Statement of
The Under Secretary of Defense for Acquisition and Technology
Honorable Jacques S. Gansler

Before the Subcommittees on Procurement and Research and Development
House Committee on National Security

A&T Overview

February 26, 1998

Chairmen, members of the committees, and staff, I appreciate the opportunity to appear before the Subcommittees on Research & Development and Procurement today to report on a wide range of acquisition and technology issues. As you know, I have only been in my job for a little more than three months; this is my first appearance before these subcommittees and I am truly honored. I am also pleased to have with me today a distinguished senior Air Force officer, Lieutenant General Frank B. Campbell, Director of Joint Staff Force Structure, Resources and Assessment.

Before taking your questions, I want to spend a few minutes giving you my perspective, as Under Secretary of Defense for Acquisition and Technology, on where we are today in providing our forces with the best equipment and support possible and where we want to be -- both in the near future and within the next 10 or 20 years.

The Quadrennial Defense Review, conducted last year, outlined the prospect of continued global dangers and established our strategic goals for meeting projected threats in the early 21st century: to promote regional peacekeeping efforts; to prevent or reduce conflicts and threats; to deter aggression and coercion; and to respond to the full spectrum of potential crises. In order to carry out this strategy, the U.S. military must be prepared to conduct multiple, concurrent contingency operations worldwide. It must be able to do so in any environment, including one in which an adversary uses asymmetric means, such as nuclear, biological, or chemical weapons. Thus, our combat forces must be multi-mission capable; and, to do so, they must be organized, trained, equipped, and managed with multiple missions in mind.

This strategy is based on the reality that, while we no longer face the threat posed by a global peer competitor, we still live in a very dangerous, uncertain, and unpredictable world; a world where terrorists, transnational actors, and rogue nations can unleash firepower in many ways as terrifying as that of a major global power. We are not facing a few disorganized political zealots armed with pistols and hand grenades. Rather, we must defend against well organized forces armed with sophisticated deadly weapons and access to advanced information and technology. They represent a different and difficult challenge to forces organized and equipped around traditional missions.

These hostile forces are unlikely to attempt to match overwhelming U.S. superiority on a plane-for-plane, ship-for-ship, or tank-for-tank basis, but are more likely to use asymmetrical strategies against us -- including weapons of mass destruction, "information warfare", large quantities of low-cost cruise and ballistic missiles, and the like. They can use commercial navigation, communications, and imagery satellites. They can project their forces anywhere and anytime using worldwide commercial transportation networks available to any and all. The Defense Science Board, in its 1997 Summer Study Task Force Report on our response to transnational threats, warned that, today, even a small nation with a modest defense budget can afford sufficient modern weapons to offer a formidable challenge to our entering and remaining in their region. The Board asserted that this smaller adversary can present a non-traditional military force as deadly and destructive as large conventional forces. And, finally, this adversary is highly likely to combine its regional actions with a synchronized -- but perhaps terrorist appearing -- physical and cyber attack on the U.S. homeland.

How do we counter this threat and keep ahead of accelerated modernization by the new adversaries facing us in the early 21st century? Clearly, we must perform better than they do and retain our vast superiority in the quality of our personnel and in our force’s mobility, global projection, and equipment. These, combined with "information superiority", will assure our nation’s future stability.

From an acquisition perspective, to accomplish this, we must do three things. We must modernize our current weapons systems; develop and deploy the major new systems and subsystems required for 21st century operations; and support those systems efficiently, effectively, and securely -- and we must do all three of these at lower cost and with drastically reduced cycle times.

We recognize that many of today’s weapons systems and platforms were designed and deployed many years ago and are fast approaching the end of their useful life. And the operations and support costs associated with them are rising significantly. Yet, we know that we must operate, in the near future, with many of these legacy systems as the basis of our force structure. So, we cannot simply discard them in favor of new equipment. It is too expensive and impractical, given our current budget constraints. For the present, we must invest heavily in upgrading current systems and provide them with the means to take advantage of the modern "digital technology" – both for its improved performance and its enhanced reliability. We plan to do this. But upgrading current systems can only go so far; and the time is fast approaching when we must focus on building the new, rather than simply retrofitting the old.

Our vision for the 21st century is a warfighter who is fast, lean, mobile, and prepared for battle with total battlespace situation awareness and information assurance. Our military strategy, as stated in the Joint Chiefs of Staff "Joint Vision 2010" posture statement, is to be based on Information Superiority -- real-time intelligence from "sensor to shooter". This is the backbone of the "Revolution In Military Affairs" that will allow us to achieve total battlefield dominance. Additionally, our forces must be supported by a logistics team that is fully adaptive to the needs of dispersed and highly mobile combat teams -- combining advanced, secure information technology and modern transportation systems to deliver rapid crisis response, track shipments en route, re-deploy them if necessary, and provide sustainment directly at all levels of operations; again, all at far lower costs.

Thus, our challenge is to transform our forces in order to enhance our military superiority in the face of likely changes in our security environment and in the art of warfare. To do so, I have established a set of acquisition goals -- complements to our more traditional systems -- which will help to bring about this change in the equipment we deploy in the early 21st century.

    1. We must achieve an interoperable and integrated, secure, and "smart" command, control, communications, computers, intelligence, and surveillance and reconnaissance (C4ISR) infrastructure that encompasses both strategic and tactical needs. Enhanced situation awareness and information assurance are the critical elements of an effective 21st century warfighting capability and the backbone of the Revolution in Military Affairs.
    2. We must develop and deploy -- in sufficient quantities -- long-range, all-weather, low-cost, precise, and "brilliant" weapons. This will allow us to achieve maximum fire power on fixed or mobile targets -- from land, sea, or air -- with minimum loss of life and to take full advantage of the C4ISR systems – which, for example, provide in-flight re-targeting updates to weapons launched from remote platforms.
    3. We must achieve rapid force projection and global reach of our military capability. With uncertainty over where our forces will be required, and the need for extremely rapid response to a crisis anywhere in the world, this capability -- when combined with the first two elements -- will provide us with overwhelming military superiority.
    4. We must develop and deploy credible deterrents and, if necessary, military defense against projected, less traditional early 21st century threats -- biological, chemical, and nuclear weapons; urban combat; information warfare; and large numbers of low-cost ballistic and cruise missiles. These threats represent priority issues.
    5. We must achieve interoperability with our Allies -- essential for coalition warfare. We must insure that their technologies compliment those of our forces. To accomplish our goal of information assurance, we must make certain that the C4ISR and advanced weapons we use are fully interoperable with theirs.

