 Hello shipmates. I'm here with the Master Chief Petty Officer the Navy Stevens and we're on the bridge of the USS Boxer on deployment in the Arabian Gulf. We want to talk to you about safety. Many of you will be making long drives over this holiday season. I ask that you go to the Navy Safety Center website and click on the trips link. That link will help you to identify some of the risks of the drive that you may be taking. Also remember that alcohol has no place behind the wheel of a vehicle. When you plan to travel this season use the tools and resources that are available. Listen up during the safety briefs and commit to your chain of command that if you see something that isn't right speak up. If you see a shipmate that isn't right help them get assistance. So shipmates take care of yourself and take care of your shipmates this holiday season. Your presence back on duty at the end of this holiday season is the best gift that we could ever have. Happy holiday shipmates. Captain John Esposito was relieved by Captain James Akin as commander destroyer Squadron 60 during a change of command ceremony at Naval Support Activity Naples. Vice Admiral Phil Davidson commander US 6 fleet was the keynote speaker and said that he sincerely appreciated the phenomenal job Captain Esposito contributed to keeping Desron 60 vigilant and prepared. Under his steady hand the Desron 6-0 team ensured their ships and crews remained vigilant and prepared to meet current and future challenges and threats. Following his speech Vice Admiral Davidson presented Captain Esposito with an end of tour award which Esposito attributed to the hard work of military members and leaders. The list is almost endless all working together to generate a favorable outcome for our nation that continues to be the envy of the world. It has been a privilege. Captain Esposito will report for duty to Joint Chiefs of Staff in Washington. Petty Officer Matt Wright Naples Italy. Brandy and I extend our warmest wishes to each of you this holiday season. We also like to thank each of you for your service and sacrifice not just during the holidays but every day of the year. During this joyful season we remember the men and women deployed around the globe because you have the watch all of us can celebrate. Take time during the holidays to be with your friends family and loved ones. Relax and think safety from our family to yours. Happy holidays. The holidays are here and during this time of joy and reflection I'd like to express my sincere thanks to the entire Navy and Marine Corps family for what you do throughout the year and the sacrifices that you make. On any given day you our sailors our Marines our civilians are deployed around the world providing a constant presence defending the American people and defending our nation's interests. You do this at home you do this abroad and whether war fighting whether providing humanitarian assistance to our partner nations or whether designing our future fleet know that your service and the service of your families is deeply appreciated. The impact of what you do so well day in and day out is especially important and especially poignant during this time of the year. You are and will continue to be America's away team the greatest and finest expeditionary fighting force the world has ever known. So on behalf of every single American thank you happy holidays and from the Navy super forward always courageous from the Marine Corps super fidelis always faithful. My everyday job is always different it's always changing it's always challenging and that's what I was looking for when I came into the Navy after I got through dive school and realized what I had accomplished I feel like I could do anything. It's all about commitment it doesn't matter what you are a man a woman you commit yourself and make up your mind to do it you can take on any challenge. Going fast it's what they do in fact about 500 knots fast that's approximately 575 miles per hour. To put that into perspective you might be used to going around 65 miles per hour down the highway in your car. I think that being probably the biggest challenge in flying F-18s is just the speed the aircraft moves you're covering over eight miles a minute going that fast so you just have to be thinking so far out in front of the jet and not only are you just flying the jet but you're trying to operate the systems to accomplish your mission which ultimately is supporting the Marines in the ground. We do our low altitude training they're about 300 feet above the ground so you're going 500 knots that close to the ground ground just whizzing by it's a it's a cool feeling. When you go back to World War one you had little little airplanes that flew really slow you started off with guys that were just taking pictures of the battlefield so stuff that we do as satellites now you kind of think about it that way so those things evolved to pilots bringing handguns and shooting each other with rifles and pistols to finally mounting a machine gun on the top of those airplanes. Fast forward to World War two you got high-powered prop-driven airplanes that are pretty soon going to