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tv   Key Capitol Hill Hearings  CSPAN  December 1, 2016 11:00am-1:01pm EST

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getting started to overpromise on its abilities to perform and underestimate cost and schedule. >> and to load requirements on. >> especially if you're only going to have platforms once a generation you better get everything on that platform you can. we have to look at the int is enives what they are and some as competition for funding in the pentagon and if you show any weakness, your lunch is going to get eaten, your program is not going to go forward. you have to be a try dent supporter of those programs going through. we have to learn where to take risk and how to take risk and i would say it's before that milestone b decision, where we really need to make investments and try things out and be willing to put money there, and you're right, there's an aversion if we take time to do that, that's going to delay the capability of the war fighter and we find that to be unacceptable, but when we've approved the program and then it runs into delays, we find that's
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acceptable, so i think we can get it right and i empathize with secretary stackley. he's in a very difficult position, and i think he's one of the best service acquisition executives i've had the pleasure to work with. but he's charged dually with executing these programs and defending the programs, and that's a very tough position to put somebody in, but our acquisition process demands it. >> mr. chairman, i'd just like to say one thing on this topic based on my experience over 26 years. what we have to do is quit denying the facts. there are plenty of fax that were available about what was happening with lcs all along, yet as recently as 2013, when it comes to the countermeasure system on lcs the navy testified and i'll quote here "most of the systems in the first few increments consist of offthe shelf products, the risk in the
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increments is very low andel where managed." turned out not to be the case. "the packable, the mmnv has 800 hours of growth over in the meantime substabbially exceeding requirements." that statement was absolutely incorrect. i have been reporting for several years that those claims were incorrect and the program office and the navy couldn't bring themselves to deal with what the facts were. ultimately they did, to their y credit, with the independent review team but what i have seen repeatedly is abinability, a refusal to deal with what the facts are of how well the systems are or not performing and it's because of these incentives and other things discussed but it keeps happening and it's a real problem. >> doctor, that's why some of us expressed such extreme frustration because we're only as good as the information we
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receive, as that lcs would cost $220 million per ship which now secretary stackley says well that was absolutely wrong. nobody said it was wrong at the time. everybody said it was right, and yet i don't want to take the senator's time, but there's two stories here that i could relate to, one was the mrap which we needed very badly in iraq, and then secretary of defense had to preside over a weekly meeting in order to get the mrap to the battlefield to save lives from the ied, then we had the other extreme an rfp for a new poll that's 200 pages long, for a pistol, because it's gone through layer after layer after layer after layer, and the reason why i am frustrated and other members are, we're only, we can only make decisions on the information we get.
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if that information is incorrect or false as secretary stackley just said about the lcs, then how can we function effectively for the people we represent? that's why you sense this frustration here amongst members of the committee, including this chairman. because we see it time after time after -- we haven't even talked about the aircraft carrier and the resting gear and the catapults and i don't want to take more time of the committee but i hope that our witnesses understand that we have to bring this to a halt, and fooling around on the fringes is not, has proven to be unsuccessful. senator ernst? >> thank you, i agree with the chair we have to have honest brokers and we have to have people that will be held accountable. i don't know that we have seen that so far. i do want to thank all of you
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for coming in today, and as you may be aware, improving acquisition program macment is a priority for me, and i have passed legislation to improve program management government-wide, not just in the dod, but government-wide, with an emphasis on areas that are designated by a gao as high risk, and this especially includes dod acquisition program management, and i know we can all agree that this lcs has become really an example of one of those dod challenges. we mentioned the aircraft carrier, we won't go there today but that's another one that we need to take a look at, but during times of defense spending caps, we know how difficult it is and we have looming entitlement spending which will further squeeze our military budgets. we cannot have repeats of acquisition failures like we've seen with the lcs.
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acquisitions excess is bottom line a matter of national security, and this is a question for all of you, if you could just briefly respond, please. the lcs program changed its acquisition approach several times, something cited by the gao as a reason for the increase in costs and also created performance issues. in your opinion, would the lcs program and others throughout dod benefit from a standardized approach to managing the portfolio based on the best practices not only of the industry but also the government before fully moving forward, if you could briefly respond, please, starting with you. mr. stackley? >> let me just describe the experience at lcs is t broke the navy and we've retooled the entire way that we do business when it comes to acquisition programs. i think we are trying to pull best practices in.
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i described cno and rda sitting side by side, reviewing requirements, reviewing specifications that lead to design, that lead to production. we have our program managers pretty much under a microscope right now and we've taken things like cost and we've put cost into our requirements so that you don't get to ignore cost while you're chasing a requirement, so just like speed, range, power and payload, if you start to infringe on the cost requirements that we put into our documents, then you have to report to rda and cno just like you do if you infrick on the other requirements and what you're going to do to revert that, either trading away or otherwise we look at either canceling or if necessary adding cost to the program. >> would that have been good to have had before the process was started? >> absolutely. mr. chairman's reference to the
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$220 million ship, the witnesses that informed the congress, i don't think they knew. i don't think they knew or understand what this ship would cost, and so the system led to information that was provided -- >> they did nif they didn't knoy didn't they tell the congress that the cost would be -- >> absolutely. >> because i think they believed or they desired it strongly enough that they believed that it would cost $220 million but the underpinnings below that was broken and that's why, sitting side by side with the cno, reviewing our programs, holding program managers accountable, understanding the details of the cost element by element, time phrase by time phase and if we need to make trades we'll make trades. >> very good, thank you very much. vice admiral? >> yes, ma'am, with respect to the application of lessons learned, back into the acquisition system and as my perspective commander of athe service force one of the things
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the 60-day review showed that we needed to take a step back, take a pause and apply and look at what lessons we had learned associated with the program and make the appropriate is ajudgments to get the value on to the combatant commanders to meet the operability of the ships and i think it's a constant process and i know that we'll be continuing to look at ships as we continue to deploy more than applying those appropriate lessons as we learn them, and then feeding them back into the system and as it applies to the acquisition system if we can apply the lessons back certainly we'll go do that. >> dr. gilmore if you could respond as well and well and good i'm amailsed that we are only now just discovering that we should be reviewing these processes and having a finished product in mind before we start the process. could you respond, please? >> we should use best practices, and if you read the department's acquisiti acquisition, the documents that
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describe its acquisition process, they incorporate most of these best practices that people talk about, except they're often waived. and what i have watched over 26 years is what i call a constant search for process solutions to what i think are fundamentally leadership problems. so when leadership is presented with a cost estimate that a number of people, and i was working at cbo at the time when the original cost estimates were put out and we were warning that they were probably quite low. when leadership doesn't make itself aware, doesn't critically question the information that it's being given, and lets it go forward, that's a big problem, and a process can help get them that information but if they don't do their jobs as real leaders and critically question the information that they're being given and it's being recommended that they send to the congress and elsewhere, then they are failing and i watched those kinds of failures occur for 26 years and i'm certainly
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for process improvements, and if you have a bad process, it stops information from getting forward, from, doesn't it able the reviews to fwlanlg information occur then that's all bad but if you have leadership that doesn't do its job, those process solutions won't fix things. >> that's very well put, thank you. mr. francis? thank you. >> thank you, mr. chairman, and thank you for having this hearing. thank you to each of you for being here today, realizing that this topic is a challenging one for you, but as the chairman said at the very beginning, quoting ronald reagan "facts are stubborn things" and leadership is important. dr. gilmore i find your testimony probably the most damning document concerning any
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government program i have ever read, not just as to what's happened in the past, and my colleagues have amply and ably focused on the process but the decision, what should we do going forward, and not only is the survivability of this ship in question, but its very ability to accomplish the essential missions and endure the testing that has been reduced in effect because the ships are not sufficiently shock hardened and in fact its cyber security defenses are not amply developed, so in this approach that mr. francis has outlined of a procurement process rather
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than a block purchase what is the case now for going forward with this program at all? >> well, sir, it is not my purview to say what ships the navy should buy or what capabilities the navy should have in those ships. that's the navy's decision. what we have seen is that the ships thus far are not meeting the navy's own performance requirements and we're well into the program. i can't predict what the future will hold. and i know it sounds parochial, but i'll say it again. i said it in my opening comments. whatever the navy zbis to do with regard to going forward,
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the history here in this program, as well as in many other programs, is clear, and that is that the only way you're going to discover the problems with performance that are significant, that you have to deal with, you have to deal with before you send sailors into harm's way in combat, you don't want to discover these problems for the first time when you're in combat. the only way you're going to discover those problems is by doing realistic testing along the way. >> i agree completely that you want to fly before you buy, which apparently has not been done here and obviously test before you use the ship in combat, but what's, what assurance can any of the witnesses give us that this ship is actually going to be capable of accomplishing its mission and protecting the sailors, who are going to be on board? >> well, the, again, we can give
