It is great to be here. This is called just-in-time operations. I started out this morning talking to AIA and I got here exactly four minutes ago. It just goes to show that you can do these things – you can get the inventory where it has to go.

    I appreciate the introduction. One of the things about John Shaud that is probably not a well kept secret is that he is a graduate of West Point. The only thing John didn’t say about me to this audience is that I also served in the Navy. I am a lawyer from the Navy and how in the world did I ever get here? John is a shining example that if you marry the right woman you can get across any obstacle.

    I wanted to make an important space announcement. I am not sure if I am a lame duck or not. I don’t know what is going on in Florida today. There is one important space announcement that I wanted to make for some time. I want to confirm to this audience that the Air Force does indeed have living aliens on many of its bases. Not only that, they all voted absentee in Florida. [Laughter]

    I always enjoy coming out here. Last year, Carole DiBattiste stood in for me. As I interpret which part of the universe I am in, this is the second day of a trip that is literally going to take me around the world by the time I get back to Washington in early December. Tomorrow morning I head off for Alaska, Japan, Okinawa, Korea, Singapore and kind of keep going trying to make sure that our allies buy American and that our troops in Korea know how much we appreciate the fact that they are there on Thanksgiving.

    I am also glad to be here because this is an important audience as well. This is the audience that we depend on to get ourselves into space. I want to thank you in this audience from industry, academia, government, the Air Force and the other services who have labored so diligently to build a space and missile infrastructure for our country. We have a vital and important partnership and that partnership has given us a space infrastructure that is the envy of the world and illustrates just how much a team founded on mutual respect and shared principles can accomplish.

    Moreover, I want to thank the Air Force Association for its unwavering support of this partnership, in part through this annual meeting, but equally important in what AFA does for us on Capital Hill. Without AFA, we would not have many of the things we have today. Tom and John, I really appreciate what you do for us up there. I am absolutely certain this partnership will continue and will help us meet the challenges of the next millennium which will be our first full millennium in space.

    Forty years ago, not ten miles from this very spot, John F. Kennedy first spoke of a new frontier, a frontier of unknown opportunities and perils, the frontier of unfulfilled hopes and unfilled threats. His call for exploration of this new frontier called many of the people in this room to a lifetime of public service. Certainly there was a space program before President Kennedy, but he and his administration set the tone that resulted in many of the great advances that we have made in the last 40 years. His advisors understood the close partnership between the government, academia and industry would be indispensable if we were to achieve our nation’s ambitious goals in space.

    Since those days of Camelot, much has changed, but the partnership, here particularly on the West Coast, has remained constant. Today there are very few places in our society where we will find a closer, more respectful partnership between government and industry than in the national defense space segment.

    Today, the wonders of space technology have become common place, so common place, in fact, that many no longer have the sense of wonder that those of us who grew up in the 50s and 60s have about space. As Keith Hall has said on many occasions, we as a nation sometimes forget that space is, after all, no kidding, rocket science. Drive through the cities, suburbs and especially the rural areas of this nation and places as remote as Kuwait as well, and count the satellite dishes, those ubiquitous Domino Pizza boxes that bring the terabytes and the gigabytes into our homes. They are certainly everywhere, absolutely ubiquitous.

    Are you an absentee landlord? Do you want to monitor the old homestead? Go to Spot.com. Have your credit card ready and you can buy imagery from anywhere on the earth. I am told that unlike what we get charged by some of our space providers, Spot doesn’t even charge you for cloud obscured photography. Not a bad deal. The good news is post will take euros which are down as against the dollar right now, so run out and please buy spot and don’t buy from me.

    I am told that you will soon be able to buy a GPS module for your personal digital assistant. This GPS module will not only tell you where you are, but it is going to beep any time you are in an Internet store or any store that advertises on the Internet that is having a sale. As a father of three daughters, two of them still on my payroll, I want parental control over that feature. [Laughter]

    One might think that with all these advances in technology, that America would be in an enviable position in space and indeed I think it is. But as the nation with the greatest resources devoted to space, and as the pre-eminent nation in space today, America, nonetheless, needs to worry about where we will be in the future. We might need look no farther than at the great seafaring nations – Portugal, Spain and Holland – to see how those who had the advantage in an important area of the world, the sea, can lose it over a period of time. We need to be ever vigilant about what we are doing in space and how we are managing space for the future. I think we have a number of critical challenges that we must meet as we think about space.

