[Senate Hearing 114-315]
[From the U.S. Government Publishing Office]


                                                      S. Hrg. 114-315

                      THE FUTURE OF DEFENSE REFORM

=======================================================================

                                HEARING

                               BEFORE THE

                      COMMITTEE ON ARMED SERVICES
                          UNITED STATES SENATE

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                            OCTOBER 21, 2015

                               __________

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                      COMMITTEE ON ARMED SERVICES

                     JOHN McCAIN, Arizona, Chairman

JAMES M. INHOFE, Oklahoma            JACK REED, Rhode Island
JEFF SESSIONS, Alabama               BILL NELSON, Florida
ROGER F. WICKER, Mississippi         CLAIRE McCASKILL, Missouri
KELLY AYOTTE, New Hampshire          JOE MANCHIN III, West Virginia
DEB FISCHER, Nebraska                JEANNE SHAHEEN, New Hampshire
TOM COTTON, Arkansas                 KIRSTEN E. GILLIBRAND, New York
MIKE ROUNDS, South Dakota            RICHARD BLUMENTHAL, Connecticut
JONI ERNST, Iowa                     JOE DONNELLY, Indiana
THOM TILLIS, North Carolina          MAZIE K. HIRONO, Hawaii
DAN SULLIVAN, Alaska                 TIM KAINE, Virginia
MIKE LEE, Utah                       ANGUS S. KING, JR., Maine
LINDSEY GRAHAM, South Carolina       MARTIN HEINRICH, New Mexico
TED CRUZ, Texas

                   Christian D. Brose, Staff Director

               Elizabeth L. King, Minority Staff Director

                                  (ii)

                            C O N T E N T S

                               __________

                            october 21, 2015

                                                                   Page

The Future of Defense Reform.....................................     1

Gates, Hon. Robert M., Former Secretary of Defense...............    12

                                 (iii)

 
                      THE FUTURE OF DEFENSE REFORM

                              ----------                              


                      WEDNESDAY, OCTOBER 21, 2015

                                        U.S. Senate
                                Committee on Armed Services
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9:30 a.m. in Room 
SH 09216, Hart Senate Office Building, Senator John McCain 
(chairman) of the committee, presiding.
    Committee members present: Senators McCain, Inhofe, 
Sessions, Wicker, Ayotte, Fischer, Cotton, Rounds, Ernst, 
Tillis, Sullivan, Lee, Cruz, Reed, Nelson, Manchin, Shaheen, 
Gillibrand, Blumenthal, Donnelly, Hirono, Kaine, King, and 
Heinrich.

       OPENING STATEMENT OF SENATOR JOHN McCAIN, CHAIRMAN

    Senator McCain. Good morning. The Senate Armed Services 
Committee meets today to begin a major oversight initiative on 
the future of defense reform.
    This will be the first in a series of dozen hearings that 
will proceed from a consideration of the strategic context and 
global challenging--challenges facing the United States, to 
alternative defense strategies in the future of warfare, to the 
civilian and military organizations of the Department of 
Defense, as well as its acquisition, personnel, and management 
systems, much of which is the legacy of the Goldwater-Nichols 
reforms that were enacted in 1986.
    There is no one, in my view, in America that is better to 
help us begin this effort than our distinguished witness, the 
former Secretary of Defense, Robert Gates. We welcome him back 
for his first testimony to Congress since leaving the 
Department.
    Dr. Gates, we know that you have eagerly awaited this day 
with all of the anticipation of a root canal.
    [Laughter.]
    Senator McCain. Few defense--in my view, none--defense 
leaders can match Dr. Gates' record as a reformer. He directed 
more than $100 billion in internal efficiencies in the 
Department of Defense. He eliminated dozens of failing or 
unnecessary acquisition programs. He held people accountable. 
He even fired a few. And yet, by his own account, Dr. Gates 
left, overwhelmed by the scope and scale of the problems at the 
Defense Department.
    This is the purpose of the oversight effort we are 
beginning today, to define these problems clearly and 
rigorously, and only then to consider what reforms may be 
necessary. There is profound urgency to this effort. The 
worldwide threats confronting our Nation's--Nation now and in 
the future have never been more complex, uncertain, and 
daunting. America will not succeed in the 21st century with 
anything less than the most innovative, agile, and efficient 
and effective defense organization. I have not met a senior 
civilian or military leader who thinks we have that today. In 
no way is this a criticism of the many patriotic mission- 
focused public servants, both in and out of uniform, who 
sacrifice every day here at home and around the world to keep 
us safe. To the contrary, it's because we have such outstanding 
people that we must strive to remove impediments in our defense 
organizations that would squander the talents of our troops and 
civilian--and civil servants.
    Now some would argue that the main problems facing the 
Department of Defense come from the White House, the National 
Security Council staff, the interagency, and, yes, the 
Congress. You will find no argument here, especially about the 
dysfunction of Congress. We must be mindful of these bigger 
problems, but addressing many of them is outside this 
committee's jurisdiction.
    Americans hold our military in the highest regard, as we 
should. At the same time, our witness will explain, the 
problems that he encountered at the Defense Department are real 
and serious. Just consider chart 1, here. In constant dollars, 
our Nation is spending almost the same amount on defense as we 
were 30 years ago, but, for this money today, we are getting 35 
percent fewer combat brigades, 53 percent fewer ships, 63 
percent fewer combat air squadrons, and significantly more 
overhead. How much is difficult to establish, because the 
Department of Defense does not even have complete and reliable 
data, as GAO has repeatedly found.
    Of course, our Armed Forces are more capable now than 30 
years ago, but our adversaries are also more capable, some 
exponentially so. At the same time, many of the weapons in our 
arsenal today--our aircraft, ships, tanks, and fighting 
vehicles, rifles and missiles, and strategic forces--are the 
products of the military modernization of the 1980s.
    And, no matter how much more capable our troops and weapons 
are today, they are not capable of being in two places at once. 
Our declining combat capacity cannot be divorced from the 
problems in our defense acquisition system, which one high-
level study summed up as follows, quote, ``The defense 
acquisition system has basic problems that must be corrected. 
These problems are deeply entrenched and have developed over 
several decades from an increasingly bureaucratic and over-
regulated process. As a result, all too many of our weapon 
systems cost too much, take too long to develop, and, by the 
time they are fielded, incorporate obsolete technology.'' 
Sounds right. But, that was the Packard Commission, written in 
1986.
    And, since then, since 1986, as this chart shows, cost 
overruns and schedule delays on major defense acquisitions have 
only gotten worse. Defense programs are now nearly 50 percent 
over-budget and, on average, over 2 years delayed. It's telling 
that perhaps the most significant defense procurement success 
story, the MRAP, which Dr. Gates himself led, was produced by 
going around the acquisition system, not through it.
    The rising cost of our defense personnel system is also 
part of the problem. As chart 3 shows, over the past 30 years 
the average fully-burdened cost per service member, all of the 
pays and lifetime benefits that military service now entails, 
has increased 270 percent. And yet, all too often, the 
Department of Defense has sought to control these personnel 
costs by cutting operating forces while civilian and military 
headquarters staff have not changed, and even grown. Indeed, 
since 1985, the end strength of the joint force has decreased 
by 38 percent, but the percentage of four-star officers in that 
force has increased by 65 percent.
    These reductions in combat power have occurred while the 
Department's overhead elements, especially its contractor 
workforce, have exploded. Nearly 1.1 million personnel now 
perform overhead activities in the defense agencies, the 
military departments, and service staffs in Washington 
headquarters services. An analysis by McKinsey & Company found 
that less than one-quarter of Active Duty troops were in combat 
roles, and with a majority instead performing overhead 
activities. Recent studies by the Defense Business Board and 
others confirmed that little has changed in this regard. The 
United States tooth-to-tail ratio is well below the global 
average, including such countries as Russia, India, and Brazil.
    For years, decades in some cases, GAO has identified some 
of the major management and administrative functions of the 
Department of Defense as being at high risk of waste, fraud, 
abuse, and duplication of effort. Perhaps none of this should 
be surprising when you consider the judgment of Jim Locher, the 
lead staffer on this committee during the defense 
reorganization efforts, three decades ago, quote, ``The 
remedies applied by Goldwater-Nichols to defense management and 
administration have largely been ineffective. They were never a 
priority for the Act's drafters, and troubling trends remain. 
The Pentagon is choking on bureaucracy.'' He wrote that 14 
years ago, and the problem has only gotten worse.
    Ultimately, we must ask whether the Defense Department is 
succeeding in its development and execution of strategy, 
policy, and plans. The Office of the Secretary of Defense, the 
service secretaries and service staffs, the joint staff, and 
the combatant commands are all bigger than ever. But, is the 
quality of civilian oversight and control of the military 
better? Has the quality of military advice to civilian leaders 
improved? Are the joint duty assignments that our military 
officers must perform producing a more unified fighting force? 
In short, is the Department of Defense more successful at 
planning for war, waging war, and winning war?
    Goldwater-Nichols was perhaps the most consequential 
defense reform since the creation of the Department of Defense. 
And, while the world has changed profoundly since 1986, the 
basic organization of the Department of Defense, as well as the 
roles and missions of its major civilian and military actors, 
has not changed all that much since Goldwater-Nichols. It must 
be asked, Is a 30-year-old defense organization equal to our 
present and future national security challenges?
    I want to be clear. This is a forward-looking effort. Our 
task is to determine whether the Department of Defense and our 
Armed Forces are set up to be maximally successful in our 
current and future national security challenges. We will be 
guided in this effort by the same principles that inspired past 
defense reform efforts, including Goldwater-Nichols, enhancing 
civilian control of the military, improving military advice, 
operational effectiveness, and joint officer management, and 
providing for a better use of defense resources, among others.
    This oversight initiative is not a set of solutions in 
search of problems. We will neither jump to conclusions nor 
tilt at the symptoms of problems. We will take the time to look 
deeply for the incentive and root causes that drive behavior, 
and we will always, always be guided by that all- important 
principle: First do no harm.
    Finally, this must and will be a bipartisan endeavor. 
Defense reform is not a Republican or Democratic issue, and we 
will keep it that way. These are vital national security 
issues, and we must seek to build a consensus about how to 
improve the organization and operation of the Department of 
Defense that can and will be advanced by whomever wins next 
year's elections. That is in keeping with the best traditions 
of this committee, and it is how Dr. Gates has always 
approached this important work across administrations of both 
parties.
    We thank Dr. Gates for his decades of service to our 
Nation, for generously offering us the benefit of your insights 
and experiences today.
    And I'd like to apologize for the long statement, Dr. 
Gates, but I take--I believe that this hearing must set the 
predicate for a number of future hearings that we will be 
having in order to carry out--achieve the objectives that I 
just outlined.
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    Senator McCain. Senator Reed.

                 STATEMENT OF SENATOR JACK REED

    Senator Reed. Well, thank you very much, Mr. Chairman.
    And, Dr. Gates, welcome back to the Senate Armed Services 
Committee. And let me join the Chairman in thanking you for 
your willingness to testify today, and also underscore how 
thoughtful and how appropriate the Chairman's remarks are with 
respect to the need for a careful bipartisan review of policy 
in the Defense Department, and change in the Defense 
Department.
    I must also apologize. As I've told you before, I have 200 
or so Rhode Island business leaders that I must inform all day 
long today, so I won't be here for the whole hearing. And I 
apologize to the Chairman, also.
    It's no accident that the Chairman has asked you, Dr. 
Gates, to testify today on--as the first witness in a major 
effort to look at the Department of Defense. You have more than 
1,500 days as Secretary of Defense, decades serving the United 
States Government in roles that range from the National 
Security Council to the Central Intelligence Agency, and then, 
of course, the Department of Defense. And your vast experience 
with DOD and the interagency process, especially in a post-
September 11th context, will be important to the committee's 
study of these issues as we go forward.
    And, while you were Secretary of Defense, you were an 
outspoken critic of your own Department and its ability to 
manage critical competing priorities, such as funding military 
modernization and ensuring that the requirements of deployed 
forces are being supported appropriately.
    In a speech before the American Enterprise Institute, you 
said the Department is, in your words, ``a semi-feudal system, 
the amalgam of fiefdoms without centralized mechanisms to 
allocate resources, track expenditures, and measure results, 
relative to the Department's overall priorities.'' As a 
policymaker in the legislative branch, this kind of assessment 
from the most senior official in the Department is deeply 
concerning, but also very helpful, in terms of giving us a 
direction. I look forward to hearing your ideas and thinking 
of--about the changes you recommend to us for addressing these 
issues.
    Congress has tried to help address some of these problems, 
as you have rightly noted, in creating the Deputy Chief 
Management Officer. But, one person is not enough to create or 
compel systemic change in the largest organization on Earth. 
And during your tenure, you created two ad hoc entities in the 
Department, the Chairman mentioned, to address rapidly 
dangerous issues to our troops: the Mine- Resistant Ambush 
Protector, or MRAP, Task Force, and the Intelligence, 
Surveillance, and Reconnaissance, or ISR, Task Force. And both 
of these endeavors were very successful, but they are just an 
indication of the kind of more holistic and comprehensive 
change that we need to undertake in the Department of Defense.
    Also in your American Enterprise Institute speech, you made 
a critical point. Since 2001, we have seen a near doubling of 
the Pentagon's modernization accounts that has resulted in 
relatively modest gains in actual military capability. And this 
should be of a concern to all of us. And we'd welcome your 
recommendations on how to bring changes necessary to ensure 
that we're getting what we're paying for; in fact, getting 
more, we hope, bang for our buck.
    You've also spoken about the need for defense spending to 
be stable and predictable, and the importance of the role of 
Congress in ensuring that such stability is provided. And 
former DOD Comptroller Bob Hale, who served with you at the 
Pentagon, wrote recently about the budgetary turmoil he 
experienced during his tenure, including sequestration, a 
government shutdown, and continuing resolutions. Specifically, 
he wrote, ``This budget turmoil imposed a high price in DOD 
and, therefore, the Nation it serves. The price was not 
measured in dollars, since DOD certainly didn't get any extra 
funding to pay the cost of the turmoil. Rather, the price took 
the form of harm to the efficiency and effectiveness of the 
Department's mission, and we are still confronting those issues 
today.''
    Finally, during your tenure, Dr. Gates, you were a strong 
advocate not only for our military, but also the funding the 
soft-power tools of statecraft: our diplomacy, developmental 
efforts, and our ability to communicate our goals and values to 
the rest of the world. As we consider steps to making DOD more 
effective, I'd also be interested in your thoughts on the 
importance of our national security in enhancing our civilian 
elements of national power, and also the impact that 
sequestration has on these elements.
    Again, thank you, Dr. Gates, for your service. I look 
forward to your testimony.
    Senator McCain. Dr. Gates.

