[Senate Hearing 111-836]
[From the U.S. Government Printing Office]



                                                        S. Hrg. 111-836

     THE REPORT OF THE QUADRENNIAL DEFENSE REVIEW INDEPENDENT PANEL

=======================================================================

                                HEARING

                               before the

                      COMMITTEE ON ARMED SERVICES
                          UNITED STATES SENATE

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                               __________

                             AUGUST 3, 2010

                               __________

         Printed for the use of the Committee on Armed Services







        Available via the World Wide Web: http://www.fdsys.gov/

                               __________

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                      COMMITTEE ON ARMED SERVICES

                     CARL LEVIN, Michigan, Chairman

JOSEPH I. LIEBERMAN, Connecticut     JOHN McCAIN, Arizona
JACK REED, Rhode Island              JAMES M. INHOFE, Oklahoma
DANIEL K. AKAKA, Hawaii              JEFF SESSIONS, Alabama
BILL NELSON, Florida                 SAXBY CHAMBLISS, Georgia
E. BENJAMIN NELSON, Nebraska         LINDSEY GRAHAM, South Carolina
EVAN BAYH, Indiana                   JOHN THUNE, South Dakota
JIM WEBB, Virginia                   ROGER F. WICKER, Mississippi
CLAIRE McCASKILL, Missouri           GEORGE S. LeMIEUX, Florida
MARK UDALL, Colorado                 SCOTT P. BROWN, Massachusetts
KAY R. HAGAN, North Carolina         RICHARD BURR, North Carolina
MARK BEGICH, Alaska                  DAVID VITTER, Louisiana
ROLAND W. BURRIS, Illinois           SUSAN M. COLLINS, Maine
JEFF BINGAMAN, New Mexico
EDWARD E. KAUFMAN, Delaware
CARTE P. GOODWIN, West Virginia

                   Richard D. DeBobes, Staff Director

               Joseph W. Bowab, Republican Staff Director

                                  (ii)




                            C O N T E N T S

                               __________

                    CHRONOLOGICAL LIST OF WITNESSES

     The Report of the Quadrennial Defense Review Independent Panel

                             august 3, 2010

                                                                   Page

Perry, Hon. William J., Co-Chair, Quadrennial Defense Review 
  Independent Panel; Accompanied by Hon. Stephen J. Hadley, Co-
  Chair, Quadrennial Defense Review Independent Panel............     6
The Report of the Quadrennial Defense Review Independent Panel...    54

                                 (iii)

 
     THE REPORT OF THE QUADRENNIAL DEFENSE REVIEW INDEPENDENT PANEL

                              ----------                              


                        TUESDAY, AUGUST 3, 2010

                                       U.S. Senate,
                               Committee on Armed Services,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9:34 a.m. in room 
SD-G50, Dirksen Senate Office Building, Senator Carl Levin 
(chairman) presiding.
    Committee members present: Senators Levin, Lieberman, Reed, 
Bill Nelson, E. Benjamin Nelson, Webb, McCaskill, Udall, Hagan, 
Begich, Burris, Bingaman, Kaufman, McCain, Chambliss, Thune, 
LeMieux, Brown, Burr, and Collins.
    Committee staff members present: Richard D. DeBobes, staff 
director; and Leah C. Brewer, nominations and hearings clerk.
    Majority staff members present: Jonathan D. Clark, counsel; 
Creighton Greene, professional staff member; Jessica L. 
Kingston, research assistant; Gerald J. Leeling, counsel; Peter 
K. Levine, general counsel; Roy F. Phillips, professional staff 
member; and William K. Sutey, professional staff member.
    Minority staff members present: Joseph W. Bowab, Republican 
staff director; Adam J. Barker, professional staff member; 
Christian D. Brose, professional staff member; Pablo E. 
Carillo, minority investigative counsel; John W. Heath, Jr., 
minority investigative counsel; Michael V. Kostiw, professional 
staff member; David M. Morriss, minority counsel; and Dana W. 
White, professional staff member.
    Staff assistants present: Paul J. Hubbard, Brian F. Sebold, 
and Breon N. Wells.
    Committee members' assistants present: Christopher Griffin, 
assistant to Senator Lieberman; Carolyn Chuhta, assistant to 
Senator Reed; Nick Ikeda, assistant to Senator Akaka; Ann 
Premer, assistant to Senator Ben Nelson; Patrick Hayes, 
assistant to Senator Bayh; Gordon Peterson, assistant to 
Senator Webb; Tressa Guenov, assistant to Senator McCaskill; 
Jennifer Barrett, assistant to Senator Udall; Roger Pena, 
assistant to Senator Hagan; Jonathan Epstein, assistant to 
Senator Bingaman; Lenwood Landrum and Sandra Luff, assistants 
to Senator Sessions; Matthew Rimkunas, assistant to Senator 
Graham; Jason Van Beek, assistant to Senator Thune; Scott 
Schrage, assistant to Senator Brown; and Ryan Kaldahl, 
assistant to Senator Collins.

       OPENING STATEMENT OF SENATOR CARL LEVIN, CHAIRMAN

    Chairman Levin. Good morning, everybody.
    The committee meets this morning to receive testimony on 
the report of the Quadrennial Defense Review (QDR) Independent 
Panel.
    Our witnesses, the co-chairs of the independent panel, are 
well-known leaders with long careers in and out of government, 
and we are grateful for the willingness of former Secretary of 
Defense William J. Perry and former National Security Adviser 
Stephen J. Hadley to serve as co-chairs of this panel.
    We are also thankful for the efforts of your 16 other panel 
members. All of you have brought a breadth and depth of 
expertise that is evident throughout the report that is 
comprehensive, insightful, and even provocative in its many 
findings and recommendations.
    The QDR is a congressionally mandated, comprehensive 
examination of our national defense strategy, force structure, 
modernization, budget plans, and other defense plans and 
programs intended to shape defense priorities, operational 
planning, and budgets projected as far as 20 years into the 
future.
    In 2007, Congress required that the Secretary of Defense 
create an independent panel of experts to conduct a review of 
the Department's QDR, an independent review that had not been 
done since the very first QDR back in 1997. This new 
independent panel is tasked with providing Congress its 
assessment of the QDR's stated and implied assumptions, 
findings, recommendations, vulnerabilities of the underlying 
strategy and force structure, and providing alternative force 
structures, including a review of their resource requirements.
    Last February, the Department of Defense (DOD) delivered 
its QDR report. This is another explicitly wartime QDR, as was 
the last report in 2006, that emphasizes the need to succeed in 
the conflicts in Iraq, Afghanistan, and against al Qaeda, and 
ensuring that our strategy and resource priorities support that 
objective.
    The QDR also argues for realignment of investments from 
programs that it sometimes describes as ``relics of the Cold 
War'' toward those that support critical joint missions, 
including countering anti-access strategies, building the 
capacity of partner states, and ensuring access to cyberspace. 
The QDR report also proposes measures to reform institutional 
procedures, including acquisition, security assistance, and 
export control processes.
    The independent panel acknowledges the QDR is a wartime 
review that is understandably and appropriately focused on 
responding to the threats that America now faces. However, they 
are also critical that, like previous QDRs, it fails to provide 
long-term planning guidance for the threats the Nation could 
face in the more distant future.
    In taking its own longer, fiscally unconstrained view of 
America's strategic challenges, the independent panel makes 
findings and recommendations that raise important questions and 
provide policy and program options that we will explore in the 
months and the years ahead.
    The panel's report begins with the recognition of the many 
shortfalls in civilian capacity necessary to meet the modern 
demands of the current and future security and stability 
environment. The panel reiterates the longstanding call for 
participation of U.S. and international civilians--both 
government and nongovernment--in preventing conflict and 
managing post conflict stability situations.
    In some of the panel's most far-reaching and provocative 
recommendations, they challenge both the administration and 
Congress to reform our national security institutions and 
processes. Among other changes, the panel calls for 
restructuring the U.S. Code to realign and integrate executive 
department and agency responsibilities and authorities, 
expanding the deployable capabilities of civilian agencies, and 
consolidating the budget processes and appropriations of DOD 
and the Department of State (DOS) and the Intelligence 
Community. We will want to learn more from our witnesses about 
these proposals and which of them, in their view, are the most 
important to address in the near- and long-terms.
    The panel goes on to warn us about what it calls the 
growing gap between what the military is capable of doing and 
what they may be called upon to do in the future. To reduce 
this gap, the panel essentially argues that defense spending 
should be substantially increased, despite the current economic 
environment and DOD's plans for modest real growth for the 
foreseeable future.
    With respect to force structure, one of their most 
significant recommendations would increase the size of the Navy 
to 346 ships to promote and protect our strategic interests in 
the Pacific. We would be interested to know from our witnesses 
in what way the QDR force is inadequate to this challenge and 
what specific additional capabilities that the panel believes 
are necessary for that region and what missions are the 
priorities.
    In the area of personnel, the panel commends the QDR's 
emphasis on the strategic importance of sustaining the All-
Volunteer Force that has performed so magnificently over the 
last 10 years of war. The panel notes, however, that the recent 
and dramatic cost growth of the All-Volunteer Force is 
unsustainable for the long term and will likely lead to 
reductions in force structure and benefits or a compromised 
volunteer system altogether.
    Higher costs per servicemember, as the panel points out, 
could mean fewer servicemembers, resulting in an increased 
number of deployments for those in service and greater stress 
on them and their families. Now that is a vicious budgetary 
cycle.
    Nevertheless, the panel recommends increasing the Navy end 
strength while maintaining the current strengths of the other 
Services. We would be interested to hear from our witnesses 
more about their recommendations in this area, which include 
some kind of a bifurcated compensation and assignment system 
for career and non-career military members.
    Many of the panel's acquisition-related recommendations 
echo Congress' longstanding concerns and legislation previously 
enacted by this committee. For example, the panel's call for 
the increased use of competition and dual sourcing parallels 
requirements enacted in last year's Weapon Systems Acquisition 
Reform Act (WSARA). The same is true of the panel's call for 
increased emphasis on technologically mature programs that can 
be delivered in the shortest practical time.
    Similarly, the panel's call for shortening the acquisition 
process for wartime response to urgent needs appears to be 
consistent with provisions already included in the National 
Defense Authorization Act (NDAA), which was reported by our 
committee earlier this year.
    The panel's recommended realignment of acquisition process 
responsibilities and authorities, however, is less clear. We 
look forward to learning more from the witnesses regarding the 
panel's recommendations for adjustments to the lines of 
authority established two decades ago in response to the 
recommendations of the Packard Commission and to the increased 
role that the combatant commanders are already playing in the 
acquisition process.
    Finally, the independent panel followed our statutory 
guidance and conducted its review of the QDR and strategic 
assessments from a fiscally unconstrained perspective. When 
reading their report, however, one cannot escape questioning 
the affordability of many of their recommendations, 
particularly given the current state of our economy and the 
budget deficit.
    The panel recommends that in order to meet the greater 
costs associated with its recommendations for force structure 
increases, DOD and Congress should restore fiscal 
responsibility to the budget process that was lost when 
balanced budget rules were set aside at the beginning of the 
war. Those rules force decisionmakers to make tradeoffs and 
identify offsets to cover those increased costs. Does the panel 
recommend other steps to generate the resources necessary to 
pay for its many proposals?
    Again, we thank our witnesses and their panel colleagues 
for this very significant contribution to our ongoing national 
security debate. There is much here to discuss as we work 
together to meet the challenges that confront our Nation today 
and well into the future.
    Senator McCain.

                STATEMENT OF SENATOR JOHN McCAIN

    Senator McCain. Thank you, Mr. Chairman.
    Let me thank our distinguished witnesses and old friends, 
former Secretary of Defense William Perry and former National 
Security Adviser Steve Hadley. Thank you for your many years of 
service to our Nation and your leadership of this panel.
    Again, I am grateful for the many years of service to our 
country that both of our witnesses have provided and also the 
distinguished members of your panel, which I think are amongst 
the finest thinkers that we have in America today on national 
security issues.
    As we know, the panel was mandated in the 2009 NDAA to 
provide a separate, outside assessment of the questions posed 
by the QDR. The administration's QDR, which was released in 
February, is, in their own words, a ``wartime QDR.'' It is 
focused mainly on winning the wars we are in and meeting the 
associated needs of the force. This priority is understandable 
and right.
    Our men and women in uniform have for nearly a decade now 
been serving in a force at war. They are defeating America's 
enemies in the fight against violent Islamic extremism. They 
are supporting Iraq's emergence as an increasingly stable 
democratic state. If given the necessary time and support, they 
can reverse the momentum of the insurgency in Afghanistan and 
prevent that country from ever again becoming a safe haven for 
international terrorists.
    As long as America has troops in combat, they and their 
mission must be our highest priority. Yet prevailing in the 
wars of today cannot be our only priority. We will also need to 
ensure that our force is prepared and resourced to meet a wide 
array of other challenges over the coming decades, especially 
amid the tectonic shifts now occurring in the global 
distribution of power.
    In particular, our military must be able to ensure secure 
access to the global commons, including cyberspace, to shape a 
balance of power in critical regions that favors our interests 
and values and those of our allies; to build the capacity of 
weak partners to secure their countries and operate together 
with us; and, of course, to defend the Homeland.
    These are just some of the major challenges that our force 
will be called on to meet over the next 20 years, which is the 
period of time for which the QDR is mandated by Congress to 
propose defense programs. However, as this panel's report 
correctly observed, the intended long-term focus of the QDR is 
being lost. Instead, successive administrations have 
increasingly produced QDR after QDR that are more reflections 
of present defense activities than, in the words of the panel's 
report, a ``strategic guide to the future that drives the 
budget process.''
    The 2010 QDR mostly continues this trend, and now more than 
ever we need to regain a long-term strategic focus on our 
defense priorities. In that regard, the report of the QDR 
Independent Review Panel makes an important contribution.
    We are in the midst of a great national debate about the 
priorities and spending habits of our Government, driven by the 
mounting debt that threatens our Nation's future. For the first 
time in a decade, there is a growing call for real cuts in 
defense spending and a willingness on both sides of the aisle 
to consider it.
    This panel has now offered a strong counterargument. A 
bipartisan group of respected national security experts who all 
agree, as Secretary Perry told the House Armed Services 
Committee (HASC) last week, that identifying savings and 
efficiencies in the defense budget is necessary but not 
sufficient to meet our Nation's future national security 
priorities. Ultimately, the panel finds overall defense 
spending must rise.
    As we debate the future of the defense budget at a time of 
fiscal scarcity, this report will not be the final word, but it 
offers formidable proposals that Congress must take very 
seriously--from recommendations for fixing DOD's dysfunctional 
procurement system to bold ideas for reforming TRICARE so that 
rising healthcare costs do not devour the defense budget. The 
report is also an important reminder that we should not allow 
arbitrary budget numbers, whether capped top-line figures or 
percentages of GDP, to drive our defense strategy.
    Instead, we must frankly identify the strategic challenges 
facing our Nation over the next 20 years. We must lay out the 
commitments and capabilities needed to meet these challenges. 
We must cut waste, identify efficiencies, and make every 
possible reform that can save money.
    We must terminate expensive or over-budget programs that we 
can do without. We must put an end to pork barrel earmarking, 
which wastes billions of dollars every year on programs that 
our military doesn't request and doesn't need.
    Finally, having done all of this, having identified our 
real needs and gotten the most of our defense dollars that we 
can, America should be prepared to pay the resulting bill, 
whatever it is, or accept the resulting risk to our national 
security and that of our friends and allies for failing to do 
so. This will require some very hard choices, but the benefit 
to be gained by sustaining and strengthening America's global 
leadership is imminently worth it.
    I want to thank the witnesses and their fellow members of 
the QDR Panel for emphasizing the importance of strong, 
confident U.S. leadership in the world and the special role 
that our Armed Forces play in securing not only our own 
interests, but in defending an open international order that 
benefits all who join it.
    This panel's report is an important point of reference in 
our current debates. I appreciate the time and care that our 
witnesses and their fellow panelists put in it.
    Thank you, Mr. Chairman.
    Chairman Levin. Thank you, Senator McCain.
    Secretary Perry, if there are any other members of the 
independent panel who are here with you and Mr. Hadley, could 
you introduce them? Then you can begin your testimony.

   STATEMENT OF HON. WILLIAM J. PERRY, CO-CHAIR, QUADRENNIAL 
 DEFENSE REVIEW INDEPENDENT PANEL; ACCOMPANIED BY HON. STEPHEN 
  J. HADLEY, CO-CHAIR, QUADRENNIAL DEFENSE REVIEW INDEPENDENT 
                             PANEL