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you information along the way about how well the ships and the crews are doing with regard to what the navy expects the ships and crews to do, and of course the navy's views of what the ships and crews are going to do, is changing along the way as they learn more, which is appropriate, which is appropriate. it's late in the process, but it's appropriate. you're never going to get from me or anyone else an honest ironclad guarantee that the ships are going to perform the way people now say they hope they will. those hopes are sincere, but again, and i know it sounds parochial, what you have to continue to do is to do the testing that will tell you along the way whether your hopes are actually going to be realized, not deny the results of that testing, and adjust accordingly along the way, and now finally the navy is doing some of that adjusting and i actually commend them for it, but it took a while for all that to occur. >> admiral, did you have a
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comment? >> yes, sir, if i could just add, there's a number of things that we're doing to ensure the value of the ships to the commanders as they go forward, and in my discussions with the commanders both in the mediterranean and western pacific one of the things they constantly tell me is we can't get enough of these ships, out there to provide the presence and provide the operational availability forward i'm excited about the direction that we're taking the ships. i'm excited about the capabilities that we're bringing to the fleet. i'm excited by the conversations i have with the sailors on the ships as they look forward to inknow vating with the capabilities that we're delivering forward. there's no doubt that we have a lot of work to do with you as recently as 18 months ago we stood up to the surface and war
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development center an organization that we're building which mirrors a similar organization that the aviation community has had for a long time in the submarine community where we can take those good ideas, take the equipment and the capability that the acquisition system is delivering and put that in the hands of the sailors and get it forward, and i think that what we're finding and what i'm finding, as i talk to these young men and women that take these ships to sea, yes, there are problems and they are not shy about telling me what needs to be fixed about the littoral combat ships but they're also very excited not only about the potential, or the capabilities that they do deliver but also the potential that are built into these particular ships. >> thank you. >> may i make a comment? regards to the ships, once you do produce a hull, then the navy is going to have to support it, so for the ones that we've already committed to, and under contract, the navy will have to do whatever's required through mission equipment and so forth
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to make them viable, as we know there's no guarantee it's going to work out the way we thought. it's hard to say as mike gilmore had said. the navy is committed to the full buy of lcs and the frigot and they're entitled to their decision. you have to make your own decision, there's a $14 million commitment and the opportunity costs. the question for the committee, is that the next best use of $14 billion? >> thank you very much. thank you, mr. chairman. >> thank you, mr. chairman. ms. chair i hate to take exception to something you said earlier you said the handgun rfp was 200 pages. it's actually almost 680 pages and been in the works for ten years, a shining example to me of a disastrous procurement process. >> thank you for that correction. >> but the acquisition people did tell me that there are only
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39 pages of specifications so i asked them are the other pages plank pages for note taking or relevant to the acquisition. mr. francis, first off, i believe everyone here is trying to dot very best to put war fighting capabilities out there to protect our men and women. lot accomplished our mission. i think everybody's intention it to do that and secretary stackley i think you inherited a problem. great joke i won't use my time on now that takes the difference between a bear skinner and a bear hunter. you're trying to skin a bear somebody took down that didn't quite wrestle it to the ground so i appreciate the fact that you're dealing with something and expectations that were set back over a decade ago. i do think there are things even in this administration that we have to face up to and going forward, mr. francis, i worked in complex consulting environments and research development and when we would go about estimating large projects,
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we would use cast history as a basis for going out and creating an estimate for what we're doing now and once we did that, we would still handicap it with examples of other projects that we didn't hit our mark. it seems to me, until we come up with an acquisition process that actually comes close to its original mark, we've got to start handicapping any estimates here, and if i go through the lcs, the f-35, the carrier, the future combat systems, it would seem to me any time someone comes in here, either you or your successors comes in here, i should multiply somewhere on the order by 2 or 2 1/2 times the amount of money and the length of time that's going to be necessary to deliver this platform, because past history has proven that to be the case most of the tile. would you agree with that? >> i would, sir. >> and i have to ask you just as a point of interest on my part, i don't know how on earth anybody who has worked in your capacity -- in your position for
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4 years could possibly have the amount of hair that you do, because i've got to believe you're tearing it out. i mean, why can't we front end load -- the insights that you're providing here, why can't that be instructive to the estimating process to begin with? in other words in the same way we would handicap these large complex projects not anywhere approaching the complexity of what we're talking about here in the i.t. world, why don't we have a function that says you know, you guys, you think you've got it right, an ideal circumstance, $200 million, it's going to be great, time horizon, but then have somebody come in and say but because all of you have been consistently and habitually wrong, we're going to require a handicapping of some multiplier. why shouldn't we have that methodology until we get our act together and deliver something on time and on budget? >> so it's a really interesting
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discussion and if you look at the private sector, and i think this is the point the chairman is getting to, accountability is pretty clear. i mean, if you blow the estimate and you can't sell your product at a profit, then the company loses money and you know who's accountable. >> i'm going to keep my time, the committee has gone long but that's another point that the chair has made, and source of frustration for many of us that i think we also have to change in the procurement process. i used to call them memorable moments when i would have a team who would come out and do these sorts of estimates and then we'd do the handicapping. i would put a tag on every single one of them. who was ultimately responsible for this? was it the supplier with the inputs from the supplier, in my case subcontractor, staff on board, i would create a memorable moment, if that person still worked for the government at the point in time that we were two and a half times over cost or two and a half times over time budget they lost their
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job and i think in this process we have to start looking that way, or are we going to continue these poor results and it be to be frustrated at the expense of having more money to put to more war fighting systems that make our men and women safer and the profitability of our completing our missions more likely and i think we have to start doing and i i'm going to reach out to your office and speak to you about how we can front end load the handicapping. if it has happened we have incompetent people doing it. thank you mr. chairman, i yield back my time. >> senator, could i just add something because in my previous life i worked as a career person in what's called cost assessment program valuation in osd, and there's a group there that does cost estimates, they're independent cost estimates independent of the services in the program offices cost estimates of programs on the basis you described, historical experience and there's a very rigorous process that exists,
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and guide literature that exists about how to do that and they do it very well and they present their estimates, and then the acquisition leadership starts rationalizing why the next time this time things will be different, things will be better, so they go through the handicapping that you talked, but in exactly the opposite way that you just described. >> if i may, dr. gilmore's description of the role of the cost estimate something correct. his description of what happens between the acquisition community and the cape regarding that estimate is not correct. >> the bottom line, secretary stackley w all due respect, they've been wrong. the lcs, the f-35, the carrier, the fcs, if i had more time i would ask mr. francis in his 42 years how many -- this is a bipartisan failure. it's transcended administrations
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but at some point you have to look at history and recognize history for what it is. it's the only way you will not repeat the mistakes, and the fact of the matter, if somebody wants to come up to me and say senator, look at all these programs in dod we've gotten right. it's unfair for to you say that we're off almost every single time. i don't believe that the data would be very compelling to support that argument, so let's figure out a way to handicap it so we can have discussions and set realistic expectations so we can help a war fighter. sorry, mr. chair, i've gone over, thank you. >> secretary stackley, you wanted to comment? >> no, sir. what things, one i think we owe you the data. we as a task here we should be providing you the data in terms of cost growth on programs and it's not a pretty picture, cost growth on programs over history. my comment with regards to the cape's estimate, i can't point at many programs in the navy, i can't think of any offhand where we are not in fact budgeted to
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the cape's estimate, with the exclusion of programs where we have a fixed price contract in hand, and so we do not budget above the fixed price. i think we actually tried to work very collaboratively with the cape to arrive at the best estimate for our programs going forward. i'd go back to mr. francis' discussion with regard to the importance of milestone b, that's the critical point where we've got to get it right, lock in the program baseline, get the independent cost estimate as best as possible, budgeting the risks and everything else accounted for, that is the critical point, in effect, lcs went forward without a milestone b. that rigor was not there >> again, wonders why, and who did it. senator graham? >> thank you, mr. chairman. admiral, we've gone from 52 ships to 40. why? why are we going to just pie 40 buy 40 of these things?
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>> so the requirement for the small surface combat jnt an remains 552. >> secretary carter said 40. is that because of budget? >> it was a budget-driven decision. >> one the committee needs to know the sequestration probably, is that right? is that mr. secretary? >> let me weigh in. the budget control act, yes, sir. secretary's carter's decision was we have to take risk due to the budget and where we're going to take risk -- >> i got you. he said, i gotta do something because i just don't have enough money, so i'm going to like go from 52 to 40. admiral, you said that people out in the field, out on the, fighting the wars and preventing wars, they like this, they want more of these ships. is that right? >> that's correct, sir. >> okay, what does this ship do that's so important? what can it do that's different than the ships we have today? very briefly.