transform into the first jets in that time frame so now you have guys going out dropping bombs on bad guys and then and then maybe doing a lot of actually doing a lot of aerial combat and you take all that and you think about Navy aviation specifically and you put those airplanes on a boat and now you have a country that's got worldwide reach and there's nothing anybody else can do about it into today's age where the jets are going so fast the results can just be catastrophic for uh for our enemies. As fast movers they have to concentrate on hitting their target at plus or minus three seconds. All the while the pilot is enduring some significant physical stress this stress is known as the g-force or gravitational force which is the measurement of acceleration felt as weight. All this for one primary mission support Marines on the ground. I'd run if I was the enemy I mean take cover that's got to be what they're thinking because I mean we can rain down fire. And now these and dozens of other Marine fighter pilots are strapped inside one of the U.S.'s fastest fiercest and most lethal combat weapons. The office of naval research revolutionary research relevant results. Most of the training that I received prior to my deployment was just uh power points and walking through pre-plan responses actually being able to visually see what is going on and how to practice that communication with the combat and attack the Black action officer will be very useful. The fleet integrated synthetic training testing facility or FISTA fact is paving the way of the future for U.S. Navy training by combining simulation with live exercises and the ability to include artificially intelligent synthetic forces. ONR has developed a unique training capability that is both affordable and adaptable. At Ford Island Hawaii sailors are already seeing the benefits of training on a system that can address present-day scenarios as well as model future fleet threats. In order for us to develop better cruiser weapon teams from a perspective of combat this type of police synthetic trainer would be phenomenal. Take the the cruiser weapon teams above and beyond where we can train them currently. We've learned from aviation training that use of live assets is extremely expensive and also you can't take the risks with live assets that you can with a simulate with the full range of tools that we have including synthetic forces and synthetic platforms. We can scale to include a large sets of platforms globally or theater-wide. Incorporating live assets with simulated training allows the integration of multiple platforms at the same time as compared to training on a singularly focused Navy flight trainer or ship's bridge and ONR has assembled an impressive team to accomplish the task. We have developed a team of specialists based on what we're needing to try to do for the fleet so that they get the best of the best. Camber Corporation's specialty is creating auto intelligence behavior models. What we want to do is create a realistic environment something that's true to the patterns of life so when the guys go to sea on the ship for real they see these normal patterns of life as norm so when they come into the simulation world we want to mask that as close as possible. The true-to-life simulation allows the sailor to virtually enter a combat scenario. The biggest thing I gained was learning how to effectively communicate with the tactical actions officer relaying what I am visually seeing so he can effectively make tactical decisions on how to fight the ship. It's really learning by doing that enables the student to become proficient. Interestingly the students when given the opportunity to create their own scenarios often really explore very difficult problems that the instructor might not have even thought about. Simulation-based training has a lot of interesting features. One of it of course is that it enables the instructor to build in training hooks into a simulation to address specific training points. My wife says my wife you know my wife who worked like 20 years for the FBI is going to be All right, now I'm going to go ahead and see part of the magazine to find out if there are additional issues. If the president do like these guys, they want to do, you know, they switch with profiles on about 40 different salaries, brains, compartments, which are brains. Okay, so you've got to round up. I've got to round up interviews with seven different brains here during the holidays and so on. That's good. Right, yeah. Okay, what's wrong with this picture? I mean, couldn't you think of this thing for the later in the year when people were around so far out there? Or tell you earlier, you know. Yeah, they came up with the idea about this. First week. December. And then gave us my answer. Second week. First week. December. And then gave us my answer. Second week. Second week. Second week. Second week. He was still just dressed. Don't you usually take a ski vacation to clip time? He usually in January. You do a math test here. I'm trying to sign it. Because of our son and his little snowboard instructor and they're not going to get home for the holidays. So