These five priorities form the building blocks of my strategy for maintaining our strength and building our security in the face of a new generation of threats.

As you are aware, Mr. Chairman, Secretary Cohen announced, in November, the Defense Reform Initiative. The DRI, as it is called, is a basic restructuring of the way the Department does business. It demands a "Revolution In Business Affairs". Although our military is unquestionably the strongest in the world, our defense establishment has labored under outdated and outmoded policies, procedures, and infrastructure -- designed to deal with a Cold War threat -- all of which are at least a decade out of date and far behind the private sector which, restructured and revitalized, is now thriving in a dynamic global marketplace.

Our defense industrial base has undergone successful consolidation; and we, in turn, must capitalize on the lessons we have learned from this successful commercial restructuring – how to adopt modern business and commercial practices; consolidate and streamline; embrace competitive market strategies; and eliminate or reduce excess support structures. Our future direction must include greater competition (both horizontal and vertical); greater civilian/military integration; and global links to achieve the full potential of our defense industrial base.

Our objective in the Office of Secretary of Defense is to streamline our operations to highlight our core competencies: policy and oversight of Service and Agency programs. As part of that restructuring, we plan a 33 per cent reduction in OSD staff levels.

I hope that the members of the Research & Development and Procurement Subcommittees will support our objectives and approve the funding we require to sustain, equip, and modernize our military. I also hope that you share our determination to transform the way the Pentagon does business.

Now, I wish to report to you on specific current and projected programs designed to implement these objectives, beginning with a report on our FY99 budget request for research and development and procurement.

 

Investment Budget Overview

The FY99 President’s Budget proposes a DoD investment program to strike a balance between current and future defense needs. It provides the additional procurement funding needed to support modernization and recapitalization of our forces while providing for a significant R&D program. The budget request for FY99 contains $36.1B for RDT&E which represents a $200M increase over last year’s request. The budget also requests $48.7B for procurement. This represents a $6.1B increase over last years request and an increase from that appropriated by Congress.

Our investment funding strategy reflects a careful prioritization of resources consistent with the Quadrennial Defense Review (QDR) and the National Military Strategy. Readiness and quality of life for military personnel continue to be our highest priorities. The investment budget, limited by an essentially fixed top line, reflects these priorities.

The Administration’s goal of $60B in procurement funding will be achieved in FY01. Over the period from FY99 through FY03, we have programmed a total of $288B for procurement and $171B for RDT&E.

Total RDT&E funding levels are essentially unchanged from last year. RDT&E spending declines during the FYDP because we are coming out of a procurement pause and modernizing our force with several new systems. Seven of the top 10 Defense acquisition programs are moving from development into production in this time frame. However, over the FYDP, we are looking out for our long-term future by keeping up our basic and applied research – the "seed corn" of our future military capability.

On the procurement side, the submittals are consistent with the funding profile that was developed during the QDR. At these levels, procurement is projected to experience real (adjusted for inflation) growth throughout the FYDP until we attain the administration target procurement spending level ($60B) in FY01.

The five percent reduction in procurement relative to the forecast from last year is a result of extensive analysis during the QDR which showed there was a significant risk of resource migration from procurement accounts to pay for operating and maintaining our forces and infrastructure. Consequently, this year we have planned more conservatively, and we believe more realistically, for future operating and support costs in order to achieve improved stability in our investment program. This manifests itself in an increase, over the five year period, of $25B, or 5% over operations and maintenance requirements projected last year. By shifting resources into operating accounts now and implementing the "Revolution in Business Affairs" initiatives directed in the Defense Reform Initiative, we can significantly reduce the potential for resources migrating in the future and retain a much more stable modernization funding profile in the years to come.

Science and Technology Program and Funding

The Department of Defense Science and Technology (S&T) program consists of Basic Research (6.1), Applied Research (6.2), and Advanced Technology Development (6.3). In the FY 1999 Budget Request, S&T is $7.2 billion or 20% of the total funding for Research, Development, Test and Evaluation (RDT&E).

The DoD S&T program is structured to ensure the long-term technological superiority of our military forces. It is focused on exploiting those technologies that have the greatest potential to provide significant improvements in military capabilities, to provide needed capabilities affordably, and to extend the useful lives of existing systems.

One of our S&T priorities is Joint Warfighting Experimentation. Joint Warfighting Experiments examine innovative approaches to joint forces full spectrum dominance. We plan to invest $23.7 million in this area in FY99; a significant increase over last year – in recognition of the importance of this area.

Manufacturing Technology ("MANTECH") is another priority effort. Our budget request of $151 million is a large increase from last year’s request. MANTECH helps us develop important process technologies. By identifying production issues early and providing timely solutions, MANTECH reduces risk and enhances affordability.

Reducing Life Cycle Costs

Leveraging commercial technologies is one way to bring down the cost of operating and supporting legacy systems. However, DoD managers are not always aware of technologies in the commercial sector that could be modified for use in military equipment. The Commercial Operations and Support Savings Initiative (COSSI) solicits innovative ideas for reducing operations and support (O&S) costs from the commercial sector and provides funding, in a cost sharing arrangement, to do the modification and testing needed to adapt a commercial product for use in a military system. The result is a reduction in the cost of operating and supporting DoD’s legacy systems. Our first competition last year produced some dramatic results. Our initial joint investment of $100 million each will result in savings of more than $3 billion over the next ten years.

