Previous IFPA-Fletcher Conferences

36th Annual IFPA-Fletcher Conference on
National Security and Policy
Nuclear and Non-Nuclear Forces in 21st-Century Deterrence: Implementing the New Triad

December 14-15, 2005
Grand Hyatt Washington Hotel
Washington, D.C.

Session 6 - Transformation and the New Triad: Industry Perspectives on Current, Projected, and Other Essential Requirements

Address by Mr. Steven Cortese, Vice President of Programs and Budgets, < Lockheed Martin Corporation – Washington Operations, and former Chief of Staff, Senate Appropriations Committee

Thank you. Good afternoon. What I’ll try to do in the next ten minutes or so is respond to the tasking that was presented for our segment of the panel, which is to speak to the industry perspective on transformation and how industry is approaching interacting with the government and serving as a partner and a full participant in how the Department of Defense and the Department of Energy looks to chart a way ahead. I’ll try to look at it in three aspects. First, the environment. What is it industry is walking into as it engages with the government and looks at what that market is going to look like?

Secondly, what are the current challenges that industry is facing, what is it industry needs to be doing to best serve the ability of the government to fulfill and execute this mission? And then finally looking forward to the projected, what I’ll call, opportunities. Because the bottom line for industry is just that, the bottom line. And there's got to be a marriage of the requirements that the government lays out and then in how industry can construct an effective business case to be able on a long-term basis to serve and sustain those very critical missions.

In looking at the current environment, my observation would be that the intellectual piece of transformation, of realignment of how government and the national security establishment, is going to look at this New Triad, is well laid out through the national security studies, the nuclear posture review, the quadrennial defense review that'll be presented by Secretary Rumsfeld in February. That roadmap is well established now, and there are no surprises, I don't think, coming that industry is looking to in how the government’s going to go execute that. The stability of the two termed administration has looked hard at these issues, I think lays out both for those federal agencies as well as industry, a pretty clear picture of the intensions and the direction the process needs to go.

What's perhaps been lagging in the execution of that vision has been how to align the technical capabilities, the systems, the munitions to be able to realize that. Because we’ve largely been working to sustain and apply capabilities that, as John pointed out at the outset, that were committed to and delivered through the late 1980s and early 1990s, and align these systems to meet these mission challenges by calling upon them to do tasks and capabilities they were not envisioning to undertake.

I think we’ve also largely been involved in a county mindset. That is, the numbers have come down, the sense of urgency about investing to renew these capabilities has lagged because of the overhang and the sense that as we’re drilling down, there's obviously a large well that can be tapped to be able to sustain the nation’s capabilities in this era. And I would argue that we’ve reached the end of that string and it’s become extremely critical that the resources be aligned in the budget to allow us not just to sustain those legacy capabilities which have been redirected to the new missions, but to genuinely be able to provide the commanders in the field, the national command authorities, a more robust, a more diverse tool set going into the 21st century.

The current dynamic I point to in an industry context is that industry needs to be able to demonstrate, deliver and deploy systems that are going to make real the vision that's been articulated by Secretary Rumsfeld and his team at the Pentagon. Be it a missile defense capabilities, be it in space launch and satellite capabilities, industries struggled in terms of delivering to the department the key systems which are going to enable this new nuclear environment to be founded, and we’re going to have to do better. And I think there's a lot of focus right now in the company I work for and our partners across industry to insure that that performance, to enable the billions that have been invested over the past five years in particular, to begin to produce real deployed capability in the hands of the war fighter and in the quiver of the national leaders who have to make the decisions on these programs.

Technology sustainment is a critical piece of this. There's anxiety in industry about the pace at which funds are flowing for S&T activities in the Department of Defense. It’s not just been flat, I would argue the buying power of the department’s S&T funds has actually declined, somewhat from competition from other major systems, but also somewhat from my former colleagues in the Congress directing those funds to priorities which are maybe not as robustly contributing to how the department seeks to insure that there is that refreshment of technology and folks capable in industry of tapping that technology to meet the department’s needs.

In looking forward at the opportunities and what industry’s going to need to do, to be there, to be able to support the requirements and the objectives, first and foremost, it’s about the net. And I think in industry there's tremendous recognition that all of these elements have to fit within an architecture and they're linked together, it’s going to be done in not just a joint environment, but in a totally integrated environment. And looking at it as peace parts, really both undermines the direction the leadership I think and the department and the executive branch seeks to go, but also in how a consensus can be built in Congress to get this job done the right way. That trying to do just one piece of the mission as a stand alone or through a stove pipe isn’t going to be sustainable, either in a technical context or a budgetary context. The pieces have to fit together, and industry thinking has to be aligned to insure these capabilities do mesh and can be brought together, especially in a coalition environment.

Political consensus, the Admiral spoke to some of the challenges related to that. Again, turning back to that bottom line outlook, towards how industry participates in this activity, political consensus is a poor piece of that because that enables industry as well as the department to take a long-term view. And by long, I mean more than the next quarter and more than the next year; five years, ten years, fifteen years. That what we’ve come to appreciate is that the systems that industry provides to support this mission, we’re asking those capabilities to endure for two or three decades. And with that kind of mind set not likely to change, and responsibly so, there has to be enough confidence in industry that between the executive branch and Congress, the gauntlet that these programs are asked to run is going to be sustainable and manageable. Fits and starts mean that we’re deriving very little real value out of the investments that are being made. There needs to be continuity, there needs to be that consensus so that as various program managers, the Secretary of Defense, as chairman and ranking members of key committees in the Congress come and go, there's a sense of commitment to that direction that will enable industry to make those long-term commitment of resources both in infrastructure capital as well as human capital to be able to serve and be a reliable partner in undertaking that mission.

The share of the budget that is allocated to support these systems, I would argue, has been under great pressure. Again, largely because of the sense that we’re in a draw down mode and have been in a mode of reducing that component of our national security apparatus in conjunction with other external events. What that new baseline is going to emerge to be and its sustainability is going to be critical for the military services, for OSD, for Department of Energy to be able to anticipate with confidence the deployment of systems out 10 to 15 years. But we're stretching capabilities far beyond any logical engineering basis, though with a tremendous degree of commitment by industry to be able to sustain those capabilities, sooner or later we're going to have to build new platforms, new launch vehicles, new munitions. And the three elements are going to have to come together, and that's been very hard to realize as we’ve seen the global war on terrorism become a dominant factor in the budget discussions of the Pentagon and Congress today.

The seat at the table that needs to be there for sustainment of this New Triad is going to be critical and voices to emerge who are going to carry that message, both within the executive branch and Congress, are going to be critical for industry then to be able to align itself to what those expectations and opportunities are going to be. I think that's going to be the most complicated piece, is drawing and insuring that the leaders in industry are able to go to Wall Street and the markets and the folks they have to turn to and are graded by to be able to keep that enterprise moving in the right direction, to be available, to have the inherent capabilities to perform this charge. They’ve got to be able to explain it in that context. It’d be great if they had the flexibility to just unilaterally say, “This is so important, we have to do it and that's the way it is.” It’s hard recognizing there are fiduciary responsibilities to take that approach without being able to point down the road in the 10 to 15 to 30 year life cycle that’s now the common conventional situation with the capabilities and the sustainment.

With that, I’d be very happy to respond to questions as well with the rest of the panel.
[Applause]