[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]



                         [H.A.S.C. No. 111-72]
 
                       COORDINATING REQUIREMENTS,

                        BUDGETS AND ACQUISITION:

                      HOW DOES IT AFFECT COSTS AND

                         ACQUISITION OUTCOMES?

                               __________

                                HEARING

                               BEFORE THE

                  PANEL ON DEFENSE ACQUISITION REFORM

                                 OF THE

                      COMMITTEE ON ARMED SERVICES

                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                              HEARING HELD

                              JUNE 3, 2009

                                     
[GRAPHIC] [TIFF OMITTED] TONGRESS.#13

                                     




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                  PANEL ON DEFENSE ACQUISITION REFORM

                  ROBERT ANDREWS, New Jersey, Chairman
JIM COOPER, Tennessee                K. MICHAEL CONAWAY, Texas
BRAD ELLSWORTH, Indiana              DUNCAN HUNTER, California
JOE SESTAK, Pennsylvania             MIKE COFFMAN, Colorado
                Andrew Hunter, Professional Staff Member
                 John Wason, Professional Staff Member
                     Alicia Haley, Staff Assistant


                            C O N T E N T S

                              ----------                              

                     CHRONOLOGICAL LIST OF HEARINGS
                                  2009

                                                                   Page

Hearing:

Wednesday, June 3, 2009, Coordinating Requirements, Budgets and 
  Acquisition: How Does It Affect Costs and Acquisition Outcomes?     1

Appendix:

Wednesday, June 3, 2009..........................................    27
                              ----------                              

                        WEDNESDAY, JUNE 3, 2009
COORDINATING REQUIREMENTS, BUDGETS AND ACQUISITION: HOW DOES IT AFFECT 
                    COSTS AND ACQUISITION OUTCOMES?
              STATEMENTS PRESENTED BY MEMBERS OF CONGRESS

Andrews, Hon. Robert, a Representative from New Jersey, Chairman, 
  Panel on Defense Acquisition Reform............................     1

                               WITNESSES

England, Hon. Gordon, Former Deputy Secretary of Defense, Former 
  Secretary of the Navy, and President, E6 Partners, LLC.........     4
Giambastiani, Adm. Edmund, USN (Retired), Former Vice Chairman of 
  the Joint Chiefs of Staff, and Chairman of the Board, Alenia, 
  North America..................................................     5
Kadish, Lt. Gen. Ron, USAF (Retired), Former Director, Missile 
  Defense Agency, Former Chairman, Defense Acquisition 
  Performance Assessment, and Vice President, Booz Allen Hamilton     8

                                APPENDIX

Prepared Statements:

    Andrews, Hon. Robert.........................................    31
    Coffman, Hon. Mike, a Representative from Colorado, Panel on 
      Defense Acquisition Reform.................................    33
    England, Hon. Gordon.........................................    36
    Giambastiani, Adm. Edmund....................................    46
    Kadish, Lt. Gen. Ron.........................................    56

Documents Submitted for the Record:

    The Defense Acquisition Performance Assessment Report, 
      January 2006...............................................    69

Witness Responses to Questions Asked During the Hearing:

    Mr. Andrews..................................................   227

Questions Submitted by Members Post Hearing:

    [There were no Questions submitted post hearing.]
COORDINATING REQUIREMENTS, BUDGETS AND ACQUISITION: HOW DOES IT AFFECT 
                    COSTS AND ACQUISITION OUTCOMES?

                              ----------                              

                  House of Representatives,
                       Committee on Armed Services,
                          Defense Acquisition Reform Panel,
                           Washington, DC, Wednesday, June 3, 2009.
    The panel met, pursuant to call, at 8:09 a.m., in room 
2212, Rayburn House Office Building, Hon. Robert Andrews 
(chairman of the panel) presiding.

OPENING STATEMENT OF HON. ROBERT ANDREWS, A REPRESENTATIVE FROM 
   NEW JERSEY, CHAIRMAN, PANEL ON DEFENSE ACQUISITION REFORM

    Mr. Andrews. Ladies and gentlemen, with the permission of 
the minority staff and their gracious cooperation, we are going 
to begin. I wanted to welcome the witnesses and the members of 
the public and the media to this morning's hearing, and I 
wanted to begin by thanking my colleagues on this panel for 
their diligent work and the efforts that led to the acquisition 
reform legislation signed by the President 12 days ago.
    This panel was empanelled a very brief period of time ago, 
and each of the members on both the Republican and Democratic 
side put in a significant amount of time in learning these 
issues and made a very valuable contribution to that effort 
which has now become law. I did want to express my appreciation 
to the staff as well as the colleagues on the panel for their 
hard work. Our work, as we see it, is only about 20 percent 
done in that statute. Maybe a little less than that. But 
obviously, we have a responsibility as the statute was 
implemented to understand whether it is working or not and to 
determine what that means. But by any definition, about 80 
percent of the procurement done by the Department of Defense 
(DOD) is not touched by the statute the President signed 12 
days ago because it dealt with the major weapons system 
exclusively, as this panel knows well, and as many members of 
our panel know very well as well that about 60 percent of the 
procurement done by the Department of Defense is services, not 
goods.
    And of the 40 percent that is hardware, major weapon 
systems only make up a part of that, maybe about a half of 
that. So there is a lot of work left to be done. The panel 
began with a series of questions and the first question that we 
started with was what set of metrics should exist or can exist 
to properly measure the difference between what we are paying 
for goods and services procured by the DOD and what the value 
of those goods and services is.
    The delta, if any, between what we are paying and what we 
are getting. And after a series of hearings on that, we are now 
ready to proceed to our next step which is to ask the next 
question, what hypotheses are out there as to why that 
difference exists? In other words, given the fact that the 
evidence is rather clear that there is a gap between what we 
pay and what we receive, what are the causes of that gap. Today 
is the first in a series of hearings that will be structured 
around the idea of a hypothesis as to what those causes are. 
This morning, the hypothesis would be this: The gap between 
what we pay and what we receive is, in some part, explainable 
by the absence of effective coordination among the requirements 
process, the procurement process and the budgeting process. 
That when one looks at those three significant initiatives that 
must be accomplished in the Department of Defense, there is 
either little or no coordination on too many occasions.
    Now there are exceptions to that rule. There have been many 
instances where there has been very effective coordination. I 
think the bulk of the evidence is that that is more a function 
of the talents and commitment of the individuals that are 
involved, not necessarily the administrative structure within 
which they are working. One of the corollary hypotheses to this 
is maybe it doesn't matter much what the administrative 
structure is. It is entirely dependent upon the skills and 
personalities of the people involved and that there are very 
finite limits as to what we can do with manipulating an 
administrative structure. That may well be the case.
    But the general purpose of this morning's hearing is to 
hear from three incredibly accomplished individuals with deep 
experience and broad knowledge in this area to address this 
hypothesis to the extent there is a lack of coordination among 
the requirement setting process, the procurement process and 
the budgeting process to what extent is this the cause we have 
identified as the gap between what we pay and what we get. 
After this morning's hearing we will proceed with a lot of 
other hypotheses that people have suggested over the years and 
try to evaluate those and come to some understanding as to what 
combination of hypotheses make the most sense in meeting our 
ultimate objective, which is to come up with a series of 
legislative recommendations to try to make the system work 
better. Pleased to be joined by our friend from Colorado, Mr. 
Coffman, and I realize he just dashed in. But I would give him 
the opportunity to make an opening statement if he so desires.
    [The prepared statement of Mr. Andrews can be found in the 
Appendix on page 30.]
    Mr. Coffman. Thank you, Mr. Chairman. I will submit my 
statement for the record after the meeting. But I appreciate 
you all for coming here and look forward to your testimony.
    [The prepared statement of Mr. Coffman can be found in the 
Appendix on page 32.]
    Mr. Andrews. Thank you very much, Mr. Coffman. And without 
objection, opening statements from any other member of the 
panel will be included in the record should they choose to 
submit them. We appreciate the indulgence of the witnesses in 
waiting and arriving. I am going to give very brief 
biographical introductions, because each of you truly is a 
person who needs no introduction around here. We mean that as a 
compliment.
    But very briefly, Mr. Gordon England is now President of E6 
Partners, LLC, a firm specializing in international business. 
As we well know, he has previously served as the 29th Deputy 
Secretary of Defense. He also served as the 72nd and 73rd 
Secretary of the Navy and the first Deputy Secretary of the 
Department of Homeland Security. He is a native of Baltimore, 
graduated from the University of Maryland in 1961, earned his 
masters in business administration from the M.J. Neeley School 
of Business at the Texas Christian University and has been a 
leader in civic and charitable organizations as well as his 
exemplary service to our country. Welcome, Secretary England. 
Nice to have you back with us.
    Secretary England. Chairman, thank you.
    Mr. Andrews. The Admiral is next. The bio is here. Admiral 
Edmund Giambastiani. Is that correct, Admiral?
    Admiral Giambastiani. Yes, sir.
    Mr. Andrews. I am from New Jersey. So I get a lot of 
practice. It is a beautiful Italian name. He joined Alenia 
North America, Inc., in January of 2008 as Chairman of the 
Board of Directors. In addition, he serves as Director of SRA 
International, Inc., Monster Worldwide, Inc., The Atlantic 
Council of the United States, QinetiQ Group in the United 
Kingdom. A career nuclear submarine officer, the Admiral 
retired from active duty on October 1, 2007. In his last 
assignment, he served as the Nation's 7th Vice Chairman of the 
Joint Chiefs of Staff and its second highest ranking military 
officer. He is a native of Canastota, New York. And he 
graduated from the U.S. Naval Academy in 1970 with leadership 
distinction. Welcome, Admiral. Thank you for your service.
    Admiral Giambastiani. Thank you, chairman.
    Mr. Andrews. And Lieutenant General Ronald Kadish is 
presently the Vice President and the partner in the aerospace 
marketing group for Booz Allen Hamilton, Inc. He joined that 
firm on February 15, 2005. He has distinguished himself there 
as panel Chairman of the Defense Acquisition Performance 
Assessment, examining the strengths and deficiencies of the 
current defense acquisition process. He has worked with us for 
a very long time on this committee as the Director of the 
Missile Defense Agency in the Office of the Secretary of 
Defense. As director, General Kadish was the acquisition 
executive for all ballistic missile defense systems and 
programs. He entered the Air Force in 1970 after graduating 
from the Reserve Officers' Training Corps (ROTC) program at St. 
Joseph's University in Philadelphia. We had another St. Joe's 
witness earlier. I said the hawk will never die to those 
witnesses, right, General?
    It is great to have you with us, gentlemen. We will start 
with Secretary England. You know the rules well, that we ask 
people to summarize their oral testimony in about--their 
written testimony rather in about five minutes. Your written 
statements in their entirety will be made a part of the record. 
We try to maximize the amount of question time for the members 
so we can get the benefit of your excellent work. So, Mr. 
Secretary, you are on.