COSSI is a two-stage process. In Stage I proposals are submitted by firms or teams that include at least one for-profit firm. Proposals must include the written support of a "Military Customer" who has the authority to modify the system and purchase the kits in Stage II. During Stage I, modifications are made to the core commercial product to adapt it for military use. The item is then tested to ensure it works satisfactorily in the selected application, with no degradation in overall system performance. If Stage I is successful, the Military Customer may then use procurement funds to purchase production quantities of the kit in Stage II. Projected savings are calculated using the target prices and quantities expected in Stage II over a ten year period.

COSSI is a cost shared program that requires contractors to provide at least 25% of the non-recurring engineering testing, and qualification costs involved with adapting commercial items for use in military systems. This investment is offered with the expectation of recouping their Stage I costs by selling the items developed and tested in Stage I to a military customer in Stage II. The Government’s share of initial development costs is relatively low compared to the potential for O&S savings over the life of the system.

The FY 99 COSSI Budget Request is as follows:

Army

$33.6M

Navy

$28.5M

Air Force

$27.9M

OSD

$13.4M

In FY 1997 and FY 1998, thirty projects were selected for Stage I funding totaling $100M. The COSSI projects comprise several broad technical categories. The largest is the application of Commercial Off the Shelf Electronics and Software to replace military specific items. This area includes open electronic architectures, commercially available chip sets, standard commercial interfaces, and easily maintained and upgraded software. Other categories include commercial helicopter technologies, advanced materials for advanced batteries and lightweight structures, and test equipment.

Dual Use Programs

The maintenance of our technological superiority on future battlefields will depend heavily on our ability to take advantage of the technological advances taking place in commercial industry. Recognition of this fact by both the Department and Congress has resulted in the establishment of joint programs to fund and develop technologies that will provide a military advantage on the battlefield and meet the demands of the commercial marketplace.

The Department plans to continue to increase its reliance on commercial technologies. In many cases, we simply do not have a choice. Commercial technologies, especially in the areas of electronics, advanced computing, communications, and medical research, are simply better than what we can develop on our own; and the gap will only grow as commercial industry continues to out spend the Department in research and development in these critical technologies. Greater reliance on commercial technologies can increase the pace at which improvements are incorporated into defense systems. It can also reduce the cost of those systems by applying the same competitive pressures and market-driven efficiencies that lead to accelerated development of technologies and savings in the private sector.

The Dual Use Science and Technology Program has two primary purposes. The first is to jointly fund and develop dual use technologies with industry, and the second is to transfer to the Services the techniques developed by DARPA during the execution of prior dual use programs. This will lay the groundwork for the FY99 transition of program execution to the services.

The Program is off to a good start. A number of commercial firms have become involved in the Program and are bringing new ideas to the table. In FY97, a total of 68 projects were approved and $67 million of dual use funds to support these projects was provided to the Services. This $67 million in funding resulted in a total of $275 million being invested in developing dual use technologies with industry when Service funds and industry cost share were included. A complete listing and description of the projects awarded will be included in our report to Congress due on March 1, 1998. Let me cite a couple of examples:

Advanced Concept Technology Demonstrations

Advanced Concept Technology Demonstrations (ACTDs) reflect a teaming operation between military operators and the development community to evaluate solutions to critical military needs that can be addressed using mature or emerging technologies. These evaluations include field demonstrations and operational employment in large military exercises.

The objectives include: gaining an understanding of the capabilities being provided; developing the appropriate concepts of operation and doctrine; evaluating their military utility prior to committing to formal acquisition; and providing a limited operational capability at the conclusion of the ACTD. Key ACTD participants include a developer and an operational user who typically is under the sponsorship of a Unified Commander.

ACTDs are typically two to four years in length, however some have been much shorter. They address a wide range of current or emerging military missions and capabilities such as; advanced C4I systems, advanced software planing tools to enhance force employment, chemical and biological detection systems, unmanned aerial vehicles, counter-sniper systems, tactical high energy laser weapons and countermine capabilities. Products from ACTDs have already been used in operational exercises and in some cases operational deployments. The ACTD effort is now in its fourth year. To date, the Department has initiated 46 ACTDs.

At the conclusion of an ACTD, the residual capability that has been demonstrated is left in the field providing the warfighter with a limited operational capability. An example is the Predator UAV, one of the initial ACTDs. This program has completed the ACTD process, and entered the formal acquisition process. At the same time, the system is being operated in support of the Peacekeeping operations in Bosnia. This is an important aspect of the initiative, and it requires that the ACTD prototype systems be designed and tested as fieldable prototypes. The requirement is not only that these units be effective in performing their mission, they must also be suitable for use by our forces.

Since the ACTD program began four years ago, forty six ACTDs have been initiated; nine have been completed; and, nine will complete their demonstrations in FY98. The following are examples of completed ACTDs:

The first nine ACTDs were completed in an average time of slightly under 20 months. That means we went from concept to prototyping, utility assessment, and, in most cases, fielding of a limited capability in less than two years. Second, our total cost for these nine ACTDs was 10% less than we planned, because, as we proceeded, subsystems that did not prove useful were dropped. I cannot promise that we can maintain this performance over the long term, but the initial results confirm our conviction that we are on the right path. The following are two examples of current ACTDs:

Although the results to date are very positive, we are refining the ACTD process based on lessons learned from the early efforts. A few of the more significant changes are: requiring that a lead service be designated at the start of an ACTD to plan and prepare for the transition of the residual capability to the users and for the entry into the formal acquisition process if required; getting the Operational Test community more involved to support the operational evaluations; and increasing the level of scrutiny of ACTD candidates, particularly with regard to technology maturity.

Ballistic Missile Defense

The Administration has instituted a comprehensive Ballistic Missile Defense (BMD) program to respond to existing and emerging ballistic missile threats to the United States, its forward deployed forces, allies, and friends around the world. The first program priority is Theater Missile Defense (TMD) and the acquisition and integration of systems designed to defend against the tactical air, cruise missile, and ballistic missile threat. The second program priority is National Missile Defense (NMD) and the development and testing of a capability to defend the United States against rogue nation missile attacks, which, if the threat warrants, could be rapidly deployed. The third priority is the investment into advanced technologies to improve the performance of theater and national missile defense systems and to respond to the emergence of more sophisticated future threats.

