Ellen M. Lord, undersecretary of defense for acquisition and sustainment, discusses defense spending and capabilities after COVID-19 at the Brookings Institution’s virtual European Union Defense Washington Forum, July 8, 2020.
Greetings, everyone. I’m Michael Hanlin from the Brookings Institution. And I have the privilege of interviewing today Secretary Island Lord, the Undersecretary of defense for opposition and sustainment, the position she’s now held for several years, which is essentially the duration off that position it having been created a few years ago in a change from previous Pentagon practice for acquiring weaponry. So, Secretary Lord, thank you for joining us today. Welcome. Very happy to have you here. As as you know, in our brief 20 minutes, I’d like to get out your views on three broad questions starting with COVID, which I know is on your mind and is the acute issue trying to make sure that the U. S. And the transatlantic industrial basis continue to provide for our men and women in uniform and deal with rising and serious threats, even in the face of various kinds of shutdowns and restrictions. So I really just wanted to begin with a simple question of how is it going? What are your concerns but also what’s going well so far in terms of sustaining the transatlantic and the American Defense industrial base over to you, Secretary Lord Good morning, Michael, thank you so much for the opportunity to really talk a little bit about the security and resiliency of the transatlantic defence industrial base. I’m very, very important to us. So covert obviously hit us all hard. And from our perspective, the first thing that I did was to make sure we communicated with our defense industrial base to designate them as critical infrastructure. We followed very quickly with our Department of Homeland Security Toe put out some directives and interestingly enough, I had the opportunity to talk very quickly to a lot of my fellow national armaments directors in Europe and around the world talking about what we did, and perhaps how their nations could leverage some of the documents and some of the strategies that we used. So what went well was getting people back toe work fairly quickly. We started convening daily meetings here at the Pentagon with the Navy, the army, the Air Force to understand the health of the industrial base, and we had a lot of our organizations reach out. I personally reached out to many state governments to governors, also to embassies in Mexico, in India, where we were having challenges and had very, very good receptivity. So then it really turned into how do we make sure we get the appropriate protective equipment? How do we make sure we listen to what the industrial basis issues were? So we stood up three times a week teleconferences with, um, our industry associations so that they could really echo and amplify the issues they were hearing from their members and so that we could push information. So one of the silver linings here has been really opening up communications both ways. I wondered if you could comment on two specific things. One of them is. You mentioned Mexico when I had the opportunity a couple months ago. Teoh Interview Secretary McCarthy and Zharmakhan Villa the Army. They expressed a general feeling of confidence that the military was holding up pretty well in the face of Corona virus. But they were worried about the industrial base and specifically mentioned hearts that come from Mexico in the context of how Hard COVID was hitting their. We’ve seen some, you know, impressive and good turns of events in regard to Europe and its handling of Kobe and the incidence rates there. But I know that in North America were still struggling, including Mexico. How is that relationship going? Does it cause you any ongoing concern? The broader defense industrial base relationship with Mexico? Our relationship with Mexico has been excellent. We were able toe work through our State Department in Mexico and reach out to the critical industrial partners that are a part of our supply chain. And right now I am not aware of any critical facilities that are currently shut down in Mexico. So we were able to bridge that gap win about a three week time span. Is there a particular concern that’s still on your mind? You mentioned some very effective processes that are brought together. Stakeholders facilitated rapid communication, but beyond the fact that, of course COVID could get harder in a second wave anywhere in the world. Is there anything else specifically that’s most on your mind in terms of a problem that’s not fully solved yet? Or that something that still keeps you up a little bit at night? Even if you feel like overall, it’s sort of a so far, so good kind of message. Absolutely. I think one of the silver linings, frankly, to COVID has been the fact that there’s a much larger awareness off issues we have with our supply chain being offshore with potentially adversarial the country’s. So what we now have is a much larger awareness throughout the US and I think the world as well as to the challenges we particularly have with China. So now we have interest in