    Dr. Perry. John Nagl is the other member of the panel with 
us.
    Chairman Levin. Good. Thank you.
    Mr. Nagl, great to have you.
    Dr. Perry?
    Dr. Perry. Let us start with Mr. Hadley first.
    Chairman Levin. Mr. Hadley, you have your own opening 
statememt?
    Mr. Hadley. Mr. Chairman, we have a joint statement, which, 
with your permission, we would like submitted into the record. 
We thought we would just summarize that statement. I will do 
the first half.
    Chairman Levin. Oh, okay. Great.
    Mr. Hadley. Secretary Perry will do the hard work at the 
last half, if that is acceptable.
    Chairman Levin. I had it reversed. Very good. Mr. Hadley, 
you shall begin then.
    Mr. Hadley. Thank you, sir.
    Chairman Levin and Ranking Member McCain, we thank you for 
the opportunity to appear before you and other members of this 
distinguished committee to discuss the final report of the QDR 
Independent Panel.
    Congress and Secretary Gates gave us a remarkable set of 
panel members who devoted an enormous amount of time and effort 
to this project. It was a model of decorum and of bipartisan 
legislative and executive branch cooperation.
    Paul Hughes, as executive director of the panel--who is 
here today--ably led a talented expert staff, and the result is 
the unanimous report you have before you titled: ``The QDR in 
Perspective: Meeting America's National Security Needs in the 
21st Century.''
    Our report is divided into five parts. The first part 
conducts a brief survey of foreign policy with special emphasis 
on the missions the American military has been called upon to 
perform since the fall of the Berlin Wall. From the strategic 
habits and actual decisions of American Presidents since 1945, 
habits and decisions that have shown a remarkable degree of 
bipartisan consistency, we deduce four enduring national 
interests, which will continue, in our view, to transcend 
political differences and animate American policy in the 
future.
    Those enduring national interests include the defense of 
the American Homeland; assured access to the sea, air, space, 
and cyberspace; the preservation of a favorable balance of 
power across Eurasia that prevents authoritarian domination of 
that region; and providing for the global common good through 
such actions as humanitarian aid, development assistance, and 
disaster relief.
    We also discussed the five greatest potential threats to 
those interests that are likely to arise over the next 
generation. These threats include, but are not limited to: (1) 
radical Islamist extremism and the threat of terrorism; (2) the 
rise of new global great powers in Asia; (3) continued struggle 
for power in the Persian Gulf and the greater Middle East; (4) 
an accelerating global competition for resources; and (5) 
persistent problems of failed and failing states.
    These five global trends have framed a range of choices for 
the United States. We have a unique opportunity to continue to 
adapt international institutions to the needs of the 21st 
century and to develop new institutions to meet those 
challenges.
    We have various tools of smart power--diplomacy, 
engagement, trade, communications about Americans' ideals and 
intentions--and these will increasingly be necessary to protect 
America's national interests. But we conclude that the current 
trends are likely to place an increased demand on American 
hard-power to preserve regional balances because while 
diplomacy and development have important roles to play, the 
world's first-order concerns will continue to be security 
concerns, in our judgment.
    In the next two chapters, we turn to the capabilities of 
our Government and that our Government must develop and sustain 
to protect our enduring interests. We first discussed the 
civilian elements of national power, what Secretary Gates has 
called the tools of soft power.
    We make a number of recommendations for the structural and 
cultural changes in both the executive and legislative 
branches, which will be necessary, in our view, if these 
elements of national power are to play their role in protecting 
America's enduring interests.
    The panel notes with extreme concern that our current 
Federal Government structures, both executive and legislative, 
and in particular those related to security, were fashioned in 
the 1940s. They work, at best, imperfectly today. The U.S. 
defense framework adopted after World War II was structured to 
address the Soviet Union in a bipolar world, and the threats 
today are much different. A new approach is needed.
    We recommend that Congress reconvene its Joint Committee on 
the Organization of Congress to examine the current committee 
structure and consider establishing a single national security 
appropriations subcommittee and a coordinated authorization 
process between relevant committees.
    Furthermore, the panel recommends that the President and 
Congress establish a national commission on building the civil 
force of the future to develop recommendations and a blueprint 
for increasing the capability and capacity of our civilian 
departments and agencies to move promptly overseas and 
cooperate effectively with military forces in insecure security 
environments.
    Let me turn to my colleague, Bill Perry, to summarize the 
rest of the report. I want to thank him for his leadership. He 
is the person who made clear from the very beginning this 
needed to be a consensus report and, because of his leadership, 
it is. He is a great national resource, and the country is 
lucky to have him.
    Mr. Secretary?
    Dr. Perry. Thank you very much, Steve.
    I must say a major part of our panel's effort was devoted 
to a consideration of future force structure. For many decades 
during the Cold War, the primary mission of DOD was to build a 
force capable of deterring and containing the Soviet Union. DOD 
recognized other missions, but considered those missions were 
lesser included cases--that is, they would be automatically 
covered by the force we had capable of deterring the Soviet 
Union.
    In 1993, the Cold War was over. We needed a new force 
structure, and we created something called the bottom-up 
review. That identified the primary missions of DOD to have the 
force structure capable of fighting and winning two major 
regional conflicts. We looked at other cases, but we considered 
them lesser included cases that would be covered by the force 
we built for the two MRCs.
    Today, the assumptions of the Cold War in the 1990s are no 
longer valid. A major portion of our military is engaged in two 
insurgency operations. Not surprisingly then, Secretary Gates 
has focused this QDR on success in Afghanistan and Iraq. I must 
say, had I been the Secretary of Defense, I would have done the 
same thing.
    However, it is also important to plan the forces that we 
will need 10, 20 years ahead. A force planning construct is a 
powerful lever for shaping DOD.
    The absence in the QDR of such a construct was a missed 
opportunity. So our panel decided to offer our own judgments as 
to what that should be, based on the assumption of the global 
trends and the threats that were just described by Mr. Hadley. 
Those judgments are as follows.
    First, the recent additions to the ground forces, we 
believe, will need to be sustained for the foreseeable future.
    Second, the Air Force has the right force structure, except 
for the need to augment its long-range strike capability.
    Third, we need to increase our maritime forces to sustain 
the ability to transit freely in the Western Pacific. We saw 
that as the primary driving factor for an increased naval size.
    Fourth, DOD needs to be prepared to assist civil 
departments in the event of a cyber attack on the homeland. It 
is a homeland security issue, but DOD has the primary resources 
for dealing with a cyber problem.
    We believe that a portion of the National Guard should be 
dedicated to the homeland security mission. In fact, we need to 
revisit the contract with the Guard and the Reserves.
    A major capitalization will be required of our forces, not 
the least of which is because of the wear and tear of the 
equipment in the wars in Iraq and Afghanistan. Secretary Gates' 
directive on efficiencies to deal with these costs is a good 
start but, in our judgment, will not be sufficient. That is, 
additional top line will be required. What we have described as 
a need will be expensive, but deferring recapitalization could 
entail even greater expenses in the long run.
    We looked carefully at the personnel issue and believe--
started off with the belief that the All-Volunteer Force has 
been a great success. But the dramatic increases in costs in 
the last few years cannot be sustained. We believe we must 
seriously address those costs, and a failure to do so would 
lead either to a reduction in force or a reduction in benefits 
or some way compromise our volunteer force, none of which is 
desirable.
    So we must reconsider longstanding practices, such as 
extending the length of expected service, revising benefits to 
emphasize cash instead of future benefits, looking hard at and 
revising the current longstanding up-and-out personnel policy, 
and revising TRICARE benefits.
    I must say we understand that these are all big issues and 
all very politically sensitive issues, but we believe they have 
to be addressed. We recommended the establishment of a new 
commission on military personnel comparable to the Gates 
Commission back in 1970, which established the All-Volunteer 
Force. The charter of that commission basically should be to 
implement the recommendations which we have described in this 
report.
    An important part of the personnel issue is the 
professional military education. The training and education 
program in the military today plays a key role in making the 
U.S. military the best in the world. It is expensive, but it is 
worth it.
    We recommended a full college program for Reserves with 
summer training and a 5-year service commitment. We recommended 
expanding graduate programs in military affairs, foreign 
culture, and language. We recommended providing key officers 
with a sabbatical year in industry. All of those are 
evolutionary changes to professional military education which 
would be beneficial.
    We looked carefully at the acquisition and contracting 
problems and recommended, first of all, clarifying the 
accountability. In fact, we devoted several pages to discussion 
of specific recommendations as to how that might be improved.
    We looked at the history of programs in the last decade or 
so which dragged on for 10, 12, 14 years and led to very 
extensive overruns. We believe that we should set limits of 5 
to 7 years for the delivery of defined programs. Five to 7 
years, we have a history of programs with that limit that have 
been successful, and all programs that we know of that have 
dragged on for 10 to 20 years have been unsuccessful. We 
believe that it is no coincidence that the long programs lead 
to problems.
    We recommended requiring dual-source competition for 
production programs whenever such dual-source competition 
provides real competition. We recommended establishing a 
regular program for urgent needs such as now being done by the 
Under Secretary of Defense for Acquisition, Technology, and 
Logistics in Afghanistan.
    Finally, we had some comments on planning. We believe that 
the QDR, as now mandated, is an inappropriate vehicle for 
dealing with the issues that Congress wants to deal with. It 
comes too late in the process.
    We recommended that you establish an independent strategic 
review panel in the fall of the presidential election year that 
would be established by the legislative and executive branches, 
as was the QDR, that this panel convene in January of the new 
administration and report 6 months later. This then would be an 
input to the National Security Council for preparing a national 
security strategy, and this plus the regular procurement 
planning and budgeting process would replace the QDR.
    I would like to close with a final comment that this report 
we hand to you is a unanimous report from a bipartisan panel. 
Mr. Hadley and I, from the very first day of the panel, told 
our panel members that not only was it a bipartisan panel, but 
our deliberations should not be bipartisan, but rather 
nonpartisan. The national security issues we deal with are too 
important to be dealt with in a partisan way.
    The panel responded positively to this, and therefore, we 
are able to give you today a bipartisan, unanimous report.
    Thank you very much.
    [The joint prepared statement of Dr. Perry and Mr. Hadley 
follows:]
 Joint Prepared Statement by Hon. William J. Perry and Hon. Stephen J. 
                                 Hadley
    Chairman Levin and Ranking Member McCain, we thank you for the 
opportunity to appear before you and other members of this 
distinguished committee to discuss the final report of the Quadrennial 
Defense Review (QDR) Independent Panel.
    The QDR Independent Panel includes 12 appointees of the Secretary 
of Defense, Robert Gates, and 8 appointees of Congress, and is mandated 
by the National Defense Authorization Act (NDAA) for Fiscal Year 2010 
to:

         Review the Secretary of Defense's terms of reference 
        for the 2009 QDR;
         Conduct an assessment of the assumptions, strategy, 
        findings, and risks in the 2009 QDR;
         Conduct an independent assessment of possible 
        alternative force structures; and
         Review the resource requirements identified in the 
        2009 QDR and compare those resource requirements with the 
        resources required for the alternative force structures.\1\
---------------------------------------------------------------------------
    \1\ National Defense Authorization Act for Fiscal Year 2010, P.L. 
No: 111-84, Section 1061.

    That is what our panel has tried to do in its review. We have 
deliberated for over 5 months, in the process reviewing a mass of 
documents (both classified and unclassified), interviewing dozens of 
witnesses from the Department, and consulting a number of outside 
experts. Congress and Secretary Gates gave us a remarkable set of panel 
members who devoted an enormous amount of time and effort to this 
project. It was a model of decorum and of bipartisan, legislative/
executive branch cooperation. Paul Hughes, as Executive Director of the 
Panel, ably led a talented expert staff. The result is the unanimous 
report you have before you entitled: ``The QDR in Perspective: Meeting 
America's National Security Needs in the 21st Century.''
    Mr. Chairman, the security challenges facing the United States 
today are much different than the ones we faced over a decade ago. In 
addition to ongoing military operations in Iraq and Afghanistan, the 
United States faces a geopolitical landscape that is increasingly 
dynamic and significantly more complex. Secretary Gates and the 
Department of Defense deserve considerable credit for attempting to 
address all these challenges in the 2009 QDR.
    The modern QDR originated in 1990 at the end of the Cold War when 
Secretary of Defense Dick Cheney and Chairman of the Joint Chiefs of 
Staff General Colin Powell undertook in the ``Base Force'' study to 
reconsider the strategy underpinning the military establishment. Then 
in 1993, building on his own work as the chairman of the House Armed 
Services Committee, Secretary of Defense Les Aspin decided to conduct 
what he called a Bottom-up Review--an examination of the long-term 
risks which America was likely to face, the capabilities necessary to 
meet them, and the various options for developing those capabilities.
    The Bottom-up Review was considered generally a success. Congress 
thought the process worthwhile and mandated that it be repeated every 4 
years. Unfortunately, once the idea became statutory, it became 
routine. Instead of unconstrained, long-term analysis by planners who 
were encouraged to challenge preexisting thinking, the QDRs became 
explanations and justifications, often with marginal changes, of 
established decisions and plans.
    This latest QDR is a wartime QDR, prepared by a Department that is 
focused--understandably and appropriately--on responding to the threats 
America now faces and winning the wars in which America is now engaged. 
Undoubtedly the QDR is of value in helping Congress review and advance 
the current vital missions of the Department. But it is not the kind of 
long-term planning document that Congress envisioned when it enacted 
the QDR requirement.
    Our Report is divided into five parts.
    It first conducts a brief survey of foreign policy, with special 
emphasis on the missions that America's military has been called upon 
to perform since the fall of the Berlin Wall. From the strategic habits 
and actual decisions of American Presidents since 1945--habits and 
decisions that have shown a remarkable degree of bipartisan 
consistency--we deduce four enduring national interests which will 
continue to transcend political differences and animate American policy 
in the future. Those enduring national interests include:

         The defense of the American homeland;
         Assured access to the sea, air, space, and cyberspace;
         The preservation of a favorable balance of power 
        across Eurasia that prevents authoritarian domination of that 
        region; and
         Providing for the global ``common good'' through such 
        actions as humanitarian aid, development assistance, and 
        disaster relief.

    We also discuss the five gravest potential threats to those 
interests that are likely to arise over the next generation. Those 
threats include, but are not limited to:

         Radical Islamist extremism and the threat of 
        terrorism;
         The rise of new global great powers in Asia;
         Continued struggle for power in the Persian Gulf and 
        the greater Middle East;
         An accelerating global competition for resources; and
         Persistent problems from failed and failing states.

    These five key global trends have framed a range of choices for the 
United States:

         Current trends are likely to place an increased demand 
        on American ``hard power'' to preserve regional balances; while 
        diplomacy and development have important roles to play, the 
        world's first-order concerns will continue to be security 
        concerns.
         The various tools of ``smart power''--diplomacy, 
        engagement, trade, targeted communications about American 
        ideals and intentions, development of grassroots political and 
        economic institutions--will increasingly be necessary to 
        protect America's national interests.
         Today's world offers unique opportunities for 
        international cooperation, but the United States needs to guide 
        continued adaptation of existing international institutions and 
        alliances and to support development of new institutions 
        appropriate to the demands of the 21st century. This will not 
        happen without global confidence in American leadership, its 
        political, economic, and military strength, and steadfast 
        national purpose.
         Finally, America cannot abandon a leadership role in 
        support of its national interests. To do so will simply lead to 
        an increasingly unstable and unfriendly global climate and 
        eventually to conflicts that America cannot ignore, and which 
        we will then have to prosecute with limited choices under 
        unfavorable circumstances--and with stakes that are higher than 
        anyone would like.

    In the next two chapters, we turn to the capabilities that our 
Government must develop and sustain in order to protect our enduring 
interests. We first discuss the civilian elements of national power--
what Secretary Gates has called the ``tools of soft power.'' We make a 
number of recommendations for the structural and cultural changes in 
both the executive and legislative branches which will be necessary if 
these elements of national power are to play their role in protecting 
America's enduring interests. The panel notes with extreme concern that 
our current Federal Government structures--both executive and 
legislative, and in particular those related to security--were 
fashioned in the 1940s and they work at best imperfectly today. The 
U.S. defense framework adopted after World War II was structured to 
address the Soviet Union in a bipolar world. The threats of today are 
much different. A new approach is needed.
    We then turn to the condition of America's military. We note that 
there is a significant and growing gap between the ``force structure'' 
of the military--its size and its inventory of equipment--and the 
missions it will be called on to perform in the future. As required by 
Congress, we propose an alternative force structure with emphasis on 
increasing the size of the Navy. We also review the urgent necessity of 
recapitalizing and modernizing the weapons and equipment inventory of 
all the Services; we assess the adequacy of the budget with that need 
in view; and we make recommendations for increasing the Department's 
ability to contribute to homeland defense and to deal with asymmetric 
threats such as cyber attack.
    In this third chapter, we also review the military's personnel 
policies. We conclude that while the all-volunteer military has been an 
unqualified success, there are trends that threaten its sustainability. 
Major changes must be made in personnel management policies and in 
professional military education. A failure to address the increasing 
costs of the All-Volunteer Force will likely result in: (1) a reduction 
in force structure; (2) a reduction in benefits; and/or (3) a 
compromised All-Volunteer Force. To avoid these undesirable outcomes, 
we recommend a number of changes in retention, promotion, compensation, 
and professional military education that we believe will serve the 
interests of America's servicemembers and strengthen the All-Volunteer 
Force.
    The fourth chapter of our Report takes on the issue of acquisition 
reform. We commend Secretary Gates for his emphasis on reducing both 
the cost of new programs and the time it takes to develop them. But we 
are concerned that the typical direction of past reforms--increasing 
the process involved in making procurement decisions--may detract from 
the clear authority and accountability that alone can reduce cost and 
increase efficiency. We offer several recommendations in this area.
    Finally, our Report's last chapter deals with the QDR process 
itself. While we very much approve of the impulse behind the QDR--the 
desire to step back from the flow of daily events and think creatively 
about the future--the QDR process as presently constituted is not well 
suited to the holistic planning process needed by our Nation at this 
time. The United States needs a truly comprehensive National Security 
Strategic Planning Process that begins at the top and provides the 
requisite guidance not only to the Department of Defense but to the 
other departments and agencies of the U.S. Government that must work 
together to address the range of global threats confronting our Nation.
    The issues raised in our Report are sufficiently serious that we 
believe an explicit warning is appropriate. The aging of the 
inventories and equipment used by the Services, the decline in the size 
of the Navy, escalating personnel entitlements, increased overhead and 
procurement costs, and the growing stress on the force means that a 
train wreck is coming in the areas of personnel, acquisition, and force 
structure. In addition, our Nation needs to build greater civil 
operational capacity to deploy civilians alongside our military and to 
partner with international bodies, the private sector, and 
nongovernmental organizations in dealing with failed and failing 
states.
    The potential consequences for the United States of a ``business as 
usual'' attitude towards the concerns expressed in this Report are not 
acceptable. We are confident that the trend lines can be reversed, but 
it will require an ongoing, bipartisan concentration of political will 
in support of decisive action.
    In conclusion, we wish to again acknowledge the cooperation of the 
Department of Defense in the preparation of this Report--and to express 
our unanimous and undying gratitude to the men and women of America's 
military, and their families, whose sacrifice and dedication continue 
to inspire and humble us.
    Mr. Chairman, thank you for the opportunity to testify before you 
today. We welcome your questions regarding the Final Report of the 
Quadrennial Defense Review Independent Panel.

