 Well, good afternoon. Welcome to CSIS, the Center for Strategic and International Studies. I am David Burto, and I serve as the Director for Defense Industrial Initiatives here at CSIS. I'm here today, before you, because Dr. John Hamery, who is the President and CEO of CSIS, is on overseas travel and could not greet you today or introduce our distinguished speaker. On his behalf I want to extend both to Mr. Bush and to all of you his regrets for not being able to be here today. The Defense Industrial Initiatives Group at CSIS is dedicated to the study of defense resources, programs, management, and industry. Our focus is on fostering public discussion on critical national security issues and topics. It's therefore our privilege today to host our speaker and we are most grateful for that opportunity. Mr. West Bush is the CEO and President of Northrop Grumman Corporation, a role that he assumed in January of this year. He carries to that position a distinction that is becoming unfortunately less and less common. For he has a technical background as an electrical engineer and a systems engineer, he cut his technical teeth at TRW space and electronics business, and prior to becoming CEO he was president and chief operating officer of Northrop Grumman and he was president of the space technology sector. But notably he also served as the firm's chief financial officer. These two qualifications, the technical background and the financial background, are important because the US defense industry serves two very different communities. On the one hand the nation's security depends upon their technical excellence and superior innovation, and it always has. On the other hand, the global financial markets demand of our defense companies a return on investment that's competitive with their counterparts in less demanding realms. Reconciling these competing demands of these two communities is no easy task and it requires both technical and managerial and financial skill. Mr. Bush has these. So we are pleased to welcome Mr. Bush and Northrop Grumman also as a new neighbor. After decades of being near Los Angeles, Northrop Grumman is moving its headquarters to the Washington area, in part to be able to respond better to their critical customers in the federal government and the national security sector. Now those of us who commute every day in Washington know there's another reason. There's actually only one city in America that has worse commuting traffic than Washington D.C. And so you're going from the worst to the second worst. It's an interesting progression. Following Mr. Bush's remarks this morning, we will open the microphone for some of your questions. All the comments today, of course, are on the record and to the point. So with that, I ask you to please join me in welcoming the CEO and President of Northrop Grumman, Mr. West Bush. Well, thanks, David. I really appreciate the opportunity to be here today. And we are looking forward to being a new neighbor here in the D.C. area and looking forward to getting that underway pretty quickly. We're just hoping that this winter isn't a reflection of last winter. As we're working hard to recruit those Los Angeles-based folks to relocate here to the D.C. area. So again, thank you all for being here today. I really appreciate the opportunity to speak about the Defense Industrial Base and some of the challenges that I see for the Industrial Base on the horizon. I think you all know that our Defense Industrial Base is a fascinating product of some key strategic decisions that have been made over many decades by policymakers, technologists, and the capital markets. And I appreciate it, David's introduction, because I think he said it well in terms of the convergence of the three major players that have to come together to make this work. But it's also a reflection of the core strategy that we as a nation have adopted for our defense. That strategy has, at its foundation, an extremely capable cadre of well-trained, equipped, and dedicated servicemen and women who are enabled by absolute technological superiority. I think the Department of Defense does an extraordinary job of recruiting, training, and creating an environment in all of our armed services where dedicated men and women are able to superbly serve their country. It's the job of our Defense Industrial Base to ensure that they are always equipped with the very best capabilities. But our ability to ensure those outcomes is being challenged on multiple fronts. And I believe that the policy decisions that are associated with the Defense Industrial Base must reflect its role as a strategic asset for our nation. A healthy Defense Industrial Base is certainly critical to our nation's security, to our nation's technological standing in this most technological of ages, and to the hundreds of thousands of Americans that it employs. So for the next few minutes, I'll talk about the base, about the pressures that I see on it, about the choices facing those who are deciding its future, and about the implications of those choices, because sometimes the implications aren't always so clear up front. When you stand back and examine the changing threats that our Defense Industrial Base has had to address since the end of the Cold War in particular, I think you'll be struck by how versatile and how resilient the base has been. Two decades ago, when the Soviet Union fell, along with it, fell a relatively tidy geostrategic situation. Back then, it was pretty easy to spot who the bad guys were. Most had governments that they talked with. Most had armies, navies, air forces that we could all analyze and figure out pretty perceptively how to counter. But when the Soviet Union fell, things certainly changed and changed in a big way. One of those changes was perhaps best summed up by a fellow named Marine General Charles Kula back in the mid-90s. He had a little