 STATEMENT OF HON. ROBERT M. GATES, FORMER SECRETARY OF DEFENSE

    Dr. Gates. Chairman McCain, Senator Reed, probably the 
least sincere sentence in the English language is: Mr. 
Chairman, it's a pleasure to be here with you today.
    [Laughter.]
    Dr. Gates. Frankly, short of a subpoena, I never expected 
to be in a congressional hearing again. And, given some of the 
things that I wrote in my book, I'm rather surprised to be 
invited back.
    [Laughter.]
    Dr. Gates. So, thank you for kind introductory remarks and 
for the invitation to address the important topic of defense 
reform.
    I also commend you, Mr. Chairman, for attempting to 
transcend the daily headlines and crises of the moment to focus 
this committee, and hopefully the rest of the Congress, on 
institutional challenges facing the defense establishment. 
While I've stayed in touch with my successors periodically and 
have followed developments from afar--very afar--my testimony 
today is based predominantly on my experience as Defense 
Secretary between December 2006 and July 2011, and being 
engaged in two wars every single day during that period. So, my 
comments this morning may not necessarily account for all of 
the changes that have taken place over the last 4 years.
    I joined the CIA to do my bit in the defense of our country 
50 years ago next year. I've served eight Presidents. With the 
advantage of that half-century perspective, I'd like to open 
with two broad points:
    First, while it is tempting and conventional wisdom to 
assert that the challenges facing the United States 
internationally have never been more numerous or complex, the 
reality is that turbulent, unstable, and unpredictable times 
have recurred to challenge United States leaders regularly 
since World War II: the immediate postwar period that saw the 
Soviets tighten their grip on eastern Europe and surprised 
Western leaders and intelligence agencies by detonating their 
first atomic device; the frequent crises during the '50s, 
including the Korean War; regular confrontations with China 
over Taiwan; pressures from the Joint Chiefs of Staff to help 
France by using nuclear weapons in Indochina; war in the Middle 
East; uprisings in eastern Europe; and a revolution in Cuba. 
During the 1960s, a war in Vietnam, another Arab-Israeli war, 
and confrontations with the Soviets from Berlin to Cuba. In the 
1970s, Soviet assertiveness in Africa, an invasion of 
Afghanistan, and yet another Arab-Israeli war and oil 
embargoes. The 1980s brought a number of surrogate conflicts in 
places like Afghanistan and an attack on Libya, crises in 
Lebanon, and the intervention in Panama. And in the 1990s, we 
had the first Gulf War, military action in the Balkans, 
Somalia, Haiti, missile attacks on Iraq, and the first al-Qaeda 
attacks on the United States.
    The point of recounting these historical examples is that 
Americans, including all too often our leaders, regard 
international crises and military conflict as aberrations, 
when, in fact, and sad to say, they are the norm. Convinced, 
time and again, that a new era of tranquility is at hand, 
especially after major conflicts, Presidents and Congresses 
tend to believe they have a choice when it comes to the 
priority given national security, and, correspondingly, 
significantly reduce the resources provided to Defense, the 
State Department, and CIA. In the short term, at least, until 
the next crisis arrives, they do have a choice, and the budget 
cutters and deficit hawks have their way. But, in the longer 
term, there really is no choice. While we may not be interested 
in aggressors, terrorists, revanchists, and expansionists half 
a world away, they ultimately are always interested in us or in 
our interests or our allies and friends, and we always discover 
then that we went too far in cutting, and need to rearm, that 
the cost in treasure and in the blood of our young men and 
women is always far higher than if we had remained strong and 
prepared all along.
    The primary question right now before the Congress and the 
President is the priority you give to defense, which, at 
roughly 15 percent of Federal expenditures, is the lowest 
percentage of the Federal budget since World--before World War 
II. Without proper and predictable funding, no amount of reform 
or clever reorganization will provide America with a military 
capable of accomplishing the missions assigned to it.
    The second and related point I think highly germane to your 
deliberations is that our record in--since Vietnam in 
predicting where we will use military force next, even a few 
months out, is perfect. We have never once gotten it right. 
Just think about it: Granada, Lebanon, Libya twice, Iraq now 
three times, Afghanistan, the Balkans, Panama, Somalia, Haiti, 
and most recently West Africa to combat ebola. Because we 
cannot predict the place or the nature of future military 
engagement, we must provide a premium on acquiring equipment 
and providing training that give our forces the most versatile 
possible capabilities across the broadest possible spectrum of 
conflict.
    These two lessons on funding and flexibility must underpin 
any defense reform effort, whether the focus is on bureaucratic 
organization, command structures, acquisition, or budgets. All 
that said, it is completely legitimate to ask whether our 
defense structures and processes are giving us the best 
possible return on taxpayer dollars spent on our military. The 
answer in too many cases is no. In this context, the questions 
the committee are considering are, in my view, the correct 
ones, namely whether our country's institutions of national 
defense are organized, manned, equipped, and managed in ways 
that can deal with the security challenges of the 21st century 
and that efficiently and effectively spend defense dollars.
    Mr. Chairman, over the next 15 minutes or so, I'll make 
observations about Goldwater-Nichols, acquisition policy, the 
interagency process, and the budget. And we can then delve into 
these and other matters, as the committee sees fit.
    First, Goldwater-Nichols, at 30 years, and the question 
whether the ambition of the original legislation has been 
fulfilled, or is additional legislation of similar magnitude 
needed, in light of all the changes that have taken place over 
the last three decades? My perspectives on the current 
structure of the Defense Department is shaped primarily by my 
experience as Secretary overseeing a military fighting two 
wars. I discovered early on that I led a Department designed to 
plan for war, but not to wage war, at least for the long term.
    The swift victory of the 1991 Persian Gulf conflict seemed 
to validate all the post-Vietnam changes to our military, 
including the landmark 1986 legislation. But, the Pentagon 
clearly was not organized to deal with protracted conflicts 
like Iraq and Afghanistan, which, contrary to the wishes of 
most Americans, most assuredly will not be the last sustained 
ground campaigns waged by our military.
    In this respect, Goldwater-Nichols succeeded all too well 
by turning the services into force and equipment providers 
walled off from operational responsibilities now the exclusive 
domain of combatant commanders. This became especially 
problematic in unconventional conflicts requiring capabilities, 
usually immediately, that were significantly different from 
what was in the prewar procurement pipeline.
    Just one illustrative example. While there was, and is, a 
joint process to deal with the ongoing needs of battlefield 
commanders, it was left up to the designated military service 
to reprioritize its budget to find the funding for those needs. 
It will come as no surprise to you that, with some regularity, 
the designated service decided that urgent battlefield need did 
not have as high a priority for funding as its long-term 
programs of record. These were mostly advanced weapon systems 
designed for future conflicts, and had near sacrosanct status 
within the military services, making it difficult to generate 
much enthusiasm for other near-term initiatives that might 
compete for funds.
    I soon learned that the only way I could get significant 
new or additional equipment to commanders in the field in weeks 
or months, not years, was to take control of the problem myself 
through special task forces and ad hoc processes. This would be 
the case with the MRAP vehicles, additional intelligence, 
surveillance, and reconnaissance capabilities, shortened 
medevac times, counter-IED equipment, and even the care of 
wounded warriors. I learned that if the Secretary made it a 
personal priority, set tight deadlines, and held people 
accountable, it was actually possible to get a lot done, even--
quickly, even in a massive bureaucracy like the Pentagon.
    But, satisfying critical operational and battlefield needs 
cannot depend solely on the intense personal involvement of the 
Secretary. That is not sustainable. The challenge is how to 
institutionalize a culture and an incentive structure that 
encourages wartime urgency simultaneous with long-term planning 
and acquisition as a matter of course.
    A final thought relative to defense organizations and 
authorities. Through my tenure, I was privileged to work with 
two superb Chairmen of the Joint Chiefs of Staff, Pete Pace and 
Mike Mullen, who were true partners while providing 
independent, occasionally dissenting, professional military 
advice. The Chairman, along with the Vice Chairman, is the one 
senior military officer with a stake in both current needs and 
future requirements. One of the great achievements of 
Goldwater-Nichols was strengthening the position of the 
operational commanders and the Chairman relative to the service 
chiefs. I believe that, as a general principle, this must be 
sustained.
    Service chiefs have a tenure of 4 years. Combatant 
commanders, nominally, 3 years. Yet the Chairman and Vice 
Chairman of the Joint Chiefs of Staff have 2-year renewable 
terms. I believe their positions vis-a-vis both service chiefs 
and combatant commanders would be strengthened by also giving 
them 4-year terms. This would not diminish in the least their 
accountability to the President, the Defense Secretary, and the 
Congress.
    Second, a subject that has, for years, been a focus of this 
committee, the acquisition process. Not only has Goldwater-
Nichols hit the 30-year mark, so too has the Office of the 
Secretary of Defense for Acquisition, Technology, and 
Logistics. AT&L was established because a service-driven 
acquisition system was yielding too many over-designed, over-
budget, and over-scheduled programs. The theory was that, by 
giving acquisition responsibility for major programs to a 
senior OSD official removed from parochial service interests, 
wiser and more disciplined decisions would ensue.
    So, what can we say, 30 years on? We've succeeded in 
building a new layer of bureaucracy with thousands of more 
employees and new processes to feed it. But, when it comes to 
output, the results have been quite mixed. As Secretary, I 
found that, despite all of the OSD and joint oversight 
mechanisms, far too many major weapons and equipment programs 
were ridiculously overdue, over-cost, or no longer relevant to 
the highest-priority defense needs. To the chagrin of many 
inside the Pentagon, and probably even more here on the Hill, I 
canceled or capped more than 30 major programs in 2009 that, if 
built out fully, would have cost the taxpayers $330 billion.
    So, where does that leave us today as Congress considers 
reforms for the future? Problems with the services running 
acquisitions led to greater centralization and oversight 
through AT&L. But, that led to another set of problems in the 
form of sizable central bureaucracy that adds delays and 
related costs without discernible benefit. So, now there's 
pressure and legislation to return significantly more 
acquisition authority back to the services.
    My sense is, the right answer lies with finding a better 
balance between centralization and decentralization than we now 
have. But, a strong word of caution: You must not weaken the 
authority of the Secretary of Defense and his ultimate 
decision-making power on acquisition. I cannot imagine a 
service chief or service secretary able to overcome intense 
internal pressures and voluntarily do away with, for example, 
programs like the Army Future Combat System, the airborne 
laser, the Zumwalt destroyer, or dozens of other troubled and 
needlessly exquisite systems that had built up a loyal service 
constituency. The simple fact is that such decisions are not 
just programmatic, but political. And only the Secretary of 
Defense, with the strong support of the President, has the 
clout, the power inside the Pentagon, with industry and here on 
the Hill, to make such decisions, and make them stick.
    A couple of other observations seem obvious as you and the 
Secretary of Defense address this issue. Nothing will work 
without rigorously applied accountability within the services, 
by AT&L, and by the Secretary. And then there is the importance 
of basic blocking and tackling on the acquisitions process. To 
wit, high-level rigorous control of requirements and limiting 
changes beyond a certain point, competitive prototyping, 
wherever possible, before program initiation, more realistic 
cost estimates, and revising contract incentives to better 
reward success and penalize failure.
    Also promising are your legislative efforts, Mr. Chairman, 
and those of Chairman Thornberry in the House, to streamline 
acquisition processes, eliminate counterproductive regulations, 
encourage more use of commercial products and pricing, and 
attract more nontraditional vendors to defense markets.
    That said, at the end of the day, redrawing the 
organization chart or enacting new acquisition laws and rules 
will matter less than leaders skilled enough to make--to 
execute programs effectively, willing to take tough, usually 
unpopular choices, and establish strong measures of 
accountability, and willing to get rid of those not performing 
well, whether people or programs.
    In terms of being better stewards of taxpayer dollars more 
broadly, the effort I began in 2010 to reduce overhead costs, 
and continued by my successors, must be renewed and sustained. 
It was telling that, in just 4 months, in 2010, we found some 
$180 billion over a multiyear period we could cut in overhead. 
There is, as Deputy Secretary Gordon England liked to say, a 
river of money flowing under the Pentagon, primarily funded 
through catchall operations and maintenance accounts. Now, 
there's no line item in the Defense budget called ``waste,'' so 
getting at unnecessary overhead spending without harming 
important functions is extremely hard work. It's kind of like a 
huge Easter egg hunt. But, it can and must be done.
    A brief word here on resisting the usual approach of 
reducing budgets with across-the-board cuts. I have seen 
countless Washington reform efforts over the years result in 
mindless salami-slicing of programs and organizations. That is 
not reform, it is managerial and political cowardice. True 
reform requires making trades and choices and tough decisions, 
recognizing that some activities are more important than 
others. It's hard to do, but essential if you're to reshape any 
organization into a more effective and efficient enterprise.
    Further, the Congress must contain its own bad behavior, 
such as insisting on continuing unneeded programs because of 
parochial interests, preventing the closure of roughly one-
quarter of all defense facilities deemed excess, burdening the 
Department with excessive and frequently expensive rules and 
reporting requirements, and more.
    My third broad point with regard to the interagency 
process. From time to time, the idea arises to reorganize the 
U.S. national security apparatus put together in 1947 to better 
integrate defense, diplomacy, and development, a Goldwater-
Nichols for the interagency, if you will. Goldwater-Nichols has 
mostly worked at the Defense Department because, when push 
comes to shove, as it often does there, everyone in and out of 
uniform ultimately works for one person: the Secretary of 
Defense. And he or she has the last word and can tell everyone 
to get in line. When multiple Cabinet departments are involved, 
however, there is only one person with that kind of authority: 
the President. The National Security Council and its staff were 
created to provide the President with an organizational 
mechanism to coordinate and integrate their efforts. How well 
that works depends entirely on the personal relationships among 
the principals and the talents and skills of the National 
Security Advisor. Even this structure, headquartered just down 
the hall from the Oval Office, works poorly if the Secretary of 
State and the Secretary of Defense can't stand one another, as 
was the case for a good part of my time in government, or if 
the National Security Advisor isn't an honest broker. How well 
the planning, activities, and efforts of State, Defense, and 
others are coordinated and integrated is the responsibility of 
one person: the President. And there is nothing anybody else, 
including the Congress, can do about it.
    I'll conclude with three other reasons the Nation is paying 
more for defense in real dollars today than 30 years ago, and 
getting less, and getting less. One is that men and women in 
uniform today drive, fly, or sail platforms which are vastly 
more capable and technologically advanced than a generation 
ago. That technology and capability comes with a hefty price 
tag. A second reason for the higher cost is the exploding 
personnel costs of the Department, a very real problem on which 
I know this committee and others are at least beginning to make 
some inroads after years of futility.
    But, the third factor contributing to increased costs, and 
one of immense importance, is the role of Congress itself. 
Here, I am talking about the years-long budgetary impasse on 
the Hill and between the Congress and the President. The 
Department of Defense has had an enacted appropriations bill to 
start the fiscal year only twice in the last 10 years. The last 
7 years all began under a continuing resolution. During the 
first 6 full fiscal years of the Obama administration, the 
Defense Department has operated under continuing resolutions 
for a third of the time, a cumulative total of 2 years. 
Department leaders also have had to deal with the threat--and, 
in one year, the imposition--of sequestration, a completely 
mindless and cowardly mechanism for budget-cutting. Because of 
the inability of the Congress and the President to find a 
budget compromise, in 2013 defense spending was reduced midyear 
by $37 billion. All of those cuts applied equally, in 
percentage terms, to 2500 line items of the defense budget and 
requiring precise management of each cut to comply with the 
Antideficiency Act with its criminal penalties for violations. 
Sequestration effectively cut about 30 percent of day-to-day 
operating funds in the second half of fiscal year 2013.
    But, then add to this mess the fact that the Department, 
probably the largest organization on the planet, in recent 
years has had to plan for five different potential government 
shutdowns. In the fall of 2013, with sequestration still 
ongoing, the Pentagon actually had to implement one of those 
shutdowns for 16 days, affecting 640,000 employees or 85 
percent of the civilian workforce.
    It is hard to quantify the cost of the budgetary turmoil of 
the past 5 years: the cuts, the continuing resolutions, 
sequestration, gimmicks, furloughs, shutdowns, 
unpredictability, and more. During continuing resolutions, in 
particular, the inability to execute programs on schedule, 
limits on being able to ramp up production or start new 
programs or to take full advantage of savings offered by 
multiyear purchases, the time-consuming and unpredictable 
process of reprogramming even small amounts of money to higher-
priority projects, all these impose tremendous costs on the 
Defense Department and the taxpayer. And this doesn't even 
begin to account for the costs involved in hundreds of 
thousands of man hours required to try and cope with this 
externally imposed leadership and managerial nightmare. 
Moreover, reimposition of full-scale sequestration looms in 
January, absent a bipartisan budget agreement.
    Given the harm all this politically driven madness inflicts 
on the U.S. military, the rhetoric coming from Members of 
Congress about looking out for our men and women in uniform 
rings very hollow to me. Further, this legislative dysfunction 
is embarrassing us in the eyes of the world at a time when 
allies and friends are looking to us for leadership and 
reassurance. All the smart defense reforms you can come up with 
will be of little use if the military is unable to plan, to set 
priorities, and to manage its resources in a sensible and 
strategic way.
    The failure of the Congress in recent years, because of the 
partisan divide, to pass timely and predictable defense 
budgets, and its continuing parochialism when it comes to 
failing programs and unneeded facilities, has not only greatly 
increased the cost of defense, it has contributed to weakening 
our military capabilities, and it has broken faith with our men 
and women in uniform. This committee with its counterpart in 
the House has long supported, on a bipartisan basis, a strong 
defense and protecting those in uniform. As you consider needed 
reforms in the Pentagon, I fervently hope you will also urge 
your colleagues in Congress to break with the recent past and 
place the national interests and our national security ahead of 
ideological purity or achieving partisan advantage, because, as 
you know as well I, our system of government, as designed by 
the founders who wrote and negotiated the provisions of the 
Constitution, is dependent on compromise to function. To do so 
is not selling out. It is called governing.
    Thank you.
    [The prepared statement of Dr. Gates follows:]

