Hearing of the House Armed Services Committee - The Defense Department's Fiscal Year 2009 Budget

Interview

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REP. RICK LARSEN (D-WA): Thank you, Mr. Chairman.

I have a few questions on the -- I think on the same topic, and that has to do with this discussion about Defense spending ought to be 4 percent of GDP. And I'm not bought into that concept -- or not bought into that it should be 3 percent or that it should be 5 percent of GDP.

The problem that I face when I look at that question is, for instance, this year, if we are in a recession or are technically in a recession or even if we have lower growth, and our GDP doesn't increase as much as some people want it to, you all will be back next year saying, what we meant to say was 5 percent of GDP.

That is, it doesn't seem to me to be a very useful metric for what Defense spending ought to be. And this is a debate that does go back farther than three years ago. I went back, and they had this debate during the '60s as well. So I was wondering if you've had any discussions about other metrics that seem to be less random and more solid about what a Defense budget out to be. That's the first thing.

And the second thing, and it's related, is that every year GAO puts out their report on major Defense acquisition programs, MDAPs. And it makes it very difficult for some of us to, when we look at the problems that exist in major expense acquisition programs, to say, sure, have 4 percent of GDP and we don't care how it's spent, even though we're told every year that their acquisition programs are over budget, they're not on schedule, and yet we ought to just sign off on 4 percent of GDP for the Defense budget. Or any percentage, for that matter. Let's get off the 4 percent; just any percent.

So are there other metrics you've been considering? And second, how would you square having a set percentage of GDP when we have to deal with these major Defense acquisition programs that tend to be sometimes over budget and off schedule?

SEC. GATES: Let me give you an answer and then ask the admiral to chime in.

First of all, I think -- I'm not quite -- you know, I wouldn't bet my life on the fact 4 percent is the right number. That seems to be a number that more people talk about than any other, on both sides of the aisle and in the executive branch and the legislative branch.

The two things that I think are the most important, as you think about the Defense budget philosophically, is ensuring absolute real growth and predictability. The biggest problem, I mentioned elsewhere this morning. If you were to graft the Defense budget for the last 40 years, it would look like the EKG of a fibrillating heart. And it is that lack of predictability, frankly, that creates some of the acquisition concerns and problems, as well as, I think, significant additional expense.

Because if I knew -- if I'm worried that the Defense budget is going to go off a cliff in two years, then I'm going to hurry to try and get something done. If I know that there's going to be some steady growth rate over a protracted period of time, then I can plan properly and manage better. So philosophically, I think predictability and real growth, particularly for investment, is very important.

In terms of acquisitions, I encourage you all to have our new undersecretary for acquisition technology and logistics, John Young, come up and talk with you. Because John has put in place a number of changes in the way we approach acquisition that I think are going to mitigate considerably some of the problems that we've had. You know, all the studies that have been written on acquisition in the Department of Defense would fill this room, probably. But I think John's got a very solid approach to it.

One of the concerns that I have that where we bear a mutual responsibility is that from 1990 to the present the Defense Contract Management Agency was reduced from 24,000 people to about 9,000 people. As of even the end of November 2007 we had 63 contract specialists in Iraq. Thanks to the actions of the secretary of Army, we now have over 300. So we do have a personnel problem.

Acquisition -- those involved in acquisition programs in the Department of Defense, all together, drop from over 600,000 people to under 300,000 people over a 10- or 15-year period. Part of that was force excessive national defense authorization acts, that mandated reducing 95,000. We did the rest as part of budget cuts. So I'd say personnel and process, and I think we're beginning to address both of those.

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