actually making sure that we understand the fragilities in our supply chain and that we make sure we re sure as much as possible and also have partners and allies supporting us wherever possible. So I think a silver lining is some of my concerns about rare earth, mineral processing, microelectronics, fabrication and packaging. We now have a lot more receptivity about the challenge. Is there and a lot more interest in resolving those? Additionally, I continue to be concerned about adversarial capital coming in nefarious M and a activity taking over critical companies here in the US and again with our partners and allies. There’s a much, much higher sensitivity towards that now, and I believe we’re able to make some progress. When you say re shore certain capabilities do you specifically and literally mean within the United States. Are you talking more about the broader Western alliance system? Just making sure we don’t have dependencies on China or other countries that might be adversarial or competitive. So when you say re shore, are you including Mexico? Are you including Europe? Are you including Japan, Korea within that broader definition of re shore, or do you mean more specifically in literally, the United States? We’re starting literally with the United States. As always, in acquisition competition is our friend. We like to have at least two sources. We would like one of those, if possible, to be domestic, because, frankly, we saw the problems with being able to take deliveries from offshore sources, obviously with Canada and Mexico, that’s not as much of an issue now. I want to be careful when I say this, because we do depend on many, many you countries for a lot of critical technology, and their North American subsidiaries have contributed very significantly toe our efforts. I think a couple examples of those are Leonardo contracts for ground vehicles. For instance, Fink in Terry’s from design for the US Navy next generation frigate Ah, lot of fantastic work going on between the US and Norwegian companies bringing advanced missile technologies, including the naval strike missile to the U. S. Inventory. So a lot of critical work there. We just found that particularly with microelectronics, we have gotten ourselves into a potentially compromised position where we have US intellectual property in terms of designs, then going off shore, um four fabrication and packaging, leaving us with some vulnerability there That is unacceptable. Moving forward. Thank you. Since we have such a nice opportunity here to talk with European colleagues on, you know, we’re sort of taking stock of where we are not only with Kobe, but with the broader national defense strategy in the United States. You know, in the summer of 2020 I wondered if you wanted to offer any reflective thoughts on what you’ve been able to accomplish so far in your tenure there as the undersecretary of defense for opposition sustainment. There have been a lot of new initiatives, of course, in recent years, starting with the legacy of John McCain and Congressman Thornberry as they created or split up the old office and created your position. Then, of course, we’ve had the national defense strategy under former Secretary Mattis that Secretary Esper says he’s trying to implement. There’s been a greater focus on great power competition, certain specific kinds of technologies, certain kinds of vulnerabilities as well. I just wondered if you would take a moment to take stock of what’s been accomplished, which enduring challenges you still think we need to look at hard as an alliance and as a country, Absolutely so. Everything we do is under the framework of the national defense strategy. And there are three lines of effort. The first is locality were warfighters. We need to deliver capability down range. That’s our customer. Secondly, is strengthening partnerships and alliances. That’s a lot of what we’re doing here today. The U NATO very, very important to us. And thirdly, we want to reform the way we do business. So I think in acquisition and sustainment, the largest impact we can have is really making sure we speed up and get cost out of the acquisition process. One of the more significant things we have done is to totally rewrite our acquisition system, the 5000 Siri’s, and we call it the Adoptive Acquisition framework because we’re acknowledging some of the realities of doing business today, For instance, procuring software is very, very different than procuring hardware. Our systems are typically hardware enabled, but software defined. And if you really want to dio agile Dev ops development versus the traditional waterfall, you need to budget differently for that. So I’m very, very excited that we have a separate software pathway and that Congress is working with us on a number off Pathfinder programs where we’re looking at a software color of money that doesn’t have the same constraints as typical money that comes into programs. We’re also very focused on cybersecurity, and we’ve put in requirements for cybersecurity in our development of new systems. We have something that’s analogous toe I. So for quality, we’ve put in the