    Chairman Levin. Thank you very much, Dr. Perry.
    We will have a 7-minute first round.
    Dr. Perry, let me start with you. The Department of State 
(DOS) has traditionally had the lead in decisions on security 
assistance through programs like foreign military financing. In 
recent years, DOD has brought an increasing share of resources 
to the table in determining the distribution of U.S. security 
assistance through programs like train-and-equip programs, the 
Iraq Security Forces Fund, the Afghan Security Forces Fund.
    The panel's report, Secretary Gates, and a number of think 
tanks in Washington have proposed the idea of establishing an 
interagency-controlled pool of resources in certain areas such 
as counterterrorism, stabilization, and post conflict. DOD, 
DOS, and the U.S. Agency for International Development have 
national security interests, and each has a role to play in 
these critical areas, and to varying degrees, they cooperate in 
advancing the foreign policy agenda.
    Would you recommend pooling these resources and providing 
each of these agencies an equal seat at the table in 
distribution of the nondirected portions of these military 
security assistance accounts?
    Dr. Perry. In a word, yes. The kind of conflicts we have 
been fighting in Bosnia, Iraq, and Afghanistan cannot be done 
successfully by DOD alone. They are fundamentally interagency 
problems. Providing the right training for that and the right 
coordination for that is very difficult, but we really have to 
face those issues.
    I would make an analogy with the problems of getting joint 
service operations in an earlier era, which finally led to the 
Goldwater-Nichols bill and to where we now truly have joint 
operations. That was difficult as well, but it was 
accomplished. Something comparable needs to be done in this 
area.
    Chairman Levin. Now, is there any recommendations you have 
as to where you would draw the line between where DOS would 
have the lead in providing assistance and where DOD would have 
that authority?
    Dr. Perry. I don't have a good formula for drawing that 
line, Senator Levin.
    Chairman Levin. Okay.
    Dr. Perry. I would say that certainly, a basis for making 
that judgment should be on the proportion of effort of each of 
the various departments.
    Chairman Levin. Now for some of us, the civilian agencies, 
which are better suited to build capacity in certain nondefense 
elements of the security sector, have provided a very uneven 
performance in those areas to date. We have seen their 
operations in Iraq and Afghanistan, and they have not been 
particularly steady or successful. They have been halting, and 
we have had to push that envelope a lot.
    Would you agree with that? If so, is that not going to be a 
problem?
    Dr. Perry. I do agree with that, and I think at least two 
things could be done to correct or improve that process. First 
would be to adequately fund that mission, that function in the 
civilian agencies that has been traditionally underfunded in 
the past and, second, to have DOD and the civilian agencies 
train together, exercise together for these kinds of missions. 
That has been completely absent in the past.
    Chairman Levin. Okay. You have made some recommendations 
relative to Navy capacity, particularly for the Asia-Pacific 
region, and you have cited potential challenges in Asia as the 
reason to increase the size of the Navy fleet. What specific 
capabilities did the panel find to enhance our capability in 
the Asia-Pacific region?
    Given the long lead times inherent in the budgeting and 
construction associated with major acquisition programs such as 
shipbuilding, what would you consider the most pressing 
military needs in the Asia-Pacific region? Either one of you 
could answer that.
    Dr. Perry. I would say, generally, the most pressing need 
is dealing with so-called anti-access missions, that is, 
various military systems that could deny access of our fleet to 
the Western Pacific. High on that list would be certainly anti-
ship missiles, divining countermeasures for those.
    Mr. Hadley. We were not in a position to generate a 
detailed force structure. A lot has changed in the 21st 
century, but the circumference of the Earth and the percent 
covered by water is one thing that hasn't. What we thought was 
that a bigger presence requirement would require a bigger Navy.
    Obviously, much more work needs to be done to make sure 
that the Navy is structured in a way that is appropriate to the 
challenges. The one thing we did identify was that this anti-
access process needs to be addressed, but exactly what ships 
with which capabilities is something this committee and the 
Department would have to develop.
    Chairman Levin. Okay. The panel's acquisition-related 
recommendations would give greater responsibility and authority 
to the combatant commands supported by the Services for the 
identification of weapons and equipment requirements or 
capability gaps. We have included provisions in recent 
legislation, including both the WSARA and the NDAA, which the 
committee reported earlier this year, that would ensure that 
combatant commanders play an important role in the requirements 
development process.
    However, General Cartwright, who has been a leading 
advocate for an improved requirements process, has told us that 
the combatant commands have heavy responsibilities as 
operational headquarters executing missions around the world 
and cannot be expected to run the requirements process.
    Are you familiar with General Cartwright's recommendations 
for improving the requirements process? If so, would you agree 
or disagree with him as to the appropriate role of the 
combatant commanders?
    Dr. Perry. I have not read General Cartwright's testimony.
    Chairman Levin. Mr. Hadley, are you familiar with that?
    Mr. Hadley. Yes, we think--and I think our report 
suggests--that the combatant commander doesn't necessarily run 
the process, but the combatant commander, supported by the 
Joint Chiefs, should be looked to for his input on this 
requirements issue since they are the closest to the----
    Chairman Levin. More so than is currently the case?
    Mr. Hadley. Mr. Chairman, what we tried to do was where 
there were reforms that had been in place--and the activities 
of this committee is one--we tried to reaffirm those reforms we 
thought were in the right direction and suggest where we had to 
go further. We think that a number of things in the 
legislation, which came out of this committee are in the right 
direction, and this was one.
    Chairman Levin. Okay. Thank you.
    Senator McCain.
    Senator McCain. Thank you, Mr. Chairman.
    I want to again thank the panel. Could I discuss for a 
minute with the panel members this latest issue of the leak of 
93,000 documents? Obviously, we have already had a private 
first class charged with leaking of documents.
    The environment that we grew up in was that classified 
information was kept on close hold. There was a need-to-know 
provision that even if you had clearance, you did not have 
access unless you had need-to-know.
    Now we have a situation where apparently a private first 
class was able to get access to classified information, and, 
apparently, other people that shouldn't have obviously did, 
abetted and aided by a willing and compliant media that doesn't 
seem to care about national security or the lives of the 
Afghans that have been put at risk.
    How do you size up that problem, and what do we need to do? 
It is obviously due to the age of computers. Dr. Perry or 
Steve, whoever wants to take a stab at that.
    Dr. Perry. I think there are two fundamental factors 
leading to this problem. First is the desire to get 
intelligence down to the battlefield level so that people who 
are fighting the battles have access to the best intelligence. 
I completely support that requirement, and I understand why 
there is the desire to do that. That inevitably leads to much 
more information being held at lower levels in the military.
    Second, it fundamentally has to do with the fact of the 
digital age that we are now in, as you said. That it is not 
only possible to transmit huge amounts of data, but it is also 
possible to store it in very simple and small devices. That is 
a fundamental problem. I don't think I can give you a solution 
for how to deal with that.
    But I do support both factors which have caused this 
problem, both getting the information down to the people who 
can use it in the field and the greater use of the digital 
systems to handle and process data. That does make us highly 
vulnerable to these kinds of leaks.
    Mr. Hadley. One of the problems is anonymity. I think many 
people believe that if something is anonymous, it makes it more 
reliable because people will then speak the truth if shielded 
from responsibility. I think just the opposite. Anonymity is a 
problem because it does not hold people responsible for the 
results of their actions, and we don't have a good way when 
people leak to hold them to account.
    A lot of leaks occur. A lot of leaks get referred to the 
Justice Department. Very few leaks get prosecuted so that 
people are able to escape responsibility for the consequences 
of their actions, and that is a problem.
    Dr. Perry. I would say one other thing, Senator McCain. 
When I was the Secretary, we had an example of an egregious 
leak which I thought compromised the national security. We 
prosecuted a case and sent the leaker to prison. I think more 
examples of that would be useful in injecting better discipline 
in the system.
    Senator McCain. I thank you both.
    The situation as it exists now, obviously, we want to 
preserve those aspects of technology that you point out, Dr. 
Perry, but at the same time, it seems to me that cybersecurity 
has been rocketed up to the top of our priority list here. We 
have had indications of a need for it in the past, entire 
computer systems being shut down, et cetera, et cetera. At 
least if there is anything good that comes out of this, it may 
put emphasis on the absolute requirement for us to address 
cybersecurity.
    Dr. Perry, in the 1990s, as part of your honorable service, 
you talked to the defense industries and told them that there 
would have to be consolidations, which I don't disagree with 
that. But it seems to me, we have ended up, despite our efforts 
legislatively and other areas, in the worst of all worlds. We 
have a consolidated defense complex, industrial defense 
complex, and, at the same time, a lack of competition, but yet 
a lack of sufficient cost controls being in place.
    It seems to me that is the fundamental problem here with 
cost overruns. On the one hand, you can impose further 
government intervention and regulation, or you can encourage 
competition, which isn't likely to happen. In fact, more and 
more major industries are getting out of the defense business.
    I would really like your thoughts on that because we all 
know that cost overruns not only are damaging to our ability to 
defend the Nation, but it is also greatly damaging to our 
credibility.
    Dr. Perry. We were very conscious of that problem when we 
prepared this report. The primary recommendation we made on 
controlling costs had to do with strongly recommending that 
major programs be limited from the beginning to a 5- to 7-year 
period, from the time of the beginning of the program to the 
time of delivering the operational equipment.
    We know that can be done. It was done in the F-15. It was 
done in the F-16. It was done in the F-117, all of which 
programs came in on cost and on schedule. So I think a 
discipline on schedule is the first requirement.
    The competition we have had in major aerospace programs at 
the front end of the program has been, I think, sufficient. The 
issue is also whether you can continue that competition through 
the production of the equipment. In other words, can you have 
dual-source production? In our report, we recommended that 
whenever that truly leads to continuing competition that we 
should provide for dual source.
    Mr. Hadley. If I could add a third consideration? Our 
panel's conclusion is once the performance requirements for a 
system get set, they remain in stone. If the program gets in 
trouble, you either extend the time, and that usually means you 
increase the cost. Our recommendation is that performance 
should be in the trade space. With the advice of the combatant 
commanders, you should be willing to trade away performance in 
order to maintain cost and schedule.
    We need to start using technology not just to drive up 
performance but, in some cases, to hold performance constant 
and use technology to drive down cost. That is the only way, in 
our view, we are going to have both an adequate force structure 
and a modernized force structure.
    Senator McCain. Mr. Chairman, if you will indulge me one 
other question very quickly. It seems to me that your 
recommendations for increasing the size or capability of the 
Navy, especially in the Pacific region, is a recognition of the 
rise of China and the influence of China in the region. The 
latest dust-up about the South China Sea is an example.
    But yet there are allegations such as Secretary Gates said. 
It is a dire threat that by 2020 the United States will only 
have 20 times more advanced stealth fighters than China. 
Secretary Gates says, ``Does the number of warships we have and 
are building really put America at risk when the U.S. battle 
fleet is larger than the next 13 navies combined, 11 of which 
belong to allies and partners?'' How do you respond to that?
    Dr. Perry. Secretary Gates is operating within restrained 
budget. Our requirements, we were not restrained by budget. We 
were looking just at the requirements and the needs. We did 
observe that if our recommendations were actually acted upon, 
they would require an increase in the top line of the DOD 
budget.
    But I believe that there is a growing importance of the 
United States being able to maintain free transit in the 
Western Pacific, and there is a growing difficulty in being 
able to do that. The only way I can see of achieving that is by 
increasing the size and capability of the Navy.
    Senator McCain. Thank you, Mr. Chairman.
    Chairman Levin. Thank you, Senator McCain.
    Senator Lieberman.
    Senator Lieberman. Thanks, Mr. Chairman.
    Secretary Perry, Mr. Hadley, thanks very much for really an 
extraordinary piece of work. It is a very important document, 
which shows a lot of thoughtfulness. All the more important, I 
think, because you have achieved your goal of having it be 
nonpartisan and because it is self-evident that you were not 
special pleading for any Service or industry or whatever.
    You start out very methodically with the four traditional 
security interests of the United States. You talk about global 
trends that represent the most significant threats to our 
security today. Then you provide answers to how we can best 
meet those.
    Along the lines of ``no good deed should go unpunished,'' I 
have a suggestion for you, which is this. We are heading into a 
time, self-evidently, of fiscal austerity. I fear that the 
defense budget will become a fashionable target for cuts, 
thereby creating some real peril for our country because my own 
personal belief is that security is the pre-condition to 
liberty and prosperity. So if we are not able to provide for 
the security of the American people, we are not going to be 
able to guarantee the great values of liberty and prosperity 
and the pursuit of happiness that our founding documents 
guarantee.
    I want to cite for you the example of the 9/11 Commission, 
Governor Kean and Congressman Hamilton. After their official 
work was done, they somehow miraculously reconstituted 
themselves in the status of a nonprofit corporation. They 
continued to issue regular reports and entered the debate about 
our homeland security.
    I hope that the two of you and your commission members will 
consider doing that because I think we are going to come to 
some points in the not-so-distant future where we in Congress 
really will need an independent outside group to come in and 
say, ``hey, what you are about to do here is not good for the 
national security of the American people or what you are about 
to do makes sense in a tight budget situation.''
    I don't particularly invite a response. I fear that if I 
give you the opportunity, you might be negative. I want you to 
think about it. So I hope you will think about that.
    I note Colonel Nagl is here. He runs the Center for a New 
American Security. He has proven a remarkable ability to raise 
money. I don't know how he does it. But I am sure it is all 
legal. But he might be one to assist in making this vision come 
true.
    I want to say that it was my honor during the 1990s to work 
with former--and it looks like maybe future--Senator Dan Coats 
on the legislation that actually created the responsibility and 
authority to do the QDR. In that regard, I want to say that I 
share your criticism of what has become of the QDR.
    A lot of the problems you cite, as you say, are 
understandable. It is much more focused on the current threats, 
the wars, and to some extent, unfortunately, on defense of 
current programs. What we had hoped this would be was, at a 
minimum, looking 4 years forward. Instead those other things, 
the defense of the programs, confronting the wars, is what we 
do, what DOD does in the annual budget submissions, what we do 
here.
    We were trying to get the process to rise above the 
immediate and look over the horizon. I think you have made a 
very good case that it is not doing that now. I think your idea 
of the independent panel is a good one. I would still not want 
to give up on something like the QDR because I think we ought 
to be trying to force people inside the building to look over 
the horizon, as well as convening an independent panel.
    I don't know if you have a response to that. Is it possible 
to combine your suggestion for making statutory the independent 
review with some continuation and perhaps sharpening of a QDR?
    Dr. Perry. I would not want to suggest that the 
recommendation we made is the only way of proceeding on this 
problem.
    Senator Lieberman. Yes.
    Dr. Perry. But if you are trying to keep the QDR and have 
it look at long-range planning as well as force, as well as the 
budgetary issue, it has to be later in the process because for 
the first 6 months of a DOD QDR, the team is usually not fully 
together.
    Senator Lieberman. That is right.
    Dr. Perry. Therefore, you are asking the team to do 
something that they are not there to do. So it has to be either 
later in the process or, as we suggested, getting it started 
ahead of the game. Then there has to be an independent group 
outside of it.
    Senator Lieberman. That is a good suggestion.
    Mr. Hadley?
    Mr. Hadley. I think the only way that would work is if you 
have a front end, as we propose with the independent panel on 
the national security strategic planning process, that will 
force and lay out a broader framework and then have that 
broader framework with a broader time horizon drive the 
individual planning processes within DOD. That is the model we 
propose.
    Whether you formally need a Quadrennial Diplomacy and 
Development Review or QDR at DOD or whether you can do that 
through the normal planning, programming, budgeting, and 
execution process, I leave to you. But I think you won't get 
there without the broader front-end process that we recommend 
in our report.
    Senator Lieberman. Okay. I would like to continue that 
conversation. I thank you.
    I think that perhaps the most important contribution of the 
panel will have been to highlight the need for continued, 
sustained, strong defense funding if we are to maintain the 
forces we need to protect our security. I was particularly 
struck by your recommendation about the Navy.
    We are now at about 285 vessels at sea. The goal for a long 
time has been a 313-ship fleet, which we are not reaching at 
all. You have recommended 346 ships. I wanted to ask you in 
this public session whether you would describe what 
capabilities you envision growing in this larger fleet and why.
    Dr. Perry. Three points. First of all, more ships give you 
more presence, and presence itself is important. Second, 
improved anti-ship capabilities. Third, improved anti-submarine 
warfare capabilities.
    Senator Lieberman. Mr. Hadley?
    Mr. Hadley. The principal task is to maintain our ability 
to have access to international waters throughout the world. 
People have focused on China and the anti-access threat there. 
It is also in the Persian Gulf. There are a lot of places.
    That, I think, is the principal mission. You want a 
configuration of ships and operational concepts that vindicate 
that mission. That entails both, in our view, a larger Navy, 
but it also involves in some sense doing things differently and 
more creatively so we can achieve that objective with an 
operationally sound concept and as modest a cost as we can 
achieve.
    Senator Lieberman. So is it fair to conclude from your 
recommendation that you would say that the 285-ship Navy that 
we have now or the 313-ship Navy that is our goal now is not 
adequate to give us the access we need around the world to 
protect our national security in the decades ahead?
    Mr. Hadley. We think the challenge is going to get greater, 
and we don't see how you can meet a greater challenge with a 
diminishing number of ships. Again, bottom-up review seemed a 
good place to start, and that is what that number is, a 
starting point, because it was at a time 17 years ago when we 
thought the world was going to be much more benign than it 
turned out to be.
    Senator Lieberman. Right.
    Mr. Hadley. We see challenges coming even greater in the 
future in this area, and that is why we think as a mark on the 
wall that 340 is probably the right number.
    Senator Lieberman. Thank you both.
    Thanks, Mr. Chairman.
    Chairman Levin. Thank you, Senator Lieberman.
    Senator Burr.
    Senator Burr. Thank you, Mr. Chairman.
    Dr. Perry, Mr. Hadley, welcome.
    To either one of you, the comprehensive approach also 
requires international security assistance and cooperation 
programs. As we have seen in Iraq and to a different degree in 
Afghanistan, our coalition and North Atlantic Treaty 
Organization (NATO) partners are often constrained in the near-
term by public opinion and in the long-term by budgetary 
austerity measures that limit their ability to provide the 
proper mix and quantity of forces.
    With the latitude to participate without strict rules of 
engagement, it is likely that these nations will continue to 
spend far less than we do on national security. Given that 
reality, should we expect many of our NATO partners and allies 
will not be willing or able to support the types of operations 
that will be undertaken in the future and that that may be 
better suited for a more defined, nonkinetic role in support of 
future operations?
    Mr. Hadley. Those are certainly constraints. I think the 
point the report tries to make is part of the constraints of 
building better partners are not just their reluctance or the 
constraints they are under, but constraints that we have 
imposed on ourselves.
    So we talk about in our security systems reforms, building 
systems in the United States that are able to be shared with 
allies in the get-go, so that we can have allies working with 
common systems with us. We talk about identifying 
communications and others' equipment that can be shared among 
allies so that it enables them to partner with us in the most 
effective way.
    So the constraints you describe are real. But within those 
constraints, we have imposed some constraints on ourselves. The 
recommendations of the report are how to eliminate the 
constraints we have imposed on ourselves.
    Senator Burr. Great. Steve, if I could, one last question 
to you. Part of your review is to look at emerging threats, and 
this is not the first time you have had the responsibility to 
look at emerging threats.
    Do you see chemical and biological weapons as a real 
threat? Is our research and response in this country today 
sufficient for the threat that you perceive?
    Mr. Hadley. No. There has been a lot recently about the 
need for greater preparedness, particularly on biological, 
which is a much more strategic threat than is chemical. I think 
the priorities are nuclear, biological, and chemical. I think 
the report says that there is more to be done on weapons of 
mass destruction, and the priority there, I think, is nuclear 
and then bio. More to do.
    Senator Burr. On many of those threats, there is a fine 
line between an agent that is a disease threat to us and an 
agent that is used for the purposes of terrorism. You were in 
the administration when we stood up biomedical advanced 
research and development authority at Health and Human 
Services, and we created the BioShield procurement fund. Those 
most recently have been under attack to steal the money out of 
both. Do you see that as a threat to our country's national 
security?
    Mr. Hadley. It is a threat. It is also, as you point out, 
short-term thinking because the investments we make in 
defending against the biological weapon threat also help enable 
us to deal with disease threats. So it is a case where if we do 
it right--and there are members on this panel with more 
expertise than myself--it can be win-win both for defending the 
country and enabling us to better deal with pandemic and other 
threats.
    Senator Burr. Thank you for that. I thank both of you for 
the review.
    I thank the chairman.
    Chairman Levin. Thank you very much, Senator Burr.
    Senator Ben Nelson.
    Senator Ben Nelson. Thank you, Mr. Chairman.
    Thank you, gentlemen, for your service.
    In your report, you highlight the cooperation between the 
Air Force and Navy on the AirSea Battle concept as one of the 
best examples of Services developing I think what you called 
new conceptual approaches to deal with operational challenges 
we will face.
    I am glad you have drawn attention to an effort to break 
down the barriers, sometimes referred to as stovepipes, between 
the various branches so that they can use their collective and 
collaborative capabilities more efficiently.
    One of the things that has always been important is 
enhancing overall mission effectiveness, and the best use of 
available resources where the branches of Services come 
together. But one area where there just simply doesn't seem to 
be that level of cooperation is each branch wants to develop 
its own fleet of unmanned aircraft.
    What can we do, in your opinion? How do you assess the 
ability to avoid duplication and unnecessary redundancy that 
very often develops from each wanting to develop its own?
    I am in favor of competition from time to time, but not 
necessarily in this area, where cooperation and collaboration 
would serve us a lot better. What are your thoughts about that? 
Dr. Perry first, and then Steve.
    Dr. Perry. I can see the need for each of the Services for 
unmanned aircraft. Further, that each of the Services probably 
have needs for unique aircraft.
    In the case of the Army, it would be very short range, 
basically soldier-launched aircraft. In the Navy, it would be 
ship-launched aircraft, unmanned aircraft.
    But having said that, there is a very broad area of 
commonality here as well, and I would think it would be very 
appropriate to have a joint office for unmanned aircraft, which 
would deal with the requirements for all three Services and 
would strive to get standardization even among the different 
Services' unmanned aircraft. I think nothing could be more 
important to our future than continuing to aggressively develop 
this capability, but I do very much take your point that there 
is a greater need for jointness in this field.
    Senator Ben Nelson. Steve?
    Mr. Hadley. I agree with that. It needs to be done in a 
coordinated way with an eye on duplication that is unnecessary 
and emphasizing commonality wherever possible. I think it is 
important that this report not get characterized as the ``we 
need more'' report. The essence of this report is, in some 
cases, we need more, but that we need to do things in a better, 
in a smarter way, in a different way, a more effective way with 
an eye on cost.
    Having said all that, where quantity matters, we have tried 
to make that point as well. But I don't want the rest of it to 
be lost.
    Senator Ben Nelson. Thank you.
    Regarding force structure, the report concludes, first and 
foremost, that it is important to rapidly modernize our force. 
You also recommend an alternative force structure, increasing 
the size of our existing force.
    We really would like to do everything that we could afford 
to do, but is it even likely that we might be able to afford an 
alternative force?
    Dr. Perry. Briefly, my answer would be yes. There are many 
different ways of assessing affordability. One common way 
through the years has been as a percentage of the gross 
domestic product (GDP). As a percentage of GDP, our defense 
spending is not excessively high. By that criterion, I think 
the answer is, yes, we could afford more.
    Mr. Hadley. The report applauds ongoing efforts to reduce 
costs, reduce duplication, acquisition reform, suggests 
additional ways and additional reforms, which we think will 
produce additional cost savings. We think we need to address 
the cost increase of the All-Volunteer Force. Our view is we 
need to do all of those things very vigorously and save as much 
money as we can.
    But what we thought we owed this committee was to say that 
if those savings do not produce enough savings in order for us 
to afford the force structure we need, a modernized force and 
the All-Volunteer Force, then the country has to be prepared to 
increase the top line. Our expectation is that there may need 
to be some increase in the top line. We thought we owed this 
committee that statement.
    Senator Ben Nelson. Thank you.
    Last week, Dr. Hadley, you told the HASC that your panel 
thinks we really need to rethink the relationship between the 
Active Force, the Guard, and the Reserve. Of course, you said 
the question is which role for the Guard and Reserve? How much 
of it is an operational reserve and how much of it is a 
strategic reserve?
    Just last Saturday, we sent an additional 300 Nebraskans to 
Afghanistan. The Guard and Reserve continue to contribute to 
the operational reserve. Can you speak to the significant 
factors you see affecting the balance between a strategic and 
an operational reserve force? What is your assessment of our 
current mix in that regard?
    Mr. Hadley. Obviously, the Active Force is the most 
expensive way to deal with the mission. Where the Guard and 
Reserve can make a contribution, we think it is a smart way to 
go.
    The Guard and Reserve is very stretched, and it needs to be 
looked at. It is operational reserve, strategic reserve, and 
homeland mission. We talked, for example, that there needs to 
be perhaps greater priority for that in terms of the Guard and 
Reserve. We could not, within our own resources, make a 
specific recommendation on the right balance, which is why we 
thought it was important to have the national commission on 
military personnel take a thoughtful look at it.
    But we believe that we can and should have a better balance 
between Active, Guard, and Reserve and consider some kind of 
capacity to mobilize beyond the Guard and Reserve. We have 
talked on the civilian side of a civilian response corps--
firefighters, policemen, and the like--that would be available 
potentially for missions overseas as required. That may be a 
concept that we can be using, for example, dealing with issues 
like cybersecurity and the like.
    So our only point here is we need some new thinking. We 
have given our own recommendations, the direction of change, 
and suggested that Congress and the White House establish this 
national commission to follow it up.
    Senator Ben Nelson. Part of the continuing obligation and 
requirements would be at the State level in the event of 
emergencies--nonmilitary emergencies, natural disasters, and 
the like. I would assume that would continue to be part of the 
ongoing role of the Guard in particular?
    Mr. Hadley. Yes, sir.
    Dr. Perry. Senator Nelson, I think that is a particularly 
important part of our recommendation, to focus some part of the 
National Guard on preparing for the homeland defense mission. 
They are uniquely able to do that, and some segment of the 
Guard ought to be focused on that particular mission.
    They train with the local police. They train with the State 
police. That makes them uniquely able to respond to 
emergencies.
    Senator Ben Nelson. Thank you.
    Thank you, Mr. Chairman.
    Chairman Levin. Thank you very much, Senator Nelson.
    Senator Chambliss.
    Senator Chambliss. Thanks, Mr. Chairman.
    Gentlemen, good to see both of you again. Thanks for your 
continuing service to our country.
    The United States has been successful in maintaining air 
dominance, basically, since the Korean War. That has allowed us 
to provide ground support in every theater we have ever been 
in. Times have changed. Conditions on the ground have changed 
relative to the war on terrorism, but obviously, we don't know 
where the next adversary is going to come from.
    Today, we know that both Russia and China are building 
airplanes that they have publicly said compete or, in their 
opinion, are superior to the F-22, which is designed to make 
sure that we maintain air dominance. The F-35 is a great 
airplane, but it is interesting to note that those countries 
don't even mention the F-35 in their public statements because 
its mission is primarily air-to-ground, and from an air 
dominance standpoint, the F-22 is our lone asset in the sky out 
there.
    Obviously, we have made a decision to discontinue 
production of that. We now will have somewhere between 120 and 
140 F-22s at any one time available to maintain that air 
dominance in whatever region of the world the next adversary 
appears.
    During the course of your review of the QDR, did your panel 
have any discussion about this issue? Assuming that you did, 
what kind of conclusions did you arrive at relative to air 
dominance?
    Mr. Hadley. We thought that we need to look at the Air 
Force in terms of air superiority--we talked about the need for 
more long-range strike. There is, of course, also continuing 
need for a modernized force for lift.
    Our judgment was that we do need a fully modernized force 
and a fully capable force, but our judgment was that the 
requirements of the Air Force could be met within the current 
size of the force. The issue then becomes the right mix, 
ensuring a fully modernized force within that mix. That was the 
challenge, and the one thing we emphasized was that 
modernization be long-range strike.
    As a first approximation, that is how we looked at the Air 
Force, the emphasis on the air superiority mission, but 
believing that it could be accomplished adequately within the 
currently sized force.
    Senator Chambliss. Okay. I think it is interesting that you 
did conclude that the top line needs to continue to rise. I 
know one of your panel members was Senator Jim Talent, and Jim 
and I have been long-time advocates. I am sure that he was very 
forceful in his comments and discussions with the panel about 
that.
    You found that the 2010 QDR lacked a clear force planning 
construct and that thus, by implication, DOD doesn't really 
have one. In the absence of a clear force planning construct, 
how does DOD determine priorities, goals, and investment 
decisions across the department?
    Dr. Perry. Our critique of the force planning structure was 
on the future, the 10- to 20-year planning period. We believe 
they certainly have a careful consideration on the way to 
structure the force for the present needs. So the critique was 
only directed to the 20-year time planning period. That is 
where we felt that there was a missed opportunity.
    Senator Chambliss. In your report, you talk about how the 
aging of the inventories and equipment used by the Services, 
the decline in the size of the Navy, and the escalating 
personnel entitlements is going to lead to a train wreck in the 
areas of personnel acquisition and force structure. In your 
view, which of these issues is most pressing, and what are the 
potential consequences of not addressing these issues and those 
priorities?
    Dr. Perry. Certainly, number one on my list was the fact 
that we are simply wearing out or destroying our equipment in 
the ongoing wars in Iraq and Afghanistan. The need for 
recapitalization, at a minimum, is going to be very extensive 
and very expensive.
    Mr. Hadley. I don't think that we have the luxury, really, 
of picking among the three. We thought all three were a top 
priority, that we had to save the All-Volunteer Force, have 
adequate structure, and do the modernization. That really was 
behind the recommendation.
    Senator Chambliss. Lastly, I want to veer off-course for 
just a minute and take advantage of both of your being here to 
ask you a question about an issue that is very much front and 
center with this committee right now, as well as with the 
Senate Foreign Relations Committee. That is the issue of the 
Strategic Arms Reduction Treaty (START). I know both of you 
have made public comments about that.
    I know both of you have come out in support of the treaty, 
but what concerns do you both have about the treaty? What would 
be the implication for the United States if we fail to ratify 
this treaty in the Senate?
    Dr. Perry?
    Dr. Perry. I believe if the United States failed to ratify 
this treaty, our country would essentially lose any ability for 
international leadership in this field and international 
influence in the field. I think this would be a very unhappy 
consequence.
    Senator Chambliss. Do you have any concerns about 
provisions in the treaty?
    Dr. Perry. I do not. I have studied the treaty rather 
carefully, and it is my own judgment that it provides 
adequately for the national security interests of the United 
States.
    Senator Chambliss. Steve?
    Mr. Hadley. I think there are concerns about some 
ambiguities on some of the coverage issues, the concerns about 
whether it indirectly would put some limitations on missile 
defense or conventional strike. I think there are concerns that 
we have, the kind of modernization of our nuclear 
infrastructure, our weapons, and our delivery systems to 
maintain a credible strategic force going forward.
    The good news is, in the appearance I had on this, 
Republicans and Democrats seem to share these concerns and 
believe they need to be addressed. So my view is, with that 
bipartisan consensus, let us address these problems in the 
ratification process. Then we can, on a bipartisan basis, 
ratify the New START treaty because the problem has been fixed.
    I have not seen much disagreement about the commitment to a 
modernized force, to not have defenses constrained, and, 
obviously, to sort out any ambiguity. So I think there is a 
terrific opportunity in the Senate in the ratification process 
to address these bipartisan concerns. Then, having addressed 
them, I think people can feel very comfortable about ratifying 
this agreement.
    Senator Chambliss. Your thoughts about not ratifying it, 
the implications of that?
    Mr. Hadley. I don't get there because I think the problems 
that people have identified need to be fixed in their own 
right. Once they are fixed, then the issue of ratification 
becomes easy.
    So I think they should be fixed, and then the treaty should 
be ratified. It makes a modest, but useful contribution to the 
process of dealing with these strategic weapons.
    Senator Chambliss. Okay. Thank you very much.
    Thanks, Mr. Chairman.
    Chairman Levin. Thank you very much, Senator Chambliss.
    Senator Udall.
    Senator Udall. Thank you, Mr. Chairman.
    Good morning, gentlemen.
    I want to thank Senator Chambliss for his important 
questions about the START. I think it is a fact that, right 
now, we have no treaty in place. Is that correct, gentlemen?
    Dr. Perry. That is correct.
    Senator Udall. I think that is an important reason to move 
forward. I appreciate, Mr. Hadley, what you said about building 
on what START II would provide us. There are some significant 
questions that need to be answered. But I, too, hope the Senate 
will move quickly to ratify the treaty by the end of the year.
    Let me turn to the QDR itself. There was some attention 
paid in the QDR to energy security and the effects of climate 
change on the DOD. The QDR made it clear that these were 
concerns that the DOD leadership thought were real and needed 
to be addressed.
    Did you, in your efforts, look at energy security and 
climate? Did you draw any conclusions about whether the 
Pentagon has enough resources to respond?
    Mr. Hadley. We addressed it in a couple of different ways. 
First of all, one of the emerging problems we feel is increased 
competition for resources and as countries try to get energy 
security.
    Second, our report noted that energy issues and climate 
change are liable to exacerbate some of the problems we are 
going to face over the next 20 years.
    Third, we talked about the need to take into account cost 
of energy, both in fueling platforms, but in terms of also 
getting energy--gas, oil, and the like--into combat theaters. 
We thought that that should be a consideration in the 
acquisition process--energy efficiency. But we could not come 
up with a specific recommendation as to how to take that into 
account in the acquisition process.
    So I think our judgment was that it is a priority. DOD 
needs to address it. We did not have any specific 
recommendations to offer on it at this time.
    Dr. Perry. Senator Udall, I would just offer one additional 
comment by way of example.
    We complain about the high cost of gasoline at the pump of 
$3 or $4 a gallon, depending on where you live in this country. 
But the cost of gasoline delivered to a forward operating base 
can be $50 or $500 or $1,000, not counting the lives that are 
put at stake by getting the gasoline there. The importance of 
energy considerations in our national security is very clear, I 
think.
    Senator Udall. Thank you, Dr. Perry.
    I am convinced DOD will lead us toward more energy security 
and new technologies, if we provide them with the support and 
the interest. Thank you for taking time in your commission's 
efforts to consider that important area.
    Senator Chambliss and others, including yourself, have 
talked about the rising costs associated with doing right by 
our men and women in uniform. I think you proposed a 
commission, a national commission on military personnel, of the 
quality and stature I think of the Gates Commission back in the 
1970s.
    Could you talk just a little bit more about the mandate 
that you propose and the challenges it would address? How do 
you think the service chiefs would react to such a commission?
    Dr. Perry. The Gates Commission was originally established 
because they considered the problems were so fundamental, they 
should not be left to each military department considering what 
to do about them. They made a sweeping recommendation, which 
led to the All-Volunteer Force, which has been a very important 
benefit.
    Such a commission, if it were established, should consider 
very basic issues--for example, the longstanding up-and-out 
practice of the military. With the trend of rising longevity, 
and with the importance of technical aspects in the military 
today, it is very clear that we need people who have benefited 
from the training, who have the technical background, to stay 
in the Service longer than they are now staying.
    That is going to take making a fairly fundamental change to 
the way our personnel systems are run today.
    A related issue is, of course, the rising costs of 
healthcare, the TRICARE costs. That has to be reconsidered from 
first principles as well, exceedingly important to the military 
to have some sort of a benefit. But the benefits, as they are 
now established, will simply be unaffordable to go on into the 
future.
    So those are the kinds of issues that need to be 
considered. They are very difficult, and they are very 
politically sensitive issues. Therefore, it is going to take 
something of the nature of the Gates Commission to make those 
changes.
    Senator Udall. Would you recommend that the Simpson-Bowles 
Commission, which is undertaking an important study right now--
it will hopefully be followed by recommendations on how we 
drive down our deficits--that they give the chiefs a chance to 
testify along with Secretary Gates?
    Mr. Hadley. I think that would be useful. But I think our 
judgment was these issues are so technical, and you want to 
reform the All-Volunteer Force and the career patterns without 
breaking them, and reform them--we are in the middle of 
fighting a war. This is a delicate business. That is why we 
thought you really needed a commission of distinguished people 
supported by the right expertise that would really focus 
exclusively on this problem.
    Our sense in the witnesses we heard from is that the 
Military Services would see this needs to be done, see the 
train wreck government coming, and would generally welcome this 
recommendation. That is our belief.
    Senator Udall. That is a very powerful image, by the way, a 
train wreck.
    Let me talk on the macrocosmic level. I think it is 
probably my last question. I think the chairman alluded to this 
and asked some specific questions as well.
    But you actually, as I understand it, recommend that we set 
aside the QDR process and craft a new way forward. An 
independent strategic review panel, I think, is the way in 
which you characterized it. Would you comment, both of you, 
about your thinking in that regard and how we would put such a 
new approach in place?
    Dr. Perry. First of all, the timing of the QDR is wrong in 
terms of the capability of a newly established DOD. Second, the 
focus on strategic issues instead of budgetary and program 
issues is needed. Given both of those factors, we felt that it 
was important to get this process started earlier, and that 
almost by definition has to be an independent panel outside of 
DOD.
    So the key to our recommendation there was the 
establishment of this independent strategic review panel, and 
we felt that it would be best established before the new 
administration came in place. So Congress and the executive 
branch, about the time of the presidential elections, would 
appoint the panel, and they would be ready to start then in 
January of the year and have the report ready 6 months later. 
That would get the timing in sync with the objectives that we 
called for.
    Mr. Hadley. That report then would be taken by this 
national security strategic planning process to give a 
government-wide look to set some priorities, and with that 
guidance, then you could go into the departmental planning 
processes.
    Our judgment was that what this committee was seeking out 
of the QDR process was right, but a DOD-only process was not 
going to get you there. So, what we tried to design was a 
process that would get you what you were looking for in a way 
that would actually perform, and that is what we hope we have 
done.
    Senator Udall. Thank you, gentlemen.
    It is uplifting to see the two of you sitting there 
together, working together. So thank you for being here today, 
and thanks for your good work.
    Chairman Levin. Thank you, Senator Udall.
    Senator Collins.
    Senator Collins. Thank you, Mr. Chairman.
    Let me echo the comments of Senator Udall that it is 
wonderful that you have come together to produce such an 
excellent report. I thank you for that public service, as well 
as both of you for your previous public service.
    Your report very clearly states that to project power and 
ensure access, we need a larger Navy. Mr. Hadley, you said it 
very well this morning. You said greater challenges require 
more ships. That raises the question of why didn't the QDR 
reach that conclusion, which you document carefully in your 
report.
    The law requires that the QDR directly state the 
recommendations in a way that are not limited by the 
President's budget request. Do you believe that DOD in the QDR 
proposed a smaller force structure than your panel proposed for 
the Navy because DOD was, in effect, considering budget 
requirements, even though the law very clearly states that that 
is not supposed to be a consideration?
    Mr. Hadley?
    Mr. Hadley. I think they tried to walk a line between 
budget constrained and budget unconstrained. I think our best 
judgment was that the QDR was informed by the budget, that in 
some sense they were developing their budget proposals in 
parallel with the QDR.
    It is laudable in one sense because they did not want to 
make policy or force structure recommendations that they could 
not afford, and you can understand why they would do that. But 
the effect of it was, I think, that it was not an unconstrained 
look.
    Our judgment is that it is almost inevitable, if you give 
this to DOD, that that is probably the best you are going to 
get. Therefore, if you really want an unconstrained look, you 
need a different kind of process, which is what led us to the 
recommendations that are contained in our report.
    Senator Collins. The problem is that the law is pretty 
clear that it is supposed to be unconstrained by budget 
considerations. I think you are right that the practical 
reality is that it is not going to be, given that the same 
people who are involved in the budget analysis and the budget 
request are also performing the QDR.
    But what we really need is an assessment that is 
unconstrained by the budget requests. That is what you have 
given us. It is significant that in the case of the Navy, your 
recommendation--looking at the threats, looking at the need to 
project power and ensure access--is a Navy that would be sized 
at 346 ships. That is considerably above the current level of 
282 and higher than the goals set out by the Navy on 
shipbuilding plans, which I believe is 313.
    We do need that kind of analysis. We need to know what we 
really should be providing in a world that is free from budget 
constraints. Now, we are not going to be able to ever have that 
kind of a situation. But if we are going to set priorities and 
make the best judgments, we do need that analysis.
    I want to turn to a second issue. Due to the wars in Iraq 
and Afghanistan, our focus in recent years has been on 
determining the appropriate end strength for the Army and the 
Marine Corps. We have seen our troops under tremendous pressure 
because of repeated deployments. We have seen the National 
Guard and the Reserves called up repeatedly as well.
    I was interested in your conclusion that the Army and the 
Marine Corps are sized about right, in your judgment, while the 
Navy and the Air Force are a bit too small and do need to be 
increased. Did you reach that conclusion because you are 
looking at the drawdown of troops in Iraq? Or did that reflect 
the recent increases that we have authorized in the end 
strength of the Army and the Marine Corps? What is behind that 
analysis, which surprised some of us?
    Mr. Hadley. We think this issue has been worked pretty hard 
by DOD and Congress in the context of meeting the needs of 
these conflicts. While we think there will be continuing 
requirements, we don't see an increasing requirement.
    So we thought the level was probably about right, and the 
recommendation we had is that it be sustained for the next 3 or 
4 years because the Army and the Marine Corps do have a plan to 
get dwell times and the like on a more sustainable basis. So 
what we thought was needed for Army and Marine Corps end 
strength was stability over the years so that it can then be 
built into the rotation and return times and all the rest. That 
was our judgment.
    Dr. Perry. It does reflect, though, the recent increase 
very much.
    Senator Collins. Thank you. Thank you both.
    Thank you, Mr. Chairman.
    Chairman Levin. Thank you, Senator Collins.
    Senator Hagan.
    Senator Hagan. Thank you, Mr. Chairman.
    I want to thank both of the gentlemen here for your 
excellent work and your testimony today.
    In your opening comments, you recommended that DOD return 
to a strategy requiring dual-source competition for the 
production programs in circumstances where we will have real 
competition. In most situations, competition works better than 
sole-source contracting. That was an underlying reason last 
year, under Senator Levin's and Senator McCain's leadership, 
the Senate passed WSARA. Hopefully, competition does drive down 
costs, enhances performance, and yields savings ultimately to 
the taxpayer.
    Currently, the Secretary of Defense continues to recommend 
sole-sourcing one Joint Strike Fighter (JSF) into the F-135. 
Terminating the F-136 JSF alternate engine will leave only one 
U.S. company to produce high-performance military engines for 
this platform. It is expected to be the largest engine 
procurement in the history of DOD.
    The development of the F-136 engine is 75 percent complete. 
I understand that DOD has experienced 50 percent cost overruns 
beyond the original estimates in the JSF F-135 engine.
    Can you describe your views on the JSF alternate engine and 
whether DOD should have dual competition in this sector? If 
not, could you please describe your rationale consistent with 
the panel's overall recommendation on ensuring dual 
competition?
    Dr. Perry. Senator Hagan, when I was the Secretary and 
earlier, when I was the Under Secretary for Acquisition, I was 
confronted with these kinds of decisions frequently. I found in 
each case that each case was a special case, and I had to dig 
very deeply into it before I came to a judgment.
    I have not studied this problem enough to make an informed 
judgment. While we support dual sources whenever it leads to 
appropriate competition, I cannot give you a personal judgment 
on whether that applies to this case.
    So, therefore, I am really obliged to defer to the judgment 
made by the people in DOD who have studied it carefully and 
trust that they have made the right decision. But I would not 
presume to offer an independent judgment on that, not having 
studied it carefully and deeply.
    Senator Hagan. Mr. Hadley?
    Mr. Hadley. I think what our panel could do was establish a 
set of general principles, which is what we did. But we didn't 
really have the time and resources to take the two or three 
leading cases and look at them and to be able to come with a 
specific judgment or recommendation.
    So we did what we could do, which was to establish 
principle, dual sourcing when it results in real competition. 
Then this committee, DOD is going to have to take those 
principles, if you agree with them, and apply them case-by-
case.
    Senator Hagan. Thank you.
    I also appreciate your comments on reducing the number of 
years in the contract situation.
    Let me ask a question on personnel. All of the Services are 
concerned with driving down the cost of manning the All-
Volunteer Force. Your panel indicated that the growth in the 
costs of the All-Volunteer Force cannot be sustained for the 
long-term. The panel further indicated that a failure to 
address the increasing costs of the All-Volunteer Force may 
result in a reduction in force structure, a reduction in 
benefits, or a compromised All-Volunteer Force.
    You made several recommendations aimed at modernizing the 
military personnel system, including compensation reform; 
adjusting military career progression to allow for the longer 
and more flexible military careers; rebalance the missions of 
Active, Guard, and Reserve and mobilization forces; reduce 
overhead and staff duplication; and reform Active, Reserve, and 
retired military healthcare and retirement benefits to put 
their financing on a more stabilized basis.
    Our military personnel, we know, are highly specialized 
with specific skill sets that are needed in this persistent, 
irregular warfare environment. We obviously cannot compromise 
the QDR's goal of preserving and enhancing the All-Volunteer 
Force and to develop our future military leaders.
    Would you please elaborate how the All-Volunteer Force may 
be compromised if we fail to address the increasing personnel 
costs? Will we see a sharp decrease in retaining personnel that 
have served in overseas contingency operations and what long-
term impact this might have to our military?
    Mr. Hadley. Even in times of relative prosperity, it has 
been costly to make sure that the incentive system was enough 
to get the people we need to have a fully fleshed-out All-
Volunteer Force that meets our standards. Our concern is that 
as we return to more prosperous times, the cost of retaining 
the structure to fill out the All-Volunteer Force will just 
continue to increase. At some point the money won't be there, 
either for the All-Volunteer Force or for adequate force 
structure for modernization, and that is the train wreck we 
talk about.
    So our judgment is we need to take a smarter approach, 
maybe not so much a one-size-fits-all approach, tailoring the 
military personnel system and the compensation to the different 
groups of people available who have different objectives in 
serving. That is the door we tried to open and suggest that 
this military personnel commission needs to explore.
    So the main concerns are we are okay now. But as you look 
at the projections of the costs, we may not be in the future. 
Let us address the problem now. That was our recommendation.
    Senator Hagan. How do you weigh that with the increased 
number of contractors?
    Mr. Hadley. One of the things we recommend is that there be 
a good look at the contracting issue and that there be an 
Assistant Secretary-level person appointed to look hard at the 
whole contracting issue. But there are reasons why we have 
contractors.
    For example, the fact that our civilian departments and 
agencies have difficulty deploying promptly overseas has 
resulted in a reliance on contractors, for example, to do 
functions that couldn't be done in a different way. So one of 
the things I think we need to do is to ask the question why is 
it that we are relying on contractors? Where does it make 
sense? Is it because of something else that we should address 
and maybe solve a problem in a different way without using 
contractors? We have suggested in our recommendations that 
there needs to be more focus on that issue.
    Senator Hagan. Dr. Perry?
    Dr. Perry. I just wanted to make a really, I think, basic 
point on this issue, which is that we have, without doubt, the 
best military in the world, maybe the best the world has ever 
seen. I think a primary reason for that is because of the 
superb training and professional military education we have. 
Those are very expensive, but they are worth it.
    The second factor, though, is when you invest all of this 
in training, to get the benefit of that, you need retention. I 
have two comments regarding retention. The first is that 
retention does depend on our benefits because the reenlistment 
decision is made as much by families as it is by the military 
personnel themselves. So that is a very important issue.
    We are not getting enough benefit from that when we have 
people leave the military at 20, 25--when we force people to 
leave the military at 20 or 25 years. We need to revise our 
procedures on how people leave the benefit. In particular, we 
need to fundamentally review the up-and-out system.
    Senator Hagan. Thank you.
    Chairman Levin. Thank you, Senator Hagan.
    Senator LeMieux.
    Senator LeMieux. Thank you, Mr. Chairman.
    Dr. Perry, Mr. Hadley, thank you for being here today. 
Thank you for this very thoughtful report. I enjoyed reading 
it.
    I want to talk to you about these emerging first powers--
Brazil, Russia, India, and China--the so-called BRIC countries 
and what their role will be, as you see it, going forward. It 
seems that these nations want to have all the benefits of 
first-tier powers but don't necessarily want to shoulder the 
responsibilities.
    We don't see Brazil taking a strong role in dealing with 
Venezuela, for example. We don't see China taking a strong role 
in dealing with North Korea. It falls upon the United States to 
shoulder the burden in issues such as terrorism and dealing 
with rogue countries.
    How do you think that relationship can change? What can we 
do so that we are not the only nation in the world that is 
responsible for fighting terrorism around the world, for 
shouldering this immense burden that we shoulder now? How can 
we get those countries more engaged?
    Mr. Hadley. I think the four countries you mentioned are 
very different. BRIC are all different cases. But I think 
particularly with respect to China and India, we have to 
recognize that China is going through a period of enormously 
rapid change. Their government is, I think, struggling to deal 
with probably the fastest rate of change in the world's most 
populous country, fastest rate of change we have ever seen.
    So the role that China is playing and being asked to play 
is new. I think it is, in some sense, true for India. India has 
broken out from being a regional country to be a global 
country, and it is going to take them time to adjust to that 
new role.
    So it is both a challenge and an opportunity. I think that 
some of the language in our report makes that point. We need to 
be both engaging them, trying to work with them to understand 
their responsibilities and them working with us to solve global 
problems.
    At the same time, we make it clear that there are a set of 
international rules and that all countries, including India and 
China, would be better if they played within those rules. We 
have to have the capabilities to enforce those rules, if 
necessary.
    So it is not all black or white. It is a challenge and an 
opportunity, but we need to be engaging those two countries, 
and we need to be present and active in Asia not just in terms 
of militarily, but economically, in terms of business, in terms 
of diplomacy.
    There are free trade agreements being signed all the time 
in Asia, and we are on the sidelines. I think the number-one 
point we would make is Asia is where the action is going 
forward, and we need to be a player, not on the sidelines.
    Senator LeMieux. Dr. Perry?
    Dr. Perry. The last administration called on China to be a 
responsible stakeholder. I think that is a pretty good term. I 
think pushing that concept, not only with China, but with the 
other three countries, is a very good idea.
    I think the point you raise is a very important one. The 
best approach I can describe to dealing with that is to 
continue to call these countries to be responsible 
stakeholders. We need their assistance in dealing with global 
problems.
    Senator LeMieux. I want to focus, if I can, specifically, 
as part of that larger subject, on Latin America. Not a lot of 
attention in your report to it, but some. There was one line I 
liked in your report where you said America has too often been 
chasing the future rather than working to shape it. I have that 
concern about Latin America. I think that we have taken our eye 
off the ball because of all of the other things we have had to 
work on around the world.
    The hemisphere is obviously very important to us from a 
trade perspective, but it is also important to us from an 
emerging democracy perspective, as well as the challenges to 
democracy that folks like Chavez and Morales and others pose in 
the region.
    Where do you see our relationship with Latin America in the 
next 10 to 20 years? Do you have concerns about Venezuela and 
threats that they may pose? I see the growing connections 
between Caracas and Tehran. The presence of Hezbollah and Hamas 
in Latin America gives me a lot of cause for concern.
    Mr. Hadley. To be honest, I think with all the things going 
on, it is a struggle for any administration to pay as much 
attention to Latin America as we should, particularly with 
Mexico, which is in a life-and-death struggle with 
narcotraffickers, which are really posing a threat to the 
future of the Mexican democracy.
    The prior administration made some initiatives to try to be 
a partner to Mexico. The current administration has continued 
those.
    Second, we need to be working with Brazil, Chile, Colombia, 
Peru--those countries that have not chosen the Chavez way, but 
are really trying to proceed and develop their countries on the 
basis of free-market and democratic principles. Those are our 
natural allies in the hemisphere. We need to be partnering 
closely with them.
    I would like to think that Chavez has peaked, in some 
sense, in terms of his appeal. Certainly what is happening 
within Venezuela is an enormous tragedy. It is destroying that 
country--not only its politics, but also its economy--and that 
is an example for all to see. But it is a struggle in Latin 
America.
    I think, as I say, it is a challenge for every 
administration to pay as much attention as they should and to 
be standing with those countries that are trying to make the 
right decisions based on right principles.
    Dr. Perry. I would like to comment on how strongly I agree 
with your comments on Latin America. Indeed, when I was the 
Secretary, I visited Mexico, Brazil, Argentina, Chile, and 
Venezuela. I was amazed to learn that I was the first Secretary 
of Defense to visit Mexico.
    I established a meeting of all the defense ministers in the 
hemisphere--biannual meetings which still continue to this day, 
and we created the Center for Hemispheric Defense Studies.
    In spite of that, I think that there has been a slacking 
off of interest in that in recent years, and I would very much 
urge that we return to that interest and strengthen those. We 
have substantial security interests in Latin America.
    Senator LeMieux. Thank you both.
    My time is up, but a follow-on comment to what both of you 
said, Mr. Hadley, what you commented about Mexico. It occurs to 
me that Mexico is in the situation Colombia was in 10 years ago 
when they are fighting for their very life.
    We need to have not just diplomatic help for Mexico, but we 
need to have, like we did with Colombia, a military-to-military 
strong relationship now so that they can fight back what has 
really become an existential threat to that government.
    Thank you, Mr. Chairman.
    Chairman Levin. Thank you.
    Dr. Perry. I couldn't agree more, by the way, with you on 
that last point, the importance of working with Mexico, 
specifically in helping them deal with their problem and using 
Colombia as an example of what can and should be done.
    Chairman Levin. Thank you, Senator LeMieux.
    Senator Reed.
    Senator Reed. Thank you very much, Mr. Chairman.
    Thank you, gentlemen, and your colleagues for your 
important contribution.
    Secretary Perry, can you help us think through this 
tradeoff between quantity and quality, which is going to be one 
of the issues we will have to address? I think it is identified 
in the report between the number of platforms versus the high-
tech platforms?
    Dr. Perry. We have a unique advantage in the United States 
in the way we can apply technology to our weapons systems. This 
has given us a strong, competitive, unfair advantage over any 
other military. It is manifested in the way we have used 
stealth in our systems. It is manifested in the way we use 
smart intelligence and smart weapons. That is a huge advantage, 
and we should sustain that advantage.
    There are some areas, though, where quantity is necessary, 
whatever the quality of your systems. You have to have 
presence, for example, in the Western Pacific, and that takes a 
number of ships. That was one of the factors driving our 
recommendation for increasing the size of the Navy.
    But there is no doubt, particularly in the case of air 
platforms, that quality gives us a huge advantage and allows us 
to reduce the numbers of our air platforms.
    Senator Reed. But in practice, it seems, over the last 
several years at least, that the quality issue wins out. Look 
at the initial plans for procurement of F-22, hundreds and 
hundreds of fighter planes which have shrunk dramatically as 
the price has gone up and, arguably, hopefully, the quality has 
also been maintained or enhanced.
    As we go forward, I think we are going to be in that 
similar dilemma, where you want to have a lot of platforms, but 
after DOD gets through with the design, it is pretty expensive, 
and it gets more expensive in the contracting phase.
    Dr. Perry or Mr. Hadley, any sort of sense of how we break 
through that?
    Dr. Perry. Specifically in the case of air platforms, if 
you look, for example, at the bombing mission, the fact that 
our bombs are precision bombs now and fall directly on the 
target means it takes a small fraction of the total number of 
bombs and, therefore, fewer bombers. That is one very obvious 
example.
    The fact that our airplanes have stealth and can resist air 
defense systems means we have less attrition that way. So, in 
that area, I think it has allowed for a substantial decrease in 
quantity.
    There are other areas that are like where we need boots-on-
the-ground, where we need the presence of naval ships, where we 
need quantity as well.
    Senator Reed. Thank you.
    Mr. Hadley, your comments?
    Mr. Hadley. We seem to have an iron law of increasing 
performance, and you wonder whether it is driven by need or 
just by inertia. One of the things we say in this report is 
technology is a tool. We have been using it to drive 
performance. We need to use technology to reduce costs that 
would allow us to increase quantity.
    So I read Bob Gates' comments not about quantity, but 
quality. If there are places where the quality of our forces 
far exceed what our adversaries have, then that is an 
opportunity to use technology to bring down the cost of 
fielding systems in adequate numbers to affect those things 
that haven't changed, which is the size of the globe and, for 
example, the proportion of it covered by water.
    That is what we need to be thinking about, to put 
capability and performance into the trade space and be willing 
smartly to trade it against cost and schedule and quantity.
    Senator Reed. Going forward, it seems that we have seen a 
shift from the Cold War, where there was a competition between 
two superpowers based upon these issues we have talked about--
technology, quantity, innovation, in terms of more and more 
sophisticated weapons and systems.
    But over the last several years, we have seen asymmetric 
warfare become the predominant. One of the great and even cruel 
ironies is that we have produced very sophisticated equipment, 
which is being defeated and our troops being killed by plastic 
containers of fertilizer and detonation.
    The irony here as we go forward is as we build these new 
systems, build these new platforms, build all these things, we 
ironically might become more susceptible to asymmetric attacks. 
How do you propose that we think about these things? This is a 
large question, but it might be an important one.
    Dr. Perry?
    Dr. Perry. In the specific example of the use of improvised 
explosive devices, for example, using insurgent forces to 
attack our convoys, we need two things. First of all, we need 
boots-on-the-ground. We do need quantity to deal with that.
    But additionally, technology can be directed to dealing 
with those problems. We have unmanned aircraft, for example. 
Our drones can be used to provide protective cover over our 
convoys and is being used for that today I think quite 
effectively. We also have devices which can detect the presence 
of buried explosive devices by sophisticated infrared detection 
means. So the technology and quality does have a role in that.
    But fundamentally, in the battle going on and the 
insurgency battles going on today, we cannot get around the 
fact that a quantity of troops, indeed boots-on-the-ground, are 
important.
    Senator Reed. Mr. Hadley, your comments?
    Mr. Hadley. Senator, part of it is just asking the question 
you asked. It is interesting, in our deliberations, we met with 
a QDR task force that was dealing with the asymmetric threats. 
We asked them, ``Is the acquisition system giving you what you 
need?'' The answer was ``no.''
    Then we met with the panel that was dealing with the high-
end anti-access threats, and we said, ``Is the acquisition 
system giving you what you need?'' The answer was ``no.''
    It made us ask the question, ``Well, who is the acquisition 
service system serving?'' I think it tends to serve that kind 
of traditional set of requirements for conventional forces that 
we have looked at and that has driven the situation for the 
last 20, 30 years.
    The question is whether that is the right allocation of 
effort. I think you are right to ask that question, and we 
somehow have to drive that into the planning process within 
DOD.
    Senator Reed. Gentlemen, again, I not only thank you for 
this report, but for your service to the Nation. Thank you very 
much.
    Chairman Levin. Thank you, Senator Reed.
    Senator McCaskill.
    Senator McCaskill. Thank you, Mr. Chairman.
    Thank you, gentlemen, and the rest of the panel, for your 
service.
    I know that my colleague from North Carolina touched on 
contracting, but I would like to go a little further as it 
relates to contracting. I was very disappointed at the QDR and 
how it handled contracting, almost as if this was an 
acquisitions personnel matter as opposed to the dominant role 
that contracting has taken in our contingency operations in 
both Iraq and Afghanistan.
    We are north of $750 billion worth of contracting in these 
two contingency operations, and I don't think there has been a 
time for a long time that we have had more active military on 
the ground and engaged in the contingency operations than we 
had contractors. Contractors have been more in volume, and 
contractors have been a huge, huge cost driver of these 
contingency operations.
    I appreciate the fact that the panel at least did more than 
the QDR did as it related to contracting. I think that that is 
helpful. But I want to try to visit with you about this because 
I worry that it has not really penetrated yet that we will 
never again have a contingency operation where our military is 
really executing logistics support.
    It is questionable whether or not we will ever again have a 
military that is executing some of the important missions that 
must be undertaken in a conflict like Afghanistan. Best example 
I can give you is police training, where, clearly, training the 
army and police is one of the primary missions we have in this 
contingency operation. But yet I can give you example after 
example--I could take all my time citing something far beyond 
anecdotal examples of failure of contracting in this regard.
    So I would like you to take another round at what we can do 
specifically that will begin to bring some accountability. My 
favorite story to tell, when I went over on contracting 
oversight in Iraq and realized that that Logistics Civil 
Augmentation Program (LOGCAP) was so out of control that when I 
asked someone in the room, the civilian personnel that was 
briefing with the ubiquitous powerpoint, how they could explain 
that it went from--I think the figure went from the first year 
of $20 billion on a contract, by the way, that was estimated to 
be $700 million when it was entered into. It went from an 
estimate of $700 million to a cost of $20 billion in its first 
year, and it went down to $17 billion in the second year.
    I thought this poor woman who had been asked to do the 
presentation, the civilian employee over there, I said to her--
well, she clearly forgot what measures they took to get it down 
from $20 billion to $17 billion. You know the answer she gave 
me in that briefing in Baghdad? It was a fluke.
    So here you are recommending that we spend more and more 
and more, and we reduced a contract by $3 billion in 1 year, 
and nobody even knew how we did it. That is one example of 
many, many I can give you because I have focused on this in my 
time in the Senate. That is why I put in the NDAA this year 
that the QDR will be required to address contracting in a more 
in-depth manner when we go around for this again in 2013.
    But I would like both of you to take a moment and talk 
about this in terms of ways that we can get some urgency within 
DOD that this is no longer an afterthought. This is a core 
competency that, frankly, we are just now beginning to get our 
arms around.
    Mr. Hadley. You are right. I think the thing that is easy 
to get lost is that there is a role for contractors, an 
appropriate role when it makes sense for contractors to do 
things it doesn't make sense for Active-Duty Forces to be 
doing.
    But it is clear that the use of contractors grew like Topsy 
without adequate oversight. We have really tried to address 
that problem.
    I know it is going to sound very bureaucratic, but we 
couldn't find any other way to do it other than to say DOD 
needs to have an Assistant Secretary-level person who is 
responsible for contracting and can look at the whole way we 
manage them, the way we train them. How do we hold them to 
account? How do we make sure they are accountable, for example, 
when they are involved in the security side, to the 
consequences of their actions the way our military is?
    The whole area needs to be re-thought and managed. It is, 
in our view, not being managed now. So our solution was you put 
somebody in charge and say, ``Your job is to try to manage this 
problem.''
    But second, we also recognize that, appropriately used, 
contractors can play an important role in the battlefield. The 
question is to get it down to that appropriate role and then 
integrate them into our planning and training so that they are 
actually doing effectively the role we have asked them to do, 
not just treat them off to the side.
    So that was the philosophy, if you will, of the report. A 
lot more, obviously, to be done. One of the questions will be 
whether this national commission, for example, on military 
personnel or the national commission on building the civil 
force for the future ought to have as part of their 
responsibilities looking at this contractor question as well.
    Dr. Perry. This is a very important issue. The QDR, in my 
judgment, did not adequately address it. Our panel looked at 
the issue, saw the problem, but I must say we did not have the 
resources to do a detailed examination or recommend solutions.
    I think the first step in trying to get a handle on this 
would be what the military calls an after action report on 
Iraq. We are far enough along in Iraq now that I think a look 
back at what has happened there in this field in the last 
number of years could be very useful in identifying the issues 
and problems and recommending solutions.
    It could be done by one of these two commissions, as Steve 
Hadley has said. But it ought to be an explicit charge to that 
commission to do this. It is very important.
    Senator McCaskill. I know my time is up, and I appreciate 
that you all recognize the importance of this. I urge both of 
you, because you have a sphere of influence and connections, 
this is something that is going to have to be inserted in the 
culture because it is not there now.
    It is not something that commanders really feel like they 
have true accountability for. It is like who is the low man on 
the totem pole? We hand the Contracting Officer Representative 
a clipboard. Typically, this was somebody who wasn't trained or 
experienced.
    They are doing slightly better in Afghanistan. I have to 
give credit where credit is due. But I also think it is 
important that we take a look at what, if any, impact 
earmarking has on overall cost drivers. There are a lot of good 
ideas that Senators have about what should be earmarked to 
either a company in their State or a university in their State, 
research that must be done on this armor or on this technology, 
and that this all is about the future and our technological 
capabilities.
    But I am not sure that there has ever been an analysis as 
to how much of that money that has been spent actually produced 
something the military wanted or needed. We are past the point 
we can afford that anymore.
    So I certainly would urge you all, as you finished your 
work, as we look at the next QDR, and then we look at these 
other commissions that are coming, I think it is time we take a 
look at whether or not what one Senator thinks is a good idea 
is something that we can afford in light of the overall 
stresses--and we all know that our deficit is a national 
security threat. That stress is something that I think that 
needs to be brought to bear.
    So, thank you both, and thank you, Mr. Chairman.
    Chairman Levin. Thank you, Senator McCaskill.
    Senator Thune.
    Senator Thune. Thank you, Mr. Chairman.
    Dr. Perry and Mr. Hadley, thank you very much for your good 
work.
    Please convey to the other members of your panel our 
appreciation for all that they and you put into this. This is 
an important review, something that I had advocated in the 
defense authorization bill. I think it has borne out that it 
was something that needed to be done.
    I think your assessment and recommendations are very useful 
as we try and do everything we can to make sure that America 
stays strong not only for the near term and the challenges we 
face today, but also those that we are going to face in the 
future.
    Your report states on page 58 that the Air Force's need for 
an increased deep strike capability is a priority matter. On 
page 60, the report goes on to say, ``The panel supports an 
increased investment in long-range strike systems and their 
associated sensors.''
    As part of your recommendation to increase investment in 
long-range strike systems, do you believe that the Air Force 
should be modernizing its aging bomber fleet by developing a 
next-generation bomber?
    Dr. Perry. My answer to that is a short one, which is: yes.
    Senator Thune. What do you think about the prospect of 
Services retiring weapon systems before a replacement weapon 
system is built and made operational?
    In other words, before the replacement for, say, the next-
generation bomber, the follow-on bomber is operational, some of 
the existing fleet being taken out of service? Your view on 
that, the Services retiring weapon systems.
    Dr. Perry. Particularly, are you thinking of the B-52s?
    Senator Thune. B-52s, right. B-1s.
    Dr. Perry. I would be reluctant to retire the B-52s until 
the new bomber force has been established.
    Senator Thune. Any comment on that, Mr. Hadley?
    Mr. Hadley. There are obviously cost pressures. But I think 
the obvious question you have to ask is, if a Service is 
willing to retire something before the next generation comes 
in, how important is the requirement if they are willing to 
accept a gap? It raises questions about the seriousness of the 
requirement.
    Senator Thune. For the Air Force, the QDR provides for a 
bomber force structure from 2011 to 2015 to be up to 96 in 
primary mission bombers, implying that the number could be less 
than 96. Your report suggests that the alternative force 
structure that you recommend was 180 bombers.
    I guess my question is what assumptions led you to 
recommend a number of bombers that is well above what the QDR 
recommends? When do you believe the Air Force will need those 
180 bombers?
    Mr. Hadley. It was part of our recommendation to enhance 
long-range strike. We explicitly have in the report a list of 
systems we thought that were required. A new bomber was part of 
them. So it is part of our notion that we need to be able to 
have long-range strike capability to deal with emerging anti-
access threats, which we think will get worse over the next 20 
years.
    So, as to when, I think our reaction is it takes a long 
time to get these systems fielded. It is time to get on with 
these necessary modernizations.
    Dr. Perry. To that I would add that our emphasis on long-
range strike, among other things, included our concern that we 
would not have continuing access to forward bases that we now 
have. That was the reason for the emphasis on the long-range 
aspect of strike.
    Senator Thune. Why do you think that the QDR recommends the 
lower number compared to what is recommended in your report? 
That is probably not a fair question.
    Dr. Perry. ``I don't know,'' is the short answer.
    Senator Thune. Okay. Let me just put it this way. The 2006 
QDR directed that a next-generation bomber be built by the year 
2018. The 2010 QDR states that long-range strike capabilities 
must be expanded, but only directed that a study be conducted 
to determine what combination of joint persistent surveillance, 
electronic warfare, and precision attack capabilities, 
including both penetrating platforms and stand-off weapons, 
will best support U.S. power projection operations over the 
next 2 to 3 decades.
    In fact, Secretary Gates stated in a hearing earlier this 
year that a new bomber would not be developed until the mid to 
late 2020s.
    So let me put the question this way, in the 2006 QDR, they 
said we need to have a bomber fielded, operational by 2018. Now 
it has been pushed back to the 2020s. Do you believe that the 
need for the new bomber became less urgent over that 4-year 
span from the 2006 QDR to the 2010 QDR?
    Dr. Perry. No.
    Senator Thune. I like the way you answer questions.
    Let me shift over for one other observation here and a 
question dealing with UAVs. You write in your report on page 58 
that the Air Force end strength may require only a modest 
increase in order to meet the requirements of the increased use 
of UAVs.
    What do you estimate that modest increase in Air Force end 
strength should be to accommodate the increased use of UAVs? Do 
you believe that UAVs are going to become more and more 
prominent in terms of our force structure in future years?
    Dr. Perry. I definitely believe there will be increased 
prominence of the UAVs for the indefinite future. I think they 
continually demonstrate their increased effectiveness and their 
increased ability to use our limited manpower very effectively.
    Mr. Hadley. We could not put a number on that. It is not 
just Air Force personnel, but there are additional intelligence 
requirements generated to process the information that you get 
from the UAVs. So it is a terrific tool. There is a big 
footprint associated with it. It is much more than the Air 
Force.
    We were not in a position to put numbers on it. So what we 
thought we needed to do was just to flag that as a 
consideration as you look forward in terms of planning.
    Dr. Perry. One other comment about the UAVs in terms of 
their effective use of manpower. Of course, even though they 
are unmanned, they do require personnel on the ground to 
operate and maintain.
    So they are not--in the use of the UAVs in Afghanistan, for 
example, a substantial percentage of the personnel are actually 
based in the United States instead of overseas. So not only the 
fact that they use less manpower, but the fact that some of the 
manpower can be based out of theater, which is a great 
advantage.
    Senator Thune. Mr. Chairman, my time is up. I thank you all 
again. Thank you very much for your very complete body of work 
and for the great assistance that it provides us in looking 
into these important issues. Thank you.
    Thank you, Mr. Chairman.
    Chairman Levin. Thank you, Senator Thune.
    Senator Webb.
    Senator Webb. Thank you, Mr. Chairman.
    Gentlemen, I would like to say first that I have been here 
through most of the hearing today, and I appreciate your 
frankness. Also, it has been a long, long morning for you. I 
know it is getting on 2\1/2\ hours here. So I appreciate very 
much your patience in getting through our litany of questions.
    I had to leave briefly to meet with the Commandant of the 
Marine Corps. But I wanted to come back and make this point 
because I think it is so vital in terms of the findings that 
you have brought forth. That is really a valuable service to 
have had the input of the people on your commission providing 
us a continuity here of defense experience as we try to project 
into the future as opposed to, as has been hinted a few times, 
the more immediate budgetary nature of the QDR itself.
    But I would support the idea of having a continuing 
independent strategic review panel. I think that would be very 
valuable to how these issues are analyzed up here. We get 
caught up so much in reacting to events that we need something 
like that.
    I have spent many years trying to address the issues of the 
Navy force structure and how vital it is in terms of our 
national strategy. We tend, when we get in these long-term 
ground engagements, to eat the gingerbread house a little bit. 
We have to pay for what is in front of us.
    But there is going to come a time at some point where the 
ground commitments in Iraq and Afghanistan are going to end, I 
hope, and we may be looking at rebalancing the ground forces. 
Then we are going to turn around, and without the right sort of 
planning and projection, we may be in a very vulnerable place 
in terms of our sea power presence around the world.
    I have heard a few questions here today, a few comments 
about the size of other navies in the world and why should our 
Navy be a much larger size. As both of you well know, in the 
articulation of national strategy, the issue for us is how we 
communicate our national interests to the rest of the world, 
not how a navy can fight a navy. It is how a nation can have 
credibility and link up with its allies.
    So that particular question is basically irrelevant of a 
size of a navy versus a size of a navy. It is how we are 
going--particularly in Asia and the Pacific--to help maintain 
stability in that region. I have spent a good bit of time 
there. I have spent a good bit of time there this year, in the 
last 12 months.
    When we look at the increased size and the sophistication 
of the Chinese navy and the buildup in places like Hainan 
Island and its increased activity throughout that region and 
the sovereignty claims in the South China Sea that have gone 
beyond anything that we have seen in our collective lifetimes, 
I think, with China stating that the South China Sea areas in 
terms of sovereignty are a core interest and putting it on the 
same level as Taiwan has always been, and the reality that only 
the United States can ensure the right sort of stability in the 
face of this kind of growth.
    We see a lot of nervousness in the region, as I am sure you 
know. Vietnam has just ordered six submarines from Russia. 
There is a great deal of concern as to whether we are going to 
stay and a realization that bilateral arrangements don't work 
with China when these countries are so much smaller.
    So I was very gratified to see the report and with the 
collective experience of the people on your panel saying we 
need to grow the size of the Navy. The big question--and, Dr. 
Perry, I would really like to get your advice on this--is how 
to get there, how to get there when we want to grow the Navy 
back up.
    When I was commissioned in 1968, we had 930 ships in the 
United States Navy. They were different types of ships. That is 
not an apples-to-apples comparison. We went down to 479 by 
1979. We got up to 568 when I was Secretary of the Navy. I have 
heard several different numbers here, but we are somewhere just 
north of 280 today.
    The goal stated by the Navy is 313. I think you were 
talking 346. But the key question that I have been struggling 
with up here is that there is a very unusual economic model 
when we talk about shipbuilding. It is not normal competitive 
process because of the sophistication and our very low profit 
margin, quite frankly, for the industry.
    So, if you were Secretary of Defense today, how would you 
be going about this so that we could--and with all the other 
pressures that we have--increase the force structure?
    Dr. Perry. A couple comments, Senator Webb. First of all, I 
don't see the relevance in comparing with the size of other 
navies. The United States has global interests, and those 
global interests require presence around the world, around the 
globe.
    In particular, we have increasingly important economic 
interests and security interests in the Western Pacific. That 
requires not only a presence in the Western Pacific, but an 
ability to confidently assure transit there and a competence 
that our allies can have confidence in. So I do want to 
underscore the importance of that recommendation. It does 
require presence, and it requires a larger fleet than we now 
have to do that with confidence.
    It takes a long time to build a ship, from the time you 
conceive it to the time you actually have it operational. So it 
is important to get started. I don't think that the Secretary 
of Defense can make the tradeoffs with this present budget to 
do this. That is why we say there has to be a way of decreasing 
other costs. Even if you are successful in that, there will 
have to be a larger top line at DOD than we now have.
    So this is something that the Secretary of Defense cannot 
do by himself. The Secretary of Defense, although he advocates 
a defense budget, is not the one that finally determines the 
size of the budget. So it will take a greater top line to do 
that. It needs to get started, I think, because it is going to 
take a while to build it up. But the presence--there is no 
substitute, in my judgment, to maintaining our security in the 
Western Pacific, in particular, than having a strong and able 
maritime presence there.
    Senator Webb. Thank you very much.
    Thank you, Mr. Chairman.
    Chairman Levin. Thank you, Senator Webb.
    Senator Nelson.
    Senator Bill Nelson. Thank you, Mr. Chairman.
    In your report, you discussed the concept called 
comprehensive approach. It goes beyond the concept of the 
whole-of-government concept that was emphasized in the QDR. So 
can you explain the comprehensive approach and why you think 
the whole-of-government concept falls short of addressing the 
national security requirement?
    Mr. Hadley. Yes, sir. We have learned in Iraq and 
Afghanistan that in those kinds of missions, it is not just the 
U.S. Government. Yes, you want all elements of national power 
or all agencies, departments working together in an organized 
way. But there are other players.
    There are other allies that are with us on the ground, both 
militarily and in terms of civilians. There are in Afghanistan, 
for example, and in Iraq international organizations that are 
present. There are nongovernmental organizations, private 
voluntary organizations that are players.
    It was an effort to say that in those efforts there are 
players beyond the U.S. Government, and there needs to be a 
coordinated activity with a common set of objectives, working 
together as much as possible in an organized way to achieve 
those objectives. We thought the best way of showcasing that 
requirement was whole of government and then, beyond it, 
comprehensive approach.
    Senator Bill Nelson. Thank you.
    Thank you, Mr. Chairman.
    Chairman Levin. Thank you.
    Senator Bill Nelson. Thank you, gentlemen. Thank you for 
your continuing service to our country.
    Chairman Levin. Thank you very much, Senator Nelson.
    I just had one additional question of you, Secretary Perry. 
The issue of the START has come up here this morning, and I 
want to just ask you a question about the fact that tactical 
nuclear weapons are not included in the START. That has been 
raised by some as a problem.
    Now, as I understand it, this issue is a topic which the 
Strategic Posture Commission, which you chaired, discussed and 
concluded that the first treaty should focus on strategic 
offensive nuclear arms, and then, hopefully, there would be a 
subsequent treaty addressing the tactical nuclear weapons 
issue.
    Can you give us your thinking as to the argument that there 
is a flaw in START because it does not include tactical nuclear 
weapons--if that is a reason for opposing the START?
    Dr. Perry. The START did not do everything we want to see 
done in the field of nuclear weapons, but it is a very 
important first step. But it is only a first step, and we need 
to be looking beyond that to follow-on treaties, which would 
deal, among other things, with tactical nuclear weapons.
    So I don't think the fact that it does not do everything we 
want in the field means that it is not a very useful and 
important treaty. I strongly support the START the way it is 
now negotiated, but I do look forward to follow-on treaties 
which deal with these other issues.
    Chairman Levin. Mr. Hadley, does the fact that the START 
does not include tactical nuclear weapons, is that a reason not 
to ratify it?
    Mr. Hadley. No.
    Chairman Levin. Okay. Looks like Senator Nelson and I are 
the last ones here. So if you are all set, Bill, we will 
adjourn, with our thanks again to you and your panelists.
    I hope that you could pass that along when you see them, 
that we are greatly indebted to them.
    Mr. Hadley. Thank you. We will do that, Mr. Chairman.
    Chairman Levin. We are adjourned.
    [Questions for the record with answers supplied follow:]
             Questions Submitted by Senator Daniel K. Akaka
                        unified medical command
    1. Senator Akaka. Dr. Perry and Mr. Hadley, the Quadrennial Defense 
Review (QDR) Independent Panel report notes that the rising cost of 
medical care is taking an ever increasing portion of the Department of 
Defense (DOD) budget. Between the years 2000 and 2015, the Department's 
health care budget will increase by 179 percent ($48.5 billion), with 
cost inflation amounting to 37 percent of that total increase and 
medical care to retirees amounting to 31 percent. These total costs, 
projected to exceed $65 billion in 2015, show retirees as the fastest 
growing portion of the military medical budget since 2001, when the 
TRICARE for Life program began. Some have proposed a Unified Medical 
Command (MEDCOM) as a way to help DOD realize health care cost savings. 
Did your panel look at the Unified MEDCOM as a method to help DOD 
realize cost savings?
    Dr. Perry and Mr. Hadley. The QDR Independent Panel shares your 
concern about the rapidly rising costs of military health care, which 
are unsustainable over the long-term. While the panel did not 
specifically examine a reorganization of service medical activities 
into a centralized Joint/Unified MEDCOM, a 2001 RAND Corporation report 
on reorganizing the military health system discovered at least 13 
previous studies examining military health care organization since the 
1940s. All but three had either favored a unified system or recommended 
a stronger central authority to improve coordination among the 
Services.
    A Unified MEDCOM would have value, if the Military Services would 
endorse and commit to the concept of a single organizational structure 
to deliver health care. Currently, TRICARE is being implemented as a 
separate program that comes on top of the three independent medical 
structures for each of the Military Services.
    As part of the panel's work to ``stress test'' the All-Volunteer 
Force, we came to the conclusion that military personnel management 
policies and benefits must be reexamined by a national commission to 
fully examine and consider these complex issues in depth, particularly 
health care. As part of the review, we recommend the commission 
consider updating the military health care system to allow a shift to a 
defined-contribution plan allowing all employers to contribute to 
health care for serving and retired members of the Armed Forces. A 
helpful precursor to this reform could be the establishment of a 
Unified MEDCOM. The standing up of this command would also align with 
the Secretary of Defense's latest efforts to find efficiencies within 
the Department and to streamline operations and consolidate redundant 
bureaucracies and thereby generate cost savings that may be applied to 
modernization.
    While the potential savings would be helpful, this command would 
not address the cost explosion connected to TRICARE. The Defense Health 
Program base budget--including retiree health care costs--has grown 151 
percent in the past decade in constant dollars. Meanwhile, private 
sector benefits have decreased, leading many military retirees who are 
working to abandon their civilian health care program in favor of 
TRICARE. One challenge will be the long-term solvency of the retiree 
medical benefit, which is extremely important to the men and women who 
have served in the Armed Forces and earned this benefit. To guarantee 
retiree health care for the long term, bold options need to be 
considered.

