The Honorable Chuck Hagel, Secretary of Defense 1000 Defense Pentagon Washington, DC March 5, Dear Mr.

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1 The Hnrable Chuck Hagel, Secretary f Defense 1000 Defense Pentagn Washingtn, DC Dear Mr. Secretary: March 5, 2013 Yu take respnsibility fr the natin s defenses at a perilus time. Despite warnings frm frmer Secretary f Defense Len Panetta and the cuntry s senir military leaders abut the disruptins that the mandatry budget reductins wuld d t the peple, prgrams and peratins f the U.S. defense system sequestratin has been impsed n the Department f Defense. As yu recgnize these cuts will be especially severe because the DOD has been spending under a Cntinuing Budget Reslutin s that the mandated fiscal year 2013 (FY13) reductin f $ 42.7 billin (7.95%) cut must be taken in the remaining seven mnths f this fiscal year. Yur initial cmments t the DOD cmmunity stressed the imprtance f the President and Cngress wrking tward a new defense psture that prvides predictable and stable financial resurce t preserve the military capability the United States needs. We write t suggest an apprach t achieving this critical bjective. The Defense Strategic Guidance annunced last year by President Obama with release f the FY13 DOD budget prjects a cnstant budget in real terms f abut $550 billin, during the perid cvered by the Budget Cntrl Act, 2013 t If the mandated sequestratin applies thrughut this perid, the annual DOD budget will be abut 10% less, in real terms, averaging less than $500 billin in real terms. Up t the present, the DOD has resisted discussing cuts belw the President s plan, under the reasnable presumptin that budget negtiatrs in the current strained climate, will pcket any ffered saving withut mving clser t an alternative t sequestratin. Hwever, nw sure f sme perid f sequestratin, the Pentagn nw faces crippling uncertainty abut its future financial resurces t supprt frce structure, readiness and training peratins, and fr critical mdernizatin prgrams. The Pentagn must engage Cngress n pssible future defense budget reductins. But, DOD leadership must deliver the message t Cngress, and the cuntry, that lwer budgets mean a reshaped defense psture. 1

2 Twenty years ag Secretary f Defense Les Aspin arrived at the Pentagn frm the Chairmanship f the Huse Armed Services Cmmittee, t cnfrnt a situatin similar t tday: There was n agreement n a pst Cld War strategy fr DOD and the defense budget was declining precipitusly (indeed the decline in the tp line frm FY92 t FY98 was abut 20% in real terms, t a level f abut $385 billin in 2013$. Secretary Aspin realized that the nly way t reestablish the stability necessary t manage the military establishment and plan fr the future was fr the Administratin and Cngress t cme tgether n a new pst-cld War strategy and agree n the resurce plan t supprt the strategy. Accrdingly Secretary Aspin directed a Bttm-Up Review f the natin s defense strategy, frce structure, mdernizatin prgram, infrastructure, and the frmulatin f affrdable strategy that addressed the geplitical threats f the pst-cld War. The Bttm-Up Review sized the defense psture n the need fr a military capability fr tw, almst simultaneus majr reginal cnflicts, (MRCs), (ntinally Nrth Krea and Iraq). The Bttm-up Review was adpted by President Clintn and accepted in large measure by Cngress, as the basis fr the defense prgram fr frm 1993 t the defense build-up brught abut by 9/11. The Bttm-up Review was certainly nt perfect, but it did give much needed stability t the defense effrt. Such stability is what is mst needed tday. We recmmend that yu launch a new, cmprehensive review f ur defense psture and take respnsibility fr prpsing a new defense psture t the President and Cngress. The cmprehensive review must assess the threats that the natin faces and prpse a new defense psture t prtect the cuntry and its interests. The review shuld specify frce end strength, peratinal temp, readiness, and training, and the suite f military equipment and systems required t supprt the defense psture. Finally, the resurces needed t pay fr the psture must be determined. A range f pstures f differing capability and cst shuld be explred in rder t infrm the President abut the chices he faces. The lng-term federal budget utlk indicates the directin f change: frce structure reductins, fewer and less lengthy verseas deplyments, reduced research and develpment, and prcurement levels, and thus a slwer rate f mdernizatin f military equipment and systems. Realistically it is nly changes in these three areas (and 2

