal with that centrally rather than put the impact on the program makes us more able to be flexible than we have been in
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previous years. the next big change i thought we'd mention is we've been consciously injected private sector enterprise into our organization. that isn't the issue about using different contractors, it isn't the issue about finding new ways of developing and benefitting from new technologies. it's using expertise from the private sector in our buying arm. and one of the ways we've done that is to establish our procurement organization as a thing in our treasury jargon is called a bespoke trading entity. what that means is procurement business for us is the in a separate organization that is disciplined and kept deliberately apart from the people that set the requirements. it also means -- and i'll come back to this in a minute -- they have militore flexibility in pa people and rewarding them in order to keep their services. but most importantly we call it an arm's length body and that does one most important things
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which insert discipline between their relationship -- into their relationship between them as the supplier and the services as the customer because in our view peopling up on something that dan was saying, it's the customers' lack of discipline that where many problems in procurement originated. like you we have also enjoyed the centralized or decentralized debate. it goes on in a ten-yearly cycle and the pendulum swings one way or the other. we've been going through the process to decide whether or not the service authority should have more power to determine their own future and their own requirements and deliver their own capabilities and where we sit since between is that our officers do have the authority to develop their own procurement programs and as other vs. said have the accountability for delivering them. what that means for us is that while the center still plays an overall important role in
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setting the program, what our ambition is for future capabilities it's the services who set the rooirmts, who have the freedom to prioritize their manpower, equipment and training requirements to balance off between those things and to deliver in the best way they see fit the objectives set for them at departmental level and most importantly perhaps is the chiefs of staff of those services who are held personally accountable for delivering on those objectives. so if an army program that goes wrong, the person that gets in the neck far is the chief of staff of the army. our dns has also been going through a significant transformation. we've introduced commercial transformation partners into the organization to help them with specific work pages. for example, we have now deck tell advising on maritime and air domain programs. ch 2m hill doing the sand for land and joint enablers. these people are not managing the program but they are providing an alternative and
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distinct voice to program executives to say "are you sure you're doing the this the right way and have you thought about alternative ways of doing things?" it's not just equipment. we also have service providers helping in our infrastructure organization looking at the best way to manage our estate and trying to find new ways to improve the efficiency with which we run our infrastructure. the key factor that that arms length arrangement has enabled our procurement arm to is retaining skilled staff and a number of speakers mentioned this. so we now have in the organization more authority to pay market rates to compete with industry to incentivize people to improve their performance, to allocate staff where their skills are most suited so people don't get stuck in the same old business doing the same old things. and to better match work force demands with the needs that we have. so what that meant in simple terms, we had to break our acquisition organization out from the normal service service
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roles on employment and pay so folk get better rewarded for better tasks but they also get fired more easily if they don't perform. another important transformation in our acquisition organization which i think is also slightly different than has been the case here is an increasing use of commercial providers to deal with most of the services we used to do internally. for example in the areas of defense logistics. in 2014 in december we sold our defense support group who now in the organization run by babcock do all of the storage of our military vehicles and weapons. in april of this year, we won a 13 year contract to improve efficient sip in warehouse procurement and stock control of food, clothing, general and medical supplies, we just don't think we need to own those services in the department. we think they're much better provided by by commercial companies who know how to do
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this as part of their core business. lastly in the commercial space we've increasingly sought to buy outcomes and not products. examples in place are the air tanker aircraft and mail tear communications satellites are now provided by as services. we don't own the aircraft or satellites. we buy refuelling, we buy trained pilots and we buy bandwidth. that means the risk of servicing, providing, maintaining and keeping updated those particular provisions is held by our service providers, we just look to get the outcome that does one very important and interest thing that i don't think anyone has touched on today which is as well as the search for commercial providers outside of the normal defense markets in terms of technology, whether it's robotics or competing, it also brings into the defense field in our face service providers that genuinely know how to provide a service not just defense equipment. that's an important distinction
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for us. i'll close by saying i think the biggest single factor in the last two decades or so in bringing down the costs and performance of our acquisition programs at the major end of the scale has been embracing open international competition which i think is arguably the most basic acquisition reform of all. the issue of competition internationally raises tough questions about sustaining your industrial base and about retaining operational sovereignty but as can be seen not least from the wide number of u.s. flat forms in uk's portfolio of equipment, most of those concerns are mitigated by buying stuff from our closest allies and making sure our industrial bases are closely interwoven. we think that approach is wholly consistent with our defense policy which is international in nature. by ron referred as not talking about foreign governments. and my advice is stop telling
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foreign governments that they're foreign governments and treat them as part of your base, too. thank you very much. [ applause ] >> thank you very much, steve. our next speaker is greg kiley, president of kiley and associates. zbreg a former professional staff member on the senate arms services committee, former defense analyst at the congressional budget office and retired c-130 pilot in the u.s. air force as well as a u.s. air force maintenance officer. good to see you, greg. thanks for coming. >> good to see everyone. thank you, mack, for inviting me. it's a very august group of speakers. when mack called me he asked fixed speak on how d.o.d. could be a better customer but he also asked if i'd put a couple sentences on my bio so i'll take those sentences to answer the first question. so, yes as a good trained military officer i'll give the bottom line up front, three main points, repeat what i said an get off the stage. [ laughter ]
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looking at my background and where i came from, how i could contribute to the this body, in two words, sustainment matters. i'm talking about sustainment of weapons systems. it's fully one-third of the defense budget. it's fully 70% of any weapons system over its life cycle. so i was a maintenance officer, the planes i worked on were older than me. the planes i flew were older than me. and when i decided to get out of the military after the '90s and the downturn and the hollow force we talked about i thought it would be straightforward to come to washington to help lend voice to this idea of a spending death spiral of people around here are familiar with chuck spinning and his work, this idea that the systems were getting older and older, costing more and more, exponential cost growth in weapons systems was squeezing procurement so i thought get a job with the congressional budget office, collect the data that must have been collected, this is going to be a no brainer. not so much. go to the navy, they'd been
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collecting two or three years of data, they had a new system that i'm sure doesn't exist anymore. the air force total operating costs were incoming buzz words. they were collecting data. they didn't have more than six years because they changed how they account for flying hours and costs but i spent about a year working and doing original regression analysis to determine where this cost growth was, where this death spiral was. i thought it would be real easy to show we should buy new, it would be cheaper. turns out, cost growth is not exponential, it's linear, 1% to 3% growth per year and that's for an f-22 or a kc-13 a5. at the time the air force was talking about the kc-135 because there were unique system problems. once they fixed those system problems the increases went back to normal. the point was the death spiral conversation ended and the war kicked off so that kind of ended the idea of we needed to collect data. so the first point is the data matters and understanding what
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data you're collecting and analyzing it for matters and you can make a difference. leaving the congressional budget office, i got a job on the senate arms services committee as their budget person and i was going to congratulate john for saying budget matters. he and i have debated that at times. i think it does but john brought that up. i won't repeat. i do think you need to be realistic. i can sit up here and talk about depo depots and how public depots are a waste of money and we could do it better in the private sector but given the political environment we won't get it are of all 17 in the next year or next five years. one of the parts of the portfolio i wanted to bring up in this conversation is i had oversight of -- for the republican sideover financial management and i talked to my counterpart and this had been a high-risk area for the government accountability office since they started creating high-risk areas. financial management in the pentagon ripe for fraud, waste, and abuse so i talked to my counterpart who -- i'll mention who it is later then we reached out to the department of defense
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to the senior assistant secretaries and then to the government accountability office and said let's get together and talk about what a system of oversight would look like every six months, every year we had our senators' support, what would it look like to make progress? we mapped out a plan of doing hearings every six months, sticking with it and over several years we got off the high-risk list. where financial management of the pentagon is you can ask peter levine because he was my counterpart then. i worked with him and now he's the deputy chief management officer. the third personal anecdote about how this all works and the points i want to leave you with, after i left the senate arms services committee, i got hired by dr. january hammery at the center for strategic and international studies. while i was there we were approached by a couple trade associations to look at when secretary gates kept on under president obama in his first term he started making
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pronouncements about in sourcing. our british fellow talked about services. this is a very important part of this discussion. but secretary gates started talking about 40% savings and insourcing. he reformed that to 25% savings. every job you insource we'll save 25%. a decade prior when the doctor was at the pentagon outsourcing saved 15% to 30%. we do two more turns of that and everyone must work for fry. so we started to look, we went to the pentagon knocking on doors doing the interviews, cost analysis, they have just stood up and sustained the office because they realized that's important in 2012. some people are kind of late to the game that sustainment is important. the data wasn't there. we thought maybe they've figured out the overhead but, again, how zvó analyze it, compare public sector versus private sector.c the data wasn't there.
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neither was the policy after we started asking the questions the secretary of the army walked away from the strategy of insourcing, they took the money but stopped the insourcing. i bring up that anecdote but talk about if you're going to have a policy you need to be transparent, it needs to be verifiable and repeatable, somebody needs to be held accountable. if you think that issue went away, just a month ago the air force started touting to us on a separate topic about 30% savings on our in source job on another project. did they figure out how overhead gets captured? did they figure out what private sector labor is? i'm not sure, i doubt it. did they go back to a speech with secretary gates in 2009? somebody must have told them that it saves. the issue there again is analysis. that can be backed up and supported. so i gave new you my bottom line up front that sustainment
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matters. it matters in the data, in potentially doing the joint oversight and partnering in oversight, being accountable. things like performance bases and i'll wrap up on just just t little points of you how this translates. performance based logistic, we put a man on the moon but we can't figure out ohow to compet in performance based logistics? i doubt that. commercial practices. and i'm getting off topic. but the commercial practices. we know how to buy things. we should know how to sustain them. and i'll leave with that. thanks. [ applause ] >> andrew hunter, our next speaker, from csis.