bit of insight in the future. He said then that the future would be characterized by what he called three-block wars. In one block, our forces might be fighting conventionally trained and equipped military adversaries. The next block over, our forces might be contending with violent insurgencies. In the block next to that, our forces might be conducting humanitarian operations. It's interesting now, more than 15 years later, looking back at that, how perceptive his comments were relative to what we've been engaging in these last number of years. We certainly, as we think about our future, need to prepare for more of that. I think we all see that on the horizon. But we also need to prepare for potential adversaries that seek to field nuclear arsenals, biological weapons, ballistic missiles, and counter space capabilities. Those capabilities could be wielded by states or by stateless terrorist organizations. And you can add to that the threat of cyber attack from sometimes unknown actors who threaten not only our defense capabilities, but also our core infrastructure and perhaps even the very bank accounts of our citizens. We also face multiple regional instabilities that could boil over at any moment, threatening our global interest in the process. And of course, there are a number of growing economic powers out there who want to reflect their economic strength and their military strength. So the whole notion of how our nation defends its citizens and our interests have changed. And yes, there will certainly be a body of enduring security needs that we'll always face. We'll always need to be able to assure that we can affect US military dominance through power projection, strategic deterrence, global access and global awareness. But in addition, our defense industrial base must now supplies supply tools and solutions that address the needs of what we call the global commons. And I think most everyone has come to be familiar with that term, the global commons. It includes more than the familiar geopolitical hot spots. It's now a global commons that include cyberspace. And oftentimes it's reflected to include energy, food and water rich areas. This in the context of a world population that continues to grow in numbers every year. And many parts of the world continues to grow in desperation every year. And I think it's sometimes not well understood continues to grow in technological savvy every single year. So in short, the dynamic range of threats facing our nation and our interests is unparalleled in our history. At the same time, our defense industrial base will be called upon to find those needed solutions, as we are focusing on tremendous pressures on the nation's investment capacity for defense. Certainly we in the defense industry need to do all that we can to provide the most cost effective systems and capabilities. We at North of Grumman, as have our peers in industry, have been working hard to reduce overhead, streamline our organizations and processes, increase productivity, doing all of the things that you would imagine that would help to provide our customers with a very best value possible, and our investors with an attractive rate of return. The industrial base, of course, did not spring forth in a vacuum. It is rather an extraordinary product of the capitalism that has forged America's economic might, capitalism that is the most successful economic system in recorded human history, and one that rewards initiative, merit, foresight and risk taking with national prosperity and higher standards of living. It's easy to forget that a little bit when you pick up the newspaper every day and read about the tough times, the recessionary effects that we're all feeling. But even today, despite our economic challenges in the current recession, the American free market remains the most powerful economic engine in the world. And the defense industrial base that works within that system, and is key to its long term defense is still unparalleled as a strategic asset. And we have every opportunity to extend the supremacy of that base well into the future. But maintaining that leadership will require thoughtful, determined action. So let me touch on some of those necessary actions. Our defense industrial base is and always has been much more about people and innovation than it is about facilities and production rates. And that base draws on three principle sources for its strength. First, it relies on a very intimate relationship with its customers, a relationship that generates innovation, and the program funding necessary to realize that innovation. Those customers, of course, include the defense and intelligence communities, the emerging homeland security marketplace, Congress and ultimately the American taxpayer. And I'll come back in just a moment to talk about another important customer, the international customers, our allies. Secondly, the base relies on the constant influx of technical and management talent to drive the innovation that creates and enables technological superiority. And third, like other industries, of course, it relies on the capital markets to provide the investment and the financing required for the large scale undertakings that are characteristic of the defense industrial base. All three of these sources must be engaged, robust, and committed to achieve the outcomes upon which our national security depends. I think we can see that there are clear risks in all three of these areas. As economic conditions place more and more pressure on government spending, the customer's appetite for new innovation can receive. It takes great discipline to preserve that innovation at the meaningful level required to support the long term industrial base. And without the customer's commitment to innovation, not only do new science and engineering graduates avoid our industry, but current talent in our industry could