In a place as big as the Defense Department, something is always going wrong. Most of the time, it’s just a bureaucratic screwup. But when our nuclear forces are involved, it can quicken your pulse. The first two such incidents on my watch, as I’ve described, had led to my firing of the secretary and chief of staff of the Air Force in 2008. In October 2010, at F. E. Warren Air Force Base near Cheyenne, Wyoming, all communications were lost with a squadron of fifty Minuteman III nuclear-tipped intercontinental ballistic missiles. While alternative communications were soon reestablished, no one had informed the secretary of defense or the president when we lost contact with a launch control capsule and fifty ICBMs. And of course, when the communications went down, no one at the base, or at its higher headquarters at Strategic Command, knew at that moment how long they might be down or whether they had been lost due to a technical malfunction, terrorist act, sabotage, or some other scary scenario—or even whether one or more of the missiles might somehow be at risk. In a masterpiece of understatement, Obama allowed as how he would have liked to have known about it. It was a sentiment I shared.
After a massive investigation, a technical problem was found to be the cause and quickly remedied. The missiles had never been outside our control or at risk. I told the president in early November that new regulations were in place providing that in the event of any future problem involving the nuclear force, the national military command center at the Pentagon would be informed within ten minutes, and both the chairman and secretary notified within fifteen minutes of the event. It would be my decision whether to inform the president. It was a sure bet I’d make the call.
MONEY, MONEY, MONEY
Two wars and “Don’t Ask, Don’t Tell” notwithstanding, I spent more time on the defense budget in 2010 than on any other subject. For all the bleating from Congress about defense acquisition reform, tighter management, reducing waste, and auditable accounting, they made it nearly impossible to manage the Pentagon efficiently. I oversaw the execution or preparation of six defense budgets, and not one was enacted by Congress before the beginning of the fiscal year. Every year we had to operate for anywhere from a few months to an entire calendar year under a “continuing resolution,” which, in the absence of an enacted appropriations bill, meant we received exactly the same amount of money as the previous fiscal year, without authority to start any new program. Such madness played havoc with acquisition programs. We were left in a state of near-perpetual financial uncertainty.
On several occasions, political fights over the continuing resolutions led us to the precipice of government shutdowns. Warnings of civilian furloughs had to be issued, and we had to interrupt countless programs and initiatives. Under these ridiculous circumstances, when we had to move money from one account to another to cover a dire shortfall, regardless of the amount, we had to get the approval of four congressional committees; a single hostile staff member could gum up the works for weeks. Congress had no problem expeditiously voting in favor of National Pickle Week, but one task it had to do under the Constitution—appropriate money in a timely way—seemed beyond its grasp. Even eliminating wasteful or obsolete programs was almost always a monumental political lift on the Hill, as I learned in 2009. And each year we would get a defense authorization bill from the Armed Services Committees that contained about a thousand pages of nearly paralyzing direction, micromanagement, restrictions, and demands for reports. You can imagine why congressional complaints about inefficient management at the Pentagon rang very hollow with me. The legislature played its own significant part in making it so.
For three years, I had endured this congressional incompetence with public equanimity and patience. But I was coming to the end of my tether. Because of the growing effort it took to maintain self-discipline, I increasingly resisted going to the Hill to testify or even to meet with members. Throughout my tenure, before every hearing I held meetings with my staff ostensibly to work through answers to likely questions from members of Congress. Actually, the meetings were more an opportunity for me to cathartically vent, to answer the anticipated questions the way I really wanted to, barking and cursing and getting the anger and frustration out of my system so that my public testimony could be dispassionate and respectful. New members of my staff were sometimes shocked by these sessions, fearful that I would repeat in the hearing what I had just said privately. By 2010, the effectiveness of even these sessions was wearing off. Cuffed and shackled, my heel marks visible in the hallway, I would be dragged to the car and hauled before the people’s elected representatives. At least that’s how I felt. Robert Rangel warned another member of my team, “You need to give hard counsel to the secretary—that is, telling him to do things when he doesn’t want to.” He had to be referring to visiting Capitol Hill.
During the first months of 2010, as usual for a secretary, I was dealing with three annual budgets simultaneously—executing the FY2010 budget; defending the proposed FY2011 budget, presented in February; and preparing the FY2012 budget. Beginning with the significant program cuts and caps I announced in April 2009 for the 2010 budget, I was determined to use my remaining time in office to try to shape these budgets to create the versatile military I thought we would need. I also wanted to build on our 2009 success in cutting wasteful and unnecessary programs and activities. However, as I looked at the ever more complex and turbulent world beyond our borders, and remembered history, I had no intention of cutting the defense budget. I readily admit it. As I looked to FY2011 and 2012, what I very much wanted to do was cut bureaucratic overhead and invest the money thus saved in additional and new military capabilities. I continued to hope, as pressures to cut the federal budget deficit built, that if the department operated in this manner, we could avoid the kind of drastic reductions in defense spending that had followed the Vietnam War and the end of the Cold War.
