March 7th, 2012

The following is a full transcript of FedCentral’s interview with General James Jones, United States Marine Core (Ret), former National Security Advisor and Deloitte Senior Advisor and General Charles F. Wald: Director and Leader of Deloitte’s Department of Defense Practice, conducted by The Honorable Tom Davis on March 7, 2012. To listen to the full interview go to http://www.deloitte.com/us/fedcentral.

Jane Norris
Welcome to FedCentral brought to you by Deloitte, a program where executives and federal government leaders talk about the issues and initiatives that are making a real impact on the business of government today, to help government help America.

On today’s program we’ll be talking about keeping America safe, the new defense strategy, and joining us is General Charles F. Wald, Director of Deloitte Services, LP, and leader of Deloitte’s Department of Defense practice, Federal government services. He’s responsible for providing senior leadership and strategy in relationships with the Department of Defense, and he’s a subject matter specialist in weapons procurement and deployment, counter-terrorism, national and energy and international security policy. General Wald, thanks for being here today.

General Wald
Hi, Jane, appreciate it.

Jane Norris
Also we’re proud to have General James Jones. General Jones is a former National Security Advisor and 32nd Commandant of the Marine Corps. He’s a Senior Advisor to Deloitte’s Federal and commercial clients in the Department of Defense practice, and he was appointed National Security Advisor to President Barak Obama on January 20, 2009. General Jones, happy to have you here.

General Jones
Thank you very much. I’m honored to be here.

Jane Norris
It’s a pleasure, Sir. And then finally, the Honorable Tom Davis, former Virginia Congressman and known to many on this radio show. We’ve heard him many times. He was formerly Chairman of the House Government and Reform Committee. He serves as the Director of Federal Government Affairs for Deloitte and Touche, LLP. Tom, great to have you,too.

Tom Davis
Jane, thanks for having me.

Jane Norris
It’s a great show today. So let’s get started. The Department of Defense and officials at the Department of Defense have announced their plan for a proposed $614 billion budget in fiscal year 2013, and they plan spending reductions of about $487 billion over the next decade. So General Wald, we’ll start with you. How do you think this will impact the new DoD strategy going forward?

General Wald
Actually I think it’s in line with the strategy. I think you’ll find General Jones will probably talk about this in a minute. If you look at the geo-strategic environment we live in the world today, it really addresses how we are facing the threats we’re facing. With Afghanistan and Iraq winding down but in a perpetual conflict kind of situation, where we’re at today, and the fact that we’re a global world, we need to maintain our global presence. So the reduction in the numbers, a lot of that will come from the reduction of our presence in Iraq and Afghanistan. The remainder, even though it sounds like a large cut over ten years, there will still be a large baseline available to address the threats that we think we’re going to face in the future. I think we’re going to be in pretty good shape.

Jane Norris
General Jones, how do you see this?

General Jones
Well, I agree with General Wald and I think we have to see this in perspective. While it’s true that the US military will be smaller and leaner under the President’s plan, the defense budget will remain essentially constant over the next ten years. The plan calls for it to keep pace with inflation. So the well-publicized budget reductions as such, are actually reductions in projected budget increases and I think what’s going to happen is necessary and appropriate. I wouldn’t want to go too far and say that this is going to cause a magical solution for our national debt and everything else, and we shouldn’t kid ourselves that you can solve that problem on the back of the Defense Department.

Tom Davis
You know, a number of the chairmen of the committees are talking about undoing this sequestering—that these cuts are getting very harmful. Looks to me like the new strategy seems to be going in the direction of a smaller, leaner, flexible, technologically advanced military. What kind of changes do you think we’ll see assuming that these “Godsend” and the sequestering go into effect?