 STATEMENT OF HON. GORDON ENGLAND, FORMER DEPUTY SECRETARY OF 
   DEFENSE, FORMER SECRETARY OF THE NAVY, AND PRESIDENT, E6 
                         PARTNERS, LLC

    Secretary England. So, first, Mr. Chairman, thanks for the 
opportunity to come by again. First of all, I applaud you. You 
have to be pretty brave to enter this arena as you know. In my 
commercial days, I ran several Defense Science Board studies on 
acquisition reform and probably served on another dozen over my 
career. When I became the deputy, I had a group, in fact, 
General Kadish was one of the leaders of that group to look at 
the 123, I believe, prior formal studies on acquisition reform 
and that didn't include all the work by think tanks and 
everybody else in the Government Accountability Office (GAO) 
and the Congress and so this is not new ground being plowed. 
But that would tend to indicate that this is an extraordinarily 
complex topic that you are about. And I would make just a 
couple of recommendations and observations in terms of how you 
might improve this process. Obviously requirements is key. I am 
sure Admiral Giambastiani will have something to say about that 
because he actually ran the organization in terms of 
requirements.
    I do believe there are some organizational changes that 
were put in the Department frankly when I was there that are 
hopefully beneficial to help tie together the requirements, the 
budgeting, the acquisition, in fact, the operational end of 
this business. We now have processes in place. I hope they are 
still in place, specifically called the DAWG, which is the 
Deputy's Advisory Working Group, which is all the senior 
leadership, four-stars and civilian leadership met every week 
several times a week, and literally went over every single 
program, what the budget was, what was the performance, what 
was the need, what were the requirements so we integrated this 
across the department because programs are no longer operated 
as individual programs.
    They are now overarching capabilities. So then we also put 
processes together to look across all of the programs in terms 
of how did they all integrate, because frankly they all come 
together at some point in time. So they have to be 
synchronized. Everything has to be synchronized so that it all 
works together when it comes together in terms of being fielded 
because all of this is integrated some very high level and not 
individual programs.
    So I think some steps have been made to address that, but 
this is a complex issue and that is one process that was tried 
as a way to get better visibility and better ways of 
controlling. In my statement, I made a few recommendations. 
First of all, I will tell you, the system is very complex. 
Counterintuitively, that means you want to give managers more 
flexibility. The more complex the system, the more flexibility 
you need, managers need. The trend is always the other way. 
That is it gets more complex, we add layers of bureaucracy and 
regulation and control and that makes it almost impossible to 
run very complex programs. So the system today is way over-
burdened. It is over-burdened by the Department, it is over-
burdened by the Congress. As it becomes a more complex system, 
we need to simplify it, otherwise managers won't be able to 
operate.
    But the other comment I will make is I think multi-years, 
we have the wrong approach on multi-year contracts. Stability 
is what counts in these programs, predictability in programs. 
Today we have multi-years based on savings. But frankly, in my 
view, that is the wrong criteria. Multi-year programs almost 
always hit their targets year after year because there is a 
long-term commitment of money to the program, people know what 
the schedule is, they know what the requirements are, they can 
rely on future years, companies can invest. So we look at 
saving money. My own view is we should have more and more 
multi-years on the basis of providing stability of programs so 
cost doesn't grow. I mean, one approach is to look at cost 
savings. The other approach is how do you put a structure in 
place so that costs do not grow in the future. So I would turn 
that process around.
    My last comment would be--you mentioned metrics. I think 
you need to decide what your objective is here. Not all things 
are, ``going to come out with a perfect answer,'' just like our 
international relations. You have to set what the objective is. 
This is an extraordinarily complex process with many competing 
interests and cross-currents that go in every day and every 
year in industry, in government and the DOD and the military. 
So you have to decide what is the plateau you are trying to 
achieve in this. Because otherwise, I think if we are looking 
to end up with this sort of perfect system, perfect meaning 
manageable like--I almost said a car company, but that is 
probably a bad example--but manageable like a commercial 
product. You know, where we put out regular products on a 
repetitive basis. It is never going to achieve that level of 
performance because that is not the nature of what this 
business is about.
    So a few comments. My statement hopefully is clear in terms 
of some observations and recommendations. But I would like to 
engage in a discussion with the members.
    [The prepared statement of Secretary England can be found 
in the Appendix on page 35.]
    Mr. Andrews. Thank you, Mr. Secretary. And we have had a 
chance to read your testimony prior to this. We appreciate it 
very much. And I appreciate you giving us a chance to expand 
the question time, too. Admiral, welcome back. It is great to 
have you with us again.

 STATEMENT OF ADM. EDMUND GIAMBASTIANI, USN (RETIRED), FORMER 
VICE CHAIRMAN OF THE JOINT CHIEFS OF STAFF, AND CHAIRMAN OF THE 
                  BOARD, ALENIA, NORTH AMERICA

