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Adm. Winnefeld's Remarks and Q&A at the Bloomberg Defense Summit

By Admiral James A. "Sandy" Winnefeld

ADMIRAL WINNEFELD:  Good morning, Peter, and thank you for that very kind introduction.  I don’t think of myself as all those things.  I think more of myself as LJ and Jonathan’s dad.  (Laughter.)  But that’s a real pleasure for me.

Anyway, good morning.  It’s really a pleasure to have the opportunity to speak with you today and to follow up on Secretary Hagel’s presentation on Monday that of course unveiled our 2015 budget submission.  It goes without saying that we’re entering a period of great turmoil and change in a world that’s becoming increasingly a dangerous place.  While our national security interests are enduring, the thrust of those interests seem to be coming in a widening range of shapes and sizes.  Also, the ways of warfare are changing at an accelerating pace, with potential adversaries wrapped up in gaining access in all domains to advanced war-fighting capabilities that our nation has yet to face.

Meanwhile, as you know only too well, our fiscal environment is changing due to the national security imperative of deficit reduction.  I was confirmed for the very first time in this job on the same day in August 2011 that the Budget Control Act, or BCA, was enacted into law.  So it’s been my great pleasure as the vice chairman to oversee nothing but declining budgets.  But that took the first $487 billion bite out of the next 10 years.  We’ve really seen nothing but budget carnage since then.  As you know, last March sequestration was triggered, and DOD’s budget was cut $37 billion for the remaining seven months of fiscal year 2013.  That took us off a cliff.  It’s really impacted our readiness and even forced us to furlough civilians over the course of the summer.  And as you know, we’re still recovering our readiness from the events of last year.  And while the recent Bipartisan Budget Act provided a little bit of relief in fiscal years ’14 and ’15.  Our budget will decrease yet another $228 billion over the next five years if the BCA caps remain in place.  So it’s against that backdrop that we’ll submit our budget in – for fiscal year 2015, along with the 2014 Quadrennial Defense Review, which I think Michele Flournoy may briefly mention.

So the first point that I want to make this morning to you is that this budget that we are submitting in the next week or so here is strategy-driven.  We have not come off of that.  Strategy is not just about the ends that you look to achieve.  Too often people only focus on that.  It’s about balancing ends, ways and means and ensuring that the enduring and resultant risk is acceptable to us as a nation.  Our ends, of course, are our national security interests.  Our means are the resources we apply to protecting those interests.  And of course, our ways are how we apply those means to make it all happen.  And risk, which is more often art than science, reflects the unwelcome things that could happen if the world does not behave the way that we wish or predict.

So when I say that our budget submission is strategy-driven, I mean it reflects the fundamental decisions we’ve made in a complex and collaborative process over the course of the last year, starting with the Strategic Choices and Management Review, which you’ve heard so much about, in order to strike the best balance we can find among ends, ways, means and risk.  As you know by now, the president’s budget submission requests about a $115 billion more than the sequester level of funding would provide over the five years that start in 2015.  We believe that those means will allow us to maintain a military that will achieve the ends of our current strategy, albeit with additional risk.

But because sequester remains the law of the land, we also provided in our submission what we would have to do if sequester funding endures beyond 2015.  Anything, structure, readiness or modernization, in our budget submission that lies above that sequester number is identifiable and reversible if we have to do so.  However, we also wanted to make it clearer – and I think the secretary was very clear – that the means we expect to receive if the BCA caps remain in place will not allow us to fully protect our national security interests, regardless of how hard we work to improve the ways in which we do it.

Now, if our work on QDR was purely budget-driven, we would not have submitted a budget at a funding level higher than the BCA caps.  Rather, we would have submitted a budget at the BCA level only, and we would have written a new, less ambitious budget-driven strategy.  But the secretary was very clear the other day when he said he would never recommend a budget that compromises our national security.

So what about the middle piece, the ways?  That’s the most fun part, right?  The best word we’ve been able to find to describe what we’ve been trying to do with ways is the word “rebalance.”  Make no mistake:  This means far more than just rebalance to the Pacific, so please do not confuse the two.  It involves rebalancing in at least six different areas.

First, we’re going to rebalance the types of wars for which we prepare our joint force.  Over the last decade, we’ve been mostly focused on a single type of war, but the world has changed, and we need to restore our readiness for the full spectrum of what we might face in the future.  In so doing, we’ll continue to build innovative operational concepts for how we’ll fight, including extending what we’ve learned over the last 12 years of counterinsurgency into other types of fights.  We’ll also closely examine our operational plans to ensure they reflect how the world has changed, how war fighting has changed, the kinds of flexibilities that senior leaders need in this new world, and that they inculcate our most innovative thinking.