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>> well, certainly, sir, as we move forward the building of the -- >> is it more stealthy? what makes it different? >> it gives us, it will deliver higher operational availability forward. i think it will deliver more capacity forward. i think as we bring in the minesweeping capabilities, as you bring in the anti-submarine capabilities which i think will significantly improve our ability to hunt and track -- >> is this a modernization program, are we trying to modernize ships, is that what this is. ? >> certainly the advanced technologies that we'll deliver will be of much use to the sailors as we move them forward, yes, sir. >> okay, all right, so modernization of the existing fleet is one of the goals to be achieved if this ship comes online, right, and operates? it would be more effective? >> yes. >> that's why we're doing this, right? >> yes, sir. >> and the reason we're not
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building 52 is because of money, not because of demand. the world is not safer to justify 40 versus 52, is that correct? >> that's correct, sir. >> okay. when it comes to estimating ships, who actually said $220 million or whatever the number was? >> sir, we're going to have to go back to the record. >> all right let's do that. >> navy leadership. >> well that's a lot of people, so let's find the guy or gal or groups of guys and gals that say it's $220 million and see who they are, and figure out what we should do about that. i think we should like call them in, mr. chairman, and talk to them. so it's 448. why did it go up so much, was it because we asked for things
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additional to what was originally required, was it sort of add-on capability? >> so the one major change that was done to the program early on, after contract award, commensurate with contract award was we changed the specifications to go to what's referred to as naval vessel rules, to give it the degree of design details associated with a -- >> how much did that add to the cost? >> it's hard to pin a number on it, but it created extraordinary disruption at the front end of the program. >> so you can't blame the original people who gave the cost estimate because they weren't confronted with that requirement? >> that's a good point, that that requirement was added after the 220. >> who put that requirement on? >> i'd have to go back to the record to find out. >> i want to find out who did the 220, i want to find out who said it needs to do this, not
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that, so we can talk to him as to why they decided that. mr. frap sncis, do you have any idea who did that? >> i don't remember at this point, senator, but i think that what happened with the ship is it was thought to be a relatively simple drivation of high speed commercial vessels and they made that estimate before they entered detail design. when they got into detail design and got naval vessel rules in, they found out it was way more complicated than they thought. >> they found that out after they started building the thing? >> yes. >> okay. so i want to end with this. if we don't modernize our force, we'll pay a price. the a-10 works today but it's not going to work forever because we won't be fighting isil forever. there will be an environment where the f-35 makes sense. no sense to retire the 18 because it works. you're trying to modernize the force so the next war we're in
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or the next war we need to prevent that we're capable of doing both, right, modernization is not an exact science, so part of the problem is when you modernize your force, it's not like just duplicating something, it's not a commodity, but what have i learned? that in the effort to modernize the force, our estimates of what it cost and the capabilities we need are ever changing, and the process completely broken. it goes back to what you said, doctor, about leadership. if you want this to stop, somebody needs to get fired. one of the reforms we did in this committee is to make every service secretary, service chief responsible for the big programs under their control. hopefully in the future someone will be held accountable and get fired if this happens again, and if nobody ever gets fired, nothing's going to change.
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thank you. >> senator sullivan? >> thank you, mr. chairman and dr. gilmore, i wanted to follow up on some of the questions you received if senator blumenthal. you were talking about kind of the hopes that you had, as a matter of fact i think you used the word "hopes" three or four times just in answering questions on the capability of the ship. but in your written testimony, your written testimony is not full of hope at all. let me read a little bit of what you said with regard to the written testimony with respect to survivability, neither the lcs variant is expected to be survivable in high intensity combat. neither of the lcs designs includes survivability features necessary to conduct sustained operations in a combat environment? the lcs limited lethality makes
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these ships a shadow abilities of modern navy frigots. with regard to combat capability you seem very concerned. let me ask a more operationally focused question, admiral. given what dr. gilmore said, do you think, are you confident that these ships could, say, for example, go into the south china sea, conduct an op near mischief reef or other places and be able to survive if chinese frigots responded with force or could an lcs in the fleet today survive attacks from small boats and other patrol craft like the ones that were used in the recent capture of american sailors by iran? are you confident of that, given what dr. gilmore clearly states is a ship that's not combat
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survivable? >> yes, sir, i am. and i'll tell you -- >> are you, dr. gilmore? >> no, for the reasons that are stated in detail in all the reporting that i've done at the classified level and other levels. >> so admiral, these ships, the original vision for these ships was that they could use unmanned systems that would go in conduct combat and stand off threats. those are systems that can reach out and conduct combat operations we don't have and it isn't clear when we ever will. so the ship was built not to be nearly as survival as the fig-7s we used to have. it was built according to high speed naval vessel rules which limits the armt of
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compartmentalization and redundancy on the ships so it's not as survival as other ships and frankly won't wasn't meant to be in that regard and the original con ops if it could have ever been realized that might have been fine. as i understand the con ops and the navy is continually revising it based on what it learns, the con ops says that the ship would be out there preparing the way for the battlefield, a fleet an that's true then it will be subject to attack by anti-ship cruise missiles, torpedos and lines. the only thing the navy expects if it's hit by one of those kinds of threats is for it to be able to exit the battle area and/or provide for an orderly abandon ship. so against those kinds of threats, which asems for example, the chinese are fielding thousands of them and they are supersonic and they are
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very threatening, and those are going to be a challenge for any ship, but a particular challenge for this kind of ship. >> so admiral, how do you respond to that and are you confident in putting our marines and sailors on these ships to conduct those kind of operations, say again in the south china sea or standoff or a confrontation with iranian small boats? >> yes, sir. sir, there are a number of variables that go into the equation associated with the survivability of the ships. certainly the manufacturer of the ship, the water tight integrity of the ship, the way the ship is manufactured, that's part of the survivability. part of it is the damage control systems that we put on the ship in order to ensure the survivability, part of it is the defensive systems that we put on this -- >> you don't agree with dr. gilmore's written testimony? >> i think there's a number of, there are a number of variables that have to be looked at when you look at the survivability of
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the ship. for example, one of the variables you have to look at is the intensive training that we provide to all of our sailors not only to fight the ships but also to fight battle damage and i go back to the examples of the "uss samuel b. roberts" that hit the mine in the arabian gulf. every analysis says that ship should have gone to the bottom of the gull. it didn't. those sailors fault and saved that ship and that is one aspect i think is sometimes lost in talking about the survivability of a ship. clearly we don't want to have any of our ships get hit and we rely on operations, we rely on intelligence, we rely on operating those ships to hopefully not have to lean into a punch. >> so despite dr. gilmore's written testimony you're comfortable putting marines and sailors on these ships in combat situations against chinese frigots or naval ships? >> yes, sir but i think you have to take it in the proper context in that i don't think that it
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necessary we would find these ships operating alone and unafraid in the middle of an adversary's fleet. >> if they were? >> if they were then i think we would do our best to fight the ship and defend the ship and if the ship took a hit the crew would fight to save the ship, and exit the area as the ship is designed. >> can i add something, senator? >> sure. >> we do something called a total ship survivability trial and gets at the issues the admiral was just raising. of course we don't actually let an ascm, a navy ship cruise missile hit the ship, but we have the crew there, they are trained and all the damage control measures that they're supposed to take, and we do then go through a simulation of one of these threat systems, like anti-ship cruise missile, we've done this, hitting the ship, we've done this for the lcs, and we then have the crew fight to save the ship, and in the total
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ship survivability trials that we did, the crews did their best, but in almost every instance, there was major damage to the ship, and the combat capability was fully lost, and in some instances the ship would have been lost. and again, an anti-ship cruise missile ship hit is going to be a problem, but a hit on one of these ships with their lack of redundancy, their lack of compartmentalization, by their small speed requirement and construction according to high speed naval vessel rules a hit on one of these ships is going to be a real problem and we've analyzed that and we've done the kind of testing that enables the crew to try to fight to save the ship and there are definitely problems with these ships. if you can keep them out of harm's way, okay, but the current con ops says they'll be out ahead of the battle fleet preparing the way. again if they're going to do that, they will be subject to
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being hit and attacked by these threats. >> senator cruz? >> thank you, mr. chairman. good morning, gentlemen. thank you for your testimony this morning, and thank you for your dedicated service to our men and women in uniform. the near peer threat we're facing is increasing across the globe. with our nation's adversaries bolstering their defense capabilities and focusing on new technology in the hopes they can deny access to the united states navy or if necessary compete militarily with the united states in a more limited scenario. recent acts of aggressions by our adversaries proved the men and women in the united states navy operate in an incredibly difficult environment every single day, whether facing threatening shows of force from iran, russian belligerents, and unsafe practices, or china's egregious claims and illegal expansions into the south china sea. our navy sailors are to be