    2. Senator Akaka. Dr. Perry and Mr. Hadley, what is your opinion of 
a Unified MEDCOM as a way to address increasing healthcare costs in 
DOD?
    Dr. Perry and Mr. Hadley. A Unified MEDCOM has been studied by 
various organizations and has the endorsement of the Defense Business 
Board. The Center for Naval Analyses estimates annual savings of 
roughly $300 to $500 million depending on the organization's structure 
and mandate. The Government Accountability Office (GAO) determined that 
DOD must overcome both a cultural resistance to change and the inertia 
of various subordinate organizations, policies, and practices, 
including longstanding organizational and budgetary problems, to update 
the military health system structure.
    Given that the challenges and solutions go beyond organizational 
restructuring, however, we also urge Congress to consider the 
establishment of a national commission, perhaps as part of a mandate 
for the panel-proposed National Commission on Military Personnel, to 
further study these recommendations and to offer additional bold 
solutions to keep the All-Volunteer Force healthy and the defense 
health program viable. A Unified MEDCOM would have value, if the 
Military Services would endorse and commit to the concept of a single 
organizational structure to deliver health care. Currently, TRICARE is 
being implemented as a separate program that comes on top of the three 
independent medical structures for each of the Military Services. 
Careful attention would have to be paid to ensure the unique needs of 
each Service are met under a Unified MEDCOM. To reap the level of 
savings required to make military health care more affordable, however, 
the creation of this command would need to be synchronized and 
integrated with larger changes in the health care system, particularly 
for retirees.