depart as well. We've seen it happen before. And the large demographic hold that we have in our industry today can be traced directly to the talent departures that we experienced in the 1990s. We all know that the capital markets are very savvy. They see a direct relationship between innovation drivers and return opportunities. And when they sense a decline in the former, they presume a decline in the latter, and they invest accordingly. The three components, customer drive and investment for innovation, the ability to attract and retain talent, and the availability of capital, all must work together to make the defense industrial base strong and capable of fulfilling its mission as a key element of our national security. So what can we do about these changes? There are a couple of things that I'd like to focus on today, concepts that I think are going to be important as we move forward. I don't claim up front that these are the only two things we're going to be needing to do. But I think these are very important actions that we need to have underway. First, let's talk about capabilities. The government customer has to make focused decisions about what capabilities are key to the long term security of our nation. And they need to work very closely together with industry to create meaningful approaches that drive the continued evolution of that capability. So let me talk about an example. A good example is aircraft design. Once the Joint Strike Fighter program completes testing, America will not have any large scale DOD manned aircraft design programs under development, or perhaps even on the horizon. This is an unprecedented situation for us. If you compare this to the period of time back in the 1950s, the United States initiated 45 new aircraft programs during the 1950s. Perhaps there will be eventually a long range strike program that will fill that void. But what will the aircraft designers do until that program comes along? There are many other examples across the industry where a lack of new start programs could have a devastating consequence on the basis resources for human capital. Speaking as an engineer, I know very directly that for many of our critical skills areas, there simply is no substitute for actually building something. We have to be building things to maintain the capability. If we don't have new projects, those skill areas will atrophy and reacquiring the skills sometime in the future will take at a minimum a lot more time and a lot more money than had we made nominal investments in the intervening time to preserve the capability, if in fact you can even do it in the future. And on top of that, in some of the key disciplines across the defense industry, more than 50 percent of the industry's current engineering population is either retirement eligible today or soon will be eligible for retirement. So a fairly rapid decline in capability is conceivable if there are not investments made to preserve those capabilities. So to continue with that aircraft design example for just a minute, if aircraft design is seen to be important to our future, and I certainly think that it is, the customer should decide and work with industry to invest in a few reasonably advanced designs that would enable us to move out quickly should we reach the point where a new advantage is required in the aerospace arena. And they don't have to be manned aircraft. In fact, I think up front it would be foolish to say it has to be X or Y. We should stretch for innovation if we are investing for that purpose. A second thought, a second line of action I believe we should be taking to mitigate the risks on the industrial base involves reshaping export control. And I know there's been a fair amount of discussion around export control. I thought I would offer some perspectives from an industrial based perspective. Much of our capability when you think about what we're trying to maintain can be not only maintained but extended by lifting the export shackles off of American defense companies. Now certainly to rely on technological superiority as a strategy, we have to maintain those things that truly make us superior. But with regard to export control, we have for years made the perfect the enemy of the good. We've been so focused on protecting that technological advantage that in many cases, I believe we've actually done severe and unnecessary damage to the defense industrial base. A good case in point on that satellites, something I have quite a bit of experience on from years ago. Back in the 80s and 90s, we were so concerned about others gaining what we saw to be a force multiplier benefit of satellite communications that we essentially made it impossible for us companies to sell communication satellites even to our allies. We somehow thought that we had a corner on that technology. And we thought that if we held that to ourselves, we would be the only beneficiaries of the capability. In hindsight, we were badly mistaken. The very policies that were intended to keep this technology secure for us actually encouraged others who could not buy it from us to develop their own. In fact, they even went out and marketed their products around the world as it are free. America lost valuable export opportunities and we are no safer as a result. The rules have become ill-defined and they're simply not cohesive. If you deal with the export regime every day, it is a challenge to navigate your way through the process. Just another example on the, if you will, on the airborne side of things. Last year, we were denied the ability to export some upgrades to F-16 radars that would have actually provided less capability than those on the F-35. Now, the F-35 radars were approved for numerous coalition partners several years ago, but the F-16 upgrade was denied. And we're still struggling to sell unmanned aircraft even to our allies. It's almost a repeat of the