 Good afternoon to everyone. I'm Kathleen Hicks. I direct the international security program here at CSIS, and I appreciate everyone coming today. It's my honor to have the opportunity to introduce Heidi Shue, who is here, to join us and tell us a bit about Army modernization. Heidi Shue is currently the Assistant Secretary of the Army for Acquisition Logistics and Technology. And prior to that, she served as the Principal Deputy for that same position, and of course as the acting for quite a time. So bottom line, she knows her business very well here on Army modernization. She serves as the Army's Acquisition Executive, the Senior Procurement Executive, and she is the Science Advisor also for the Secretary of the Army. She, prior to being with the Army, was the Vice President of Technology Strategy for Raytheon for its Space and Airborne Systems Division. And she has held several leadership positions while at Raytheon to include the Corporate Vice President of Technology and Research. She has also served with a variety of other industry partners. And she comes to us with a bachelor's degree in math, something I could never, ever hope to have had from the University of New Brunswick in Canada, a Master's of Science degree in math from the University of Toronto, and in systems science from UCLA, and an engineer degree from UCLA, which has many more degrees than I think I have all together, let alone that they're in math. So with all of that, let me just say CSIS is very happy to welcome Ms. Hsu, and she'll have her discussion here after she makes her comments, moderated by the Director of our Defense Industrial Initiatives Group, Andrew Hunter. So without further ado, Ms. Hsu. Good afternoon. It's great to be here with you this afternoon. I have to say, I have to thank you for getting me out of the Pentagon, at least just briefly for the afternoon. It's not easy to get pardoned, as you well know. So what I would like to do is kind of share with you the modernization portfolio, then I will dive into a little bit about acquisition and reform, so you get a flavor of both. So if you look at the army-physical environment, what we've been facing the last several years, our top line has come down a fair bit, as you guys well all know, under sequestration. But the piece that has come down the fastest is the RDA account. That's a research development acquisition account. So what that tells you is the RDA account, in the near term, has been the bill payer. That's because, in the near term, we can't squeeze the money out of the mill per, the military pay piece. You can't get the force structure out there fast enough. So the mill per piece of the pie is actually growing. Also the ONM piece, which is operation and maintenance piece, relative to the RDA account, is also growing. So the squeeze, in terms of fungible account that we have to be in terms of when the top line comes down fast, is the RDA account. And this is where the S&TPs, where the research and development, procurement, all falls into that, and that's what's being squeezed in the near term. So since 2011, army RDA account, unfortunately, has decreased as twice as fast as army's top line. Next. If you look at our PB President's budget, PB16 budget portfolio, so if you look at the red piece on the left side, that's the RDA account. We're now down to about 18% of the army top line, and I would say about four years ago we were at about 23%. So we definitely have taken our hit. If you take the RDA account of the piece of pie and blow it up to see what it's composed of, you can see the biggest piece, aviation, which is not surprising, because that's the most expensive part that we have. So that's quarter of our budget, belongs to the aviation portfolio. Next biggest is the mission command that is comprised of our command and control and communication to tactical pieces that belongs within that piece of pie. Since we have preserved S&T and protected it, the S&T piece is now our third biggest portfolio. The S&T is really the sea corn of our future, and what we really don't want to do is eat our sea corn. As you can see, the fourth biggest piece is the ground system. So if you look at the top three pieces, it's half of our budget. Everything else falls into the other half. Next. So how are we going to modernize the Army material enterprise? The way that we've looked at this problem space is decompose it. Are there stuff that we have today that we should be divesting because it's old? It's consuming a lot of operation and sustainment cost, and we're really not using it. It's like old stuff that sits in your garage for years on end. You don't get rid of it, but you're keeping it. God knows why. It's taking up space. So we're looking through every one of our portfolio to figure out what our stuff, we ought to be just divesting, get it off our books, get rid of it. We are resetting and sustaining equipment that's coming out of theater, coming out of Afghanistan, because one of the things we do need to do, obviously, is set it to I'll call it zero miles, because if it's being around for quite a bit, in terms of utilization, you want to reset it. Because if we have to go to another contingency near term, we're going to go with the equipment we have today. So therefore we need to reset and sustain it. So if you look at modernization, how are we modernizing our stuff? We, in the middle layer, the talks about incremental modernization that is incrementally upgrading our existing platforms, buying back a lot of the weight and power that we lost due to the fact that we add a lot more armor with a lot more communication gear, so weight has grown. It's like going on a diet. So now you have, now you're maxed out in terms of size, weight, and power. Now you've got to getting that back. So we do a really good job incrementally upgrading stuff. This piece above there is to build new capabilities, capability that we currently don't have, but we want, because it will increase our mobility, increase our lethality, and or increase our survivability, okay? Critical new capabilities that we currently don't have. And then we're investing S&T to enable us to develop the next generation of capabilities that we will need for future systems. Next. I'm going to go through