                      foreign language proficiency
    3. Senator Akaka. Dr. Perry and Mr. Hadley, foreign language 
proficiency and cultural understanding are essential to protecting our 
national security. Threats to our national security are becoming more 
complex, interconnected, and unconventional. These evolving threats 
have increased the Federal Government's needs for employees proficient 
in foreign languages. In June 2009, the GAO found that DOD had made 
progress on increasing its language capabilities, but lacked a 
comprehensive strategic plan and standardized methodology to identify 
language requirements, which made it difficult for DOD to assess the 
risk to its ability to conduct operations. I noticed that the QDR 
Independent Panel report recommends that foreign language proficiency 
should be a requirement for those receiving a military commission from 
the Reserve Officer Training Corps (ROTC) and the Service academies. 
What do you recommend that DOD do to increase currently serving 
servicemembers' foreign language proficiency?
    Dr. Perry and Mr. Hadley. We would support DOD's continuation of 
its efforts in this direction and reinforce the need for Active and 
Reserve Forces and DOD civilians to be prepared for the complexities of 
the operational environment in foreign countries. First, if officers 
begin their time of service with foreign language proficiency, that 
skill will likely be renewed in a master's degree program, given that 
many encourage or require proficiency in one foreign language. Second, 
in pursuing programs and policies to promote foreign language 
proficiency, DOD should develop more training opportunities. These may 
include online distributed learning, resident, and/or localized 
instruction for visiting units preparing for deployment to provide some 
basic instruction for all personnel in the language(s) used while on 
deployment. Successful company grade or junior field grade officers 
should be offered fully-funded civilian graduate degrees to study in 
residence military affairs and foreign cultures and languages, without 
specific connection to a follow-on assignment. Additionally, personnel 
already serving should be identified for language schooling prior to 
deployment, especially in the Army and Marine Corps due to their 
interaction with local people as part of combat operations. Finally, 
while the 2009 GAO report notes DOD's deficiencies in fulfilling its 
plans, we are encouraged by the June 2010 updated report that is 
similar but notes progress in solidifying those plans.
                                 ______
                                 