The Department's 1997 Quadrennial Defense Review (QDR) reaffirmed the importance and priorities of both the Theater and National Missile Defense missions, to include the integration of Cruise Missile Defense (CMD) capabilities. Specific recommendations from the QDR, designed to improve program stability and reduce risk, were provided to BMDO in the Department's Defense Planning Guidance (DPG) and the accompanying Fiscal Guidance. BMDO and its Service Executing Agents have successfully implemented this guidance.

The Ballistic Missile Defense Organization currently manages and is funding four "core" Theater Missile Defense programs--Patriot Advanced Capability-3 (PAC-3), Navy Area, Theater High Altitude Area Defense (THAAD), and the Navy Theater Wide (NTW) program.

The PATRIOT PAC-3 is the most mature of the Theater Missile Defense Systems. The program is currently in the Engineering and Manufacturing Development phase, and is being fielded in three phased upgrades called configurations. Today, we have fielded the first two configurations, providing the Army with improved operational performance. The third configuration will provide a hit-to-kill missile and further communications, radar, and ground system improvements. We expect to conduct the first intercept flight this year, to be followed by a decision to begin Low Rate Initial Production of the new missile. The first deliveries of the ground system hardware and software have already begun, and developmental and operational testing will start this year. All of these efforts support a First Unit Equipped in late FY99.

The Department's FY99 President's Budget Request for $137M in RDT&E and $343M in Procurement funds support the deployment of the Configuration 3 system starting in 2000.

The Navy Area program was approved for entry into Engineering and Manufacturing Development on 22 February 1997. The program will commence Development Test (DT) flight testing in FY99 followed by an at sea demonstration of the User Operational Evaluation System (UOES) in FY00, low rate initial missile production in FY00 and a first unit equipped (FUE) in FY01/02.

The THAAD program is currently in the Program Definition and Risk Reduction phase of development and is the most mature the BMD upper tier systems. In 1997, as a result of flight test failures and the need to reduce technical and programmatic risk, the QDR endorsed a plan to restructure the program to achieve a First Unit Equipped in 2006. The restructure is complete and the program is on track to conduct its next flight test in the 3d Qtr, FY98.

The Department’s FY99 President’s Budget Request for $822M fully supports deployment of the THAAD system in 2006. This level of funding is required for completion of the PD&RR flight test program, continuance of risk reduction for Engineering and Manufacturing Development, and for acquisition of missiles for the User Operational Evaluation System.

The Navy Theater Wide Program is currently in the Program Definition and Risk Reduction phase of development and is preparing for an initial Defense Acquisition Board (DAB) Review (MS I - equivalent) in mid-April. The Navy has proposed an evolutionary acquisition approach consisting of an initial Block I system followed by a more-capable Block II system. The MS I-level DAB will be asked to review and approve the proposed evolutionary acquisition strategy, with the supporting documentation providing details only with regard to the Block I system. For acquisition purposes, Block II will be treated as a major upgrade to Block I.

The NMD system is being designed as a ground-based system to defend the United States against an attack from a rogue nation that might acquire an intercontinental ballistic missile capability in the future. It will also have some capability to defend against an accidental or unauthorized launch by one of the more capable nuclear powers. The NMD system is being developed with a very flexible architecture to allow for a variety of deployment options to respond to unknown threats. The elements of this disparate system include the battle management command, control and communications; the ground based interceptor and kinetic kill vehicle; and the ground based x-band radars and upgraded early warning radars. The architecture also requires military satellites to include the Defense Support Program and Space Based Infrared System – both High and Low.

The NMD "3+3" program will complete the initial development within three years, by the end of FY1999. A Deployment Readiness Review will be held in FY2000. Depending on the threat present at that time, a decision will be made either to deploy an initial system to counter that threat within an additional three years, by 2003, or to continue development in the absence of a deployment. The ability to deploy within three years will be maintained during the continued development period, while the capability of the system will be improved.

The Administration is committed to developing and, when necessary, deploying an NMD system to protect the United States. Our program is structured to reach the first decision point in 2000. At that point, we will have results of component and system testing, assess the threat, and proceed forward as appropriate, with more development or a deployment with continued development.

We recognize that this will be an extremely difficult task and continue to characterize the effort as a high risk approach. We are, however, building on an extensive base of technology development which was undertaken before this program was initiated. This has allowed us to proceed rapidly with the development of the elements of the system. We have successfully completed the sensor flight tests of the two exo-atmospheric kill vehicles, the most challenging technical aspect of the program.

Our Advanced Technology program, which builds on past BMD technology investments, is paying dividends. It demonstrates that continued investments in our tech base are absolutely necessary. To this end, the BMDO has begun a concerted Technology Master Planning process to add rigor into our technology program and to ensure that each dollar invested in technology provides maximum payoff in programs that are directly relevant to our missile defense needs.

Finally, the international Medium Extended Air Defense System (MEADS) program is currently in the Project Definition and Validation (PD/V) phase scheduled to be completed in the 1QFY99. The Memorandum of Understanding (MOU) negotiations for the Design & Development phase are currently under way. The QDR recommended continuation of the MEADS program and OSD Fiscal Guidance increased FY99 funding to provide a bridge to the next RDT&E phase Design & Development. Existing MEADS funding provides for concept definition; however, no funding is provided beyond FY99.

Information Infrastructure

Information technology is an integral component of every weapon system and support application in the DoD. Proper integration of these information systems will enhance total battlespace information awareness and assurance, leading to information superiority. The Services have recognized this and have responded with numerous modernization efforts including digital battlefield, multi-media telecommunications transport, cellular networks, switching systems, and fiber optic Wide Area Networks.

C4ISR infrastructure initiatives include the successful implementation of many near term Automated Information Systems (AIS) and require that an adequate and protected computing and communications infrastructure must be in place. The DoD is pursuing several infrastructure initiatives to satisfy these infrastructure requirements. Some of the important information infrastructure modernization initiatives are summarized below.

In response to the mandates of defense planning guidance and the realities of declining budgets, the DoD is leveraging the rapid advances in commercial information technology products to meet many DoD requirements. By taking advantage of commercial initiatives and investments, DoD can avoid many of the high costs of research and development, hardware, and military unique operations and maintenance activities. Other DoD requirements, that can not be completely satisfied by commercial products, can often use products that employ a mix of military and commercial information technology components.