we would go see him at any rate. He's not in that business now. So we're going to see him in a little while. No. No. No. No. No. No. No. No. No. No. No. No. No. No. No. No. No. No. No. No. No. No. No. No. No. No. No. No. No. No. No. No. No. No. But you just have to know there isn't a lot of things that you can do about it. So you just talk about it. Yeah. Yeah, okay. Okay. Right, right. Okay. Good morning everybody and welcome. I'm going to turn the podium over here to Secretary of the Navy, the Honorable Ray Mavis, who as you know will be talking to you today about contracting issues and some reforms and initiatives that the Navy Department is executing. We also have with us after the Secretary who will have a brief statement and then take some questions from you. After that, if you want to stick around we've got two other subject matter experts that will be happy to come to the podium and speak to you. One is Rear Admiral John Ewen, who is the Commander of the Naval Supply Systems Command. And Mr. Elliott Branch, who is the Deputy Assistant Secretary of the Navy for Acquisition and Procurement. And they will be happy to take any further more detailed questions you might have. With that, Secretary Mavis. Good morning. First I want to apologize for my voice. I've caught something and people have suggested it because I stood out for six hours in the freezing rain in Army Navy, but I'm pretty sure that wasn't the reason it happened. As John Kirby said, I'm going to make a few remarks and then take questions. And he noted that Admiral Ewen and Mr. Branch are here for if you want to go into greater detail or greater length. Prevention, identification, and action against fraud against the government. That's been a focus of mine since I first entered public service as State Auditor of Mississippi. And I have continued putting attention and action on acquisition and integrity and preventing contracting fraud as Secretary. Now lately, our efforts to go after contracting fraud have produced some headlines. And while we're obviously not pleased about the alleged misconduct of those involved in the Glenn Defense Marine Asia case, I do believe that the discovery and disposition of those allegations are indications that our efforts are working. I haven't spoken publicly about Glenn Defense Marine or this case before. And I'm still restricted in what I can say now because of the ongoing prosecution by the United States Attorney's Office in San Diego and the Department of Justice Criminal Division in Washington. And I want to say that both of those offices have done a tremendous job with a difficult case. And I want to express my thanks on behalf of Navy for their work and for their public support of what Navy and NCIS has done. However, it's important that the public and the people in the Department of the Navy know the role that Navy played in discovering the suspicious activity in developing the case and in working closely with other agencies to address it. The Naval Criminal Investigative Service, NCIS, along with the Defense Criminal Investigative Service and the Defense Contract Audit Agency did and is doing incredibly impressive work to ferret out the alleged fraud and corruption carried out by GDMA allegations against naval personnel as well. NCIS opened this investigation in May of 2010 against GDMA based on suspicious claims and invoices the company submitted to the Navy claims that internal processes Navy had set up helped reveal. During this investigation, NCIS uncovered critical evidence that connected one of their own agents to the suspicious activity and NCIS deliberately planted bogus information in NCIS reports in order to protect this investigation and did so without any leaks outside the investigation. Information gathered during this investigation was eventually turned over to government prosecutors that led to the recent charges filed in federal court. According to the U.S. Attorney's Office, shortly after NCIS filed a false report to mislead the agent suspected of involvement and this report said that the investigations against GDMA and its owner Leonard Francis were about to be closed. Francis traveled from Singapore to San Diego for a meeting with Navy officials, which allowed law enforcement officials to arrest him. I was briefed for several months before this case became public. By necessity, the number of people who knew of the investigation was kept very small. Throughout this period, I repeatedly instructed NCIS agents to take the investigation wherever it led. Although the criminal investigation was and is being conducted independently by law enforcement, I understand that they have pulled no punches and will continue to pursue any and all leads. And it was NCIS that announced the first arrest in this case, but this occurred on September 16th, the day of the Washington Navy art shootings. Some have questioned why GDMA won contracts after NCIS opened an investigation. I think the answers are very straightforward. First, information about the investigation was restricted primarily to law enforcement personnel with a few exceptions to prevent leaks. And as I've noted, even that