               Questions Submitted by Senator Mark Udall
                       climate change and energy
    4. Senator Udall. Dr. Perry and Mr. Hadley, I would like to ask 
some questions related to climate change and energy in both a domestic 
and international context, and the role of DOD in these areas. In the 
domestic context, the QDR noted that both energy security and the 
impacts of climate change are major concerns of DOD, and referred 
specifically to the roles of the Services and especially of the 
Strategic Environmental Research and Development Program (SERDP) and 
the Environmental Security and Technology Certification Program (ESTCP) 
in assessing and responding to the impacts of climate change on DOD 
within the United States and of developing and serving as a test bed 
for emerging energy technologies to increase both domestic energy 
security and reduce the energy-related logistical burden on deployed 
U.S. forces.
    Did your panel consider that aspect of the QDR report, and, if so, 
did you reach any conclusions about the current DOD activities in this 
regard, and especially whether the SERDP/ESTCP program as currently 
constituted and resourced is sufficiently robust to effectively perform 
the roles described in the QDR report?
    Dr. Perry and Mr. Hadley. The DOD's SERDP and its companion 
demonstration/validation program, the ESTCP, are essential to DOD's 
ability to address climate and energy security concerns. Since the 
early 1990s these two technology development programs enabled DOD to 
address critical energy and environmental challenges confronting our 
Armed Forces. Given the significant energy and climate security 
challenges DOD faces, including that it consumes approximately 1 
percent of total U.S. energy and that DOD's energy needs present 
continuing operational challenges and logistical burdens to our 
deployed forces, investments in ESTCP and SERDP should enable DOD to 
improve delivery of energy to our forces, reduce overall energy demand, 
and reduce climate risks. With greater investment in ESTCP, DOD 
installations could serve as testbeds for improved energy technologies 
that reduce the fuel burden on our troops. Additionally, DOD 
installations will face future risks from natural disasters and other 
environmental changes. These programs constitute an important set of 
capabilities needed by DOD to provide the information and resiliency 
necessary to make appropriate decisions to protect its assets in the 
face of these risks.