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commended for their professionalism and steadfast service. however these actions should remind us there's too much at stake, if we willfully choose to ignore the ambitions of our foes. there is undoubtedly room for improvement in the lcs program and i appreciate your candid testimony regarding several of the reviews and efforts that are already under way, but instead of looking back, i'm most concerned that future problems might plague the program, and that it could have a crippling impact on the nafty's envirn modernization efforts between the ford class carrier f-35 procurement, the lcs, and an ohio class replacement ballistic submarine, the navy simply must make the most effective and efficient use of every single dollar it receives if we're to have any hope of rebuilding the fleet. secretary stackley, there have been many studies that attempted to determine the appropriate
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size and mix of navy forces, including the 1993 bottom-up review and the 2010 quadrennial defense review, to name a couple. most of the studies indicate that we need more than the navy's current plan to build 308 ships in order to defend our global interests. in the time since those reports our navy has now shrunk to around 275 ships, while commitments in the number of deployments have remained relatively constant. this has resulted in a larger percentage of the force being at sea on any given day, often for longer deployments than their predecessors and at the expense of other mission requirements. the incoming administration has set a goal to increase the navy to 350 ships and to reverse this damaging trend. that is a goal with which i strongly agree. my question to you is, can you provide your professional opinion to this committee on how we can accomplish a 350-ship
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fleet? what an appropriate high/low mix of platforms might look like and where you believe the lcs and its successor will fit into that construct? >> yes, sir, let me describe that right now, the cno and his staff is conducting an update to the four structure assessment that was last updated in 2014. he's been very clear and testimony in the public describing that the threat vector has only increased and so the 308 ship navy that is currently on the books all pressure says that number's got to go up, so the four structure assessment is taking place right now is identifying what number and mix of ships we need for the future, mid 2020s and beyond, and he's been clear the number's going to go, the number in terms of requirements will go north that's going to put more pressure on the budget and what we have to term is in the mix of ships what are the specific
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modernized capabilities that we will need platform by platform, and then how to procure those as affordably as possible, so we don't add more pressure to the budget than absolutely necessary. inside of that construct, high/low mix lcs is the small surface combatant today and we talked about the frigot modification to the lcs platform going forward. the number today 52 in the four structure assessment, 40 in terms of budget determination. if we failed to deliver the small surface combatant in those numbers, then what that means is we're going to put more pressure on the high end of our force structure that's going to add cost and take those ships off of where they need to be to tax them in terms of operational demand compared to where they need to be, and that's going to put more pressure in terms of turnaround time and the entire operations and maintenance cycle. >> so what do you see as the
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biggest challenges facing growing to a 350-ship fleet and what you see is a realistic time frame for that? >> yes, sir, let me first say the first big challenge that's already in the program or record is the high replacement program due to its uniqueness, its imperative in terms of schedule and the capability that we have to provide and then its cost. it is a high cost program, and so we are, and when i say we, cno and myself, are on top of that program in terms of the design process, in terms of the planning to ensure that it does not grow, in fact we're looking to find ways to make it more affordable than it is today. that already stands as a challenge going forward. the next thing we need to do is leverage existing designs. what we don't want to do is bring a whole bunch of new design to the table, add the technical and startup cost that
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adds, add the uncertainty that introduces and add the amount of time that will take to go through the design and production cycle. let's leverage the production sinsz we have and introduce capabilities points as best as possible look at the future threat and that's the path that we are on and then the next is raising the rate at which we produce those ships. i will tell you the first party is going to be looking at our attack submarines. you look at our four structure going forward we have a serious shortfall in attack submarines in the late 2020s. we've got to stem that as best as possible so that will be the first place we go in terms of increasing our production rates. surface combatants right now we're building surface combatants at a rate that in the long-term results in dropping off in terms of total number of large surface combatants because we build at a high rate during the reagan buildup years. if we stay at two per year we'll start settling down to a 60, 70 number of large surface xwanants
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which won't meet our operational requirements and amphibs today we are below what the cno and commandant agreed to in 2009 in terms of the amphi fw force structure. we have to get to that number and we're on that path. these are high utilt platforms, high demand, high utility, very flexible, wherever we have operations going amphibs find a way to support that operation that, would be the next leg in terms of increases our production rates. >> thank you. >> i am sure will you not get support if we have double and redoubled the cost for these systems. we owe the taxpayers a lot more than that. this has been very helpful hearing. i thank the witnesses. we're adjourned.
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[ indistinct audio ] [ indistinct audio ] the senate arms services committee hearing will be available for viewing shortly in the c-span video library. go to cspan.org.
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by the way defense policy being debated in the u.s. house today when members return from recess in just a couple of moments. they're expected to consider the rules for debating that legislation. general debate and final passage set for tomorrow in the house. see the house live when they gavel back in on our companion network c-span in just a couple of moments. also, the navy times is reporting the service is pressing private contractor hewlett-packard enterprise to pay for credit monitoring services for sailors who were affected by a data breach that exposed more than the 130,000 social security numbers. a defense official familiar with the on going investigation said that the investigation has expanded to include the fbi which has joined with the naval criminal investigate i haive se in probing the case according to an official who spoke on background more now on military
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issues with defense innovation as the pentagon's third offset strategy initiative that would seek to identify next generation technologies and capabilities in the military. a little bitater there will be remarks by defenseecrery ashton carter. good morning, everyone, welcome to csis and the third offset conference we are holding today to talk about what the third offset is, assessing its progress to date, the challenges to going forward and what may be in store for this issue set that the third offset raises into the future. i'm so pleased with us opening
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the conference today the three architects if you will of the third offset and its implementation. collectively they constitute something you may not have ever heard of called the advanced capability and deterrence panel. and so i get to be the moderator of the advanced capability and deterrence panel speaking about defining the third offset. let me begin with introductions then we'll have panelists speak about it and have conversation on how it's defined and how to think about it in temples of how it shapes government activity. all the way to my left is the honorable robert wirth, the deputy secretary of defense. to his right is general paul sellba, the vice chairman of the joint chiefs of staff and then stephanie o'sullivan, the principal director for national intelligence. let me begin with the main architect of the third offset
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strategy. deputy secretary, i wonder if you can talk to us about when you first conceived of framing this issue set around third offset, what is the issue set you were seeking to define and the problem and operational challenge set and how do you see third offset as a frame being helpful in implementing the department's activities. >> well, i'd like to thank csis for hosting this today. i can't take credit for thinking of the third offset. i trace that thinking back to 2012 when secretary carter, who was then the deputy secretary of defense established what is called the strategic capabilities office. it was motivated by the same thinking of what i'll talk about which was followed by an important presentation secretary carter gave to the national security council on the growing threats and vulnerabilities to
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our space constellation. and so when i came in the job of the secretary is to in conditions gnat with the secretary's strategic vision. that's what we do. so let me tell you what the third offset is about within the context of fashioning a defense program. it's not a unified field theory. it's focused on one thing and one thing only -- conventional deterrence. it's designed to strengthen u.s. conventional deterrence to hopefully avoid ever any major confrontation with any major state. think of it as the theater level
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and campaign level. it's not focused on specific exchange ratios. it's focused on having an advantage at the operational level because from a historical perspecti perspective, especially since world war ii, having that advantage is the surest way to underwrite conventional deterrence. people ask offset for what? we'll get to that in the question and answer period but you start with your competitors who are developing capabilities and you want to start your conventional deterrence approach focused on those pacing competitors. and the pacing competitors, not adversaries, not adversaries, the pacing competitors are russia and china because they're developing an awful lot of advanced capabilities that potentially worry us. now, what are we trying to offset? in a case where we are
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projecting power across the oceans, most of the combat power of the united states is now resident on continental -- on u.s. territory. either continental united states or states outside the continental landmass or territories. that's different than in the cold war when we had forces forward in the theaters they were expected to fight. the second thing is offset strategies, always happen when our potential competitors reach parity. our competitors have reached parity in what we would determine theater wide battle networks. all it is is a sensor grid that looks and see what is's happening, a command and control communications and computers and intelligence grid that tries to make sense of what's happening and then says what type of effects would we like to achieve and then you have an effects grid which then goes out and
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tries to achieve the effects that the c-4i grid said let's do it and then you have a logistics and support gri that keeps the whole thing running. russia and china now have battle networks that are in parity with us so we want to make sure we can extend our advantage in that particular area. and the third thing is both our pacing competitors have put money in counternetwork operations. because they know how powerful our battle networks are so they spend money on cyber capabilities, electronic warfare capabilities and on counter space capabilities because our space constellation is a very important part of our ability to put these battle networks together. now those three things, not a lot of forces in the theaters they might be expected to fight.