    The first, and I suspect many of the previous speakers talked about this, is the impact, positive and negative, of the space commission that is having its deliberations right now. I have no way of predicting what that space commission is going to decide any more than I can predict who is going to be sitting in the Oval Office in late January or indeed in my office on January 21^st. But I do know that the solutions that are being offered by many to the space commission seem to be solutions in search of a problem. At the risk of confirming that I am a Luddite when it comes to space, let me say that I really do not understand what the big problem is that justifies a national commission. The Air Force, I think, is doing a pretty darn good job of space stewardship within the constraints of the budget that we have been given. We spent 85 percent of the national defense space budget and have roughly the same number of men and women engaged in the trenches of national defense space. Add in the NRO, which is also heavily staffed by the Air Force and we you get to about 95 percent of both people and dollars. Add in NASA, with whom we have critical partnerships and you get to almost 100 percent. Add in commercial for which we are working hard with both Boeing and Lockheed on the EELV and with our partners on the other smaller launch vehicles and you round out that 100 percent.

    On the R&D side of the house, the space partnership council started by Keith Hall, Dick Myers and Dan Golden is doing a good job of coordinating science and technology expenditures across the federal government. At some point we hope to be coordinating with industry as well. But it is taking a little longer to get started. Recognizing the importance of space, General Ryan and I have directed that space become roughly 55 percent of our S&T budget. It is true that the S&T budget is down, but it is also true that we in the Air Force spend two dollars of somebody’s money – Air Force or DARPA or somebody’s money for every dollar of Air Force budget money and that is a very effective leveraging of what we do.

    On the procurement and operations front, space has increased as a proportion of the overall Air Force budget, even as the Air Force top line has come down by 40 percent and its active duty manpower has come down by about 45 percent. Everyone of our major space systems has a program, replacement or upgrade over the next decade and also the next 20 year period, a situation that is simply not true for our air breathing assets.

    We have often been accused of syphoning off money to go to the air side but I will tell you that we do not have a dollar programmed at this point to replace our aging tanker force, probably the most important part of our infrastructure. We don’t have a dollar program to replace the RC-135s. We don’t have a dollar program to replace a number of our air assets. In fact, our airborne assets will grow to an average age of our 30 years in 2020, whereas our space assets, with the exception of missiles will be kept relatively new and relatively robust in that same period of time.

    I would also point out that the only installation that we have added to the rolls of the active duty force in about 16 years is Buckley Air Force Base, obviously part of Space Command. Over the last two and a half years, we and our industry and NRO partners, with the help of the White House, have identified and funded a program to increase the safety and reliability of our expendable launches. With the help of Boeing and Lockheed, we have restructured the EELV program to keep it fiscally fit as well as reliable and we have reached a consensus across the government on what must be done to modernize our space-launch ranges. Not a consensus on who will pay for it, but a consensus at least on what needs to be done. To be sure, some of these efforts took awhile. In fact, the multitude of players in the space business is what I think is perhaps the only problem that I would suggest the Space Commission ought to discuss.

    The Air Force position is relatively clear and I agree with it. Number one, we need some methodology, a national space council, call it what you will for integrating space policy and space budgets at a national level. Happily, our space-launch broad area review and our space range task force have produced real results. We have gotten money. We have gotten progress. We have gotten policy and we are ready to move out across the United States government. That is a real step forward and one that I hope to see institutionalized.

    On the flip side, we in DoD need a better way to integrate what we do in space. One of the things I find frustrating is that there are three or four officers in DoD who have the authority to spend every dollar that I put up and to spend it three or four times over when it comes to space. For example, as General Ryan and I have tried to ramp up S&T spending in space, OSD has been ramping it back down and taking the money and putting it into turbine engine technology. No doubt we need turbine engine technology, too, but our judgement is the future is in space, the most expensive technology which we need to get less expensive in space and the bang for the buck we get in space is by far the largest, but we don’t have the final say on that so one of the other things I think we need is a better way of integrating policy within the Department of Defense and we have asked and said we ought to be the executive agent for space.

