1 00:00:04,519 --> 00:00:08,920 Speaker 1: From Bloomberg News and iHeartRadio It's the Big Take, and 2 00:00:09,080 --> 00:00:24,760 Speaker 1: West Consova Today growing doubts about America's military readiness. In 3 00:00:24,800 --> 00:00:30,200 Speaker 1: his nineteen sixty one farewell address, President Dwight Eisenhower famously 4 00:00:30,240 --> 00:00:33,600 Speaker 1: warned about the danger of building a business of war. 5 00:00:34,040 --> 00:00:38,720 Speaker 1: We annually spend on military security alone more than the 6 00:00:38,840 --> 00:00:44,480 Speaker 1: net income of all United States corporations. Now, this conjunction 7 00:00:44,720 --> 00:00:48,199 Speaker 1: of an immense military establishment and a large arms industry 8 00:00:48,680 --> 00:00:51,960 Speaker 1: is new in the American experience. In the councils of government, 9 00:00:52,400 --> 00:00:56,920 Speaker 1: we must guard against the acquisition of unwarranted influence, whether 10 00:00:57,040 --> 00:01:02,880 Speaker 1: sought or unsought, by the military austrial complex. The potential 11 00:01:02,960 --> 00:01:06,960 Speaker 1: for the disastrous rise of misplaced power exists and will 12 00:01:07,000 --> 00:01:10,720 Speaker 1: persist more than sixty years later. The United States spends 13 00:01:10,760 --> 00:01:14,280 Speaker 1: more on its military than any nation on Earth. My 14 00:01:14,360 --> 00:01:18,560 Speaker 1: Bloomberg colleagues Peter Martin, Courtney McBride, and Rock Sena Torone 15 00:01:18,720 --> 00:01:22,520 Speaker 1: report that now the rise of China and the strain 16 00:01:22,640 --> 00:01:26,160 Speaker 1: the war in Ukraine has put on US weapons stockpiles 17 00:01:26,360 --> 00:01:30,280 Speaker 1: have some inside and outside the military questioning whether the 18 00:01:30,319 --> 00:01:34,240 Speaker 1: Pentagon has become too big and too slow to keep 19 00:01:34,400 --> 00:01:37,679 Speaker 1: up with a rapidly changing world. They're here with me 20 00:01:37,760 --> 00:01:41,479 Speaker 1: now to tell us what they've learned. Pete. In reporting 21 00:01:41,480 --> 00:01:45,040 Speaker 1: this story, you found growing concern among some top generals 22 00:01:45,040 --> 00:01:50,120 Speaker 1: and Defense Department officials, contractors, policy experts that the US 23 00:01:50,280 --> 00:01:55,200 Speaker 1: military is in danger of falling behind its rivals. Can 24 00:01:55,240 --> 00:02:00,560 Speaker 1: you describe the conversation that's happening right now in military circles. 25 00:02:00,560 --> 00:02:03,400 Speaker 1: Something that I found really interesting reporting this was that 26 00:02:03,440 --> 00:02:07,400 Speaker 1: there are hundreds thousands of people in Washington who spend 27 00:02:07,440 --> 00:02:11,720 Speaker 1: their lives immersed in what's called the defense industrial base, 28 00:02:11,840 --> 00:02:15,000 Speaker 1: right or the military industrial complex, And a lot of 29 00:02:15,000 --> 00:02:20,240 Speaker 1: the time, these people who have exquisite technical expertise decades 30 00:02:20,280 --> 00:02:22,480 Speaker 1: of experience, don't kind of come out and see the 31 00:02:22,560 --> 00:02:25,639 Speaker 1: light of day too much. But as we started reporting 32 00:02:25,639 --> 00:02:29,679 Speaker 1: this story, we realized that these problems which have been 33 00:02:30,120 --> 00:02:32,560 Speaker 1: known about for years and years, and if you talk 34 00:02:32,639 --> 00:02:35,200 Speaker 1: to these kind of old defense hands, they're like, oh, yeah, 35 00:02:35,240 --> 00:02:37,880 Speaker 1: everyone's known about this for the longest time. But these 36 00:02:37,880 --> 00:02:40,360 Speaker 1: problems are really bubbling up in the minds of top 37 00:02:40,400 --> 00:02:45,000 Speaker 1: policymakers now. And there's kind of been this clarifying moment 38 00:02:45,080 --> 00:02:47,880 Speaker 1: I think over the last eighteen months that's brought this 39 00:02:47,880 --> 00:02:51,359 Speaker 1: stuff to the four. There was China's hypersonic missile test 40 00:02:51,440 --> 00:02:56,080 Speaker 1: stific an event of a test of a hypersonic weapons system, 41 00:02:56,440 --> 00:02:59,080 Speaker 1: and it is very concerning. So it's a very significant 42 00:02:59,120 --> 00:03:03,359 Speaker 1: technological event that occurred or test that occurred by the Chinese, 43 00:03:03,680 --> 00:03:06,400 Speaker 1: and it has all of our attention. But that's just one. 44 00:03:06,560 --> 00:03:09,520 Speaker 1: That's just one which was pretty shocking for policymakers in 45 00:03:09,560 --> 00:03:13,799 Speaker 1: Washington because hypersonics was an area where the US had 46 00:03:13,840 --> 00:03:16,720 Speaker 1: the lead for a long time, but now China has 47 00:03:16,760 --> 00:03:19,000 Speaker 1: kind of moved ahead, and that's something that speaks to 48 00:03:19,040 --> 00:03:22,359 Speaker 1: some of these problems with getting innovations to the warfighter 49 00:03:22,440 --> 00:03:25,560 Speaker 1: when it comes to the defense industrial base. There was 50 00:03:25,960 --> 00:03:30,079 Speaker 1: the rapid depletion of US munition stockpiles when it came 51 00:03:30,080 --> 00:03:33,960 Speaker 1: to supplying Ukraine, and there's this kind of looming worry 52 00:03:34,160 --> 00:03:37,520 Speaker 1: about supply chains and the vulnerabilities that might be there 53 00:03:37,560 --> 00:03:41,200 Speaker 1: because of Chinese parts and components, and so all of 54 00:03:41,200 --> 00:03:44,720 Speaker 1: these things have started to kind of press policymakers as 55 00:03:44,760 --> 00:03:47,440 Speaker 1: they think about, Okay, we have the strongest and best 56 00:03:47,480 --> 00:03:50,400 Speaker 1: military in the world with the most impressive technology, but 57 00:03:50,480 --> 00:03:52,800 Speaker 1: do we have enough things and can we produce them 58 00:03:52,880 --> 00:03:56,080 Speaker 1: quickly enough in order to actually fight the kind of 59 00:03:56,120 --> 00:03:58,560 Speaker 1: war that would be needed with an adversary like China, 60 00:03:58,640 --> 00:04:01,560 Speaker 1: and so this has really become a press issue. Roxanna, 61 00:04:01,640 --> 00:04:04,400 Speaker 1: You've been covering the US military for quite some time. 62 00:04:04,760 --> 00:04:08,920 Speaker 1: Why is the Pentagon struggling a bit to adapt? It's 63 00:04:08,920 --> 00:04:12,920 Speaker 1: because it's so big, and it is the biggest military 64 00:04:12,920 --> 00:04:14,880 Speaker 1: in the world and the best military in the world. 