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he worked for four or five years in the obama administration and atnl for secretary carter and secretary frank kendall. former professional staff member of the house armed services committee and also both for former congressman dicks and congressman spratt. thanks to coming. >> when you put it that way, which is a great introduction, it occurs to me that at some point in time i've been the enemy of just about everyone in this room. but the nice thing about being at a think tank is you can be everybody's friend. so it's a nice place to be and a good place to be. and it's a very distinguished group, so i'm honored to be here ta today. obviously our topic is a broad one and i appreciate that you because as i like to tell folks, being in that defense acquisition reform is a continuous employment insurance program because it's always
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popular, always a hot topic of debate. and i think it probably should be because it is something that continually needs improvement and can be improved on a continuous basis. so today i want to focus on where we are now. it's noteworthy that defense authorization bill with probably the most significant and extensive changes to acquisition statute, actually i missed whether it had been signed today or late yesterday or later today or exactly where things stood, but it's effectively at this point enacted and will become law. and we have a budget deal which dealt at least to some extent with the budget uncertainty which has been a huge handicap for the acquisition system. it's only a temporary deal. s's too short, but it's the best possible outcome that i think was obtainable. so good news really on two fronts there.think was obtainab. so good news really on two fronts there. one thing important to note,
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though, it's very extensive and that's true, but it's also a series of legislative provisions that really won't reveal their true shape until they're fully implemented. and that may be a process of several years. because and i think appropriately so for legislation not all the details are spelled out. quite a bit is left to the discretion and one would hope the expertise of the executive branch to shape and implement these provisions and what they're really going to mean to the industry base, what they will mean to the workforce and how the system operates is very much yet to be told and that's true across the board from the way that the change in the role of the service chiefs is implement theed theed, to a le stepts the mda change, and certainly the way that the department implements the change to commercial item provisions and intellectual property. what will really happen as a result of the legislation is still very much up in the air. and so i want to talk a little
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bit about where i hope those things will go in implementation. i always like to start with what is the goal, what is the objective. for me the way i like to summarize it is the objective is an acquisition system that is responsive to our needs. and that can take on different character t characteris ticks at different times. it can be faster, it can be higher end, it can be cheaper. it's kind of what is the imperative of the day. by the way, you generally complaint get all three of those at the same time. longer testimony than i gave on that topic a couple weeks ago that you can check out. i mentioned some of the things that i think will be important in trying to get us to that goal. i think the role of the service chiefs that was enhanced in this authorization bill, i'm hoping that it will be implemented in a way where the service chiefs get actively engaged to ensure that there is continuous dialogue between the acquisition
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community and the requirements community throughout the acquisition process, not that we want churn or change, but just the constant back and forth about what do these requirements really mean, what is really available this in the technological pace that it can inform the requirements process as it goes forward. and that's something that i think we did fairly well actually in rapid acquisition over the last several years, that back and forth with between the two communities along with a budget community. and it served us very well. one of the other big items that i hope to see implemented this a way that encourages more responsive acquisition is this middle path or middle tier of acquisition that the senate bill proposed and has carried through into the final version. and there i think when we were trying to find a are more responsive acquisition system, i also want to think of it in terms of more adaptable systems. as we've had this dialogue and it was a prominent feature of
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the reagan defense forum that happened last weekend about how do you deal with pace of technology change, the need for the third offset strategy, it seems to me that we have to have systems that are more adaptable since we're not going to buy a whole new set of weapons systems every five years, to get new technology into the system, you're going to have to implement it on existing systems. and those systems have to have inherent flexibility. and to my mind the poster child for that has been the predator system which adapted tremendously over the course of the last ten years as we kept identifying new needs in the war fight. and so new weapons, new sensors were continuously added to that system. i think it's a great example of what can be done and what is good about our system. interestingly enough, it also highlights what it is about our system that makes that really hard. because the predator program was always kind of on the verge of a
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non nonmccarty breach. not because they had necessarily dwun anything wrodone anything the baselines doesn't contempt la late all this new that the systems would need. and it truly complaian't. it's not possible. and so this wholethe systems wo. and it truly can't. it's not possible. and so this whole push towards chalk marking a baseline and once you hit 15% you're in trouble, once you hit 25%, we want you to terminate and go away, that system doesn't fundamentally work with a system that is trying to created a dab weapons systems over time. you can't take to the other extreme, but i think we need to find a way to capture those systems at least that are meant to be highly adaptable. another key enabler is funding
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flex flexibility. i know that has been mentioned previously. i always agree with john, he always speaks brilliantly and i know he and i have similar thoughts on this issue of the importance of funding and being able to react in real time and not have to wait two to three years to wait for an appropriation every time an urgent need comes along. as i mentioned, the commercial item provisions in the legislation just passed, there is also an important concept that the bill reintroduces about nondevelopment at items. because in my mind, there is nothing holy or sacred about commercial, i don't mean to owe depend jack, but commercial in itself is a good thing, but not necessarily the end game is into the just to be commercial or to support commercial, it's about leveraging the best that is out there, affordability and about being able to take access technologies that were developed on somebody else's dime which is
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always a nice thing if you can do it. and so the bill takes a step toward recognizing it's really the nondevelopmental aspect and the affordability aspect that is important, not so much whether something has sold more than 50% of the time to a commercial customer. and so i think that is something we'll have to think through and think about how we define that in a way that our contracting officers can embrace and understand in the years coming. and i'm probably getting close to the end of my time. along those lines, obviously the move towards open systems approaches is highly in accord with what i've been trying to say about wanting to acquire ed a daptable systems. it's always fascinating that the services differents, talking to the air force and that he have about how they approach open systems, they approach it exactly opposite, which is perhaps the most predictable thing in the world. air force has more of a top down
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approach, navy more of an inside out proiapproach. and i tried to compare the two because they're so different. but interestingly enough, the air force asserted that the two approaches really get you to the same place and they are compatible. so hopefully knock on wood that's true because at the end of the day, if the air force open mission system standards fundamentally are misaligned with the navy's open standards, that will be a real problem for industry. and we don't have q&a, so i can't put anyone from ministry on the spot as to how you you see it, but that's an issue that we really need to explore going forward. we want to embrace open systems. i think it's a key to where we need to go, but it also needs to be something that industry is totally bought into and not being whipsawed between various services and different parts of
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the accidedepartment of defense. it's sometimes captured with a phrase silicon valley, but i think it's really all over the country. essentially referring to companies that don't primarily or haven't primarily worked with d.o.d. in the past. and the last thing i want to touch on, although i can't dig too deep, but this idea that actually our friend and colleague from great britain brought up about acquisition 24r50u s through services. this has been controversial in our system and in the united states and you can wander off into the "l" word territory about leasing and it can get very messy. but there is a lot of potential there and one of the more are remarkable things that has happened in acquisition of the last 15 years is that we've had a new entrant, a major new entrant in the most unlikely of
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spaces which is space launch. i don't take sides on who is the better competitor in that competition, but the fact that there is a competition is fairly remarkable and something new and different under the sun whi you don't get a lot particularly in washington. but it's really in a lot of ways enabled by acquisition through services approach. space launch is a service rather than -- and nasa really committing to that approach really made that new entrant possible. gave it a foothold that could be gotten a hold of and has gotten us to a place where i think this this week proposals are due for the first national security raunch that has been competed in a very long time. which is again something new under the sun. so there is a lot of positive encouraging trends in defense acquisition reform right now. i actually take a little bit of an issue with some of, if you will, the rhetoric that is out there about how the system is
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getting progressively worse. it's not true. i think if you really dig down into the numbers, the last several years cost growth has not been occurring. i don't think our performance maybe is quite as good as what you've been enjoying in great britain in the last ten years, but there has been improvement. it is not a continuously upward explosion as greg was saying when you look at the numbers. it's not a continuously upward explosion of cost growth. we are making progress. and there are some really encouraging, we use the word green chutes happening, and we need to keep working on it. and i close by saying that i think what is also most encouraging and grounds for optimism is that there is a priority on defense acquisition reform in congress, priority in the administration, priority if you will on the broader defense community and in the press. and so i think keeping the effort going and keeping everyone talking to one another, working together, is where we need to be. thank you. [ applause ]
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>> our next speaker is christine fox, assistant director for policy analysis at johns hopkins university's applied physics lab. she's the former acting deputy secretary of defense in 2013 and 2014 and she was also the director of c.a.p.e., so has tremendous and excellent experience in this area. remarks. >> well, thank you very much. i think everybody in this room knows how important this topic is at this time in our history, so i really appreciate the opportunity to be a part of the lexington institute's series on this topic. as is clear from the talks today, everyone in this room also knows how many times we
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have tackled the topic of defense acquisition reform and of course we will continue to do so. i think while we have conceived, designed, fielded amazing capabilities, i think it's pretty clear that we alsohbq;ñ to evolve. now, as others have suggested today, i'm in the camp that suggests everything doesn't need to evolve. ships and planes and large armored vehicles, at the need to be developed carefully, they need to be tested, and they need to be procured with rigorous processes. we need to ensure that they work and, yes, sustainment matters. i couldn't agree more. and while it's not very pop and you regard to say it these days, i personally think that oversight is indeed necessary for those processes. now, i'm not saying it can't be improved. i hope everybody wrote down ken miller's list because i thought it was spot on. those are exactly the categories of the things that we ought to keep hard working on to try to
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make them better, to make them support that process more efficiently and effectively for what we need do. we can't throw that process out. at the same time, it's pretty clear we need new ways to respond to the pressure on our technological edge that i think we're all feeling. the world has changed. technology has changed. times have changed. and we need to be positioning about that. in addition to the way that we think about evolving and improving our acquisition process for those major weapon systems. in today's d.o.d. budget and throughout the entire downturn, there is an attempt to protect to the degree possible the snt and r&d investments, but the truth is in this budget environment, we won't be fielding new programs that aren't currently designed or in the process anytime soon. and we also face many new threats from our potential
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adversaries and across a very broad spectrum of capabilities. so i think the question is how do we develop capabilities across that broad spectrum with no money and no time. and that really requires us to think about at least part of the acquisition process i submit to you very differently. i think we need new concepts for those technologies that maybe don't need to last for 30 years, or are that don't need the kind of complex development associated with planes and ships and armored vehicles. we're working on shall concepts like this. i'll throw them out today. they are ideas, not plans. they aren't the solutions. at t they are a solution. but i think that i want to offer them to you you as the kind of thinking that i hope we can be doing together as a community as we think about challenges in this sort of new world. so the first one we're working on is the concept we're calling tech on the shelf. to understand this concept, i
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need to is you guys to think about a movie. i want you to think about "batman." and don't tell me you you have not seen it. i want you to think about the scene will bruce wayne goes down in wayne enterprises to meet luciosu fox. and he's showing him around to the military prototypes that they developed at wayne speaker pric pri speaker prices that the military in the end didn't pick up and field. bruce wayne looks around and he sees an sbrirly new set of applications for those very technologies. and he picks out the ones that he wants and asks that they be painted black. okay? what if we in the national security world, in d.o.d., had a basement? what if in that basement we had prototypes, not things on a shelf that were gathering sdus, but that were living breathing prototypes, prototypes that we pulled on which tff the shelf,
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maintained, that we upgraded and critically importantly that we deployed and tested through experiments and exercises with the operating forces such that the operating forces could evolve their con ops as our technology developed? and what if those technologies could continue to advance over time even though they would not be procured in large numbers? at least not right away. now, at some point, hopefully because we start making sensible decisions about what our national security needs really are, and not in response to some terrible crisis, the defense budget will be set to a level we can once again afford to start fielding new capabilities. now envision that future world where we have our basement, and now we go to that basement and we know exactly which proceed toe i'm types to pull out and s feeling because we've tested
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them, we know that they're updated. we know the operators are waiting for them and the operators have fold us which one of those things in our basement are the most important because we've been experimenting with them. and we start producing them. if we could do that, we would save back the time that we're losing today by not being able to do it because we have so many con strabts straints on our bud our system. that's one idea. now what if it we were to couple that idea with advances in additive manufacturing? that's another area in technology that is going at this incredible rate. so now you marry our row t prototypes in the basement with with this idea that they could in the future be produced on demand.