               Prepared Statement by Dr. Robert M. Gates
Chairman McCain, Senator Reed:
    Probably the least sincere sentence in the English language is: 
``Mr. Chairman, it's a pleasure to be here today.'' Frankly, short of a 
subpoena I never expected to be in a Congressional hearing room again. 
And, given some of the things I wrote in my book I'm rather surprised 
to be invited back to Capitol Hill. So, thank you for your kind 
introductory remarks and for the invitation to address the important 
topic of defense reform.
    I also commend you, Mr. Chairman, for attempting to transcend the 
daily headlines and crises of the moment to focus this committee, and 
hopefully the rest of the Congress, on the institutional challenges 
facing America's defense establishment. While I have stayed in touch 
with my successors periodically and have followed developments from 
afar--very afar, my testimony today is based predominantly on my 
experience as Defense Secretary between December 2006 and July 2011 and 
being engaged in two wars every single day during that period. So my 
comments this morning do not necessarily account for all the changes 
that have taken place over the last four years.
    I joined CIA to do my bit in the defense of our country fifty years 
ago next year. With the advantage of that half-century perspective, I'd 
like to open with two broad points.
    First, while it is tempting--and conventional wisdom--to assert 
that the challenges facing the United States internationally have never 
been more numerous or complex, the reality is that turbulent, unstable, 
and unpredictable times have recurred to challenge United States 
leaders regularly since World War II--the immediate post-war period 
that saw the Soviets tighten their grip on eastern Europe and surprise 
western leaders and intelligence agencies by detonating their first 
atomic device; the frequent crises during the 1950s including the 
Korean War, regular confrontations with China over Taiwan, pressures 
from the Joint Chiefs of Staff to help France by using nuclear weapons 
in Indochina, war in the Middle East, uprisings in eastern Europe and a 
revolution in Cuba; during the 1960s the war in Vietnam, another Arab-
Israeli war and confrontations with the Soviets from Berlin to Cuba; in 
the 1970s, Soviet assertiveness in Africa and their invasion of 
Afghanistan, yet another Arab-Israeli war, and oil embargoes; the 1980s 
brought a number of surrogate conflicts in places like Afghanistan, an 
attack on Libya, crises in Lebanon and the intervention in Panama; and 
the 1990s the first Gulf War, military action in the Balkans, Somalia, 
Haiti, missile attacks on Iraq, and the first al-Qaeda attacks on us.
    The point of recounting these historical examples is that 
Americans, including all too often our leaders, regard international 
crises and military conflict as aberrations when, in fact and sad to 
say, they are the norm.
    Convinced time and again that a new era of tranquility is at hand, 
especially after major conflicts, presidents and congresses tend to 
believe they have a choice when it comes to the priority given to 
national security and, correspondingly, significantly reduce the 
resources provided to Defense, the State Department, and CIA. In the 
short term, at least until the next crisis arrives, they do have a 
choice, and the budget cutters and deficit hawks have their way.
    But in the longer term, there really is no choice. While we may not 
be interested in aggressors, terrorists, revanchists and expansionists 
half a world away, they ultimately are always interested in us--or our 
interests or our allies and friends. And we always discover then that 
we went too far in cutting and need to rearm. But the cost in treasure 
and in the blood of our young men and women is always far higher than 
if we had remained strong and prepared all along.
    The primary question right now before the Congress--and The 
President--is the priority you give to defense which, at roughly 15% of 
federal expenditures, is the lowest percentage of the budget since 
before World War II. Without proper and predictable funding, no amount 
of reform or clever reorganization will provide America with a military 
capable of accomplishing the missions assigned to it.
    The second and related point I think highly germane to your 
deliberations is that our record since Vietnam in predicting where and 
how we will be engaged militarily next--even a few months out--is 
perfect: We have never once gotten it right. We never expected to be 
engaged militarily in Grenada, Lebanon, Libya (twice), Iraq (now three 
times), Afghanistan, The Balkans, Panama, Somalia, Haiti and, most 
recently, West Africa to combat Ebola.
    Because we cannot predict the place or nature of future military 
engagement, we must place a premium on acquiring equipment and 
providing training that give our forces the most versatile possible 
capabilities across the broadest possible spectrum of conflict.
    These two lessons--on funding and flexibility--must underpin any 
defense reform effort--whether the focus is on bureaucratic 
organization, command structures, acquisition or budgets.
    All that said, it is completely legitimate to ask whether our 
defense structures and processes are giving us the best possible return 
on taxpayer dollars spent on our military. The answer in too many cases 
is no. In this context, the questions this committee is considering 
are, in my view, the correct ones: namely, whether our nation's 
institutions of national defense are organized, manned, equipped, and 
managed in ways that can deal with the security challenges of the 21st 
century and that efficiently and effectively spend defense dollars.
    Mr. Chairman, over the next fifteen minutes or so, I will make some 
observations about Goldwater-Nichols, Acquisition Policy, the 
interagency process, and the budget. We can then delve into these and 
other matters in more depth as the committee wishes.
    First, Goldwater-Nichols at 30 years, and the question whether the 
ambition of the original legislation has been fulfilled or is 
additional legislation of a similar magnitude needed in light of the 
all the changes that have taken place over the past three decades.
    My perspective on the current structure of the Defense Department 
is shaped primarily by my experience as a Secretary overseeing a 
military fighting two wars. I discovered early on that I led a 
department designed to plan for war but not to wage war--at least for 
the long term. The swift victory of the 1991 Persian Gulf Conflict 
seemed to validate all the post-Vietnam changes to our military 
including the landmark 1986 legislation. But the Pentagon was clearly 
not organized to deal with protracted conflicts like Iraq and 
Afghanistan which, contrary to the wishes of most Americans, most 
assuredly will not be the last sustained ground campaigns waged by our 
military.
    In this respect, Goldwater-Nichols succeeded all too well by 
turning the services into force and equipment providers walled off from 
operational responsibilities, now the exclusive domain of combatant 
commanders. This became especially problematic in unconventional 
conflicts requiring capabilities--usually immediately--that were 
significantly different from what was in the pre-war procurement 
pipeline
    Just one illustrative example: while there was--and is--a joint 
process to deal with the on-going needs of battlefield commanders, it 
was left up to the designated military service to reprioritize its 
budget to find the funding for those needs. It will come as no surprise 
to you that with some regularity, the service decided the urgent 
battlefield need did not have as high a priority for funding as its 
long-term programs of record. These were mostly advanced weapons 
systems designed for future conflicts and had near-sacrosanct status 
within the military services, making it difficult to generate much 
enthusiasm for other, nearer-term initiatives that might compete for 
funds.
    I soon learned that the only way I could get significant new or 
additional equipment to commanders in the field in weeks or months--not 
years--was to take control of the problem myself through special task 
forces and AD-HOC processes. This would be the case with the mine-
resistant-ambushed protected (MRAP) vehicles; additional intelligence, 
surveillance and reconnaissance capabilities; shortened MEDEVAC Times, 
counter-IED equipment and even care of wounded warriors.
    I learned that if the Secretary made it a personal priority, set 
tight deadlines, and held people accountable, it was actually possible 
to get a lot done, often quickly, even in a massive bureaucracy like 
the Penatagon. But satisfying critical operational and battlefield 
needs cannot depend solely on the intense personal involvement of the 
Secretary. That is not a sustainable approach. The challenge is how to 
institutionalize a culture and incentive structure that encourages 
wartime urgency simultaneous with longterm planning and acquisition as 
a matter of course.
    A final thought relative to defense organizations and authorities. 
Through my tenure I was privileged to work with two superb Chairmen of 
the Joint Chiefs of Staff--Pete Pace and Mike Mullen--who were true 
partners while still providing independent, occasionally dissenting, 
professional military advice. The Chairman, along with the Vice 
Chairman, is the one senior military officer with a stake in both 
current needs and future requirements. One of the great achievements of 
Goldwater-Nichols was strengthening the position of Operational 
Commanders and the Chairman relative to the Service Chiefs. I believe 
that as a general principle this must be sustained. Service Chiefs have 
a tenure of four years, combatant commanders nominally three years. Yet 
the Chairman and Vice Chairman of the Joint Chiefs of Staff have two 
year, renewable terms. I believe their positions vis-a AE2-vis both the 
Service Chiefs and Combatant Commanders would be strengthened by also 
giving them four-year terms. This would not diminish in the least their 
accountability to the president, the Defense Secretary and the Congress 
throughout their term.
    Second, a subject that has for years been a focus of this 
committee--the acquisition process. Not only has Goldwater-Nichols hit 
the 30 year mark, so too has the Office of the Secretary of Defense for 
Acquisition, Technology and Logistics. AT&L was established because a 
service-driven acquisition system was yielding too many over-designed, 
over-budget and over-schedule programs. The theory was that by giving 
acquisitions responsibility for major programs to a Senior OSD Official 
removed from parochial service interests, wiser and more disciplined 
decisions would ensue.
    So what can we say 30 years on? We have succeeded in building a new 
layer of bureaucracy--with thousands more employees--and new processes 
to feed it. But when it comes to output, the results have been mixed. 
As Secretary I found that, despite all the OSD and Joint Oversight 
Mechanisms, too many major weapons and equipment programs were 
ridiculously over-due, over-cost or no longer relevant to the highest 
priority defense needs. To the chagrin of many inside the Pentagon and 
even more here on the Hill, I canceled or capped more than 30 programs 
in 2009 that, if built out fully, would have cost taxpayers some $330 
billion.
    So where does that leave us today as this Congress considers 
reforms for the future? Problems with the services running acquisitions 
led to greater centralization and oversight through AT&L. But that led 
to another set of problems in the form of a sizeable central 
bureaucracy that adds delays and related costs without discernable 
benefit. So now there is pressure--and legislation--to return 
significantly more acquisition authority back to the services. My sense 
is the right answer lies with finding a better balance between 
centralization and de-centralization than we now have.
    But a strong word of caution. You must not weaken the authority of 
the Secretary of Defense and his ultimate decision-making power on 
acquisition. I cannot imagine a Service Chief or Service Secretary able 
to overcome intense internal pressures and voluntarily do away with, 
for example, programs like the Army Future Combat System, the Airborne 
Laser, the Zumwalt Destroyer or dozens of other troubled or needlessly 
exquisite systems that had built up a loyal service constituency. The 
simple fact is that such decisions are not just programmatic but highly 
political. And only the Secretary of Defense, with the strong support 
of the President, has the clout--the power--inside the Pentagon, with 
industry and here on the Hill to make such decisions and make them 
stick.
    A couple of other observations seem obvious as you and the 
Secretary of Defense address this issue. Nothing will work without 
rigorously applied accountability, within the services, by AT&L and by 
the Secretary. Then there is the importance of basic blocking and 
tackling in acquisitions processes: to wit, high level, rigorous 
control of requirements and limiting changes beyond a certain point to 
avoid the ``Gold Plating'' phenomenon; competitive prototyping where 
possible before program initiation; more realistic cost estimating; and 
revising contract incentives to better reward success and penalize 
failure. Also promising are your legislative efforts, Mr. Chairman, and 
those of Chairman Thornberry in the House, to streamline acquisitions 
processes, eliminate counterproductive regulations, encourage more use 
of commercial products and pricing, and attract more non-traditional 
vendors to the defense markets.
    All that said, at the end of the day, re-drawing the organization 
chart or enacting new acquisitions laws and rules will matter less than 
leaders skilled enough to execute programs effectively, willing to make 
tough, usually unpopular choices, and establish strong measures of 
accountability. And willing to get rid of those not performing well--
whether people or programs.
    In terms of being better stewards of taxpayer dollars more broadly, 
the effort I began in 2010 to reduce overhead costs--and continued by 
my successors--must be renewed and sustained. It was telling that in 
just four months, we found some $180 billion over a multi-year period 
we could cut in overhead. There is, as Deputy Secretary Gordon England 
liked to say, a river of money flowing under the Pentagon, primarily 
funded through catch-all operations and maintenance accounts. As you 
know, there is no line item in the defense budget called ``Waste.'' So 
getting at unnecessary overhead spending without harming important 
functions is extremely hard work--like a huge Easter egg hunt, but it 
can and must be done.
    A brief word here on resisting the usual approach of reducing 
budgets with across the board cuts. I have seen countless Washington 
reform efforts over the years result in mindless salami slicing of 
programs and organizations. That is not reform. It is managerial and 
political cowardice. True reform requires making trades and choices and 
tough decisions, recognizing that some activities are more important 
than others. It is hard to do, but essential if you are to re-shape any 
organization into a more effective and efficient enterprise.
    Further, the Congress must contain its own bad behavior--such as 
insisting on continuing unneeded programs because of parochial 
interests, preventing the closure of the roughly one quarter of all of 
defense facilities deemed excess, burdening the department with 
excessive--and frequently expensive--rules and reporting requirements, 
and more.
    Third, with regard to the interagency process, from time to time 
the idea arises to re-organize the U.S. National Security Apparatus--
put together in 1947--to better integrate defense, diplomacy and 
development--a ``Goldwater-Nichols for the interagency'' if you will. 
Goldwater-Nichols has mostly worked at the defense department because, 
when push comes to shove'' as it often does there--everyone in and out 
of uniform works for one person: the Secretary of Defense. And he or 
she has the last word and can tell everyone to get in line. When 
multiple cabinet departments are involved, however, there is only one 
person with that kind of authority--the President.
    The National Security Council and its staff were created to provide 
the President with an organizational mechanism to coordinate and 
integrate their efforts. How well that works depends entirely on the 
personal relationships among principals and the talents and skills of 
the National Security Advisor. Even this structure, headquartered just 
down the hall from the Oval Office, works poorly if the Secretaries of 
State and defense can't stand one another, as was the case for a good 
part of my time in government; or, if the national security advisor is 
not an honest broker. how well the planning, activities and efforts of 
state, defense and others are coordinated and integrated is the 
responsibility of one person--the president. And there is nothing 
anybody else--including Congress--can do about it.
    I will conclude with three other reasons the nation is paying more 
for defense in real dollars today than thirty years ago and getting 
less. One is that men and women in uniform today drive, fly or sail 
platforms which are vastly more capable and technologically advanced 
than a generation ago. That technology and capability comes with a 
hefty price tag. A second reason for the higher cost is the exploding 
personnel costs of the department, a very real problem on which I know 
you are at least beginning to make some inroads after years of 
futility.
    But the third factor contributing to increased costs, and one of 
immense importance, is the role of Congress itself. Here I am talking 
about the years-long budgetary impasse on the Hill and between Congress 
and the President. The Department of Defense has had an enacted 
appropriations bill to start the fiscal year only twice in the last 
decade--the last seven years all began under a continuing resolution. 
During the first six full fiscal years of the Obama Administration, the 
Defense Department has operated under continuing resolutions for a 
third of the time--a cumulative total of two years. Department leaders 
also had to deal with the threat, and in one year, the imposition, of 
sequestration--a completely mindless and cowardly mechanism for budget 
cutting. Because of the inability of the Congress and the President to 
find a budget compromise, in 2013 defense spending was reduced mid-year 
by $37 billion--all of those cuts applied equally in percentage terms 
to some 2,500 line items of the Defense Budget, and requiring precise 
management of each cut to comply with the Anti-Deficiency Act with its 
criminal penalties for violations. Sequestration effectively cut about 
30 percent of day-to-day operating funds in the second half of fiscal 
year 2013.
    But then add to this mess the fact that the department--probably 
the largest organization on the planet--in recent years has had to plan 
for five different potential government shutdowns. In the fall of 2013, 
with sequestration still ongoing, the Pentagon actually had to 
implement one of those shutdowns for 16 days, affecting 640,000 
employees or 85 percent of the civilian work force.
    It is hard to quantify the cost of the budgetary turmoil of the 
past five years--the cuts, the continuing resolutions, sequestration, 
furloughs and shut-downs, the unpredictability and more. During 
continuing resolutions in particular, the inability to execute programs 
on schedule, limits on being able to ramp up production or start new 
programs, or to take full advantage of savings offered by multi-year 
purchases, the time-consuming and unpredictable process of re-
programming even small amounts of money to higher priority projects all 
impose tremendous costs on the Defense Department--and the taxpayer. 
And this doesn't even begin to account for the costs involved in 
hundreds of thousands of man-hours required to try to cope with this 
externally imposed leadership and managerial nightmare. Moreover, re-
imposition of full-scale sequestration looms in January absent a 
bipartisan budget agreement.
    Given the harm all this politically driven madness inflicts on the 
U.S. military, the rhetoric coming from members of Congress about 
looking out for our men and women in uniform rings very hollow to me. 
Further, this legislative dysfunction is embarrassing us in the eyes of 
the world at a time when allies and friends are looking to us for 
leadership and reassurance.
    All the smart defense reforms you can come up with will be of 
little use if the military is unable to plan, set priorities and manage 
its resources in a sensible and strategic way.
    The failure of congress in recent years because of the partisan 
divide to pass timely and predictable defesne budgets--and its 
continuing parochialism when it comes to failing programs and unneeded 
facilities--has not only greatly increased the cost of defense, it has 
contributed to weakening our military capabilities, and it has broken 
faith with our men and women in uniform.
    This committee, with its counterpart in the house, has long 
supported--on a bipartisan basis--a strong defense and protected those 
in uniform. As you consider needed reforms in the Pentagon, I fervently 
hope you also will urge your colleagues in Congress to break with the 
recent past and place the national interest--and our national 
security--ahead of ideological purity or achieving partisan advantage. 
Because, as you know as well as I, our system of government--as 
designed by the founders who wrote and negotiated the provisions of the 
Constitution--is dependent on compromise to function. To do so is not 
``selling out''--it's called governing. Thank you.