and just touch upon, highlight some of the stuff we're doing in terms of incremental upgrade. I don't need to go through a laundry list of stuff that we're divesting. I already told you we're in the process of doing that, cleaning our garage, right? So in terms of incremental upgrades, we have things that's in design phase. We have things that's in low-ray initial production, okay? So in the design phase, we have Black Hawk, the V version, which is giving us a digital cockpit. What that will enable us to do is literally reduce training, because we have an M version of the variant that's in production that has a digital cockpit. So therefore, we want to have the same thing on the L variant. So the L variant, the digital cockpit of the L variant is called the V, just to confuse you, okay? Okay. So Bradley, we're doing engineering change proposal. Like I mentioned before, we're incrementally upgrading more and more things. We're upgrading the power distribution system as a generator to buy back some of the power that I mentioned that we lost due to the fact we added more equipment on board. Abram, same thing, going to a digital architecture, increasing the power. Gimlers, this is guided multi-launch rocket system. We're developing an alternative warhead. That really is to significantly reduce the unexploded warhead issue, right? To meet the Ottawa compliance, less than 1% unexploded ordinance. So we are actually heading into low-rate production on that system. We're just entering that now, okay? PIM is a Paladin Integrated Management System. Just last month, we brought out our very first system out of low-rate initial production. So that's pretty exciting. That's a system that was in development for a while. So again, improving our maneuverability, our survivability, our force protection. So we're very happy to get that final introduction, okay? Patriot system. We're upgrading the radar digital processor. As you well know, once you have a processor around for a few years, it's pretty old, right? It's like your cell phone. Nobody has a few-year-old cell phone except my mom, okay? She likes to keep everything constant, okay, next. We also have quite a few of our systems that have incrementally upgraded. That's in production. That's our Bradley ECP systems, our Striker, our Apache, our Blackhawk, our Chinook, all of our aviation platforms actually are in production, okay? Our UAVs, which is Great Eagle. Also our Gimlers, that's a unitary board here. It's a different type of board here. That's also in production, next. So if you want to take a look at what do we have in terms of a system that's in technology development, a system that's in engineering, manufacturing, phase design, and things that we have in production. We map it into what capability it's going to give us. Are there things, so as you can see, we're doing things like increasing lethality, increasing survivability, increasing mobility, come in and control communication, and overall, fundamentally increasing our efficiency. I'll just give you, highlight a few of the examples. In technology development, we'll have a second generation forward-looking IR system that's already into production. So that's already transitioned onto our platforms. So we spent the last 16 years in S&T, developing the next generation, which is called the third generation flare, okay? And now we are about ready to initiate a program to develop the third generation flare. In terms of system that's entering EMD, joint air to ground missile system, it's really the next generation beyond Hellfire's missile, okay? And we're about ready to enter EMD this year. In the production timeframe, we have Excalibur, which is a 155-millimeter system, with an exclusive precision. It's a system that's in production right now, okay? So those are the things that we're doing in terms of increasing our lethality, increasing our survivability. Example of some of the things we have in development. Next generation of chemical detector, obviously we want to be aware of chemical weapon systems that's out there and have the ability to actually detect that. We also develop a lot of vaccines. People don't typically know about this, but we develop multifunctional vaccines for our soldiers. When they're deployed, they can be obviously protected against different types of chemical and biological threats. If you're looking at increasing mobility, I'll give you an example of the ITEP engine. So this is a next generation engine we're developing that will insert into Blackhawks and Apaches. And will give us a lot more mobility, a lot more lift power that can go high hot just by antiquaring the world. So this is an important capability that we want to have. Like tactical vehicle, for example, we're an EMD. We had three contractors that was bidding on that program. It's a fierce competition. The proposal is in. So we'll wait to see what the source selection says. And we hope to do a war sometime this summer. Increasing command and control, we'll talk about things that we have developed is integrated battle command system. So any sensor, any shooter, it's our goal and that's where we're heading in terms of our EMD program. The things that we're doing trying to improve efficiency, I'm going to give you an example. Right now we have over 50 different types of pay and personnel systems today. 