65 00:04:15,040 --> 00:04:17,360 Speaker 1: And I think the planning part of it is always 66 00:04:17,360 --> 00:04:21,159 Speaker 1: extremely ambitious, and when you finally put it on paper 67 00:04:21,200 --> 00:04:24,000 Speaker 1: and put it in practice, it doesn't work out that 68 00:04:24,080 --> 00:04:28,440 Speaker 1: well because there's so many rules, so many regulations. The 69 00:04:28,640 --> 00:04:32,919 Speaker 1: bureaucracy moves so slowly that it doesn't leave any room 70 00:04:32,960 --> 00:04:37,800 Speaker 1: for creativity. They don't foster creativity because creativity means risk, 71 00:04:38,240 --> 00:04:42,680 Speaker 1: and so the US military doesn't want any of these 72 00:04:42,800 --> 00:04:46,279 Speaker 1: risks because they need to show that they can put 73 00:04:46,320 --> 00:04:50,280 Speaker 1: together these ambitious concepts and have these weapons that no 74 00:04:50,279 --> 00:04:54,320 Speaker 1: one else has. But that comes with tremendous downsides because 75 00:04:54,720 --> 00:04:57,479 Speaker 1: the industry will build what the Pentagon tells them to 76 00:04:57,960 --> 00:05:02,159 Speaker 1: along the way require change. The Pentagon changes some of 77 00:05:02,200 --> 00:05:06,080 Speaker 1: the requirements. Technology doesn't work. It's either too ambitious or 78 00:05:06,320 --> 00:05:09,040 Speaker 1: the industry sold something that is too ambitious that they 79 00:05:09,080 --> 00:05:12,520 Speaker 1: can't follow through. So I think it's a combination of 80 00:05:12,560 --> 00:05:18,680 Speaker 1: just ambition, bureaucracy, and just inertia. A lot of the 81 00:05:18,839 --> 00:05:23,080 Speaker 1: problems with the Pentagon really came forward when the US 82 00:05:23,120 --> 00:05:28,760 Speaker 1: started supplying Ukraine with weapons to fight off rushing I 83 00:05:28,920 --> 00:05:33,120 Speaker 1: was pleased to announce another major round of US security 84 00:05:33,160 --> 00:05:38,320 Speaker 1: assistance designed to meet Ukraine's urgent battlefield requirements, and this 85 00:05:38,440 --> 00:05:42,360 Speaker 1: two point five billion dollar package is one of our 86 00:05:42,440 --> 00:05:47,960 Speaker 1: largest yet. And then realized that that was rapidly depleting 87 00:05:48,160 --> 00:05:50,560 Speaker 1: US stockpiles, that they didn't have enough weapons, and they 88 00:05:50,560 --> 00:05:53,680 Speaker 1: didn't have a way to replenish them very quickly, that 89 00:05:53,680 --> 00:05:57,960 Speaker 1: that had all deteriorated exactly. So, after the end of 90 00:05:58,000 --> 00:06:01,360 Speaker 1: the Cold War, the US kind of study repositioning its 91 00:06:01,400 --> 00:06:06,000 Speaker 1: defense industry for short, sharp, high tech conflicts where the 92 00:06:06,080 --> 00:06:08,720 Speaker 1: US would go in with huge strength and win very 93 00:06:08,800 --> 00:06:11,279 Speaker 1: quickly and hopefully keep the price tag a little bit 94 00:06:11,360 --> 00:06:14,720 Speaker 1: lower for the US taxpayer. The result of that is 95 00:06:14,760 --> 00:06:18,200 Speaker 1: that there is this widespread perception now that the US 96 00:06:18,279 --> 00:06:22,040 Speaker 1: isn't equipped for a major war against an industrial power 97 00:06:22,240 --> 00:06:25,080 Speaker 1: like China and to a lesser extent, Russia. And so, 98 00:06:25,240 --> 00:06:28,720 Speaker 1: you know, you think of supplying things like Stinger surface 99 00:06:28,760 --> 00:06:32,320 Speaker 1: to wear missiles or Javelin anti tank missiles. US stocks 100 00:06:32,360 --> 00:06:35,640 Speaker 1: depleted very very rapidly. Is the US supplied Ukraine over 101 00:06:35,640 --> 00:06:38,520 Speaker 1: the course of the last year, as Ukraine took on 102 00:06:38,839 --> 00:06:42,680 Speaker 1: Russia's economy, which is ten times smaller than China's, and 103 00:06:42,720 --> 00:06:45,960 Speaker 1: so the scale of that problem would be magnified greatly 104 00:06:46,000 --> 00:06:48,440 Speaker 1: when it comes to taking on the PRC. The best 105 00:06:48,480 --> 00:06:52,360 Speaker 1: example to just think about the stockpiles here is munitions. Right. 106 00:06:52,600 --> 00:06:56,159 Speaker 1: So the Pentagon basically when they plan their budgets, they 107 00:06:56,279 --> 00:06:59,880 Speaker 1: usually take money out of the munitions because it's easier 108 00:07:00,080 --> 00:07:03,680 Speaker 1: to cut bullets then to only fund three quarters off 109 00:07:03,760 --> 00:07:06,200 Speaker 1: the F thirty five. And so they want to show 110 00:07:06,240 --> 00:07:09,600 Speaker 1: that they can proceed with the high tech programs. They 111 00:07:09,600 --> 00:07:12,160 Speaker 1: don't want to delay things. They're funding these programs, but 112 00:07:12,200 --> 00:07:15,360 Speaker 1: then they basically take money out and then later on 113 00:07:15,440 --> 00:07:17,440 Speaker 1: they don't put the money back. And so now we 114 00:07:17,480 --> 00:07:21,000 Speaker 1: realize that we have depleted that budget bucket, and now 115 00:07:21,040 --> 00:07:24,280 Speaker 1: we're in trouble because it comes down to bullets, right, 116 00:07:24,320 --> 00:07:27,640 Speaker 1: It comes down to munitions, It comes down to artillery 117 00:07:27,760 --> 00:07:30,400 Speaker 1: in a war, and so just the accounting of it 118 00:07:30,480 --> 00:07:33,560 Speaker 1: is surprising, and there's a certain amount of sort of 119 00:07:33,720 --> 00:07:38,800 Speaker 1: maneuvering and perhaps hope that if from the army side, 120 00:07:39,040 --> 00:07:41,320 Speaker 1: for instance, they cut some of the tanks that they 121 00:07:41,360 --> 00:07:43,480 Speaker 1: actually would hope to build in a given year, that 122 00:07:43,600 --> 00:07:46,480 Speaker 1: Congress will stuff the money back in. And I think 123 00:07:46,480 --> 00:07:48,920 Speaker 1: that has happened a few times with that borrowing from 124 00:07:48,920 --> 00:07:52,080 Speaker 1: the munitions account that Roxanna is talking about. But then 125 00:07:52,120 --> 00:07:55,120 Speaker 1: the money never gets put back in, and if the 126 00:07:55,240 --> 00:07:59,160 Speaker 1: US doesn't deplete those munitions, then no real harm is done. 127 00:07:59,520 --> 00:08:03,640 Speaker 1: But as we're seeing now with the Ukraine Security Assistance effort, 128 00:08:03,880 --> 00:08:08,160 Speaker 1: those stockpiles are being diminished. Fifty nine additional Bradley Infantry 129 00:08:08,160 --> 00:08:13,400 Speaker 1: fighting vehicles and ninety Striker armored personnel carriers, fifty three 130 00:08:13,640 --> 00:08:18,040 Speaker 1: M reps and three hundred and fifty up armored humves 131 00:08:18,520 --> 00:08:21,920 Speaker 1: and it will provide thousands more, even as some US 132 00:08:22,000 --> 00:08:24,400 Speaker 1: planners are realizing that perhaps the stockpiles should have been 133 00:08:24,400 --> 00:08:27,360 Speaker 1: bigger to begin with, and there's not a way for 134 00:08:27,720 --> 00:08:34,920 Speaker 1: the contractors to rapidly increase the production to refill the stockpiles. Courtney, 135 00:08:35,080 --> 00:08:38,160 Speaker 1: some of those defense contractors you're talking about have said 136 00:08:38,200 --> 00:08:40,880 Speaker 1: that the supply chain issues we saw across all kinds 137 00:08:40,880 --> 00:08:44,079 Speaker 1: of industries during the pandemic are somewhat to blame. Does 138 00:08:44,120 --> 00:08:47,360 Speaker 1: that explain a lot of this? I think that's part 139 00:08:47,400 --> 00:08:50,720 Speaker 1: of it, But a much bigger part is the embrace 140 00:08:50,800 --> 00:08:54,880 Speaker 1: of the sort of just in time supply philosophy, which 141 00:08:54,960 --> 00:08:58,720 Speaker 1: you may work for a commercial retailer but doesn't work 142 00:08:58,760 --> 00:09:01,880 Speaker 1: for defense contract acting. If you need to rapidly spin 143 00:09:02,000 --> 00:09:04,640 Speaker 1: up production, what do you mean by just in time? 144 00:09:05,160 --> 00:09:09,480 Speaker 1: So that's you know, having equipment inventory arrive right before 145 00:09:09,520 --> 00:09:11,520 Speaker 1: you need to sell it, or in the case of 146 00:09:11,679 --> 00:09:14,880 Speaker 1: a military right before you need to use those munitions 147 00:09:15,000 --> 00:09:17,360 Speaker 1: you have them in hand. That doesn't work when you're 148 00:09:17,400 --> 00:09:21,600 Speaker 1: operating in terms of wartime contingencies and suddenly you need 149 00:09:21,640 --> 00:09:26,280 Speaker 1: to use or supply a partner with massive amounts of 150 00:09:26,400 --> 00:09:29,360 Speaker 1: artillery ammunition. And then you also have to think about 151 00:09:29,360 --> 00:09:32,720 Speaker 1: the fact that there are different incentives operating for a 152 00:09:32,800 --> 00:09:37,599 Speaker 1: private sector firm like a Lockheed or a Boeing or 153 00:09:37,679 --> 00:09:42,480 Speaker 1: a BAE then for the defense department. So these companies 154 00:09:42,520 --> 00:09:46,320 Speaker 1: are accountable to shareholders and they're looking at profit maximization. 