    Admiral Giambastiani. Thank you, Chairman. And thanks to 
you and all the members of the committee for inviting not only 
me, but obviously this group to participate this morning in 
this incredibly important hearing. I might just mention that 
the fact that you have focused on, if you will, requirements, 
budgets and acquisition is gratifying to me because recently, 
over the last year, I have been helping the Secretary of the 
Navy out in his advisory panel and my mantra frankly for a year 
has been requirements, budgets and acquisition. But I would 
tell you it has been integration of those as opposed to just 
coordination of them. Coordination is that level that is very 
helpful, but if you can integrate these and bring them to a 
higher level, frankly, I found you are much more successful in 
the long run. It also feels like old times again to be here 
with these three individuals. Gordon didn't mention in, but--
and Ron may, but I will pre-empt here and just tell you the 
last time the three of us appeared together in a hearing on 
this very subject was September of 2005 before the Senate Armed 
Services Committee.
    We also had Ken Krieg at the time who was the new Under 
Secretary. We were all--Gordon and I were new in our roles as 
Ken Krieg was and Ron was working on that DAPA report, the 
Defense Acquisition Performance Assessment. So it is old times 
here this morning.
    Let me make a few points here and you may hear a little bit 
of repetition on the stability front on what Gordon talked 
about. But first of all, as I said, I am very pleased that you 
are covering this. A fundamental premise in my view to our 
success is based on well informed risk management, a very 
important thing, well-informed risk management. And I call the 
requirements, if you will, the budget and acquisition portions 
of this, the three legs of the stool. And I will refer to these 
three legs and the integration of them repeatedly. But I would 
emphasize with the three legs--there is three things that I 
have always found important across all of them and that is 
affordability, stability and simplicity. And let me just talk 
about requirements for a couple of moments, and again, I will 
summarize what I have got in my statement.
    I have participated in these requirements generations, 
frankly, since I was in my first commanding officer role in the 
early 1980s, and then onwards throughout successive commands, 
successive tours in the Pentagon and then in joint and allied 
positions. In my opinion, at least 50 percent of getting a 
program right is establishing realistic, sound, practical, 
simple requirements up front and then, of course, sticking with 
them.
    Affordability, stability and simplicity, those three 
factors are really important and executable set of requirements 
for any procurement in my view. Let me talk just for a moment 
on the affordability front. All too often, this word is 
forgotten in the course of talking about this, the 
affordability piece right up front. We need to give military 
officers who are tasked with defining requirements more and 
better insights into the cost drivers, the cost drivers in the 
requirements they are defining.
    Now, I just might mention this. I uniquely had a very good 
relationship here with this gentleman next to me. He was a 
wonderful man to work with, it is the Deputy Secretary. And I 
might mention three processes that I spent a lot of time 
working. And the first one he mentioned was the Deputy's 
Advisory Working Group. What he didn't tell you is that he, as 
the Deputy Secretary, went so far as to name me as the co-chair 
of the Deputy's Advisory Working Group. This was very 
important, once again, to bring the military side of the 
equation and the civilian side to produce capabilities for our 
service personnel together.
    He did that early on and it was very important. So that 
helped me work in the concept, in the resource side as a co-
chair of this group. Very important. The second thing, 
obviously, I was the chairman of the Joint Requirements 
Oversight Council (JROC) which sets military requirements. But 
thirdly, and just as important, I served as the co-chair of the 
Defense Acquisition Board. So those three things allowed me as 
a senior military officer to work in all three legs of the 
stool, if you will, in a line way. Very important.
    In the recommendations I have made in panels to date--for 
example, in the Secretary of Defense (SECDEF) advisory panel 
with the Business Executives for National Security and the rest 
is to make sure that we, in fact, take senior military leaders 
and allow them to be participating in a line functional way in 
all three of these legs, so that I think it will help them make 
better decisions, at least in my perspective, as a military 
officer. Cost-driver-analysis, as I said, in these is very 
important. And I can elaborate on that, and clearly my 
statement does. But I borrowed most of the cost-driver-analysis 
techniques from reviews I learned early on in the acquisition 
process as a co-chairman of the Defense Acquisition Board, we 
were looking at the Joint Tactical Radio System, JTRS, we were 
looking at the National Polar-orbiting Operational 
Environmental Satellite System. And frankly, we then introduced 
and made it a requirement through a chairman instruction that 
all of the services had to bring in cost drivers. Very 
important.
    On the stability front, it should be no news to anyone 
sitting in this hearing, just as Gordon England has said, is 
that setting unrealistic requirements during program definition 
and subsequent requirements creeps are major causes of failing 
programs. And let me just reiterate one important point here. I 
believe that delivering 80 to 90 percent of a solution on time 
with a life cycle maintenance plan allowing for further growth 
is far superior to trying to go after a 100 or 120 percent 
solution. Stabilizing requirements is tough. We all see how a 
program could be better if we could incorporate the latest 
technology or some additional capacity. Which leads me to my 
last point of simplicity. We have done best, in my view, as I 
said, by trying to be simple. I have given you a series of 
examples in the written testimony. F-16, the series of the F-
16, the F/A-18 Super Hornet E/F/G, Los Angeles-class, Arleigh 
Burke-class, Virginia-class submarine. These have all been 
successful programs and are successful programs because we kept 
simplicity, if you will, affordability, we kept that block 
approach as we provided these capabilities. Funding stability 
is incredibly important.
    Gordon mentioned greater use of multi-year buys. I cannot 
over-emphasize how this takes risk out of the industrial side 
of the equation and takes risk out on the defense side. The 
ability to plan ahead, the ability to invest in Research and 
Development (R&D), the ability to invest in installation and 
the rest is incredibly important. All those programs I cited 
before in general had some type of multi-year or risk 
management that really made them incredibly effective.
    Lastly, budgets have no memories. It is something an old 
Pentagon saying I learned very early on. In order to add memory 
to the process of procurement, if you will, writ large across 
our government, multi-year buys are important risk reduction 
techniques to inject a memory into the budget.
    One last point I will just make, and it is very important. 
Again, I borrowed these from the acquisition side and they are 
the introduction of technology readiness levels and 
manufacturing readiness levels into the requirements generation 
piece where you take these and lift them, if you will, from the 
acquisition side. You bring them into the requirements 
generation so you are not trying to shoot for the moon, you are 
keeping it simple and reduce the risk on a program to make it, 
if you will, more doable and make it more successful. The 
healthy conversation to do all of this stuff between industry, 
the civilian and military sides and with Congress is incredibly 
important.
    Thank you again for allowing me to introduce my written 
testimony, chairman, and the members of the committee. 
Recommendations regarding this three-legged stool if I could 
leave you with one point, those three words, affordability, 
stability and simplicity. Thank you.
    Mr. Andrews. Thank you, Admiral very much.
    [The prepared statement of Admiral Giambastiani can be 
found in the Appendix on page 45.]
    Mr. Andrews. Again, we have had the chance to review your 
written testimony and look forward to questions. General 
Kadish, welcome back. It is good to have you with us.

   STATEMENT OF LT. GEN. RON KADISH, USAF (RETIRED), FORMER 
  DIRECTOR, MISSILE DEFENSE AGENCY, FORMER CHAIRMAN, DEFENSE 
 ACQUISITION PERFORMANCE ASSESSMENT, AND VICE PRESIDENT, BOOZ 
                         ALLEN HAMILTON