General Wald
I’ll start with that if you don’t mind—I think because we talked about this a little earlier. Because of better business practices, improved technology, and the nature of the threat— the fact that we have a superior technological capability in our military, whether that be space, air, land or sea, and our information capability with intelligence and surveillance: reconnaissance is actually where the focus should be— and that’s pretty much our sweet spot in America. Then you look at our ability, and the reductions that General Jones mentioned a minute ago— where the military will get smaller, better business technology and practices that are going to help us do our job more efficiently on a daily basis. So I think with the right type of vision and application of business practices and technology, we’re going to be just fine.

Tom Davis
What do you see on the end force—will the drawdown be a bit more flexible? How do you see that playing out?

General Jones
Well, after two conflicts come to an end, Iraq and then Afghanistan, it is essential that we right-size the force again. One of the things that concern me is that when we take a look at the economic ramifications of right-sizing the force. I think everybody agrees that there should be some reductions. We know that the world is different now and we know that large military bases overseas with all of the costs that are associated with that presence are probably not as necessary. My favorite saying is, “virtual presence is actual absence.” For the United States to remain as a global leader, I would caution that you want to be careful, that as you adjust the footprint around the world that you do so very carefully so that you can retain a certain base force. It could rapidly be augmented by an expeditionary capability by land, sea, and air, and I also think there are two more points I would make.

One is that we’re dangerously close to making the all-volunteer force unaffordable if we don’t tackle the issue of entitlements. The second issue that I think is an absolute must is that we have to tackle the acquisition process. We cannot afford to continually take 10-12, 15, and sometimes 20 years to bring on a new fighter, ship or tank. First of all, our industry can do a lot better. The taxpayer deserves a more efficient system that produces what the military needs before the technology you’re trying to replace runs out of service life. In many cases over the last ten or fifteen years, we have shown ourselves unable to reform the acquisition system in the Defense Department and I think that’s a high priority.

Jane Norris
It’s been tried before. Secretary Gates gave it a whack and certainly Secretary Panetta’s is making it a priority.

General Jones
Yep, you need to do it though, consistently. I’m almost of the opinion that the only way you do something like that is from the outside, because secretaries usually aren’t there long enough, and there’s built-in resistance to doing these kinds of things. Let’s face it; it’s about jobs and career tracks, and these are wonderful people that work in the defense industry of this country. In some areas, we just have not made the changes and the reforms that we need, and I think acquisition is one of them.

Jane Norris
So why is that? Do you think it’s the internal resistance or do you think there are other pressures that come to bear?

General Jones
Well, first of all, it’s a difficult thing to do. The entire military of the United States operates under the idea that leaders are there for two to four years at max in any one job. Where that plays over in the programs is that you change program managers every two or three years, and people being who they are, they come in and say oh no – we’re not going to do it this way. We’re going to add this and we’re not going to do that. You subtract your cut and sooner or later, you just have incredible delays and cost overruns and things like that. I think a company like Deloitte can really be helpful in helping the Department of Defense and the various service departments in tracking the numbers in a way that makes more sense and is more cost-effective. Deloitte is very well established and over a long term can provide the glue that’s needed to transition from one leader to the next in different aspects of these reforms.

Tom Davis
Is there more you think the Defense Department could be doing with shared services between the Army, Navy and the Air Force than doing them separately? I think there’d be a lot of savings in there if we could ever get them together. What do you foresee General Wald?

General Wald
Well, I think it’s a balance. There is savings there—there’s no doubt about it. My personal opinion is that there could be some common shared capabilities, probably even more so with the services. There’s a balance of what the service chiefs and military bring from the standpoint of expertise in that particular area, so that each service does bring a little bit different capacity to the fight. On the other hand, as we say a lot in Deloitte is that the overhead part can sometimes be consolidated in a better way that gives you these savings. I would think as General Jones just mentioned, that this is really a matter of an outside application that has to be placed on this because of the fact that it’s very difficult to change internally sometimes while you’re still doing your job, and you advocate for that. Number two is, I think we’re in a situation now because of both technology and capabilities. In Deloitte’s case, our commercial practices bring us a lot that we can apply to the Department,and more of a better business practice case, so I would agree with you.