155 00:09:46,800 --> 00:09:50,640 Speaker 1: They're not going to expend tens of millions of dollars 156 00:09:50,679 --> 00:09:55,320 Speaker 1: just to potentially have the capacity for increased production. If 157 00:09:55,360 --> 00:09:58,240 Speaker 1: the government tells them it needs it. And that's the 158 00:09:58,280 --> 00:10:02,000 Speaker 1: other issue. The defense industry is suffering from a lack 159 00:10:02,040 --> 00:10:04,160 Speaker 1: of skilled workers. And when you have to ramp up 160 00:10:04,160 --> 00:10:06,960 Speaker 1: like that, it's really hard because you know, you have 161 00:10:07,000 --> 00:10:09,920 Speaker 1: to train them. There's a bunch of other hoops that 162 00:10:10,000 --> 00:10:12,079 Speaker 1: they have to jump through. So it's not as easy, 163 00:10:12,360 --> 00:10:14,880 Speaker 1: you know, as a commercial company to build these weapons 164 00:10:14,920 --> 00:10:18,240 Speaker 1: because you need a certain type of trained person to 165 00:10:18,360 --> 00:10:20,680 Speaker 1: do it. And you know, one of the things that 166 00:10:20,720 --> 00:10:23,920 Speaker 1: the contractors are consistently telling the Pentagon is that they 167 00:10:24,000 --> 00:10:27,760 Speaker 1: need certainty so they can hire and train and maintain 168 00:10:27,800 --> 00:10:30,520 Speaker 1: those skilled workers, and they can have the you know, 169 00:10:30,600 --> 00:10:34,240 Speaker 1: the assembly lines open and ready to expand, but only 170 00:10:34,280 --> 00:10:37,960 Speaker 1: if they have long term contracts that give them some 171 00:10:38,040 --> 00:10:43,719 Speaker 1: financial security to do so. These companies are hobwired to 172 00:10:43,720 --> 00:10:46,760 Speaker 1: sell to the Pentagon. That's in many cases the sole 173 00:10:46,840 --> 00:10:49,280 Speaker 1: customer that they have. If they want to sell to 174 00:10:49,360 --> 00:10:52,080 Speaker 1: foreign customers, they need sign off from the US government. 175 00:10:52,320 --> 00:10:55,400 Speaker 1: And so everything about how to be profitable as a 176 00:10:55,440 --> 00:10:59,640 Speaker 1: large defense contractor flows from being able to build what 177 00:10:59,720 --> 00:11:02,160 Speaker 1: the Pentagon wants, being able to build it on the 178 00:11:02,200 --> 00:11:06,400 Speaker 1: timeline that the Pentagon wants, following the thick handbooks of 179 00:11:06,440 --> 00:11:09,800 Speaker 1: regulations that are involved there, and so you know, really 180 00:11:10,080 --> 00:11:13,040 Speaker 1: defense contractors have kind of remade themselves in the image 181 00:11:13,120 --> 00:11:15,840 Speaker 1: of the Pentagon, and so getting away from that or 182 00:11:16,120 --> 00:11:18,560 Speaker 1: saying to them, like you should be thinking long term, 183 00:11:18,640 --> 00:11:21,360 Speaker 1: you should be building out extra capacity in less in 184 00:11:21,360 --> 00:11:23,960 Speaker 1: case the US wants it is not really a realistic 185 00:11:23,960 --> 00:11:26,920 Speaker 1: proposition if you have to justify your actions as a 186 00:11:26,960 --> 00:11:30,400 Speaker 1: defense industry executive to shareholders. And some of those same 187 00:11:30,440 --> 00:11:33,360 Speaker 1: things that Pete is talking about are actually barriers to 188 00:11:33,600 --> 00:11:37,640 Speaker 1: entry for smaller companies, perhaps more innovative companies that might 189 00:11:37,720 --> 00:11:42,120 Speaker 1: have something to offer to the Pentagon. I wanted to 190 00:11:42,160 --> 00:11:45,920 Speaker 1: ask exactly about that, because it used to be that 191 00:11:46,040 --> 00:11:51,160 Speaker 1: there were a lot of defense contractors and now it's 192 00:11:51,240 --> 00:11:54,720 Speaker 1: dwindled down to really five big players. How did it 193 00:11:54,840 --> 00:11:59,280 Speaker 1: happen that the industry has so consolidated that you really 194 00:11:59,320 --> 00:12:03,199 Speaker 1: have just a bare handful responsible for producing almost everything 195 00:12:03,240 --> 00:12:06,840 Speaker 1: that the military requires. So in the aftermath of the 196 00:12:06,880 --> 00:12:10,240 Speaker 1: Cold War, US politicians got very excited about this idea 197 00:12:10,320 --> 00:12:13,400 Speaker 1: called the peace dividend, this idea that you could bolster 198 00:12:13,840 --> 00:12:18,200 Speaker 1: domestic economic growth by reducing military spending and diverting those 199 00:12:18,400 --> 00:12:22,880 Speaker 1: efforts elsewhere. And of course the big adversary for decades. 200 00:12:23,000 --> 00:12:26,360 Speaker 1: The Soviet Union was winding downs, and so this existential 201 00:12:26,400 --> 00:12:29,000 Speaker 1: threat that required such a huge military was seen as 202 00:12:29,080 --> 00:12:32,080 Speaker 1: no longer necessary. It had completely disappeared. And you know, 203 00:12:32,280 --> 00:12:36,640 Speaker 1: after the Soviet Union, foul military planners were rethinking what 204 00:12:36,800 --> 00:12:39,839 Speaker 1: America's national security environment looked like. This was going to 205 00:12:39,920 --> 00:12:43,560 Speaker 1: be an environment where failed states were a problem, where 206 00:12:43,760 --> 00:12:46,320 Speaker 1: terrorists popped up and were a threat to the US. 207 00:12:46,800 --> 00:12:51,600 Speaker 1: The idea of a large industrial war involving land armies 208 00:12:51,640 --> 00:12:55,040 Speaker 1: and huge protracted conflicts was something that was supposed to 209 00:12:55,080 --> 00:12:59,120 Speaker 1: belong to the past, and so the US and the 210 00:12:59,160 --> 00:13:02,240 Speaker 1: Pentagon in particular, the hope that the defense industry would 211 00:13:02,320 --> 00:13:06,720 Speaker 1: respond accordingly. And there was this kind of extraordinary clarifying 212 00:13:06,760 --> 00:13:10,280 Speaker 1: moment in the early nineties where then Deputy Secretary of 213 00:13:10,320 --> 00:13:13,800 Speaker 1: Defense William Perry called in the largest defense contractors and 214 00:13:13,840 --> 00:13:17,120 Speaker 1: told them, you guys need to consolidate, or there's not 215 00:13:17,200 --> 00:13:18,840 Speaker 1: going to be enough of a pie for you in 216 00:13:18,880 --> 00:13:21,480 Speaker 1: the future. And they did. They followed his lead. It 217 00:13:21,559 --> 00:13:24,280 Speaker 1: was just this kind of epochal event known now by 218 00:13:24,360 --> 00:13:27,400 Speaker 1: defense industry inside is There's the Last Supper, This kind 219 00:13:27,400 --> 00:13:30,679 Speaker 1: of