    General Kadish. It is great to be back, Mr. Chairman. I 
spent a lot of time in this system and, quite frankly, have 
been a victim of it at certain times. So I have a perspective 
and Secretary England allowed me to spend some time on that 
commission called DAPA, Defense Acquisition Performance 
Assessment Group, to think about this even more. And my 
statement has a lot of what the DAPA report came up with it is 
not so much interesting for this group for the specific 
recommendations as it is to describe the problem a little bit 
more in detail and how we saw the issues that both Secretary 
England and Admiral Giambastiani talked about. But there is 
just a couple of points I would like to re-emphasize and I 
would also recommend that if you would allow to have the DAPA 
report in your record.
    [The information referred to can be found in the Appendix 
on page 67.]
    Mr. Andrews. Without objection.
    General Kadish. The first issue is it has never really been 
clear to me when we looked at the system what the criteria for 
success is and when we were dissatisfied with it. We talked a 
little bit about the metrics and the value equation and that is 
certainly an important aspect. But as you look in the history 
where all these studies have been done, in fact, you can go 
probably to the Civil War and earlier on some of these very 
same issues, the fact of the matter might be that we need to 
adjust our expectations a little bit in a sense of the outcomes 
of this.
    All of the hardware, if not most of the hardware and the 
equipment we have put out of this system over many years have 
given us a technological edge. So we shouldn't forget that. 
There are thousands of people working out there every day to 
make this happen and doing a very good job. Now, we see some of 
the disasters, but I think that is more a function of the 
difficulty of the job. These systems that we are talking about 
and even the services, under very difficult circumstances in a 
lot of cases, are difficult tasks, especially in a wartime 
environment and in a peacetime environment when we faced the 
Cold War, we produced some of the most technologically 
sophisticated elements that the world has ever seen.
    And the newest examples, you could go right down the list 
from Unmanned Aerial Vehicles (UAVs) to some of the robotics 
that we are doing today and especially in medical fields. It is 
phenomenal what we have been able to accomplish. So we 
shouldn't lose sight of that. But in the process of trying to 
improve this system over many years, we have made it almost 
unintelligibly complex to understand. And that complexity 
drives a lot of what--the problems we see today. And I would 
challenge anybody to, in one day's study, try to understand how 
we actually do business in this area. And I think you might be 
experiencing that yourselves in the sense that even people who 
have spent careers like myself here, I still marvel at some of 
the things that we have in our rule book that we just don't 
necessarily understand.
    So that complexity is an albatross around our expectations 
for success. And it gets translated into lengthy schedules, 
time that is out of control and that all translates into huge 
cost expectations that are not met. However, the system is, if 
you look at it, could be simply described. Requirements, budget 
and acquisition and they need to somehow work together and on 
the charts it looks pretty good. In addition to complexity, 
we--because of the way we operate independent in each one of 
those processes, we introduce instability and that is financial 
instability--I don't think I have ever been if a program where 
my budget didn't change every 12 to 18 months.
    It is remarkable that the people we have out there doing 
this every day can make this work still under the systems that 
we impose on ourselves. And all for good reason. There are a 
lot of heroes out there really making this work and I would 
almost say in spite of the system. And we tend to, especially 
at our level with Admiral Giambastiani and Secretary England, 
work very hard at the top level and we could very easily see 
that these things are solvable in the sense of making 
requirements more simple.
    And I will just take one example. We came up with a system 
of key performance parameters not too many years ago and the 
idea was very simple. If we could leave three to four or maybe 
five key performance parameters and specify a system, we would 
be satisfied with that system. And if we didn't, we would have 
it come back and reevaluate whether we wanted that system. 
Well, now, we have programs with 14, 15, 16 key performance 
parameters, and each one of those key performance parameters 
drives specifications in a tree like manner down to 2,500 to 
3,000, to 10,000 specific specification requirements you have 
got to make.
    So the decisions that look very simple, coherent and 
practical at the top of the pyramid get implemented through 
this system and through a following of all the rules into very 
complex and difficult tasks. The last point I would make in 
summarizing my testimony is that there is a set of criteria--
and some questions you should challenge this hypothesis with 
any procurement improvement idea that might be postulated.
    And the first one would be: Will it reduce complexity? And 
going back to the Admiral's idea of simplicity here. If it 
increases the complexity of the system and it adds to the rule 
book without something coming out, it ought to be challenged. 
And other layers of oversight and management don't necessarily 
improve the process. Second, will it be more--will it add 
stability to the programs at all levels? The big ones we all 
understand, but the smaller ones out there that people are 
operating at the same--under the same rule book and having the 
same challenges. So the stability idea where you can get a 
decision and operate under it and only have a problem when you 
cannot perform because the technology is too challenging or you 
run into an obstacle and not the system coming back and saying 
you are not spending your money fast enough so we have to take 
half of it away for next year.
    Okay. And the third one, and I think the final point I will 
make is that we too often substitute costs for the real issue 
here and that issue is time. The time value of the things that 
we do is ignored in a lot of cases in decision making. 
Schedules seem to be more of an afterthought and a desire 
rather than a sense of urgency in the process. And time--and I 
am talking about time to make decisions, to do budgets, as well 
as to write specifications and do the drawings and those types 
of things that make these systems work and perform the 
services. The time value of this capability to the warfighter, 
especially in wartime is incredibly important. And it is 
similar to the time value of money concept, the dollar today is 
worth more than the dollar tomorrow.
    That is what I have been taught in the economics books. And 
the same way with the time value of these systems and services. 
Done today, they are cheaper, better than if we wait years. 
Some technology requires more time. But we ought to focus more 
on the time required to make the decisions and implement them 
and hold people accountable for that and we will reduce the 
costs.
    And finally, this idea that I don't think process is going 
to fix this problem. When we add process and improvements, we 
tend to really add things and not take things away. And under 
that approach, I think we will just increase complexity.
    So I would be--I would advise a lot of caution in adding 
things without asking the question what are you going to take 
away to make these processes more integrated and less complex. 
And at the end of the day, it is the people doing the job, 
making more right decisions than wrong decisions that are going 
to produce the outcome here. And it really does--it might 
really come down to the fact that we can make the 
administrative systems as good as we can make them in human 
terms, but it is going to come down to people doing the job 
every day. And we have got to select them right and we have got 
to support them and make them perform and hold them 
accountable. Thank you, Mr. Chairman.
    [The prepared statement of General Kadish can be found in 
the Appendix on page 55.]
    Mr. Andrews. Thank you, General. I thank the panelists for 
excellent presentations. We will begin with the question time. 
I think it is fair to say that we have heard a consensus that 
lack of coordination that we see in the requirements and 
procurement and budget process is a result of too many rules 
and too many attempts to fix the problem, which creates a sort 
of archeological dig where there is one solution piled on top 
of another, piled on top of another, piled on top of another 
that worsens the problem. And that these add--to use the 
General's criteria--they add complexity, they reduce stability 
and they extend time, therefore adding to costs and adding to 
complexity. Which starts the whole downward spiral all over.
    I think I also hear a consensus that an expansion of multi-
year budgeting and therefore multi-year contracting authority 
would be one way to address this problem. Because if you do a 
multi-year contract, sort of by definition, assuming you have 
got a cleaned up requirements process that goes more toward 
that 80 percent solution, if you go the multi-year contracting, 
almost by definition, the procurement and budgeting steps are 
integrated because of the way you think about a multi-year 
budget or contract.
    Let me play devil's advocate for a moment. Isn't this 
saying that systems that have produced dramatic cost overruns 
are now going to buy more of it because we are going to do 
three or four years' worth of budgeting instead of one and buy 
three or four years' worth of mistakes instead of one? Doesn't 
that take away the oversight function of the legislative branch 
in a way that would be deleterious?
    Secretary England. I guess, Mr. Chairman, I would say you 
are obviously not going to put everything into a multi-year. 
But right now we do very few programs and not just production. 
I would actually look at development programs because when you 
go to that multi-year, you basically freeze the requirements, 
you know, what the dollars are, not only this year, but in out-
years, which you never know, because every program, other than 
a multi-year is funded yearly. So you actually never know your 
out-year funding. The contractor doesn't know the out-year 
funding. Everybody gets a bite at this apple, in the services, 
in the building, in the Congress. Right? So you still have to 
be selective at this.
    Mr. Andrews. What would be the criteria for that selection? 
Which projects and systems would fall into the multi-year 
basket and which wouldn't?
    Secretary England. First, I say ones that are critical and 
national importance I would always look to put in that basket 
because I believe those----
    Mr. Andrews. I don't say this to be facetious, but have you 
ever heard somebody come in here and testify that something is 
not of critical national importance? I don't mean to be 
whimsical----
    Secretary England. You are right. So obviously judgment 
applies--and I am not sure that there is a formula for that 
judgment. My only comment would be the formula in the past has 
been a program that is reasonably stable and that you can 
predict basically 10 or 15 percent cost savings. And I would 
say that any program you can predict that if you actually want 
to because the baseline is always unknown some extent. So I am 
not sure it is a reasonable baseline anyway. And I would just 
suggest when you look at the multi-years, don't look at it in 
terms of savings, look at it in terms of stability achieved so 
that you don't get the cost----
    Mr. Andrews. Productivity.
    Secretary England. Well, predictability. The budgets will 
be in the out-years. Contractors can invest in improvements 
because they know there is business in the out-years. I mean, 
there is incentives in this system to perform better as opposed 
to a year-by-year type process.
    Mr. Andrews. As a follow-on to that to either of the--any 
of the panelists, if the taxpayers are going to make a multi-
year budget and contract commitment, should there then be more 
rigid standards from the contractors to have fewer overruns? In 
other words, if we are giving you three or four years of 
stability in a contract, should change orders and cost overruns 
in the contract be much, much more rare as a quid pro quo?
    Secretary England. There are fixed price contracts. Multi-
years are fixed price contracts. So we negotiate a fixed price 
contract, and therefore every change has to go through a formal 
change process and you immediately get control of changes and 
contractors with the overrun, that is on them.
    Mr. Andrews. I am aware of that, but of course, the fixed 
price very often turns out to be a fictional aspiration, rather 
than a legal reality. Shouldn't it be much more difficult to 
get ahead of that fixed price contract? If we do a multi-year, 
shouldn't there be a much, much heavier burden on the vendor to 
come in and say you have got to go beyond the target that was 
originally in the contract?
    General Kadish. Can I----
    Mr. Andrews. Yes.
    General Kadish. I would like to make sure I understand 
exactly what we are talking about in terms of the multi-year 
because I think what Secretary England at least what I heard 
was that he is introducing the concept for stability and maybe 
for programs that we haven't done multi-years before. And your 
question is how do you pick these and what value would you get 
out of them. And I guess the way--one of the things that we 
