Duty: Memoirs of a Secretary at War (76 page)

(I shared with Rahm Emanuel a story about the time during the Reagan administration when all the deputy cabinet and agency heads met for dinner at the Justice Department and beforehand saw a live demonstration of the FBI’s hostage rescue unit, with the lights going out and the unit walking among us firing blanks at “terrorist” targets. I told everyone afterward I thought it could have been played as a scene right out of Agatha Christie’s novel
Murder on the Orient Express
, with the murder victim the deputy director of OMB because everyone in the room would have had a motive for killing him.)

I had several arguments to justify the budget growth we requested. We had already made significant program cuts in 2009, more extensive than ever before, cutting many large programs that were weak, wasteful, or unnecessary. Because no other department had done anything comparable—even proportionately—we deserved some consideration for that. Moreover, our costs rose inexorably. Year in and year out, Defense health care costs would rise $4 billion, military pay raises would cost an additional $3 billion, fuel inflation another $4 billion—in short, the military’s basic overhead and operating costs would rise by about $13–$15 billion even if we didn’t add a dime for existing or new programs.
A broad range of equipment bought during the Reagan years—particularly ships and aircraft—had not been replaced during the defense budget downturn in the 1990s and early 2000s and were coming to the end of their useful lives. After ten years of war, much of our equipment was worn out and would need to be refurbished or replaced. Even the further reductions in overhead I was planning would be inadequate to cover these costs.

My discussions with Orszag and the president on the FY2011 budget began in mid-July 2009. I asked for $558 billion for FY2011, $16 billion more than OMB had proposed. Citing the longer-range factors mentioned above, I also asked for an additional $208 billion for the period from 2011 through 2015. Emanuel, Orszag, and I met privately several times, including once on Rahm’s West Wing office patio, where I balanced a sandwich in one hand and PowerPoint slides in the other. After countless meetings through the fall between OMB and the defense budget team, led by our comptroller Bob Hale, it finally fell to me to cut the final deal. I met with Emanuel and Orszag again in Rahm’s office on November 23, and we agreed to split the difference for FY2011 at $550 billion (up $8 billion from OMB’s original guidance) and a five-year increase of $100 billion over the original OMB number. The president signed on. It was the best budget day I would have as secretary. Everything afterward would go downhill between the White House and me when it came to the defense budget.

The Quadrennial Defense Review (QDR) is a congressionally mandated report—yet another tasking from the Hill that had been introduced since I last left government—that requires a reexamination of defense strategy and priorities roughly every four years. It is a massive undertaking within the department, involving countless military and civilian hours over a period of months. The effort in 2009–10 was led by Michèle Flournoy, with the day-to-day leadership falling to her colleague Kathleen Hicks. The primary complaint about the QDR—other than the blandness that typically characterizes documents based on bureaucratic consensus—in past years had been that its conclusions about strategy and priorities were detached from actual budget decisions. We tried hard but with incomplete success to avoid that pitfall in the 2010 QDR.

On February 1, 2010, I went public with the FY2011 budget, as well as the results of both the QDR and the Ballistic Missile Defense Review. I announced that we would be asking for a base budget of $549 billion and
a war supplemental (now euphemistically called “overseas contingency operations”) for Iraq and Afghanistan of $159 billion. It added up to a staggering $708 billion.

I said the budget requests and the strategy reviews had several themes. One was continued reform—fundamentally changing the way the department did business: the priorities we set, the programs we funded, the weapons we bought, and how we bought them. I was also introducing a “bracing dose” of realism with regard to risk. I observed that for years, U.S. defense planning and military requirements were based on being prepared to fight two major conventional wars at the same time. I said that that model had been overtaken by events, and we now had to prepare for a much broader range of security challenges, from an adversary’s use of new technologies to deny our forces access to “the global commons of sea, air, space, and cyberspace,” to the threat posed by nonstate groups developing the means to attack and terrorize. I voiced a view I would express repeatedly until I left as secretary:

We have learned through painful experience that the wars we fight are seldom the wars that we planned. As a result, the United States needs a broad portfolio of military capabilities with maximum versatility across the widest possible spectrum of conflict. This strategic reality … directly informed the program decisions contained in the budget.