Modernization for our base infrastructure is vitally needed to support the growing computing and communication bandwidth requirements created by the large number of information systems planned for bases in the near future. Using the DoD’s technical architecture framework, the Services are modernizing their communication infrastructures with wide area networks and integrated high-speed telecommunication backbones.

The Defense Information System Network provides a secure, wideband, multimedia, flexible, and fully integrated global network. It provides for terrestrial, and satellite transport of voice, video and data to meet the information needs of the deployed warfighter. The Defense Information Systems Agency is implementing the final stages of a fiber optic secure network, consolidated at 34 bandwidth management nodes in the United States.

An Enhanced Mobile Satellite Service (EMSS) Program has also been initiated to leverage commercial satellite technology and provide a mobile secure global communications capability. The Department has programmed $90.3M from FY99 through FY03 for this program.

The Department has made great strides in the modernization of information infrastructure and associated support systems for the warfighter. However, the modernization products must be even more interoperable, which is difficult given the proliferation of information systems within DoD. We will soon issue the second version of the Joint Technical Architecture (JTA), which specifies the interface requirements and the foundation of interoperability for all DoD C4I systems. Built largely with commercial standards and guidelines, the JTA will help ensure that the future information technology we buy is interoperable.

The department is making good progress in averting the problems that could occur if systems are not able to process correctly the year 2000. Our senior leaders are personally involved in managing the solution to this problem. The Deputy Secretary of Defense chairs a corporate level Year 2000 Steering Committee to oversee progress, provide guidance, and make decisions related to Year 2000. We have embarked on a thorough and far-reaching examination of systems to address the problem. Interface assessment workshops are being held for each major DoD function to identify information systems and processes that exchange data to allow them to be Year 2000 compliant prior to January 1, 2000. The DoD is also working closely with our Federal and International partners to assure those interfaces are identified and repaired. In this process, our management strategy is based on centralized policy and oversight with decentralized execution of a five-phase management approach: Awareness, Assessment, Renovation, Validation, and Implementation. This management strategy is being used throughout the Military Departments and Defense Agencies. We have identified approximately 3,000 mission critical systems in DoD and we are confident that our mission critical systems will be ready for the year 2000.

 

Information Assurance

The Department’s steadily increasing dependence on a global information environment heightens its exposure and vulnerability to a growing number of increasingly sophisticated internal and external threats. Globally interdependent information systems tend to "level the playing field" between allies and adversaries and offer adversaries access to potentially high-value and potentially vulnerable information infrastructure targets which, when successfully attacked, have the potential to impact the full spectrum of DoD operations. Further, with every advance in information technology, new vulnerabilities are created that must quickly be discovered and effectively neutralized.

Today, the Department is developing information infrastructures that support DoD systems and networks, including connections to networks such as the Internet. Given the risks and the fact that a weakness in any portion of the defense information infrastructure is a threat to the operational readiness of all components, the Department is moving aggressively to ensure the continuous availability, integrity, authentication, confidentiality, and non-repudiation of its information as well as the protection of its information infrastructure. Recent exercises and assessments clearly demonstrate that Defense-wide improvement in Information Assurance is an absolute and enduring operational necessity.

We can no longer be satisfied with reactive or after-the-fact Information Assurance solutions. As the Department modernizes its information infrastructure, we are continuing to invest, through DoD programs and in cooperation with other federal agencies, in the research, development, and timely integration of products and procedures necessary to sustain our ability to protect it. Protecting the defense information infrastructure against physical, electronic and cyber threats is one of the Department’s highest priorities and most formidable challenges.

Critical to achieving this objective is the implementation of a DoD-wide integrated program management framework. To that end, the Department has created the Defense-wide Information Assurance Program . The Defense Information Assurance Program (DIAP) provides the common management framework for central oversight necessary to ensure the protection and reliability of the defense information infrastructure.

The transformation of information assurance from a largely technical issue to an operational imperative is critical to the success of the Department’s information technology strategy. We plan to infuse Information Assurance throughout our operations as a fundamental element of readiness and training. Operational readiness standards will then be used to assess the adequacy of the protection afforded to the entire defense information infrastructure. This strategy emphasizes the responsibility and authority of individual system owners and operators to meet Defense-wide standards that enhance the security and integrity of their information systems. Success ultimately depends upon every information system user, and particularly system operators, understanding that information assurance an integral part of every communications and information system and that it is critical to the operational readiness of the Department.

To ensure the protection of the defense information infrastructure, we must continuously "map" and prioritize its components to identify its components and interconnections with other systems. Further, we will create network-wide accreditation and operational readiness criteria and standards to objectively evaluate risk, measure performance, and quantify the return on our investment in information assurance resources. To that end, during the Quadrennial Defense Reviews the Department formulated a strategy based on the following management areas:

The Department plans to invest $72M from FY 1999 through 2003 to develop a Global Security Management Infrastructure. It will accommodate security enabled commercial products and protocols that provide key recovery capabilities. Complementing this effort, the Department has programmed $34M from FY 1999 through 2003 to accelerate the development and testing of security enabled commercial off-the-shelf products.

 

The Department is also working with industry in addressing its assessment requirements. The National Defense Industrial Association recently initiated an independent study to identify areas where industry support could be used to improve the operational readiness of critical DoD systems through expanded monitoring, validation testing, and system certification.

Modernization

Tactical Aviation

In the near term, the Department’s tactical aviation modernization includes: the F/A-18E/F as a replacement for the F/A-18A-D and F-14 for naval aviation, with initial operational capability in 2000; and the F-22 air superiority aircraft as the replacement for the Air Force F-15, with an initial operational capability in 2005. In the longer term modernization plan, the Joint Strike Fighter (JSF) is the replacement for the F-16, AV-8B, earlier model F/A-18 attack aircraft, and possibly the A-10; it has an initial operating capability in 2010. The DoD can afford all three aircraft, so long as the programs are properly planned and executed. These aircraft complement and do not duplicate each other. The Department has emphasized life cycle cost reduction in its modernization efforts. The Quadrennial Defense Review (QDR) validated that all three aircraft are important and are needed. The QDR adjusted the procurement quantities for each aircraft in order to balance the warfighting risk against the need to use scarce modernization resources prudently and support acquisition program stability. The proposed DoD plan to develop and produce the F/A-18 E/F, F-22, and JSF is sound and can be maintained within historical spending norms for total aviation modernization by the services, although TACAIR will increase its share of the aviation modernization funds.