Jane Norris
So Tom, from your perspective—you were in Congress. How does Congress see some of these acquisition challenges?

Tom Davis
Well, it just depends where you sit. I think for members who have large bases in their district, they are dug in at this point. They’re nervous about what that’s going to do to their local economies. You got to remember that the defense budget isn’t just a national defense budget and a war budget. It’s also a jobs machine. It’s Congress’s budget to a great extent, and Congress has not always been that good and proactive in terms of making the appropriate changes. That’s why it’s got to come from the Department itself and you need some Congressional buy-in.

It’s interesting in the sequestering. Congress didn’t know where to cut, couldn’t agree on where to cut. They just said we’re going to leave it up to the Department to sequester certain dollars and try to stole – get the mission done at the same time. But Congress is very parochial when it comes to defense budget and due, I think it’s as much a part of the problem as it is the solution some days.

General Jones
You know, the all-volunteer force was created in the mid-70s, and it was essentially a great idea that was superimposed on the conscriptive model, and there were people back then in the 70s that said if you don’t watch it this will become unaffordable. Whenever you see the human costs, salaries, retirements, and healthcare cross over the 50% line of your basic budget, which it is now doing, you really have to take a firm look because that gets into an unaffordable Department and unaffordable forces. I think we are approaching the point where we need to absolutely take a look at this and react in a way that we can produce the force that is articulated in the defense strategy.

Jane Norris
We’re going to come back in just a moment. Our guests today on FedCentral – General Charles F. Wald—he’s the Director of Deloitte Services and the leader of Deloitte’s Department of Defense practice, General James Jones, who is the former National Security Advisor, and now also an Advisor to Deloitte, and of course Tom Davis, the former Virginia Congressman and Chairman of the House Government Reform Committee. He’s a Director at Deloitte in the government affairs area. So we’ll be back in just a moment here on FedCentral on Federal News Radio 1500 AM.

Break

Welcome back to FedCentral brought to you by Deloitte. Today we’re talking about keeping America safe, the new defense strategy. Joining us is, General Charles Wald, director Deloitte services and leader of Deloitte’s Department of Defense practice. Also here in studio is, General James Jones, United States Marine Corps, retired, and former National Security Advisor and Senior Advisor to Deloitte. And also Tom Davis, the Honorable Tom Davis is a former Virginia Congressman and former Chairman of the House Government Oversight Committee and he also serves as a Director of Federal Government Affairs for Deloitte and Touche, LLP. Tom?

Tom Davis
Well, thank you very much. General Jones, I’m going to ask you a question. As we take a look ahead at what we’re going to be doing with a military budget that will be flat in many ways – it won’t be increasing with what we’re used to. One element of the strategy seems to be built around strengthening innovative partnerships and key alliances around the world. What do you think the focus on this part of the strategy will be?

General Jones
Well, I think it’s extremely important that the United States strategy be one that produces a position in the world that Americans expect from the United States, and that is to say that we spent the second half of the 20th century becoming a dominant nation of great influence and impact. You could without being too immodest say that the United States actually shaped the world for the latter half of the 20th century. The dissolution of the Soviet Union, and now all of a sudden, we have an event of equally important significance, the so-called Arab Spring. That really should trigger this discussion about what do we and how we do it.

Because the world has changed so much and we have new peer rivals at least in economic terms like Brazil, India, China, like the sill of Japan, South Korea and the European Union. I think it’s going to be very important that as these phenomenon’s take place, that the United States develop partnerships with like-minded countries to have an answer for these countries as they try to pivot into more opportunity. These people took to the streets based on what they learned on the social networks and then they were on travels, and the fact that the world is a smaller place, much more globalized, and things are happening at a much more rapid pace.