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that would be a paradigm shift. we could save a lot of money for having a stockpile of things and weould provide them when and where they were needed efficiently and effectively. production on demand. as i said, are these the solutions? no, of course not. these are ideas. but my point of offering them to you today is to suggest that as we think about defense acquisition reform, we understand as ken so well said, there is only so many levers there. we know what they are. we know who for you work on them. and frankly, we produce pretty awesome stuff through it.you wo. and frankly, we produce pretty awesome stuff through it.ou wor. and frankly, we produce pretty awesome stuff through it.u work. and frankly, we produce pretty awesome stuff through it. work . and frankly, we produce pretty awesome stuff through it. we need to continue to make that efficient. but inching away, i'm not sure it will propel us into this new world where we need new game changing capabilities maybe that don't last for 30 years, but that give our operators that technological edge that is applicable this today's world.
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so again, i thank you very much for the opportunity to participate in this important topic. so thank you. [ applause ] >> our next speaker is dr. william leplant, if you're ready. >> i'm always ready. >> i figured you might be. assistant secretary of the air force for acquisition. he has more than 29 years experience in defense technology including positions at johns hopkins university. and he has been a member of the defense side, as well. thank you for coming up. >> appreciate it. sorry for being a little surprised 7. >> that's okay. >> i was told i was the 16th speaker.7. >> that's okay. >> i was told i was the 16th speaker.. >> that's okay. >> i was told i was the 16th speaker. it takes you five minutes to get through introductions most of
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the place i work. certainly my introduction takes a long time. hi, everybody. i won't talk about acquisition reform unless you ask me to because it's been talked about to death. i just got back from the dubai air show. very interesting. a couple roekup ecouple reporte on the plane coming back. they're still sleeping. aaron and laura. first thing that is going on, the u.s. stuff is in incredible high demand overseas. i mean people are desperate. they're desperate for our stuff. it's taking way too long to get to them. we tell them the good news is it used to be a very short conversation. it was, oh, you want that? no. we used to have very efficient short conversations. now we have very inefficient long conversations like we'll try. and it's a very laborious process that goes across multiple agencies. we need to do something about
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it. and it's urgent. it's urgent for the following reasons. number one is i said in washington, our acquisition program is broken. everything is bad, blah, blah, blah. oversew best stuff, it works, you help us sustain it, you train us. there is nobody else like you. i go will you tell washington that is this becau that? because they don't believe that. on the other hand, the urgency is they're fighting wars. saudis and united arab emirates, their number one issue is fighting the houthis. they're having issues of munitions, isr. on the good news side, the uae says we wouldn't be able to do what we're doing if it wasn't thate were associated with the united states air force for the last several decade. and they're doing the whole job themselves. i mean we're helping a little bit with isr and tanker support.
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they have their own tankers. most of the tankers are their own. most of the isr is their own. doing their own uae flying. own munitions. pilots have all been trained by us. they're doing an incredible job. but here's the thing. they need more. and guess who is over there selling stuff? oh, i don't know, a place called china. guess how many uavs china is selling over there? you think china has an interagency process like ours? are they as good as ours? no. it's kind of like we got the apple store. apple buys -- apple wins its customers with not just its products, but with its customer service. mi my daughter's going to be anxious appan apple person for life because of how they treated her. right next to the apple store with the long line outside it,
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another store has opened up and they're selling apple products but they're not really apple products but they certainly look like that. i could show you pictures i took of some displays of i thought was an mq-9. it's not an mq-9. it customer looks like one. j-31 fp. i walked up to the model. other than the two engines, it's f-35. is it really f-35? probably not. but they're doing the same thing with uavs. how much of this is bluster and how much is not? i don't know. but our partners are saying, well, you know what, at least if i buy that stuff, even if it doesn't work, if it works a third of time compared to your stuff, at least i have something. how much of that is plis bluste don't know. our industry partners are saying the same thing. we had one group i met yesterday with a bunch of mid level suppliers. one told me we're having to send jobs overseas to get around itar
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and other export issues. having to manufacture and do things overseas. this is a problem, guys. we need to fix this. and it's urgent because we have to ask ourselves what do we want the middle east to look like ten years from now in terms of military capability. what capability do we want all our allies and partners to have that we'll have to fight with. do we want thing to use link 16. yes. do we want them to use things more advanced? kre. do we want them playing ua predators as opposed to china? yes. that's the issue. and i think it's as urgent as anything else. you want to put that on your acquisition reform umbrella, you're welcome do it. but i was really struck by it. and those guys are at war. we've talked with many of the countries over there including jordan, saudi arabia, all the
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way around and we heard the same thing from everybody. some are more polite than others. some more direct. and then we sat down with industry. industry said the same thing. i said, well, i'm going back to washington to talk to one of these acquisition reform things. i'll talk about this. so this is something we need help. we need help in educating the congress, we need help educating the media. we have to educate ourselves. make no mistake, there is a reason that it's hard for us to sell our products overseas, that we make it hard. because we're concerned about keeping our best technology for us. that's understandable. and it's -- once you make the decision once, you can't undo that decision. i got that. but we better be consistent and he we better be trarnsparent.
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because the inconsisten-kconsis killing us. if you're in line at the apple store and i look next to me and there is no line there and it's half price, i know the stuff sucks, but maybe i'll get lucky. that's the situation we're in right now. so we need your help. that was what i wanted to say. i will only say this on acquisition reform. i said i wouldn't at the beginning. i don't know. are you taking questions, are people taking questions? no. okay. good. >> we can take one or two. >> whatever you want to do. acquisition reform, all good. all good. house bill is good. senate bill's good. nda is good. let's do more. let's do more. you know, it's not rocket science. we know what we need to do. people in this room know what you need do. do acquisition right. hold requirements firm. set the program up right. have a robust industrial base. have a strong government team. incentivize industry for the right things. don't change things left and right. don't go chasing like a squirrel every new technology or every new fad that comes along.
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rules don't change. that's what it needs. we know how to be successful. we are being successful despite what you read. i'm a data guy. but this is pure anecdote. it's not data. and data says in the air force that our prices, our costs, every year continue as a net to come down. i'm sorry that that's what the data says. but it says that. do we have programs going up in cost? yes, we do. ocx is going up in costs. courtney will write about that. on net effect, the price of the costs are coming down. okay? our programs kpps, this that's basically requirements, are 95%. where we need to do work, we need to deliver things faster because our development time lines are still too long.
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that's the truth. not much more to it than that. so if you want to help us with acquisition, help us focus on the right things. focus on speed. but we can't do speed at the expense of competition. that's one thing you have to remember. sometimes the fastest -- easy button is to go sole source. but you have to weigh that. we want to do commercial. commercial is great. but remember, if we're buying it commercial, so can anybody else. so at some point, you don't buy everything commercial because you don't want our stuff to be available commercially. the stuff that smaks accepts ma buy commercial, buy commercial. the problem is we have to decide as a society, as a country, what is more important to us. finding the next $700 hammer which is always -- there is always the pursuit of it as there should be, versus making buying commercial actually
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practical. and we all in our lives have accidentally paid too much for something. or maybe not accidently, purposefully. i tell the story about a month ago, i brought -- i have a 2011 pilot. i took it into the dealer and in like the two hours i have to do everything for my life which is saturday morning from like 9:00 to 11:00. and the dealer said your battery is on its last legs. i know, i know, but it's fine. just leave it alone. i got to go. driving home from work, pull over to get something, do some shopping. get back in in the car. doesn't start. first cold -- crap. the dealer is right. i get it jumped, i get it home. and i go how can i get the bat theory fixed. i have to go on a trip tomorrow morning at whatever.battheory f. i have to go on a trip tomorrow morning at whatever. i got a busy job. so i thought aaa. aaa will come and bring a battery. so i told my wife okay if i just have them do it.