clarifying moment where they realized that, you know, this 220 00:13:30,760 --> 00:13:33,080 Speaker 1: was the direction of things and they'd better follow or 221 00:13:33,120 --> 00:13:37,120 Speaker 1: face extinction. And they did. They really did start to 222 00:13:37,480 --> 00:13:39,920 Speaker 1: kind of gobble each other up. Is that right, Roxana, 223 00:13:40,120 --> 00:13:42,960 Speaker 1: Yes they did. And now we're down to five basically, 224 00:13:43,280 --> 00:13:48,000 Speaker 1: and who are the five? It's lacked Martin Boeing, General 225 00:13:48,080 --> 00:13:53,920 Speaker 1: Dynamics north of Grumman and Raytheon when we come back, 226 00:13:54,240 --> 00:13:58,000 Speaker 1: why it matters that just five companies are left to 227 00:13:58,080 --> 00:14:10,920 Speaker 1: build the military's big weapons systems. So there's consolidation of 228 00:14:10,960 --> 00:14:15,319 Speaker 1: the defense contracting industry, five companies now dominating it. How 229 00:14:15,360 --> 00:14:17,720 Speaker 1: has that affected the ability of the Pentagon and also 230 00:14:17,760 --> 00:14:21,720 Speaker 1: these companies to be innovative, to be creative, to come 231 00:14:21,800 --> 00:14:24,640 Speaker 1: up with new ideas, to be agile and quick. So 232 00:14:24,760 --> 00:14:29,680 Speaker 1: it has definitely affected it because there's very little incentive 233 00:14:29,920 --> 00:14:33,080 Speaker 1: to be innovative and creative because that means going off 234 00:14:33,120 --> 00:14:36,600 Speaker 1: the path that the Pentagon is basically laying out for you. 235 00:14:36,960 --> 00:14:39,440 Speaker 1: If the Pentagon doesn't want to buy it or doesn't 236 00:14:39,440 --> 00:14:41,720 Speaker 1: want to invest in it, that there's no point in 237 00:14:41,840 --> 00:14:45,200 Speaker 1: coming up with some innovative technologies. But that would be 238 00:14:45,320 --> 00:14:48,200 Speaker 1: unfair to the industry. They do spend some money on 239 00:14:48,360 --> 00:14:52,600 Speaker 1: research and development to come up with new and innovative technologies, right, 240 00:14:52,880 --> 00:14:56,280 Speaker 1: but it makes it really hard for for example, you 241 00:14:56,280 --> 00:14:58,600 Speaker 1: know you had the rise of Silicon Valley. It makes 242 00:14:58,600 --> 00:15:01,680 Speaker 1: it really hard for those types of companies to go 243 00:15:01,720 --> 00:15:05,240 Speaker 1: into business with the Pentagon because of all the regulations. 244 00:15:05,560 --> 00:15:08,440 Speaker 1: There's a lot of security clearance required. They can't do 245 00:15:08,480 --> 00:15:11,080 Speaker 1: business with anyone else if they end up doing business 246 00:15:11,080 --> 00:15:15,600 Speaker 1: with the Pentagon. So there's just no real incentive to 247 00:15:15,880 --> 00:15:19,240 Speaker 1: move fast and to offer certain things to the Pentagon 248 00:15:19,320 --> 00:15:22,600 Speaker 1: when it comes to the new tech companies. The best 249 00:15:22,640 --> 00:15:26,000 Speaker 1: example of this would be SpaceX, who had to sue 250 00:15:26,000 --> 00:15:30,400 Speaker 1: the government to be allowed to compete for national security 251 00:15:30,400 --> 00:15:33,400 Speaker 1: space launches basically launching satellites into space for the Pentagon, 252 00:15:33,560 --> 00:15:36,920 Speaker 1: because the Pentagon was giving all these contracts and focused 253 00:15:37,240 --> 00:15:41,520 Speaker 1: on the United launch allowance. It's basically a venture between 254 00:15:41,640 --> 00:15:45,120 Speaker 1: Boeing and Lockheed Martin. But they couldn't do these launches 255 00:15:45,120 --> 00:15:49,320 Speaker 1: without Russian made rocket engines, and so ellen Musk had 256 00:15:49,320 --> 00:15:52,360 Speaker 1: to sue the government. He eventually won and now is 257 00:15:52,400 --> 00:15:55,400 Speaker 1: one of the bigger providers of these satellite launches. But 258 00:15:55,440 --> 00:15:57,080 Speaker 1: it took a lot of patients and it took a 259 00:15:57,080 --> 00:15:59,320 Speaker 1: lot of great to do this. It was this really 260 00:15:59,320 --> 00:16:02,840 Speaker 1: fascinating study done by the Hudson Institute, which is a 261 00:16:02,920 --> 00:16:06,760 Speaker 1: Washington think tank, where they kind of looked at dozens 262 00:16:06,800 --> 00:16:09,840 Speaker 1: of weapons systems and figure out what does the timeline 263 00:16:09,920 --> 00:16:12,600 Speaker 1: look like from going from inception of an idea through 264 00:16:12,640 --> 00:16:15,800 Speaker 1: to delivery, and they found pretty shocking stuff. And this 265 00:16:15,920 --> 00:16:19,080 Speaker 1: evolution that's taken place from the nineteen fifties where it 266 00:16:19,120 --> 00:16:22,040 Speaker 1: took on average, I think one year to go from 267 00:16:22,120 --> 00:16:25,720 Speaker 1: identifying a need to issuing a contract to today where 268 00:16:25,720 --> 00:16:28,080 Speaker 1: it takes about seven years to go from identifying a 269 00:16:28,160 --> 00:16:31,440 Speaker 1: need to issuing a contract. Then once that contract is 270 00:16:31,440 --> 00:16:34,600 Speaker 1: issued for an innovative weapons system in the case of 271 00:16:34,640 --> 00:16:37,600 Speaker 1: the F thirty five fighter, it took a further twenty 272 00:16:37,600 --> 00:16:41,400 Speaker 1: one years to get it from contract to something that 273 00:16:41,480 --> 00:16:44,040 Speaker 1: was usable for the military. So it's really an extraordinary 274 00:16:44,080 --> 00:16:49,239 Speaker 1: timeline when you think about how quickly technology is developing. 275 00:16:49,640 --> 00:16:54,440 Speaker 1: And meanwhile, China in particular has decreased the amount of 276 00:16:54,440 --> 00:16:57,840 Speaker 1: time it takes to go from concept to actual reality 277 00:16:58,240 --> 00:17:01,440 Speaker 1: exactly moving from the air to the ground. Corney, what 278 00:17:01,480 --> 00:17:05,960 Speaker 1: does this mean for more conventional WESTMN systems for fighting 279 00:17:06,000 --> 00:17:08,720 Speaker 1: on the ground, which, as we're seeing now in Ukraine 280 00:17:08,720 --> 00:17:12,080 Speaker 1: in other places is still really relevant. The army has 281 00:17:12,160 --> 00:17:15,919 Speaker 1: no successors to the Abrams tank and the Bradley fighting vehicle, 282 00:17:16,080 --> 00:17:20,159 Speaker 1: which were developed through the sixties and seventies, fielded in 283 00:17:20,200 --> 00:17:22,800 Speaker 1: the eighties and made their debut in Desert Storm back 284 00:17:22,800 --> 00:17:25,760 Speaker 1: in nineteen ninety. They have been top of class, but 285 00:17:25,880 --> 00:17:30,840 Speaker 1: are losing ground to competitors, both friendly and not so friendly. 286 00:17:31,320 --> 00:17:34,360 Speaker 1: I think there was also this period of the War 287 00:17:34,440 --> 00:17:36,720 Speaker 1: on Terror in some ways kind of vindicated the decisions 288 00:17:36,760 --> 00:17:38,160 Speaker 1: that were made at the end of the Cold War. 289 00:17:38,680 --> 00:17:42,240 Speaker 1: You had this shift to just in time manufacturing and 290 00:17:42,520 --> 00:17:45,160 Speaker 1: this idea that production lines were going to be nimble 291 00:17:45,240 --> 00:17:48,720 Speaker 1: and quick and when you're chasing terrorists around. Actually it 292 00:17:48,800 --> 00:17:51,080 Speaker 1: turned out that the defense industrial base was able to 293 00:17:51,119 --> 00:17:55,200 Speaker 1: meet that challenge pretty squarely. Terrorists don't require super high 294 00:17:55,200 --> 00:17:58,800 Speaker 1: tech solutions and they don't require massive amounts of production. 