50 different legacy systems. So what we're trying to do is integrate all of that together to have an integrated pay and personnel system that can be used across the active armies, the National Guard, as well as the reserve. And sunset all these legacy systems that we have. So that's a path we're on on IPSA. We're making great progress on that. G-Fibs obviously will want to have visibility in terms of auditability of our financial system. So this is why we're implementing G-Fibs. Next. If you look at some of the S&T stuff, we invest about $2.4 billion a year in S&T. A big chunk of that is in, I will say, over 400 million, or 440 million or so, it's in basic research. And that's something that we fund to predominantly universities. Okay. Clearly, we're looking at the next generation capabilities that will bring us again, but I talked about the mobility, survivability, and increased lethality. So I've talked about ITAP Engine to join multi-role. It's the next generation of helicopters that we are developing. It's in S&T right now. So there will be a flight demonstrator in 2017 that will help to inform us what the requirements are to be. Okay. The greater visual environment, clearly, if you're flying in a brown-out situation and in a white-out situation, you want to ability to actually see. So obviously, we're keenly interested in developing that capability. We will always be looking for a lighter, way stronger armor, just something you'll never stop looking for, right? And in addition, we want to optimize our soldiers' performance. As you well know, our soldiers carry over 100 pounds on their backs. Mind boggling how they can still perform their mission with that much load on their back. So we're trying to figure out how to unload the weight and how to optimize our soldiers' performance. Position navigation and timing. You always want to make sure that you've assured PNT. We're looking at cyber operation. We're looking at lasers. We're looking at future next generation of disruptive type of project and energetic materials for our next generation of missiles and munitions. Next. So that gives a very quick snapshot of what we're doing modernization. But I want to talk a little bit about acquisition reform. That seems to be a topic of interest to everybody. I will just highlight the DOD acquisition process, very, very risk adverse. It is not like 30 years ago, which you could actually have. It's a project that blow us and it's still okay to just develop the next one because you'll learn from it. Nowadays when you have something that goes wrong, there's incredible scrutiny on what happened. So inherently, it's a very, very risk adverse process that we're in. There's multiple gate reviews our PMs have to go through. Again, each one of the gates is there to ensure that you have a low risk entry into the next milestone, the next phase of the development. And there's enormous amount of documentation. I will call it mind boggling amount of documentation that the PMs have to do, okay? Why? Because you want to ensure that you met all the regulations. There's tons of regulatory requirements we have to meet. Tons of regulatory requirements that we have to meet, okay? So there's enormously burdensome documentation that really impedes your agility, okay? There's also extensive amount of development tests and operational tests. Again, it's because we're very risk averse. We want to make sure we test everything out thoroughly so there could be no failures. Failures are not tolerated, okay? On top of that, there's enormous layers of oversight. And by the way, oversight doesn't act exactly equal efficiency, okay? It slows you down, right? There's speed bumps, okay? So from programmatic wise, there's a program manager who's responsible for this program. Then there's a program executive office. Then it goes up to me, the Army Acquisition Executive. And then there's a large enough program, ACAT 1, it goes up to the Defense Acquisition Executive, okay? That's just on the programmatic side. There's a functional staff, all the functional staff from OSD, and functional staff from Army that all are a stakeholder. Because each one of them has a vested interest in their domain, okay? And they want to make sure that you pay attention to their specific interest area, right? The audit agencies galore, right? From the Army side to AAA or DODIG and GAO. So if one person starts auditing, you get, I call it a shark infestation effect in terms of everybody jumps in, okay? Then you get more and more audits, okay? Come to the party, contracting oversight, tons of that. From the principal that's responsible for the contracting within one region, to the head of contracting activity, to up to the OSD level, the DPAB, DCMA, DCAA, multiple layers of contracting oversight. And of course, we have Congress to help us as well in terms of watching oversight. Why is that? As I said before, there's zero tolerance for failure. Somehow we've gotten ourselves into that state, okay? Next. So I like to compare and contrast the differences. So I spent 33 years in industry, okay? Part of my career was a program manager. I was able to move fast, okay? So why is it when I'm coming to the government four and a half years ago, I can tell you it's mind-boggling, just mind-boggling. The authorities I had in industry that you simply don't have is a government PM. So let me talk about it and describe it. Budget-wise, when I was a PM in industry, I control my budget. I had the top-line budget, it's mine to manage the program. Nobody else on an annual basis cut your budget. That would be insanity, because you can't have a stable baseline. Well, that's exactly what happens to the government PM on annual basis. We're living under sequestration, so guess what happened? Annual basis, there's a round of cuts. Round of cuts, what happens? You have shifting baseline, right? It's quicksand. So then they beat you up, say, why can't you keep your schedule? Well, you just cut my budget, right? It's insanity. Okay, requirements. When I was in industry, we knew exactly the impact of the requirement. We knew exactly how this requirement impact a cost, impact a schedule, and how that translates into performance. And we know exactly the impact of that in terms of technical risks. In the government, however, you have a separate stove pipe that writes requirement, right? So the requirements are usually derived by somebody who wants a capability, a warfighting capability that they currently don't have. So once they think about that capability, that's their desire. They write the requirement that way. It's not necessarily fully informed by cost, schedule, or technical realism. So unfortunately, sometimes we get an obtainium in the beginning. That's not informed by the structure that you've laid out within your program, okay? Stakeholders. Stakeholders in industry are called functional staff, okay? There's guys that's in engineering, in manufacturing, in quality, right? In finance, in contracts. All the functional area that you need to help support you on your program. Well, they're actually incentivized to help you, right? Because ultimately, if you're in the industry, you