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she said okay. so i called them up, they came by. talked to him about the redskins. a good guy. put my battery in. i don't remember how much it was. i think $150. way too much, right? i couldn't do that, but i didn't care. because i got the thing done. i couldn't do that in my job. in this job i have an ig chasing me. we have to decide when we're talking about commercial, you know, what are we willing for accept as a society. i'll say one other thing and then i'll stop. i'm a big fan as a geek of what people like elon musk are doing. i'm talking about what he's doing with his different companies. most geeks follow what people likeelon musk are doing. he's trying to close a business case to go to mars to join matt damon. so okay. that's good. i know people who are really smart. smarter than me in space, that
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don't believe it will work. either it won't work technically or the business case won't close. but he's doing it anyway. how many times has he tried to land this thing on mars? byron? i think it's four. and he puts a tweet out right afterwards and if it doesn't work, which it hasn't, he says rockets are tricky things. close but no cigar. but everybody loves it. do i think he'll pull it off? i do. i absolutely do. i think everybody else following says -- now imagine for a second if that was the united states government, let's take the part of the defense that is supposed to be the most far outreaching way ahead take risk part. if it was sdchltdarfa, they woue tried it twice and quietly said we're stopping it and it would be considered a failure. if we had done it in the air force, we would have done it once, an i sgchg investigation the headline would be talking
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about how this business case is a crazy idea. am i saying we should be doing things like that in the government? no, i think there are things that are too risky for us to do. what i am saying is you'our attitudes -- we have too cheto check it. we say we quant risk taking, but we don't behave that way. and some who say that on monday on tuesday are blasting because of some commercial price went up. yeah, commercial is great, let's do other transactional authority stuff. we're trying all that stuff. that's great. but let's also remind ourselves what is important. i'll stop. and i was not prepared. that was completely off the -- i made it up on the plane. and don't call me -- >> how are you going to change
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the system given the congressional requirements, given the enormous amount of regulations that are thrown out? >> are you talking within the context of fms or just in general? >> well, i assume you're talking largely about fms. >> when i came in here, my first half of my talk was on fms. so you're asking about that. there is not a good answer to this question. somebody asked this at the secretary when she had a press conference at tutu bye. a reporter asked would you feed shall be at the white house to coordinate this.bye. a reporter asked would you feed shall be at the white house to coordinate this. we're talking about a whole of government issue. we have the state department involved, commerce. department of defense. all for reasons that you can understand when it's explained to you, but the net effect is very frustrating. can decide as that it's ook. and i'm not kidding. we'll let the market play out
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and if the chinese -- pick another country -- that it's okay if their stuff is with a gets sold. that's fine. but i don't think that's right. gets sold. that's fine. but i don't think that's right. but i don't think it's right for our industrial base. we don't fight wars by ourselves. we fight them joints and we fight them with coalitions. and so that to me i think this is an you are departmeurgent is solve.them with coalitions. and so that to me i think this is an urgent issue we need to solve. one more question. >> and it also has to be friendly. >> i like the unfren friendly. those are the funner ones. [ inaudible question ] friendly. those are the funner ones. [ inaudible question ]friendly. those are the funner ones. [ inaudible question ] >> -- so what's changed? >> i don't know that anything has changed, and i don't know what happened with israel saying the '67 war. my guess is it probably went almost to the president. here is the thing. can we do this without involvement of the president? like secretary gates used to say
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where he had to be the program manager of emraps. we can to do emraps, but why have the secretary of defense be the program manager. so i think we can do it, but without going to the leadership of the country. because that's where this stuff will go. okay. thanks. [ applause ] >> mckenzie, are you ready to come up here? resident fellow at the american enterprise institute. she's former research fellow for national security studies at the heritage foundation and principal defense adviser to senator susan collins of maine. thank you so much for coming. >> so we're getting close to batting up time, so probably just about the right opportunity to actually pick up kind of where andrew left off and christine fox and dr. leplant continued. so when i survey capitol hill which is where we are today and
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their efforts this year, i november we've spoken a lot about the time in memoriam efforts, but this year it did seem to be exhaustive in number and scope. so before there was a final conference version, there were over 150 acquisition reform provisions alone. pretty substantial. and what was the focus of the bill this sgleer weyear? no surprise, but you ite it's f personnel and purchasing. some won't eneven take effect for a year or so. so i'm here to offer a sneak preview of where we can expect our friends on the authorization committees to go next year. chair men of both committees said this is their opening round but next year they will double down.men of both committees said this is their opening round but next year they will double down.
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so my next question is what else is there to do, not being the expert in this. and so the focus next year will be on implementation and oversight. and so in some regards the congress is admitting something rare which they typically two not do, which is that the things that are going to take effect over the next 12 to 24 months whether need to be periodically revisited, updated, tweaked and possibly changed as they take effect. one of the biggest ones that we all know of course is the additional authorities provided back to the service chiefs somewhat. now, that provision doesn't really take effect for almost a year now. the major defense acquisition portfolio programs are basically fwrand father grandfathered for the next year give or take. but it's still something that the many other 149 other provisions are all going to be enacted and followed company lo.
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so they want the defense accident to start using other transactions, waiver authorities, new commercial procurements, et cetera. so there are ten areas of acquisition reform that the two chair men have said they will focus they feel like they have achieved five in this year's defense authorization bill. and there will be five areas next year. i'll give you three as a freebie. if you want the other two, you'll have to call me. and what do they believe is not done yet. okay. so the biggest is the elephant in the room and by that i mean literally and figuratively. which is defense services acquisition reform. the focus is overwhelmingly on weapons systems, but yet the pentagon spends the majority of its purchasing dollars buying services. not goods, not hardware, not equipment, but services i.t. and some cases commodities. it's the overlooked area of
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lar largess that has very little attention. it's complicated. it's overseen by literally two armies of civilian workforces at the defense accident both civilian payroll employees and d.o.d. and federal contracting civilians, as well. those two workforces outnumber the entire active duty military. this is an area -- i can't even find the word -- in great need of scrutiny and review. the people who are purchasing labor. what is labor? people. it's that simple. people performing service. so things like medical, health care, tri-carry, provision of services therein, construction, not just military, but other types. operations and maintenance of infrastructure, existing facilities and buildings. and even to some extent some research and development. investments. so they will be looking to find what are the best practices in the commercial marketplace.
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it does not mean that everything is going to be applicable. that's not at all what they're say. simpay what iew tod3s! could be applicable, what might work and let's try it if it does. what are the allies doing that we're not that could also be useful and perhaps relevant. for example the you united kingdom, the use of sole source noncompetitive contracts. is that a vehicle the d.o.d. can use more of for example. the second is i would put it under the services umbrella, but in this case they're counting it as number two, information technology acquisition. who is responsible, who has a hand in that pot and how do we determine success in terms of the drought put of i.t. enterprises across the largest federal agency. and then there is another one which is more of the front end of the acquisition. and this is an area again sort
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of making sure the defense department is using as a customer, as a beneficiary of congress' love anded a more race in this regard some of the things that were given to it or possibly new processes and procedures. more operational prototyping, horrific reduction programs. what do they look like, what actually has to clhange. does the definition of the program itself need to change. there are times when we need to sunset even the best intentions. and that leads knne me to get oe top three of the five to the final sort of point and indicators of where congress will go next years. so the senate armed services committee has been undertaking this 30 years of goldwater/nichols reform hearing
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series. once the bill was complete essentially a month ago, they launched this review. the intentioned is to finish it by january. certainly before the president's budget comes over the first monday of february, but probably even the before the new session of congress begins next year. this is an organizational review but also a process review.he be of congress begins next year. this is an organizational review but also a process review.e beff congress begins next year. this is an organizational review but also a process review. befo congress begins next year. this is an organizational review but also a process review.befor congress begins next year. this is an organizational review but also a process review. and certainly an acquisition review. including personnel. it's trying to cover everything and it's also trying to look at 30 years later. by most metrics, goldwater/nichols has been a success, but there have been unintended consequences and there are certainly things that need for be rolled back. and these hearings started of course with secretary gates. a couple themes identified by the ranking member senator jack reed and the chairman senator mccain of what are they trying to get after as part of this effort. there are six enduring principles which apply to this
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topic. one is providing for more efficient defense management and another is enhancing innovation and accountability in defense acquisition. and so where are they going for example. so we have some insights from secretary gates in his hearing. the question i think will remain open even taking into account where the 2016 bill went, finding and striking that right balance, something that i know makes some people very happy in here. there were problems when the services had their own acquisition authorities that led to greater central staigs of ize oversight, but then there were problems in the minds of the chairman and ranking member when the pendulum swung the other way. so now the goal is to find a better balance. so as i conclude, i will just summarize again, this year new authorities, new processes, new procedures. next year, it will be on implementation and oversight.
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and in about a year, matt will invite us back and i'll review how they did. thanks. [ applause] ] >> our next speaker is greg dalbert, the former senior vice president for washington operations for lockheed martin. he also was the democratic staff director for the house defense appropriations subcommittee and also the undersecoretary of the army in the clinton administration. thank you for coming. >> i know my rule, i think i'm the last speaker, and i can't repeat anyone and i have to be short.le, i think i'm the last speaker, and i can't repeat anyone and i have to be short.ole, i think i'm the last speaker, and i can't repeat anyone and i have to be short. so i'll start by saying i will endorse remarks of phil jasper and byron callan and a splash of dan gray in there. i'd like to may talk about something that hasn't been talked about yet, you try to
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find a topic here, its vee difficult with this esteemed room and a lot of really good ideas and excellent talent. but i thought i'd talk about congress and the reform efforts there. i'm an old appropriator. is 20 some years in the committee. if you find the full committee office in the capitol, you'll look and there is all the hearing records going back from the beginning of the committee which is in the 1800s. the very first hearing that they had is about a lock and dam 21, whatever it was, that the arm co army corps of engineers was building where there was a cost overrun and they were giving them hell about the cost yefr runs.where there was a cost ove and they were giving them hell about the cost yefr runs. i think all of you involved in acquisition reform, you have full a ka rear careers ahead yo
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sure because it's a continuous process. and the issues of cost growth and government spending will be with us forever. doesn't mean we shouldn't work on it. a couple people in this room i remember grilling in my time in appropriations and we killed a couple programs. and we weren't happy with a few of them. and sometimes we rewarded them because they were doing good work. so this is not a new phenomenon. it's with us and it will be with us forever. and i think if you look at the congressional reform efforts, let's say the modern ones in the last 20 years or so, you know, i kind of have a hard time finding real big successes. and i think nothing against the people at all who are all well intended, i think what happens, good example i think the last -- i won't name name, bs, but the t bills started off pretty strong, but by the time the process ended with all of the discussion
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from many of the people in this room for instance, and we saw all the differing viewpoints just today, it's incredibly complex subject. there are different views. and when congress tries to pull all that together and get a rational process, frankly, i don't think they do a very good job. and unfortunately, my own view is that much of the reform we've seen is half good/half bad, maybe more red tape than anything else. a little less which is not good in my view. and it gets back to that time is money point which would be my bottom line, as well. i think that is really one thing that is not understood by this community and it's not understand stood by the congress about how process and the delays that come from -- and i learned this in industry -- having teams put together, having
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subcontractors put together, all engineers staffs all put together waiting for a process to kind of come through that huge decision cycle that happens because all these steps in that spaghetti chart, and i think we've all seen that spaghetti chart of the acquisition process, that is huge money. and by the way, the contractor will recoup that money over time because, you know, nothing is free in this business. so to me, what i'd like to see is something pretty simple. i talked to my former staff about this and they roll their eyes, but i said, look, why don't you go to the hill and say instead of all these little tweaks to the system and getting more competition here and all the different processes that you want to invent, how about just saying, mr. secretary, give us a plan a year from now to cut the time it takes for major acquisitions by a third.