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guided munitions and a lot of counternetwork operations, a shand hand rerefer to that is a 2 ad. anti-access area denial. it's the shorthand for those three objective facts on the ground. so what is the offset? that's what we're trying to offset. we're trying to improve conventional deterrence and the best way to go about this on the initial vector, the initial vector. the third offset doesn't have a destination this is adds the vice chairman always says, it's a journey. and our initial vector is to exploit all of the advances in artificial intelligence, insert them into battle networks to achieve a step increase in performance that we believe will strengthen conventional
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deterrence. it's not about technology. it's about operational and organizational constricts based on doctrine, based on training based on exercises that allows the joint force to operate with these type of technologies to achieve an advantage. it's also an institutional strategy. secretary carter is going to talk about that a lot in his presentation about how we're orking the entire department of defense to is compete in this new dynamic environment. that's where i'll stop because i want to get to your questions but, again, the third offset is not a unified hold that theory. it's focused on one thing and one thing only. strengthening conventional deterrence to make sure wars don't happen. >> thank you. general, i wonder if we could get your perspective from the operational and joint combat side in terms of third offset
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and its value as a frame. >> you bet. so i'll just make a couple points to expand on what the secretary's already said. first is the third offset isn't an answer, it's a question. it questions our advantages to emerge in potential competitor forces and i describe it as a journey not a destination. if it were a fixed point in space to which we could navigate i would drive those requirements into the joint requirements oversight council and mandate them in every program that exists in the department and impose them through the chairman on all of the services. except it's not an answer, it's a question and by asking the question and repeatedly asking the question what are the advantages our adversaries are accruing over time, what threats do they pose to our fielded forces and can addressing those threats strengthen conventional
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deterrence? i think we're asking the right question. so the way you take technologies and ideas and turn them into tactics, techniques, procedures and doctrine is through operational experimentation. that begins with designing, then testing in war games and then hopefully in exercises. is so the operation we're on has the potential to increase our conventional forces but we have to ask the right tactics, we have to disseminate those in doctrine to our fielded forces, to our partners, our allies and our friends and figure out how to bring that to the battle space which is in simple case long range precision strike at
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volume. in space, in cyberspace, for the air, on land and at sea. we can say we invented long range precision strike and that will be true. everyone who wishes to compete with us has read our doctrine, they've watched us in battle they analyze our strengths to find symmetries and they are reflecting what we are back on us. so we have to figure out how to offset that in the operation battle space. i'll stop there because i'm interested in your question. >> ms. o'sullivan, if one thing is not like the other, you represent the intelligence community, i would love to get your perspective from the and how you have come to be partnered with the department and how you think about third offset. >> from the moment the department started talking about
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third offset it deeply resonated in the intelligence community. we share a world in which the threats are changing and and which countermeasures are advancing as well. eroding collectively our national security advantage so from the time we conceive of a new capability, our competitors are working to counter that new capability. so in my view from the ic and for the ic is that if we are not changing, if we are not driving our own offsets were creeding ground and we are losing our ability to inform policymakers from the oval office to war fighters and oval shaped fox holes if you will.
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i don't believe from the intelligence community or any policymakers we support that not changing is an option that we have. >> if i can hope to invoke a conversation among you on this topic, you all see each other in various venues but we don't always get to hear the dialogue that happens so we hope to get a piece of that today. secretary work, if i could start with you, one of the things some people would say about third offset is it's all well and good to look at russia and china but there are a lot of other issues going on in the world. the american public is concerned about isis or non-state threats in general, homeland security, many other operational challenges out there. what's your response to that in terms of the role third asset plays within the broader defense strategy? >> well, i knew this question was going to come. i didn't know whether from kat or the audience because this is constantly a question we receive across the department. so i have a couple slides
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[ laughter ] >> always good to be the straight man. >> >> i'd like you to look at the top part first when we say we're injecting ai and autonomy into the grids we're looking at five different things -- autonomous learning systems, these are learning machines that can crunch big data and can see patterns that humans simply cannot see and they can reveal those patterns to the humans and they affect the ic, i'm sure stephanie can talk about that but they will increasingly impact operations. human machine collaborative decision making is providing investigation, advanced visualization coupled with machine to machine communications with humans being in it that allow humans to make more timely relevant decisions.
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we refer to that as collaborative decision making with human at the beginning. not machine/human collaboration, it is human/machines. machines using humans to allow them to make better decision. this is providing as much information to the individual in the battle network as possible. that they can pull this information to allow them to make better decisions at every level. and it also is some physical existence such as exoskeletons, wearable electronics, disposable sensors right off of the soldier. that's what we mean by assisted human operations. advanced human machine combat teaming, you see this all over the place with manned and unmanned systems working together and the final are networked-enabled autonomous weapons and high speed weapons
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like directed energy, electromagnetic rail jumps and hypersonics. al of that is put into the logistics and support grid allowing the big performance impact. again, it's not about technology per se, it's how paul goes from the jsids process saying here's the requirements to the doctrine developers who say this is how we will use this. to exercises in the field to train our forces to fight in a new way that's what we're talking about. so just like kat said, why are you focussed? we're fighting isil on a day to day basis. why wouldn't you focus there? could i have the yankee slide? >> this is a white board
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writing. this was a special operator code named "yankee 1." came off a mission in 2003. he stacked up his special operators on a specific target and said, look, i need to bring the entire power of the battle network to me at this point in time to accomplish this affect on the battlefield and he sketched out i need forward looking infrared, i need radar, i need it all connected and i need it connected to me. the five areas that we are doing battle networks are scalable from micro networks all the way up to the operational level of war, this is completely transferable across the full range of military operations and let me give you a concrete example.
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now, what this is is a learn magazine trained to look across all social media, i mean all social media. and that is the story of the mh-17 shootdown. on the lower left, there's a shot of mh-17 taking off. the next one comes from parismatch.com. it is the picture of the russian sa-11 launcher with a serial number on it date and time stamped near the village where the shootdown on cured. then on bellingcat.com, exact same, sa-11, exact same serial number in the very same location. then there's a twitter shot of a contrail of a missile rising at the time of the shoot down. then a rebel leader takes credit for the shootdown on vk.com, that was immediately taken down, by the way. and finally on youtube there's a picture of the exact same sa-11 with a missile rail that is now
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mysteriously empty going back into russia. learning machines did this without any human interaction. if we had had this capability at the time of the shootdown we would have been able to prove in my view that this truly was a russian missile provided by to the separatests in eastern ukraine and they were responsible for the shootdown. this type of stuff will allow us new indications in warning in gray zone operations. the little green men. learn magazine cans say there is an influence operation going on. we don't know who is doing it but here are the key themes of the influence operations. so there will be new means of inw, new means of going after terrorists, new means of operating against reeblgnal powers, now ways of operating against great state powers. this is totally transferable across the range of operations. >> anyone else want to comment
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on that? >> let me give you a simple example because everybody pushes back on this notion of ai and algorithms helping us do what we do better and it's not a military example. i'm a horrible guitar player but i play my guitar every night for an hour. you know there's an app that can taken a algorithm and decode a song and give you the chord progressions and let you play along with the band. so my wife's new favorite party trick is to pull the app out, hand me my guitar, pick the title of a song i've never heard before and ask me to play it for dinner guests. which is a little bit of torture for them. it's always a surprise for me. but what's interesting is this algorithm is 90% accurate at picking out the chord progressions on any song you put into your computer.
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it makes me better at what i do. all of you some time today will interact with a piece of artificial intelligence that makes you do something better, faster, efficiently. we have not to this point harnessed the capability of that part of our i.t. inventive and innovative community. we have in very narrow spaces and part of what we do with this question we're asking about the potential for a third offset is to plant that question in the minds of people that work for us. is there a better way? if there's a better way, can you assist that operation?