    5. Senator Udall. Dr. Perry and Mr. Hadley, in the international 
context, the QDR report concluded--and the Independent Panel 
concurred--that climate change and energy are two key factors that will 
play a significant role in shaping the future security environment and 
that climate change may act as an accelerant of instability or 
conflict. More broadly, your report identified as one of the five key 
global trends an accelerating global competition for resources. Your 
report also indicates, and as I understand it, many in the Intelligence 
Community (IC) and many other international security experts agree, 
that increasing global water scarcity as a result of climate change and 
other factors may both raise the potential for and perhaps the scope of 
instability and conflict.
    The QDR report indicated merely that, ``Working closely with 
relevant U.S. departments and agencies, DOD has undertaken 
environmental security cooperative initiatives with foreign militaries 
that represent a nonthreatening way of building trust, sharing best 
practices on installations management and operations, and developing 
response capacity'' and further, that ``Abroad, the Department will 
increase its investment in the Defense Environmental International 
Cooperation Program (DEIC) not only to promote cooperation on 
environmental security issues, but also to augment international 
adaptation efforts.'' Unstated in the QDR is the fact that these 
efforts are minimally funded (the global budget for the DEIC is 
currently around $5 million per year) and that the environmental 
security cooperative initiatives are largely low-budget initiatives 
included as minor aspects of the Theater Security Cooperation plans of 
the combatant commanders and that these efforts are divorced from the 
broader Security Assistance and Foreign Military Sales (FMS) programs.
    Your report calls for significant restructuring of the Security 
Assistance and FMS programs as part of the overall effort to achieve a 
true whole-of-government approach to the new security challenges facing 
us. Both the QDR and your review concluded that those challenges 
include climate change and energy and more broadly competition for 
resources, including energy but perhaps especially water resources.
    Given the major impacts that the international aspects of climate 
change, energy resources, development and fielding of new energy 
technologies, and water management will have on our national security, 
should the reform of the Security Assistance and FMS programs also 
include support aimed at conflict prevention by addressing climate 
change, energy, and water management to allow DOD to play a more 
effective supporting role to U.S. civilian agencies within a whole-of-
government approach to these security challenges?
    Dr. Perry and Mr. Hadley. The QDR Independent Panel noted that the 
roles and responsibilities of DOD have grown across many nontraditional 
military missions. The militarization of these roles outside 
traditional defense, deterrence, security, and disaster assistance 
missions has a direct impact on the ability of DOD to accomplish its 
traditional missions. This growth also imparts a military persona to 
traditional civil roles and issues with all the attendant foreign 
perception issues a military presence creates. A whole-of-government 
approach does not mean that the whole-of-government must be used on all 
issues, but instead means that the whole-of-government must be reviewed 
for the appropriate pieces and resources to solve the issue. It is our 
opinion that the role of prevention, vice deterrence, is best performed 
by the civil departments and agencies, with DOD assisting in its 
traditional roles as needed, filling in near-term capability gaps, and 
with technology as appropriate.
    The scope of the panel did not include reviewing the roles and 
capabilities of U.S. civilian agencies. We cannot directly opine on 
what level of assistance may be needed by them in this matter, and by 
extension whether DOD would, or could have the right capabilities to 
meet any shortfalls. It was to this type of question that the panel 
recognized and recommended that the United States needs a truly 
comprehensive National Security Planning Process to address the roles, 
responsibilities, and balance between executive departments and 
agencies so that resource decisions such as the above may be cogently 
answered. This question also goes to the panel's recommendation on 
reconvening the Joint Committee on the Organization of Congress to 
review national security authorities, appropriations, and oversight to 
establish a single national security appropriations subcommittee for 
Defense, State, State/AID, and the IC so that Congress may also address 
such issues from a holistic viewpoint.

    6. Senator Udall. Dr. Perry and Mr. Hadley, do you see a potential 
for a technology transfer program where the results of both the DOD 
energy and the DOD climate change assessments and adaptation programs 
in a U.S. domestic and operational context could be, perhaps in a 
Security Assistance/FMS context, transferred to foreign militaries to 
assist those militaries in addressing similar challenges within their 
own countries? Could that be extended, under the leadership of U.S. 
civilian agencies, to transfers beyond the militaries as such, much as 
the advances in energy technologies developed by DOD in the United 
States are transferred to and benefit energy production and use in the 
civil sector in the United States?
    Dr. Perry and Mr. Hadley. The potential for a technology transfer 
program has merit. Any ability to provide peaceful, preventive measures 
to reduce the risk of crisis and military intervention in areas vital 
to U.S. national security is worth investigating. Broadening the range 
of ways in which the Security Assistance and FMS programs can help 
foreign militaries train and equip their forces to address emerging 
threats to security and stability would enable DOD to play a more 
effective supporting role to the U.S. civilian agencies, such as the 
State, State/AID, and Energy departments. This would enhance the U.S. 
comprehensive approach to address the complex and interrelated security 
challenges we will face in coming years.
    In many nations, the military is the only institution with the 
capacity to rapidly respond to widespread humanitarian crises that may 
be caused by climate change or water management failures. Certain 
organizations within DOD, such as the National Guard Bureau and the 
Army Corps of Engineer, possess significant technical expertise that 
could support the State Department, State/AID, and Energy in their 
efforts to build capabilities in partner nations and international 
institutions to respond more effectively to climate change, energy, and 
water management challenges. Such capabilities would likely enhance 
regional and State-specific stability. Additionally, new technology 
developed to address operational energy and water management challenges 
may be appropriate for consideration under FMS programs. Certainly, 
including the leadership of all relevant U.S. civilian agencies in such 
decisions is consistent with the panel's recommendation to establish a 
National Commission on Building the Civil Force of the Future.
    Projects designed to support partner nations by building such 
capabilities should be allowed to compete for funding under Section 
1206 of the 2006 National Defense Authorization Act along with more 
traditional proposals for improving capabilities to conduct 
counterterrorism or stability operations. The U.S. Government should 
consider issuing revised guidance to ensure the review process 
considers the security threats posed by climate change and natural 
resource competition as it seeks to prioritize proposals and to select 
projects aligned with regional security cooperation and foreign policy 
goals.
    Linking energy, climate, and water challenges to the broader 
context of Security Assistance and FMS programs will help enhance 
awareness and understanding of the interrelated nature of security 
challenges the United States will face in the coming years and promote 
an integrated approach to preventing crises. As in all FMS and 
technology transfer programs, any technology transfer should be 
reviewed for the balance between the value to the United States, 
resources available, and the potential threat of the transfer before 
approving any individual transfer within such a program.

                            recommendations
    7. Senator Udall. Dr. Perry and Mr. Hadley, your panel recommends 
that Congress consider structural reforms to improve whole-of-
government planning and budgeting. With regard to cybersecurity, you 
specifically recommend the establishment of a special committee with 
members drawn from Armed Services, Intelligence, Judiciary, and 
Homeland Security because cybersecurity cuts across all of the 
departments and agencies overseen by these committees. My question is 
why stop there? There are numerous, important national security 
challenges that cut across multiple Federal departments and committee 
jurisdictions--terrorism, proliferation of weapons of mass destruction, 
narcotics and organized crime, capacity building and stability 
operations, and so forth. Why single out cybersecurity for a joint 
committee approach?
    Dr. Perry and Mr. Hadley. Though the panel was focused on areas 
specifically addressed by the QDR, the panel agrees that there are 
other areas of concern for national security that could be well served 
by developing a variety of mechanisms to enable all U.S. Government 
stakeholders to work together on coordinated solutions, including, but 
not limited to, a joint committee approach. The panel views the present 
organization of Congress as being inefficient because its organization 
precludes the ability of Congress to harmonize its decisions relative 
to a host of national security challenges. The recommendation to 
establish a joint committee on cybersecurity would improve the ability 
of Congress to address the multi-faceted nature of the cyber threat, 
not just to DOD, but to the entire nation.

                           interagency teams
    8. Senator Udall. Dr. Perry and Mr. Hadley, the government has 
faced the problem of ineffective interagency integration and 
coordination for decades, and frequently has turned to the creation of 
so-called czars with questionable results. You recommend that the 
President try naming lead departments and establishing interagency 
teams. But naming lead agencies is nothing new, and the interagency 
process already is replete with interagency policy teams and processes. 
The executive branch is managed by powerful cabinet secretaries who 
answer to no one other than the President and defend their departments' 
interests in the interagency. Thus, short of the President presiding 
over everything, progress depends largely upon consensus--in other 
words, often the lowest common denominator of agreement among the 
departments and agencies.
    The President's executive authority by law can be exercised only by 
presidentially-appointed and Senate-confirmed officials. There is no 
``joint'' or interagency space where the President's authority can be 
delegated. Is that needed to balance the power of cabinet secretaries 
and their subordinates?
    Dr. Perry and Mr. Hadley. We believe our panel's recommendations 
for revamping the national security strategic planning process provides 
the necessary space within which the President can exercise his 
constitutional authorities to provide for the defense of the Nation. 
The recommendations identify the need to a develop a national security 
strategy based on input developed by a proposed Independent Strategic 
Review Panel and timed to ensure a top-down driven development process. 
Our recommendations also provide for a whole-of-government approach to 
ensure an efficient and effective strategy emerges from the process.
                                 ______
                                 
               Questions Submitted by Senator Mark Begich
                            missile defense
    9. Senator Begich. Dr. Perry, in the findings and recommendations, 
the panel identifies the five key global trends that the Nation faces 
as it seeks to sustain its role as the leader of international system 
that protects our enduring security interest. The QDR discusses how we 
will seek out opportunities to work with Moscow on emerging issues, 
such as the future of the arctic and the need for effective missile 
defense architectures designed to protect the region from external 
threats. Can you further elaborate on the arctic being critical to our 
national security and the need to cooperate in missile defense?
    Dr. Perry. The arctic is a region that affects many nations, both 
because of its natural resources, as well as the fact that it may, in 
the future, serve as an important maritime trade route. Because of 
that, we believe that the arctic represents a promising region for 
international cooperation. Moscow has in recent years attempted to 
stake out its sovereignty over the arctic. We believe it would be 
undesirable for any state to dominate the region, and as a result would 
support efforts to cooperate with the international community to keep 
the arctic free and open to all.
    As to missile defense, U.S. presidential administrations since that 
of Ronald Reagan have sought to cooperate with Russia on missile 
defense. Both the Bush and Obama administrations have demonstrated at 
length to the Russian leadership that American missile defense 
deployments are not aimed at Russia. We face common threats such long-
range ballistic missiles in the hands of a nuclear North Korea and 
(prospectively) a nuclear Iran. Cooperation is in both nations' 
interest.

                       the law of the sea treaty
    10. Senator Begich. Dr. Perry, keeping with the importance of the 
arctic and the opportunity for further international cooperation, the 
QDR, DOD supports the United Nation's Convention on the Law of Sea 
(UNCLOS) Treaty and says it is necessary for cooperative engagement in 
the arctic. Do you agree with this statement?
    Dr. Perry. Yes, absolutely. The UNLOS is a comprehensive, multi-
lateral regime that provides the structure and general international 
rules for maritime navigation (the principle of freedom of navigation 
is central), coastal states rights versus those of maritime users in 
the high seas as well as provisions dealing with protection of the 
marine environment in ice-covered areas and maritime boundary 
delimitation. Because of the inherent difficulties in operating in 
harsh arctic waters, rules and procedures will need to be evolved to 
deal with oil and gas exploration, transarctic shipping, and search and 
rescue responsibilities. It will be more difficult for the United 
States to be a powerful broker of those policies in organizations like 
the International Maritime Organization, the Arctic Council, and other 
UNCLOS fora if the United States remains a nonparty to the UNCLOS. 
Also, as a nonparty the United States lacks the ability to legally 
register its claims to the arctic extended continental shelf areas 
north of Alaska and to have its own experts on the Continental Shelf 
Commission to pass on the legality of the claims of other arctic 
claimants. Such registration is the only way for U.S. claims to gain 
the international recognition that is necessary to minimize conflicts 
and incent investment activities. By contrast, Russia, Norway, Canada, 
and Denmark have all ratified the UNCLOS and have either registered 
their claims or are in the process of doing so. Finally, so long as the 
United States remains outside of the UNCLOS it lacks full access to the 
mandatory dispute settlement mechanisms that it might use to deal with 
excessive maritime claims or high seas fishing violations in the 
arctic.