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just show us what you'll do with that. with a wou what would you cut out of the system. what kind of savings would you get from that. and leave it up to the experts on actually come up with a system that might really change things. and i think that's really what industry would actually like to see. that's the kind of change that would really wake up the system. and unfortunately, i don't see that happening anytime soon. i will say that the spaghetti chart as we call it of the acquisition process will scare the dickens out silicon valley and anybody else who wants to try to get in on this game. i've had personal discussions in my time with industry folks from fortune 50 companies who is looked at coming into defense and they said, map, n, we look that process and there is no way we're jumping in there. and then they come to us at
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lockheed martin, can you show us how to get through this incredible process because they know they're going to fail and they know it will be very expensive. so i think folks who kind of look at that as the golden cow of maybe the next generation for true innovation, i think they will be mistaken because i don't think they will come. i think another thing that hasn't been talked about a little bit is the consistency of departmental strategy, acquisition strategy. that's a tough one. i get it. the problem is assistant secretaries change. they change quickly. and, boy, can they change the nature of a program overnight in terms of what we were planning versus what they want. i'll give you one example. it's an old one thousand. presidential helicopter. the -- i won't name names, but the assistant secretary back
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then who wrote the rfpthousand. presidential helicopter. the -- i won't name names, but the assistant secretary back then who wrote the rfp which is it about five assistant secretaries earlier than when the decision to terminate happened, said i want off the shelf, i don't want development. this will be cheap, it will be 85% solution. it's just a helicopter. we'll protect it, but this is going to be off the shelf. we're going to to do it. that's how we bid it. that's how it was won. that's not how it ended up.o do. that's how we bid it. that's how it was won. that's not how it ended up. do . that's how we bid it. that's how it was won. that's not how it ended up.do i. that's how we bid it. that's how it was won. that's not how it ended up. a few little things -- and this is not meant to criticize because i think these are just what happens. the white house comes in and says we need to harden certain systems in there, we need 360-degree rotating seats so the president can have meetings inside. just doing that added incredible weight to the system because these seats are not the cheap.
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they're custom made. carpet had to be thicker. all kinds of things like that. small things, but then things like the white house photographer came up and said, you know, i don't like the rivets in next to the door. it wrecks the photo-op. so we need to move that strut back out of the way so we have a clean, you know, view of the camera. well, i think all you know you move one strut, and we does it did it by the way, one strut into the guts of the helicopter, you're movingend of the day, we another rotor blade. redesign the whole transmission. it was a new helicopter. and this was done to very good reasons, but this is why we had the cost growth in that system. again, people at the beginning
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of the process who made the decision set the parameters weren't at the end. it's a fasct of life of our system. i don't know how you change that. you can try to educate people. but everyone has a different -- and i fear for instance the folks -- many of the folks who are now in place in the structure as decision makers, they're not going to be there when many of these systems they're making decisions for future secretaries, many secretaries into the future, and i kind of sgarn tguarantee one it will change as the thing goes forward. so it's a dynamic tough interesting process. you know, i think -- congratulate everyone in this room for number one sticking if there, but also really you really see the dynamics of how difficult this voz. process is. there is a lot of good thinking
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and a lot of goodwill temperature industry gets a bad rap sometimes, but definitely trying to pull the weight of cost reduction and delivering more with less. so thanks very much. [ applause ] >> that concludes our program. i'd like to thank all the speakers for their outstanding presentations and doing a wonderful job keeping things on schedule. it was a very good forum. the lexington staff organized another great event for us. than you constance. we will have video of this forum posted on our website soon.k yo. we will have video of this forum posted on our website soon. formal presentations we've received we will circulate to you and also put them on our website. and we welcome any ideas you have for future events, future guest blogs, guest articles on our website and elsewhere.
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and thank you very much for participating and have a great weekend. good to see you, jack. thank you for comin news this afternoon that the supreme court is taking on its first abortion case in eight years. it's a did dispute over state leg lags of abortion clinics. the justices will hear arguments
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over a texas liaw that would leave about ten abortion clinics open across that state. the decision should come late june. the high court previously blocked parts of the texas law. republican presidential candidates are in florida today for what the state gop party calls the sunshine summit. they're speaking throughout the day live on c-span, but you can see them again tonight starting at 8:00 also c-span. speaking today, marco rubio, ted cruz, lipd zi gram, mike huckabee, ben carson. tomorrow, bobby jindal, chris christie, rick santorum, rand paul, john kasich and carly fiorina. the saturday session gets under way at 10:00 a.m. you can watch it live on c-span.
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all campaign long, c-span takes you on the road to the white house. unfiltered access to the candidates at town hall meetings, news conferences, rallies rallies and speeches. we're taking your comments on twitter, facebook, and by phone. and always, every campaign event we cover is available on our website at cspan.org. american history tv this weekend. >> setting out boundaries, political boundaries, state boundaries, community boundaries, for the future. and for this territory going forward. >> lectures in history, with iowa state university professionals on the 1787 northwest ordinance an october by congress to organize and govern newly acquired territory from ohio to the mississippi river. and our new series, road to the white house rewind.
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>> who is on what side? >> he is a senior citizens. >> senior citizens against the kids? >> no, no, i missed. let them have it. >> oh, i see. >> i don't know if you made it special. >> you call told me to sit facing the coke machine. that's what you said. i just do what i'm told. >> a look back at the 1992 presidential campaign of bill clinton during a visit to franklin high school in new hampshire. on real america, marking the 70th anniversary of the nurmberg trials. the 1945 u.s. army documentary on nazi concentration and prison camps. and continuing on oral histories. >> my outfit went over. it was a couple of days after d day when they had enough beach landed to justify it. and my captain who was a new captain on that job came, and he said, you stay here. and, again, it was one of those times when somebody reached out.
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and i was left. and off they went. and it was sfl days later, a week or so later before i went across and rejoined my outfit. >> an interview are a former chief prosecutor for the united states, born in transveinia to a jewish family, immigrated to america. he reflects on enlisting in the u.s. amy after law school and being assigned to set up a war crimes branch to investigate nazi atrocities. watch american history tv all weekend every weekend on cspan 3. get our complete schedule at cspan.org. the commander of the pentagon special operations africa recently answered questions about the u.s. military support role to a number of sovereign military forces throughout africa. defense one hosted this events and its global business reporter also asked what lessons can be learned from the u.s. strategy
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in africa. this is about half an hour. >> good afternoon, everyone, welcome. i'm a joined by brigadier general bond bull dock, he is the commander of special operations command africa, very -- a place of lots of military activity, and in many cases, general bull dock's troops are the face of not only the u.s. military but the u.s. government in the types of missions that they are doing over there. so first i wanted to -- >> can i say something, please. >> yeah, go for it. >> first of all i'd like everybody to take note of the picture mooind behind me here and the soldier dressed in his combat kit. and that soldier is representative of all of us who serve in the military and those that support. in my environment, that's navy, air force, marines, army, and civilians. and this is what it's a all
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about. this gentleman here represents us all over the world. he is expectsed to do a number of thing for us. one, see the big picture. number one. number two, he is expected to work well with others. and number three, he or she is expected to build teams. have common sense. professional education. physically fit. aggressive but not reckless. optimistic. energetic. and resourceful and this is what we see every single day. i want to thank everybody out here for all the support, the service that they give -- because i know we have people that are in the service out here. we have those that have been in the service. we have those that continue to serve. our civilian partners, our civilian agencies. and i just with a tonight make a point to thank them and to thank you before we get start toed. god bless you all, and thank you. [ applause ] >> so, stan, the theme of that soldier there, that soldier there these days is facing a lot of threats, especially in your
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lor, lra, boeka haram, now isis. which one of them is your top threat right now? and what are the threats that you are seeing being the most serious? >> thanks marcus for that question. i appreciate it. we are -- when you think of special operations command africa, you have to think of us as the threat focused component for general rodriguez and the african command as we support his operations through his theater campaign plan. so i do not categorize the threats from one to five. and we do have five different threats. i have four different platforms deployed on the continent to be able to deal with those threats. we are connected by our partners in africa, and by the threat in africa n. north africa, east africa, central africa, west
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africa, and across the sahel. and we organize ourselves to do that. although isis is grabbing a lot of the headlines lately, it's not just isis that we focus on. isis has a foot hold in libya. isis is able to coopt and influence foreign terrorist fighters and other terrorist organizations and other criminal organizations in north africa. they are a transnational threat. there is a transregional threat, as are all the threats that we deal with in africa in our assessment, cross, regional, transregional, and transnational. and that's an important takeaway. and it's about building networks and organizing yourself on the continent to be able to get at these threats. although isis is a concern, so is al shabaab, so is the lord's resistant army in central africa.
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and the 43 other illicit groups that operate in that area that don't get much press but are there at present. boko haram, aqim, and other small groups in thattia ir. >> let's stick with isis for a second. what type of activity are you seeing between isis in iraq and syria coming into africa or vice versa? >> well, like i said, it's transnational and it's transregional. so isis in north africa is in libya. they feel that that is a lemg mat part of their call fat, they try to draw foreign terrorist fighters from other countries in africa to support operations in syria and iraq and to build a ka dre and a recruitment base in north africa. they are very good at reaching out and coopting other terrorist organizations like al shabaab, boko haram and aqim.
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we are seeing that influence there. we are seeing the transfer of tactics, techniques, and procedures. that's why i say we are connected across africa by your threat and by our partners. and most importantly, our african partners and our allies and coalition partners as we develop platforms to be able to assist african countries in developing capabilities and capacity to deal with the threats within a particular country. and it's most important to note here, i think, is that our african partners are realizing that their problems are more regional than isolated to their country. so they've got to reach across borders and kroord nate with borders. in the african union regional task force in east after, ammason in east africa. the african union regional task force in central africa. and most recently the multinational joint task force
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in the basin headed by chad led by nigerian general officers and supported by nor, jir, chad, and cameroon are examples of the rijal kper suspective they are developing to deal with their threats. >> you mentioned all the borders. with all the porous bore derls in the continent how does that complicate your mission in terms of you are dealing with specific governments in some cases and different ones in others. how does that form a challenge for you? >> that's a great question because this isn't a military solution to the problem in africa. the military play as role, special operations forces play as role, small role, in a much larger picture. the real solution to the problem in africa is strong institutions and institution building and beingab able to do that.