satellite example. The thinking seems to be that our allies would neither build their own nor buy them from those who will be motivated by the perversity of our policies to build them for themselves. So we really need to stand back and think hard about our policies with respect to export. Now, fortunately, Secretary Gates is promoting what is clearly the best policy. Build higher walls around fewer things. His primary motive for such a reform makes a lot of sense to better support our allies and to actually codify the technology sharing that occurs every day on the battlefield and in the joint training that we perform with our allies. But I think the Secretary's reform initiative should also be promoted for reasons of sustaining the industrial base. By broadening the international market for our base's high-tech products, the Secretary's reforms will translate directly into the preservation and the expansion of our nation's critically important high-tech workforce. By strengthening the defense industrial base, the Secretary's export reforms, I believe, will keep us safer for the long term. As I said earlier, the policy decisions we take in the near term clearly have substantial consequences for the future health of this precious national resource known as the Defense Industrial Base. I'm optimistic that these decisions will swing in the right direction, a direction that will revitalize the innovation and safeguard the workforce upon which our nation's own security depends. I'm also optimistic because our government customer has already committed to one of these two things. They are already pursuing the reform of our export control policies. We're just at the very beginnings of this. We have a lot of work to do to actually be successful in that reform. But I see the energy and the focus and the determination to get us there. And the other critical task that I described, the identification and funding of key capabilities, is a natural process for government to take on, certainly when there is clarity around the policy objectives. Of course, these are not the only actions required for us to move forward. But I think they are two very actionable approaches to push us in the right direction. The other reason that I'm optimistic is because the alternative is so clearly, at least to me, at odds with the nation's interests. Without an aggressive push to manage the industrial base as a strategic asset, we could potentially experience outcomes similar to what we saw in the 1990s. During that time, I'm sure you all remember, many of us lived through that process. There were massive waves of talent departures. There were consolidation of companies driven more by a focus on cost synergy instead of innovation synergy. And of course, the loss of competition and innovation that that implies. And during that period, there was also extreme investor reluctance to channel capital towards the defense industry. Now, I don't believe that that's the outcome that will serve America's interests. And I believe that our government leaders who are entrusted with protecting the security of our nation and our allies feel the same way. In fact, one thing I would point out has been the very proactive approach that's been adopted by the DoD's acquisition team under the leadership of Ash Carter to engage the industrial base. That has really reinforced my perspective that there is a solid path forward here because the channels for discussion and communications are open. So I'm optimistic that we'll proactively choose the better direction, one that will let us continue to provide our servicemen and women with the tools and capabilities that they need to keep us secure in a world that continues to grow ever more dangerous. And with that, I look forward to your questions. Thank you. Now, ladies and gentlemen, most of you are familiar with our procedure for questions. You raise your hand. I'll recognize you. If I don't see you, you might have to wave it a whole lot. I don't think you have to throw something at me, but the lights are bright, so I might miss a few people on the side here. Wait for the microphone. You'll get a microphone brought to you. If you would stand up, use the mic, tell us your name and your affiliation, and then ask your question. And by telling us your name and your affiliation, you'll allow the electrons to connect the microphone to the speaker. So we won't actually know who you are. But by the time we get to your question, we'll have that recorded. So that's why we follow that procedure. Do I have any any hands interested in in questions here? Let's bring a mic up to the front here, if you would. Hi, Gopal Ratnam, reporter with Bloomberg News. Thanks for taking my question. You talked about the need to invest in capabilities and which is required for innovation and industry. But there's something else that's quite important. That's going on in town. There's a couple of commissions looking at how to reduce the US deficit. And there seems to be a growing demand that both defense spending and entitlement programs be put on the table to figure out ways to cut deficits. So I'm wondering, what would you tell this commission? Would you advocate against further cuts in defense spending? And why, I mean, how would you make the case for further cuts in defense spending? Yeah, the perspective, I think that's going to be important here is to be thoughtful about any approach that's taken relative to managing the overall budget pressures. It would be easy to simply say, all right, we've had a substantial investment in defense for over a decade. Why don't we simply just stick with what we've got, stop all new programs and build out some of the programs that we've invested to create? That would be, you might say, a logical conclusion if you were primarily focused on coming forward with answers to take on the budget pressures. The argument that I think