have to make a profit. If you don't make a profit, you're coming to go under. So they're actually incentivized to help you, help the PM to meet their goal, program, performance, cost, and schedule, right? The stakeholders within the government, unfortunately, have very different vested interests, okay? And they can steer you to say, well, I want you to do more testing here. I want you to do more requirements on this side. What happens is you have numerous stakeholders with very different interests, but they're not held responsible. But they add to the cost and schedule, right? But they're not held responsible. So there's no accountability there. When I was a PM in industry, I was able to manage the program by cutting out on the top line, cut out the reserve. I had a manager program that's at very high risk. So what I ended up doing, the beginning of program, I took 10% from each one of your budget. I'm holding it. I'm holding it because I can't predict everything that could potentially go wrong. I don't have a crystal ball. I can predict vast majority what can potentially go wrong and plan for. But you're not going to have 100% predictability. You need to have ability to pivot rapidly, right? The flexibility for you to manage unanticipated risks. In the government, that's called money that set aside the early to need. So they'll take your money, right? So you don't have the flexibility, unfortunately. Next. Okay, in terms of tests, so when I was a PM in industry, we actually worked closely with the testing folks to say, this is what are the things you need to do, to do tests, to test out the system or test out this algorithm. They actually coordinate and collaborate together. Unfortunately, I think in the government side, once again, it's a different independent entity, totally different from the PM shop. So they can add tests. They will say, I don't agree with your test plan. I think you need X amount more vehicles to blow up, okay? So they can increase cost, increase schedule. And yet they're not held accountable for cost and schedule, right? But the PM is. Financial incentives in industry, you have a lot of flexibility and can incentivize your employees. I'm gonna pay you over time. I need you to work 12 hours a day, right? Six days a week. You can pay them over time. You could do high performance and give them stock options and give them bonuses, right? You don't have that flexibility in the government, right? You have to beg them, okay? Hiring, okay. I can tell you when I was in industry, I get really upset with human resource guy when it takes him one month to hire a person. Like, why the heck does it take you one month to hire a person, right? Why are you so slow? Why can't you be more agile? In the government, if I can hire a person in eight months, I jump up and dance, okay? It's sad, okay? Tenure. PM tenure is based upon your need. Whether it's one year or two year or three year or whatever, X number of years, it's dependent upon your needs, flexible. You don't dictate your time frame for the PM. In the government side, PM tenure is pretty much three year time slot, okay? Then they rotate on to the next assignment, right? In terms of expertise, the difference there in industry, the PM typically has quite a bit of technical domain expertise. So that's a functional area you're from, okay? In the government, we select PMs based upon their leadership skills, not necessarily your technical domain expertise. So there's a pretty big difference, okay? And I'll talk about the milestone process that we have to meet. Each of the program have to meet milestone A, milestone B, milestone C, milestone, okay, get into production. As I mentioned before, the functional staff is there to help you, to meet the milestones, right? Within the building, what happens is the PM literally has to bring every functional lead. So during the building a zillion times, one of my programs that got into LRIP, they came to the Pentagon 31 times to give briefings, okay? That's for a mind numbing, 31 times, really? Would you end up briefing? Every stakeholder who's interested, asked for a briefing. Very, very efficient system that's inherent in the structure, okay? Next. So here's the best analogy I can give somebody who's not an acquisition person who doesn't do acquisition speak, okay? The PM is the bus driver, okay? With the PM's, they put on his forehead, okay? His responsibilities go from point A to point B as quickly as possible, right? It's the shortest distance as quickly as possible because you're responsible for that. However, you have numerous Army stakeholders, you have numerous external stakeholders within the OSD, as well as Congress. All of them have a steering wheel and a brake, right? That's exactly what's happening, but we're only holding the PM accountable. So to me, that's the fallacy. How could you possibly hold one person accountable when everybody else's action has impacted the program, yet they're not held accountable? To me, it's a bit mind-boggling, okay? So I'm going to share with you what happens when a program goes billy up. Namely, a program gets into trouble. The best analogy is bus turned upside down into a ditch, okay? So what happens? Let me compare and contrast between what happens in government and what happens in industry, okay? In industry, everybody runs through the bus because you know what happened? You're bleeding cash, right? So you will throw the best people you have across the company to bail the program out, to help the program manager to right-size the bus, because you can't stand bleeding cash, right? It's on the bottom line, and everybody's incentivized to help you. So what happens to the government? Next. Okay, the government, they shoot out the windows, the tires, and the kneecap of the bus driver. Okay, it's really sad. Why? Because everybody has separate interests. Remember, these are separate stovepipe people, and it's an opportunity to take your money, right? If I take your money, maybe I can increase the money for me, okay? So, or you obviously screwed up. There were irony, more influence on this process, because you obviously can't manage it. You delayed your schedule and cost, right? That's what happens. Sad, but true. Next. So, how can we improve the