We have to be more agile. We have to be more proactive in this century in order to achieve the results that we hope to achieve. We’re still in that transition space I think in my view. I think you have to be very careful about how you say things. For example, when we say we’re pivoting to Asia, the Africans will point out as it was pointed out to me last week in Africa— that’s interesting, Asia’s pivoting towards Africa? Does that mean you’re not going to compete in Africa? The answer to that should be no, but you know, the words are important. You have to be careful how you use them.

So I do think the United States leadership can be the same as it was, but it’ll have a different context to it in terms of who our partners are. Most of the people of the developing world want the kind of life that we take for granted; and we should do everything we can to try to make sure that that opportunity is there, and we should do that as quickly as we can. The longer it takes to make that mark and to set that bar so that people in the affected countries can say oh, I like this economic plan; I like how they’re talking about governance and rule of law and a new constitution. We can help that, and we should partner with like-minded nations to do that. We don’t have to do it by ourselves anymore, which is good, and I think that this is what’s going to link up. I think the developed world from the developing world and the United States should be a leadership role in that.

Jane Norris
General Wald, what about the geo-political landscape? How does that all factor in?

General Wald
Well, I absolutely agree with General Jones. I mean, I think he put it perfectly. I think we are such an interconnected world today primarily because of economics and global economics, if you will. There’s emerging markets. If you look, it’s obvious that China and India are growing incrementally in a huge way—they’ll be part of the market. They hopefully will be part of the security solution, we hope, but if you look at the need for protection of the global commons, for example, the fact that the ceilings are there for everybody as the sky, space, and now cybersecurity, those are all things that aren’t just necessarily interesting to the United States. They’re interesting to all of our potential partners and economic partners, particularly. We can’t do all this alone in the United States anymore, and General Jones I think put it very clearly.

So part of our interest is to build partnerships around the world that have common interests and through maybe interoperability, common equipment sometimes but common procedures – that’s where I think Deloitte really fits in well as we are present in 144 countries around the world. I think the statement General Jones made about virtual presence is actual absence is exactly what the new world’s all about. It’s kind of like they say—if you’re not there, you’re not there, and Deloitte is there, so I think the world we live in has changed dramatically over the last ten years. We’ve been focused, as we should have, I think, on Afghanistan and Iraq as far as our focus, but from the standpoint of the world, it’s shifted well beyond that, and I believe, as General Jones said, we’re a global world, we’re interconnected. We have to be partnered with other people, and I think we’re well postured for that.

Tom Davis
What we’ve seen, though, in Libya and other areas forming these partnerships becomes kind of ad hoc sometimes in terms of who’s going to join you and who can’t join you. Everybody’s got the same, I think, economic problems and financial problems that our country does at this point. The UN is singularly incapable of acting, you know, in unison on any issue. So you see roving partnerships, regional partnerships? How do you see this playing out?

General Wald
Frankly,yes. First of all, I’d say this. I think – and again, this is not because I’m an American, but I think there is still a need for US leadership in the world. General Jones can talk to this better than me, but when you talk to our friends overseas, even in the larger countries, they still look to America for leadership. So that hasn’t changed, so we have to be part of that.

From the standpoint of organizations that are actually going to be governing the world, I think that’s to be determined. I think much of it will be ad hoc based on common interests. We have to be flexible and nimble. On the other hand, I think we have to start continuing to build those relationships. For example, some of our equipment that we are going to export overseas will have a common capability that we can always build on when we have these ad hoc situations you talk about. So I think it’s a world that will be unpredictable. You’ll have to be flexible. You’ll have to be present. You’ll have to be able to be there, and that’s where we’re going, I believe.

Tom Davis
General Jones, you were the National Security Advisor to the President—you have a global perspective on this, as well.