295 00:17:59,040 --> 00:18:02,639 Speaker 1: But the China as it emerged, and then Russia's invasion 296 00:18:02,640 --> 00:18:06,640 Speaker 1: of Ukraine really highlighted that those assumptions about the adversaries 297 00:18:06,680 --> 00:18:08,360 Speaker 1: that the US was going to be facing were wrong 298 00:18:08,400 --> 00:18:10,800 Speaker 1: and something else was needed. Absolutely, and I think there 299 00:18:10,800 --> 00:18:13,480 Speaker 1: had been a lot of talk about the death of 300 00:18:13,720 --> 00:18:16,320 Speaker 1: tank warfare altogether. I think a lot of people thought 301 00:18:16,320 --> 00:18:20,240 Speaker 1: of it as something of an anachronism, and obviously the 302 00:18:20,320 --> 00:18:23,600 Speaker 1: value of tanks in Russia's war on Ukraine has led 303 00:18:23,600 --> 00:18:26,159 Speaker 1: people to question a lot of those assumptions. There's a 304 00:18:26,200 --> 00:18:30,400 Speaker 1: political problem looming here when it comes to this talk 305 00:18:30,400 --> 00:18:33,560 Speaker 1: of supply chains. When you speak to people who are 306 00:18:33,920 --> 00:18:37,320 Speaker 1: deeply involved in the US events industry, they'll say, well, 307 00:18:37,359 --> 00:18:39,440 Speaker 1: you know, we've got to reshore supply chains. We kind 308 00:18:39,440 --> 00:18:43,080 Speaker 1: of embrace this old vision of globalization anymore. America's got 309 00:18:43,080 --> 00:18:45,320 Speaker 1: to make these parts so that our supply chains is secure. 310 00:18:45,560 --> 00:18:47,439 Speaker 1: And that's all very well and good in theory, and 311 00:18:47,480 --> 00:18:48,920 Speaker 1: then you kind of push them on it a little 312 00:18:48,920 --> 00:18:50,879 Speaker 1: bit and they say, well, you know, the American public 313 00:18:51,040 --> 00:18:53,760 Speaker 1: is going to have to deal with higher costs, and 314 00:18:53,840 --> 00:18:56,399 Speaker 1: you kind of think to yourself, well are you going 315 00:18:56,440 --> 00:18:58,800 Speaker 1: to tell them, because there are arguments about the debt 316 00:18:58,800 --> 00:19:00,560 Speaker 1: sailing at the moment. You know, these are going to 317 00:19:00,760 --> 00:19:04,520 Speaker 1: create political fights, and it's a conversation I don't think 318 00:19:04,560 --> 00:19:07,080 Speaker 1: the US politicians have had with the US public yet. 319 00:19:09,400 --> 00:19:12,200 Speaker 1: So we've talked about a lot of things that we 320 00:19:12,359 --> 00:19:15,840 Speaker 1: know are not working. Well, what is the Pentagon doing 321 00:19:15,960 --> 00:19:20,119 Speaker 1: now to try to rectify this situation to improve it 322 00:19:20,160 --> 00:19:23,040 Speaker 1: in the future. They definitely have learned from the war 323 00:19:23,080 --> 00:19:27,480 Speaker 1: in Ukraine. They're investing more in munition production. They are 324 00:19:27,480 --> 00:19:30,399 Speaker 1: trying to look at ways to move a little faster. 325 00:19:30,480 --> 00:19:34,800 Speaker 1: They're trying to overhaul their planning and budgeting process. In fact, 326 00:19:34,800 --> 00:19:37,720 Speaker 1: their Congress is making them do that, and they're supposed 327 00:19:37,720 --> 00:19:40,879 Speaker 1: to come up with some answers this year. So do 328 00:19:40,920 --> 00:19:43,639 Speaker 1: you definitely see movement and you see the realization. You 329 00:19:43,680 --> 00:19:46,560 Speaker 1: also have Congress who realize that they need to sort 330 00:19:46,600 --> 00:19:49,560 Speaker 1: of back up the Pentagon. They have green lighted a 331 00:19:49,600 --> 00:19:53,240 Speaker 1: lot more multi year contracts that gives a lot more 332 00:19:53,240 --> 00:19:56,200 Speaker 1: predictability to the industry. I mean, one of the things 333 00:19:56,200 --> 00:19:58,960 Speaker 1: that you realize when you look at this problem is 334 00:19:59,000 --> 00:20:03,840 Speaker 1: that almost everyone who's involved recognizes that the system is 335 00:20:03,840 --> 00:20:07,440 Speaker 1: at massive volt from the White House through to the 336 00:20:07,840 --> 00:20:12,639 Speaker 1: bowels of the Pentagon to boardrooms of defense companies. Everyone 337 00:20:12,720 --> 00:20:15,040 Speaker 1: knows that there's a problem, But the system is so 338 00:20:15,160 --> 00:20:19,199 Speaker 1: huge and so sprawling that no one, including Congress in 339 00:20:19,240 --> 00:20:21,840 Speaker 1: the White House, really have the ability to fully get 340 00:20:21,840 --> 00:20:24,240 Speaker 1: their hands around the problem and can only kind of 341 00:20:24,240 --> 00:20:26,320 Speaker 1: look at it from their own narrow perspective. And so 342 00:20:26,359 --> 00:20:29,680 Speaker 1: that makes reforming it a really huge undertaking, and it's 343 00:20:30,400 --> 00:20:32,359 Speaker 1: the kind of action that's not easy to accomplish in 344 00:20:32,400 --> 00:20:35,600 Speaker 1: Washington at the moment. Yeah. I mean, I think John Ferrari, 345 00:20:35,680 --> 00:20:39,800 Speaker 1: who's a retired Army major general who led the Services 346 00:20:39,920 --> 00:20:44,000 Speaker 1: Officer Program an Analysis and Evaluation, said, you're fighting the 347 00:20:44,080 --> 00:20:48,040 Speaker 1: ultimate system. There's actually nobody and no single place to 348 00:20:48,080 --> 00:20:50,000 Speaker 1: go to change it. He said, you know, you can 349 00:20:50,040 --> 00:20:52,640 Speaker 1: poker at it from around the edges, but it's a 350 00:20:52,640 --> 00:20:55,919 Speaker 1: living organism that nobody actually controls, you know. And I 351 00:20:55,960 --> 00:21:00,119 Speaker 1: thought that was just particularly illustrative of the problem in 352 00:21:00,200 --> 00:21:04,280 Speaker 1: all of this. How concern should Americans be about US 353 00:21:04,359 --> 00:21:08,000 Speaker 1: military readiness the ability of the US to fight a war? 354 00:21:08,800 --> 00:21:10,160 Speaker 1: You know, I think there are a couple of ways 355 00:21:10,200 --> 00:21:13,040 Speaker 1: to come at that. If you put your pessimists hat on, 356 00:21:13,440 --> 00:21:16,960 Speaker 1: you would say that the most surefire way to prevent 357 00:21:17,119 --> 00:21:20,680 Speaker 1: a major war with an adversary like China is ensuring 358 00:21:20,720 --> 00:21:23,200 Speaker 1: that the US is ready to fight one. And if 359 00:21:23,320 --> 00:21:27,600 Speaker 1: you are Chinese intelligence and you're looking at the way 360 00:21:27,640 --> 00:21:32,440 Speaker 1: that US munition stockpiles are depleting as America's supplies Ukraine 361 00:21:32,560 --> 00:21:35,879 Speaker 1: against Russia, You're likely to be thinking, well, what do 362 00:21:36,000 --> 00:21:39,440 Speaker 1: America's stockpiles look like when it comes to the kind 363 00:21:39,440 --> 00:21:42,200 Speaker 1: of missiles they'd need to stop US from invading Taiwan, 364 00:21:42,440 --> 00:21:46,640 Speaker 1: And those lessons, I think are pretty sobering and pretty worrying. 