Second, we’ll continue to rebalance our posture around the globe, to include permanent presence, pre-positioned presence and rotational presence as well as surge capability.  We’re already on the road to developing new ways of doing presence, and we’ll also re-emphasize building partnership capacity because we’re going to be relying more on our partners in the future.  And of course, we’re going to shift greater emphasis to the areas where our security interests are most likely to be threatened in the future, including the Pacific.

Third, we will rebalance the capability, capacity and readiness of our force.  They’re out of balance now, in different ways with each service, and that’s a situation that will grow worse if we don’t take action now.  Even at the president’s budget level, and even though it will be painful, we’re going to have to begin reducing the size of our force while restoring its readiness and modernization.  And at the sequester level, it will only get worse.  Secretary Hagel outlined the major muscle movements of those changes just the other day, so I won’t repeat them here.  But in any case, we fully intend to leverage advances in technology and our own asymmetric advantages in order to keep our edge.

Fourth, we will rebalance our tooth-to-tail ratio.  This of course involves working in a different set of ways.  We’re determined to determine our quest to become more efficient, to include the secretary’s imperative on downsizing headquarters and staffs. And we’re also going to try to retire equipment we don’t need, continue our efforts on acquisition reform and reduce excess infrastructure.  In so doing, we’re going to need to counter the narrative that base closures do not save money.  They actually do save money, faster than some people think, and we’re going to need to get some help from courageous members of Congress if we’re going to get that done.

Fifth, we will rebalance both among the active and Reserve components, with slightly more capacity going into the latter.  To be sure, this will be difficult and controversial.  It always is.  But we’ve worked hard to try to get it right, to include moving some of our capabilities around between the active and Reserve component.  For example, the Army wants to swap Guard Apaches for Black Hawk helicopters, a move that some will feel will relegate the Guard to a support role.  I would not want to watch someone try to tell Representative Tammy Duckworth she wasn’t flying in combat when she was shot down in her Black Hawk.  And Black Hawks can be far more useful to a governor than a gunship during a natural disaster.  And that’s only one of the many very difficult choices, and sometimes controversial choices, that we’ve had to make this year across our entire budget.

And last, speaking of difficult choices, this budget also rebalances the trajectory of military compensation.  Our men and women in uniform deserve the best possible support we can provide, including solid compensation, especially at a time when they’ve sacrificed more than normal peacetime deployments and stress.  But we also have to invest prudently to maintain the best possible quality all-volunteer force while simultaneously getting best value for the taxpayer in what we need in order to win decisively in combat.  Over the past decade we’ve enjoyed a high rate of growth of compensation that finally corrected some of the serious deficiencies of the 1990s.  It’s time now to gradually adjust that growth in order to set and sustain the right load. 

We worked hard within the department over many months to produce the most appropriate package of adjustments, and we studied a host of proposals and ranges within each proposal very, very carefully.  The chiefs and senior enlisted advisors for the services were fully involved and fully consulted, and we all agree that adjustments are required and that we settle on the right combination. 

Nobody’s pay is going to decrease under this plan, and we are not forcing commissaries to close, contrary to popular belief.  And we’re leaving any potential changes to the retirement system, which we still believe should be grandfathered, to be worked by the Military Compensation and Retirement Modernization Commission.

Now, some might think that any adjustment in the trajectory of compensation, even one that accounts for budget or market change, is a violation of a promise, something gained that can now not be changed.  Rather, we believe the most important way we keep faith with the fantastic young men and women who volunteered to defend our nation is to only send them into combat with the best possible training and equipment, and to take care of them when they come home, and their families.  These changes will help us do so by allowing them to continue serving in a modern and ready force.

In the end, with the president’s budget submission, we believe we’ll be able to execute the Defense Strategic Guidance that we put out in 2012.  We will be able to simultaneously defend the homeland, conduct sustained counterterrorism operations, and deter aggression in multiple regions.  If deterrence fails, as the Defense Strategic Guidance specifies we will be capable of defeating one adversary in a large-scale regional campaign, while at the same time denying the objectives of, or imposing unacceptable costs on, a second aggressor in another region. 

As I said earlier, we cannot avoid the fact that we will meet soon some more risk executing those things under this submission.  Every strategy has a band of acceptable risk.  Under the president’s 2014 submission, we will probably be squarely in the middle of that band or slightly on the low end.  This budget takes us closer to the edge of that band, but in our view we stay within it.  That risk will be significant in the near term due to our readiness challenges left over from last year, and at lower budget points.  There’s also increased risk in the long term due to our uncertain security and fiscal environments.

A smaller force will mean less deterrent presence and smaller margin for error in combat, particularly if it involves two simultaneous threats.  But much of this risk will be mitigated by the two principal advantages that we enjoy today, namely our great all-volunteer force and our ability to innovate across every discipline of what we do in this department.  Now, as we go forward, there are a few echoes from the last couple of days after Secretary Hagel’s presentation on Monday that I’d like to reference. 