General Jones
No, I think Chuck said it very well. I would just simply add that I think in this new century – still a new century, even though we’ve used up over 10% of it already, the public/private link has to become much closer. We’ve had the luxury in the 20th century of kind of being a one-trick pony with the military, foreign presence and the bases, and in a bipolar world, that worked very well for us. We set up a lot of institutions that were focused on reactive policies, reactive to what the Russians did or didn’t do, but that was really the only threat, the only real serious threat, but now it’s a multi-polar world. It’s messy. It’s not only nation-states, it’s non-nation state actors, and we have to figure out a way to compete in that arena, and we have to be more agile, and I’ve been heartened recently by learning about Deloitte and the 144 countries that you’re in. That means you’re engaged. That means you’re a player.

Now, does that mean that the government leaves you alone to play and to fend for yourself? Maybe in some cases, but in most cases, probably not. Wouldn’t the Department of Commerce like to know what you’re doing in 144 countries and how they can be helpful? Are there some laws on the books that are hindering you from competing against China or India or any other country? I mean this in a healthy way. That’s the kind of thing that we need.

I recently got back from Rwanda in Africa and had a dinner with the president there just three nights ago, and his question to me was;

You know, I’ve been holding off various other countries waiting for America. Where are you? Where’s the United States in Africa? We need your engagement. We need your companies.

We will do more for our nation by influencing, by showing good examples, good business practices and honest integrity in our operations; no bribery of foreign officials but delivering a quality product if we really set our mind to competing, with the help of public and private partnership. I think that’s the evolution we’re seeing, and you need to have a very active Chamber of Commerce, and you need to be tied into that. So between the State Department, the Commerce Department, and the Chamber of Commerce, and also the security portfolio, by virtue, our presence has a calming effect on regions, that let us get on with bridging the gap between the developed world and the developing world.

Tom Davis
General, sounds like the economic strategy is as important as the military strategy as we look ahead.

General Jones
Congressman, I think the big difference between the 20th and the 21st century is that this century, forgetting the real threats that we talk about every day in the paper, but this century is about rediscovering American competitiveness overseas.

Tom Davis
Chuck, you got anything to add? You spent a lot of time overseas.

General Wald
No, I did. As a matter of fact, I was fortunate to work with General Jones overseas for several years. Going back to this whole topic about presence and how we should respond to it, we had a study done by the GAO at that time and we asked what’s the difference between the money you spend on engagement, pre-engagement, stability operations, or prevention, versus reaction? There’s about $1 for every $10, so every dollar you put into prevention by building stability in a certain country or relationship or better yet, economy, is going to save you about $10 in the long run. That’s a difficult thing to argue when you’ve avoided conflict, but that’s the new world that we live in. I mean, it’s not totally, but I think that’s how we’re going to have to really solve some of our problems in the future.

Tom Davis
Sounds like the Tom Freedman talks about the McDonald’s theory of warfare where both countries have McDonald’s restaurants and don’t go to war with each other because they’re too busy making burgers, eating burgers, and selling burgers, and the risks of war get escalated.

General Wald
Yeah, I think he’s got some pretty good insights when you read his op-eds.

General Jones
It’s a pretty good concept because most people get that. The difficult part is finding the resources and bringing them together across the inter-agency. I’d say another way to describe the environment we’re in, is that the solutions require the whole of government approach and that includes the private sector, and while you can’t be everywhere, if you want to prevent, say, Nigeria from becoming the next Afghanistan, you need to start working on Nigeria now, and it’s a lot cheaper. Believe me, it’s a lot cheaper than having to be reactive when it’s too late.

Jane Norris
Gentlemen, we’ll have to stop it there, but thank you very much. Fascinating conversation. Our guests, General Charles F. Wald, Director, Deloitte Services, LP, and the leader of Deloitte’s Department of Defense practice; General James Jones, United States Marine Corps, formerly National Security Advisor, and Senior Advisor for Deloitte; and then finally the Honorable Tom M. Davis, former Virginia Congressman and chairman of the House Government Reform Committee, and he’s also a director for Deloitte Government Affairs.

We thank you all for listening today, and we’ll see you again next time. This is FedCentral on Federal News Radio 1500 AM.

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