365 00:21:46,800 --> 00:21:50,119 Speaker 1: And it's not necessarily because the US plans on fighting 366 00:21:50,160 --> 00:21:52,600 Speaker 1: war anytime soon, but because it needs to have the 367 00:21:52,640 --> 00:21:55,399 Speaker 1: strength to stop one from breaking out. I think the 368 00:21:55,440 --> 00:21:59,800 Speaker 1: optimists angle is that China has huge problems too. The 369 00:22:00,040 --> 00:22:04,879 Speaker 1: US military industrial bases replete with shortcomings. China's is also. 370 00:22:05,160 --> 00:22:08,359 Speaker 1: You know, China faces massive problems when it comes to corruption, 371 00:22:08,600 --> 00:22:12,040 Speaker 1: It faces huge problems when it comes to innovating, even 372 00:22:12,040 --> 00:22:16,840 Speaker 1: on very foundational technologies like semiconductors and jet engines. China 373 00:22:16,920 --> 00:22:19,879 Speaker 1: is struggling and is deploying people to try and copy 374 00:22:19,920 --> 00:22:22,080 Speaker 1: systems from the US. So I think that, you know, 375 00:22:22,119 --> 00:22:24,240 Speaker 1: the optimist case is that the US is still very 376 00:22:24,320 --> 00:22:27,240 Speaker 1: much in the lead, but that there are questions about 377 00:22:27,240 --> 00:22:30,760 Speaker 1: whether it can sustain that. Pepe, you mentioned how the 378 00:22:30,800 --> 00:22:34,520 Speaker 1: F thirty five other weapons systems take decades from concept 379 00:22:34,600 --> 00:22:39,320 Speaker 1: to actually being built. What is in the pipeline now 380 00:22:40,119 --> 00:22:43,520 Speaker 1: as we look at rapid changes in technology that will 381 00:22:43,560 --> 00:22:45,800 Speaker 1: be the weapons of the future for the US. So 382 00:22:45,840 --> 00:22:48,840 Speaker 1: I think there's a lot of focus on autonomous systems, 383 00:22:48,920 --> 00:22:53,359 Speaker 1: you know, submarines that aren't manned, further developments in drone technology. 384 00:22:53,440 --> 00:22:55,920 Speaker 1: But the thing that people are really excited about at 385 00:22:55,920 --> 00:23:00,000 Speaker 1: the moment is this concept called JABC two, which means 386 00:23:00,359 --> 00:23:04,679 Speaker 1: Joint All Domain Command and Control. Basically, it's the idea 387 00:23:04,760 --> 00:23:09,919 Speaker 1: that using satellites, undersea cables, swarms of drones, you ensure 388 00:23:09,960 --> 00:23:13,600 Speaker 1: that the war fighter in the battlefield, the naval assets, 389 00:23:13,760 --> 00:23:17,560 Speaker 1: the fighters overhead, and intelligence are all able to talk 390 00:23:17,600 --> 00:23:19,560 Speaker 1: to each other in real time. And it's the idea 391 00:23:19,600 --> 00:23:22,200 Speaker 1: that the US will have an advantage by being able 392 00:23:22,240 --> 00:23:25,679 Speaker 1: to outthink or think more quickly than its potential opponents. 393 00:23:26,000 --> 00:23:29,200 Speaker 1: And that's what the Pentagon is actively working toward right now. 394 00:23:29,560 --> 00:23:32,000 Speaker 1: They're actively working on that. Yeah, but it is very 395 00:23:32,040 --> 00:23:35,000 Speaker 1: much of the conceptual stage, as you get from the 396 00:23:35,000 --> 00:23:39,680 Speaker 1: clunky Jatz to acronym Courtney Roxanna Pete, thanks so much 397 00:23:39,720 --> 00:23:42,560 Speaker 1: for coming on the show. Thank you, thanks for having us, 398 00:23:42,800 --> 00:23:46,040 Speaker 1: Thank you for having us. When we come back, a 399 00:23:46,160 --> 00:23:56,840 Speaker 1: view of the Pentagon from someone who's been on the inside. Now, 400 00:23:56,920 --> 00:24:01,000 Speaker 1: let's hear another view about the challenges the US military faces. 401 00:24:01,440 --> 00:24:05,800 Speaker 1: Michelle Flournoy is co founder and managing partner of West 402 00:24:05,840 --> 00:24:12,080 Speaker 1: Exact Advisors, that's a national security consulting firm here in Washington. Michelle, 403 00:24:12,119 --> 00:24:16,800 Speaker 1: you served as Deputy Assistant Secretary of Defense for Strategy 404 00:24:17,080 --> 00:24:20,280 Speaker 1: under President Bill Clinton, and then you came back to 405 00:24:20,359 --> 00:24:24,879 Speaker 1: the Department a decade later as Under Secretary of Defense 406 00:24:24,920 --> 00:24:29,040 Speaker 1: for Policy when Barack Obama was president. So, from what 407 00:24:29,160 --> 00:24:31,960 Speaker 1: you've seen, has the Pentagon done a good job of 408 00:24:32,119 --> 00:24:35,679 Speaker 1: adapting over the years. One of my privileges in the 409 00:24:35,720 --> 00:24:38,720 Speaker 1: Pentagon was to work for Secretary of Defense Bob Gates, 410 00:24:38,800 --> 00:24:41,679 Speaker 1: and he used to like to say that we have 411 00:24:41,720 --> 00:24:45,440 Speaker 1: a perfect track record in predicting future conflict. We never 412 00:24:45,520 --> 00:24:49,120 Speaker 1: get it right. And so the Pentagon is always in 413 00:24:49,160 --> 00:24:55,679 Speaker 1: the situation where we've organized, trained, equipped, prepared for conflicts 414 00:24:55,720 --> 00:24:59,320 Speaker 1: that we foresee in the future, and almost always the 415 00:24:59,359 --> 00:25:02,080 Speaker 1: world pulls us in a different direction and you have 416 00:25:02,160 --> 00:25:05,280 Speaker 1: to adapt all of that to a new set of circumstances, 417 00:25:05,400 --> 00:25:08,480 Speaker 1: usually with very little time. What has a Pentagon done 418 00:25:08,520 --> 00:25:12,520 Speaker 1: well in adapting as you describe it, and where has 419 00:25:12,520 --> 00:25:18,000 Speaker 1: it really fallen short? So I think probably our strength 420 00:25:18,040 --> 00:25:22,840 Speaker 1: and adaptation is in our people. When you look at 421 00:25:22,880 --> 00:25:26,600 Speaker 1: how we responded to nine to eleven and the ability 422 00:25:26,640 --> 00:25:29,879 Speaker 1: of particularly of our initially our special operations forces to 423 00:25:30,000 --> 00:25:34,359 Speaker 1: pivot and focus on a very different threat. I think 424 00:25:34,440 --> 00:25:36,960 Speaker 1: that was pretty impressive. I think what's harder is what 425 00:25:37,040 --> 00:25:40,280 Speaker 1: we budget for and procure. Our fiscal year twenty three 426 00:25:40,320 --> 00:25:44,280 Speaker 1: budget request included more than fifty six billion dollars for 427 00:25:44,440 --> 00:25:47,800 Speaker 1: air power platforms and systems, and more than forty billion 428 00:25:47,840 --> 00:25:52,040 Speaker 1: dollars to maintain our dominance at C and almost thirteen 429 00:25:52,119 --> 00:25:55,160 Speaker 1: billion dollars to support and modernize our forces on land, 430 00:25:55,440 --> 00:25:58,000 Speaker 1: and some thirty four billion dollars to take years and 431 00:25:58,160 --> 00:26:01,840 Speaker 1: years to move a weapon system from research and development 432 00:26:01,920 --> 00:26:05,679 Speaker 1: into acquisition and then finally actually fielding it in the force. 433 00:26:06,240 --> 00:26:10,680 Speaker 1: And so you know, you're buying things now that you'll 434 00:26:10,680 --> 00:26:15,800 Speaker 1: see in ten, fifteen, twenty years. And once those programmatic 435 00:26:16,040 --> 00:26:20,040 Speaker 1: trajectories are set, it's very hard to change or adapt them, 436 00:26:20,320 --> 00:26:23,680 Speaker 1: either because of new circumstances in the world and new needs, 437 00:26:24,240 --> 00:26:28,320 Speaker 1: or because of technology disruption, like better solutions or things 438 00:26:28,359 --> 00:26:31,040 Speaker 1: that you could add and make something better. So those 439 00:26:31,080 --> 00:26:34,879 Speaker 1: are the places where it's really hard to turn. The 440 00:26:34,920 --> 00:26:41,200 Speaker 1: proverbial aircraft carrier. Has Abandagon focused too much on big 441 00:26:41,359 --> 00:26:46,000 Speaker 1: weapons systems at the expense of smaller, more agile weapon 442 00:26:46,080 --> 00:26:48,439 Speaker 1: systems that it would allow it to adapt more quickly. 