28 June 2001

Excerpts: Rumsfeld Says 20th Century U.S. Military Needs Fixing

Defense Secretary Donald Rumsfeld told members of the House Armed Services Committee June 28 that serious investment must be made in the U.S. Armed Forces if they are to be ready to face new emerging threats.

"But we cannot build a 21st century force quite yet," he said, "because the 20th century force we have is in serious need of repair."

Rumsfeld presented an amended fiscal year 2002 defense budget of $328.9 billion which includes $1.6 billion for missile defense and $2.6 billion for research and development projects. Additional money has been added to boost the pay of the military and to improve housing.

Despite what Rumsfeld described as a proposed spending increase "unmatched by any President since the mid-1980s," he said it cannot fix all the problems caused from "a decade of miss-match between requirements and appropriations."

The problem is that the U.S. military has shrunk by 30 percent, the secretary said, while being forced to perform 165% more missions.

Following are excerpts of Rumsfeld's statement as prepared for delivery:

(In the text, billions refers to thousand of millions)

We are about to face new, emerging threats of the post-Cold War world. They are real, they are dangerous, and they are just over the horizon. If we are to meet them, we need to invest now to begin transforming our Armed Forces for the challenges of the 21st Century.

But we cannot build a 21st Century force quite yet ... because the 20th Century force we have is in serious need of repair.

We need to get on a path to correct the most serious deficiencies; we need to stabilize the force and begin needed modernization; we need to restore DOD infrastructure; and we need to make progress toward transformation -- so that our forces are ready for the new and different threats of the new century.

The President's budget

The President's 2002 defense budget adds urgently needed funds to begin stabilizing the force.

Using the 2001 enacted budget of $296.3 billion as a baseline, the President earlier this year issued a budget blueprint that outlined a 2002 baseline budget of $310.5 billion.

This included $4.4 billion in proposed new money for Presidential initiatives, including:

• $1.4 billion to increase military pay,

• $400 million to improve military housing,

• $2.6 billion for research and development,

• $1.6 billion for missile defense.

The request before you proposes to raise that investment still further to a total of $328.9 billion -- $18.4 billion more than the President's February budget blueprint.

Taken together, these increases amount to $22.8 billion in proposed new money for the Department in 2002.

I am told that this represents the largest peacetime increase in defense spending since the mid-1980s. So, if Congress approves this budget, by historical standards, it would represent a significant investment of the taxpayer's money.

But let's be clear: This increase, while significant, does not get us well. The systematic under-investment went far too long -- the gap is too great. There is no way it could be fixed in one year, or very likely, even six.

Mr. Chairman, allow me to provide an idea of the depth of the hole we are in. To get well by 2007 -- to meet existing standards and steady state requirements in areas like readiness levels with proper flying time, training, and maintenance; replacement of buildings and facilities that are falling apart; fixing family housing and restoring quality of life for the men and women of our Armed Forces -- all of this together would cost the American taxpayers many tens of billions of dollars. And that would do little with respect for the investment needed to transform the force for the future.

So, yes, $22.8 billion is a large increase by historical standards. And, it is a huge commitment of the American people's hard earned tax dollars. We need every cent of it, but it only begins to make a dent in the leftover problems we face today.

What the Budget Will and Won't Do

• This budget will put us on the path to recovery in some categories such as military pay, housing allowances, readiness training, and health care;

• It will start an improvement but leave us short of our goal in others such as defense-related science and technology, maintenance of weapons systems and reaching best standards for facilities replacement;

• And, in still other categories there will be continued shortfalls such as backlogs in property maintenance requirements.

Or, take an example where things are continuing to decline -- shipbuilding:

• The current standard based on the 1997 Quadrennial Defense Review is to maintain a steady state of 310 ships.

• Here is the reality: Under the 2001 enacted budget, DOD is building 6 ships a year at a cost of $11.5 billion -- which puts us on course to reduce the size of the U.S. Navy to a clearly unacceptable steady state of 230 ships by 2030.

• The 2002 budget, by providing for six ships at a cost of about $9.3 billion will keep the Navy on the same course toward a 230-ship steady-state Navy. We need to begin to turn this trend up.

• This puts us in a worse situation than in 2001 because the cost of reversing the decline and "catching up" to the 310 ship steady-state increases by $3.0 billion every year we put it off.

• To meet the target of 310 ships would require building at least 9 ships each year, at a cost of about $12 billion.

Or consider the aging of Navy aircraft:

• The desirable average age for Navy aircraft is pegged at11 years. Given the impact of continued low procurement, that average age has grown steadily to 18 years.

• Here is the reality: Today, with the current strategy, the Navy has a requirement for a total of 4,200 aircraft, which allows them maintain an average age of 18 years.

• To meet this steady-state requirement, the Navy needs 180 to 200 new aircraft per year at a cost of $11 billion.

• The 2001 budget amendment would provide for 97 aircraft at a cost of $8.4 billion.

• The 2002 budget would provide for 88 aircraft at a cost of $8.3 billion.

• Even at the rate of 122 aircraft a year, the cost of reversing the decline and "catching up" to the 4.200 plane steady-state increases by $4 billion every year we put off the decision to do so.