    Senator McCain. Well, thank you, Mr. Secretary--Dr. Gates, 
thank you. Those are very strong words, and I wish that all 535 
Members of Congress could hear the--your closing remarks. I 
will quote them quite often and quite liberally. And it is, 
frankly, a damning but accurate indictment about our failure to 
the men and women in the military, the 300 million Americans, 
and the security of our Nation.
    We are also looking at a debt-limit showdown, Mr. 
Secretary. And we all know that debt limits have to be raised 
because of spending practices, yet we now have a substantial 
number of Members of Congress that, ``By God, we're not going 
to vote to increase the debt limit, and anybody that does is, 
of course, a traitor and doesn't care about fiscal 
responsibility.'' The rhetoric has been very interesting.
    So, we're now looking at sequestration, and we are also 
looking at the debt limit, and we're also looking at a 
President and Secretary of Defense--with the Secretary of 
Defense's support of vetoing a bill that is not a money bill; 
it's a policy bill. That's what defense authorization is all 
about. So, the President's threatening to veto because of the 
issue of not increasing nondefense spending, when there is 
nothing that this committee nor the authorizing process can do 
to change that. I'm sorry to say that members of this committee 
will be voting to sustain a presidential veto on an issue that 
we have nothing that we can change.
    Well, could I just ask, again, on sequestration--I also 
would ask a specific question. In your remarks, it was 
interesting to me that you didn't make a single comment about 
the service secretaries and their role. Do you think we ought 
to do away with the service secretaries, Dr. Gates?
    Dr. Gates. I've thought about that, thanks to your staff 
providing me with some of the issues that you all might want to 
discuss today. And I think that--I think I would say no to that 
question. And I would say it primarily because I think that 
having a civilian service secretary does strengthen the 
civilian leadership and the civilian dominance of our military. 
If there is--and they are able to do so on a day-to-day basis 
in decision making that a single person, like the Secretary of 
Defense, could not do. I mean, I couldn't--the Secretary can 
sort of reiterate that, and make it clear in his actions, that 
civilian control is important, but I think that the symbolism, 
to members of the services, that there is a civilian at the 
head of their own service who is responsible for them, and 
accountable for them, I think, is important.
    Senator McCain. Let me go back over this relationship 
between AT&L, the uniformed service chiefs, the Secretary of 
Defense--and you cited a couple of cases where, by going around 
the entire process as in MRAP, you've mentioned, and other 
cases--where is--go over, for the benefit of the committee, 
the--where is the balance? We're trying to, in this 
legislation, give some more authority and responsibility to the 
service chiefs, who, right now, as I understand it, have none, 
and yet, at the same time, as you said, not return too much to 
the service chiefs because of their advocacy, their view of 
sacrosanct, long-term programs that they believed were 
important to their services. I don't quite get that balance 
there.
    Dr. Gates. Well, and I wish I could give you a precise and 
very specific answer. It seems to me that--I mean, the irony is 
that--for example, when it came to the MRAPs, although I made 
the decisions, it was, in fact, AT&L and the leadership of AT&L 
that executed those programs and that signed the contracts, and 
they were actually implemented, then, by the--the Marine Corps 
actually had the responsibility, because they had originated 
the--the MRAPs were originally their idea, and it was their 
success in Anbar that led me to expand it. But, the problem 
that I ran into in the Defense Department is that any problem, 
whether it's an acquisition or anything else, affects multiple 
parts of the Department, none of which can tell the other what 
to do. So, if the comptroller has a problem, he can't tell AT&L 
what to do. If Cost Assessment and Program Evaluation has a 
problem, they can't tell AT&L or anybody else what to do. They 
only report to me or to the Secretary. And so, the reason I 
found myself chairing these meetings was because there were 
enough different parts of the Department who were involved in 
almost any decision that no one below the Secretary could 
actually get everybody in the room and say, ``This is what you 
have to do.''
    So, how you fix that, institutionally--and I will tell you, 
when Ash Carter was AT&L, was the Under Secretary, and 
particularly in my last 6 or 8 months, Ash and I talked all the 
time, ``Ash, how do we institutionalize this? How do we 
institutionalize meeting these urgent needs along with the 
long-range kind of planning and acquisition that we have?'' 
And, frankly, when I left, we hadn't solved that problem.
    But, it has to--the services do have authority, they do 
have procurement or acquisition authority, and they do have 
senior people in those positions. And, frankly, my sense is 
that there are--a couple that I dealt with seemed to me to be 
quite capable. But, how you realign the roles of AT&L and the 
service procurement or acquisition officers, I don't have an 
easy solution for you. All I can suggest is that there be a 
dialogue between this committee and Secretary Carter and the 
services and AT&L, in terms of how you adjust the balance.
    It is clear to me that the balance has shifted too far to 
AT&L. And therefore, there needs to be some strengthening of 
the role of the services. But, central to that will be forcing 
the service leaders, the Chief of Staff and the Secretary, to 
hold people accountable, and to hold those two people 
accountable for the service. I know Mark Milley was up here 
testifying and said, you know, ``Give me the authority, and, if 
I don't do it right, fire me.'' Well, that's kind of extreme. 
But, at a certain point, accountability is a big piece of this, 
and I just--I don't have for you a line drawing or even a 
paragraph where I could tell you, ``Here's where you redraw the 
balance,'' because I'm not sure right where that line goes.
    Senator McCain. Thank you.
    Senator Reed.
    Senator Reed. Thank you very much, Mr. Chairman.
    Thank you, Dr. Gates, for extraordinarily insightful 
testimony and not only giving us advice but also sort of 
pointing out the questions which you're still trying to 
carefully think through. It'll help us immensely.
    One point you made is that we plan very well for the 
initial phase 1, phase 2, phase 3 operations with our 
equipment, with our personnel. It's the--usually the phase 4 of 
how we sort of conduct protracted war that you predicted would 
be the likely face of conflict in the future. So much of that 
depends upon capacity-building in the local nations, and so 
much of that depends upon non-DOD elements--State Department, 
police trainers, public health systems. I think we've seen that 
so many times, in Iraq and Afghanistan. And this comes back to 
the point I think you've also made about, you know, if these 
agencies are not properly funded or not properly integrated, 
then we could succeed in the initial phase of the battle, but 
fail, ultimately. Is that a fair assessment? And----
    Dr. Gates. Well, I can only remind this committee how many 
times you heard from our commanding generals in both Iraq and 
Afghanistan about the desperate need for more civilians, both 
in Iraq and Afghanistan, and the value that they brought. 
Secretary Rice used to chide me occasionally, reminding me that 
we had more people in military bands than she had in the entire 
Foreign Service.
    I'll give you another example, though, and it's an action 
that--frankly, where the--both the executive branch and the 
Congress are responsible. When I left government in 1993, the 
Agency for International Development had 16,000 employees. They 
were dedicated professionals. They were accustomed to working 
in dangerous and difficult circumstances in developing 
countries, and they brought extraordinary, not only skill, but 
passion. When I returned to government, 13 years later, in 
2006, AID was down to 3,000 employees, and they were mostly 
contractors. And that is a measure of what's happening in the 
development part of our broader strategy. And I would say that, 
you know, for those of us of a certain age who can remember 
USIA in its heyday, what we have in the way of strategic 
communications in our government today is a very pale 
reflection of that.
    So, those--that whole civilian side has been neglected for 
a very long time.
    Senator Reed. And that neglect will be exacerbated by 
sequestration, and they will not--these agencies don't have a 
way to provide at least short-term funding, as DOD does through 
the overseas contingency accounts. They're just stuck. And 
because they don't function well--and I think that's the 
conclusion you draw--our overall national security, our overall 
response in this, is impaired dramatically. Is that fair?
    Dr. Gates. I believe so, yes.
    Senator Reed. And it raises the issue, too, and--because 
this is the subject of a lot of our discussions, is--we have 
tried to find the money for Department of Defense, and the 
account that's bearing the bulk of the differences, both 
budgetary and political, is the overseas contingency account. 
As a means of funding defense on a long-term basis, in your 
view, is that an adequate approach, or should we raise the 
regular budget caps and do it as we thought we used to do it?
    Dr. Gates. Well, first of all, my approach when I was 
Secretary was to take every dollar I could get, wherever I 
could get it.
    Senator Reed. Yeah, I know. That's a----
    Dr. Gates. It's a terrible way to budget. I mean, it is a 
gimmick. It does provide the resources, but I think it's hard 
to disagree with--I mean, the way the things ought to operate 
is that if there is a sense on the Hill, a majority view, that 
the budget needs to be cut to reduce the deficit, you go 
through regular order of business, and you--like I did when I 
was Secretary of Defense, you make tough decisions. What are 
you going to fund? What are you not going to fund? But, you 
make choices. That's what leadership and political life is all 
about, it seems to me. And then you vote a budget, and the 
money flows, whether there's more or less of it. You know, in 
the current paralyzed state, maybe there's no alternative right 
now to getting the money this way, but it is--as the saying 
used to go, it's a helluva way to run a railroad.
    Senator Reed. Well, thank you very much, Dr. Gates, for 
your extraordinary service to the Nation.
    Thank you.
    Senator McCain. Senator Sessions.
    Senator Sessions. Thank you, Dr. Gates, and thank you for 
your service. And I would add my compliments to those of my 
predecessors--prior speakers, that I believe you represent one 
of the best Defense Secretaries the Nation has ever had.
    Dr. Gates. Thank you.
    Senator Sessions. And I know you've served with dedication, 
put the Nation's interests first, you put the Defense 
Department first. Some of your former Cabinet colleagues put 
Secretary of Health first, and education first, and roads 
first. And so, we got pleas from every department and agency, 
and we don't have as much money as we'd like. So, the crisis 
we've entered on the budget process is essentially that the 
President of the United States has said, ``You Republicans care 
about defense. You're not getting any more money for defense 
unless I get more money for nondefense.'' And that's a big 
conflict. And so, the process we moved forward met the Defense 
Department's request and the President's request for defense, 
but it has not met the nondefense increases, all of which, on 
defense and nondefense, are borrowed, because we're already in 
debt. So, anytime we spend more, we borrow the extra money. So, 
it's a difficult time, and----
    But, you are correct, history teaches us that conflicts 
just don't go away. They keep coming back, and we don't know 
what it will be like, and we need a strong national defense. 
And I thank you for your real good advice.
    Briefly, do you believe that, with regard to the extremism 
we're seeing in the Middle East, that we, as a Nation, and our 
allies in Europe, NATO, and other places, should seek to 
develop a strategy--bipartisan in the United States or 
worldwide--to deal sophisticatedly with that threat over 
decades to come? And can we do that?
    Dr. Gates. Senator, I think that--I think we face a 
generation of conflict in the Middle East. I think we have 
four--at last four conflicts going on simultaneously: Shiite 
Islam, led by Iran, versus Sunni Islam, led by Saudi Arabia; 
reformers versus authoritarians; Islamists versus secularists. 
And then the question of whether these artificially created 
countries--Iraq, Afghanistan, Syria--comprised of historically 
adversarial ethnic and religious groups can hold together at 
all. I used to say ``without repression.'' Now the question is 
whether they can hang together at all. Syria has become, if you 
will, the epicenter of all of that.
    Some of you may have read Dr. Kissinger's long essay the 
other day in the Wall Street Journal. My concern is that I 
don't see an overreaching--or an overriding strategy on the 
part of the United States to how we intend to deal with this 
complex challenge for the next 20 or 30 years. And one of the 
benefits of containment--and there were lots of disagreements 
about how to apply it and how--and the wars we fought under it, 
and so on--but, I will always believe that critical to our 
success in the Cold War was that we had a broad strategy, 
called containment, that was practiced by nine successive 
administrations of both political parties. It had bipartisan 
support, the general notion of how to deal with this. We don't 
have anything like that with respect to the Middle East. And I 
think that as long--and so, we're kind of dealing with each of 
these crises individually rather than backing up and saying, 
``What's our long-range game plan, here? And who are going to 
be our allies? Who are going to be our friends? Where do we 
contain? Where do we let it burn itself out?'' We just really 
haven't addressed those long-term questions. It seems to me 
we're thinking strictly in sort of month-to-month terms.
    Senator Sessions. Well, thank you. I think that's very good 
advice for us.
    I believe--I've been around here a good while--I believe 
there's a possibility of a real bipartisan support for that 
kind of long-term vision. We've got big disagreements on 
spending and some other issues that--hard to bridge, but I 
think this one we could bridge. And I appreciate your thoughts 
on that.
    I met with the--some German group yesterday in a very fine 
meeting, and raised the need for Europeans to contribute more 
to their defense and our mutual defense. And the leader of the 
group pointed out it was unacceptable that NATO is funded 70 
percent by the United States. He acknowledged that. You've 
spoken on that in the past very clearly. Do you have any 
further ideas about what we might do to have our allies carry a 
bit more of the load?
    Dr. Gates. Well, this is one area where one might hope, in 
the long term, that Mr. Putin has done us a favor by reminding 
the Europeans that, actually, the world has not gone on to 
broad, sunny uplands where there is peace and tranquility all 
the time. The reality is, many years ago NATO countries all 
committed to spend at least 2 percent of GDP on defense. When I 
left office, there were five countries out of 28 that met that 
threshold, and two of them were Greece and Croatia. So, it 
gives you a measure of where the others need to pull up their 
socks. And, as you say, I spoke very bluntly about this, 
including in Brussels in my last speech in Europe. Probably 
never be welcome in Europe again, either.
    [Laughter.]
    Dr. Gates. But, the--but, no, I--and I think the more 
that--particularly, the more that Members of Congress from both 
parties talk to their counterparts in Parliaments in Europe, 
that can only help, in my view.
    Senator Sessions. Thank you.
    Senator McCain. Senator Heinrich.
    Senator Heinrich. Dr. Gates, in your speech on budget 
austerity at the Eisenhower Library, you said that, quote, 
``Eisenhower was wary of seeing his beloved republic turn into 
a musclebound garrison state, militarily strong but 
economically stagnant and strategically insolvent,'' unquote.
    As you've heard, we've got a lot of digit--very difficult 
appropriations challenges coming up in the next few months, and 
I wanted to ask you if you have any opinions as to what 
Eisenhower might think of the proposal to use the overseas 
contingency operations fund--i.e., the war fund--to cover base-
level DOD budget items, or whether you might have some thoughts 
on that.
    Dr. Gates. Well, I think I expressed my view that these 
kinds of ad hoc arrangements are never at all as satisfying or 
as cost effective as regular-order business in which choices 
are made and decisions are made based on those choices, and 
dollars allocated. And there may be more dollars, there may be 
fewer dollars, but at least people have some predictability. I 
would also tell you that having some predictability year-on-
year would be helpful. And so, I think that, obviously, 
regular-order business, in terms of managing these budgets--
that's really what I was talking about in a good part of my 