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the military can only get you so far. so i'm asked to build a counterviolence community in a particular country. i can build that operating force, i can build a generating force. but if there is not a validness institution to plug it into, then we are there for a long time. so we have to build these institutions that are able to be able to do the medical piece, put them on leave, pay them, promote them, and do a lot of other things to support that military. but the gap begins when the military operation ends and there is a need for civil administration. there is a need for police. and so we can also help that with our civil military support elements and our military information support teams. but the bottom line is the way you get at those other problems is not necessarily a military solution. it's a civil administration and police solution and an institutional solution and
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cooperation regionally with other countries to protect both sides of the border or multiborder in some areas in africa. >> i wanted to talk tau, sticking i guess the threat theme. last month, defense one we had an even with general hodges the commander of army europe. we were asking him about russia and the threat being posed to europe from russia and the kind of visibility he had into the situation in ukraine. one of the things he said which was telling which was a lot of the isr, the intelligen intelligence & surveillance and reconnaissance assets wereside tied up in sank come. you have a huge area of responsibility. do you have enough of what you need? >> well, there is a question -- and i heard the chief of staff in the army this morning saying nobody ever has enough of what they need. yes, we can always use more. but that's a global resourcing
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question driven by national priorities. we take what we get. whether it's isr, forestructure, authorities, structures, permission, funding, resources and other things, and what we do is we knit those into a four-structure platform inside africa that is flat, decentralized and distributed. so we have a lot of soft forces spread out that are designed to operate in this area, shoulder to shoulder, leveraging our partners. we also leif ramming our allies. united kingdom, canada, the italians, the french, depending on where we're operating, in order to take their capabilities and capacities and integrate them in everything that we do so that we can maximize some of the shortages that we may have in isr. if one country has a shortage in isr then another country comes in and fills that. if someone needs to put boots on
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the ground in order to get a presence on the ground, a foot print on the ground then we assist each other that way. we leverage the african partners because, remember, in africa, the united states isn't at war. but our african partners are. and that is an interest policy and strategy perspective as you go to conduct operations inside africa. so the most effective thing that we do is about 1400 soft operators and supporters integrated with our partner nation, integrated with our allies and other coalition partners in a -- in a way that allows us to take advantage of each other's capabilities and capacities, fill those gaps as best we can in order to be able to have the information that we need to drive our african partn partner's operations against the enemy. >> those 15 houn, how busy are
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they? what is your up tempo been like, give me a historic perspective in recent years. >> they are extremely busy. so if i could just take a moment to talk about what my structure looks like. first of all, i have a special operations command forward n. east africa, central africa, north, and west africa commandsed by an 06. so it's either a navy captain, air force captain, army colonel, air force colonel -- consume -- you know where i'm going. so it's an 06, anyways. and then i have a joint special operations air component that runs all the air operations for special operations on the continent. okay? that's an 06 as well. underneath, i all these my integrators. they are integrating everything we need to do. all the missions that general rodriguez gives us, and the requests that we get from our partners, they integrate all that together. and they give that down to the soft teams who are executing the
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missions on the ground in 23 different african countries on a day to day base. so that's seven days a week, 24/7 they are busy. so everything that we are doing in africa is designed to support african partners who are in the fight today. and that's something that has to be -- has to be understood. we are coffee breath close with our partners. we're coffee breath close with anyone operating in that area. and then we have augmentation inside the embassies because the ambassadors integrated country strategy is hugely important. we are supporting effort in this environment in africa on the military side. we are not the main effort. we are a supporting effort. so you have the ambassador's plan. so everything has to be transparent with them, with our partners. we have to make sure we're doing what our partners asked for.
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so we have this soft structure, this backbone that can act as a platform to receive and support ngos, u.s. aid, and other governmental agencies, either foreign or u.s. that come in that need a platform to work from in order to have an influence on the populous. remember, it's all about institution building. effective governments, the ability to deliver goods and services, the military provides time and space for that. the operations that our partners do are designed to do that. and so -- and we support that. >> there was talk earlier, i know when general millie was up here about the special operations forces heading to syria and the type of fight that they will be getting themselves into, in many ways is similar to the missions that our forces are under. what type of lessons, i guess, can sock sent take from sock
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africa as they move forward with this new mission in syria. >> soft looks at how we advice and atest train and equipment and conduct full strek trum s t soft -- spectrum operations. how to integrate that with civil administration and the police to fill the gaps and then how to do the proper messagings. i think there is a lot to be taken. i'm not going to sit here and say that sock sent can learn something from us. but that's how we operate on africa. in an lethal and dangerous an environment as anywhere else in the world we are close to our partners. we do advise, assist, accompany.
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we do everything that i think is being expected of our soft brothers in syria and iraq. and we take lessons from everywhere that we can get them. we are constantly doing assessments, constantly doing lessons learned, and we are integrating those things. if you look at how we operate on the continent. small teerges one guy, three guys, five guys, 12 guys embedded to do the missions i just talked about. on a operational time line of hours to years depending on what we are doing. if it is a crisis response. it's hours. days, weeks. if it's building partnership capacity, it could be a persistent presence that lasts for years. >> what are your african partners telling you that they want? what type of -- be it training or equipment. >> first and foremost what they want is a meaningful enduring long lasting relationship. and they want that with the united states and the united
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states military. and we're seeing the fruits of that, you know, across the board. but more importantly what they want us to do is assist them with professionalizing their force. they are particularly interested in developing a noncommissioned officer corps. they see how we operate with our noncommissioned officer corps on the continent and it's very appealing to them how we do that. so -- you know, in some places that's going to ache a little bit of -- you know, a little bit of time. they like how soft operates because predominantly that's who they are around. small teams, decentralized distributed types of organizations. they want us to be there to advise and assist them. they want us there with them. not to be a crutch. but in support of what they are doing. >> are you seeing their militaries becoming more structured than they were? i don't want to use the term bureaucracy but -- i guess the
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professionalization, as you mentioned. >> yes. >> are you actually see -- can you talk about the challenges involved in that -- >> absolute. >> i guess based on histories in certain police. >> we have a wonderful amendment called the leahy amendment. if we were having serious problems with our ability to work with our partners then we will not be able to vet them accordingly. so we are seeing less and less issues with leahy vetting. less and less things that would trip a leahy vetting problems. so that, in my mind, over the years, the work that has been done because that has decreased, their ability and effectiveness has increased. their communications to us are at, you know, a much, much higher level. they are looking at, you know, institution building, professionalizing the force, how they take care of their force structure in a way that we, you
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know, we haven't seen before. so i say the overall effectiveness is going up. >> i want to talk about the authorities and maybe the way money is appropriated for certain missions, unlike other places in the world. for instance, you have money being appropriated for the lra mission to hunt for coney. eventually, or while you are doing those missions you come across, i'm sure, other types of threats, and or advising for other types of -- where you could advise for other types of missions but you can't. can you talk about maybe the issues you have with the authorities there and maybe tying money more toward threats than toward a specific mission. would that be helpful to you. >> well, yes. when you are talking about putting a mission together or for special operation forces,
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given what general rodriguez has asked us to do in his theater campaign plan it is a all tied to threats. authorities that allow us to be able to do this with the maximum flexibility possible is desirable. the permissions that we need to get are also, you know, very, very important. and that's why the relationship between the military and the inner agency is so important. that's why that integration, coorder nation, sin coniesation of everything that we do has to happen extremely early so that we are all inform and we understand you know, what we want to do so that we have maximum flexibility. i give my commanders a tremendous amount of leeway on the ground to do what they need to do to get done so we can operate as fast as our partner nation and as fast as the threat. and that's usually important because the risk that we have to assume sometimes out on the ground needs that flexibility
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for them to be able to operate. but we have to do it within a uct.constr that construct is established and given to us. sometimes that construct changes. we need to rescope it. sometimes we need to terminate it. sometimes we need to pause and it regroup and refocus it somewhere else. the goal that we get to is we want to transition it. we've done some of that, but not as much as hopefully we do in the outyears here. so we constant eare doing assess mtsd and lessoned learned for that. and you know, you alluded to the lra mission. it's been a hugely successful mission. >> right. >> over 3,000 lra when we started four years ago. now down to under 200 roaming around imaimlessly in an area the size of california. in triple canopy jungle. they are hard to find. but we've had four out of five coneys -- coney being the fifth one -- four out of five of the
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commanders are off the battle field. seven other senior commanders have just recently given themselves up. and they are on the run. so what we're doing now, we've been directed by the national security council staff osd and the join staff to give you an example, we are looking at that mission to rescope it or to transition it or to do something with that mission. and that will require different authorities because right now we have advise and assist authorities. depending what they now ask us to do they made me train and equip shorts or something else. we've been asked the give them that feedback and that assessment. somal somalia, another example. a lot of success there. amazon, our partner countries that we are working with there. i just talked about central africa. tremendous amount of success in the lake chad basin area with
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niger, chad, and cameroon. on the continent -- i try to simplify everything because i think keeping things simple helps out even in a complex environment. and i think you can get there. it's called outside in, and inside out. that's how we look at every be problem. we have a problem inside the cup. we try to develop a plan that looks at that plan and developing support based off our partners rirlts inside out and then the countries surrounding it, we look for plans to support outside in. and in niger, chad, and cameroon, this is hugely important because they are containing the bul boko haram problem, where nigeria is inside degrading it and defeating it. so that combination and connecting them in that way has opened their eyes to a regional solution to the boko haram problem. >> can you talk about cameroon? there was some news made a few weeks ago about an isr deployment to cameroon.