needs to be made and needs to be made very thoughtfully is that, yes, that might save us some next year or the year after or maybe for the next three years some expense. But what does it mean for the long term security of the nation and for the cost when the time comes and it always has come at all points in our history when the time comes when we need the things that we allowed to atrophy. I think it is a better investment to maintain the capability than to let it atrophy and hope that in the future you can reconstitute it when you need it. So it's all, it's like most things, it's a matter of balance, it's how much, but I think it's going to be critical that that perspective be at the table in an era where there's clearly going to be a lot of pressure in the downward direction. Got one on row three, seat six here. Not that we're keeping track of course. Thank you. Dick Van Adder with the Science and Technology Policy Institute. You've mentioned mostly what happens in the defense sector specifically. And yet the defense sector is a manufacturing sector by enlarge. We need real things, real products. And what we're seeing in the in the domestic manufacturing for commercial and civil that the role of the United States in terms of domestic manufacturing has withered and gone down and down even in key technology industries, advanced technology industries like semiconductors and even sensor and sensor systems. Do you think that the defense industrial based concerns that you've talked about need to be linked to our ability to make things commercially and in industrial areas in the United States economy? Are they absolutely do and much of the discussion that we engage in as a defense industrial base? And so I hear again, I'm not just talking about Northrop Grumman. I'm talking about the full number of industries or the full number of companies in our industry relates very directly to that challenge that we are a manufacturing industry. We're also a research and development industry. But at its core, we are a manufacturing industry. And we are critically reliant on other manufacturing industries, both domestically and in our allied nations and being deeply connected into the outcomes for those manufacturers is a national security perspective. One thing that I would mention there, you know, oftentimes there is a view that manufacturing naturally migrates to the lowest cost of labor locations. And perhaps that's part of the reason that we've been suffering a decline in manufacturing in our country. I would offer a little bit of a counter view to that. It tends to go to the lowest cost of manufacturing location. And the total cost of manufacturing is not only the labor cost, but it's also the infrastructure costs, all the costs that go with operating in a particular governmental environment. And whether or not you can actually get things done that need to be done to have manufacturing facilities. I would say that we do have a great opportunity in the U.S. through the application of technology to be very, very cost competitive when it comes to manufacturing. But we need the government regulations and I would say the broader environment to be supportive of those outcomes. I will tell you there are many places around the country today where it is just downright impossible to get a new manufacturing facility up and running. And it's not because of the cost of labor locally. So there's a broader set of issues that have to be addressed from a manufacturing perspective. I've got a question on the back. My left, you're right. It's funny how politics looks that way sometimes. Chip Pickett, no affiliation. This industry has gone through one enormous change in the past half century and that began in the mid 1980s with the Reagan cutbacks and then when the Russians decided to leave the game. That caused a major restructuring in the way this industry works. If you look over the next 10 years do you see a similar scale of restructuring taking place? And what do you think this industry will look like say in 2020? Yeah, I think if you stand back and think about what the industry needs to look like that helps answer the question. If if we are able to approach it from a from a thoughtful perspective to drive in that direction. We are in a situation today where for many of the core capabilities there are one, two or three manufacturers left. And that's a product of a lot of consolidation that occurred during the period of time that you described. But I think we all are competition advocates that there is a belief that competition in our industry actually creates better outcomes. So further consolidation for most of the capabilities base probably does not make a lot of sense. Now there are other types of consolidations that can occur for innovation synergies that I do think make some sense. And I think we're going to see some of that. I think there is a possibility that not only smaller companies but also mid-tier companies or even perhaps some of the larger companies will think through their portfolio and decide where they can actually get the most innovation synergy, innovation capability to bring forward as the nation's defense needs continue to evolve. So I would never say that we're in an in-state for the corporate landscape if you will for the defense industry. But I don't forecast that we'll go through another wave where the consolidation of capabilities reduces in a substantial way the competitive capabilities of the competitive landscape. In the SRO section in the back there, I believe you had a question, Terry. Terry Murphy, I'm a senior associate with CSIS. My family and I were in Australia this August and on the 5th of August there was a major story in the Australian magazine with large picture of a plane taking off from a big carrier and the headline was and I quote, as the US wanes China gains and the subhead was the tectonic plates were shifting