precaution was not enough for a time because an NCIS agent was actively obstructing the investigation by helping Leonard Francis avoid detection. Second, contracting officers certainly were not told because that could have compromised the investigation. And finally, if the Navy suspends a company's ability to compete for contracts or refuses to award a contract to a low bidder, we are required by federal law to give that contractor a reason. In this case, a notification would have tipped off GDMA that something was wrong. This is a very serious case, and it's a serious issue. And I'm making sure that Navy leaders everywhere understand just how deeply concerned I and the Navy am about it. I've already spoken with the chief of naval operations, our fleet commanders, and our component commanders, the three and four-star admiral stationed around the world reiterating these points. But I think the public discussion today to sometimes miss the fact that the concerns about Glenn Defense Marine were first raised by people inside the Navy, that the Navy acted on these suspicions by building a case against the company, its owners, and implicated Navy officials, and that the Navy partnered with government prosecutors at the Department of Justice to make the arrest and assist in the current prosecution. Without the Navy and Navy's actions, there would almost certainly be no story today. The conduct and the behavior alleged to have occurred in connection with this case is absolutely incompatible with the standards we require from our Navy officers and civilians. So if as a result of this investigation, criminal prosecutors decide not to pursue criminal charges, but instead refer cases to the Navy for disposition, I'm announcing that those cases will be reviewed and resolved through a consolidated disposition authority. This CDA will be a four-star admiral and a team of professionals, all of whom have been fully vetted to have had no part in this case. This CDA will ensure that if allegations are substantiated, individuals will be held appropriately accountable. Now that's GDMA to date. I want to talk briefly about efforts this department has taken to prevent or act against contract fraud. Soon after I took office, I made several changes to our acquisition procedures to crack down on companies and individuals who attempt to defraud the government. Some examples. We have dramatically increased suspension and debarment proceedings to address misconduct and poor performance by Navy contractors. Since 2009, Navy has suspended 252 contractors and debarred 400. And where the seriousness of the misconduct warranted it, more than 120 of these debarments were for periods longer than the three-year default period to improve accountability. We now require Navy commands to refer terminations for default to our Acquisition Integrity Office, which in fiscal year 13 results in the referral of about 11 contract terminations. Next, if there's an illegal gratuity or bribery under a government contract, there's a special statute to terminate those contracts and assess punitive damages, regardless of whether a criminal conviction has occurred. In 2011, I directed a change that established detail procedures for cases involving this type of criminal activity. And GDMA may be the first case to use those new procedures. Finally, as an example, I've also provided detailed guidance to assist contracting officers to determine whether a contract award is appropriate and to do so beyond checking just to see if a contractor has been suspended or debarred. The Government Accountability Office, graded Navy is having one of the top Acquisition Fraud programs in government. But it's also apparent that we need to do even more to prevent fraud and corruption in our contracting processes. So I'm announcing a series of additional initiatives and policies. First, in September, I directed Assistant Secretary of the Navy for Research, Development, and Acquisition, Sean Stackley, to review acquisition strategies for husbanding and similar contracts worldwide. We now have the preliminary results of this review and based on those, we're taking some immediate steps. A so-called red team of experts from across the fleets and from Naval Supply Systems Command has been formed to scrutinize the husband and contractor process from end to end and to recommend changes to correct deficiencies in those procedures and to provide maximum effective oversight of the process. When their work is done and based on that work, Assistant Secretary Stackley will issue a revised acquisition strategy to be used on all husband and contracts globally. Second, we will further standardize requirements, further standardize contract vehicles, further standardize administration, and increase oversight of husband and contracts and contractors. One way we're going to do this is to increase the use of firm fixed-price line items and minimize the use and improve the oversight of unpriced line items. Third, we will remove pay functions to husbanding service providers from shifts and provide better guidance on requirements and more contracting support ship COs went overseas. Fourth, we will