When Congress got around to passing a defense appropriations bill for FY2010 in December 2009 (two and a half months into the fiscal year), they gave us a base budget of $530 billion, $5 billion less than the president’s request but still about a 4 percent increase, including inflation. (When asked at one point by a reporter whether I was “gutting defense,” I retorted, “In what parallel universe are you living where a four percent increase in the defense budget is a cut?”)
For everyone in the executive branch except the president, the Office of Management and Budget is the villain. It recommends to the president how much each agency and department should spend, and it’s always lower than the request, sometimes a lot lower in the case of the State Department. Of course, if everyone got what he wanted, we would have a deficit far bigger than the one we have. Defense was no exception. As we worked on the FY2011 budget, OMB director Peter Orszag was telling us to plan for no budget growth beyond the rate of inflation for 2011 and several years beyond that. OMB and I were, shall we say, far apart.
(I shared with Rahm Emanuel a story about the time during the Reagan administration when all the deputy cabinet and agency heads met for dinner at the Justice Department and beforehand saw a live demonstration of the FBI’s hostage rescue unit, with the lights going out and the unit walking among us firing blanks at “terrorist” targets. I told everyone afterward I thought it could have been played as a scene right out of Agatha Christie’s novel Murder on the Orient Express, with the murder victim the deputy director of OMB because everyone in the room would have had a motive for killing him.)
I had several arguments to justify the budget growth we requested. We had already made significant program cuts in 2009, more extensive than ever before, cutting many large programs that were weak, wasteful, or unnecessary. Because no other department had done anything comparable—even proportionately—we deserved some consideration for that. Moreover, our costs rose inexorably. Year in and year out, Defense health care costs would rise $4 billion, military pay raises would cost an additional $3 billion, fuel inflation another $4 billion—in short, the military’s basic overhead and operating costs would ris
e by about $13–$15 billion even if we didn’t add a dime for existing or new programs. A broad range of equipment bought during the Reagan years—particularly ships and aircraft—had not been replaced during the defense budget downturn in the 1990s and early 2000s and were coming to the end of their useful lives. After ten years of war, much of our equipment was worn out and would need to be refurbished or replaced. Even the further reductions in overhead I was planning would be inadequate to cover these costs.
My discussions with Orszag and the president on the FY2011 budget began in mid-July 2009. I asked for $558 billion for FY2011, $16 billion more than OMB had proposed. Citing the longer-range factors mentioned above, I also asked for an additional $208 billion for the period from 2011 through 2015. Emanuel, Orszag, and I met privately several times, including once on Rahm’s West Wing office patio, where I balanced a sandwich in one hand and PowerPoint slides in the other. After countless meetings through the fall between OMB and the defense budget team, led by our comptroller Bob Hale, it finally fell to me to cut the final deal. I met with Emanuel and Orszag again in Rahm’s office on November 23, and we agreed to split the difference for FY2011 at $550 billion (up $8 billion from OMB’s original guidance) and a five-year increase of $100 billion over the original OMB number. The president signed on. It was the best budget day I would have as secretary. Everything afterward would go downhill between the White House and me when it came to the defense budget.
The Quadrennial Defense Review (QDR) is a congressionally mandated report—yet another tasking from the Hill that had been introduced since I last left government—that requires a reexamination of defense strategy and priorities roughly every four years. It is a massive undertaking within the department, involving countless military and civilian hours over a period of months. The effort in 2009–10 was led by Michèle Flournoy, with the day-to-day leadership falling to her colleague Kathleen Hicks. The primary complaint about the QDR—other than the blandness that typically characterizes documents based on bureaucratic consensus—in past years had been that its conclusions about strategy and priorities were detached from actual budget decisions. We tried hard but with incomplete success to avoid that pitfall in the 2010 QDR.
On February 1, 2010, I went public with the FY2011 budget, as well as the results of both the QDR and the Ballistic Missile Defense Review. I announced that we would be asking for a base budget of $549 billion and a war supplemental (now euphemistically called “overseas contingency operations”) for Iraq and Afghanistan of $159 billion. It added up to a staggering $708 billion.
I said the budget requests and the strategy reviews had several themes. One was continued reform—fundamentally changing the way the department did business: the priorities we set, the programs we funded, the weapons we bought, and how we bought them. I was also introducing a “bracing dose” of realism with regard to risk. I observed that for years, U.S. defense planning and military requirements were based on being prepared to fight two major conventional wars at the same time. I said that that model had been overtaken by events, and we now had to prepare for a much broader range of security challenges, from an adversary’s use of new technologies to deny our forces access to “the global commons of sea, air, space, and cyberspace,” to the threat posed by nonstate groups developing the means to attack and terrorize. I voiced a view I would express repeatedly until I left as secretary:
We have learned through painful experience that the wars we fight are seldom the wars that we planned. As a result, the United States needs a broad portfolio of military capabilities with maximum versatility across the widest possible spectrum of conflict. This strategic reality … directly informed the program decisions contained in the budget.