    I don’t understand how some of the proposed solutions would solve the dollar problem. One of them is looking at a new major force program. That is a Defense budget element. We have one of those today called MFP 11 which supports the special operations command. I will tell you that is a mixed blessing. Some years it is good, some years it is bad. In FY 02, we have had to cut the production of CD-22 because the Special Ops guys put some of the equipment on that airplane and they have run out of money in MFP 11 before we in the Air Force have run out of money and priority for CD-22. In this instance, a Defense program has not done Special Operations Command any good. In fact, it has brought them backwards from where we hoped they would be.

    There are some who believe we ought to have a national space service at a time when the Air Force vision says we ought to be integrating air and space. Again, I don’t have all the answers here and I don’t think anyone in the Air Force does, but it seems to me that there are certainly kind of fundamental problems about a space service that will certainly make it more likely will not get more dollars.

    The first of these is simply the overhead associated with the new headquarters. Running a service is not cost free. There are 2,631 individuals in the headquarters. We are right at the cap, that is why I know the number. They are around every day running the U.S. Air Force. I have no idea how many it would take to have a space force, but I will tell you, it has got to be some number and that is expensive.

    In addition the chief of staff of that space force, and I don’t know if it gets a secretary or not, must still answer to the conflicting dictates of several different offices within OSD, NASA, NRO, several civilian agencies, not to mention the other space users in DoD, which would be the other four services. I am not sure we would achieve by that. We would certainly fragment our effort to try to move air and space together into an integrated platform which is producing the kinds of results we want to produce for America with our defense dollars.

    Finally, I would say that the complexity of adding another player, really does not seem to me to be worth the cost. A flow chart of the space decision making process today already resembles the street map of Rome – chaotic, somewhat arbitrarily drawn and full of circles and dead ends. I would suggest to you that the convoluted decision making process we have today is part of the problem. We can solve that problem primarily by creating a persistent national forum to try to deal with the very serious problems of national security space, civilian space and all the other potential space users. I would hope when the committee comes down to it that we would get such an organization.

    I also hope that the committee recommends to Congress that it try to come up with a better way for integrating the space force in the budget. Today, space budgets are all over the place. They are in the DoD committees, they are in the Intel committees. Ultimately, some really good and really important ideas like Discoverer 2 somehow don’t pop out of that committee structure. In fact, it is killed even when every CINC has said the most important future priority we have is space-based radar and yet we don’t have a program.

    In the best of all possible worlds the space commission would recommend a national integrating organization, would recommend that Congress also try to figure out a way to integrate what it wants to do with space with what we in the Administration want to do with space and then would let us try to go on with integrating space in the way that the Air Force vision for 2020 contemplates.

    Indeed, I think the second major challenge we have is developing a truly seamless aerospace force. I know Ed Eberhart is changing the color of the bags from blue to green. I think that is probably a good start. I am not throwing my blue bag away. The history of uniforms is such, you never know what may come back [Laughter]. What about the berets, Ed?

    No, I am not changing the beret. It is a fearless Army that is doing that [Laughter].

    Let me say the integration is really multi-fold. One of the things that is important about integration is that we understand that the modern capability of software systems we have really does give us a rare opportunity to start integrating these data streams. Most software really doesn’t care whether the electrons come from space, air, ground or wherever. The electrons basically show up, they get processed and they go out the other end.

    As we’ve shown in Kosovo, if you glue enough of these electrons together, some from Predator, some from other systems, optical imagery, you can come up with a heck of a system which allows you to target things off of a Predator that doesn’t know well enough where it is to target it if you only based your targeting on Predator alone. It is these kinds of innovations that we need to look for and it is these kinds of innovations that we are trying to support with our integrated operations center, with our global grid, with all of the other issues we are taking to try to move information more smartly around the Air Force from sensors to shooters and with some decision makers in between.