Echo number one:  We’re thumbing our nose at Congress by presenting a budget that’s funded above sequester levels.  On the contrary, our submission adheres to the budget act that was enacted this year, the bipartisan budget act.  Beyond that, we’re providing the program we believe will allow us to continue executing our strategy, as well as what it would look like under sequester.  As a serving military officer, I steer well clear of the politics of where the extra money will be found, but we look forward to working with the Congress on why we made the choices we made on the internals of our budget.

Echo number two:  We’ll have the smallest Army since before World War II.  That’s true.  In terms of ships and aircraft we’ll also have the smallest Navy and Air Force since before World War II, and that happened over 30 years ago.  The fact is that the world has changed a lot since World War II.  The nature of warfare has changed.  The cost of people, ships and airplanes has gone up along with their capability, and our nation’s fiscal environment has changed as well. 

So let’s not compare apples to oranges.  But while we’ve made it clear that we don’t anticipate any long-term stability operations in the near future, our nation has to be ready to defend, take and hold in ground combat.  And we don’t ever want that to be a fair fight, which is why we believe the Army should land at around 440(,000) to 450,000 rather than the 420,000 we’d have to go to under sequester.

Echo number three:  We’re balancing the budget on the backs of those who serve.  Again, absolutely not true.  The compensation savings we propose only amount to 10 percent of the savings we’re suggesting out of what constitutes fully one-third of our budget.  Military compensation is one-third of our budget.  These savings are gradual, they’re measured, and they’re fair.  The remaining 90 percent of the savings that we’ll find constitutes – it comes out of the other two-thirds of our budget, which pays for modernization and readiness as well as end strength across it.  So we’re taking a lot more risk there.

Echo number four:  We’re managing the cuts on the backs of the Guard and Reserve.  On the contrary, the reserve component is coming down in size proportionally less than the active force. 

Echo number five:  DOD is making draconian cuts to force structure when we can easily find savings elsewhere.  Also not true.  Even though we labor under the twin burdens of being both a large organization and a government organization, we spent the last year looking at every dollar we spent inside the department.  The vice chief of one of our services has literally been holding contractor court in order to try to get at any excess.  We’re determined to continue seeking ways to do business better.  We will always have more work to do here.

But getting this budget across the finish line will require considerable support from Congress, where changes in force structure and infrastructure and institutional reform can be unpleasant and unpopular.  Let’s face it; it’s hard to cut this kind of money out of any budget and expect people to cheer you on.  We can’t have it both ways, though.  To ask the Pentagon to take nearly a trillion dollars out of our budget over 10 years but to also not cut anything is unrealistic and unresponsible. 

Lots of people around this town care deeply about one issue or another related to this budget and will fight the changes fiercely, but we have to look at the whole many-dimensional puzzle of building a budget where one piece moves and affects all of the others.  It ends up being a zero-sum game.  Every efficiency we need that’s denied, every program cut we need that’s reversed, every element of old force structure or unnecessary base structure we’re required to keep will require a decrease in readiness or modernization somewhere else.  And that will mean more young men and women can go into combat with less readiness and less modern equipment, and that means fewer of them will come home, and none of us want that.

The good news is that many of our ways are ripe for innovation and you will see clearly outlined in the QDR.  Liddell Hart said:  The only thing harder than getting a new idea into the military mind is getting an old one out.  We’re going to have to work very hard to empower our people to do both.  And that’s Chairman Dempsey’s and my greatest concern, that we will not innovate quickly enough or deeply enough to be prepared for the world we will face over the next decade.

Innovation is “the” leadership opportunity for this generation that’s serving in the military, our people.  We have to seize it and run as hard as we possibly can with it.  But in the end, we believe this budget, challenging and difficult as it will be to pass and execute, will allow us to maintain the most powerful military in the world to protect the American people and to continue standing by our allies and our friends around the world. 

I thank you.  I look forward to the next part of the conversation.  Peter, let’s get at it.  (Applause.) 

PETER COOK: Thank you, Admiral, for setting up the conversation and for amplifying what we heard from Secretary Hagel.  Let me jump right in there and talk to you quickly about the process by which this budget was arrived at. 

Can you give us a sense -- can you lift the veil a little bit and talk about within the Joint Chiefs, the services, your conversations with the secretary, what's the toughest call in this budget?  Is it the compensation discussion?  Is it another component?  I know there are a lot of tough decisions in here, but from your perspective.

ADMIRAL WINNEFELD: Well, it's hard to put your finger on what the hardest thing was that we discussed, because we had so many difficult issues.  When you take this much money out of a budget, there are a lot of people who feel very strongly about the pieces that they're being asked to adjust.  People in this business really believe in what they're doing, and they don't want to give up anything, because they sense how important it is.  The compensation piece was, in fact, particularly difficult.  We knew we needed to do it, but, candidly, every one of the service chiefs, the chairman, and myself, and the civilian leadership of the department care so deeply for these young men and women who have volunteered to serve our country, who -- many of whom have given more than a limb to this country, that is the hardest thing for us to wrestle with, knowing that it's something that we have -- a trajectory that we have to adjust. 