acquisition process? So, there's a zillion acquisition reform studies that's being done, right? Probably hundreds, right? Number one, the first thing that's the most important is to have requirements that's realizable. You formulate your requirements, and it's informed by cost, schedule, technical risks up front. You do the trade space up front before you set the requirements. Once you set the requirements, the ball's rolling, right? And if you don't set the requirements properly, there is no hope and prayer for you ever to meet the schedule. Look, I've talked about the overwhelming bureaucracy. I will see. It's overwhelming. It's a bit mind-numbing when I came into the Pentagon. It's really important that we work with Congress to write some of the legislation to reduce the amount of bureaucracy that's there. Bureaucracy does not help you to expedite things. It just slows you down. I forgot to point out the speed bumps. I was underneath the bus every five feet. Okay, that's what bureaucracy does. It slows you down. We've been working with Representative Thornberry at Haske to identify here's some low-hanging fruit, right? We have billions of documents that we have to fill out before we go from each milestone to milestone. If you don't fill out all the documentation, it becomes a checklist. You don't have it done. You shouldn't go to the next milestone. It's your documentation done. So become a checklist mentality as opposed to have you really thought through the risks of your program. And the other thing we do in industry, which I don't see in the government, is we don't do 31 briefings through the stakeholder. That's mind-numbing, right? I mean, that's incredibly inefficient. We will have a big meeting. We'll bring all the stakeholders together like you guys. We can all criticize systems, right? But at the end, I will hear all the feedback from everybody simultaneously as opposed to serially, right? Sequentially, one at a time. So that's what's painful in the building. The other thing is I've talked about the mutual accountability. If you have, if you cut the program budget by 10%, you've impacted the program. PM, now there's no way they can execute to the original schedule. But your name is not being held accountable. We have to get to a position where there is mutual accountability. As there is in industry, okay? Back when I was vice president, I was running multiple programs underneath my portfolio. If I have a red that says red program on our monthly ops review, and if I identify, I've got a shortfall in staffing or 12 systems engineer on this program, that's why I'm red. So the president doesn't just be me up. The president will turn to the VP engineering and say, what are you doing about it? Right? What are you doing in terms of hiring the 12 system engineers or getting 12 systems engineer to her? So there's the mutual accountability that's there in a functional organization that's in industry that's lacking in the government. I would like to get some of the mutual accountability onto the lap of the government side. So they understand the impacts of their decision and impacts to program that's suffering the consequences afterward. The other thing is, so I've talked about PM has the responsibility but not the authority because you don't control the budget. You don't control the hiring. You don't control the requirement. You're just the bus driver. So what people are saying that, well, we want to hold the PM accountable. We want him to be a PM for a longer period of time. Great. You're just bus driver for a longer period of time. You haven't changed anything else. Everybody else still has steering wheel and brake. People also talk about, well, the PMs need to have engineering degree. Well, that's fine. You have a more skilled bus driver. But guess what? You're still the bus driver of a big long bus with everybody with steering wheel and brake. That fundamentally hasn't changed and nobody's tackling that piece, which frustrates me because I see that's an inherent problem. Okay. So what do we need? We need rapid hiring authority. And the government can't hire the best people you want, can't fire the worst person you want. But you're still going, you're still held accountable, right? You don't have the flexibility. And by the way, and I talked about the ability to hold the reserve. You really need to have ability to flex when something goes wrong. And bottom, and the bottom bullet that I talked about, eliminate sequestration, provide budget stability. It's the number one thing. If you want to hold a program stable to make sure I can measure you going from point A to point B on schedule, on time, you need budget stability. How could you have a budget that changes every year and expect you to meet a milestone? That's insane, right? That's the boat we're in today. With sequestrations, it creates this huge unknown. We can't plan our portfolio. So that's where we, that's the position we currently stand, which is unfortunate. But there's a lot we could do to improve acquisition, I can tell you, coming from industry and knowing how I can run a lot faster if I wasn't, you know, if my legs and hands weren't tied together. Right? Thank you very much. I'll be looking forward to your questions. Okay. Okay, I think we're mic'd up now. Well, Heidi, thank you very much for that presentation. That was, I have to say, remarkable that you fit that much content into 40 minutes, and I really appreciate it. I think there was a lot, a lot of meat there, and I want to get into questions so we can explore it with you. I have a couple of questions I'm going to lead off with, and then I'll open up to the audience because we have a great group here. And I see a lot of folks who will have some good questions. I want to start out and ask maybe a question to your first discussion about the Army's modernization situation, I'd put it, the environment that you talked about, and then a little bit on acquisition reform. But on the Army's budget environment, you know, you laid out the challenge that sequestration and the overall budget drawdown has put on the Army modernization budget very well. And I want to ask you a two-part question on that. First part is how has that affected the way the Army has decided to