F/A-18E/F

The F/A-18E/F is currently in the Engineering and Manufacturing Development (EMD) phase. This aircraft has met or exceeded all requirements, with performance margins established in several key areas. The seven flight test aircraft (5 single-seat F/A-18E and 2 two-seat F/A-18F) completed 1500 sorties and 2300 hours of flight testing as of February 1998. Unit flyaway costs are projected to be below the mandated 125% of the F/A-18C/D (when normalized for production and inflation); total development costs will fall below the $4.88 billion FY90$ congressional target. The F/A-18E/F program continues on cost and schedule, with performance better than required. The Integrated Test Team for the much publicized "wing drop" issue is completing testing on several viable alternatives. Final systems engineering and risk mitigation remain; however, the final solution is expected to be low cost and have minimal impact on performance. The Department will not proceed with the next production lot until the wing-drop solution is in hand. The F/A-18E/F provides the Navy with a front-line strike fighter with 2.5 times the weapons delivery capability, and 3-5 times greater survivability, at only 25% more than the life cycle cost of the F/A-18C/D. It also provides 50% improvement in the amount of unused fuel or ordnance (bring-back) that can be returned to the carrier. The QDR reduced planned production quantity from 1000 to a maximum of 785, or a minimum of 548 E/Fs, depending on the JSF development schedule. The maximum rate of production was reduced from 60 to 48 per year. The Department expects that competition with JSF will help reduce costs of both programs. Planned upgrades being considered include an Active Electronically Scanned Array (AESA) radar, and a Command and Control Warfare (C2W) variant as an EA-6B replacement. The Navy and Boeing (McDonnell Aircraft Systems) are investigating viability of a multi-year procurement approach. The first Low Rate Initial Production delivery is scheduled for January 1999; Operational Evaluation is scheduled to begin in May 1999; and Initial Operational Capability is expected by September 2000.

F-22

The F-22 program is technically sound and is currently seven years into a twelve year EMD program. Our analysis shows that this weapon system can meet or exceed all key performance parameters. Procurement funding is scheduled to begin in the summer of 1998 for Lot 1 long lead. The F-22 provides revolutionary capability that permits air dominance through a first-shot, first-kill capability. Stealth, supercruise, and integrated avionics permit dominance over all current and future air-to-air adversaries. The F-22 will also have a valuable air-to-ground capability with Joint Direct Attack Munitions integration. The F-22 is designed to have lower operating and support costs than the F-15C/D.

Although numerous minor problems delayed the first flight about six months, flight testing was initiated at Marietta, GA, in September 1997. The first flight of Air Vehicle #1 was completed on September 7, 1997, with approximately 48 of 51 flight test points accomplished. The second flight of AV#1 was accomplished on September 14, 1997, with additional flight envelope expansion completed. Flight testing was suspended after the second flight in order to complete aircraft modifications needed for subsequent flight testing at Edwards AFB, CA. AV#1 will be shipped to Edwards AFB, CA, and flight testing is expected to resume in the April 1998 time period. The Air Force sponsored Joint Estimating Team (JET) completed a revised estimate of EMD and production costs in December 1996. The EMD estimate – $18.8B (TY$) – represents a $2.159B increase. The JET recommended a major restructure of EMD program content and contract to reduce risk. The JET production estimate is $61.2B (TY$) without cost reduction initiatives and $48.3B (TY$) with cost reduction initiatives included. The Memorandum of Agreement between the AF and contractors included: Target Price Curves for Low Rate Initial Production (LRIP), Lots 1-6; funding a new avionics test facility to reduce risk; multi-year contracts for Lots 6-10 and 11-13; and implementation of producibility enhancements and cost reduction initiatives. The OSD Cost Analysis Improvement Group independent cost estimate was completed and forwarded to Congress in April 1997. I approved the JET recommended re-phasing of the program in February 1997. The QDR decisions, however, superseded the prior JET estimates, with total quantity reduced from 448 to 339 aircraft. The maximum production rate was reduced from 48 to 36 per year, and LRIP quantity was reduced from 70 to 58. In the future, DoD will also will consider variants of the F-22 as possible replacement for the F-117 and the F-111 for the long range strike role. The Air Force is currently completing a new joint effort to define an updated production cost estimate based on QDR, with a team composed of contractors, AF, and OSD staff participants. An updated independent estimate by the Office of the Secretary of Defense (OSD) Cost Analysis Improvement Group (CAIG) should be completed by the end of March 1998. Award of the long lead funding for Lot 1 (2 aircraft) LRIP aircraft is planned for the June 1998 time period. The Air Force plans call for a contract award for LRIP Lot 1 in late December 1998, following a November 1998 Defense Acquisition Board milestone review.

Joint Strike Fighter

The Joint Strike Fighter (JSF) is the DoD’s largest planned acquisition program and will provide a family of common aircraft for use by land- and sea-based aviation forces. The JSF will be employed by Air Force, Navy, Marine Corps, and United Kingdom in variants configured for the specific needs of each Service. The QDR quantity for US forces is 2,852 aircraft, down from 2,978 aircraft. The maximum planned production rate of 194 aircraft will be reached in 2012. The JSF program is currently in the second year of a four year concept demonstration phase. Flight test demonstration is planned for late CY1999; down-select for Milestone II, the EMD phase, is planned for CY2001; and initial operational capability is planned for CY2008. The Department has fully funded the program through the Future Years Defense Plan, and remains confident that we have a sound acquisition strategy that can be executed at the projected costs, provided the "Cost As an Independent Variable" process is followed in requirements definition.