That was probably the hardest part.

PETER COOK: And, sir, let me ask you the question that you're going to -- we're going to hear from some folks, budget hawks out there, who are going to suggest "Maybe you guys have not been aggressive enough here."  For example, the retirement issue, we're putting that off till the commission reports back February 2015; that's quite some time away from now.  How would you respond to those who say, "You haven't done enough on this front in this budget"?

ADMIRAL WINNEFELD: We need to give the Retirement Commission a chance to do its work.  We felt very strongly that we had the information that we needed in order to make the required compensation decisions that we made, recommendations we made, but the retirement piece is so complex, so emotional, that we really wanted to let a separate body deliberate over this.  We've given them information and we really look forward to see what they come back with. 

But we did not want to rush into that.  And, candidly, as you look at the details, even if you adjust that program in many of the different ways we looked at, it's going to be hard to get money out of that and still meet the needs that we have for what our Retirement Program does.

PETER COOK: Do you fully expect that as the secretary and the Joint Chiefs go up and try and sell this budget up on Capitol Hill that you're going to find members of Congress say, "Admiral, I'm going to do you a favor.  I'm going to raise up those numbers for compensation.  I'm not going to adjust the housing allowances.  I'm going to make life better for the troops," when in reality will he be making your life harder -- the Pentagon's life harder?

ADMIRAL WINNEFELD: Well, as I mentioned in my remarks, this is a 20 -- you know, a 20-dimensional Rubik's Cube when you're trying to put a budget together.  And moving one part affects all other parts.  So if somebody thinks they're doing us a favor by raising -- you know, taking away the compensation savings, we've got to find something else to take out. 

It's going to come out of readiness, or modernization, or force structure, in one way or another, assuming it's a zero sum game, unless they give us more money.  So we believe we've struck the right balance here between the various moving pieces of this budget.  So we would love to see the budget enacted as is.  We know that Congress will change it.  We just hope that the changes will be minimal, because every piece does affect every other piece.

PETER COOK: And this time -- you've been involved with budgets before.  Is it different this time?  Because, once again, we have the sequester threat in 2016.  This time does that sales job by Secretary Hagel, is it that much more important, because there aren't -- there isn't the ability to, if you will, fudge these numbers going forward?

ADMIRAL WINNEFELD: It's always a challenge because of a completely understandable member -- individual member concerns, where they have a particular program or a base or something that they're concerned about.  And this is part of how Washington, D.C. works.  Of course it was harder this time because, you know, the cuts continue. 

The first $487 billion wasn't easy.  We managed it.  This next set is all the much harder, and we did ask the services to plan at the full BCA cut level.  That was the baseline.  That's where we started from, and that was immensely difficult.  Being able to potentially submit at a higher level than that took some of the pressure off and actually got us back into the band of risk that I described earlier.

PETER COOK: And, again, your message when you sit down with a member of Congress and you talk about the $115 billion above, what would happen if we do have sequester kick in in 2016, the 420,000 U.S. Army troops?  What’s going to be your message to those members of Congress, again, about the risk?  You're basically telling us here, and then the secretary did as well, that in terms of protecting national security to the level that you all feel comfortable, that budget number won't work.

ADMIRAL WINNEFELD: Well, I mentioned, we are sort of barely inside the acceptable band of risk for the current strategy under the budget submission.  When you start to look at the kinds of things that would come out if we had to go back to the BCA, we would lose probably 50,000 to 60,000 Army forces when you combine the active and reserve component, 7,000 Marines.  We would take an aircraft carrier out at mid-life.  We would lose six more surface combatants.  We would lose the entire KC-10 fleet.  We would lose probably 10 full Reaper or Predator drones.  That's about 30 airplanes.  We would lose construction of a submarine, which is terribly important to us in some of the areas around the world where we operate.  It will cut into our research and development, which the industry people here know very well is the lifeblood of any industry that's trying to come out of a financial crisis; you've got to keep your seed corn going.  And it'll hurt our -- all of those things add up to really pretty quickly having us exit the band of acceptable risk for the strategy that we currently have.  We have to change the strategy.

PETER COOK: Is there -- has there been a concerted effort this time around -- when sequester was first looming we heard warnings from Secretary Panetta about what would happen, the talk of a hollow military.  This time there are specifics attached to what those consequences would be.  Do you think -- was there obviously a conscientious effort to do that this time around, and to explain to members of Congress what those consequences would be?

ADMIRAL WINNEFELD: I'll tell you --

PETER COOK: Because there is a conventional wisdom among some on Capitol Hill that sequester was a good thing.