allocate its scarce modernization resources? And then the second half of the question is, how should it influence? Because I have to recognize, and based on the second part of your presentation, sometimes what happens in government as a result of the dynamics that are there doesn't produce the most direct or obvious outcome because there are internal dynamics that may move things. So how should it have affected, how did it affect the Army's choices and its investment budget and how should it have affected it? I can't tell. Can you hear me? Can you hear me? Move this a little bit closer to me. So in my perspective, what has happened the last several years is because the budgets came down so dramatically. The Chief is trying to protect force structure. Well, if you're trying to protect force structure, you saw the pie. The only fungible piece that you can squeeze in the near term is modernization, right? So the piece that can squeeze, namely who's the bill payer, is modernization. If you look at the last several years, what we ended up have to make in terms of tough decision. I'll give you some examples. We have to make a decision some of you guys may know that we were in the technology development phase of ground combat vehicles. Both contractors were doing a very good job competing on the technology development phase. We're heading towards a down select towards one. But when the budget cuts came, we had to make the decision, which is pretty binary decision, either upgrade my Abrams, Strikers, Bradley's, or else I fund the next phase of ground combat vehicle. Well, then you look at the options that you have. I'm going to go through EMD, then we're going to get into lower initial production then to production. There's a time lag of possibly a decade before I get any of the vehicles in terms of fielding. Meanwhile, I wouldn't be able to upgrade anything. That made no sense, right? So we had a very difficult choice, even though Big Army wanted the system, couldn't afford it due to the budget shortfall. So those are the decisions we make within each of the portfolios to say, okay, what's the most important priority in terms of capabilities enable us? And we look at also not just capability, we also look at the industrial base as well. So all of those are part of the decision process that we go through. It's the exact same thing we go through in the aviation portfolio, in which we decided we'll have seven different types of rotorcraft. We're going to head towards four rotorcraft. If we consolidate down to four types of rotorcraft, that will save us money, right? Save us the statement cost. Well, since our oldest variant, but if we're not allowed to do that, then there's a $12 billion tag associated with that. If you slip it here, there's a billion dollar tag. So that means something else has to get cut to fund that. So those are all the trade spaces we have to go through within the budgeting cycle. Okay. Is it pleasant? No, it's not. I wish I was here when we were booming, but I'm here on the downside of the roller coaster. Okay. That's what's happening on the modernization trade space. Yeah. So one of the things, obviously this drawdown on the budget is department-wide and affects all of the services. The Army's drop-off in modernization has been sharper than some of the other services because of the four-structure dynamics you mentioned. But a little bit unlike the other services, because of the war buildup, there are some Army stocks that were purchased during the war years, which means that there is a set of the Army's hardware that is newer and is more recent. How does that, or to what extent do you think that dynamic makes it possible for the Army to reduce its modernization accounts more maybe than the other services? And to what extent do you think that's not right for that maybe that whatever the war material that was purchased doesn't maybe fit some of the longer-term needs? A lot of the, I would say, the wartime material are a result of aunts and nuances. So that means urgent requests, right? So within a fabulous job of delivering capabilities to a warfighter very rapidly, as the stuff starts to come out of Afghanistan, there's a pro and a cons to the aunts, okay? The pros is you got the capability really quick to theater. The negative side is it was completely supported by contractors. There's no logistics tail associated with that, right? So as it come out of theater, there was no planning to literally maintain and sustain it. There's no budget, no plans, right? Because that's due to the nature of aunts. So what we've had to do is go through a process to decide out of all the systems that we bought for 13 years of conflict, what are we going to keep and what are we going to just divest, right? So about half of the stuff we decided to divest, the other half the stuff the warfighters say, I got a need for it. Okay, you got a need for this. Who's going to pay for it? Right? Because even if you stored this, there's a cost associated with it. There's no training manual because we deliver it to theater. So what's the cost associated with even sustaining that and operating that, right? So that's, so now all those systems are also trying to fight within the budget war. You got to compete? It's finite amount of budget, actually it's worse than finite. It's the shrinking budget environment that you're competing in. But what we have done, let me give you a denim to that. We've done a great job in terms of developing a lot of sensor packages delivered to theater. What we're doing is taking the best debris of the sensor packages and consolidating that in terms of having uniform packages on our fixed wing platforms. So instead of having 200 birds with all kinds of different sensors on board which is your sustainment bill is huge, right? We're trying to standardize the packages so you have uniformity and that will reduce the cost. One last question for me and then we'll open it up to the audience. But I can't resist a question on acquisition reform which you addressed with quite a bit of force and a favorite topic of mine. You talked about empowering the PM and then the issue of mutual accountability which I think are related ideas. And you talked about hiring authority and the reserve account