Army Aviation

Army Aviation modernization also continues in this constrained DoD budget environment. Plans call for all the following aviation platforms to play in the Force XXI Army digitized battlefield.

Comanche Helicopter

The Comanche is a key component of the Army modernization program. Designed for armed reconnaissance and incorporating the latest in stealth, sensors, weapons, and advanced flight capabilities, Comanche helicopters will be electronically integrated with other components of the digitized battlefield. They will replace obsolete Vietnam-era AH-1 and OH-58 attack and scout helicopters, providing the operational capabilities essential for a smaller, joint integrated force structure. Enhancements incorporated in the Comanche system will give these helicopters greater mobility, lethality, versatility, and survivability than predecessor systems, as well as low operating and support costs. The first flight test of a Comanche helicopter was conducted in 1996, and research and development will continue throughout the FYDP period. Procurement is scheduled to begin in FY 2004, with a total of 1,292 helicopters planned for production through FY 2026.

Apache Longbow and Longbow Hellfire Missile

The remanufacture of the Apache system will provide ground commanders with a long-range helicopter capable of delivering massed, rapid fire, day or night and in adverse weather. Longbow’s digitized target acquisition system can automatically detect and classify targets. The target acquisition system uses a millimeter-wave radar to direct a fire-and-forget version of the Longbow Hellfire missile. The fire-and-forget capability of the Longbow system provides an enhancement that is critical to the survivability and effectiveness of its launch platform. The first AH-64 Apache Longbow was completed in March 1997. The initial 232 aircraft in this program are being modified under a multiyear contract awarded in August 1996. Current plans call for 758 Apache helicopter conversions to the Longbow configuration through FY 2008, with the first unit fully equipped in July 1998 and initial operational capability achieved in October 1998. The Department plans to sign a multi-year contract for 10,397 Longbow Hellfire missiles in FY 1999, completing a buy of 12,905 missiles.

Black Hawk

The Army Black Hawk (UH-60A, UH-60L and UH-60Q) is a multi-role utility helicopter that performs air assault, general support and aero-medical evacuation missions for the Army. The Army plans to buy at least 10 Black Hawks per year through FY 2003 through a multi-year, multi-service contract for which the Army is the lead-service for contract execution. (8 HH-60s for the Air Force and 42 Navy CH-60s are included in the contract.) The Army plans a mid-life upgrade of its fleet of approximately 1600 Black Hawks beginning in FY 2002. While the requirements are still evolving, anticipated advancements include a 1553 data bus and cockpit/navigation upgrades to allow integration into the Force XXI digitized battlefield. Dynamic component upgrades, including blades, engines, and transmissions, are also likely.

CH-47D Chinook/Improved Cargo Helicopter (ICH)

The CH-47D is the Army’s heavy lift helicopter to transport weapons, ammunition, equipment, troops and other cargo in general support of combat units and operations other than war. The ICH will improve upon that capability with upgrades, including a new electronic (data bus) architecture and airframe modifications to reduce vibration, thereby reducing operational and support costs. The ICH will also have the benefit of more powerful and reliable engines that will also be installed on the CH-47D fleet. These improvements allow the aircraft to be one of the most relevant logistics enablers which will continue to play in the Force XXI digital battlefield. It will also extend its service life until a replacement aircraft is available in the 2015-2020 period. Approval to enter the Engineering and Manufacturing Development stage of development is currently scheduled for the first half of FY 1998.

Navy shipbuilding

For Navy shipbuilding and modernization, funding beyond the FYDP is expected to be flat (zero real growth). The QDR addressed this issue by reducing the Navy’s target for surface combatants from 134 to 116 and setting a target for attack submarines at 50. USD(A&T) is commissioning a JCS study of force level requirements for submarines to determine the appropriate investment balance to meet peacetime presence, national mission capabilities, and warfighting requirements. Overall shipbuilding capacity remains in excess of that required to procure and maintain Navy ships. Within our QDR discussions, we concluded that additional rationalization of this excess capacity could be expected. In May 1997, we commissioned a Shipbuilding Industrial Base Study (SIBS) to provide an integrated assessment of key capabilities, requirements, and acquisition alternatives. This report is nearly finished and should be available shortly.

Navy shipbuilding programs include: the Arleigh Burke class destroyer (DDG-51), the Nimitz class carrier (CVN-77), the New Attack Submarine (NSSN), and the Amphibious Assault Ship (LPD 17).

DDG-51

The FY97 Authorization Bill granted multi-year contracting authority for the DDG-51 for FY98-01 (3 ships/year). After Congress added funds to the FY98 Defense Budget, the Navy issued an RFP that solicited priced options for two additional ships: one in FY98 and one in FY01. The Navy will award two multi-year contracts in February 1998 to Ingalls and Bath. The 1999 President’s Budget fully funds Multi-Year Procurement of thirteen Aegis destroyers from FY98-01.

CVN-77

The Authorization Act for FY98 authorized the procurement of the CVN-77 and the advance procurement and construction of components, but established a funding limitation on the total cost of procurement at $4.6B. The FY98 President's Budget planned $5.2B total cost for the CVN 77 with advance procurement of nuclear components in FY 2000 and full funding in FY 2002. The Authorization Act "Cost Cap" of $4.6B was based on a Newport News proposal called "Smart Buy" which was touted to save $600M in acquisition costs if $345M in FY98 funding was provided for additional advance procurement and/or construction of ship components. Savings would be accrued by allowing the shipyard to control loading of the shipyard's workforce. The Navy revised the acquisition plan to accommodate the $50M in FY98 advance procurement provided by the Congress by advancing the CVN 77 from FY 2002 to FY 2001 with a substantial revision in advanced procurement profile from the original "Smart Buy" proposal. The President's FY99 Budget reflects a total funding of $4.448B for the CVN 77, which is in line with the Congressional $4.6B Cost Cap adjusted for revised inflation indices. This cost limitation would not provide the CVN-77 with the full combat systems capabilities or all of the technology improvements desired.