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is that in place yet? what are the goals for that mission? >> yes, the cameroonian government requested to be more involved in the operational aspect of countering boko haram. one of these things is placing isr. it's hit the news. the president is talking about it. i'm on solid ground here. they wanted a capability inside their country to support that problem set. that is being done as we speak. aft africom is putting that in. it has to be sustainable and affordable. it's got to be simple. even for us, it's got to be simple. the more complicated you make something the less likely you are to use i. so this technology transfer is hugely important. i will use an example of in
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difficulta, niger we have a team operating in the southeast portion partnered with our nigerian partnered force living right next to them. coffee breath close concept. right there with them, advising and assisting, training and equipping, doing a number of things along those lines to support the counterboko haram fight. our guys are living on solar power and water purification systems which are hugely important. they have got water purification system that sits in a little box the size that's a little bigger than a briefcase. and it purifies 80 golans of water per hour. and i mean 99.99% -- i'm not sure about the other digit there, stomach flu or whatever, bottom line they are doing well. what we are doing is we are
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showing them how to operate in austere remote areas efficiently and effectively eye doing it ourselves and using technology to be aebl to do that. we have a radio system that we are employing as well that connects all different kinds of ways to communicate, fm, hf, cell phone, into a system that allows them all to talk together. because in country x they may use cell phones, and in country yi y they may use fm. and this communication system, which is affordable, it's ruggedized we've use it in flint lock. we're going to use it again in this year's flint lock. which i invite everyone to come out and take a look at it. it is a great exercise we do once a year with our soft partners across the continent including our european partners. great opportunity to see the interaction the interoperatability that i have been talking about here. these things are hugely important. >> when you say text transfer,
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do these countries want drones of their own? are they looking for stuff like that. >> i think everybody wants that kind of capability, to see the enemy or see their threat more clearly and be pro active as opposed to reactive. so, yes, that technology -- they know about it. they come to our schools. they get trained. they know. they watch the news. they watch servidiscovery chann. they are all over. they are very smart, astute but they need our assistance. >> let's go back to coney. you said they are oitd hiding out in the youngels and everything. in your opinion is coney's days numbers? >> absolutely numbered, right. i don't know what's going to come first, either we capture him or -- not we -- our partners capture him. or he dies of the many health issues he is experiencing right now don't know. but, yes. >> and we're just about out of
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time, so i'll end with this one. can you talk about kind of if if you had just -- if you had more money right now, the budget is clearly a big issue in washington. we have a budget deal now. if you were to get a slice of that, what would you spend it on? >> if i was to get a slice of that, and it came with a capability, right, i would probably ask for more isr that has a multiend capability. if it was possible. that's what i would ask for. i have already asked my higher headquarters for that, so it's not a big skrechlt but anyways, i mean, that's what i would ask them for. but like i said, soft doesn't focus on all that. we focus on the right people, not necessarily the technology all the time. we've got to have those right people. it was mentioned earlier and i thought about three things that are extremely important to me.
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i'm the sark africa commander, i am a force employer. i get my orders from the general who ar particulates how he is going to support. he does that through two socks, i work for two commanders. the global campaign plan for the campaign plan for global special operations the theater campaign plan, they lay all that out. they give me my mission, they give me the people to do the mission. and most important to that is the families that support those people as they go out and do the mission. so i have been thinking about those three things -- i think about it all the time but it hit home with a couple speakers here today that give me a mission you have got to resource me to do the mission. if you don't resource me fully then we'll tell you what we can do. i have got to have the right
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people. and i have to -- and we have to take care of their families. >> as you say that, our clock has hit zero. so we've run out of time. >> excellent. >> great job working it right down to zero. thank you everybody for joining us and thank you general. >> god bless you all. thank you. republican presidential candidates are in florida today for what the state gop party calls the sunshine sum it. they are speaking throughout the day live on cspan. you can see them again tonight at 8:00 eastern also an v span. speaking today, rubio, cruz, graham, huckabee, bush, trump, and carson. scheduled to speak tomorrow at florida's republican sunshine summit, jindal, christie, you will hear from santorum, paul, casic, and fiorina. the saturday session gets underway at 10:00 a.m. eastern. you will be able to watch it live on cspan.
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cspan has your coverage of the road to the white house 2016, where you will find the candidates, the speeches, the debates, and most importantly, your questions. this year, we are taking our road to the white house coverage into classrooms across the country with our student cam contest giving students the opportunity to discuss what important issues they want to hear the most from the candidates. follow cspan's student cam contest and road to the white house coverage 2016 on tv, on the radio, and on line at cspan.org. then baker says to him, well i want to be a congressman. i think you are just using this as a steppingstone to the senate. george h.w. bush says no no i'm not using this as a accepting stone to the senate. i want to be president. this is 1965, he is 41 years
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old. he has yet to win a race except to be the harris county chairman. but he had a sense of diss destiny. >> saturday night at 10:00 p.m. eastern on cspan 2's back tv, the conversation between pulitzer prize winning biograf grapher john myrtle beach a.m. and george w. bush about the life of the president's fore, george herbert walker bush. also, the life of the louisiana. including adell levine and her book run don't walk. keith medley talks about his book black life in old new orleans. and the author and his book beyond freedom's reach. and at 9:00 patrick kennedy shares his personal journey with mental illness and substance abuse. >> i was really convinced that no one could pick up on the fact -- sweaty, you know, palms, i was perspiring, i was, you
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know, furtive and moving around in an agitated way. i mean, i -- i totally thought no one knew. >> he is interviewed by democratic representative jim mcdermott from washington state. book tv, television for serious readers. >> israeli prime minister netanyahu was here in washington, d.c. this week. and while he was here he accepted the 2015 irving crystal award during an event hosted by the american enterprise institute and sat down for a question-and-answer session following the award. this is about 50 minutes. >> does everybody else hear me? i know you are here for me.
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>> voila. >> there we go. it's my opportunity to sing. we apologize for that momentary disturbance. mr. prime minister, you have been welcomed only three or four times already. let me welcome you again to the american enterprise institute we are dlilted to have you. >> thank you. i have to interject. i want to tell you, i'm not used to receiving awards in israel. [ laughter ] especially not from the media. i do get them from the public on election day. but it's very moving for me to be here. i do remember irving crystal as a great intellect, as a fearless
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intellect. political correctness was thrown out of the window. he called it like he saw it. and he had a profound influence on many. he had a profound influence on me. and i consider myself honored and privileged to have spend many hours with him. i think he has left of a great legacy. and he has left a great family. and i want to special welcome his wife, bee. i read her books -- recently, a book believe it or not on phylosent michl. can you believe it. this is a tremendous family, it goes on in the next generations. i'm deeply honored to receive this award from you. thank you. >> i don't think anybody sitting here in this with a
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underestimate the affection and respect that the american enterprise institute, our entire family, our entire community has for the crystal family for irving's legacy and for all -- thank you so much for saying that. let me pick up on our remarks. just a quick brief word. for those of you who have been with us for many years, in years past we have had our honorees give a speech from the podium. and this year we asked you to have a conversation. and thank you for being willing to do that. we thought it would be more interesting, a little bit more enlightening perhaps for some of us, and in addition, it would provide an opportunity to hear about a range of issues that would be of importance to everybody. but perhaps more importantly, i think there are some who may be a little disappointed that i'm not going to interrogate you in washington style about a variety of issues.
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i'll like to remind our guests we are not a news organization. we are a think tank and we are interested in the big questions. i hope if we can take something away it will be some big answers. >> i hope this catches on. i mean, it's a wonderful idea. [ applause ] >> we are youall about leadersh. mr. prime minister, you've said israel has always been pro-american, israel will always be pro-american. you yourself spent many years in the united states, as did your father. tell us a little bit about what is at the heart of israel's and your affection for the united states. >> common values, first. i think the values of freedom. free societies. the idea of individual choice that is enveloped with a collective purpose. and i think that definesis kreel
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and defines ameri-- defines isr defines america. i have spoken in the congress a number of times. and each time i look and i see the emblem of moses in the american congress. and it says a lot. it's the idea of the of the promised land, the idea of freedom. freedom from bondage. to freedom to pursue your future. so i think this is -- i'll say the identity of conviction. but there is something else that i think has to be seen in a historic context. we were a people scattered among the nations. we had no capacity to defend ourselv ourselves. and by dent of a starker reality, we should have disappeared. most nations that existed in the past do not exist today.
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and certainly a nation scattered from its land and becoming utterly defenseless, subjects to the whims, the worst whims of humanity should have disappeared. we gathered our resolve, came back to the land of israel, the promised land, we built our country when we repossessed the power to defend ourselves. but it was said here before that all powers, all countries, even great powers, need alliances. we need an alliance, too. we did not have that alliance in the first half of the 20th century when the founding fathers of zionism identified the threat of anti-semitism, the growing threat of anti-semitism in europe, we had no capacity yet to build our nation. we built it having lost 6
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million of our brethren. and i believe that if the united states had been the preeminent world power in the first half of the 20th century, things might have turn out differently. and yet israel was born in mid century. the united states became the global power at that point. and what a difference it made. it made a difference for the entire world by guaranteeing liberty, by facing down soviet totalitarianism. it made a difference for us in that we had a partner. and i think that not only the common ideals of israel and the united states -- and they were mentioned here -- but i think it's also the role, the active role of the united states in defending liberty around the world and standing by its allies. in this case, the best possible
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ally of the united states, israel -- i think it has made a world of difference. and i bet on this alliance. i wouldn't sell the united states short. i wouldn't sell israel short. and i would not at all diminish the importance of this alliance. i think it's pivotal for the future of our world. and if you asked me about it i will a tell you more. this is what i believe. [ applause ] >> i want to ask you -- >> with a sore throat. >> and i have tissues right here, too. >> that's all right. >> like the united states. >> oh, okay, sure. >> like the united states, which was founded on a big idea, and on -- by a group of people seeking freedom, israel, too, was founded on a big idea, that of zionism, but the country has
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come a long way since 1896 when hud sell wrote the jewish state. >> right. >> is zionism still the animating idea of the state of israel? is there another direction that israel goes in? where does israel go in the 21st century? >> having not had a state for 2,000 years, we have secured it again, but we have to assure the jewish future. that's what zionism is about, giving the jewish people the ability to have their own independent state. but you know, this is an ongoing effort. the challenges keep changing. what you want to make sure is that you have the inner strength to confront these challenges and also to make these alliances that i talked about. nobody makes alliances with the
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weak. and nobody makes peace with the weak. so the first obligation we have to further the future of israeli is to make sure the country is strong, strong millitarily -- but that's expensive. i hope you know that. it's very expensive. so the only way you can actually fund israel's defenses to safeguard the jewish future is to have a very vibrant economy. the only way you are going to have a very vibrant economy is to make sure it's a free market economy. that is something that i have devoted a good part of my life to do. and i think that we're successful in doing that because in israel what is happening now is that we are harnessing the power of innovation to the power of free markets. if you have intellectual or even
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technological brilliance but you have no free markets, it's not going to go anywhere. the former soviet union had incredible metallurgists, incredible physicists, incredible mathematicians, but they were utterly useless. if you put them on the plane and took them to palo alto, they were producing value within three weeks. israel had incredible technologists, incredible scientists -- incredible. but we had to liberate our markets, which is a process i had something to do with. and as a result, israel is becoming i would say the preimminent or one of the two great centers of innovation in the world. and as a result, the -- our ability to make alliances is shifting. we are now in an extraordinary
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relationship with two small countries in asia, india, and china. and japan. together, we account for roughly 2.5 billion people in the world. now, they are all coming to this new israel. you ask where is israel going. in the century of conceptual products and knowledge, the ones who will prosper are those who can innovate faster. israel is a speed chess innovator. we don't have that large a number of innovators. but we have a very, very large number of very fast innovators. and our culture promotes that. so i think israel is moving into a leadership position in technology. i'll give you a number to illustrate this because i think it's important that i take this
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away from general concepts and make it concrete. in 2014, as a result of a deliberate policy that my government is leading, israel had 10% of the global investment in cyber security. that's 100 times our size. in 2015, we tracked that number. we receive double that amount. we receive 20% of the global investment in cyber security. in cyber, we're punching 200 times above our weight. this is indication of how you can increase our capacities and how you can harness your innate injen youty, both for national four and international connections. i read a book by a wonderful
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writer named will do you remember ant. well, he wrote some 12 volumes on history. and towards the end of his life -- i think in the late '60s -- he wrote a small book. it's 100 pages long, and it's called the lessons of history. well worth reading. i suggest aei reprint it. it's tremendous. every sentence is poetd end and pregnant with meaning and insight. and i want to give you the bad news and the good news. the bad news, if i have to -- if i can use the word crystallize what durante is saying -- he says that in history numbers count. that is big nations overcome smaller nations because, you know, they have bigger gdp, so
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they can have a bigger military and so on and so on. then i think on page 19 or so, he says, there are exceptions sometimes when nations can harness their cultural force. and he says the young state of israel may be an example of such an exception. well, half a century later, i think we proved the point. so where do we go? we maintain the defenses of the jewish state. we develop its economy. we allow our inj think jen yout to flourish. and we hope that modernity wins over the evilism in our area. if that happens to be the case, we all win.