have a problem with in our system today is defining programs 
and when they are a program. Okay? And it leads to a lot of 
misunderstanding. Multi-years are most effective and have been 
designed over the years for cost savings for programs that are 
in deep production. They are actually putting hardware out, 
whether it is rifles, or F-22s.
    Mr. Andrews. Would you start sooner in the process than 
that?
    General Kadish. Those have been very effective if you go 
back and look at them and C-17 and--there is a big track. Let 
us postulate moving multi-years sooner in the development 
context. If we had major programs that had mature technologies 
but we are pushing a mature technology and not a new technology 
and I will give you an example. We have been building airplanes 
for 100 years. I would say that is my maturing technology. Now, 
parts of those airplanes are really cutting edge, but overall, 
airplanes are maturing technology. So if we had to postulate 
that a development program--I hesitate to bring it up--but for 
an airlift tanker, could be a multi-year development program if 
the parameters for that were set properly.
    On the other hand, in something like missile defense where 
the technology is disruptive, new and challenging, it would be 
very hard for me as a program manager to come to you and say 
give me a multi-year and I will deliver this----
    Mr. Andrews. It has gotten a lot harder in the last couple 
of week, hasn't it?
    General Kadish. On those situations, level the budgets 
where you have the insight and the oversight to see what is 
going on, where you don't have to--one of the difficulties we 
have in our system today is that the system demands in all 
three of those areas that the day you charter the program, you 
have to put a cost estimate down on a piece of paper, even if 
you are going to deliver it 20 years from now or 15 or 10----
    Mr. Andrews. I appreciate that. Admiral, do you want to 
jump in? I am going to stop so Mr. Coff--one point I want to 
just interject--I would ask the staff to take a look at his 
data. I am sure the GAO or someone has this. I am curious as to 
the percentage of the cost overruns identified by the GAO which 
I know are controversial, Mr. Secretary. But if you start from 
that starting point, the percentage of those cost overruns that 
flowed from multi-year versus non-multi-year contracts. It 
would be interesting to see if there is any significant 
difference. Admiral?
    Admiral Giambastiani. If I could add just a couple of 
points to what Secretary England and General Kadish have 
brought up. Number one, dealing in multi-years for programs 
that have mature technologies, stable requirements and the rest 
are incredibly important. An example of these would be aircraft 
programs. For example, when I was a resource director for the 
Navy back in 2000, we went after multi-years to procure the 
Super Hornet. We wanted to stabilize production. We had, if you 
will, an aircraft that was fairly mature in its production and 
we could stabilize it and move on. We do these things with 
destroyers. We do them with submarines. Areas where we have 
again stable requirements, we are not making massive changes 
and we can see the benefits of the risk reduction methods that 
we have used to go into them.
    Requirements for programs that General Kadish talked about, 
for example, on missile defense where you are dealing in very 
high-leverage, high-risk, high-payoff technologies but you just 
don't know if they are going to be successful or not, it is 
incredibly difficult to go after a multi-year and I am the type 
of person that would not suggest to you to do that. But if the 
system is ruthless with, if you will, low-risk technologies and 
the rest and you are ruthless in not allowing requirements to 
change willy-nilly and you produce these things, you can do 
upgrades in the future life of that platform, for example, or 
vehicle or whatever you are building generally so that you can 
put upgrades in later and later. And we have got just a bevy of 
programs like this that have been incredibly successful that 
have been multi-year buys. However, a multi-year by itself is 
not going to be successful if you don't have the other 
integrated components with it.
    Mr. Andrews. Did you agree that integration is easier in a 
multi-year context, though?
    Admiral Giambastiani. It probably is, again, if you have 
stability and simplicity in those three components that you 
bring into the program.
    Mr. Andrews. Mr. Coffman is recognized.
    Mr. Coffman. Thank you, Mr. Chairman. Just a question about 
changes in requirements in terms of being a cost driver. 
Where--are those primarily because of the fact that in your 
view, that it is an immature technology that is being developed 
or is it from the military side of the House that maybe there 
is a changing environment tactically in terms of threat 
scenarios on a given weapon system? So there are changes in 
requirements there. Where do you think the changes primarily 
come from?
    Admiral Giambastiani. There are a variety of ways to look 
at requirements and let me give you an example of this. I am 
going to use a real life example. Again, I will just pick the 
Super Hornet. The Navy had just come out of a very, very bad 
experience with the A-12 aircraft being cancelled. It was very 
unsuccessful, it was a high-risk venture and there were a whole 
variety of things on all of the reasons on why a program fails. 
Many within the Naval aviation and Navy communities wanted to 
build a more cutting-edge aircraft. But what happened is the 
Navy got together and brought forward a fighter bomber, if you 
will, based on some pretty proven technologies without over-
the-top requirements. In other words, we didn't double or 
triple the range.
    We didn't try to do things that were just so cutting edge 
that it would be very high-risk and difficult to do. So 
therefore you produced a good, solid aircraft, if you will, 
based on solid requirements. If you try to extend yourself in 
very high-risk ways and in different technologies, you are not 
going to be able to produce a program, an aircraft, a ship or 
whatever you are doing in an effective way because you are 
working in these high-technology, high-risk areas that you 
simply can't predict. That is the reason why you want to go 
after, if you will, more mature technologies for these long-
term programs.
    You do need to do programs that push the envelope, like 
missile defense and others, but they are very different from 
the types that we are talking about that could potentially give 
you multi-years or if you will, stability.
    General Kadish. I would like to add to that and take you 
down a level because I think my experience is where we get into 
trouble with requirements is not at the deliberative level that 
the Admiral is talking about. There are sometimes we push a 
range, payloads or something like that as a peak performance 
priority that really gets in trouble. There are very few of 
those and they are remarkably stable because people have taken 
a deliberative approach.
    Where I see we get in trouble is that when we start 
translating those top level ideas or requirements into actual 
specifications, our culture is and it is very much encouraged 
that the people who are managing the program, go to the people 
who will use this equipment or idea and say we could do it this 
way or we could do it that way, which would you prefer? Or more 
likely, they start looking at what we are doing and they say we 
would rather do it this way. That is where you get the 
proliferation of changes where something seemingly easy to do 
in the first week of the design turns into a disaster as you 
try to build it. And I can't give you a lot of examples of this 
because it gets in the minutiae here to make it explainable. 
But the process is geared to work with the future user and that 
interaction at the lower levels tend to make the problem a lot 
harder, although it is necessary at the same time. I am not 
saying we shouldn't do that, but that is where we get into 
trouble.
    Admiral Giambastiani. Let me just add to this because I 
think it is very important, I had a section originally in my--
but it got into the very technical minutiae level. But let me 
just quickly tell you. Requirements are key performance 
parameters that the JROC approves and controls day to day. As 
General Kadish said, typically if we do a program right, they 
don't change much and generally we are in pretty good shape 
with them unless we proliferate the rest. The requirements he 
is talking about are the next level down and the level below 
them. They are called key system attributes and other things 
below this. What happens with these requirements is the JROC 
for example, assigns responsibility to the Air Force or some 
other agency or service to control those. And I said it in my 
testimony that requirements people have to be ruthless on 
controlling these. And the reason why you have to be ruthless 
on controlling them is because everybody comes up with up great 
ideas and this is where change orders come from. They don't 
always come from that. Sometimes there is a technical reason 
why you really have to do it to make it work. But you try to 
avoid all of these other change orders based on I have got a 
really good idea and I want to insert this because I know it 
will work better or we have been building this for a while and 
I really think I have a better way to do it. This is--we found 
in studies and you can get these from the joint staff, that a 
vast majority of requirements level cost increases actually 
came from this level of requirements change and they were done, 
if you will, at a much lower level, day-to-day basis and there 
is data on this and I know the joint staff, J8, can provide it 
to you.
    Secretary England. Another perspective, though, changing 
requirements is not all bad. We tend to view it as bad. It is 
actually--my view is we don't change them enough in a lot of 
respects. Having been on the other side of this in the industry 
and built a lot of products, F-16s and M1 tanks and every other 
kind of system imaginable. At our level it is easy to talk, at 
your level to talk about requirements up here. When you get 
down to the contractor level there is volumes and pages and 
great, great detail about this and over time they actually do 
have to change because it is a reality of design and 
production. You want them to change. Fact of the matter is 
there is great reluctance to change any of this once the 
contract is let because there is pressure on the system not to 
make those changes.
    So this is a more complex than just deciding the range. In 
the reality, I would say the system is pretty rigid, 
particularly going forward and that rigidity actually costs us 
money as people struggle to meet requirements that are not 
really germane to the ultimate utility. So it is not obviously 
always the case, but that is still a dimension. It is not all 
bad to change, quote, requirements as a program proceeds, and I 
would say you have to have the flexibility to do that or else 
you will have cost growth.
    Admiral Giambastiani. And this is how you do block 
upgrades, this is how you do the types of things for all those 
programs I cited in the testimony. If you do them in a sensible 
manner, you are going to get a really good product that over 
the life cycle produces what this Nation needs.
    Secretary England. Mr. Andrews is about people by the way. 
I mean, look, you can have all these--at the end of the day, it 
is somebody that understands the technology, the business. 
These are people who exercise good judgment at various steps 
along the way and you cannot replace that good judgment with 
systems that you----
    Mr. Andrews. I have no doubt about that.
    Secretary England. I used to tell the Secretary, I would 
take ten John Youngs over all the changes of the acquisition 
system. An extraordinarily capable person is invaluable in this 
system and that is true throughout the acquisition process.
    Mr. Andrews. Mr. Coffman.
    Mr. Coffman. Thank you, Mr. Chairman.
    Mr. Andrews. Thank you. Mr. Cooper is recognized.
    Mr. Cooper. Thank you, Mr. Chairman. General Kadish, you 
mentioned that even with a lifetime of experience in dealing 
with acquisition, occasionally you run across rules that you 
didn't know about, make no apparent sense. Would you be willing 
to go through these rule books with a red magic marker and try 
to--pages, volumes?
    Secretary England. It was done. There was a congressional--
there was a study group in the early 1990s that recommended 
hundreds of changes, and I think some were made, but I don't 
think many were.
    General Kadish. To answer your question, I would love to do 
that if I had the time. But what is interesting about the rule 
books is that, to me, anyway, is that the more they change, the 
more they stay the same in a lot of areas. You have got--you 
have got the 5000 series regulations in the Department of 
Defense that are the bibles for this type of stuff. And then 
you have got the Federal Acquisition Regulations. All right? 
And I will tell you if you start reading your contract and look 
at the clauses that are put on contracts and how they all 
operate, it is really difficult to understand why we do some of 
these things. To eliminate them, I would like that challenge. 
But----
    Mr. Cooper. I am worried about the Tower of Babel effect 
when we create a system that is so complex that nobody can 
understand it. We were just joking prior to the hearing that 
how many people actually read the weapons acquisition bill that 
we just passed. Nobody.
    General Kadish. I tried to.
    Admiral Giambastiani. I tried to.
    Mr. Cooper. This is an impenetrable thicket that is 