which I think are good ideas and things that I would favor. But that mutual accountability issue, that seems like a tough one. How do you get to that point where all of those stakeholders have almost as much or almost as much interest in program success as the PM would have? I think that's the most important thing. You have to change the culture, right? A culture of accountability because your actions impact the PM. Do you want this product? Is this product important to the Army? If this product is important to the Army, you should be doing everything possible to deliver this product. Not to be a roadblock to the product. So you know how we do in industry, we're literally putting a performance objective. If performance why you're going to be measured in terms of how well you supported others to achieve overall objective for the corporation, then everybody's aligned. What you have to do is you have to get all the stakeholders to be rowing in the same direction as opposed to fighting each other, which is unfortunate in the current state. So changing the culture, instead of a commander just worrying about either the next promotion, you ought to be worried about what is the capability we ought to be aligned behind on behalf of the big Army. Because the modernization is on behalf of the big Army, not just for the PM. Okay, well, I'm sure we have some questions out there. If you have a question, please raise your hand. We have folks with microphones here who can come around. And if you are selected, please stand up, tell us who you are and where you're from, and then keep your question relatively brief. Hi, my name is Allison Rusbrillian, reporter at National Defense Magazine. And my question was, so I know back in 2000, Congress mandated that they wanted a third of the ground vehicles unmanned by 2015. So what have kind of been the barriers to reaching that deadline? And what do you, so we're obviously not going to meet it, and what do you think is the future for unmanned ground vehicles? Yeah, this is a great question. So I think if you look at the terrain that we have to operate in, and what roles that we utilize in manned vehicles, and EOD, explosive ordnance devices, we absolutely utilize that, okay, UAVs for. UAVs have specific roles and functions, but to say a third of our platforms go to go into unmanned by 2015, that was a pretty aggressive goal, okay. Think about the terrain that we had to fight in. Very, very mountainous. For unmanned vehicles to navigate that type of terrain and not fall off the cliff. It's not that easy, right. So, and also if you think about the mud, the sandy environment that we have to operate in. So if you have to design something that can accommodate all those potential environment that we're fighting, the cost goes up significantly. So if you specify here's the narrow mission space, I need a UAV help or a UGV, excuse me, okay. That's much more doable, okay. So I think what we need to do is scope to specific mission space that we could literally use an unmanned vehicle. I'll give you example of something I saw an unmanned vehicle can absolutely do on base. You could write a bus, right. If you have a set rule, a route, you don't really need a person to drive in. You can have sensors built in. You just slowly drive to one stop sign in which you pick up passengers, right. But everybody's on board, seated. You can go to the next one. They do that today. Okay, that's not hard to do in terms of art or technology, okay. So I will say we have to be careful to look at the specific application before we decrease something so generically. Any questions here? Hi, Tom Davis, U.S. Army retired. I've watched a lot of people in your position for many years and dealt with many of the same issues. I'm also retired from a major defense company. And I want to applaud you right away for your distinction that you make between the difference between government and industry. I think you're absolutely correct on all points. One thing I'd just like your views on, I know a couple of years ago, Secretary McHugh asked Gil Decker, one of your predecessors, and Lou Wagner, or AMC commander to do a study on what was causing so much of the difficulty within the Army acquisition program specifically. My own view, which doesn't mean it's the right view, but having been on the industry side, it was always my impression that dealing with the Army was always more difficult than dealing with the Air Force and the Navy who have the same constraints and so forth that you laid out. So were there reforms and changes made with the Decker-Wagner report? And do you also have this view that there's something behind the oppression that many people have that dealing with the Army is a more difficult problem? So it's interesting, because I primarily dealt with the Air Force in my industry days, okay? So I never dealt with the Army before until I came, walking through the Pentagon, right? So it was a huge uphill battle to just kind of learn all the, first of all, the 10,000 acronyms, right? And then, okay, learned the culture. The culture within the Army is vastly different from each service, okay? I will say, if you look at the Air Force, airplanes and space is their world, right? They can line behind the major programs that everybody salutes, F-35, Next Generation Bomber, right? They can identify major program everybody's aligned to. It's the Army. Everybody has a different functional area. It's a functional area. The fire's person may not agree with the aviation guy. The aviation guy would have his priority. The fire's guy would have their priority. The maneuver guy would have his priority. So you have all of these functional areas having their priority and nobody on top says, this is number one priority across the board. That's what's hard. And each portfolio you go to, you go to a portfolio within a functional area at a time, right? So I have this dialogue with Chief, okay? And I see it would be great if we could line behind what are the top five, top 10 things the Army wants to do and then stick with that. Army also has a culture where if the leadership comes and goes, the priority comes and goes. So why is it your program gets terminated? Because the interest in the program wanes. Just when you're