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to let the machines do the rudimentary work for you? there's great promise in that space but we have to be willing to take that step. >> so as was pointed out and you just illustrated, we're all swimming in a sea of information and our analysts in the. i -- ic are charged with pulling out that sea of investigation indication and warning where a world of pervasive instability sort of feels to have become the norm and what these learn magazines and capabilities allow us to do is see patterns, to do sense making, to pull out triage documents or things in foreign languages so you can rapidly pull out the key pieces of information or to see patterns that weren't there before in all source information when you add
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it all up and above all it would allow us to enhance our trade craft, allow us to look at alternative hypotheses so we pursue that intelligence holy grail of not having bias in the analysis and assessment wes present. >> i think one of the other things that often comes up is this idea of the achilles heel, our strengths or our weaknesses, everything in life can be a greek tragedy, the more we are information enabled the more we are reliant on those information systems. we've had recent cases where the ic has come together to say, for instance, in this one -- most recent case that the russians are responsible for hacking. we have had north korean hacking before. obviously for an operator in the battle space this is a real concern the military deals with routinely. how do you approach this issue
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from an intelligence community perspective about the degree to which you can leverage artificial intelligence to enable everything that you do while recognizing the challenges it can pose because it could be exploited? >> well, i have a technology background and one thing i've known from the beginning when i first started working in the intelligence community is that all technology is a double edged sword. it's both an opportunity and challenge. all of these things that we're talking about can present new opportunities. we've been talking a lot about biology and the fact that that could make huge advances for humankind. it also poses in unscrupulous hands immense challenges for societies technology is changing
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so fast that it's challenging and stressing governments and our society's ability to adapt to changes that it's bringing. that's part of the instability i was talking about. so when we look at new capability it's with both sides it's here's how you can use this technology to advance our capabilities and here's what it will mean as a challenge to us whether it's a direct confrontation by competitors or just what it means to government's ability to handle the change that it's bringing. >> secretary work, you want toed comment? >> from an operational perspective we worry about this all the time, too. the best example i have is in war gaming over a long period of time kind of two schools of thought developed. one school of thought says look, your adversary is going to try to break up your network, it's going to try to sever the connections within the network, it's going to try to blind the
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network and so we take that as a fact. all of our exercises now are starting to inject what happens if you lose global pre-positioning system data, gps data. what happens if your communications links are severed? what do you do? we're training on this all the time. there were two schools of thought that developed. one was you will have to fight to keep your network intact, you have to keep all the connections there, you have to work on the network. and there's another school that says fool's game. the network will dissemble under attack and what you have to do is train your force to be able to operate with thin line communication and connections between the force. so that second school of thought is the way that animates us operationally and that's why we're training the force and i know we'll get there but that's one of our key advantages a
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young man in a woman who grow up in a democracy in this world will have an advantage over young men and women who grow up in an authoritarian regime. we expect the network to dissemble and we lie on our people to continue to operate. that's how we train the force from top to bottom. so we believe this is a big advantage for us. >> let me give you a current operational example. two forces use the same kind of data links to do two different things. in western military forces generally we use data links to network the force and allow people to see across that network what everybody else sees and so that broad view of the battle space allows our forces to collaborate and man mover together.
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in a country that shall not be named, data links are used to issue orders to individuals. so central leadership, believing that they have the best view of the battle space issues individual orders to individual portions of the maneuver element using a system system of data links. so in the case of the western network it degrades gracefully. in the case of the competitor network, if you can shut down the network, their forces don't know what to do because they are conditioned to react to orders. and so when you talk about the networks that we might build into the future and the dependencies on vast arrays of data that move through the networks we have to tend to the resiliency of the network and
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the resiliency of the force that subscribes to the network. so when we work without the connectivity of the network element to element we're exercising the independence of the maneuver elements within that force. typically that does not happen in authoritarian organizations that believe that central leadership and central command is an absolute. can they adapt? of course, we better adapt faster than they do. so part of the requirement we see going into the future for these networks is both acce accessibility for our force and resiliency against attack and the third part of that discussion is in the absence of the network that resilient force has to disassemble and continue to operate so we're going to work that. >> general selva, you hit on something that come up in secretary work's comments as well which is how you
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institutionalize this. the cultural underpinning, the training, the doctrine, the experiment, the exercises. the department has a rich history, some very good examples, some maybe that didn't pan out in terms of trying to drive innovation, particularly from the center. and then examples, of course of innovation arising if you will from the bottom up. what's your assessment of how well the department today is organized and acculturated to innovation as a challenge set for the future and if there are major areas where you think there is places where the department can do better it would be great to hear about that. >> as a general principle i would propose we're not organized for innovation. and now i'm going to refute that proposition a little bit so whe where our organization, the entire organization, every part of the government that reacts to national security threats is, in fact, organized to innovate is
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when we see a compelling threat, is the dynamic between the competitors who might become adversary in current our state of play. and we have identified that a threat to our ability to prevail in the battle space that threatens the stability of conventional deterrence. we've already talked about it, it's long-range precision strike at volume, it's countries that would counter our ability to project power in an effort to preserve their view of their influence over their view abroad. and that means holding us out of the pacific, it means moving us to the far reaches of western europe so that we can't defend our nato allies. and those are conditions we cannot allow to come to pass and so when we see a common thread, we all move to figure out how to
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defeat it and so in that respect we are, in fact, organized to innovate. what we don't do is innovation on a micro scale. innovation on a micro scale happens in industry everyday. it's healthy. it's how industry makes step function changes in the services and the capabilities that they bring to us in a commercial market. i've used this analogy in this room. it's like a brushfire in nature. it burns out all the underbrush, it fertilizes the ground and good things sprout and grow. and something as important as national defense and national security inch novation is treated like a forest fire. we bring out the fire brigades and we put it out because innovation on a micro level tends to threaten institutions. and so part of what we've been able to do, the three of us as the advanced concepts and deterrence panel and find common
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causes and we have all of the doctrine development centers and war gaming laboratories in the services spending a portion of their energy trying to decompose this problem and come up with new ideas. and we've even put money behind it so we have a war gaming incentive fund and we have a war fighting laboratory innovation incentive fund and we provide grants to the services when they're ready to do experiments and when they're ready to do innovative war games. so i think we have organized to innovate but i will continue with my pitch that at a micro level innovation can be a little bit unsettling for us. but at a macro level, at a strategic level -- we're incredibly innovative and we have to reach for that.
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>> i want to give a shout out to my uniform battle buddy here because a lot of times when we talk innovation we're talking about technology and how fast we can exploit or develop a technology. but the third offset is all about operational and organizational innovation. in 1975, the u.s. army said we are going to own the night. we are going to complete the entire transition of our force to operate 24/7, 365, to maintain high operational tempo and press the enemy 24 hours a day. in 1975 anybody could have bought night vision goggles, they were clunky, they were heavy, they weren't all that great but it wasn't the night vision goggles, that was just enabling the army to get to owning the night, it was all the tactics, techniques and procedures to allow the squad leaders to control a squad quietly at night. it was company commanders and
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battalion commanders and in ten years the army owned the night so the innovation that i look for in the third offset is not how fast, again, someone can get a specific innovation into the fight. that's easy. but having the operators trust that innovation and knowing how to employ it is the key and that is where we do, i think, are pretty darn good at operational and organizational innovation. >> so i completely agree it's not just technology, it's also how you operate things. so you could argue that for the intelligence community one of the first offsets was the overhead constellation and the tremendous insight that that brought to our policymakers and war fighters having that initial capability and cost lags of satellites that were put up. we evolve add way of tasking those satellites that was very much based on how precious they
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were and we competed and we had much-debated targeting decks but what technology is giving us today and the new tactic that we need to embrace is how we can do tipping and cueing via automated talking between -- across the constellation and we can get much more capacity out of that which we already have. but we need to embrace the change that we allocate those resources. it's a bit of a challenging change for us. >> thank you, i want to open up questions. there will be microphones when we call on you. we'd like to hear your name and affiliation and the most important rules always involve the question itself. and it should be a question and not a statement and it should be on topic, we purposely pulled this day together to have a
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focus on third offset and the issues around it. so with that please raise your questions if you have a question you would like to ask. >> i'm a partner in a law firm. first of all, let me congratulate you all on the dii and the focus on bringing technology to the war fighter which i think has been well overdue at the department. secretary work, one of the key premises of the third offset is technologies proliferate and has eroded our prior offsets and allowed adversaries to take advantage of the inmow separations we've brought. in that context, what is the basis to assert that autonomy, a technology that looks to me like it's going to be pretty ubiquitous could conceivably be the basis for our next offset? all you have to do is go test drive a tesla and you'll see autonomy. today elon musk has an offset. i don't mean to be glib but the
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point is, i understand how autonomy would be one element of a future force but what's the basis to say with any kind of a sustained overmatch based on that? >> well, first i'll start with your last point. we are not arguing that we will have a sustained overmatch. this is a very dynamic environment. two examples, the rifle, telegraph and railroad revolution in war. this ai and autonomy are very much like railroads and telegraphs. they are being driven by the commercial sector. it changed our society and as a result it inevitably changed the character, not the nature of war. ai and autonomy is changing all of our lives. as the vice chairman said, at an astounding rate. it's happening so fast sometimes we don't notice it. so this is going to be a world of fast followers and what we
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have said, jeff, again is it's not so much ai and autonomy, it's injecting it into our battle networks and allowing our battle nets to work better than our potential competitors. and we believe we do have an advantage in ai and autonomy on the operational level of war at this time. we think we might be able to have an advantage for some time if we move to operational and organizational constructs. we say we may only have an advantage for five years so you better think about the advantage you want to create in the next five years and the year after that. we're thinking more like a competitive business where the market is constantly changing and you're having to adapt. so, again, we know ai and autonomy will improve the power of our battle networks. we know our competitors will probably conclude the same
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thing. in a world of fast follower, as long as you're a fast leader you have an advantage but you always have to be thinking about what happens when we achieve parity and what's the next step. >> i also think we need a broader view of what autonomy is, just to pick on your point of cars that can drive themselves. that's interesting but it barely scratches the surface of what could happen if every car was part of a network. if eryehicle on the road subscribed to a network that optimized our traffic, my guys wouldn't have had to go to lights and sirens to get here on time. [ laughter ] i will say washington traffic is the best anti-access area denial in the world. [ laughter ] >> the reason i pick on that point a little bit is having spent a lot of time with people who think critically about artificial intelligence and autonomous automation, every one
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of them would tell you that we are barely scratching the surface. we are now only beginning to learn the promise of these potential technologies for the future. and that's why i say this is a question, not an answer. if we lock into systems that are not adaptive, that can continue to bring in new information and new networks, if we don't truly build resilient open architectures that what we'll doom ourselves to is a fleet of singular autonomous things. and we won't be able to adapt. and so at the heart of your question is of course autonomy is going to evolve over time and we have to evolve with it. the current advantage we have in the ba the battle space is born of technologies 40 years old, born of ops tactics and procedures that while they have evolved are
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largely 40 years old. we're not going to be able to sustain any kind of advantage over potential competitors in an environment where software applications and machines allow organizations to adapt quickly so we really have to get to the heart of your question and sort out how deeply we're going to look into this problem, how far we're going to predict what our capabilities will be and how adaptive we can make the architecture. for those of you in industry in this room, i can't tell you how many times i've asked the following question -- will your widget subscribe to an open architecture? the answer is always oh, sir, of course. because the jrock says we have to have open architecture so we built open architecture. i say wonderful, here's an application i would like you to put into your digit to make it more use to feel the military, to the service that ordered it. sir, we can't do that. it is an open architecture but only inside of our company.