almost--you challenged us, spend a day trying to figure out the 
system. Nobody has a clue. So why don't we try simplification, 
get back to basics? If it is people driven and if Secretary 
England would love to have ten John Youngs--have we even gone 
through the task of identifying--I think of them as, like, that 
marvelous job foreman or the marvelous general contractor, 
somebody who really knows what is going on and knows how to get 
stuff done. If we identified folks with those skills that we 
want to reward and perpetuate and grow more of them like that.
    And then I see, like, U.S. Special Operations Command 
(SOCOM) able to exempt it itself from lots of acquisition 
regulations, gets the job done pretty well--maybe not with 
super complex weapon systems, but shouldn't this be tried at 
least on an experimental basis with some of the services, some 
of the projects and just say maybe we don't need any of this 
stuff?
    General Kadish. Well, I think that idea is very interesting 
because that is basically what happened to the Missile Defense 
Agency, it got special authorities. Properly applied and 
chosen, a team of people--and I do emphasize a team, not just 
one individual--given the proper authorities would make better 
decisions more rapidly than under normal circumstances. This 
system is so big that it would be hard to do that carte 
blanche, okay, because you are going to hire 30,000 new people 
in the process and that might fix some things in terms of 
numbers but it could create huge problems with more people 
making--in the process making decisions to be unstable. But 
choosing the organizational entity, projects, programs along 
with this multi-year idea could have great benefit if you free 
them from some of the issues.
    Secretary England. Mr. Cooper, if I can add, though, the 
Department has authorities. We can use commercial acquisition 
rules, et cetera, and buy things. But you have to be really 
brave to do that because you get criticized when you do that. 
That is, you don't have the same amount of oversight, you don't 
get the same amount of data, you don't get the high degree of 
assurance. These are all trade-offs and risk, right? I mean, 
this system, this layer exists because it gives comfort, right, 
that no one is going to do anything wrong and there is a 
certain degree of comfort that has been laid on. When you move 
aside and do a commercial acquisition, you no longer have that 
same degree of comfort. So I will tell you people in the 
Department, my experience is, people will shy away from using 
those authorities because you open yourself to severe, severe 
criticism and in fact programs get stopped sometimes here in 
the Congress because they don't have the quote sufficient 
levels of oversight reporting. So this is a complex environment 
we operate in with many stakeholders and many different 
objectives that people are trying to achieve. And they don't 
always come together in some coherent way.
    Mr. Cooper. But, Mr. Secretary, aren't our services all 
about bravery? Isn't sacrifice on the battlefield about life 
and death? Then we have folks in the puzzle palace afraid of 
stepping across a bureaucratic line in order to get the job 
done because they might be criticized?
    Secretary England. If you are a hero in combat. You get 
promoted. If you are a hero in this arena, then you get demoted 
or you don't get----
    Mr. Cooper. Let us change the promotion system, let us 
change the incentive structure so that you can be a hero. I 
talked about identifying like you did the ten John Youngs, who 
are these people, how can we reward them? Instead of them 
fearing criticism, how can they be honored? Why don't we create 
a system like that?
    Secretary England. Fair enough, but we all have to do it 
together. It is not just the Pentagon.
    Mr. Cooper. That is why we are having hearings to explore 
these topics. Admiral.
    Admiral Giambastiani. Mr. Cooper, let me add something that 
I have observed here over a number of years. Because of the 
level of regulations you are all asking the right question, how 
can we make this simpler. And that is the reason why you have a 
guy like General Kadish that will say that is pretty attractive 
if I had the time to do it. I would just say to you that I have 
learned over the years since Goldwater-Nichols there is a lot 
of good stuff that came out of Goldwater-Nichols, for example. 
But one of the things that came out of this is that with all of 
the joint requirements and, by the way, which I believe in 
deeply, with regard to the joint requirements for operational 
excellence, one of the things that has occurred is that there 
is less likelihood of senior line officers, if you will, across 
all of the services who have vast operational experience 
existing in the acquisition community, in other words moving 
back and forth.
    And this long-term problem has created a level of 
misunderstanding, if you will, in technical expertise. We keep 
telling you people make the difference here, experienced people 
make the difference. But if you can't have somebody that has 
got good operational credentials and take hostages and put them 
in the acquisition community and have them move back and forth, 
it is very difficult, for example, in some cases for them to 
truly understand some of these requirements level pieces that 
are so important. Many of those really effective programs I 
cited before were built under a system where people came up and 
spent a significant amount of time in a variety of these 
different communities and their experiences really paid great 
benefits to the system. The question is how do you recreate 
that, how do you get people who can go into the acquisition 
side, how do you take hostages, if you will, and exchange them 
between these different communities? That is one of the things 
that some of us have spent some time trying to figure out how 
to do this.
    Secretary England. If I could focus this a little bit, Mr. 
Chairman. I don't believe we are going to end up redoing the 
acquisition system. This has been going on a long time. It 
would seem to me the objective and what I would recommend are 
one of the few things you know you can pass and get through the 
Congress that would have a marked improvement. How can you 
improve--how do you know you are going to improve and actually 
not make it worse? It is a complex system. You always have that 
problem, right? So what are the few things you can do and so I 
would just try to address a few practical things. Give people 
reserve because now every cent is accounted for, and if 
something changes, you don't have the money to accommodate 
whatever you need money for and that costs you ten dollars for 
every dollar you don't have at the front end, it costs you ten 
dollars. Make it feasible for people to have reserve. Make the 
reprogramming easier. I mean, the thresholds are way too low 
for the level of expenditure and the complexity of it. That is 
part of the simplicity.
    I mean, there are some things you can do to make this 
system simpler, easier to operate within, without trying to 
redo this whole system. And I would focus on three or four 
things that you can get concurrence from the Department and the 
Congress, and I keep doing this incrementally. The problem you 
are going to have is if you try to make too big a change, I 
keep telling people it is easy to destroy value and it is 
extraordinarily hard to build value. So we didn't get here just 
randomly. A lot of this was put into place for a reason. If we 
start to dismantle it, we better understand the reasons and 
make sure we are dismantling the right part of this because 
some parts that you don't want to dismantle. So I would do this 
on an incremental basis.
    Every year I would work this, and every year I would get 
people to address and I would keep making incremental changes, 
and I would set my objective that way. So again, recommendation 
is to get the specific--a few things everybody agrees on and 
move forward rather than look at this whole thing because as 
you can tell from his testimony, you can just stay enmeshed in 
this detail and never get to the one or two few things that you 
can really do to improve the system.
    Mr. Andrews. Very good.
    Secretary England. That is right.
    Mr. Andrews. Thank you, Mr. Cooper.
    Mr. Andrews. Mr. Ellsworth.
    Mr. Ellsworth. Thank you, Mr. Chairman. Thank you for 
holding this very informative hearing. Thank you, gentlemen. I 
have become a little concerned. We know there is at least 120 
prior studies that go back to the Civil War. I am glad we 
assembled the group that is finally going to figure this thing 
out and straighten it out. But that is our challenge. Most of 
my questions were answered. I would ask one thing maybe for the 
discussion of how much plays into, and I wouldn't want anybody 
to take this wrong, that I don't want to give our troops 
everything they need to do their job. How much of that plays 
into this?
    I can remember back in my days of law enforcement when we 
would duct tape a flashlight to the barrel of our shotgun. It 
would have been nice to have a built in flashlight in our 
shotguns, but we didn't have that. How much of it is the cause 
of this when someone in the field, someone says wouldn't it be 
nice to have the switch on this side on the thumb instead of 
the index finger or if this were in my left hand instead of my 
right, or if this seat were a little more cushioned or how much 
is it that we want to do everything we can for our troops on 
the acquisitions that come out and I think it goes back to 
those change orders and improvements. I don't have a problem 
with that. But does that add to the problem of kind of we need 
to give everything we can, whatever is even suggested. Is that 
even--I think most of my questions were answered about adding 
to and improving, but there is a play in there. There is wants 
and needs and it is a good lesson between what we want and what 
we need and sometimes you don't always get what you want, but 
we definitely want to give you what you need. I am not sure the 
question is in there.
    Secretary England. It is in the eye of the beholder what 
the value is. That is sort of the challenge always. There is 
always many more things you can do in the Department of Defense 
than you will ever have money for. No matter how much the 
budget goes up, there will always be needs, unmet needs. 
Because if you are a military person, obviously you want the 
very best equipment or latest equipment, you want the switch on 
the right side and frankly they should expect that. That said, 
there are still limitations. There are boundaries you have to 
work within. That is the trade-off that you keep making. And 
that is an imperfect world. That is judgments by people between 
the military, the civilians, the Congress who has an oversight 
role.
    I mean, everybody places judgments on this, frankly at the 
end of the day, it sort of works pretty well. You know, 
everybody has an input and it tends to balance out, right, 
between the military, the civilian leadership, the 
Administration, the Congress, I mean, all of this pushing and 
shoving--I mean, it looks bad frankly, but I am not sure it 
doesn't come out with best results you can get given all these 
competing interests that come to bear on this so it is an ugly 
process but I am not sure it is ever going to be a pretty 
process because that is the nature of what we do and these are 
all judgments. This isn't a black and white. This is almost in 
every single case judgment calls by well-meaning people and 
people disagree a lot of times.
    Mr. Ellsworth. And that vendor that has to move that switch 
from the right to the left or left to right, they have to 
retool machines that adds to the price. Is that--you make that 
determination--worth it versus armoring up a Humvee while the 
guys in the field are catching shrapnel, let us do that, let us 
do it quick, let us add panels, whatever we have to do. I can 
see the difference there. But I agree with that. I think it is 
an imperfect world. But that is kind of what we have to deal 
with.
    Secretary England. That is the world we are in and that is 
the world we deal with.
    Admiral Giambastiani. Let me give you a perspective from 
somebody who has worn a uniform and been out and used this 
stuff for a hell of a lot of my life. We have very, very 
thoughtful and good people. And as Gordon said, you are always 
going to have people making recommendations for changes. It 
just is the way we train them. We tell them we want to do our 
best and they expect the best from what they get. So the 
question then is how can you incorporate and bring these things 
to bear in a timely and useful manner so that they can use them 
to do whatever--and accomplish the mission that they have at 
hand. There has been a lot of discussion, for example, about a 
peacetime procurement system and what you do in wartime and the 
rest of it. Well, it makes a difference. When you have the 
urgency of impact out there, you are going to modify what you 
do on a peacetime basis. What is important today in wartime may 
not be as important during peacetime unfortunately or vice 
versa. So you modify processes and you modify the way you 
deliver capability.
    There is a whole variety of these joint rapid acquisition 
programs. You do the things that make sense to deliver 
capabilities and modify capabilities. And it is always going to 
happen, but we train our people--the culture is you want better 
and you are going to work for better, and hopefully we can 
provide them with the tools that keep them safe and allow them 
to effectively make their mission. That is pretty general. But 
my comment is we always have to have during wartime a 