For the first time, both the budget and the QDR sent the message that prevailing in the wars we were already in had to be our highest priority. This meant more money for special operations, helicopters, ISR, and drones. We would also focus on preventing and deterring future conflicts by increasing investment in regional as well as homeland missile defense, spending more on our ability to train and equip the militaries of other countries, maintaining our nuclear deterrent, and funding the establishment of Cyber Command. We would prepare for possible future conflicts by moving forward with the F-35 Joint Strike Fighter, improving and increasing the shipbuilding program, modernizing our ground forces, and developing new capabilities for long-range strike (including a new bomber). We had to preserve the all-volunteer force, and that required allocating more money for wounded warrior programs, family support programs, and health care benefits.

In the long list of initiatives, including a number of additional program
cuts, there were three that were controversial. As with every new aircraft in recent decades, the F-35 Joint Strike Fighter was over budget and behind schedule. The undersecretary for acquisition, technology, and logistics, Ash Carter, presented me with a long list of changes to the program in early 2010 to try to get it back on track. I accepted all his recommendations, including withholding $614 million in performance fees from Lockheed Martin, the lead contractor, and firing the two-star general who had been our program manager and replacing him with a more senior and capable officer. We also reduced the number of planes we would buy in the immediate future. Finally, to compensate for the delays in the program, I agreed with a recommendation to buy more F/A-18 fighters for the Navy so our carriers would not end up short of their full component of aircraft.

The two remaining programs with strong congressional support from my 2009 hit list were the C-17 cargo plane and an alternate engine for the F-35. Despite multiple Air Force studies showing that we had plenty of cargo aircraft, Congress just kept stuffing more C-17s into the budget in order to preserve the jobs on the production line. The Air Force didn’t need more, didn’t want more, and couldn’t afford more. President Obama agreed to back me up with a veto threat on capping the number of C-17s.

As for the F-35 alternative engine, early on Pratt & Whitney had won the competition to build the engines. Needless to say, members who had a General Electric presence in their districts and states weren’t happy about that and put money in the budget to fund development of an alternative—produced, of course, by GE, partnering with Rolls-Royce. In no time, Defense was spending hundreds of millions of dollars each year to support a program that, again, we didn’t want, didn’t need, and couldn’t afford. Facts and logic play no part in debates on the Hill when jobs at home are at stake, and so members and I would go around and around on the extra engine. Here, too, the president agreed to support my decision with a veto if necessary. When a reporter asked me if I was sure the White House would back me up with a veto, I responded, “I don’t go out on a limb without looking back to see if there’s a guy back there with a saw.”

The initial face-off on both issues came when Mike Mullen and I presented the budget to the Senate and House Armed Services Committees on February 2 and 3. Among the members with strong views one way or
the other, when it came to issues involving defense programs, the two committees (and the Appropriations Committees as well) were largely split not by party or ideology but, with a few exceptions, by the location of the pork. I suppose the two issues also ended up becoming a test of wills between Congress and the president over who had a final say on defense acquisition. Congress had held the upper hand for a long time, and now it was being challenged. At one point, Representative Neil Abercrombie, a longtime Democratic congressman from Hawaii, said that I and the executive branch needed to learn that Congress made the final decisions on acquisition issues. I replied, maybe a little confrontationally, “Only if you have sixty-seven votes”—the number needed in the Senate to override a presidential veto.