PETER COOK: That the savings have done good things for the U.S. economy, for the budget picture.

ADMIRAL WINNEFELD: Yeah, on the one hand, you know, never waste a crisis, right?  When you're under financial pressure it causes you to really take a close look at your business.  We are becoming more efficient.  We are challenging all the assumptions about what it is we do as a military, but that said, the sequester level with the cuts that we would take would cause us to have to act differently in the world, and we -- I would also make the point that showing these two different budget levels, the BCA level and the president's budget level, I wish we were clever enough to be -- to call that a tactic. 

It's not.  We really believed that we needed to -- take into account that the BCA caps are the -- currently the law of the land.  We felt, responsibly, we had to determine what we would do at that level, but we also felt we needed to determine what we would do at a level that would allow us to continue to execute the defense strategy.  Now, if somebody wants to view that as a tactic, that's fine.  That's not why we did it.  We felt we really needed to show both levels.

PETER COOK: Let me ask you about a couple of specifics within the budget, a couple of platforms, because I know a lot of folks here have interest in some of them and want to know why some of these decisions were made.  The littoral combat ship.  I did not hear from Secretary Hagel a ringing endorsement of the LCS, the decision to limit the purchase to 32.  What's the future for the LCS?

ADMIRAL WINNEFELD: Well, first of all I think that we're doing a smart thing here.  We're asking the Navy to go back and look at the program and tell us whether we really think that it's going to meet their needs as we go forward in the future, and I think that's going to be a very healthy process where they will come back with an answer. 

It could be a new ship.  It could be a different ship, or it could be an up-gunned LCS.  I think there's a lot of potential in there for that to occur.  I know industry will work very hard to help us answer that question, and we've got the right people in place in the Navy to do it.  Sean Stackley is a fantastic acquisition executive, and will do that job very well.  So I think it's a good call.  I think we're going to be okay in the future, but I think it was a smart move that Secretary Hagel did in asking this question.

PETER COOK: What -- within the Navy, what are your biggest questions about the LCS right now?  Is it a question of survivability?  Is it a question of, is it potent enough as a threat?

ADMIRAL WINNEFELD: Of course, I haven't been in the Navy in a long time.


ADMIRAL WINNEFELD: So I'm a Joint guy right now, so the better more detailed answer would come from my Navy compadres.  But I -- you know, one of the things I mentioned to somebody the other day is, I think the LCS is kind of going through its V-22 phase. 

Remember back when the V-22 was going through testing challenges and people were -- you know, they had a couple of crashes and it was -- crashes and it was going through some really rocky times.  People kind of forgot about that.  Today, “Why can't I have more V-22s?”  There's a demand signal out there in the real world today -- and I wish I could tell you all about it -- for more V-22s, wish we had some more out there protective our diplomatic facilities, and that airplane's performing extremely well.  So I think the literal combat ship is kind of going through that phase, but I also think it's -- would be very smart for us to take a look at, what else can we do either with that -- those two ships or with a different concept to make sure that we're covered for the future?

PETER COOK: And describe to us this idea of a new frigate for those who aren't totally familiar.  What purpose would this serve?  Explain to us what the idea is behind this program.

ADMIRAL WINNEFELD: Well, you want to be able to send a ship into harm's way that has a good chance of surviving, that can execute the kinds of things that aren't at quite the level that a cruiser or a larger destroyer would do, but still get the presence job done, that gets the antisubmarine warfare, and the countermine warfare, and a counter surface warfare, but also other jobs.  I think that there's potential for this ship, whatever it ends up being, whether it's another LCS or whether it's another ship, to be able to do more strike, longer range strike, to be able to do more special operations work, and potentially even be a good platform for the Marines.  So I think there's a lot of promise here.  I'm actually enthusiastic about what we're going to see coming back, regardless of which answer the Navy chooses to go for.

PETER COOK: What about the F-35?  Your assessment of where that is today, program that's had its share of problems, yet in this budget, pretty much on track with the -- where we thought it would be.  Give us your assessment of the F-35 and its future right now.

ADMIRAL WINNEFELD: And maybe another program going through its V-22 phase -- I don't know.  The airplane is a terrific airplane.  When you look in particular at some of the classified capabilities this airplane's going to have, it'll knock your socks off.  And so we really do need it.  The principal challenges, and Frank Kendall and the program manager are doing a really good job of getting this program on track, keeping it on track, and in partnership with Lockheed Martin and our other industry partners.  I think it's got a bright future.  It's a good airplane.  It will get on track.  We're working the software very hard.  We're working the testing program very hard.  But it is a very complex animal.  But I'm -- I can't wait to see this thing out there in the Air Force, Navy, and Marine Corps as it does its job, because it's a pretty special airplane.