    11. Senator Begich. Dr. Perry, in your opinion, how does 
ratification of UNCLOS impact our national security?
    Dr. Perry. In the modern security environment, it is increasingly 
important that the United States moves quickly to accede to the UNCLOS. 
The UNCLOS, as modified, provides a written legal regime that would 
protect U.S. national security interests, principally by preserving 
freedom of navigation and overflight worldwide. In dealing with threats 
such as the proliferation of weapons of mass destruction, international 
terrorism, and worldwide narcotics trafficking, U.S. forces must have 
freedom to move swiftly and as a matter of right through the world's 
oceans and straits. U.S. accession of the UNCLOS would protect these 
rights and preserve reciprocity with other coastal nations. The UNCLOS 
guarantees the right of innocent passage through foreign territorial 
seas and constrains coastal nations from unreasonably extending their 
maritime boundaries. These assurances of vessel and aircraft mobility 
and limitations on unreasonable maritime claims will ensure 
preservation of our capability to deter and respond whenever and 
wherever required pursuant to national security objectives.
    The United States is currently the only maritime power that has not 
become a State Party to the UNCLOS. The failure to accede to the UNCLOS 
continues to be detrimental to U.S. international reputation and 
adversely affects U.S. credibility in international fora, where the 
United States continues its efforts to preserve the right to freely 
move throughout the world's oceans. In many respects, the UNCLOS 
codifies customary international law and the state practice comprised 
of the cumulative actions of governments in areas such as transit 
through international straits and establishment of the exclusive 
economic zone.
    The UNCLOS has been an enormously positive influence on the 
development of authoritative decision, shaping the process in a 
direction that protects the international community's right to freedom 
of the seas. Whether UNCLOS is able to continue to serve the critical 
function on the development of authoritative decision will depend on 
the outcome of the ongoing deliberations about international law 
governing the oceans. As an outsider, the United States is hamstrung in 
its ability to shape and influence this deliberation for public order 
in the oceans.
    This issue is exemplified by the current ``disputes'' associated 
with resource exploitation, maritime claims, and transshipment of the 
very sensitive (and hazardous) waters in the arctic. Additionally, the 
recent actions by China to seek to deny the U.S. access to areas in the 
South China Sea are another example of challenges we face. That denial 
of access is predicated on China's unwillingness to abide by the 
maritime boundary rules in the UNCLOS and its unwillingness to respect 
the rights of maritime users to exercise high seas freedoms in areas 
outside of Chinese territorial waters. China asserts that the United 
States, as a nonparty to the UNCLOS, has no right to exercise the 
rights and freedoms that are codified in the UNCLOS. In this respect 
and others, becoming a state-party to the UNCLOS would enable the 
United States to exercise both leadership and a stabilizing influence 
regarding overreaching claims of China and other countries.

                legislative reform to national security
    12. Senator Begich. Dr. Perry, in the findings and recommendations, 
the panel identifies several recommendations for the legislative branch 
in reforming the national security effort. Which one of the 
recommendations for the legislative reform package would you deem as 
the most important?
    Dr. Perry. The panel identifies several recommendations for needed 
interagency and DOD process and capability improvements, some of which 
may be solved by the executive branch, and others requiring legislative 
action. Yet, no matter how well these recommendations are implemented, 
their true effectiveness and the driver of the resource management 
decisions required lie within the effectiveness of the guiding strategy 
documents. The panel concluded that sufficient strategic guidance does 
not exist at the national level for DOD to make required mission and 
resource decisions, nor does sufficient guidance exist to allow a 
complementary, coordinated mission and resource management of the 
interagency. Based upon this conclusion, we recommend that the most 
important legislative reform package is the establishment of a standing 
Independent Strategic Review Panel to review the strategic environment 
over the next 20 years and provide prioritized goals, risk assessments, 
and strategic recommendations for use by the U.S. Government. The 
results of this panel, as adopted by the administration, would then be 
the driver that guides the rest of the strategic planning process and 
determines both the capabilities and resources needed.

    13. Senator Begich. Dr. Perry, how would you suggest moving forward 
on this recommendation?
    Dr. Perry. We recommend that Congress use our panel's 
recommendations found in Appendix 4, ``Independent Strategic Review 
Panel,'' as a guide to prepare legislative language jointly with the 
executive branch to implement and empower this panel.

                    training exercises for civilians
    14. Senator Begich. Mr. Hadley, I believe the panel recommended the 
Army and Marine Corps remain at the planned authorized end strength. 
With that being said, you also recommended enhancing the civilian 
whole-of-government capacity and said ``DOD needs to contribute to 
training and exercising these civilian forces with U.S. military forces 
so that they will be able to operate effectively together.'' Without 
changing the strength of the Army and Marine Corps, would they be able 
to assume a potential mission to train civilians? If so, how should we 
go about this?
    Mr. Hadley. When we addressed the training and exercising the 
civilian forces with U.S. military forces, the panel sought to set the 
foundation for U.S. civil agencies and military units to train and 
exercise with allied and coalition partners so that they are 
collectively better prepared to handle a variety of missions that 
require extensive collaboration and cooperation with multiple 
government and military entities. This, in turn, would enhance our 
whole-of-government capacity to prepare for and participate in 
operations overseas.
    We believe that DOD's optimal contribution to the enhancement of 
civilian whole-of-government capacities should be through the 
integration of civilian agencies into its exercises and training 
events. This may require Congress to expand civil agencies' 
capabilities to allow them to surge as a situation may require. In the 
event that DOD might have to commit its forces to an ongoing operation 
at the expense of training civilian agency staffs, the most viable 
alternative with which to replace these Active-Duty Forces is to use a 
mix of National Guard and Reserve Forces and contractor personnel, both 
to provide the training personnel and to act as surrogates for Active 
Duty formations with whom non-DOD civilians must interact.

              national security strategic planning process
    15. Senator Begich. Mr. Hadley, in the last chapter, the panel 
recommends the United States needs a truly comprehensive National 
Security Strategic Planning Process that begins at the top and provides 
the requisite guidance not only to DOD, but to the other departments 
and agencies of the U.S. Government. Do you also recommend DOD being 
the lead agency to implement across the U.S. Government?
    Mr. Hadley. We do not recommend that DOD be the lead agency to 
implement across the U.S. Government. The national security concerns of 
the United States and the tools that may be used to address them are 
broad and varied. In many cases, if not in a majority, the traditional 
roles of the military may not be the right ones to use, and the 
inclusion of, or lead of the military in these, may in fact create a 
negative reaction to the intended goal from the perception and 
perspective of other nations and peoples. To determine the appropriate 
missions, strategies, lead agencies, and resources needed to meet our 
national security goals is the most important reason for our 
recommendation to establish a new National Security Strategic Planning 
Process.
                                 ______
                                 
            Questions Submitted by Senator Roland W. Burris
                            strategic scope
    16. Senator Burris. Dr. Perry and Mr. Hadley, QDR 2010 is the 
second to be conducted while at war. QDR 2010 supports the military's 
mission to disrupt, dismantle, and defeat al Qaeda. Will we miss 
strategic opportunities, given our current focus on today's wars, one 
particular region, and the current adversary?
    Dr. Perry and Mr. Hadley. Concern about seizing opportunities as 
well as preparing for future threats was one of the reasons the panel 
began its assessment of the strategic environment with an appreciation 
of enduring U.S. security interests. As a nation with global concerns 
and responsibilities, America must be alert to multiple and divergent 
trends at the same time, even while fighting two wars.
    A good example of this approach is reflected in the panel's 
emphasis on the Asia-Pacific; the current balance of power in the 
region--the world's most dynamic and clearly a key to the prospects for 
peace in the 21st century--is fundamentally favorable to the United 
States. Recent decades have seen both rising prosperity, lifting 
hundreds of millions out of poverty, and the spread of political 
liberty. But this very dynamism creates geopolitical uncertainties, 
particularly as the panel report outlines, in regard to the rise of 
China and India as great powers.
    It is fair to say that the panel saw these emerging conditions as a 
tremendous opportunity for the United States diplomatically, 
economically, and in the realm of political ideas, not only to avoid 
the kind of terrible conflicts that characterized great-power relations 
in Europe over the last century, but to provide continued security for 
the very positive recent trends across the region. Thus, we concluded 
that maintaining adequate U.S. military forces in the Asia-Pacific--yet 
not detracting from current operations in Iraq, Afghanistan, and in the 
broader effort against al Qaeda and other terrorists--was a key element 
in seizing this strategic opportunity on which so much of our future 
rests.

    17. Senator Burris. Dr. Perry and Mr. Hadley, how confident are you 
that this QDR ensures that our military will be more flexible and 
adaptable to respond to a dynamic security environment?
    Dr. Perry and Mr. Hadley. We agree that flexibility and 
adaptability are core attributes the U.S. military must cultivate to 
deal with the threats of today and tomorrow. We share Secretary Gates' 
goal of a balanced force. However, our panel's report noted a number of 
shortfalls in ensuring that the United States can respond to these 
challenges. Specifically, we noted the need to strengthen U.S. force 
structure to address the need to counter anti-access challenges, 
protect the Homeland (including defense against cyber threats), and 
conduct post-conflict stabilization missions.
    Flexibility and adaptability also come from having highly-trained 
and well-educated officers and enlisted members. In our report, we 
noted the need to strengthen professional military education by 
increasing both the opportunities and incentives for education within 
the Armed Forces. For example, we believe that successful company grade 
or junior field grade officers should be offered fully funded civilian 
graduate degree programs in residence to study military affairs and 
foreign cultures and languages, without specific connection to a 
follow-on assignment. Additionally, all officers selected for advanced 
promotion to the rank of major should be required and funded to earn a 
graduate degree in residence at a top-tier civilian graduate school in 
a war-related discipline in the humanities and social sciences. We also 
believe that attendance at intermediate and senior service school 
should be by application, and require entrance examinations 
administered by the schools in cooperation with the service personnel 
offices.

                        reserve force components
    18. Senator Burris. Dr. Perry and Mr. Hadley, the findings and 
recommendations speak to joint training, professional military 
education (PME) for General/Flag Officers, strategy, and force sizing. 
I applaud the fact these QDR recommendations are very thorough and 
specific, but they appear to focus on Active Forces. How do these QDR 
recommendations apply to the Reserve component?
    Dr. Perry and Mr. Hadley. The United States must have well-trained 
and experienced personnel in both the Active and Reserve components. 
Many of our recommendations should apply to both Active and Reserve 
Forces keeping in mind the time constraints on members of the Reserves. 
One of our recommendations is for Congress to establish a new National 
Commission on Military Personnel of the quality and stature of the 1970 
Gates Commission. Its mandate would include an examination of the mix 
of Active and Reserve Forces and a comprehensive review of personnel 
management policies. We recommend, for example, that officers selected 
for general officer or flag rank serve an assignment in some level of 
the teaching faculty in the PME system. There are currently positions 
in the Reserves for officers to serve as instructors. We also call for 
the curricula of ROTC and the service academies to be aligned so as to 
strengthen the education of the officer corps in the profession of 
arms. It is clear that the Nation goes to war using both its Active and 
Reserve Forces, and they must be interchangeable as much as possible.

    19. Senator Burris. Dr. Perry and Mr. Hadley, should these 
recommendations be supported by a top-down review of the many disparate 
pay, personnel management, and promotion systems used by the Active and 
Reserve components of each Service?
    Dr. Perry and Mr. Hadley. These are complex and challenging 
recommendations that should not be implemented without realizing that 
many of the QDR Independent Panel recommendations are interlinked. Our 
panel strongly recommends a top-down review of the policies for both 
Active and Reserve components of each Military Service as part of the 
broader National Commission on Military Personnel. Given that many of 
the military's personnel policies were established in the 1940s and 
1950s, the laws, policies, and structures therein must be reformed to 
more closely align with the needs and demands of a highly-mobile 21st 
century workforce.
    The panel continues to recommend the lengthening of officer careers 
to 40 years, including in the Reserve components. Changes in medicine, 
longevity of life, and the nature of military service make this 
possible. Additionally, this would save money and allow the Services to 
realize their full investment in the education, training, experience, 
and accomplishments of their officer corps. This recommendation should 
be considered by the commission, along with a July 2005 RAND study, 
``Reforming the Military by Lengthening Military Careers,'' by Bernard 
Rostker. If enacted, personnel management and promotion policies could 
be improved as a result.
    We also support DOD adopting a continuum-of-service model for 
personnel allowing them to move fluidly between the Active and Reserve 
components and between the military, private sector, civil service, and 
other employment. Such changes would make military service and its 
compensation system more flexible and offer attractive intangible 
benefits.
    Given that many DOD witnesses with whom we met predict today's 
operational reserve will remain for the next 20 years, our panel was 
concerned the Department was not planning for mobilization beyond 
standing forces. We are also concerned about the expectations of 
service in the Reserves, as well as the cost effectiveness of an 
operational reserve which diminishes the cost differential between the 
two components. Again, a continuum-of-service model would allow 
different pay systems and offer the Services the ability to transfer 
skill sets from the private sector readily, which improves readiness.
                                 ______
                                 
              Questions Submitted by Senator David Vitter
               defense and state departments coordination
    20. Senator Vitter. Dr. Perry, during your testimony you stated 
that we've come to a point where the relationship between DOD and the 
Department of State (DOS) now merits legislative action similar to 
Goldwater-Nichols. I agree that like Goldwater-Nichols, something needs 
to be done to better integrate DOS and DOD in terms of planning, 
operations, and training. Could you elaborate on your recommendation 
and provide a blueprint, even if only in rough format, for what you 
envision?
    Dr. Perry. We believe the panel's recommendations to establish a 
single national security funding line and a new national security 
strategic planning process are the basic building blocks to improve 
interagency integration, planning, training, and operational 
capabilities. We fully recognize the difficulty for Congress when the 
issue involves the appropriations process but the national security 
threats have changed dramatically since the current appropriations 
process was created. We believe the time has come to improve it so that 
the executive branch departments and agencies are provided funding that 
is coordinated and integrated from the very start of the process in 
Congress.
    We also recognize that having the funds in the appropriate hands of 
Federal departments and agencies is not enough. The executive branch 
needs a better planning process and our recommendations outlined in 
Chapter 5 of the report provides that blueprint. The United States 
needs a truly comprehensive National Security Strategic Planning 
Process that begins at the top and provides the requisite guidance, not 
only to DOD but to other departments and agencies that must work 
together to address the full range of threats confronting our Nation. 
The first step in creating this new process calls for both the White 
House and Congress to jointly establish a standing Independent 
Strategic Review Panel as we described in appendices 4 and 5 of our 
panel's report.

                   reporting alternatives to the qdr
    21. Senator Vitter. Mr. Hadley, as pointed out in the QDR 
Independent Panel Report, the initial legislative intent behind the 
defense QDR has degraded over time. Recent QDRs, and especially the 
2010 QDR, have devolved into near-term planning documents instead of 
reviewing/projecting long-term defense policy. You stated that the 2010 
QDR lacked a clear future planning construct going forward 20 years, 
and recommended replacing the QDR with an independent QDR panel from 
here forward. What, if any, reporting requirements would you recommend 
for continued internal DOD action were DOD to be relieved of the QDR 
requirement?
    Mr. Hadley. The DOD would still need to have an internal process to 
review and project long-term defense policy based on a current 
administration's policy and strategy guidance--informed and advised by 
our proposed Independent Strategic Review Panel. This DOD long-term 
policy would then influence the budgeting process to ensure that the 
missions, structures, forces, and processes would meet the 
administration's strategic guidance. How this is integrated and planned 
for should be a required part of the annual budget report.
    The panel's recommendation for the independent panel does the 
following:

         Provides a clear future planning construct going 
        forward 20 years;
         Ensures that strategic guidance is top-down rather 
        than a bottom-up program defense;
         Ensures that a holistic whole-of-government approach 
        is used in defining the strategy to balance and define the 
        roles, missions, and requirements of the interagency; and
         Ensures that the strategic guidance provides 
        sufficient details and priorities to allow departments and 
        agencies to make informed, critical resource decisions in a 
        whole-of-government perspective.

                        maritime force strength
    22. Senator Vitter. Mr. Hadley, the administration exempted the 
defense budget from spending freezes being applied to other parts of 
the government. However, due to cuts and delays to the defense 
shipbuilding budget, Northrop Grumman has announced it will close its 
Avondale and related shipbuilding facilities by 2013 as it consolidates 
its shipyards on the Gulf Coast.
    Given your recommendation within the QDR Independent Panel Report 
to increase the size of maritime forces, do you think that this 
announcement will have an adverse effect on America's commitment to see 
that our forces have the tools they need to prevail in the wars we are 
in while making the investments necessary to prepare for threats on or 
beyond the horizon?
    Mr. Hadley. As we recommended in our panel's report, DOD should 
return to a strategy requiring dual-source competition for production 
programs where this will produce real competition. This applies to 
shipbuilding as well as other areas. However, if the Pentagon policy 
does not change to increase shipbuilding and encourage competition in 
production between qualified competitors, then Avondale and other 
shipyards should be closed. The worst of all worlds would be to 
allocate too few ships to too many yards. We would note, however, that 
such closures would send an adverse signal to the world of our lack of 
commitment to maintain maritime deterrence.

    23. Senator Vitter. Mr. Hadley, does this have an effect on U.S.-
based dual-source competition for shipbuilding?
    Mr. Hadley. Closure of good shipyards and dispersal of skilled and 
experienced work forces cannot easily be resurrected. Once they are 
closed, the waterfront tends rapidly to put the land to other uses. 
Thus, in the future, if the Nation requires an expanded fleet there 
will not be the industrial base available to build it. But to repeat, 
to avoid closure of yards like Avondale, the shipbuilding program must 
increase and competitive production must be the procurement policy.

                                 ______
                                 
    [The Report of the Quadrennial Defense Review Independent 
Panel follows:]
      
      
    
      
    [Whereupon, at 12:02 p.m., the committee adjourned.]