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[ laughter ] or only inside of our proprieta proprietary ip in the system. we need to unlock that potential and the only way we can do that with ai and autonomy is to find a resilient architecture to which all of our systems can subscribe and we've only scratched the surface on that as well. >> i'd just reinforce that by saying that -- asking that question is like asking the question in the way back machine when arpa net first came out. well, this is kind of interesting but what's this going to do for us? and we were right at the beginning and we really can't see all the possible places that it could take us but we know we need to remove the barriers to allow it to be explored and to do that i guess the valley calls it fast failure but for us it's fast learning. see what this thing could mean, explore it and then move on if
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it doesn't -- if it's the brush that should have burned down. >> great, okay next question. i have one right here in the middle. there's a mike coming hopefully. >> thank you, dr. ted johnson from the deloitte center for government insights. the first offset was benefited from the national security act of '47, the sect from goldwater/nichols reform. what's the statutory reorg coming that will help realize the advantages in the third offset. >> i don't think we have to reorg to do this and i would challenge your premise -- i hate to do that in a group that's this bright because i'm not the brightest guy in the room -- but those offsets were not just the product of changing our national security policy apparatus. in fact, the policy apparatus changes may actually have been a result of the things that were happening around us. so i would suggest to you that a
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big part of the first offset was the fact that we found a relatively inexpensive way to miniaturize nuclear weapons and allow them to be used across the breadth and depth of the battle space, that posed some very serious questions for our national security leadership. in the mid-'70s. we realized that precision would get us to a different situation in that same battle space and some of our competitors say we create nuclear effects with conventional weapons because of our precision. that is so wrong. we create the operational outcomes with precision munitions that our competitors ascribed to nuclear weapons. there's a huge difference in the way you say thatnd what it means. that means we don't have to deploy all of that firepower in the battle space in that
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configuration and, by the way, it wasn't just precision, it was stealth, precision, and a sensor network that gave us indications and warning to make that kpatty useful in the battle space and we reorganized around it. those were the seeds of battle. we reorganized concepts around it. we didn't reorganize services around it so the compelling issue with goldwater/nichols was we had these services that were very, very capable of working together and we didn't have an organizational construct to encourage that. and so goldwater/nichols was born. i don't think we're making that big a shift in what we're doing that causes us to have to reorganize the national security apparatus of the nation. are there places we can trim and tweak on the edges? yes. but last night i found myself describing the department as a
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diamond. it's already been cut, if you polish it you'll just make it brighter and what we're doing right now is polishing the diamond. >> okay, we have a question right back here. >> hthanks to csis for arrangin this outstanding discussion. where do allies and partners fit into this equation and how do we solve long-term interoperability without giving away the goodies to potential competitors? >> and i will free advertise to say we have a whole panel on allies and partners today. we welcome your guidance to that panel. >> we have many of our close allies here, norway, the united kingdom, japan. there are many others and this is what we would say. in addition -- the first advantage we believe we have, the competitive advantage going back to the ai question in this world is we believe our people
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within the framework of what we're trying to accomplish provide us an enormous competitive advantage. second thing was talked to by paul jointness. jointness is hard. it takes all of the western armies and our armed forces to a greater or lesser degree going more towards joint solutions. why? because your battle network, if you have discrete functional networks it will never operate as well as a cohesive joint network so we're very -- we've -- 30 years since goldwater/nichols so we've got a lot of play and our competitors are trying to copy us in this regard. the thing thing you hit on is our allies. we believe in our national security strategies that alliances are absolutely central to not only our security and our partner security but to global security. if you compare us with to tenial pacing competitors they don't have a lot of allies, we do.
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so from the beginning we have been talking with our partners and allies about how we work this together and the way we describe the third offset is very coalition friendly. the second offset the coin of the realm was a mechanized infantry battalion or an armored division or a heavy artillery battalion. now anybody can come up with an application. an ai or autonomy in any one of the domains, cyberspace, air, space, on the sea, under the sea and it improves the power of the entire network. this is very coalition friendly, we're thinking of it from the very beginning as interoperable, exchanging data, machine-to-machine discussions and so far all of our discussions have been very very fruitful. >> intelligence sharing is such an important piece of this.
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clearly we here in the midst of integration and i would argue that's our current offset. integrating all the pieces that we have, fully leveraging that which we have and deepening our work with partners is foundational, i think, to an advantage that we have gained. that we can pull together what we already know. now, as far as the risks involved, sure but it just requires the additional work to think about what we're sharing. it's not an open kimono everything, that's foolish, but it's thoughtfully engaging and how can we best leverage and help each other? and we're doing all this structural work to make that possible and i won't go into the details but it's largely the way we're structuring our i.t. system so it's tagged and labelled and we can more easily share it.
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>> other questions? all the way over here. there's a young lady in the second row back, i think. >> good morning, thank you again to the panel. trish martinelli from the office of naval intelligence. there are a lot of pieces to the puzzle that you're putting together regarding innovation and advances in the department and some of the challenges i've seen in a resource-strained environment is how you articulate your return on investment to doing better or doing faster or doing an increased level of fidelity with the data points that you have. so how do you articulate return on investment now? and how do you keep the wind at your back when the pentagon doesn't actually have a competitor where the war fighter can go for a different level of service if they're not getting what they need. >> i think you'll hear from secretary carter in just a few minutes on how he has tackled this problem as far as the
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entire innovation agenda within the department. let me just say the way we will determine the return on investment is through the operators. the second offset took life when the army and the air force got together and con sceived of air-land battle which employed the technologies. and within a very short period of time, by 1984, the soviet general staff said this is completely unhinged the way we were thinking about the fight. so what we will do, paul talked about a war gaming incentive fund where we incentivize to look at new concept which is bring in these technologically abled operational constructs and they will say wow, there looks like a big return, operational return on investment if we do this. then we incentivize the concept developers and doctrine developers to develop it further then we do exercises and it will be the feedback from this loop
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on how it improves the performance of the joint force that will tell us the return on investment to tell us we should go there way. we are making modest investments, a lot of levers, a lot of tests, a lot of demonstrations. i stole paul's line, this is a journey not a destination and so the return on investment for us is going to be when the army, the marines, the navy and the air force and our allies and special operators come back to us and say this is the real deal. and that's where we'll start to pour our money. >> this is about the force taking ownership of the question. i'm very, very, very suspect of hard objective criteria that we can advertise as success and i'll just make up an example and you can push back if you want. ddg-1,000 is an incredible ship. she's stealthy, she's smart,
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she's networked, she's resilient and she's ten times more lethal than any competitor's ship of the same class to which somebody who just crunches numbers for a living would say "well, then you wanted 20 so two will do." . we have a history in the department, in the services of taking the subjective outcomes of war games before the services and our soldiers, sailors, airmen and marines have taken ownership of the tactic, techniques, procedures and doctrine and advertised them as success. and it hasn't been fruitful. so my view is i think the same as the secretary's. when i have soldiers, sailors, airmen and marines echoing back to me that in their work spaces, in their units, in their maneuver elements they are
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seeing the benefit of this kind of thinking, then we win and that's where the return on investment comes from because we can experiment and knit things together in different ways, it will be viewed as a bright idea unless it makes a difference on the tech plates and that's where we have to go so i would use the same measure. when we have articles in our professional journals, when we have commanders responding, when we have the doctrine centers and the war gaming centers putting together exercises and bringing us the ideas of those young men and women who serve in uniform, that's the return on investment. >> and the best example of this is we would not have gps today had bill perry and harold brown listened to what is now called cape, was then called pa and e. pa and e said the return on investment on the gps is hard for us to calculate and therefore you ought to kill it.