For the first time, both the budget and the QDR sent the message that prevailing in the wars we were already in had to be our highest priority. This meant more money for special operations, helicopters, ISR, and drones. We would also focus on preventing and deterring future conflicts by increasing investment in regional as well as homeland missile defense, spending more on our ability to train and equip the militaries of other countries, maintaining our nuclear deterrent, and funding the establishment of Cyber Command. We would prepare for possible future conflicts by moving forward with the F-35 Joint Strike Fighter, improving and increasing the shipbuilding program, modernizing our ground forces, and developing new capabilities for long-range strike (including a new bomber). We had to preserve the all-volunteer force, and that required allocating more money for wounded warrior programs, family support programs, and health care benefits.
In the long list of initiatives, including a number of additional program cuts, there were three that were controversial. As with every new aircraft in recent decades, the F-35 Joint Strike Fighter was over budget and behind schedule. The undersecretary for acquisition, technology, and logistics, Ash Carter, presented me with a long list of changes to the program in early 2010 to try to get it back on track. I accepted all his recommendations, including withholding $614 million in performance fees from Lockheed Martin, the lead contractor, and firing the two-star general who had been our program manager and replacing him with a more senior and capable officer. We also reduced the number of planes we would buy in the immediate future. Finally, to compensate for the delays in the program, I agreed with a recommendation to buy more F/A-18 fighters for the Navy so our carriers would not end up short of their full component of aircraft.
The two remaining programs with strong congressional support from my 2009 hit list were the C-17 cargo plane and an alternate engine for the F-35. Despite multiple Air Force studies showing that we had plenty of cargo aircraft, Congress just kept stuffing more C-17s into the budget in order to preserve the jobs on the production line. The Air Force didn’t need more, didn’t want more, and couldn’t afford more. President Obama agreed to back me up with a veto threat on capping the number of C-17s.
As for the F-35 alternative engine, early on Pratt & Whitney had won the competition to build the engines. Needless to say, members who had a General Electric presence in their districts and states weren’t happy about that and put money in the budget to fund development of an alternative—produced, of course, by GE, partnering with Rolls-Royce. In no time, Defense was spending hundreds of millions of dollars each year to support a program that, again, we didn’t want, didn’t need, and couldn’t afford. Facts and logic play no part in debates on the Hill when jobs at home are at stake, and so members and I would go around and around on the extra engine. Here, too, the president agreed to support my decision with a veto if necessary. When a reporter asked me if I was sure the White House would back me up with a veto, I responded, “I don’t go out on a limb without looking back to see if there’s a guy back there with a saw.”
The initial face-off on both issues came when Mike Mullen and I presented the budget to the Senate and House Armed Services Committees on February 2 and 3. Among the members with strong views one way or the other, when it came to issues involving defense programs, the two committees (and the Appropriations Committees as well) were largely split not by party or ideology but, with a few exceptions, by the location of the pork. I suppose the two issues also ended up becoming a test of wills between Congress and the president over who had a final say on defense acquisition. Congress had held the upper hand for a long time, and now it was being challenged. At one point, Representative Neil Abercrombie, a longtime Democratic congressman from Hawaii, said that I and the executive branch needed to learn that Congress made the final decisions on acquisition issues. I replied, maybe a little confrontationally, “Only if you have sixty-seven votes”—the number needed in the Senate to override a presidential veto.
Undeterred, the House Armed Services Committee put $485 million for the extra engine into its bill, along with more C-17s—and repeal of “Don’t Ask, Don’t Tell,” exactly the scenario I had worried about in terms of getting a presidential veto. The House committee, in which Democrats were a majority, was prepared to fight
for the extra engine until the last dog died, but after months of debate and confrontation, the newly Republican-controlled House—led by Tea Party members—in February 2011 killed the program. A full vote in the Senate led to the same result. Proponents of buying more C-17s gave up the ghost more easily. So I had put two more notches on my budget gun. I had now secured congressional approval of all thirty-three program cuts or caps I had announced in April 2009, a record.
The history of Defense Department acquisition and development of new programs is rich in over-cost, overdue, and flawed programs. There have been enough studies on how to fix the problem to fill a room, and repeated attempts at legislative remedies have been made, including as recently as 2009. Ash Carter and I spent a lot of time talking about the problem, and I concluded that the principal fixes were pretty straightforward: make sure there is competition for contracts, but real competition, not the kind Congress likes where everybody wins (such as proposals on the Hill to split the Air Force tanker buy between Boeing and Airbus/EADs or for the F-35 alternative engine); have experienced and tough government contract negotiators, people with really sharp pencils; in big, long-term programs—excluding current wartime needs—wherever possible, build prototypes of new equipment, and don’t start production until testing is complete and problems have been resolved; freeze requirements early in the process (anybody who has ever added a room onto his house knows that if you change the plans after construction begins, it will cost you an arm and a leg; same thing with warplanes and ships); demand accountability—be willing to fire government project managers or contractor managers if programs go off the rails; finally, the secretary of defense has to get his (or her) hands dirty overseeing all this, getting knowledgeable enough about the big programs, and keeping up to speed on progress to be able to know when to blow the whistle if things go awry.
Duty: Memoirs of a Secretary at War Page 59