PETER COOK: The original plan, as I recall, 2,400 aircraft.  Are we going to need 2,400 F-35s?

ADMIRAL WINNEFELD: Well, the question is going to be whether we can afford them I think as much as whether we need them.  I don't have the exact numbers at the tip of my tongue for how many -- the exact numbers that we need.  

As always, those numbers fluctuate wildly with budgets, with other pressures that are on the budget.  But, you know, it's an airplane with a solid future.  We're committed to it.  And I can't wait to see it out there.

PETER COOK: There's a debate in this budget, again -- and you mentioned it -- if sequester kicks in, between 11 carriers versus 10.  What’s your message to Americans out there who wonder, "In this day and age, do we need aircraft carriers?"  How important is this?  I'm going to pay a visit next week by chance, reporting a story on -- to the Gerald Ford under construction.  What's your answer to that?  Do we need aircraft carriers today?  Do we need 11 of them?

ADMIRAL WINNEFELD: Yeah, you know, as -- it's an old adage.  When there's a crisis, people ask, you know, 'Where's the aircraft carrier?'"  And I can't tell you how many times that's happened just in the two and a half years I've been in this job.  So for all the people --

PETER COOK: Couldn't that be part of the old thinking that you said is --


PETER COOK: -- we maybe should be reassessing?

ADMIRAL WINNEFELD: Well, we are.  We are going to reassess it.  We always reassess those things.  We're putting new platforms on those carriers, longer range platforms, more capable platforms.  One of the principles we've found over the years is that there are select areas where you can take an old platform and put new things on it, and you actually end up in pretty good shape, rather than having to buy a whole brand new platform.  But there are other times when you need to either incrementally, you know, make that type of platform better, as we're doing with the Gerald Ford, as I think you'll see next week, or just start from scratch and build an entirely new platform like an F-35.  The carrier is important to us in that in the last two and a half years, again, it's constantly asked -- during the Syria crisis we had over the last fall, "Where's the aircraft carrier?"  Whenever the Iran crisis has come to a crescendo, "Where are the aircraft carriers?  Why can't we have more?  How long's it going to take to get five or six there?"  The key advantage that you have from that platform is its independence from any dependence on basing ashore.  And politically, diplomatically, and militarily that makes a huge difference.

PETER COOK: Let me ask you about, again, selling some of this to Congress.  You mentioned the BRAC process, and having to explain to people that BRAC has been successful.

ADMIRAL WINNEFELD: [affirmative].

PETER COOK: That's enough -- that's an uphill fight, isn't it?

ADMIRAL WINNEFELD: Sure.  Of course it's an uphill fight.  Nobody wants to see a base go away.  I'll tell you, one of the adages is, nobody necessarily cares if the F-15 squadron at that base is flying or not, readiness has no constituency; they just want it to be there, okay?  And the same thing is true with bases.  What we need to do a better job of explaining, I think, is countering the narrative of the 2005 BRAC, which really had two pieces.  One, the largest part of that BRAC was what we called a transformational BRAC.  We were literally combining Air Force and Navy bases, moving things around.  There were a lot of changes that cost us a lot of money.  And it's taken a long time to start realizing the savings from that component of that BRAC. 

The other part of that BRAC was a closure BRAC.  We saw the savings pretty quickly out of that.  Cost $6 billion to implement relatively in the first few years, and we're getting $3 billion a year out of that closure BRAC.  That's the kind of money we need, and we are not necessarily interested in another transformational BRAC.  We're interested in a modest closure BRAC so we can start to capture the savings.  We've got about 25 percent excess infrastructure.  I don't know of any industry person in this room today who fully feels they could survive carrying 25 percent excess infrastructure.  They'd get rid of it immediately.

PETER COOK: Election year, it's going to be tough.  I think --

ADMIRAL WINNEFELD: I know.  Well, we're only asking for it in 2017.  So…

PETER COOK: Okay, noted, 2017.

ADMIRAL WINNEFELD: That's a good year to do it.

PETER COOK: Not an election year, remember that.  [laughs]  Let me ask you from the industry perspective, what is your message to defense contractors right now, in light of this budget, going forward, in terms of what you all expect? 
What needs to happen differently from the industry?  If they need to retool and reassess -- and a lot of them have been doing it for the last couple years, getting ready for this moment.  Are they ready for these changes?  Do you think that more needs to be done from the industry?  Give the -- what's your message?

ADMIRAL WINNEFELD: I give industry a lot of credit.  They've spent a lot of time and invest a lot of resources in trying to look into the future and prepare for it.  The smart industries do.  Those are the ones who do the best.  I think that -- a couple of things, and I would -- Frank Kendall's really the right guy to ask this question, but I would say first, keep the innovations coming.  You know, we're going to protect R&D money as best we can.  We've always tried to do that.  Frank Kendall's done a very good job of fighting for that inside our budget process, and we've responded to that.  It's going to come down a little bit, but disproportionately less compared to some of the other areas of the budget.  So keep the good ideas coming and keep knocking on our door to show us what you can do.  The other thing is --

PETER COOK: Is the engine part of that?  Sorry to interrupt, but if the --

ADMIRAL WINNEFELD: Yeah, the engine is part of that.  It's -- it does two things for us. 