willingness to also fail and maybe not get it right, because if 
we are in a zero defect environment trying to protect these 
people and allow them to accomplish their mission, then we have 
got problems. How do you balance those and get that capability 
out there?
    General Kadish. I would add there is an element of trust 
that we have. I have been on both sides. Operating and flying 
airplanes and buying and developing things. And that trust of 
the soldier, sailor, airman in the field, that they are going 
to get the best from our country is something that is unspoken 
but part of our culture. And I will just give you an example 
from my own life.
    I will never forget when I was in pilot training I had an 
old combat instructor that was teaching me that day and I had 
been very clever that morning and went out and bought a 
flashlight because--a small one that I thought was kind of neat 
because we were going to practice dark cockpit type stuff. And 
we were walking to the airplane and I discarded my big 
flashlight that was the traditional issued type of thing. And 
he said what are you doing? I said I got this new flashlight. 
He said you trust that at 30,000 feet. It works great on the 
ground. I will take my Government Issued (GI). And that made an 
impression on me because if we are going to put people in 
harm's way, yes, we have resource issues, we make those trade-
offs every day. But that trust, we are going to give them the 
best we know how to give them has got to be there.
    Mr. Ellsworth. Thank you, Mr. Chairman. I yield back.
    Mr. Andrews. Thank you, do any of the members have any 
follow-up they would like to engage in at this time? Yes, Mr. 
Cooper.
    Mr. Cooper. Secretary England impressed me with his rousing 
defense of the status quo. And I don't want to be a hopeless 
idealist, but I also don't want to give up on making the system 
better either. And surely there is some compromise between the 
two and I realize there are plenty of obstacles, but surely 
with your long tenure both in the private industry and as 
Secretary, there are specific recommendations you can give us 
that are deeper than more--a politician would call it a slush 
fund--wiggle room, an extra $57 billion, here, there, whatever 
the amount is to get the job done, smooth wrinkles. This is the 
most massive bureaucracy probably in human history, it is the 
least auditable of all government agencies, perhaps it has the 
toughest job. But we are, you know, the most important military 
force in the world. And it is so important for every troop and 
for every citizen that we get this really right. So to me, 
after your long experience, kind of waiting for more and deeper 
advice.
    Secretary England. What I recommend, Mr. Cooper, I don't 
recommend the status quo. Everything can always be improved. 
The Nation is at war. We are buying equipment. We are meeting 
warfighter's needs. I only recommend that you do this 
incrementally because you don't want to do something that is 
also going to make it harder or harmful. So if they are in 
complex system, I tend to go much more deliberate and so I 
would take--I would decide what are those things that you can 
identify and I would work with the Department on this, the 
current Administration. I say what are those things that we can 
make changes to that would immediately improve your operation 
and I believe there are some things you can do that would be 
embraced by everyone that would actually have a meaningful 
effect on this. I mean, this is small things like reserves, 
small things like reprogramming are very, very large. The 
multi-year is very important. I think if you can--the National 
Security Personnel System (NSPS) provides a whole personnel 
system. It is important. It is hard to get people in the 
acquisition arena, particularly civilians. We make it very 
onerous. So if you can attack some of these issues that are 
identified issues within the Department, you will move the ball 
forward and you can do that quickly. I mean, you can do that, 
in effect, what they are doing in the coming budget as opposed 
to over a long budget. So I am just suggesting take a 
deliberate approach on this, accomplish what you can accomplish 
and don't get mired down in this whole system because this 
whole system has been built up literally over at least 50 
years.
    Mr. Cooper. George Will had a famous column at one time in 
which he quoted Mr. Hilton of Hilton Hotels who, when asked, I 
think at a graduation speech, what his advice would be to 
future generations. He summed it up succinctly and he said 
please put the shower curtain inside the tub.
    Mr. Andrews. Is this the person that raised Paris Hilton?
    Mr. Cooper. Thank you, Mr. Chairman.
    Mr. Andrews. Bizarre note. I did have--I meant my comment, 
not yours. I did have one quick question if I could just ask 
the panel. The Center for Strategic and International Studies 
(CSIS) did a report and they made a recommendation which I am 
going to read from. I just briefly want to ask the three of you 
what you think of the recommendation. And frankly, you can 
supplement your answer in writing if you would like. CSIS 
recommends that we modify title 10 to require that all JROC 
memoranda signed by either the chairman or vice chair of the 
joint chiefs, the Joint Requirement Oversight Council 
Memorandums (JROCMs), be provided to the Deputy Secretary of 
Defense for his review. The Deputy Secretary could then issue 
any JROCMs he approves as binding guidance to DOD components. 
What do you think of that? Is that something we should do by 
statute or not?
    Secretary England. My question to title 10, do you give 
title 10 authority to the vice chairman?
    Mr. Andrews. No. Let me read it again. To the Deputy 
Secretary. In other words, the Vice Chair and the Chair would 
pass these draft memo up to the Deputy Secretary. He would then 
or she would then have the authority to give them binding or 
not to give them binding effect or modify. So what it would do 
would be to institutionalize a role for the Deputy Secretary 
that binds the services.
    Secretary England. My first reaction would be--that is a 
responsibility of Acquisition, Technology and Logistics (AT&L), 
the Deputy would just literally go to the AT&L responsible 
person because they have all of the everyday work in the 
acquisition arena, they have the authority for acquisition. I 
mean, my view being the Deputy, I would, at that point, have 
gone to John Young or Ken Krieg and got their view on that 
because they are dealing with that every day. Not the Deputy. 
The Deputy does this, you know, sort of on an as needed as 
required basis, not--I wouldn't put the Deputy in that role 
frankly. I would put the AT&L. And I haven't thought about what 
all the implications of that are.
    Mr. Andrews. I would like you to think about that if you 
could and then supplement your answer to the record if you have 
time.
    [The information referred to can be found in the Appendix 
on page 225.]
    Mr. Andrews. Admiral, what do you think?
    Admiral Giambastiani. I would tell you that I think the 
Deputy is the wrong person in that case. But I do think the 
Under Secretary for Acquisition, Technology and Logistics is 
the right person to be doing this. Now, recognizing you could 
make this a legislative piece clearly that would be a big deal 
because you were including a civilian in this military 
requirements discussion, but it is one way to help integrate, 
if you will, the system.
    Now, what I would suggest to you is that I didn't make him 
the co-chair, but I invited AT&L to every session of the 
requirements, JROC pieces that I did for two years, and in 
fact, AT&L attended everything. Ken Krieg personally as the 
Under Secretary did not, but he always had a senior 
representative there, and in fact, they did a lot of 
preparation----
    Mr. Andrews. The question is the difference between 
attendance and authority.
    Admiral Giambastiani. Correct. So what you have to think 
about is if you are going to make the vice chairman, for 
example, the co-chair of the Defense Acquisition Board, then 
would it be reasonable to make the Under Secretary the co-
chairman of the JROC? And I don't think that is bad. If you go 
back to the Packard commission, one of the things they talked 
about was--I think it was called a Joint Requirements and 
Management Board (JRMB). It was a joint requirements material 
board or something that compromised mainly of military but also 
brought some civilian expertise on the acquisition side into 
it. I personally don't think it is a bad idea at all.
    Mr. Andrews. General, what do you think?
    General Kadish. Mr. Chairman, I, in fact, talked about it 
to CSIS. I think if I am not mistaken and read it right, this 
is a reflection of the fact that the only time those three 
processes come together in the Department is at the Deputy 
Secretary.
    Mr. Andrews. I think that is right, yeah.
    General Kadish. And because budget decision is really 
resident there primarily because that is the one that usually 
is the outlier in these decisions. So making it statutory might 
be a good idea, but it could also be very problematic because 
fundamentally, the Deputy Secretary and I hesitate to speak for 
Secretary England here, because I never was one of those, but 
it is a huge job to do these types of things. But the processes 
are designed today to come together at that level.
    Mr. Andrews. Yeah. I mean, I asked the question as an 
agnostic. I read segments in the report and wondered what you 
thought. The attraction of the idea is as the General says it 
is the venue where these processes come together. And investing 
the person who sits at that venue with some enforcement 
authority has some attraction. On the other hand, it does speak 
to the caution that all three of you have given us from 
significant experience which adding new process may exacerbate 
the problem it may not solve it. So upon further reflection, I 
would like you to think about whether you think vesting some 
person with that kind of authority coming off the JROC process 
makes sense. And if so, whom would that person be?
    Admiral Giambastiani. I can tell you, most military 
personnel probably would not like that.
    Mr. Andrews. Is that an argument for doing it or against 
it?
    Admiral Giambastiani. I am trying to tell you, you have to 
integrate this. But, with all due respect to my Deputy 
Secretary former shipmate here, I think the person who really 
is vested in where all three of these come through, despite 
what Ron has said to you, is the Secretary of Defense. Because 
you have service secretaries and service chiefs in there and 
that is where the ultimate authority for all three of these are 
supposed to come together, and when you move it to a different 
level, you change the overall dynamic here in a way sometimes 
that is not good.
    Mr. Andrews. You may actually deemphasize the importance of 
it?
    Admiral Giambastiani. Correct. So some that, though, is 
very important.
    Mr. Andrews. My question is whether a person should be 
vested with the authority. And your position is maybe it should 
be the SECDEF.
    Admiral Giambastiani. The SECDEF is not going to go to 
every JROC meeting because he sure doesn't have time for that. 
But the point is, how do you get that done so he gets advice 
properly?
    Secretary England. Chairman Andrews, your original comment 
about people and personalities. A lot of this is who makes 
these decisions at any given time, frankly, because it varies 
dramatically in terms of background and experience and 
capabilities. So when you say----
    Mr. Andrews. The Constitution would probably prohibit us 
from mandating a certain person.
    Secretary England. I would say what worked out well with 
what Admiral Giambastiani said is that John Young is the 
perfect person to do that. So, for all practical purposes, you 
sort of achieved that when they were together in the offices, 
because you want to get the requirements right. They were both 
quite capable, the same reason I brought Ed in on the DAWG. So 
personality goes a long way on this.
    Mr. Andrews. I hear you. One of the recurring things in our 
work, and we will wrap up with this, we think it is self-
evident that the talent of the individuals in these positions 
and the nature of those individuals is central to any result. 
But what we can do in the law and procedure is create a series 
of incentives and disincentives that hopefully incent the more 
desirable behavior and disincent the less desirable behavior. 
And what we are trying to fumble through is to figure out in 
this instance.
    So I think in closing is if the hypothesis this morning is 
that the gap between value and cost paid is in part 
attributable to a lack of coordination among the requirement 
and procurement and budgeting process, I think the answer is, 
sure is, there is a significant problem. What we are trying to 
do is figure out a way to create the right set of incentives 
that would cause integration, the right set of disincentives 
that would mitigate against disintegration, but do so hopefully 
by going to Mr. Cooper's question, by taking things out of rule 
books rather than putting them in, and by creating fewer levels 
of oversight, more transparency, not more levels of oversight 
and less transparency. That is a tall order, but I think that 
summarizes what we are about.
    Each of you has made a very significant contribution in 
that effort this morning. We appreciate that. It is entirely 
consistent with your lifelong contributions to our country in 
this and other areas, for which we are very grateful, and we 
thank you very much for your participation. The hearing is 
adjourned.
    [Whereupon, at 9:33 a.m., the panel was adjourned.]