    Another issue is integration of our people. That is a harder process. As Chuck Link would tell you, we do have some very broad thinkers in the leadership of the Air Force, but these leaders were produced as much in spite of the personnel system as because of it. One of the things we need to do, and Chuck is working with us on something called developing aerospace leaders, is look at a career-broadening program where we make sure that our young men and women coming into the service get a thorough grounding in air, space, information, weather, intelligence, whatever their journeyman skill needs to be, but move those folks around during mid-grade so they understand the way the Air Force as a whole can be knit together and integrate together. We have started this through our aerospace basic course and we have started it by increasing the number of specialties that go to the weapons school. We have our space warfare center. But what we really don’t have is, we do not have a career path which takes our journeymen and moves them in a major level on the officer side and the tech sergeant, master sergeant level on the enlisted side to make sure they see how the Air Force knits together from the top level. That is something we need to do. Again, a separate space service would destroy our ability to do that and that is critical to our making space an integral part of what we do in the Air Force.

    One of our third challenges in space is the challenge of band width and spectrum. We already know we have very limited spectrum and as we continue to sell spectrum, as our allies continue to ask for spectrum. Spectrum and landing rights are becoming a very great problem. The flip side is, we are not going to see the kind of commercial band width that we are going to need in the 2008-2010 period that was part of our plans which we’ve been banking on because of the number of changes in what we do.

    Let me simply give you a sense of the problem. Many of you know Jack Woodward who was the J-6 on the Joint Staff until we were able to get him back in the Air Force, he is our deputy chief of staff for communications and information. Jack made the observation during Operation Allied Force that the SATCOM band width requirements grew to twice the Desert Storm requirement with only ten percent of the deployed personnel. I think that is basically right. It is a great statistic and I would not amend it in any way except to say the cause and effect is the other way around. It wasn’t because our band width requirements grew dramatically with a reduced footprint. Our band width requirements grew dramatically because we want to reduce our footprint, because we want to use the global grid to leave people at home. That is a trend that is going to continue across all of the services. All of us want to be expeditionary. All of us understand that we will have fewer permanent bases overseas. Therefore all of us understand that we must be light, lean and lethal.

    Every day we in the Air Force lighten our forward deployed footprint by using global communications grid to leave significant portions of our force at home. In effect, we allow people to telecommute to the battle. That is what we did in Kosovo when we left many of our Intel analysts at home at Beale Air Force Base and at Fort Meade. It is something we are working on at every juncture as we leave parts of our air operations center back at home. It is something that we need to do to lighten the airlift footprint forward and to make sure we have fewer and fewer of our people exposed to the risk of terrorism.

    By the way, when you leave people at home with their families, they both have the equipment they need to do the job and they get that important family time which is so critical to keeping retention in the Air Force. No question, it seems to me that we are going to continue to work through this reach-back concept for all its worth and that is going to drive more band width and ultimately more requirements for satellite communications.

    I am worried about how we will meet that requirement. There are a couple things going on here. First, as we’ve seen on the debate on what to do with Iridium, the promise of NEO and LEO space systems has not materialized. We may or may not get Iridium in the sky but it is clear to me that the demand which people banked on for Iridium in some of the other systems is only slowly emerging and as we look at things like the demand for EELV.

    The other thing that is a major issue is the growth of fiber communications. Fiber has exploded. I don’t know if we are up to 256 wave multi-colored cable yet, but we certainly are going to be there within a few years. If you go out and listen to the senior management at Sun, Cisco, Microsoft, Hewlett Packard, they will all tell you that they are banking as they design their computer systems that band width in the nature of fiber will be both ubiquitous and virtually costless. In fact, as they move their software systems forward, as they envision their net, they see band width as something we simply don’t have to worry about any more, but of course, they are looking at the downtown urban business market. They are not looking at operations in Southern Africa. They are not looking at trying to get band width to aircraft, ships and tanks. This is going to be a major problem for us because I think the software world is going one way, which we aren’t going to easily be able to go. Because it is going that way, it may sap the market for satellite communications, which are essential to us and in which we have been banking.

    If we have already increased our band width requirement in Allied Force, think what we will do when we put band width hungry Global Hawks up in the sky and even more importantly, what we will do when each of the Army’s new wheeled vehicles has a satellite transmitter receiver on it. We are going to be dying in our need for band width and it is not clear to me from a budget perspective that we have the dollars to meet that need.