One, it -- the potential for giving us a more powerful engine and it saves a lot of fuel.  And, second of all, it keeps a very important part of the industrial base alive.  The other piece for industry is, continue the good work you've been doing and push even harder as we are on becoming more efficient and getting your costs down.  That is going to be terribly important over the coming years.  It may mean -- I don't know -- smaller profit margins.  I'm not sure about that.  That depends on the industry.  But the more industry can do to control costs and get us best value for taxpayer money on the systems that we need, that will be an advantage.

PETER COOK: Cyber security:  growth area for business?

ADMIRAL WINNEFELD: Yeah, I think it is.

PETER COOK: Bigger worry on the part of you and the rest of the joint chiefs, and everyone at the Pentagon?

ADMIRAL WINNEFELD: Yeah, you know, we say that flat is the new growth in DOD.  And, you know, special operations forces are sort of flat right now, which is the new growth.  Cyber's about the only area where we're actually, no kidding, growing in terms of people and capacity. 

So Keith Alexander, and, if he is confirmed, his successor, Mike Rogers, are, you know, empowered individuals right now on the part of defending our own networks, on the part of potential cyber operations out there in the netherworld, and also helping defend our own -- helping the civilian part of our government, the Department of Homeland Security, FBI, and the like, do their job of protecting the nation's networks.  It's a growth industry.  I think there's plenty of room for industry in there, yeah.

PETER COOK: Where is it in terms of your risk factors right now out there?

ADMIRAL WINNEFELD: It's pretty high.  It's pretty high.  It's -- the problem with cyber is the speed at which it -- an attack develops, and whether you are able to discern that attack before it occurs, and if you have a tool in place that can block it or counter it as it occurs.  That’s a huge challenge for us right now.  It's a little bit like missile defense except it happens a lot faster.  You know, can you take it out on the pad, do you have to take it out in midair, or do you have to clean up on aisle nine when it hits? 

And we're -- you know, Keith's working very hard on that.  Serious challenges in there, but we got the best people in the world working on it.

PETER COOK: You talked a little bit about innovation.  And, of course, innovation can be on the industry side, new technology, but you also talk about innovation within the military itself, how we fight wars, what the wars of the future will look like.  What, to you, are the biggest lessons learned right now, for example, from Afghanistan?  What are the wars of the future?  And I know that Secretary Gates has said we're pretty bad at predicting what those --


PETER COOK: -- will be, but that's part of what you guys have to do.

ADMIRAL WINNEFELD: Yeah.  Well, we've learned an awful lot from these last two campaigns that we've been in.  The first thing is leveraging our expertise in networks to do networked warfare.  It's just unbelievable how far we've come in the last 10 years in networking our command and control and networking our warriors together, and there's more we can do in that area. 

The other things, and very much related to that, is the integration of intelligence and operations.  When I first started out in this business, and for my first 20 years in this business, you never saw intelligence people and operators sitting in the same room.  And the special operations committee showed us the way, jammed them all together, showed that you can take the intelligence you learn on one night's operations and spin it around very quickly the next day, and leverage it into the next night's operations, and you can unravel a threat network fairly quickly when you do that.  They just can't keep up with you.  Well, we're applying that in all aspects of what we do now.  It's not a natural act sometimes for people, but it really works when we do it, and that's sort of a hidden lesson.  There are a host of other lessons the -- that we have learned, not just from these last campaigns, but, you know, intelligence -- linking intelligence, surveillance, and reconnaissance tightly into what we do, cyber and the like.  There's --

PETER COOK: [unintelligible].
ADMIRAL WINNEFELD: -- a whole host of opportunities out there.

PETER COOK: And is that going to allow you to do more with less?  Is that why we can reduce force structure?  Because we've enhanced that communication, that sort of thing. 

ADMIRAL WINNEFELD: I would say that the innovations of the last few years and the innovations we have in play right now will allow us in some areas to achieve our ends with fewer means.  That's what I talked about in my discussion about ways, and we really want to empower our people as best we can.  We want to get the brightest young people that we can attacking all these problems.  They always do well when you present them with a challenge.  They always rise to it, and it may well be that we can do even better than we thought, frankly, with some of the decreases in this force structure that we're going to see.  We're cautious about that right now.  We don't want to bank on it too much, but it's very definitely an imperative for us.

PETER COOK: How worried are you about recruiting the talent you need for the military of the future?  You're sending a message right now with this budget whether you care to or not.  Things are getting smaller.  There may be fewer opportunities out there.  We're not going to be in Afghanistan to the extent we've been in Afghanistan. 