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well it just so happened bill perry was in a helicopter in the middle of a dicey whiteout brownout type situation and that helicopter just happened to have an experimental -- what was then called -- it wasn't called gps at the time. and the pilot landed and perry asked him, he said "i did it all by gps." so what is the return on investment of being able to time sync an entire battle network at the theater scale? what's the return on investment on that? it's hard for us to tell you but when we get into operations like desert storm and we say, whoa, being able to time sync everybody and do guided munitions attack 24/7, the return on investment is when paul said when theater commanders come to us and say this is how we will win in the future. so we have to be careful to not to say, well, i don't know if you're going to get a six-by return on investment on this.
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it's all about operational and organizational constructs. >> i'm afraid we're going to have to make this the last word. this has been an incredibly interesting and helpful panel in helping to frame up the rest of the day. we do have secretary carter following this so after i thank the panel formally i'm going to ask everyone to stay where they are and not get up and get coffee or anything but we will switch over very quickly here. but i do want to thank secretary work and the others for taking time out of their busy calendars today to come here and frame up for us what we hope were a fruitful discussion on the way of third offset so please join me in a round of applause for our panel. [ applause ]
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. folk folks, i'm sorry we've been delayed because of the traffic and i could introduction or 30 second introduction. i've in over secretary carter now for probably 30 years and marvelled at his abilities. there's no one that's better positioned i think to lead the department right now, especially on the question we're exploring today. he's been doing wonderful work across the board and just came back from a very grueling trip. i'll tell you right now, he's not going to take questions from the floor. i do have questions on you your behalf. if i don't cover them, yell at me later. with you warm applause, would you please welcome the secretary of defense, ash carter. >> thanks, john, for that introduction and more importantly, where did john go? for your many years of service,
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many years of friendship to me. wonderful years of service over so many years and leadership of this great institution. i also want to thank csis for hosting this important conference and i want to commend by deputy secretary of defense bob, general paul sellva, guys, thanks for holding the fort down. for their leadership and hard work in leading the technology thrust we call the third offset strategy. i'll speak about that but of course, in this speech, i also want to speak about an innovation in all its dimensions. which technological innovation is a very important piece because being more innovative in every way we can is critical to the future success of our military and our defense department. today, we have the finest fighting force the world has ever known. there's no other military that's stronger, more capable, more
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experienced, or frankly, more innovative. that's why our military edge is second to none. and it's a fact every american ought to be proud of about but it's also a fact that our military's excellence isn't a birth right. it's not guaranteed and key can't take it for granted in the 21st century. we have earn it again and again. and that's what this is all about, innovating to stay the best. and i want to talk to you today about how we're doing that in some different areas. our technology, our operations, our organization, bob all our people. right now it's imperative that we do so because we live in a relentlessly changing and fiercely competitive world. there's the faster pace of change which sets up competition
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between the present and the future. competition with us and each other. and competition with terrorists and other malfactor hers for whom we are the game to beat if they can even if only in one place and at one time. technology is one example of such change and competition that many of us have long been familiar with. when i began my own career in physics, decades ago, most technology of consequence originated in america. and much of that was sponsored by government. especially the department of defense. today, we're still major sponsors, but much more technology is commercial. the technology base is global. and other countries have been trying to catch up with the break throughs that for decades made our military more advanced than any other. up of it is commercial leading
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to additional sources of competitive dynamicism outside our five walls. against there background, your defense department is the confronting a world security environment that's also dramatically different from the last generation. and even the generation before that. indeed, the u.s. military is at this moment addressing five new jersey unique rapidly evolving challenges. we're countering the prospect of russian aggression and coercion, especially in europe. we're managing historic change in the asia-pacific. the single most conscious convention issal region for america's future. we're strengthening our deterrent and defense forces in the face of north korea's continued nuclear and missile provocations. we're checking iranian aggression and aggression in the gulf and presentinging our friends and allies in the middle east. and we're accelerating the
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certain and lasting defeat of si isil, destroying it in its parent tumor in iraq and syria and everywhere else it metastasizes around the world even as we help protect our homeland and our people. and at the same time, as all of this we're preparing to contend with an uncertain future insuring that we continue to be ready for challenges we may not anticipate today. we don't have the luxury of choosing between these challenges. we have to do them all. and as the world changes and complexity increases we'll have to change, too. how to investment, how we fight, how we operate as an organization, and how we tract and nourish talent. as we do, we have to be able to move fast because the advantages we expect to derive from each innovative cycle today will not last as long as they used to. all the commercial and global
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change that's occurred across the technology landscape has made repeated and rapid cycles necessary. and made high end tech a lot more accessible to competitors. think about it. while the cold war arms race was characterized by the inex-rable but steady accumulation of strength, with the leader simply having more, bigger or better weapons, today's era of military competitioning is characterized by the additional variables of speed and agility. such that leading the race now frequently depends on who can outinnovate faster than everyone else. and even change the game. in the area of investment, it's no longer a matter of just what we buy. it also matters how we buy things, how quickly we buy things, whom we buy them from and rou rapidly and creatively we can adopt them and use them in different an innovative ways all this to stay ahead of future
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threats and future enemies it technologically. that's why i've been so intent as secretary of defense not only to plant the seeds for a number of different technologies that we think will will be determinative in giving us a war fighting advantage for the future, but also to be more innovative and agile in all aspects of d.o.d., in our operations, in our organization and talent management of our all volunteer forces. in each of these four areas, i along with the chairman and vice chairman of the joint chiefs, the service chiefs all are excellent combatant commanders and the defense department's civilian leadership have had a lot of help. we've had help from washington think tanks like csic, from our defense labs and industry partners, and also from many innovative american who's understand the innovation imperative and who aren't in our community now but understand the
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need for our mission of national security and want to help. and all of us have been pushing the pentagon to think outside our five-sided box and investment aggressively in innovation and i want to focus on that in the rest of my remarks, the clear strategic imperative we have to innovate in each area, how we have been innovating so far and how we need to innovate going forward. given the topic of this particular conference, i'll stark with technology. the strategic imperative to innovate technologically is well-known, to those who have been paying attention, many of you here at csis. nations like russia and china are trying to close the technology gap with the united states. and as i noted, high end military technology is diffused, sometimes becoming available to countries like north korea and iran, as well as non-state actors. at the same time, our own reliance on technological
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systems like satellites and the internet has grown, creating vulnerabilities our adversaries are eager to exploit. to stay ahead of these threats and stay the best, we're pushing the envelope with research and development and new tools like data science, biotech, cyberdefense, electronic warfare, robotics, undersea warfare, autonomy it, artificial intelligence, machine learning, and much, much more. and i'll repeat yet again, since it keeps coming up, that when it comes to using autonomy in our weapons systems, we will always have a human being in decisionmaking about the use of force. now, we're making some serious investments here. just to remind you, the latest budget we've proposed, a budget i strongly encourage congress to pass when they return to washington next month, will invest $72 billion in research and development in the next year alone.
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that's more than double what apple, intel, and google spent last year combined. this budget marked a strategic turning point for the department of defense. the third offset strategy driving a wide range of new, innovative technological investments in order to advance and sharpen our military edge. we're making these investments because we aren't yet exactly certain what or where this area this offset is going to come from. it could be one area of technology or several. remember, previous offset strategies were generational successes. reflections of the security environment of their ear raz, and were only recognized as such after the fact. today speed and agility are key. and because of the world we live in, the next offset will not look like the previous ones.

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