Facility repair and maintenance:

• The deferred maintenance for DOD facilities -- the cumulative amount that has not been funded from year to year -- currently stands at least $11 billion.

• The 2001 budget included $4.9 billion for facility maintenance.

• The 2002 amended budget would increase the facility maintenance budget by $0.9 billion for a total of $5.8 billion -- an increase of 18.4%.

• But this increase only funds facility maintenance at 89% of the requirement.

• At this rate, because of years of under funding, it would take 20 years to catch up and eliminate the cumulative deferred maintenance.

There are some of the difficulties facing the U.S. Armed Forces today. Despite a proposed increase in defense spending unmatched by any President since the mid 1980s, this budget still cannot not fix the problems we face as a result of a decade of a mismatch between requirements and appropriations.

It is an indication of the depth of the hole we are in today that a $22.8 billion increase in defense spending makes just a good start in meeting the shortfalls our Armed Forces are facing.

And that is just the tip of the iceberg. Today, we are proposing a $328.9 billion defense budget. But to keep the department going next year on a straight-line -- no improvements, just covering the costs of inflation and realistic budgeting - we will need a budget $347.2. billion. That is a $18.3 billion increase.

So where do we find money for the rest of our pressing needs? We simply must achieve cost savings.

Finding Cost Savings

We have an obligation to taxpayers to spend their money wisely. Today, we're not doing that. DOD:

• Has overhead that has grown to the point where it is estimated by some that as little as 14% of DOD manpower may be directly related to combat operations.

• Despite some 128 acquisition reform studies, DOD has an acquisition system that since 1975 has doubled the time it takes to produce a weapon system -- while the pace for new generations of technology has shortened from years to 18 months. This guarantees that DOD's newest weapons will be one or more technology generations old the day they are fielded, and DOD has processes and regulations so onerous that many commercial businesses developing needed military technologies simply refuse to do business with the Department.

But the Department needs greater freedom to manage so we can save the taxpayers money in areas such as:

• Rationalization and restructuring of DOD infrastructure. A 20-25% reduction in excess military bases and facilities could generate savings of several billion dollars annually. Legislation authorizing a new round of facilities rationalization will be transmitted later this year.

• Increasing the thresholds in Davis-Bacon. If we could change the threshold for contracts subject to Davis-Bacon wage requirements from $2,000 to $1,000,000, it would permit the Department to achieve savings of $190 million in FY 2002 alone. We need that money for shipbuilding, for modernizing our aircraft fleets and for modernization.

• Contracting out commissaries, housing and other services that are not core military competencies and that can be performed more efficiently in the private sector.

In FY 2002, the Department proposes a pilot program with the Army and Marine Corps to contract out certain commissaries, and another pilot program with the Navy to contract out refueling support including tanker aircraft.

Mr. Chairman, I have never seen an organization, in the private or public sector, that could not, by better management, operate at least 5% more efficiently if given the freedom to do so.

5% of the DOD budget is over $15 billion! With those savings, we could do many of the following:

• Increase ship procurement from six to nine ships a year, maintaining a steady state 310 ship Navy and protecting needed job at Navy shipyards $3 billion annually;

• Procure several hundred additional aircraft annually, rather than 189, to help meet reach the steady state requirements for Navy, Air Force, and Army aircraft $16 billion annually; $82 billion from FY03-07;

• Meet the target of a 67-year facility replacement rate $7 billion annually for 9 years;

• Fund 100% of base operations requirements $1.4 billion annually;

• Increase defense-related science and technology funding from 2.7% to 3% of the DOD budget $1.2 billion annually;

• Purchase needed UH-60 helicopters $50 million;

• Replenish precision munitions such as JSOW (Joint Stand Off Weapon), JDAM Joint Defense Attack Munitions) and ATACMS (Army Tactical Cruise Missile Systems) $200 million;

• Buy three additional C-17 aircraft $600 million, replenish Army trucks $100 million; Buy HMMWVs (High Mobility Multipurpose Wheeled Vehicles) $50 million; Bomber upgrades $730 million; purchase high-speed sealift $122 million.

But today there is no real incentive to save a nickel. To the contrary, the way the Department operates today, there are disincentives to saving money.

We need to ask ourselves: how should we be spending taxpayer dollars? Do we want to keep paying for excess infrastructure that provides no added value to our national security? Or we want to spend that money on new technologies that will help us extend peace and security into the new century? That is the choice before us.

Conclusion

We have a big task ahead. It took years of coasting and overuse to get us where we are today. We can't dig out in a year.

Following the Cold War, we reduced forces and claimed a well-deserved peace dividend for the American taxpayers. But in the mid-1990s, we began to overdraw on that account. We kept reducing our forces, despite the fact that op-tempo increased.

As a result, we have a 30% smaller force doing 165% more missions. In short, we have been asking the Armed Forces to do more and more, with fewer resources.

The President's budget proposes a large increase by any standard. It will allow us to make significant improvements to the readiness, morale and condition of our military.

Today, we have the security of future generations of Americans in our hands. We have a responsibility to get it right.

Because of the long procurement holiday of the 1990s, we have been left a poor hand. We must resolve to leave a better hand to our successors.

I am anxious to work with you to achieve that goal. I know full well it will take the best of all of us.