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              WITNESS RESPONSES TO QUESTIONS ASKED DURING

                              THE HEARING

                              June 3, 2009

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             RESPONSE TO QUESTION SUBMITTED BY MR. ANDREWS

    Mr. England. The current system provides a series of checks and 
balances, allowing appropriate military advice to be provided to the 
civilian leadership while allowing the civilian leadership to define 
strategy and allocate resources consistent with the President's policy 
and budget priorities. There is a large staff which supports the JROC 
in the requirements review and approval process. The Office of the 
Deputy Secretary of Defense is not staffed for comprehensive review of 
the JROC requirements. Further, the Deputy Secretary already must 
address a broad spectrum of issues, and this additional workload would 
be very difficult to manage within the Office of the Deputy Secretary 
of Defense. As importantly, the current system established by the 
Congress through Goldwater Nichols legislation provides checks and 
balances in the systems while also allowing for independent military 
advice to be provided to the Nation's civilian leadership. It may not 
be appropriate for the Deputy Secretary of Defense to approve or 
disapprove individual requirements sequentially. The Deputy Secretary 
of Defense already indirectly provides a role in this process by 
balancing the JROC requirements against the President's policy and 
strategy objectives, making these decisions in the context of the 
President's budget process. It is not clear that the process would be 
improved by requiring the Deputy Secretary to personally approve JROC 
memoranda. [See page 23.]

                                  
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