443 00:26:49,119 --> 00:26:52,520 Speaker 1: I think any American force has to be a mix 444 00:26:52,680 --> 00:26:56,240 Speaker 1: of high end, cutting edge systems that will be kind 445 00:26:56,240 --> 00:26:58,639 Speaker 1: of the backbone of the force structure, like a fifth 446 00:26:58,640 --> 00:27:02,639 Speaker 1: generation aircraft or the world's best aircraft carrier or what 447 00:27:02,840 --> 00:27:07,000 Speaker 1: have you. But the key in this environment where technology 448 00:27:07,119 --> 00:27:11,080 Speaker 1: is changing so fast, threats are evolving so quickly, is 449 00:27:11,119 --> 00:27:15,359 Speaker 1: we have to be able to inject new technologies, new concepts, 450 00:27:15,400 --> 00:27:20,000 Speaker 1: new solutions to marry them up with those legacy platforms 451 00:27:20,240 --> 00:27:22,320 Speaker 1: if we're going to be successful, because once you buy 452 00:27:22,359 --> 00:27:25,000 Speaker 1: that carrier force, that fighter force, you're going to have 453 00:27:25,119 --> 00:27:29,240 Speaker 1: it for decades. Has China been better at adapting and 454 00:27:29,400 --> 00:27:33,560 Speaker 1: being quicker and more agile at changing, I would not 455 00:27:33,760 --> 00:27:37,720 Speaker 1: say so. In general. I think they have stolen a 456 00:27:37,720 --> 00:27:41,440 Speaker 1: lot of intellectual property from our defense contractors. They've copied 457 00:27:41,480 --> 00:27:44,280 Speaker 1: a lot of our systems. What they have been able 458 00:27:44,280 --> 00:27:47,200 Speaker 1: to do is they have a state, an authoritarian system 459 00:27:47,240 --> 00:27:51,160 Speaker 1: that can throw massive amounts of resources. I think where 460 00:27:51,240 --> 00:27:55,320 Speaker 1: they have taken a leap ahead of us technologically, it's 461 00:27:55,359 --> 00:27:57,760 Speaker 1: been less that they've been so good and more that 462 00:27:57,840 --> 00:28:00,760 Speaker 1: we took a break or a pause or didn't move 463 00:28:00,840 --> 00:28:03,920 Speaker 1: something forward. What do you mean by that? Hypersonics is 464 00:28:03,960 --> 00:28:07,160 Speaker 1: a good example where we had a number of programs, 465 00:28:07,600 --> 00:28:11,520 Speaker 1: we had a mixed record, some successes, some failures, and 466 00:28:11,560 --> 00:28:15,520 Speaker 1: then the Department basically didn't invest much in hypersonics for 467 00:28:15,560 --> 00:28:18,720 Speaker 1: a number of years, either believing that they weren't that 468 00:28:18,880 --> 00:28:23,480 Speaker 1: important or believing that the technology wasn't quite ready. Meanwhile, 469 00:28:23,600 --> 00:28:27,280 Speaker 1: the Chinese saw this and just put mass against the 470 00:28:27,359 --> 00:28:30,400 Speaker 1: problem for years and years and years, and then they 471 00:28:30,480 --> 00:28:33,680 Speaker 1: basically caught up and then actually surpassed us in terms 472 00:28:33,680 --> 00:28:36,880 Speaker 1: of fielding a system, and so now we're playing catchup. 473 00:28:38,520 --> 00:28:42,600 Speaker 1: China's hypersonic missile test in twenty twenty one was sort 474 00:28:42,600 --> 00:28:45,040 Speaker 1: of a big wake up call for the US military. 475 00:28:45,080 --> 00:28:49,640 Speaker 1: You described it, I believe as encapsulating a failure to 476 00:28:49,680 --> 00:28:55,000 Speaker 1: transition critical technologies from research and development to production. How 477 00:28:55,400 --> 00:28:58,240 Speaker 1: sort of big a deal was that when it happened? Well, 478 00:28:58,280 --> 00:29:01,440 Speaker 1: I think you know, this is a case that is 479 00:29:01,520 --> 00:29:05,120 Speaker 1: emblematic of a larger problem, which is we are really 480 00:29:05,160 --> 00:29:11,520 Speaker 1: good at inventing those cutting edge technologies, demonstrating them, prototyping them. 481 00:29:11,880 --> 00:29:14,960 Speaker 1: We are not so good at helping them cross the 482 00:29:15,080 --> 00:29:18,520 Speaker 1: valley of death. And actually getting into the force, so 483 00:29:18,600 --> 00:29:22,200 Speaker 1: into production at scale and field it at scale. And 484 00:29:22,320 --> 00:29:25,720 Speaker 1: that's a problem that the department is working on. But 485 00:29:25,880 --> 00:29:30,760 Speaker 1: we haven't consistently cracked the code. Why is that you've 486 00:29:30,760 --> 00:29:34,400 Speaker 1: seen it from the inside since then you've seen it 487 00:29:34,560 --> 00:29:37,160 Speaker 1: from the outside as a consultant and someone who thinks 488 00:29:37,240 --> 00:29:39,960 Speaker 1: all the time about these issues. What is it about 489 00:29:40,000 --> 00:29:44,400 Speaker 1: the Pentagon that doesn't let it work quickly enough? Well? 490 00:29:44,440 --> 00:29:46,640 Speaker 1: I think there are a couple of things. First of all, 491 00:29:47,120 --> 00:29:49,800 Speaker 1: the bulk of cutting edge r and D research and 492 00:29:49,800 --> 00:29:54,600 Speaker 1: development has moved from being US government and Defense Department 493 00:29:54,680 --> 00:29:58,800 Speaker 1: driven to now in many key technology areas that are 494 00:29:58,920 --> 00:30:01,840 Speaker 1: essential for national security, that cutting edge is coming out 495 00:30:01,840 --> 00:30:05,320 Speaker 1: of the commercial sector. So it's not a matter of 496 00:30:05,360 --> 00:30:08,880 Speaker 1: the government investing and then taking a program to production. 497 00:30:09,360 --> 00:30:12,440 Speaker 1: It's a question of innovation adoption. How do you take 498 00:30:12,480 --> 00:30:17,000 Speaker 1: a commercial technology, adapt it and then bring it into 499 00:30:17,840 --> 00:30:22,400 Speaker 1: defense systems. That's a very different challenge, and it means 500 00:30:22,440 --> 00:30:27,160 Speaker 1: that you have to train and incentivize your acquisition workforce differently. 501 00:30:28,520 --> 00:30:31,040 Speaker 1: Is it part of that? Because we went from having 502 00:30:31,480 --> 00:30:37,440 Speaker 1: say seventy defense contracting companies competing for various programs, A 503 00:30:37,440 --> 00:30:40,200 Speaker 1: lot of places go to a huge consolidation where we 504 00:30:40,240 --> 00:30:42,719 Speaker 1: now when we have a handful of them. I do 505 00:30:42,800 --> 00:30:46,760 Speaker 1: think that has been a factor. You know, every program 506 00:30:46,800 --> 00:30:49,840 Speaker 1: that one of the prime contractors wins becomes a do 507 00:30:50,040 --> 00:30:53,320 Speaker 1: or die program. They're very very good at making sure 508 00:30:53,360 --> 00:30:56,320 Speaker 1: that components for those programs are produced. What do you 509 00:30:56,360 --> 00:31:00,360 Speaker 1: know across all fifty states, and so you've got all 510 00:31:00,520 --> 00:31:03,520 Speaker 1: one hundred senators you know, wanting to support your program. 