getting to low-rate initial production. Like seriously? Yes, it happens. Okay? So it's a very different culture. That's what I saw. Let's come here. Just for our web audience, if you could use the mic. Frank Grisinski, Lockheed Martin. I'm just talking about what was just discussed and the Chief's comment. You know, the cultures are very different and I come from an Army culture. The cultures are very different. Where what do you think of the comment made? In the Air Force and the Navy, you man the equipment. Exactly. In the Army, you equip the man. Exactly. There is a difference and a very huge difference. I would just be interested in your points about that. You're 100% correct. The other two services because their big ticket item are so expensive. Mega billion dollars. So you train either the staff to literally learn how to operate the equipment. But we have soldiers with the biggest service. We have more planes than the Air Force. We have more boats than the Navy. And we have more of everything. So it is a very soldier-centric system. So everybody thinks about how am I going to empower the soldier and optimize the soldier performance. That's a very different way of thinking about the problem. So this is why it's very hard to come out with just top five priorities. You're absolutely right. Okay. Over here on the left. Good afternoon, Madam Secretary. Marcus Birch, Ray Theon. One question. And it deals with what you were discussing a number of years ago, which is a 30-year roadmap. Could you please expound on the 30-year roadmap and how can industry help you attain that roadmap? Great. So when I first walked into the Pentagon, the first thing that kind of blew my mind is how everybody's palm focused. One year at a time, right? The budget, one year at a time. So you hack away at the budget one year at a time. My God, our large platform that we had ground vehicles, aviation platform, they're just 30 years, right? So why don't we have a 30-year roadmap so this way we can plan ahead what are the spiral upgrades we need? Because the technology, whatever you have on the system, it's going to be obsolete. It has its own natural life cycle, right? It'll go obsolete. So we ought to be planning for the upgrades. So it doesn't go obsolete and go off the cliff and then figure out what to do next, right? So why don't we plan that? So that's what we started doing. So I really pushed the organization amongst the resourcing organization with the requirements of folks, with the program folks and the S&T community to literally come together to plan this integrator process. So we've been doing this for three years now. It's getting better every single year. Literally, we look 30 years out. We look at what are the technology we're developing, when the technology will be mature, what capabilities we can then spiral in into our existing program or record, or it's a capability we don't have today we're going to want tomorrow. So those are the things we're developing. I can tell you, PEOs typically hold industry days in which they roll out the roadmap and they actually have one-on-one dialogues with industry. That's where you guys can provide a lot of feedback in terms of what you guys are developing in terms of IRAT, how you can enable us to meet our milestones a lot quicker. I think I see a predecessor here in the back, so I've got to give him a chance. Yeah, Paige Haber, very, very well done, I must say. About 10 days ago, Frank Kendall came up with the final draft of Better Buying Power 3 and the one-page chart of bullet points that accompanied it. And I suspect you were pleased to see in that an emphasis on prototyping and experimentation with some very near-term goals. So I wonder if you say a few words about that. I will say that focus is really focused on how do we get technology innovations quicker into our systems, right? Because our system, I just talked about the bureaucratic development cycle that we have. Its owners, its cumbersome takes forever to get stuff inserted in, right? So how do we rapidly insert prototype capabilities in? I will tell you that the Army does a good job at the network integration exercise, the NIE events that we've been doing for probably seven different NIEs now. It occurs twice a year, although with the current budget it may be going down, okay? But what we've been doing is identifying some of the capability shortfalls that we have and sending information out to industries that do you have anything that meets what we're looking for? If you do, bring it and we'll test it out, okay? So what that has resulted in is us buying some of the systems that's COTS. But it also informed us what's available out there. It actually has shaped our RFP, shaped our acquisition strategy by seeing what's available out there in the land in terms of non-developmental item. It literally changed our entire radial strategy. Okay, we are close to the end of the hour. I want to try and fit one last one in. So why don't we come here? Ellen Mitchell inside the Army. You said you were working with Representative Thornberry to kind of identify these low-hanging fruit that you can get rid of to speed up the process get rid of some of the bureaucratic hurdles. Have you started to identify anything? And if so, what are they and how soon do you expect to see any results from this effort? So this is an effort that has been done cross-services. Andrew Hunter actually was involved in it from the beginning stages, right? True. And what we've done is provided these, I will call it initiatives, to Representative Thornberry. He's gotten a briefing from it. So Representative Thornberry has done a first cut of the language that he's proposing. We've provided some feedback. I believe Frank Kendall just yesterday provided some feedback to Representative Thornberry from a DOD's perspective. Some of the things we agree with, some of the things we didn't agree with and as to why. So that dialogue's ongoing as we speak. But he adapted, I think, six of our seven recommendations, which is great. We'll reduce some of the documentation burdens. Our PMs will kiss the floor. Well, I want to be respectful of everyone's time, and especially, of course, of Ms. Hsu's time. Heidi, thank you so much. Thank you. Really like.