    The fourth challenge that I think we need to think through is in the space-lift arena. I will tell you that EELV is going very well. When we decided to go with two vendors back in 1996, I think we looked out and thought there would be about six lift vendors that were serious vendors and we looked at a market that had demand that was just exploded. We would have predicted 50 percent of our launches would have been commercial by 1997. We are just getting to 50 percent as we speak. We are increasingly losing what we had hoped would be the commercial advantage of EELV. I don’t think it is lost, but just in this last year alone, as we have restructured the EELV program, we realize that there are now eight to ten serious providers of launch, that the launch market has become more selective because there are more providers out there and that unlike what we have hoped, we are now going to have to pay or Lockheed and Boeing are going to have to pay for first launches because first launch customers are either non-existent or existent only at a very heavy discount.

    We have funded that and I think that is critical. But we had also banked on very significant savings for EELV, some of which will emerge, but I suspect not all of which will emerge and that is going to be a very serious budget issue that will confront the next administration and perhaps the one after that.

    A fifth challenge that worries me a great deal is our strategic missile forces, which are forgotten, but not gone in my estimation. One of our most difficult problems with our missiles is that they, like our aircraft, are getting old. Unlike aircraft, we have a legal prohibition against taking down Peacekeeper which is making life really tough because we have neither funded the decommissioning of Peacekeeper, nor have we funded its maintenance. What we have funded is band-aid, putty and scraping off the rust and repainting Peacekeeper. That is what we funded and that is not enough to either keep it robust or to take it down.

    I hasten to add that while these systems are older than many of the men and women who operate them, middle age is no barrier to effectiveness. That is my story and I am sticking to it. It is only not a barrier as long as we husband our resources and act smartly in the space and missile arena. The one area in which I think we are not acting smartly is in the area of warheads. We had planned to take Peacekeeper warheads and put them on Minuteman. If we don’t do that, the cost of slipping the Minuteman warheads is just enormous. Someone said it is roughly the gross domestic product of the state of Texas. I understand Texas is a small state, small economy, that is still pretty big bucks and it is bucks we don’t have to spend. It is bucks we will needlessly spend if we can’t get Congress to take a look at this.

    As I talk about the space commission, something else they could usefully do, try to get Congress to try to look at space seriously and not through the ideas of ideologues, not through the eyes of people who think we should weaponize space immediately, but through the eyes of people who realize that we need to build up a carefully crafted space program and that strategic missiles are our national missile defense today. We have got to keep them as a strong deterrent, not only today but tomorrow and we need to take prudent steps to get that moving. I certainly hope that in the next several years we will be able to take those prudent steps.

    The one optimistic note I would make is I believe in the authorization act it requires us to do a mini-nuclear posture review and hopefully out of that, will come a sensible program for Peacekeeper.

    The sixth challenge and one I think is shared by everyone in this room – industry, government or academia alike – is the enduring challenge of recruiting, developing and retaining the right people with the right skills. This is particularly a problem in our science and engineering community. As General Larry Welch told us in the space launch broad area review, we needed to do more insight using government employees or our FFRDCs in how launch is going to be conducted, both heritage launch vehicles and EELV.

    We went out to inventory our science and engineers who could do this work. Gene Tattini is short by about umpteen hundred of these folks and we couldn’t find enough people across the whole Air Force to meet the need that General Welch prescribed. We have turned to industry and even there, we are having trouble finding the people that we need. I know when I look at work force projects that half of the Air Force science and technology workforce will be eligible for retirement in the next five years and only ten percent of that civilian work force is under the age of 30. These are not good statistics. We convinced Congress this year to let us offer early retirement to some of the people who richly deserve retirement and might take it and use the money that frees up to hire younger people to try to balance this work force. But we ultimately got 1000 people across DoD. Even though amazingly industry, the Air Force, all the services and all the unions were in favor of this, and we got it into the House bill and the Senate bill, we still lost it somewhat in conference. This is a big problem, one we have to press on.