remarks--having regular appropriated defense budgets that 
actually begin on the--at the beginning of the fiscal year is 
the way things ought to work, and they have not worked that way 
up here for at least 10 years. That needs to be fixed.
    By the same token, as I said, when I was the Secretary, if 
I were confronted with the situation that I face now, my sense 
would be to take the money, because what's my alternative, and 
what kinds of programs am I going to have to have to cut in 
order to accommodate certain defense needs?
    Let me give you an example of a place where I made a big 
mistake. In 2010, this committee and others were very unhappy 
about supplementals, and talking about moving away from 
supplementals. And I knew that, when the wars were over, those 
supplementals, or now the OCOs, would go away. A lot of the 
funding that we had for military families and for families of 
wounded warriors, and wounded warriors, were being funded 
through the supplementals. I moved all those programs, or as 
many of those programs as I could, into the base budget, in the 
belief we would need those programs for years and years and 
years to come. Well, guess what? All of those programs are now 
being hit by sequestration and by continuing resolutions and 
everything else. So, what I thought would protect those 
programs ended up making them vulnerable; whereas, if I'd have 
left them on the OCOs, they'd still be fully funded. So, those 
are the perverse consequences of not having regular 
appropriations bills.
    I would make one other observation about Eisenhower and his 
military industrial complex speech. It gets quoted a lot. But, 
there's one factoid that people don't usually include. When 
Eisenhower made that speech in 1961, the defense budget 
accounted for 51 percent of Federal spending. Today, it's 15 
percent.
    Senator Heinrich. Shifting gears a little bit with the rest 
of my time. Do you have general thoughts on how you build sort 
of a culture of incentives and values that really value off-
the-shelf solutions, where they're appropriate, within the 
acquisition process and the procurement process, rather than 
sort of having this inherent bias towards exquisite new 
programs and products?
    Dr. Gates. I think that there are obviously areas in which 
you ought to buy off-the-shelf capabilities. And, frankly, one 
of the great cultural shifts in the national security arena 
actually occurred in the early 1980s, when we, in the 
intelligence arena that had always led the way in developing 
data processing, data storage, data management, were 
discovering that the private sector was far outstripping us in 
terms of their capabilities. And so, beginning in the mid-'80s, 
we began buying off-the-shelf software; and hardware, for that 
matter. So, there are areas like that, where I think that, in 
fact, the private sector is way ahead of the government and 
where we can buy off-the-shelf capabilities that will actually 
improve our capabilities. There will be some areas--and these 
are always the areas that are contentious, but--that have to do 
with some specific military capabilities where you are in the 
realm of completely new technology, and those are the places 
where you're going to have to take risk and you're going to 
have to realize that there probably are going to be cost 
overruns. Most of the highly advanced--technologically advanced 
programs defense has had for the last 30 or 40 years have all, 
in their initial years, had cost overruns. And partly it's 
because we're dealing with, and trying to do, things that have 
never been done before.
    Senator Heinrich. Dr. Gates, I want to thank you for 
subjecting yourself to this today. We appreciate it.
    [Laughter.]
    Senator McCain. Senator Inhofe.
    Senator Inhofe. Thank you, Mr. Chairman.
    And, Dr. Gates, I agree with the statement that was made by 
our Chairman, that there's no one better suited for the reform 
that we're looking at, and we're hoping for and we're 
anticipating, than you. And I also want to say that, during the 
various incarnations you've had, I've always enjoyed personally 
working with you. You've gone out of your way to have dinners 
with individuals and really tried to work with us more than 
anyone else has. So, I thank you for that.
    You know, you observed that in 1961 it was 51 percent of 
the budget, and it's now 15 percent. And that's a problem. It's 
the lowest percentage since World War II, I guess. But, that 
isn't the problem we're addressing today. That is a problem, 
but what we're talking about is the tooth and the tail.
    Now, both you and Secretary Hagel sought to shrink the 
inflated headquarters and major combat commands' tasks during 
the--your respective times as Secretary of Defense. Secretary 
Carter initiated a targeted 20-percent reduction in the staff 
during his deputy time--Deputy Secretary. And in August of this 
year, Deputy of Defense Secretary Robert Work sent all services 
a memo entitled ``Cost Reduction Targets for Major 
Headquarters,'' ordering preparation for a 25-percent cut in 
appropriations from 2017 to 2020. I think that's great, and we 
supported it. In fact, our defense authorization bill has a lot 
of language in there that says this is what we're going to--we 
need to do. And it's a major problem.
    Let me just ask you to think about something that hasn't 
been brought up yet. It's an observation that I've made a long 
time ago. And that is the problem you have with bureaucracies 
in general. Bureaucracies don't want to get smaller, they want 
to grow. It was Reagan who said, ``There is nothing closer to 
life eternal on the face of this Earth than a government agency 
once formed.'' We both remember that. I--and so, every time it 
seems that there is a bureaucracy that is asked to reduce its 
overhead--and that's what we're talking about today, the 
headquarters, its overhead--they will pick out--cherry pick 
something that they do that the public is so concerned about.
    Let me give you an example. I've introduced legislation--in 
fact, I passed legislation that addresses the FAA and their 
treatment of general aviation. I have a second bill called the 
Bill of Rights II. I had problems with reams and reams of 
bureaucrats from that Department out lobbying, knowing they had 
a lot of people out there on their staff. If you look at the 
FAA--in 1990, their--the total number of pilots that they 
regulated, which is primarily what they were doing in the year 
2000, was 625 pilots. Today it's 593 pilots. So, the workload 
is actually reduced. And yet, in the year 2000, their budget 
was $9.9 billion. Today, it grew from $9.9 billion to $16.6 
billion. So, that's an increase of $67 billion. Now, what did 
they do--every time there is some kind of an effort by me, on 
the radio, or something else, talking about how it is an 
inflated bureaucracy that doesn't have the workload they had 5 
years ago, that their budget is 67 percent more. Every time 
they do that, they would say, ``All right, we'll go ahead and 
start reducing.'' What did they reduce? They reduced things 
that scare people. They reduce thing--the controllers--the 
number of controllers that are out there. And I could give you 
a lot of examples, but I don't have to, because I know that you 
know this.
    So, is there a way to handle this? I think that should be 
considered in this whole discussion. And, even though I had to 
leave to another committee hearing, I don't--I suspect that 
part wasn't brought up. What are your thoughts here?
    Dr. Gates. It just so happens, Senator, that, in January, I 
have a new book coming out----
    [Laughter.]
    Dr. Gates.--that specifically addresses--the subtitle is 
``Lessons on Change and Reform from 50 Years of Public 
Service,'' and it's how you lead and change big bureaucracies, 
and how you bring about change. And one of the elements in that 
book, for example, is how to use a period of budget stringency 
to change the way an organization does its business. It creates 
an opportunity for a leader who's determined to change things 
and make them better, because you don't have enough money to do 
all the things that you've been doing, and, therefore, you have 
to think about how you'd do it differently.
    I had--we had a lot of programs that--as we referred to 
earlier--in a 4-month period, we came up with $180 billion in 
overhead cuts in the Defense Department over a multiyear 
period. This was in 2010. Now, some of those cuts created a 
strong reaction, including here on the Hill. Senator Kaine will 
recall the reaction when we--when I shuttered Joint Forces 
Command in Norfolk. And I had the entire Virginia delegation on 
my doorstep. Actually, in my office. And----
    [Laughter.]
    Senator McCain. And the then-Governor.
    Dr. Gates. And the then-Governor.
    [Laughter.]
    Senator McCain. Who was the worst.
    [Laughter.]
    Dr. Gates. The point I'm trying to make is, first of all, 
we cut $80 billion out of the Defense Department, generally, 
but what I assigned the services to do was to find $100 billion 
in cuts on their own, just in the services. But, what I did, 
with the approval of the President, was to tell them, ``If you 
find $100 billion--if you find the cut, if you meet the target 
that I've given you, and then you show me new military 
capabilities or expanded military capabilities that are 
actually tooth, I'll give you the money back to invest in 
those.'' So, they were incentivized. It wasn't a zero-sum game 
for them, where anything they identified, they were going to 
lose. But, it forced them to address this tail-and-tooth issue 
and created both penalties if they didn't achieve the goals, 
but an incentive for them to find and be successful in the 
effort.
    One of those things--and it goes to one of the questions 
that the committee is addressing--the number of general 
officers. As part of that exercise, we took an initial swipe at 
senior leadership in the Department, and our objective--and I--
this is one of those things you start and you never know 
whether it came out--but, we proposed cutting 50 four-star 
positions--or 50 general-officer positions and, I think, twice 
that number of senior civilian positions.
    You can do this. But, the thing that it requires, whether 
it's the FAA or the Defense Department or anyplace else--it 
requires the person in charge to monitor it almost daily and to 
make sure that people are doing what they said--what they 
signed up to do or the assignment that they were given. In 
effect, you have to regularly grade their homework. You can't 
tell somebody--you can't tell a service secretary, ``I want you 
to cut $25 billion in overhead over the next 5 years,'' and 
then, a year later, ask him how he's doing. What you need is to 
ask him in 2 weeks, ``What's your plan?'' And in a week after 
that, or 2 weeks after that, ``How are you doing on 
implementation?"
    So, you can do these things, Senators. You can make these 
bureaucracies work. And that's kind of the thesis of the book, 
but it's kind of, How do you do that? Because it clearly is not 
done very often. And one of the things that I did, and for 
which this committee expressed a great deal of appreciation at 
the time, was actually holding people accountable. You know, 
people get fired in Washington all the time for scandals and 
doing things wrong and that kind of stuff. Hardly anybody ever 
gets fired in this city for just not doing their job well 
enough.
    Senator Inhofe. Yeah. Good for you.
    Dr. Gates. I mean, that's what was rare, was somebody 
getting fired because they didn't do their job well enough. You 
need a little bit more of that in this city.
    Senator Inhofe. Yeah. Well, my time is expired, but that's 
a great answer to that question, and I appreciate it. And, by 
the way, I'll swap you books. I have a chapter in mine on this, 
too.
    [Laughter.]
    Senator Inhofe. Thank you, Mr. Chairman.
    Senator McCain. I hope they're available on audio.
    [Laughter.]
    Senator McCain. Senator Hirono.
    Senator Hirono. Thank you, Mr. Chairman.
    Dr. Gates, thank you very much for your very strong 
statement about Congress's responsibility to govern through 
compromise. And we have been wrestling with the very negative 
impacts of sequester on both a defense and nondefense side, so 
my hope is that there will be a compromise that will achieve 
sequester relief for both sides, both segments, because 
national security is more than just defense. I'm not trying to 
lecture you or anything, because I certainly respect your 
views.
    You mentioned, during the Cold War, that we had a broad 
strategy of containment. And with all of the conflicts that 
continue to arise in the Middle East--and I think you did note 
that we're in an environment now where some of these conflicts, 
or maybe many of these conflicts, are unpredictable, that we 
don't have a strategy, like strategy in the Middle East. Now, I 
think, after our experience--decade-long experience in Iraq and 
Afghanistan, that there is a desire that boots on the ground in 
the Middle East should not be United States boots. So, from 
that flows a number of possibly what I would consider strategic 
kinds of decisions. And so, that may be one of the reasons--our 
unwillingness at this point to put our own boots on the ground 
in the Middle East may be one of the--would you consider that 
a--perhaps not a strategic decision, but one that really--from 
which flows a lot of the--our response to what goes on in the 
Middle East?
    Dr. Gates. Well, first of all, I think, when it comes to 
something that specific, it would be a mistake to have, in 
essence, a one-size-fits-all that basically says, from Pakistan 
to Morocco, the United States will have no boots on the ground. 
The truth is, we have--just as one example, we have 600 sets of 
boots on the ground in Sinai as part of a peacekeeping 
operation that's been there since the 1973 war. Are we going to 
pull those guys out because that's boots on the ground? We 
have----
    Senator Hirono. No, but--well, we're talking about in 
combat----
    Dr. Gates. Well----
    Senator Hirono.--and in long-term.
    Dr. Gates. But, my point is, then you're beginning to make 
some distinctions. So, you could have boots on the ground as 
long as they're not in combat. So, does that allow advisory 
work? Does that allow them to be spotters for airplanes?
    So, I guess my feeling is that the first thing about a 
strategy is identifying what are our interests, what are we 
trying to--what are we trying to protect? What are we trying to 
prevent from happening? And then you work back from those 
answers into the techniques, the tactics by which you try to 
accomplish those broader objectives or that broader strategy. 
And I think that the solutions, particularly where the 
situations are so complex in the Middle East, where you have 
multiple different kinds of conflicts going on, the solution 
for each country or each part of the problem may be different. 
But, you do need an overarching strategy that at least tells 
you: What am I trying to achieve out here?--and that also--I 
mean, if I had to put a negative in there of what we think 
we've learned, it is to be very modest about our ability to 
shape events in that part of the world. That doesn't mean we 
should stay out. It doesn't mean we should do nothing. But, we 
also ought to make sure that our strategy doesn't include 
grandiose objectives that are fundamentally unachievable.
    Senator Hirono. I agree with you there. Perhaps one of the 
areas of the world where we do have what I would consider a 
strategy is in the Asia-Pacific area with the Indo-Asia-Pacific 
rebalance. Would you agree that that is a strategy?
    Dr. Gates. Yeah. And I think, you know, despite--you know, 
going back several Presidents, we've had several Presidents, 
during their campaigns, take one position toward China, which, 
when they became President, they adjusted. And so, I think, 
while we don't have, if you will, an explicit bipartisan 
agreement on strategy in Asia, I think there is a pretty broad 
agreement across both parties, the leaders of both parties, in 
terms of how we--except for maybe one or two presidential 
candidates--about how you deal with China, how we--how--what 
our strategy ought to be in Asia. So, I--I guess I'm 
fundamentally agreeing. I think, in Asia it's more implicit 
than explicit, but I think there is a pretty broad bipartisan 
agreement on the role we ought to play in Asia.
    Senator Hirono. Thank you very much.
    Senator McCain. Senator Ernst.
    Senator Ernst. Thank you, Mr. Chair.
    Thank you, Secretary, very much for being here. I 
appreciate your service to the Nation in your many, many 
capacities. So, thank you.
    Secretary, you were successful in getting MRAPs, body 
armor, and drones to the field to support our warfighters. And 
to do that, even while we were undergoing sustained ground 
combat, you really had to fight the bureaucracy at the Pentagon 
to achieve that. So, we're glad that you did that and you took 
that step to make sure our warfighters were protected. But, I 
am afraid that, after you left, it has reverted back to the 
same old, same old. I'd like to see some more pushback out 
there.
    But, just for example, the Army has spent 10 years trying 
to figure out how to by a new handgun. Ten years on how to buy 
a new handgun, an end item with a total cost of just a few 
hundred dollars per item. Ten and a half years, or half a dozen 
industry days later, the Army produces a 351-page request for 
proposal--351 pages--for a handgun. And whatever is in these 
pages, it isn't a lean or streamlined acquisition process 
responsive to the needs of our warfighters. And, because of the 