3 persnnel csts) that are large enugh t yield significant reductins in the defense budget. In carrying ut this new cmprehensive review, yu shuld keep these principles in mind: Mre cannt be dne with less. Reduced expenditures mean accepting narrwer natinal security capability, recgnizing the risks this entails and making allwance fr the flexibility t respnd t events. The new strategy will likely entail a greater gegraphic fcus n Asia and avidance f significant deplyments fr peacekeeping. It will take time t realize savings. Adjusting t changes in dctrine, frce structure, and fielded systems can take several years. This is particularly true fr frced persnnel separatin where keeping faith with the military persnnel wh serve the cuntry, ften with multiple verseas deplyments, is a cre value. The hard chices shuld be made early. The federal budget utlk is nt prjected t imprve fr several years. S if a prgram r capability is nt affrdable nw it is unlikely t be affrdable ging frward. Delaying hard chices means that resurces will be spent n systems that will never be built and nt be available at the right levels fr the highest pririty prgrams and capabilities. The new U.S. strategy shuld address the key new geplitical threats and leverage unique U.S. military capabilities. The key emerging threats include terrrism and cyber attacks. The key U.S. capabilities include jint peratins, cmmand, cntrl, and cmmunicatins, and intelligence, surveillance, and recnnaissance. In the lng run U.S. military superirity relies n technlgy dminance. While R&D will likely experience further reductins, Pentagn leaders shuld give special attentin t cntinuing supprt fr technlgy base prgrams that ffer the pssibility f disruptive technlgies that culd revlutinize military capability and dctrine. The grwth in csts f military cmpensatin and benefits (especially health care 3

4 fr military persnnel and their families) system must be brught under cntrl. Since 2001 such csts have dubled while the number f full-time military persnnel has increased nly 8%. Over time, DOD must mve t a mre equitable and mdern system, which ffers greater chice and in which csts are shared. The Military Cmpensatin and Retirement Mdernizatin Cmmissin authrized in 2012 ffer an excellent start t this prcess. Cperatin with allies will be even mre imprtant in the future. Fiscal cncerns will lead mst natins, including NATO members and ther treaty allies, t reduce defense utlays. It is a gd time t reappraise U.S. plicies n transferring technlgies and defense prducts and n sharing the csts f defense R&D. The Executive branch will need a perid f private deliberatin, perhaps fr as lng as six mnths, t cllect data, perfrm analyses, and explre tradeffs and then engage with Cngress abut hw best t balance affected interests and cnstituencies. The legislatively mandated Quadrennial Defense Review (QDR) is nt an attractive mechanism fr a fresh examinatin f the challenges that the natin faces and subsequent re-balancing f the defense psture. The next QDR is nt scheduled fr release until After three cycles, the QDR prcess has becme cumbersme and captured by the interests f the services, defense agencies, and the many jint prgram ffices f the Pentagn. The Secretary f Defense needs a fresh mechanism, such as the Bttm-Up Review, that clsely links his ffice t senir military cmmanders. The credibility f the new defense psture will gain much if the Pentagn the Office f the Secretary f Defense, the Jint Chiefs f Staff, the military departments, the cmbatant frce cmmanders, the defense agencies, and the Intelligence Cmmunity participate in the review and supprt its recmmendatins. The lessn f the prir Bttm-Up Review is that wrking tgether led t cmmn understanding f the evlving threat and needed capability, resulting in a widely accepted plan that served the natin well during a perid f a balanced federal budget. 4

5 CC: The Hnrable Ashtn Carter, Deputy Secretary f Defense Sincerely yurs, Five frmer Deputy Secretaries f Defense Jhn M. Deutch March 11, 1994 May 10, 1995 Jhn P. White June 22, 1995 July 15, 1997 Jhn J. Hamre July 29, 1997 March 31, 2000 Rudy de Len March 31, 2000 March William J. Lynn III February 12, 2009 Octber 5,