Undeterred, the House Armed Services Committee put $485 million for the extra engine into its bill, along with more C-17s—and repeal of “Don’t Ask, Don’t Tell,” exactly the scenario I had worried about in terms of getting a presidential veto. The House committee, in which Democrats were a majority, was prepared to fight for the extra engine until the last dog died, but after months of debate and confrontation, the newly Republican-controlled House—led by Tea Party members—in February 2011 killed the program. A full vote in the Senate led to the same result. Proponents of buying more C-17s gave up the ghost more easily. So I had put two more notches on my budget gun. I had now secured congressional approval of all thirty-three program cuts or caps I had announced in April 2009, a record.

The history of Defense Department acquisition and development of new programs is rich in over-cost, overdue, and flawed programs. There have been enough studies on how to fix the problem to fill a room, and repeated attempts at legislative remedies have been made, including as recently as 2009. Ash Carter and I spent a lot of time talking about the problem, and I concluded that the principal fixes were pretty straightforward: make sure there is competition for contracts, but real competition, not the kind Congress likes where everybody wins (such as proposals on the Hill to split the Air Force tanker buy between Boeing and Airbus/EADs or for the F-35 alternative engine); have experienced and tough government contract negotiators, people with really sharp pencils; in big, long-term programs—excluding current wartime needs—wherever possible, build prototypes of new equipment, and don’t start production until testing is complete and problems have been resolved; freeze
requirements early in the process (anybody who has ever added a room onto his house knows that if you change the plans after construction begins, it will cost you an arm and a leg; same thing with warplanes and ships); demand accountability—be willing to fire government project managers or contractor managers if programs go off the rails; finally, the secretary of defense has to get his (or her) hands dirty overseeing all this, getting knowledgeable enough about the big programs, and keeping up to speed on progress to be able to know when to blow the whistle if things go awry.

Responsibility for overseeing acquisition cannot be delegated to the deputy secretary, as has so often been the case in the past. This is not about micromanagement, it’s about accountability in leadership. Too many top executives in business and government think the details are beneath them, often with calamitous results. Frankly, I did not involve myself in acquisition issues in the Bush administration apart from urgent wartime needs, but I changed course early in the Obama presidency.

As we began to prepare the FY2012 budget in the spring of 2010, my sense of foreboding about Defense’s budgetary future turned to alarm as I listened to the debates in Congress, followed the media, and listened to Obama. I believed our budget would remain flat at best and probably decline. To afford the weapons programs and equipment that I strongly believed we had to buy, we would need to find the money internally. Defense’s base budget—not counting funding for the wars—had nearly doubled during the previous decade, and I believed the Pentagon had forgotten how to make tough decisions and to prioritize. We needed to begin to change a culture of spending into a culture of savings. This, then, required a new, even more aggressive examination of every part of the Defense Department. Thus began the “efficiencies” initiative of 2010.

I hoped to set the tone for what we would do in a speech on May 8 at the Dwight D. Eisenhower Library. Eisenhower, one of my great heroes, had told the Pentagon he wanted it cut down to “a Spartan basis,” noting that “I say the patriot today is the fellow who can do the job with less money.” I said in my speech that I found it compelling that under Eisenhower real choices were made, priorities set, and limits enforced—even in the face of a superpower adversary like the Soviet Union. The post-9/11 “gusher of defense spending,” I warned, “has been turned off and will stay off for a good period of time.” Accordingly, the department had to take a hard look at every aspect of how it was organized, staffed,
and operated—indeed, every aspect of how it did business. I concluded: “The goal is to cut our overhead costs and to transfer those savings to force structure [military capabilities] and modernization.… What is required is not more study. Nor do we need more legislation. It is not a great mystery what needs to change. What it takes is the political will and willingness, as Eisenhower possessed, to make hard choices.”

Three and a half years into the job, I had again declared war on the Pentagon—on the 40 percent of its spending that went to overhead, on layers of bureaucracy that put as many as thirty layers of staff between me and an action officer, on unnecessary programs, on too many generals and admirals for the size of our forces, on too many senior civilians in the department, and on too many contractors.