CMM see the cyber maturity model. I’m certification where we have a five year process where we are requiring all of our suppliers to certify their cyber capability to a certain level that is tailored to the system. Those are things I think, that we’ve gotten irreversible momentum on and are going to make a big change from a reform point of view and bring leath ality down range to the warfighter more quickly, more effectively. We’re sharing all of this with our partners and allies. Bouncing ideas off of them were benefiting from them. I hope they are benefiting from us. The other thing on mentioned is again the security and resiliency of the defense industrial base. We had had a presidential executive order a few years ago asking us to look at the defense industrial base. We developed a report on that that gave us really a segmentation of the industrial base and a lexicon for it. Not there’s a right or wrong, but it gave us a common vocabulary, and what we began to do was systematically look at those fragilities to make sure that we increase our industrial capacity and capability either here in the US or with partners and allies to make sure we were not dependent on our adversaries. And, frankly, COVID has shown a very, very bright spotlight on that and, as I mentioned earlier, allowed us to accelerate that. And in fact, the work that we’ve been able to do to be very quick and agile in acquisition was very much leverage. Drawing this on COVID I’m crisis by Health and Human Services and FEMA where we stood up. What we call the Joint Acquisition Task Force a team of ours from a N s and then with detail, ease from the services. And we’ve gone in to help procure all the personal protective equipment pharmaceuticals. We have done major investments in the defense industrial base as well as the medical industrial base to make sure we have that capacity we need and to build up our strategic national stockpile. Thank you. My last question for you today. I’m very grateful for the time you spent with us. I know where everyone else is as well has to do specifically again with the transatlantic defence relationship. You’ve already commented on some of the technologies that we benefited from receiving from European partners or acquiring and developing together with them. I wondered if you could think of broader perspective and just look from your vantage point at the overall state of NATO and the US you and US Europe relationships writ large. This has been a period of, you know, turbulence in a lot of ways. There’s been an increased ability to devote resources to defense, but many European partners remain below there. NATO goals. There’s been a fair amount of progress in developing defenses for the Baltics. But there’s still a perception that Russia is a problematic actor and could be threatening, especially on the eastern side of NATO. So when you combine your specific opposition responsibilities with this broader strategic picture, what are your observations about the health of the transatlantic security partnership? At this juncture, I think mill the mill. We have a very, very healthy relationship. I’m fortunate to be able to typically travel to Brussels twice a year for the Conference of National Armaments directors within NATO that allows me to be in Brussels and visit my you counterparts as well. We typically have very, very productive by lattes while I am there and we talk about everything from countering Chinese influence toe how we’re modernizing our acquisition systems to cooperative technology, and there is an enormous amount of cooperative technology work going on. We have a couple $1,000,000,000 in programs. Right now, we have invested in grants about another $1,000,000,000 or so. We also, um, have about a $1,000,000,000 in procurement from the Army and Navy where we actually signed and use agreements. Eso were certifying that the U. S government will comply with those nations export control requirements. So it’s a very healthy, dynamic relationship and um, I think that there’s more to be done. I listened very briefly to the end of the last panel and I know Clark Cooper was commenting on PDF and Pesko. I do feel strongly that we have work to do to make sure that the best technology gets to our partners and allies. We appreciate what we get from the EU. We want to make sure that US Defence industrial companies have that same ability to participate in the EU market, to make sure our partners and allies can benefit from that because what differentiates all of us when we goto war, we goto war together. We need to be interoperable. And unless we’re working on these systems together, we will not be interoperable very, very important for our future Secretary Lord, thank you very much for your service to the country for the time you spent with us today and really for framing a discussion we’re now gonna follow on with. But I wanted to wish you the very best and again expressed gratitude on behalf of everyone involved with this conference today, so I wish I could applaud more properly. But please accept my thanks and best wishes. Thank you, Michael. I appreciate the opportunity by now. Good bye.