What are you -- what are your worries about attracting the talent you need to serve the military going forward?

ADMIRAL WINNEFELD: I think, you know, ironically the biggest concern that we have when we talk about recruiting people is the health of the economy.  As our economy comes back, there are going to be more opportunities out there for young people to not go in the military, to get a job that is a good job that gives them health care and does the whole thing, as they make their choices as young men and women, either right out of high school or coming out of college.  So that's the thing that we actually worry about the most, although we all hope for it, right?  We hope that the economy comes back.  When we look at the types of decisions that we've made in this budget about pay and compensation, those are traditionally not the factors that determine whether we're going to have a young man or woman come into the military, as we do the entrance surveys to these folks.  They're interested in serving their country.  They're interested in starting a new life.  They are looking for adventure.  It's really quite striking to see what the factors are that cause, you know, men and women to come in the military. 

The real challenge, I think, is going to be making sure we can retain the quality people that we have, and we're engineering that very carefully.  It was a factor as we looked at the various compensation proposals that we made trying to balance those out.

PETER COOK: I mentioned Afghanistan.  It's been in the news obviously the last few days, the president's conversation with President Karzai.  As you all are advising the president, is a zero option a growing likelihood now?

ADMIRAL WINNEFELD: Well, zero option is certainly on the table.  We have to have protections for our people if we're going to do the job that we think needs to be done in Afghanistan.  We're still committed to the Afghan project, as it were.  We believe in supporting them, helping them achieve the dreams of the Afghan people, but we're got to have a partner.  We've got to have a willing partner that will allow us to have a footprint on the ground to be able to keep our young men and women protected from, you know, legal protections and that sort of thing. 

And if you don't have that partner then it makes no sense to be there.  So, we're going to watch this very closely as it unfolds as the president outlined after the phone call that he had with President Karzai the other day.  You know, we're going to have to probably wait for President Karzai's successor to get the answer to this question.  Every indication we have from those who are running for office in Afghanistan is that they will make this happen.  They will sign the Bilateral Security Agreement, but we won't know until we see that.  And as we've outlined, as time marches on, it's going to get harder and harder for us to have a large -- larger presence there.  So we're taking as measured and mature approach as we possibly can to this.  We want to keep --

PETER COOK: At some point a decision has to be made.

ADMIRAL WINNEFELD: At some point we've got to make that decision, and -- because we've got to also get our people out of there safely if it comes down to that.

PETER COOK: We got just about a minute and a half left here.  What worries you most right now?  What's keeping you up at night?  It's a question I pose often to folks in the military and the government because it -- those of us out in the country who are wondering what the risks are.

PETER COOK: You would know better than most.  With this budget, what is it that concerns you most going forward right now as you do your --

ADMIRAL WINNEFELD: I'd say there are two things.  That's a very good question.  The first is the fiscal uncertainty that exists beyond 2015.  We got the Bipartisan Budget Act that gave us a small amount of relief in '14 and '15, but there's still -- we're looking through a glass darkly at 2016 and beyond.  And, you know, all I want for Christmas is some predictability in our budget.  So if we could get that, it would be of tremendous comfort for us, it would allow us to really plan prudently for the future of what we're going to do with this force.  And then the other thing that I would worry about is the unknown unknown.  There's always something out there lurking that even the best minds have not been able to anticipate. 

And hedging our bets and doing the best we can to build a force that can adapt and change course if it has to, if the world suddenly changes on us is something that, you know, any leader should worry about.

PETER COOK: And can this budget give you the flexibility to deal with that unknown unknown?

ADMIRAL WINNEFELD: We think that at the president's budget submission level that it will.  It'll be a challenge.  It always is.  As we saw after 9/11, we had to shift course.  But we think at a -- certainly much better at that level than at the sequestration level.

PETER COOK: All right, final question for you, because I'm up to 0:00 here.  Your message to the mothers and fathers of the men and women who are out there serving right now.

ADMIRAL WINNEFELD: [affirmative].

PETER COOK: Can you assure them that this budget will adequately prepare, train, and equip their sons and daughters for the fights of the future?

ADMIRAL WINNEFELD: If we're allowed to do the kinds of things that we need to do with this budget, some of the reforms, the efficiencies, and the like, if we're allowed to shape this force structure the way we think it needs to be shaped, which means bringing it down a little bit, then we will have the resources that we need in order to make sure that it's modern and ready, the force structure that we have.  So, yes, I think we can, but we're going to need a lot of help from the Congress in order to get that across the finish line.

PETER COOK: Admiral Winnefeld, thanks very much for joining us, appreciate your thoughts.  Again, tough decisions at the Pentagon.  Thank you for your service.


PETER COOK: And thanks for being here.