bureaucracy and a lack of responsiveness to anyone who isn't 
engaged in the Special Operations arena, our soldiers have 
handguns that are over 30 years old; and, in recent surveys, 
they have stated that they absolutely hate those small arms. 
What should Congress do to get the Army to fix this mess for 
small arms and for all items, really, that our soldiers need on 
the ground in a time of war?
    Dr. Gates. Well, it seems to me that--I mean, my friends in 
the Army are not going to like my answer, but----
    Senator Ernst. That's okay.
    Dr. Gates.--but, I think--you know, what it is about is 
calling the Secretary of the Army and the Chief of Staff of the 
Army and the Chief of Acquisitions to sit at this table and ask 
that question, ``Why has it taken you guys 10 years?'' This is 
absurd. And, ``Why is it a 350-page RFP?'' It's a handgun, for 
God's sake.
    And, you know, again, I always come back to the same theme. 
Most bureaucracies have a stifling effect. It's just in the 
culture. It's in the DNA. And what is required are disruptors. 
And if you have people in senior positions who are not 
disruptors, you need to make them into disruptors. And the way 
you do that is by holding them personally accountable.
    Senator Ernst. I appreciate that, thank you. And I like 
that answer, so I don't know why they wouldn't. But, I think 
you're right on, there.
    I would like to talk a little bit about the Middle East, as 
well. In the past, you've called for a safe haven to help end 
the humanitarian disaster in Syria. And I'd like to direct my 
attention to Iraq, because we do have a humanitarian disaster 
in Iraq, as well. I believe we have a safe haven there, which 
is Iraqi Kurdistan. They have taken in nearly 1.6 million 
refugees. Many of them are Christians. And our KRG friends who 
are providing that safe haven, they are really unequipped to 
provide for the influx of all those folks. The Peshmerga are 
also fighting, with limited resources, against an enemy which 
seems to have an endless supply of weapons and other types of 
equipment, to include many weapons procured through various 
processes from the United States, whether that's simply picking 
items up off the ground that have been left behind via other 
security forces. So, how important, in your opinion, has the 
United States relationship with the Iraqi Kurds been for our 
country and for the DOD over the past quarter of a century?
    Dr. Gates. Well, I think it's--I think it's a very 
important relationship. I think it's worth noting that I think 
the Chairman of the Joint Chiefs is either there right now or 
has just been there.
    I mean, my view is that one of the things we ought to be--I 
said this in an interview, and I probably was a little more 
blunt than I should have been, but I think that the idea of 
training indigenous fighters outside of a country, and then 
reinfiltrating them, was probably never going to work. I think 
one of the things that could work is to identify groups, 
particularly tribes and ethnic groups, that have shown they are 
prepared to defend their own territory against ISIS, and 
provide weapons to those tribes and those religious groups. 
They may not fight in Iraq or outside of their own turf against 
ISIS, but they may well fight to the death to protect their own 
homeland, their own villages, and so on. And so, finding those 
groups and arming them at least begins to contain ISIS and 
presents them with a diverse number of enemies that make it 
difficult for them to further expand their activities. And I 
would include, above all among those groups, the Kurds.
    Senator Ernst. Thank you very much. I appreciate your 
answer, Secretary.
    Thank you, Mr. Chair.
    Senator McCain. That was what the Anbar Awakening was all 
about, right, Mr. Secretary? My crack staff tells me that, in 
this RFP, the Army specified everything the handgun needed to 
do, including comply with the current boar brush, but they 
didn't specific what caliber the weapon should----
    [Laughter.]
    Senator McCain. Governor Kaine.
    Senator Kaine. Thank you, Senator and--McCain--Mr. Chair.
    And thank you to you, Dr. Gates, for your service. And we 
have a special affection for you because of your service to 
your alma mater, William & Mary.
    I want to really focus on the last bit of your testimony, 
which is what Congress can do better, and, in particular--we 
have a hearing right now in the Budget Committee about Federal 
budget reform. You testified that, I think, only 2 years during 
the years that you were the Secretary of Defense (SECDEF) were 
you dealing with a full appropriations bill on the first day of 
the fiscal year. Otherwise, you were dealing with CRs. You and 
your colleagues in the Secretary of Defense dealt with CRs, you 
dealt with sequestration, you dealt with furloughs, you dealt 
with threats of all of the above, you dealt with brinksmanship 
over debt ceiling limitations, you dealt with a high degree of 
uncertainty as you're planning, you know, ``Do I--what scenario 
do I run, in terms of the resources that I'll have? Will I have 
it--are we going to have to absorb the full sequester, be it 
the budget caps? Will there be some relief?"
    Talk a little bit about the strategic challenge that it 
presents to the entire defense mission of the United States 
when you're dealing with the degree of congressional budgetary 
uncertainty that we've seen in the Nation in the past number of 
years.
    Dr. Gates. Well, it--as I said in my comments, we have had 
a--an appropriations bill at the beginning of the fiscal year 
twice in the last 10 years. And, believe me, it was, I think, 
probably the 9th and 10th year ago. I submitted, through the 
President, five budgets to the Congress as Secretary, and never 
once had an appropriation at the beginning of the fiscal year.
    The problem is, you then have to straight-line your 
spending, you have to adjust all of your spending, because you 
can't spend--you can't start anything new, you can't spend 
anything more on anything. And then you get several months into 
the fiscal year, and all of a sudden you've got money. So, 
instead of disbursing the money over a 12-month period in a 
rational and planned way, you have to hurry up at the end of 
the fiscal year. When you get a cut of 30 percent in the 
operations budget halfway through the fiscal year, which is 
what happened in 2013 because of sequestration, that's when you 
ended up with a third of the Air Force Active Duty fighter 
wings grounded. That's when you didn't have the money to deploy 
the Harry S. Truman to the Persian Gulf. Those are the very 
real consequences.
    And this uncertainty ripples down to every level. And so, 
what you have are commanders at lower levels not wanting to get 
caught short, so they're very conservative in the way they 
spend their money, because they don't know what's going to 
happen. And so, you have less training, less exercises, less 
maintenance. I mean, these are all the things that can be put 
off, and they are being put off. And the backlog of maintenance 
in the Navy, for example, is becoming huge, but it's because of 
this uncertainty of when we're going to get something.
    I mentioned, in my prepared statement, often in the--in a 
program--in a development of a program, you--when you move from 
one year to the next, you create the opportunity to 
significantly ramp up production. And when you ramp up the 
numbers, the costs go down. You lose those opportunities if you 
don't have the money to ramp up because you don't know whether 
you're going to have the resources to do that, or even the 
authority, if you've got a continuing resolution.
    So, it has--you know, I mean, it has a huge ripple effect--
even a continuing resolution--a huge ripple effect throughout 
this entire giant organization, and you just--you know, I used 
to say--I used to say, when testifying up here, I'd say, ``You 
guys expect me--I've got the biggest supertanker in the world, 
and you expect me to run it like a skiff.'' And that's just 
impossible.
    Senator Kaine. Let me compare uncertainty, because, at the 
start of your testimony, you talked about there can be a 
conventional wisdom that you challenge that, ``Oh, the world is 
more uncertain now than it's been--more dangerous than it's 
been,'' but you sort of walked through from World War II to 
today, and you pointed out, decade by decade, the challenges. 
And, while we may not be able to predict the next challenge, 
that there will be challenges is actually fairly easy to 
predict, based on past history. You've testified that you don't 
think the Overseas Contingency Operations (OCO) account is 
particularly smart, in terms of budgeting. And you would try to 
put stuff in the base account. But, it seems to me that the 
mission of national defense is probably, in real terms, kind of 
more threatened by uncertainty here than uncertainty in the 
world. Bad things are going to happen in the world, and we know 
it. And we're not necessarily going to be able to stop that. We 
can predict that they will, even if we can't predict the 
particular one. The uncertainty that we can fix here is the 
uncertainty of our own budgetary dysfunction.
    Dr. Gates. I sometimes say--when I'm talking to groups and 
at universities, I get asked, ``What's the biggest national 
security threat to the United States?'' And I say, ``Well, 
fundamentally, and I'm not kidding, it can be found within the 
two square miles that encompass the Capitol building and the 
White House,'' because if we can't solve these problems, if we 
can't get through and begin to address some of the tough 
problems facing this country, there is no single foreign threat 
that is more dangerous to the future of the United States than 
that.
    Senator Kaine. Thank you, Dr. Gates.
    Senator McCain. When you have the CRs and the sequestration 
that you mentioned, and the uncertainty that it breeds, doesn't 
it, over time, have a significant effect on morale and 
retention?
    Dr. Gates. Absolutely. And I think, you know, if Bob Hale, 
who was referenced earlier, who was the comptroller while I was 
Secretary--Bob wrote an article about the consequences for 
morale of all of these changes and all this uncertainty and so 
on. People just get discouraged. I mean, they do all this 
planning, and they do--and then it all comes to naught. And, 
you know--and I told General Odierno and General Amos, before I 
left--I said, ``My biggest worry is how you--as these wars ramp 
down--is how--you have given these young officers and NCOs 
amazing independence and opportunity to be entrepreneurial, 
innovative, thoughtful, and out there on their own doing 
amazing things"--these are really the captains and the NCOs' 
wars--I said, ``And if you bring them back to the Pentagon and 
put them in a cubicle, you're going to lose them, you're going 
to lose the best of these young people.''
    I believe that this continuing uncertainty about the 
future--I mean, pilots join the Air Force to fly. People join 
the Army to drive tanks and other equipment. People join the 
Navy to go to sea. And when you tell them you're not going to 
train as much as you thought you were, you're not going to fly, 
you're not going to sail, you're not going to drive as much as 
you thought you were, I think there's a very real risk that 
these uncertainties are going to lead to a bleeding out of some 
of the most innovative and desirable young people we have in 
the military who just, frankly, get fed up.
    Senator McCain. Senator Ayotte.
    Senator Ayotte. Thank you, Chairman.
    I want to thank you, Dr. Gates, for your incredible record 
of service to our country.
    And I certainly hope, as you have rightly said to us today, 
that we can come together to address sequester with a budget 
agreement that is going to make sure that you have that 
certainty and that our men and women in uniform have that, 
given the challenges we are facing around the world, so that 
they can plan and make the right decisions that need to be made 
to make sure that the Nation is safe.
    I want to shift gears a little bit and ask on a topic, 
first of all, that I noticed, in an op-ed that you and 
Secretary--former Secretary of State Condoleezza Rice wrote 
recently on the situation with Russia and the engagement that 
Russia is taking in Syria to keep Assad in power, in 
cooperation with the Iranians. And wanted to ask your thought 
process about, as we look at what Russia is doing right now, 
what you think that their goals are, and also what you think we 
should be taking as steps.
    We recently had testimony before this committee from 
General Keane and General Jones, both very distinguished 
retired generals, and one thing they said really struck me, 
that they believe that if we continue the current course with 
our interactions with Russia, they believe it could be the end 
of NATO if NATO doesn't further step up, also, to help address 
not only this--we think about what's happening in Syria, but 
also the situation with Ukraine and what is happening in that 
region.
    So, I wanted to get your thoughts on Russia and where you 
think we should be stepping up.
    Dr. Gates. Well, I had a number of opportunities to 
interact with Mr. Putin when I was Secretary. We actually had 
an interesting relationship because of our respective 
backgrounds in intelligence. I would sometimes remind him that 
I was Deputy Director of the Central Intelligence Agency (CIA) 
when he was a lieutenant colonel serving in southern East 
Germany, but----
    [Laughter.]
    Dr. Gates. What Putin has been most impacted by, in my 
view, was the collapse of, not just the Soviet Union, but the 
Russian Empire. Russia's borders today are roughly what they 
were when Catherine the Great was Empress. Ukraine has been 
part of the Russian Empire for a very long time.
    Putin is all about lost power, lost glory, lost empire. And 
he is not crazy. He is very much an opportunist. But, what--I 
think he has two basic strategic objectives. The first is to 
restore Russia to great-power status so that no problem in the 
world can be addressed without Russia's involvement and without 
Russia's agreement. And the second is as old as the Russian 
Empire itself, and that is to create a buffer of states 
friendly to Russia on the periphery of Russia. And if he can't 
create friendly states, then frozen states, where the West can 
no longer expand its influence, and Russia can hold--have at 
least a barrier. And that's what happened, if you will, in 
eastern Ukraine.
    So, I think those are his objectives, and I think that he 
will be very opportunistic in pressing those objectives. But, 
at the same time, he is not a madman. And I think if he runs--
if he encounters resistance, he will hesitate, he will pull 
back.
    And so, I think that he has seen an opportunity to cement 
Russia's position in the Middle East through helping Assad. I 
don't think--as I--as Condi and I said in the op-ed, he's not 
particularly sentimental. When the time comes for Assad to go, 
Putin will be happy to throw him overboard whenever that's 
convenient, as long as Russia has another person coming in who 
will be attentive to their interests and allow them to keep the 
naval base at Tartus and their position--their military 
position in Syria.
    So, the question then is, What do you do about this? And I 
think that--oh, and I guess one other thing I would add is--
also in the back of Putin's head: as he sees opportunities, if 
he also has the opportunity to poke the United States in the 
eye, he will never miss that opportunity.
    So, the question is, How do you--where do you resist him? 
Where do you push? And frankly, in Ukraine, Putin has 
escalation control. He has a lot more forces on the Ukrainian 
border than we or North Atlantic Treaty Organization (NATO) can 
put on the opposite side, or are willing to put. We also happen 
to have a pretty dysfunctional government in Kiev, which makes 
our trying to help them even more difficult.
    So, the question is, then, Where do you have the chance to 
establish some limits? And it seems to me one of those places 
where he is at the end of a long supply line, and we have some 
real assets, is in the Middle East. And I think that there is 
an opportunity to draw some lines in Syria that--let me frame 
it another way.
    I think we should decide what we want to do in Syria, 
whether it's a safe haven or anything else, and basically say--
just tell the Russians, ``This is what we're going to do. Stay 
out of the way.'' And if it's a safe haven, and it's in an area 
that doesn't threaten Assad's hold on power, then it seems to 
me that the chances of them challenging us are significantly 
reduced.
    But, at a certain point, first of all, I think we need to 
stop talking about whether these actions make them look weak, 
or he doesn't know what he's doing, or whatever. I think he 
knows exactly what he's doing. And at least in the short-to-
medium term, he's being successful at it.
    Senator Ayotte. Thank you.
    Senator McCain. Fortunately, he's in a quagmire.
    Governor King.
    Senator King. Thank you, Mr. Chairman.
    Dr. Gates, welcome. It's a delight. Your testimony has been 
provocative in many ways.
    In fact, one of the--my first comment is, you talked about 
the USIA. And we abolished the USIA in 1998, and now its 
successor agencies have, according to my quick calculations, 
about half the budget that it had, and yet, one of the reasons 
we're having such a problem with ISIS is, we're losing the war 
of public opinion, particularly in the Middle East. That was 