under the Pacific and the subhead after that was Australia's defense which had relied on the US fleet and US forces, etc. Since the Battle of the Coral Sea we're now in jeopardy. I won't quote the rest of it but it does seem to put in context your broader the broader context that you're concerned with the industrial base and I'd like you to perhaps comment on that. Yes, it's been very clear that Australia in particular has been concerned about its ability to rely on the US presence, the US capability to defend against what it seems to be a growing number of issues in its region and it's hard to fault the perspective. I would say though that that should serve as an additional wake up call for us that our ability to not only seem to be able to project military superiority but actually project that superiority when it's called upon is something that is being questioned and something that we need to reflect on relative to the actions the decisions that we take. I think Australia is a very good case in point. Fortunately Australia is a very, very good ally and the discussions at least I've been privy to with the Australians have been very much on the table and very much focused on how do we take this on together. I read we've got a couple here on the front row. If you'd bring it up and then we'll start in the middle here and then you can pass the mic to the end of the row when you're finished. Thanks for taking my question. I'm Roxanna Tiran with the Hill. I was wondering whether you could answer whether North of Grandma would entertain a foreign buyer for the shipbuilding unit or whether and what timeline you're seeing for either spin off or buy. Thanks just to provide a little framework for the question. You know, we have announced back in July that we are evaluating alternatives to separate our shipbuilding business. And we said publicly that we were assessing both the possibility of selling the business or the possibility of spinning the business. And in fact, last Friday we filed something called a Form 10 with a security exchange commission that provided the paperwork, the initial set of paperwork that is required to preserve the option for spinning it out. So we are in the process of evaluating both of those alternatives. One of the things that we've held to rather firmly as a company through all our years of both buying and selling businesses is we don't talk about it as we go through the process. So I'm apologize for not being able to be direct about your question. But the one thing I would say is that it is very important to us. Should we elect to separate the shipbuilding business that its destination, whether it's in the hands of a buyer or if it is a publicly traded company, is a destination that is acceptable to our customers and enables it to perform its role very, very successfully going forward into the future. Hi, sir, Chris Castelli with Inside the Pentagon. Two things, if I may, on earned value management, how concerned are you about your company's challenges in that area and complying with that? Also on carriers, you mentioned in the Form 10, you see a potential waning of the need or reliance on carriers as smart weapons are increasingly focused on. So could you talk about that? Yeah, let me let me take them in reverse order on carriers. If you read our Form 10, and our Form 10 includes a section called risk factors. And as with any filing with the Security Exchange Commission, there's a requirement that we delineate all the potential risks that we see associated with any of the businesses. If you look at a 10 K filing for Northrop Grumman, for example, there's also a section on risk factors. And so we are very thoughtful in going through all of the potential things that we can see on the horizon. None of those are necessarily a prediction of an outcome. There's simply information for investors to consider should they want to think about the totality of that business. So I would categorize it as it's conveyed in the Form 10 filing with respect to earn value management. That is an area where all of the companies in the industry, I would say, are going through a fairly rigorous process together with our government customers to make sure that comprehensively across the company, all of the systems really measure up to the standards that the department has established. I think just about all of the companies in our industry are doing very well at EVMS overall, but we all tend to have a few spots where we've got to do better. So I would not characterize our situation as representing an unusual concern or risk. It's more in the category of continuous process improvement to make sure we're demonstrating excellence in EVMS across the across the whole board. Got one more on the side here. Teresita Schaefer from CSIS. I wonder if you could say something about international integration in your industry, and specifically in Northrop Grumman. The defense industry is a little bit different from much of the manufacturing industry from that point of view. And yet I think globalization has happened to you too. Where does this fit in the way you see the company's future? Yeah, clearly operating on an international scale, not only in terms of our sales, but also our supply chain is an integral approach to being a defense company in the U.S. today. And, you know, while there may be some who might claim that they're not that way, that they really don't use, they don't source from foreign suppliers, we all do. You can't operate today without having a global supply chain. And I would also say that you really can't bring the very best answers to the customers if you're not connected on an international basis to potential partners around the globe. And by that I mean our allies, of course. And it is an international business. It has an international framework. It's complicated by the sometimes confusing maze of ITAR regulations