511 00:31:03,880 --> 00:31:06,280 Speaker 1: So we need to get a lot more creative about 512 00:31:06,280 --> 00:31:12,560 Speaker 1: how we partner with commercial companies to get that greater resilience. 513 00:31:12,960 --> 00:31:16,760 Speaker 1: And then there are just things that are not hardware AI. 514 00:31:17,120 --> 00:31:19,520 Speaker 1: For example, well, first of all, moving to the cloud, 515 00:31:19,760 --> 00:31:22,840 Speaker 1: being able to leverage the data, the massive amounts of 516 00:31:22,960 --> 00:31:25,680 Speaker 1: data that d D sits on. I think give credit 517 00:31:25,720 --> 00:31:28,320 Speaker 1: to the Department for really trying to crack the code 518 00:31:28,320 --> 00:31:31,720 Speaker 1: on that, but then starting to use AI to make 519 00:31:31,880 --> 00:31:37,880 Speaker 1: human decision making better, to enable better quality, faster decision making, 520 00:31:37,880 --> 00:31:40,560 Speaker 1: and a whole host of areas that is very ripe 521 00:31:40,560 --> 00:31:45,120 Speaker 1: for the picking now. In twenty twenty, you wrote that 522 00:31:45,800 --> 00:31:49,680 Speaker 1: unless the US invests more in long range missile technology, 523 00:31:50,040 --> 00:31:55,040 Speaker 1: and especially because of cyber capabilities increasing, the US could 524 00:31:55,040 --> 00:31:59,160 Speaker 1: find itself stumbling into a nuclear confrontation with China if 525 00:31:59,400 --> 00:32:03,800 Speaker 1: China were to attack Taiwan. Does that still concern you 526 00:32:03,880 --> 00:32:05,840 Speaker 1: at this moment where there are a lot of height 527 00:32:05,920 --> 00:32:10,160 Speaker 1: intentions and questions about China's intentions with respect to Taiwan. Yeah, 528 00:32:10,200 --> 00:32:13,840 Speaker 1: I do think the relationship is on a downward trajectory, 529 00:32:14,280 --> 00:32:17,680 Speaker 1: despite I think the administration's attempt to try to put 530 00:32:17,680 --> 00:32:21,840 Speaker 1: a floor underneath that. I do think Hijimping is a 531 00:32:21,840 --> 00:32:24,440 Speaker 1: different kind of Chinese leader, and he has made it 532 00:32:24,560 --> 00:32:28,000 Speaker 1: very clear that he views the reunification of Taiwan as 533 00:32:28,040 --> 00:32:31,400 Speaker 1: a legacy issue. It's clear that he prefers to do 534 00:32:31,480 --> 00:32:34,440 Speaker 1: that through political and economic coersion, but he's also told 535 00:32:34,440 --> 00:32:37,160 Speaker 1: his military that if that doesn't work, I want an option. 536 00:32:37,240 --> 00:32:39,960 Speaker 1: I want a real option by twenty twenty seven. So 537 00:32:40,080 --> 00:32:42,480 Speaker 1: to me, that says we have a five year window 538 00:32:42,880 --> 00:32:48,080 Speaker 1: to meaningfully strengthen our ability to deter Jijimping from taking 539 00:32:48,120 --> 00:32:51,320 Speaker 1: that action, whether it's a blockade and invasion. We don't 540 00:32:51,320 --> 00:32:53,320 Speaker 1: know what he would do, but we want to make 541 00:32:53,320 --> 00:32:55,760 Speaker 1: sure that he doesn't have the confidence that he would succeed. 542 00:32:55,880 --> 00:32:58,520 Speaker 1: And there are lots of ways to do that, both diplomatically, 543 00:32:58,840 --> 00:33:03,840 Speaker 1: working with allies, and through the kinds of military capabilities 544 00:33:03,880 --> 00:33:06,880 Speaker 1: that we field, that our allies field, and that we 545 00:33:07,000 --> 00:33:09,880 Speaker 1: helped Taiwan to field. And do you think we have 546 00:33:10,080 --> 00:33:14,880 Speaker 1: those capabilities now that you were pointing to the US 547 00:33:15,040 --> 00:33:19,880 Speaker 1: needing Then I think that we could meet that objective 548 00:33:20,160 --> 00:33:22,880 Speaker 1: if we really put our minds to it, and if 549 00:33:22,920 --> 00:33:29,720 Speaker 1: we reallocate resources in the right way. When you were 550 00:33:29,800 --> 00:33:33,880 Speaker 1: Under Secretary of Defense for Policy when President Obama was 551 00:33:34,000 --> 00:33:36,480 Speaker 1: in office, you were the highest ranking woman in a 552 00:33:36,600 --> 00:33:40,000 Speaker 1: history of the Department of Defense. Has that changed much 553 00:33:40,040 --> 00:33:42,520 Speaker 1: since you were there? And do you think the Pentagon 554 00:33:42,840 --> 00:33:46,640 Speaker 1: would benefit from having more women in senior positions? Well, 555 00:33:46,640 --> 00:33:49,400 Speaker 1: I'm happy to say it has changed. Kathleen Hicks is 556 00:33:49,440 --> 00:33:53,200 Speaker 1: the Deputy Secretary of Defense and she is now the 557 00:33:53,280 --> 00:33:56,080 Speaker 1: highest ranking woman that's ever been confirmed. You also have 558 00:33:56,160 --> 00:33:59,600 Speaker 1: the first time ever Secretary of the Army who's a woman, 559 00:33:59,680 --> 00:34:03,440 Speaker 1: Christ Warmth. And you know, I think the Biden administration 560 00:34:03,560 --> 00:34:07,440 Speaker 1: made a commitment upfront to aim for fifty percent of 561 00:34:07,640 --> 00:34:10,120 Speaker 1: the cabinet to be women, fifty percent of the national 562 00:34:10,160 --> 00:34:13,640 Speaker 1: security leadership to be women, and they've probably gotten closer 563 00:34:13,640 --> 00:34:16,799 Speaker 1: to that goal than any administration here too. For so 564 00:34:17,360 --> 00:34:19,319 Speaker 1: I give them a lot of credit. What I do 565 00:34:19,520 --> 00:34:21,920 Speaker 1: find is, you know, I spent a lot of my 566 00:34:21,960 --> 00:34:25,359 Speaker 1: time when I was under Secretary in the Situation Room, 567 00:34:25,440 --> 00:34:27,880 Speaker 1: in what's called the Deputies Committee, which is sort of 568 00:34:27,880 --> 00:34:31,960 Speaker 1: the deputy's level interagency body that would tee up options 569 00:34:32,000 --> 00:34:34,840 Speaker 1: and make recommendations to the principles and the president in 570 00:34:35,000 --> 00:34:37,840 Speaker 1: national security. What I found was when you have a 571 00:34:37,920 --> 00:34:44,600 Speaker 1: diversity of views, not just gender, but lived, experienced, background, perspective, expertise, 572 00:34:45,080 --> 00:34:49,600 Speaker 1: you more fully explore the issues and the decision space. 573 00:34:49,920 --> 00:34:53,319 Speaker 1: You give the president better options, and usually you get 574 00:34:53,360 --> 00:34:56,799 Speaker 1: better decisions. Michelle Flourne, thanks so much for speaking with me. 575 00:34:57,080 --> 00:35:00,360 Speaker 1: Thank you, thanks for listening to us here at The 576 00:35:00,360 --> 00:35:03,760 Speaker 1: Big Take. It's a daily podcast from Bloomberg and iHeartRadio. 577 00:35:04,080 --> 00:35:08,440 Speaker 1: From more shows from iHeartRadio, visit the iHeartRadio app, Apple Podcast, 578 00:35:08,640 --> 00:35:11,239 Speaker 1: or wherever you listen, and we'd love to hear from you. 579 00:35:11,640 --> 00:35:15,120 Speaker 1: Email us questions or comments to Big Take at Bloomberg 580 00:35:15,239 --> 00:35:18,799 Speaker 1: dot net. The supervising producer of The Big Take and 581 00:35:18,880 --> 00:35:23,040 Speaker 1: the producer of this episode is Vicky Virgolina. Our senior 582 00:35:23,080 --> 00:35:27,239 Speaker 1: producer is Katherine Fink. Raphae alum Seeley is our engineer. 583 00:35:27,600 --> 00:35:31,880 Speaker 1: Our original music was composed by Leo Sidrin, I'm West Kasova. 584 00:35:32,080 --> 00:35:34,439 Speaker 1: We'll be back tomorrow with another big take.