a--in retrospect, a strategic error, in terms of our ability to 
combat the idea, which is a very important part of this 
conflict. Would you agree?
    Dr. Gates. Totally. You know, I would run into people from 
Pakistan to Morocco and elsewhere, and they would say they 
learned to speak English in a USIA library. We had a--USIA 
libraries in virtually every major city in the world. And these 
guys would go there as kids. They would say, ``We went there 
because it was the only building in town that was air-
conditioned.''
    [Laughter.]
    Dr. Gates. But--they learned to speak English, but they 
also learned something about America. And these libraries and 
these activities were very important.
    And then, obviously, during the Cold War, we had all these 
capabilities. And it wasn't just USIA. CIA had a huge covert 
propaganda operation going on. We infiltrated millions of 
miniaturized copies of the Gulag Archipelago into the Soviet 
Union over the years, and magazines and stuff like that.
    So, it was both an overt--a complementary overt and covert 
policy that extended the reach of the message that the United 
States wanted to communicate to other countries, 
extraordinarily--and we--what we have now is a pale reflection 
of all of that.
    Senator King. And yet, that's an essential element of the 
war that we're in now.
    Dr. Gates. Absolutely.
    Senator King. Second point. You talked about how to fix the 
bureaucracy. And I kept thinking, as you were talking, what you 
were really talking about is leadership, that organizational 
structure, you can mess around with, you can change. And then, 
when you talked about the budget process here, we could change 
things, have a biennial budget or a different kind of budget. 
But, the--we have a budget process: pass authorization bills 
and then pass appropriations bills. We don't do it. Wouldn't 
you agree? It's really a failure of leadership. It's not a 
failure of structure or good intentions.
    Dr. Gates. It is a failure of politicians to do politics. 
Politics is about leadership, but also about making choices and 
making decisions.
    You know, one of my favorite Churchill quotes is, ``Having 
one's ear to the ground is a very awkward position from which 
to lead.''
    [Laughter.]
    Senator King. My favorite--I'll trade Churchill quotes--my 
favorite is, ``Success consists of going from failure to 
failure without a loss of enthusiasm.''
    [Laughter.]
    Senator King. We had a very interesting hearing last week 
on the aircraft carrier and overruns. And as we got into the 
subject, it became apparent that one of the problems was trying 
to cram a lot of new technology into a--an asset that's going 
to have to last 40 or 50 years. You could say the same about 
the F 0935 or other new weapon systems. How do we deal with the 
problem of new technology, which involves risk, which involves 
time, which involves mistakes and rework, and yet we can't 
afford to be building obsolete weapon systems? Do you see the 
challenge?
    Dr. Gates. Well, I think that--let me use a--an example 
from when I was Secretary. I stopped one new bomber program, 
because I thought it was headed down the wrong path. And I 
ultimately, before I left, approved the next- generation bomber 
that the Air Force is bringing before you all. But, I told them 
that they had to design it with a couple of things in mind. 
First of all, they needed to be--we didn't want to repeat the B 
091--or the B 092 bomber, where, because we kept reducing the 
buy, we ended up with 20 of them, and so they ended up costing 
$2 billion apiece. So, when we lost one on Guam, that's 5 
percent of our bomber force, and it's $2 billion. So, I said, 
``You've got to build it--you've got to design it so that you 
can buy at least 100. And you have to keep the cost--you have 
to start with technology that you understand.''
    So, your colleague was talking about off-the-shelf 
hardware. I think that, you know, if you look at the B 0952--I 
was born and grew up in Wichita; they built the B 0952 when I 
was in elementary school and middle school. And they're still 
flying. Now, there's not much original left in the B 092. But, 
the point is, those planes were built in such a way that we 
have been able to enhance their capabilities as new technology 
has come along, for decades. That's what we need to do with the 
next-generation bomber. It needs to be something that we know 
we can get off the ground for a reasonable price, and then, as 
new technologies become available, integrate them into that 
system.
    Whether you can do that with an aircraft carrier--I got 
into a huge amount of trouble with the Navy League several 
years ago, when I made the mistake of telling them, at their 
meeting, ``We ought to think long and hard about the long-term 
missions of aircraft carriers,'' and particularly as China was 
working on their anti-access area-denial capabilities.
    But, I think that--I mean, we need to think about these 
systems more in terms of how we can get the best technology we 
can, that we have available, that we know works; build it, and 
then enhance it as we go along. That may not get you the most 
tremendously advanced capability, but you'll have a larger 
number.
    I mean, one of the reasons the number of Navy ships is down 
so far is because each ship has become so incredibly expensive. 
And, you know, the old line is, ``Well, we have a lot of 
quality.'' I mean, there's a lot of technological capability in 
these things. Another one of my favorite quotes from an 
unlikely source is Josef Stalin, who once said, ``At a certain 
point, quantity has a quality all of its own.''
    [Laughter.]
    Dr. Gates. And it goes to the Chairman's point, you can't 
have the same aircraft carrier in the Persian Gulf and the 
South China Sea at the same time. So, we've got to figure out a 
way--you know, having the most advanced technological whatever 
in the world doesn't help you much if you can only afford to 
build 20 of them. So, better to have something that has 
somewhat less capability, where you might be able to build 
hundreds----
    Senator King. And modular----
    Dr. Gates.--and then upgrade them.
    Senator King. And modularize it in some way so that you can 
upgrade. I think that's an important concept.
    Thank you. Appreciate it.
    Thank you, Mr. Chairman.
    Senator McCain. In the defense bill, we do require studies 
on other platforms. Maybe not do away with the carrier, but 
certainly the dependency on one company building it is part 
of--I think, contributes to the overrun problem. I think you 
would agree, Dr. Gates.
    Dr. Gates. The absence of competition is never good.
    Senator McCain. Senator Cotton.
    Senator Cotton. Secretary Gates, thank you very much for 
your lifetime of service to our country and its national 
security interests; in particular, your 4 and a half years as a 
wartime Secretary of Defense, when your actions saved hundreds, 
if not thousands, of lives of troops in Iraq and Afghanistan.
    Dr. Gates. Thank you.
    Senator Cotton. Appreciate it.
    In those many years as a leader in America's national 
security establishment, can you recall a time when our 
strategic interests were as threatened as they are today across 
the Eurasian supercontinent?
    Dr. Gates. Well, I think, you know, we have--as I mentioned 
at the very beginning of my remarks, every decade has had a 
variety of challenges. I think it's probably fair to say that 
we've not had as many challenges in as many and widespread 
parts of the world as we do today, that the occasions that that 
has happened have been pretty rare, I think.
    Senator Cotton. The one country that spans across the 
entire continent and has a global interest, you might say, like 
the United States, is Russia. Given some of Russia's recent 
provocations, not just in Europe, but in the Middle East, do 
you think that, as part of defense reform, we should relook at 
our basing structures in Europe, to include the possibility of 
moving permanently stationed troops to the front lines of NATO, 
the Baltics, if not Poland?
    Dr. Gates. I think that we need to increase--well, first of 
all, let me say, I agree with the steps that have been taken to 
increase the presence of NATO and United States forces in 
eastern Europe, particularly in Poland and in the Baltic 
states. I think the idea of having equipment sets, as the 
Pentagon is thinking about, has a lot of merit, in terms of 
having the equipment already pre-positioned in Europe. I think 
I would work very closely with our NATO partners, in terms of 
the wisdom of having permanent United States bases in Poland or 
in the Baltic states. There is always the risk of taking a step 
too far and creating a consequence that you were trying to 
prevent in the first place. And as in the case of eastern 
Ukraine, the Russians have a lot more capability and a lot 
shorter supply lines in that area than we do, but I think 
enhancing the defensive patrolling out of the--air patrolling 
out of the Baltic states, challenging Russian aircraft when 
they come up and go beyond where they should go, and having 
regular exercises in eastern Europe--the truth is, Putin has 
provoked all of this. Our allies, when I was Secretary, back in 
2008 092009, when we would propose--when the United States 
would propose having an exercise in Poland or in the Baltic 
states, our NATO counterparts wanted no part of it. So, one of 
the things Putin has achieved is to create enough alarm in 
Europe that our allies are now willing to participate with us 
in those kinds of forward operations.
    So, I'm--I guess what I'm saying is, I totally support 
advanced kit being over there. I totally support the rotational 
presence and increased presence of our forces and other NATO 
forces on a rotational basis. I think whether you want to go to 
permanent bases is a tougher question.
    Senator Cotton. Okay. Another thing that Vladimir Putin has 
done, especially in the last month, is display some of his 
advances in missile technology to go along with the boasts he's 
made. The United States, in recent years, has accused Russia of 
developing a nuclear ground-launched cruise missile, in 
violation of the Intermediate-Range Nuclear Forces Treaty. 
Given that Vladimir Putin already has nuclear weapons that hold 
all of Europe at risk, why do you think he would be considering 
developing such a missile? What does that tell us about the way 
he conceives his nuclear strategy as part of his overall 
security strategy?
    Dr. Gates. The Russian Defense Minister, as early as 2007, 
approached me about doing away with the INF Treaty. And he 
said, ``The irony is, the United States and Russia are the only 
countries that cannot have intermediate-range missiles.'' And 
then he said, ``Now, of course, if we do away with it, we would 
not put those missiles in the West, we'll put them in the south 
and in the east,'' meaning Iran and China. I wasn't sure I 
believed that at the time, but--so, they've been interested in 
getting out of this treaty for several years. And just as we 
unilaterally walked away from the ABM Treaty early in the 
second Bush administration, it would not surprise me in the 
least to see Russia walk away from the INF Treaty and have the 
opportunity to deploy more of these missiles.
    Senator Cotton. And should we, (a) consider their offer and 
abrogate the INF Treaty, and (b) regardless, should we consider 
to begin the development of new nuclear warheads that would be 
smaller, more versatile, to counter the threat that Vladimir 
Putin is beginning to pose?
    Dr. Gates. Well, theoretically, my answer would be yes, but 
I would tell you, practically speaking, I spent virtually the 
entire 4 and a half years that I was Secretary of Defense 
trying to get the executive--first, the executive branch and 
then the Congress to figure out a way to modernize the nuclear 
weapons we already have. That effort was a signal failure. So, 
until--if I have to have a priority on developing nuclear 
weapons, it would be to modernize the ones we already have to 
make them safer and more reliable, rather than building new 
ones.
    Senator Cotton. Thank you.
    Senator McCain. Senator Donnelly.
    Senator Donnelly. Thank you, Mr. Chairman.
    And, Doctor, thank you so much.
    As with some of our B 0952 crews recently, they enjoy 
flying them as much as ever. And we want to thank you also 
because you are also a member of the Indiana University family, 
and we are very, very proud of that fact.
    I wanted to talk to you for a second about some of the 
aftereffects of so many of the battles we have been in, and 
that is the Veterans Administration and the work together with 
the Department of Defense. And we've had glitches, things like 
sharing health records, aligning the drug formularies when the 
handoff comes, matching up disability ratings. And I was 
wondering if, in your time, you have any--that you've learned 
any recommendations you have for us that can help make that 
transition better, that can help make DOD and VA work together 
better, any glitches you saw that you think, ``Look, this still 
exists.'' How do we remove this, how do we take care of this?
    Dr. Gates. I saw a lot of glitches. And, as I've said, if 
there's one bureaucracy in Washington that may be even more 
intractable than DOD, it's VA. And I would find repeatedly--and 
I worked with two Secretaries of VA that I thought were of very 
high caliber people, and they were very intent on helping 
veterans. The problem was that, when we would meet, we and our 
deputies would meet, and we would agree to do things, it would 
all fall apart the second he and I weren't on top of it. And 
I--this was one case where I think I was better able, in the 
Defense Department, to make sure things got done, but in VA, 
and particularly under Secretary Shinseki, I just had the 
feeling that he was sort of on the bridge of the ship, and he 
had the big wheel in his hands, but all the cables below the 
wheel had been cut off to every other part of the organization, 
and he was just spinning the wheel.
    We worked on electronic records. And, frankly, a lot has 
been accomplished. Not nearly as much as could have been. But, 
I've just--I had the feeling--first of all, these bureaucracies 
were at each other's throats over whose computer program they 
were going to use--VA's or DOD's; and we would go back and 
forth on this, and we'd get briefings, and so on and so forth.
    And so, I think that--the bottom-line answer is to reaffirm 
what everybody knows. That is, there are huge problems in 
dealing with these veterans issues. My objective had been--I 
wanted the transition to--for, let's say, a soldier--to be 
seamless, that he almost didn't know when he passed from DOD 
into VA hands, because it was all done electronically, and so 
on. And, unfortunately, we're just not there. I mean, my own 
view on these issues--and I'm not an expert on veterans 
affairs--but, I think the idea of--if you can't get an 
appointment at a VA hospital within a reasonable period of 
time, then you're automatically granted a voucher to get help 
from a--from somebody in the private sector so that you 
actually can get treated quickly.
    But, VA was as unprepared for long, protracted wars as the 
Department of Defense was. They were dealing with, basically--
their youngest people they were dealing with mostly were 
Vietnam-era people, so people the Chairman's and my age. And 
all of a sudden, they had this gigantic influx of young men, 
mainly, who were grievously wounded and would need 
rehabilitation for years and years, and they were totally 
unprepared to deal with that.
    Senator Donnelly. Let me ask you one other area that you 
dealt extensively with, and that is trying to reduce suicides 
in the Active Duty military. One of the areas that we're 
pushing on, as well, is to try to move decision making down to 
platoon leaders and others who deal every day with the soldier. 
Do you have any additional recommendations that you think could 
make a difference in reducing the suicide rate?
    Dr. Gates. One of the things that we discovered--and my 
guess is, it hasn't improved much since I left--as we went out 
to hire a significant number of mental health professionals to 
work in our hospitals, to work with Wounded Warrior Units, 
Warrior Transition Units, and so on, there basically weren't 
enough of those professionals to be able to--for us to access 
to be able to make as big a dent in the problem as we wanted.
    One of the ideas that I had, that, frankly, I never got the 
chance to push, was that, just as--just as there is legislation 
that--if a young man or woman goes to medical school and is 
willing to commit to some years of service in the military, the 
military will pay for their medical education. One thing you 
all might look at is whether that could be extended to mental 
health professionals, as well. And it would be a twofer for the 
country. First of all, it would give the military more of these 
assets that we need, and so we could have people at almost 
every base and post, but, when they leave the military, they'll 
fill a very real need in American society as a whole.
    Senator Donnelly. Thank you.
    Thank you, Mr. Chairman.
    Senator McCain. We'll take that suggestion on board, Mr. 
Secretary.
    Senator Lee.
    Senator Lee. Thank you, Mr. Chairman.
    Thank you, Dr. Gates, for being with us. You--I think 
you're somewhat uniquely qualified, based on your experience as 
Secretary of Defense, to testify and to give us advice on 
issues related to reform within the Pentagon. We appreciate 
your service and your willingness to come back today, even 