incorporate standardized requisition processes fleet-wide. And fifth, the Auditor General of the Navy is conducting a special audit of husbanding and port services contract with the final report due in June of next year to identify improvements in internal controls. We'll also continue implementing the reforms that we've already made and we'll keep looking for additional ways to strengthen anti-fraud provisions. As long as we are aggressively pursuing allegations in the GDMA investigation, I expect we will continue to see headlines resulting from the discovery and disposition of these cases. The Navy has a long tradition of transparency when we uncover allegations of misconduct, particularly against high-ranking officers, because not only can the spotlight act as a deterrent, but mostly because it's the right thing to do. I would rather get bad headlines than let bad people get away. But fraud prevention is only part of the problem. I want to very briefly mention that we're also radically changing the way we manage all service contracts, which consume an increasing percentage of our top line. Closing, I want to stress three points. First, the Navy is a leader in combating procurement fraud, and we're seeing the results as the allegations in GDMA demonstrate. But the job isn't done. So second, we will continue, as we have done since I came into this office, to identify ways to protect our acquisition processes against those who would criminally or otherwise take dollars away from our warfighters and those warfighters' ability to protect our nation. And last, I think it's vital that we don't let the alleged misconduct and criminal behavior of a few stain the reputation of the many Navy sailors and civilians who are ethical and honorable and who strive every day to keep our Navy the strongest, most credible force on the seas. I am very proud of them and of their families. And as long as I am Secretary, I will continue to do everything I can to preserve the integrity of the institution we serve and we love. Okay, folks, I'll be calling on you. You could just identify yourself before you ask a question. Dave Martin with CVS. Two questions. You alluded to it in your statement. Do you expect further arrests of U.S. serving U.S. Navy officers in this case? And second, you mentioned these figures that since 2009 you've suspended 250 and debarred 400 contractors. I assume those are cases where it's not just a filling dispute, but the Navy feels it was ripped off. I mean, that's a large number. Is the Navy just such a soft target? Number one, I think it's fair to say that there will be more disclosures coming in GDMA. What kind of disclosures those are, I'm not at liberty to say. But I certainly don't think we've seen the end of it. Second, I think that the numbers that I put out there actually speak to the opposite conclusion that we go after people. We have set up procedures to try to prevent fraud, but anytime, anytime you've got this kind of money, there are going to be people trying to steal, people trying to defraud the government. And you can do two things. And I think we've done both of those things. First is you can set up procedures to try to prevent it. But that's always a race, because every time you set up a rule, somebody tries to figure out a way around it. But the second one is to hold people accountable, to go after people very aggressively. And that's not just for defrauding the government, that's also for not performing or signing a contract and just not performing on that. And I see that as an example of the transparency that we need, because we publish these things when we do these, these suspensions and these departments, that we are actively taking a look at everything we do to make sure that the taxpayer's money is being used well. Craig? Mr. Secretary, Craig Whitlock with the post. I think one striking thing about this case, maybe the public isn't that surprised that a contractor might try and take advantage of the government, but there have been six Navy officers implicated one way or another in this case, plus a senior NCIS agent. How much of this is a contracting problem with oversight and how much of it is an ethics problem with senior officers in the Navy? Well, I think at least part of it is a contracting issue and is making sure that we do that. But I also think that, I'm going to go back to what I said, it's very important to note that people inside the Navy were the first people to raise the suspicions. People inside the Navy went after this case and built this case. And when naval personnel were involved, they went after those naval personnel, and we announced it. And we do that with COs all the time. I have spoken to our fleet commanders, our component commanders, to make sure that they are personally interested in it. But this not only goes against all the ethics rules that we have, these few people that are alleged to have done these things. This goes against everything you should have learned at home, everything that, I mean, everybody knows it's wrong to take a bribe. Everybody knows it's wrong to get paid to give a contract. And that's why I said the thing I did at the