that I discussed earlier. And part of the benefit that I think we could achieve through some improvements in the export regime would be to actually facilitate some of that commerce, if you will, between partners across the Allied bridges here. But this is an international business and has to be thought of, managed and hopefully planned for the future from that perspective. I think I saw one more here on the right, Sandra. Thank you. Sandra Erwin with National Defense Magazine. I wanted to ask you about the KCX tanker, just based on what you've seen unfold since your company's decision to not compete, do you have any regrets? Do you still believe that it's not going to be a fair competition? I will just say we have no regrets. We'll do one more here in the middle and then I'll take the moderator's prerogative to do the last question here. Uh-oh. Auto-crisis with Congress Daily. You talked about the government needs to sponsor innovation to keep the industry, the engineers, technicians. But at the same time, part of the defense reforms that Secretary Gates is pushing is doing away with a limit to reducing cost plus, where most innovation usually requires. What's your view on that aspect of it? Can you do government-sponsored innovation with under-cost, under a fixed price? Now, let me provide the perspective that has been right at the table in the discussions that we've had with DOD on this. And one of the things I said in my preparatory remarks was that we have appreciated the approach that the DOD has employed through this process of looking at the set of initiatives that they're taking on today. And so there's been a lot of dialogue with industry leadership, with industry associations. And one of the things that's been right at the table throughout that dialogue has been this issue around the appropriate use of cost plus versus fixed price. So if you actually read what has been said, I know there's been a lot of commentary around what has been said, but if you read what the department has put forward, if you listen carefully to what Ash Carter and Bill Lynn have been saying in their public commentary around this, they have focused on the appropriate use of contracting. And I would agree with much of the perspective that sometimes in the past, cost plus has been inappropriately used for things that should have otherwise been fixed price incentive or firm fixed price, particularly as you're truly moving into production. And I think in general across industry, you'll find a lot of support for production activities being the FBI or the FFP approach. So the question goes to what really are the appropriate uses for cost plus and fixed price when you're not in production. And that's where the tough point in the implementation of the policy statements that have been put forward is going to be. To the extent that we are talking about simply integrating already developed technologies, then I think there is an opportunity for FBI contracts, fixed price incentive, where there's a shoreline relationship. Where we're talking about the utilization of technologies that are not at a high level of readiness, so they're not TRL six or seven readiness, then I think it's a mistake to try and go down the path of using fixed price. And I think there's going to be a lot of engagement between industry and the implementation level within the department around what is really meant by the terms that have been used to describe appropriate use of cost plus contracting. So there will be a lot of engagement around that. Let me take the opportunity to ask a final question. We've been in the throes of acquisition reform for my entire career in Washington. And those of most of you in this room as well. And the one issue on which we all agree, no matter where your point of view is situated, is that the government itself needs to rebuild and reconstitute its own capability in the acquisition and procurement workforce. What is industry's role in helping to foster that rebuilding of the government's capability? I think there is a big role for industry. We can't be out recruiting on behalf of the government, so that's something that needs to be done purely from a government perspective. But there have been a lot of ideas put forward on ways that we can help. Having myself been in the industry my entire career, I've seen that change. I've seen the implications of that change. We did lose an incredible amount of capability on the government side as well as industry side during the 1990s. Reconstituting that is critical. Some of the things that industry can do in that regard, just some of the examples that have been put forward on the table, I recall very clearly during the 80s that there were a number of folks who were coming up the acquisition ranks in different government agencies, whether it was Air Force or the Navy, that would actually take a tour through industry and be assigned to the programs in industry. And again, from my perspective, there is simply no replacing the things you learn by doing hands-on activities, whether it's being a program manager at the project level, whether it's being embedded in an engineering team, or whether it's actually sitting side by side with an experienced contracting officer going through the contracting processes. I would say, and again, not only Northrop Grumman, but my peer companies in our industry of well have been very clear with the department that we are just eager to be engaged in helping this because it benefits everyone by improving the strength, the overall strength, both in numbers and experience-based of the acquisition core. Thank you. I want, on behalf of CSIS and Dr. Hamry, to thank all of you for your attendance today. I want to thank Mr. Bush for giving us the privilege of both your remarks and the candor of your comments to the questions. And with that, we will adjourn. Thank you all very much. Thank you.