though, as you note in your book, it's not exactly your 
favorite thing to do, to testify in these hearings. And I can't 
blame you.
    A lot of military analysts have lamented at some length the 
growth, over the past two or three decades, of what they 
sometimes refer to as the military bureaucracy, referring, of 
course, to support staff and headquarters staff, whether they 
be uniformed, civilian, contractors, or a combination of the--
all of the above, and that a lot of this occurs--this growth 
occurs at the expense of the military's core operational 
forces. And so, in other words, we get a lot of growth, a lot 
of movement, but not necessarily a lot of forward progress, 
because we're not necessarily growing the part of the military 
that actually does things, that actually goes in and does the 
work that the military is there to do. How much of this growth 
in headquarters and support services occurred as the United 
States became involved in the wars in Afghanistan and in Iraq?
    Dr. Gates. Well, as your question implies, it began before 
those wars, but I think that the amount of money that began to 
flow to the Department of Defense after 9/11 really removed any 
constraints for hiring additional people. And so, you know, one 
of the things that--as you're probably aware, a couple of our 
commanders got into a lot of trouble by giving interviews to 
various press outlets that got them into trouble with the 
President. Well, what I discovered was that several of these 
commands had gone out and hired contractors to provide them 
with public relations advice. This was not something that it 
seemed to me that a combatant commander needed, but I think----
    Senator Lee. At least not for the purpose of fighting wars.
    Dr. Gates. Well, at least not for the purpose of why they 
were there. So, I--when I--in 2010, we put some very severe 
constraints on--in fact, we froze contractor--the number of 
contractors, and then put some restrictions in place that would 
require the different parts of the Department to begin reducing 
the number of contractors. We also tried, as part of the 
overhead effort in 19---in 2010, when we found $180 billion in 
savings in overhead--the measures that we were taking included 
a number of cutbacks, in terms of headquarters staffing. I 
mentioned earlier, we had a--as part of that plan, cutting 50 
general officer slots. One of the things we discovered had been 
a grade creep so that, where you might have a three- star 
commander of the air forces in Europe at one time, you now had 
a four-star. So, how do you push that back down? Because they 
all have--you know, if you go from three to four stars, you get 
more staff, and so on and so forth. So, I think we have kind of 
an--we have a pretty good idea of how we can go after those 
kinds of--that kind of overhead, but it requires--as I 
suggested earlier, it requires a continuing pressure on the 
institution, and accountability of--you know, ``You said you 
were going to cut X number. Have you done it? And if not, why 
not?"
    Senator Lee. How about the--how are these issues, meaning 
the relationship between the size of the DOD bureaucracy--how 
is the size of the DOD bureaucracy related to the scope of the 
missions that we become involved in around the world? In other 
words, if the United States were to take either a more involved 
or a less involved role in addressing various crises around the 
world, what effect might that have on the size of the 
headquarters and support structures for the military services 
and combatant commands?
    Dr. Gates. I think, particularly when it comes to 
headquarters, whichever way you went, you could cut the 
numbers.
    Senator Lee. You could cut them, either way, whether you're 
taking a more involved role or a less involved role.
    Dr. Gates. Yes.
    Senator Lee. So, it need not necessarily follow, from a 
decision to get involved in a particular conflict, that we have 
to grow the Pentagon, that we have to grow the support staff or 
the military bureaucracy to a corresponding degree.
    Dr. Gates. That's my belief.
    Senator Lee. Okay. I see my time's expired. Thank you very 
much, Secretary Gates.
    Thank you, Mr. Chairman.
    Senator Cotton [presiding]. Senator Blumenthal.
    Senator Blumenthal. Thanks, Mr. Chairman.
    Welcome, Secretary Gates, and thank you for your service to 
our Nation, and your continuing service now.
    I wonder if you could talk a little bit about the 
connectivity between the Department of Defense and the VA. And 
I know this was an issue very much on your mind when you were 
Secretary. From what you've seen, has there been improvement, 
for example, in the transfer of medical records, in the 
services that are provided to our military men and women when 
they are about to leave the military? Could you give us your 
assessment?
    Dr. Gates. Senator, we were beginning to make some headway 
on sharing electronic health records when I left. In all 
honesty, this is an area, in the 4 years since I've been gone, 
where I've--I'm not aware of what's actually been done under my 
successors. And with VA, I would hope the progress has 
continued, but I must say that, just based on what I read in 
the newspapers and what I hear from various veterans as I go 
around the country, I worry that they don't see a lot of 
improvement.
    Senator Blumenthal. I think you worry with good reason, 
from what I know, from what we have been told in these 
settings, in the VA, and other fora. So, I appreciates that you 
do not have the same kind of access or involvement, but I think 
your instinct and your observations are well taken, that, in 
many ways, there has been very little progress in the years 
since you've left. And I think that the institutional barriers 
to progress really have to be broken down and reformed. We're 
here about reform.
    And, as I think you have observed, probably in this very 
room on repeated occasions, nothing more important as a 
resource than the men and women who serve. With all the 
equipment and the organization, at the end of the day, it's 
really the rewards and incentives that we provide to our 
military men and women. And the transition to civilian life is 
part of what we owe them and, afterward, the education and 
skill training and healthcare that they need.
    From your last 4 years in the civilian world, do you have 
any observation about how well our schools are doing in 
accommodating the needs of our veterans?
    Dr. Gates. As in the public schools or higher education?
    Senator Blumenthal. Higher education.
    Dr. Gates. Higher education? I think--so, I have 
affiliations with several universities. I'm the Chancellor of 
the College of William & Mary, I'm--was president of Texas A&M. 
And so, I'd get down there from time to time. We have a 
community college in our local town in Washington State. And 
just taking those three examples, I think that these--I think 
many universities and community colleges over the past few 
years have made extraordinary strides in reaching out to 
veterans. All three of the institutions that I just described 
have space allocated for veterans organizations, a lounge where 
veterans can go and relax together on campus, programs to help 
veterans, ways to get veterans together to give mutual 
reinforcement so that men and women who have been in combat in 
Iraq and Afghanistan have somebody to talk to other than a 18-
year-old who just graduated from high school. And so, I have 
the sense that--you know, I know--I've read in the papers about 
all the scandals, in terms of misuse of VA funds, and so on. 
But, I think at--in terms of some of the for-profit schools, 
and so on--but, I--my experience and what I've heard 
anecdotally as I go around the country and talk to various--at 
various universities, from the most elite universities to the 
biggest public universities--I have the sense that they're 
totally unlike Vietnam. These campuses are bending over 
backward to make veterans welcome and to help make them 
successful.
    Senator Blumenthal. Thank you.
    My time is expired, but I might just say, your 
observations, I think, also are aligned with mine, anecdotally. 
I don't have numbers or statistics, but peer- to-peer 
relationships and veteran-to-veteran programs, where veterans 
can provide relationships, and crisis intervention, I think, 
are increasingly common, plus the OASIS program that you just 
described, where veterans can go and find other veterans, 
increasingly common, as well. So, I thank you for being here 
today.
    Dr. Gates. Thank you.
    Senator Cotton. Senator Cruz.
    Senator Cruz. Thank you, Mr. Chairman.
    Dr. Gates. Senator.
    Senator Cruz. Secretary Gates, welcome. Thank you for being 
here. Thank you for your many, many decades of distinguished 
service to our Nation and also to my home State of Texas. It's 
very good to see you.
    Dr. Gates. Thank you.
    Senator Cruz. I want to start by talking with you about the 
morale of the military, which is a concern that troubles me 
greatly. The Military Times did a survey in 2009, and they 
asked soldiers whether the overall quality of life is ``good or 
excellent.'' And 2009, 91 percent of soldiers said yes. In 
2014, that number had dropped from 91 percent to 56 percent. 
Likewise, they asked whether senior military leadership had 
their best interests at heart. In 2009, 53 percent of soldiers 
agreed with that statement. In 2014, that number dropped in 
half, to roughly 27 percent.
    Do you share my concerns about declining morale in the 
military? And, if so, what do you see as the cause of these 
challenges?
    Dr. Gates. I don't have any statistics, but I do have the 
sense that there is a morale problem. And I think it is--I 
think it's due to several things. First of all, I think it is 
due to the substantial and growing cutbacks in the number of 
men and women in the military. So, people in the military now 
are less confident that they will be allowed to remain in the 
military, that, in the force reductions, they will be turned 
out--in essence, be fired, and particularly for those who have 
some years in, and probably have families, concerns about what 
they will do if, because of forced downsizing, they end up out 
in the civilian world again. I think that there's a morale 
problem that derives from a lot of the budgetary uncertainty, 
in the sense that, as I suggested earlier, people who joined 
the military to fly airplanes, sail on ships, or drive tanks, 
are finding they don't have the same opportunities to do that 
anymore. That's the stuff that made it ``fun'' and that was one 
of the things that encouraged them to stay.
    So, I think that these and the budgetary uncertainties and 
so on are all part of a challenge for our young men and women 
in uniform.
    And then the final one that I mentioned just a few minutes 
ago, and that is, you go--particularly the ground forces--you 
go from--mostly young men who have been out in Iraq and 
Afghanistan on these deployments, they have this great sense of 
comradery and brotherhood with their fellow soldiers and 
marines. They've given--been given a lot of opportunity to 
operate independently and in an entrepreneurial way, and be 
innovative, and so on, and they're being brought back and put 
in cubicles and asked to do PowerPoints.
    So, I think all those things together probably are having a 
real impact on morale.
    Senator Cruz. You know, in my view, another factor that is 
contributing, in addition to every one you just discussed, is 
having a Commander in Chief that fails to set clear objectives, 
and, in particular, an objective of winning, clearly and 
decisively, military conflicts in which we're engaged. In your 
book, ``Duty,'' you stated that President Obama didn't appear 
to believe that this own strategy for Afghanistan in the Middle 
East would work. Is that still a concern you share?
    Dr. Gates. Well, I--what I wrote about and what concerned 
me was that--my belief that if a Commander in Chief or a 
Secretary of Defense is going to send a young man or a young 
woman into harm's way, they need to be able to explain to that 
young person in uniform why that mission is important, why the 
cause is noble and just, why their sacrifice is worthwhile. And 
that was--I think the easiest way to put it, that was not a 
speech I heard the President give.
    Senator Cruz. No. Sadly, it was not.
    One final question. The budget request that you proposed in 
fiscal year 2012 called for $615 billion in the base budget for 
fiscal year 2016. That was the last Pentagon budget that was 
directly derived from the threats we face. By any measure, the 
world, I believe, has become much more dangerous today than it 
was in 2012. Do you agree with that assessment? And do you view 
that baseline of $615 as a--$615 billion as a reasonable 
baseline, given the growing threats in the world?
    Dr. Gates. I would say--I've been out of this for 4 years, 
but I would say that, certainly, the number of challenges that 
we face in a variety of places in the world are more complex 
and more difficult than when I put together that fiscal year 
2012 budget. I have seen several assessments by analytical 
groups that I respect, that are nonpartisan, that basically say 
that the Congress and the administration should go back to that 
fiscal year 2012 budget as the base for going forward. And I 
respect the views of those who say that, and I, therefore, 
think that that probably would be a good idea.
    Senator Cruz. Thank you very much, Mr. Secretary.
    Senator Cotton. Mr. Secretary, if, as you said at the 
beginning, the least sincere statement in hearing like this is, 
``Mr. Chairman, I'm ready for your questions,'' perhaps the 
least welcome statement is, ``I have a few more questions.'' 
Just two, though.
    When we were talking earlier, you said that, theoretically, 
you think that we would need to modernize our nuclear warheads, 
build new ones, maybe smaller, more versatile. That's a debate 
we can have. But, practically, you had the devil's own time of 
just modernizing the warheads that we had. Why do you think 
that is?
    Dr. Gates. Well, there--to be honest about it, there was a 
great deal of resistance, both within the administration--this 
administration--and here on the Hill, to allocating the funds 
for modernizing our nuclear enterprise. At a time when the--
sort of, the political aspiration is to get rid of nuclear 
weapons, the--it was seen as the U.S. trying to improve or 
enhance our nuclear capabilities, when, in reality, what we 
were proposing was not any additional nuclear weapons, but 
simply, rather, trying to make the ones that we already have 
more reliable and safer than the very old designs that we have 
deployed today.
    It's a very expensive proposition, but I actually 
allocated, within the defense budget, about $4-and-a-half 
billion that would go to the nuclear enterprise at the 
Department of Energy, but, at the end of the day, it all fell 
apart. But, it was part of the deal, actually, that was made 
with the passage of the most recent strategic arms agreement. 
Part of the deal that was made was that we would modernize a 
good bit of the nuclear enterprise in exchange for support for 
going forward with the newest arms control agreement. The 
trouble is, to the best of my knowledge--and, as I say, I've 
been gone 4 years--but, to the best of my knowledge, there has 
been no forward progress on that modernization effort.
    Senator Cotton. Since you pursued this effort, despite the 
political headwinds, presumably you believe there are few 
things more important than a safe and reliable nuclear 
deterrent for our President to have?
    Dr. Gates. Well, there is nothing more important than that.
    Senator Cotton. Thank you.
    Final question. The Goldwater-Nichols Act reorganized the 
Department of Defense to improve the quality of strategy, 
policy, plans, and military advice for civilian leaders. Do you 
think the organization set up by Goldwater-Nichols provided you 
with the best possible ideas, options, and advice while you 
were Secretary of Defense?
    Dr. Gates. I would say that the policy papers and the 
planning that I received both from the Office--from the Under 
Secretary for Policy under both President Bush and President 
Obama were first-rate. Led--that organization was led, under 
President Bush, by Eric Adelman, by Michele Flournoy under 
President Obama. And I thought I got very high quality work 
from them. I thought that, on the military side, I got very 
good planning and very good advice from the joint staff and 
from the combatant commanders.
    I think that the one place where the gap between resources 
and strategy begins to diverge is, every 4 years, when we do 
the Quadrennial Defense Review. And too often the Quadrennial 
Defense Review, which is kind of what our strategy ought to be 
to implement--what our military approach ought to be to 
implementing the President's national security strategy, gets 
divorced from the budget realities. And therefore, I think that 
reduces the value of the Quadrennial Defense Review. When we 
did the one in 2010, we tried to bring those two back closer 
together, but we didn't entirely succeed.
    Senator Cotton. Thank you.
    Mr. Secretary, thank you, not just from me, but on behalf 
of all of my colleagues and the citizens we serve, but, most 
importantly, the men and women of our Armed Forces, who you led 
for 4 and a half years of war and whose lives you helped save.
    Dr. Gates. Thank you.
    Senator Cotton. This hearing is adjourned.
    [Whereupon, at 11:52 a.m., the hearing was adjourned.]

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