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>> there is, though a great battle going done between modernity and medievalism in our part of the word. and if you talk about democracy being the idea that made israel strong and markets, and capitalism being the idea that will propelis kreel into the 21st century and beyond, there are other ideas at play throughout the region. and there are a lot of people who suggest that in fact one of the things that is animating those terrorist groups that have now risen up throughout the region and are tyrannizing many of the people of the middle east, that they are founded on an idea and that as many drone strikes or air strikes or even ground wars that happen without having an idea to substitute theirs, that we cannot win. you can't beat something, as one of my colleagues so often says, with nothing. so what i want to ask you is as
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the leader of the only truly democratic market economy in the middle east, what is the idea that is going to beat this? is it democracy? >> it's certainly greater freedom. i think there is a process in which the arab world and parts of the islamic world move towards the idea of greater freedom. it's not automatic, but it's certainly a good contrast to the kind of tyranny and savagery that they are experiencing now. and the brunt of the savage reis inflicted on muslims right now. millions have been displaced and hundreds of thousands butchered. so they have a pretty good idea of what they don't want. i actually think that sometimes in these kinds of battles it's first all important to win physically. win. fight. i mean, combatting naziism first
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involved beating understand noozyism. you have denazi fix after you won. you have to win of the it's very important not to -- [ applause ] -- not to allow these beasts the freedom to prowl. because what they are doing is they are emptying parts of the middle east into europe. they are now going to empty africa. and you have these two human streams fleeing misery. i spoke to prime minister ramsey of italy, and to david cameron, prime minister of britain, and to angela merkel just in the last few weeks. and i said -- i don't want to talk about isis, that's politically loaded. you can ask me privately later. but i on twanted to speak abouto haram and al shabaab. you know, from must be at least 12, probably closer to 20 leaders of african nations who came to israel just as asia is
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coming to israel. and they only want three things from us. israeli technology, israeli technology, and israeli technology. the african states all come and they say we want israeli technology in agriculture, in health care, in irrigation -- whatever. and they all come down to one word. security. help us in security. so i suggested to some of the european countries a simple partnership. we form consortiums to deal with individual countries, help them with their economy, help them with their security. the islamist movements in africa are not yet strong. they can be defeated today. they can be defeated today. it will be a lot harder
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tomorrow. and my point is, in addition to the battle of ideas, there is the battle. you have to win the battle. and the earlier you win it, the cheaper it will be. the longer you wait, eventually, these forces will dissipate, because there is no hope, there is no future for a world of darkness. and i think the islamists will lose out. but it make may take decades. may take half a century. naziism was defeated, but it claimed the life of millions -- tens of millions of people, and a third of my people. i think defeating them early is important. we'll see feet them in the battle of ideas, but let's defeat them on the ground as well. [ applause ] >> i hope you won't mind if i press you a little bit more on this question because there are plenty of voices i would say
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growing in volume both in the united states and i think even in israel who suggest that we are better off with the is a daffy and the saddams and the assads in place to tamp down on the islamists who rise up and that secular dictator ship is really the solution that we should look for for the rest of the middle east. others say that democracy is only fertile ground for islamists to rise up. where do you come down on that? >> well, i went to serve in the united nations 100 years ago as isra israel's ambassador. and there was a woman there. her name was gejean kirkpatrick. [ applause ] and i had read an article that she had written called dictatorships and double standards. and she said basically in this
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article -- she said we are committed to the larger battle against soviet total tairntarianism. and on occasion we decide for the larger zoel gogoal to make arrangements with secular dictatorships. that's basically what she said. mind you, saddam was horrible. horrible. brutal killer. so was gadhafi. there is no question about that. i had my own dealing with each of them. but i do want to say that they were in many ways neighborhood bullies, that is they tormented their immediate environment, but they were not wedded to a larger goal. the militant islamists, either iran leading the militant
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shiites with their proxies hoz bolla, islamic jihad or hamas -- even though the hamas is sunni. or the militant sunnis led by dash, by isis, they have a larger goal in mind. their goal is not merely the conquest of the middle east. it's the conquest of the world. it's unbelievable. people don't believe that. they don't believe that it's possible to have in quest for an ima mate or a califate in this 21st century. but that is exactly what is guiding them and against this larger threat that could -- that would present two islamic states, one the islamic states of dash, and the other the islamic republic of iran -- each one of them seeking to arm themselves with weapons of mass
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d, ef, chemical weapons in the case of isis, nuclear weapons in the case of iran, that poses a formidable threat to the world. therefore, if i had to categorize the threats, i would say that these are the larger threats. it doesn't mean that you have to form alliances with secular dictatorships. it means you have to categorize what is the larger threat and that is something that i think is required from all of us. political leadership involves always choosing between bad and worse. i seldom have had a choice between bad and good. i welcome it when it happens. but these are by far the easiest choices echlt choices. it's choosing between bad and worse that defines a good part
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of leadership. and i think i know how to choose that. [ applause ] >> let's talk about syria for a moment. and then i want to turn quickly to iran. syria is spiraling out of of control. the situation seems to be going from bad to worse. when you think about this, how do you see the implications for israel? how do you see this affecting israel, how do you see solutions that israel can effect? >> i have this weakness. i have done a lot of economic reforms in israel. i think about 50. a lot. you can ask me later about them but -- >> i'm not taking this hint enough. >> they want to have dinner but i want to tell you about that. so these economic reforms, the most difficult problem contrary
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to what people think, is actually conceptual. it's getting the concept right, getting the idea right, especially if you can borrow it from others and see where it worked, okay? then you just have to fit it to your own country. then you have to battle with all the vested interests and so on but i find that particularly boring. it's the first part, deciding what is the right thing to do, that always takes the largest effort and also the greatest intellectual investment and it's pretty easy to do in economics, it's pretty easy to do in education, pretty easy to do in other things. if i see a situation where i don't have a clear concept, i don't charge in. in syria, i do not see a simple concept because you choose here between a horrible secular dictatorship or the two other
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prospects or that would be buttressed by iran and you would have iran run syria, a horrible prospect for us, or daesh, which is also there touching our borders on the golan. when two of your enemies are fighting each other, i don't say strengthen one or the other. i say weaken both. or at least don't intervene, which is what i've done. i have not intervened. i have acted several years ago and i think i was the first country to do that, to put a military hospital ten yards away from our border with the golan with syria and we have taken in thousands of syrians, children, women, men, amputated, horrible conditions, given them treatment in israeli hospitals. we never show their picture
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because if their photograph was seen and they are then rehabilitated and they go back to their villages or towns, they will be executed on the spot. but other than that, i have left the internal battle in syria untouched, because i'm not sure what to choose and you have to openly admit it. but here's what i do define in syria. i don't want syria to be used as a launching ground for attacks against us, and i have said this to vladimir putin when i flew to moscow to see him. i went to see him first to make sure that our planes don't crash into each other, that's not a good idea, but i told him here's what we do in syria. we will not allow iran to set up a second front in the golan and we will act forcefully and have acted forcefully to prevent that. we will not allow the use of --
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[ applause ] -- syrian territory from which we would be attacked by the syrian army or anyone else and we have acted forcefully against that. and third, we will not allow the use of syrian territory for the transfer of game-changing weapons into lebanon, into hezbollah's hands, and we have acted forcefully on that. i made it clear that we will continue to act that way. i explained that. i said whatever your goals are in syria, these are our goals and we will continue to act that way. and i think that message was received. now, there is talk now of an arrangement in syria and i spoke about it today in a very good conversation i had with
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president obama, and i said that any arrangement that is struck in syria, if one is achievable, i'm not sure, i'm not sure humpty-dumpty can be put back together again. i'm not sure syria as a state can be reconstituted but whatever arrangements are made in syria that do not preclude iran from continuing its aggression against us directly or by transferring weapons to hezbollah, that doesn't oblige us. we have very clear policy demands in syria. we keep them and will continue to keep them. the defense of israel is what concerns me in syria first and foremost and on that, we will continue to act forcefully. >> i know you want to talk about
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the economy but let me ask you quickly about iran. otherwise the audience won't forgive me. the iranians certainly are embroiled in syria but these have been pretty good times for them, actually. we see them interfering in yemen without too much pushback and bahrain and lebanon, of course they are still active in the west bank and gaza. they are everywhere without fairly substantial pushback. do you see iran as being constrained or in some way moderating its actions because of the joint comprehensive plan of action better known as the iran deal? how do you see iran's ambitions playing out? >> it's no secret we had a disagreement, president obama and myself, on the nuclear issue. that deal was signed. i think right now, we have to
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concentrate on three things. the first is to prevent iran from violating