NSSN (New Attack Submarine)

The FY98 Authorization Act approved the Navy’s proposal for an innovative teaming approach between Electric Boat and Newport News Shipbuilding to acquire the first of four new attack submarines between FY98 and FY02. By teaming for the first four hulls, the Navy satisfied previous congressional direction to involve both shipyards in this new start submarine program, retained the option for competitive procurement of following hulls, and met the desired objectives affordably. Under the approved teaming arrangement, Electric Boat will assemble, test, and deliver the first and third ships and Newport News Shipbuilding will assemble, test, and deliver the second and fourth. Fabrication and outfitting of the various ship sections will be shared while they each fabricate reactor compartments for the hulls they deliver. This distribution of workload is designed to provide a roughly even split in terms of volume and employment of critical skills.

 

Acquisition and Technology Restructuring

DRI Recommendations on A&T Restructuring

The Defense Reform Initiative, noting that research and engineering are especially critical in an era where funds for developing new weapons systems are limited, has recommended that Defense Research and Engineering play a more prominent role in such matters. Restructuring acquisition and technology will provide the resources to "more effectively develop and procure technologically advanced weapons," according to the DRI. In addition, the integration of C3I acquisition functions with weapons acquisition will insure enhanced integration of "sensor to shooter" – our military strategy of information dominance. Today, information systems are part of every weapons system and business application. It makes sense, therefore, from both an efficiency and a budgetary standpoint, to incorporate information technology into the overall DoD Acquisition and Technology framework.

Integration of C4ISR and Weapons

I have asked the ASD(C3I) to take a leadership role with achieving this badly needed integration and interoperability of our warfighting capabilities. The extension of our technical and system architecture efforts to encompass the information technology inherent in weapons systems and the reorientation of our interoperability process to stress operational outcome are but two examples of this revitalized emphasis and leadership.

 

Strengthening NBC/Counterproliferation

One of the institutional adjustments required by the Defense Reform Initiative is the establishment of a Defense agency to carry out programs designed to reduce proliferation and to counter threats posed by weapons of mass destruction. The new agency will be composed of the On-Site Inspection Agency, Defense Special Weapons Agency, Defense Technology Security Assistance Administration and elements of the Office of the Assistant to the Secretary of Defense for Nuclear and Chemical and Biological Defense Programs.

These agencies and offices have served the nation well in each of their areas of expertise and in the new Agency will continue this fine service but with greater efficiency across the broad spectrum spanning passive security to proactive counterproliferation. Building on our nuclear core competency, deterrence is enhanced by consolidating programs which reduce the threat of mass destruction. We have embarked on an ambitious schedule to consolidate these existing organizations and merge the new agency by October 1, 1998. Our consultations with congressional staffs have also begun. With this dialogue we expect to build your confidence in our transition process, seek your support in achieving our internal reorganization objectives and create a more focused, relevant and effective organization to deter, counter the proliferation and defeat the growing menace of weapons of mass destruction.

 

Acquisition Reform

In February, 1994, in response to the legislative recommendations of the Acquisition Law Advisory Panel and the National Performance Review, the Department of Defense recognized the need to reengineer the entire acquisition system to ensure smart, efficient, and responsive development, procurement, and support of the best value goods and services that meet the warfighters’ needs -- relying upon a globally competitive national industrial base to satisfy its requirements.

Two significant pieces of legislation, the Federal Acquisition Streamlining Act of 1994 (FASA), and the Clinger - Cohen Act of 1996, along with a Presidential Memorandum, "Streamlining Procurement Through Electronic Commerce," are guiding our efforts. By forming integrated teams throughout the Department, we have made additional policy and regulatory changes in a number of areas including electronic commerce/electronic data interchange, military specifications and standards, the procurement process, the contract administration process, systems acquisition oversight and review, and – particularly critical – in establishing metrics.

Acquisition reform is far from finished. We are expanding into new areas, seeking to capitalize on changes already made and reengineering where still necessary to enable "better, faster, cheaper" acquisition.

 

 

 

Acquisition Workforce

The National Defense Authorization for Fiscal Year 1998 contains a provision in section 912(a) requiring that the Department reduce by between 10,000 and 25,000 the workforce in acquisition organizations (exclusive of civilians in maintenance depots).

Since 1989 the Department has reduced the workforce in acquisition organizations by 42% -- over 1/4 million people. We have done extensive process reengineering through our Acquisition Reform initiatives in order to be able to operate effectively and efficiently with such reductions. However, we also know that infrastructure must continue to shrink if we are to afford modernization and readiness.

We take very seriously the mandate Congress has given the Department to reduce the workforce in acquisition organizations as much as possible by the beginning of next fiscal year. The Under Secretary of Defense for Personnel and Readiness, working with me, is gathering the information needed to determine the maximum possible reduction without sacrificing military readiness and the efficient management of the acquisition system.

Congress has given us a valuable tool in Section 912 of the National Defense Authorization Act for Fiscal Year 1998. Section 912 requires the Department to review acquisition organizations and functions and to develop a plan to streamline acquisition workforce, organizations, and infrastructure. I look at this requirement as an opportunity to examine the structure that we have in place today and, in light of the advances in commercial practices and processes and the new tools that information technology has given us, adapt that structure to the needs of the 21st Century. We intend to provide the Congress a road map to the new acquisition infrastructure when we report to you April 1.

There must be reductions in the entire defense infrastructure to provide resources for modernization and readiness. A smaller workforce will have to be a better qualified and better trained workforce particularly with regard to new policies, practices, and processes stemming from acquisition reforms. This year I intend to institute a new program of continuing education, because much of what the workforce learned in school – even just a few years ago – is obsolete. This Committee has a long history of supporting workforce professionalism. I hope we can work together on this in the future.

In conclusion, Mr. Chairman, I wish to thank the Committee for this opportunity to give you a broad overview of our defense acquisition and technology posture. The United States is today clearly the superior military power in the world. The Congress and the Department of Defense have worked hard – together – to achieve our global dominance and maintain our strength. We urge your continued support and know that, while we may differ on specific programs, policies, or initiatives, our common, overriding concern is to keep our combat forces the best equipped, the best supplied, and the best sustained in the world.

Thank you very much.