end, we have a third of our fleet floor deployed today, imports all over the world. We have Navy officers and civilians contracting for those ships to go into port. The vast, vast majority are doing it honestly, honorably, ethically. And I don't want the actions of a few who, it's not just ethics, it's, in some cases, I mean, it's criminal to tarnish the actions of the many. But we're not going to stop. And as I said, I told NCIS when I was being briefed on this case, the one consistent thing I told them every single time we met was take this investigation wherever it leads. It doesn't matter. Take it wherever it leads. You noted that any time you got this amount of money involved, there might be a problem. Do you have an estimate? How much money are you talking about with Jeannie or me? How much do you think may have been defrauded? Not one, I can say anything about because it's in prosecution right now. Chris, Drew with New York Times. Mr. Secretary, so if you step back from, you know, the bribery in that case, and you look at Inchcape and MLS and the whole husbanding process, can you talk a little bit more about why the Navy seems, in the way of structures, these contracts, and policeism seems to leave itself open to steadily rising charges and fraud, and why the, you know, the supply guy on the, on the ship has been sort of left to go into port and deal with these, these husbanding agents and having to negotiate deals on the fly to get his ship out of port. Well, number one, there are rules we have to follow. For, for example, because one employee leaves one company and goes to another one, doesn't mean we can take action against that second company. If we do, or if we say we're going to, we're going to pull all the contracts, start over here, a couple of things going to happen. Number one, we're going to get sued real fast, and they're probably going to win. It's like if we had taken this contract away from GDMA before the investigation was finished and did not have enough evidence to prove it, GDMA would have gotten the contract back. Second, we are global, and we do have a lot of these contracts out there. I think right now there are 14 regional contracts that were all done by bid. The, but the thing I will keep going back to is the tripwires that we have set up, the procedures that we have set up are the things that are leading to these discoveries. And again, I would rather have some of the headlines that I get because we are actively doing these things, because we're pursuing these, than not be here today because there's no store because you or I or anybody else doesn't know about these things that are going on. Can I follow up on that? Can you talk a little bit more, you mentioned in your remarks, changes in the contracting, in the husbandings, changing in the supply officer role, more fixed price studies. I mean a lot of that was recommended in that 2007 study that we referenced this morning, and the idea that, you know, you have a certain number of fixed items, and if the ship shows up and the husbanding guy says, I don't have that size barge, I don't have that size forklift, but I can give you this other thing for way more money. You know, your supply officer stopped buying it, nobody's really monitoring that, and there's not the kind of centralized ordering that you see in the commercial shipping world. Can you talk a little bit more about how vulnerable that made you and why it's taking this long to sort of change the basic approach in the contracting? Well, number one, I do think there were gaps in, we did set up in several years ago a standardized list of fixed price line items, and the estimate was that unpriced line items should account for about 1% of contracts because ships tend to need the same thing going into port over and over again. One of the things that you just pointed out is that sometimes the husbanding agent would say, we don't have that. We don't have whatever it is. It's a fixed line item. We've got this, but we didn't have the centralized ability to tell the contracting officer on the ship, don't do this. Now it's allowed us to chase down overpayments in a lot of these cases, but that's one of the reasons that we are doing much more in terms of centralization in these contracts and in the way that we, the way that we're going to centralize the oversight to not put the commanding officer or the supply officer in these things. I mean, I'll give you another just very simple example. One of the things that these husbanding agents do is take waste off ships, particularly wastewater off ships. And one of the things that we were noticing after I came in here was that there was often a big dispute between what the contractor said they had taken off and what the CO thought they should have taken off. And it was always the contractor thought they had taken way more and were charging way more. So we put in flow meters worldwide. I mean, it's not a very stunning thing to do, but now we know how much that's done. One of the ways you find out about things like this is you see sort of aberrations and you take action to correct it. And that's why I think we've done a lot, but I...