    On the uniform side, we are not competitive at this point in getting young scientists and engineers. That is not going to be new news to a lot of people in uniform in this audience today, but we are trying to reach out through a science and engineering conference we are having next month. Today, General Handy is down in North Carolina meeting with all the historically black colleges and universities trying to work with them and their colleagues in high schools and junior high schools in North Carolina to try to come up with a place for interesting people in aerospace careers. Not only as pilots and crew chiefs, but as engineers and as computer programers. We are trying to give people the excitement of rocket science, make sure people understand that while the dollars may not be quite as competitive with industry, the opportunity and responsibility and quality of the work is very competitive indeed. More than enough competitive to make it something people ought to do and ought to devote a lifetime to. This is a real problem because I know when we turn to industry, our industry partners will tell us they have the same problem.

    It is exemplified by a story I was told yesterday by a SPO director. We were talking about a third-tier subcontractor that is a critical software supplier to one of our systems. The SPO director had been out at his facility about three weeks ago and they had been discussing the fact that this contract was not able to retain the software programers. He said, let me tell you a story. You see that guy next door to me, he just gave $45 million out of his personal checking account to his university. There is not an individual in this whole shop that will ever be worth $4 and a half million dollars, let alone $45 million. That is the kind of problem we have. We have dot.coms which are doing tremendously, but we’ve got to convince people there is a challenge and a value of being in the national defense sector and that means all of us in this room going out and talking about the fact that we have interesting work, challenging work, work that is worth devoting a lifetime to.

    The final challenge which I suspect General Ryan talked about a bit is the financial and fiscal challenge we have in the Air Force. We are unable at this point within any of the budget projections that we have looked at to fund the re-capitalization of the Air Force. We are literally eating through our equipment and systems and do not have any plans on the books for the next 20 years within what I would say are reasonable budget projections to be able to fix all the things that need fixing. That is from leaky roofs to replacing the KC-135 to putting SBIRS low and high up in space. This is a major national problem, one the candidates really have not addressed.

    I will concede that we are probably not as ready under some measures as we were during Desert Storm. I will also tell you that the likelihood we would re-fight Desert Storm in our history is very small. In part because we have flown 255 thousand sorties over Iraq and we know pretty much where everything in Iraq is at, pretty much any time on any given day. Occasionally, we even drop ordinance on it. We have to look at what we really need to be prepared for. I suspect the future looks a lot more like Operation Allied Force than it does like Desert Storm and as we have shown, we are prepared for that. We are prepared today. The real question is, can we stay prepared tomorrow?

    It seems to me that in the current budget situation, if we are asked to continue to do what we are doing, we are simply not going to be able to be as ready ten years from now as we are today. Which leaves us with a number of what I think are very unappetizing options. We can reduce our commitments abroad both in space and overseas. We can accept reduced readiness levels. We can increase the percentage of resources devoted to national defense or, and I think this is the worst case, we can sit here and do nothing at all. Under that scenario, the cost of our O&M, the cost of our people programs will slowly but inevitably eat away the resources available for modernization. Just to give you an idea, we all know that military personnel and civilian personnel costs are going up – 3.7 percent pay raise in real terms this year alone. Of course, other costs are going up as well--healthcare and veterans benefits that were just conferred on the 65 and older group of veterans, very justifiable thing to do, is estimated it costs us $4.5 to $5 billion a year. That is a lot of money. The cost of healthcare in general. We have taken the savings in TRICARE but we are now in the same escalator for pharmaceuticals that everyone else is on. We are going to be looking at day-to-day costs going up with no obvious place to put those costs other than ultimately to take it out of infrastructure and modernization.

    I hope in the next administration as we go through QDR and the other gyrations we will be going through in the next several months, that people begin to focus on this critical issue of how do we stay ready, not just today, but in 2010 and 2020.

    Thank you to all of you for being our partners. That is very important and I cannot thank you enough. Second, to all of you personally for being so support to myself, Carole DiBattiste and the other political leaders of the Air Force who may be unemployed on January 21^st. I’ve left resumes by the door [Laughter]. Please feel free if you see us on the street to toss a quarter in the cup and we know that whatever happens on January 20, we are forever grateful for what you do for our country and we are certainly planning to stay in touch with the Air Force and continue to be supportive of both its air and space sides. Thank you.

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