Press Gaggle By Deputy Secretary Shanahan

DEPUTY SECRETARY OF DEFENSE PATRICK SHANAHAN: So you guys know why I came down here today?

Q: To see if we ate the donuts?

 

MR. SHANAHAN: No, no, no. Joe, Big Joe. Joe, here. So Joe said -- and I think I mentioned this once before when I was doing the military report at the Military Reporters' Conference. Joe was like, "We need to go downstairs and talk to people more often."

 

And so he -- he's been pushing me to get out of my office more. But one of the things that Joe keeps emphasizing is, if we don't get out and talk and tell more of the stories, then it's much harder for you to do your job than just -- you know how big the Pentagon is, and trying to generate information.

 

So I thought, as a precursor to maybe doing this more often -- this is Joe's suggestion -- come down and do this more spontaneously.

 

So I think with that, maybe -- I thought I'd spend a little time -- if you want, we can talk about some of the things that are going on in the Pentagon. It's pretty busy, here, at the end of the year. There's lots of things going on operationally, which I know you cover quite a bit of.

 

And then a lot of things in my portfolio with, you know, the Defense Strategy, the audit, the Space Force, the budget, those kinds of things. Happy to really kind of -- kind of step down into – a little more deeply.

 

So maybe, Joe, I didn't know if you had a -- a protocol. Let's ask Bob. Bob, how do I do this?

 

(CROSSTALK)

 

Q: I'll -- I'll ask you a question, if that's...

 

(CROSSTALK)

 

(LAUGHTER)

 

MR. SHANAHAN: ... orchestrate things here?

 

(CROSSTALK)

 

STAFF: No, no.

 

MR. SHANAHAN: Yeah, no, because then they'll get upset with you, right? 

 

STAFF: Yeah, right.

 

Q: Well, let me start you off with a question. You mentioned Space Force. And I'm wondering, given that the Democrats now will have control of the House, how you think that will affect the legislation we expect some time next year for the creation of a military service?

 

MR. SHANAHAN: I, you know, spent time with Adam Smith in the past. And, you know, I think what's been universal on the Space Force -- where is Aaron? I've got a thing I have to get back to you on.

 

But I think on the -- on the Space Force itself, across the board, everyone has said, "accelerate your ability to deliver capabilities." That's -- that's been universal.

And I think, with potentially Chairman Smith in place, he'll -- what he said is, he wants to focus on cost and efficiency. So I think, you know, those are kinds of questions that we'll be expected to address.

 

And I think in our legislative proposal -- and this is the thing I've been very -- I meet twice a week with our Space Governance Committee. We're really diligently putting together a proposal that can withstand the cost-scrutiny questions.

 

Q: But do you acknowledge that it's less likely that it -- that you'll get approval for the creation of a separate military service?

 

MR. SHANAHAN: I don't think so.

 

Q: OK.

 

MR. SHANAHAN: Yeah. Here's what I feel very confident about. The proposal that we're going to carry forward makes sense. OK? And then I think there'll be degrees of cost.

You know, it's one of these things, like, how much cost do we want to put into the support for the Space Force? But the mission of the Space Force, the concentration of the Space Force and the focus. And I think people are going to support it.

 

(CROSSTALK)

 

Q: Can I ask you about the budget? I know you're working with President...

 

(CROSSTALK)

 

MR. SHANAHAN: This is what happened with that. I just want to go back to Aaron. So Aaron had this great headline that said, like, "Space Expertise Not Required to Lead the Space Development Agency."

 

And what I want to just make clear on that is, what's so important in the Space Development Agency, is people who can lead, that can get capability delivered. To me, that's the number one, the most important role of that leader. Because we have to field the capabilities. It's not about architectures or standards, it's about fielding capability. But having space expertise is very important.

 

(CROSSTALK)

 

Q: I -- I have -- I have a Space Force question, OK?

 

(CROSSTALK)

 

MR. SHANAHAN: When I come back down, let's do that.

 

Q: By the way, I'm -- I'm Jamie McIntyre with the Washington Examiner. So I wanted to ask you about the budget. I -- I know you're working with the president's top line.

MR. SHANAHAN: Right.

 

Q: But yesterday, Armed Services Committee Chairman Jim Inhofe said he thought $733 billion should be a floor, not a ceiling. And -- and he said on the heels of this new report that came out yesterday, the Commission on the National Security Strategy. So...

 

MR. SHANAHAN: Right. Put it into context? 

 

Q: Yeah. Can you...

 

MR. SHANAHAN: Yeah. I have to compartmentalize my life, right? So the -- those are four different inputs. But here's the process that we're going through. So we spent the better part of 10 months developing a budget. That's the $733 billion. And that was a strategy-driven budget. But the good news on that is, we finished a month early. OK?

And then about three weeks ago, I think it was, the president in a cabinet meeting said, "I'd like the Department of Defense to look at a five percent cut," which equated to $700 billion and said, "Go work on that."

 

And since that point in time, we've been doing that exercise, to come back to him and answer, you know, his directive, which was, "Show me what a $700 billion budget looks like."

 

We'll get input back from the services about Monday. We'll need a couple of days to interpret, you know, those inputs. And then, you know, think about the folks in CAPE and the comptroller, you know, adjusting those numbers.

 

Because we always look at those numbers and we risk-adjust them. Then we'll sit down with Secretary Mattis, next week, we all know this is Thanksgiving, so it's a short week, probably the week after, we'll go back to the president. OK?

 

Q: Are you thinking that when -- when he sees, this... 

 

(CROSSTALK)

 

MR. SHANAHAN: Let me go back to Jim Inhofe part. And the... 

 

Q: OK.

 

MR. SHANAHAN: ... and the commission. And so yesterday, Senator Inhofe said, you know, "Here's -- here's the number." So our position isn't different than $700 or $733. It's putting together what a strategy-driven budget looks like, and then what a 5 percent cut looks like.

 

A lot of people have to come together to make a final determination about which trades are acceptable. So at this point, we really are working the assignment of, "What do those pledges look like?"

 

And the National Defense Strategy Commission that came out said, "Keep your budgets at a higher level so you can invest in modernization. Don't go slower, go faster. And be careful about your assumptions on when the timing of the reforms kick in, as you're building out your budgets."

 

Q: So are you thinking, when the president sees the $700 billion version, he might change his mind?

 

MR. SHANAHAN: I think what I want the president to understand when we bring forward is, what are those tradeoffs. So if he has an informed position on $700 -- you know, this -- this is either you get, you know, reduced capacity, I get lower quantities of procurement, a changed modernization. My reforms are, you know, a certain size.

 

So those are the things that he needs to have. You know, an awareness of what that number really translates to in terms of, you know, performance here at the department.

 

Q: Just on nuclear modernization, I wanted to ask, yesterday it seemed like Adam Smith pushed back a little on the president's and Secretary Mattis' nuclear modernization priorities. So what would your response be to that? And then are you looking at redoing the Nuclear Posture Review?

 

MR. SHANAHAN: What I read yesterday was the -- Representative Smith said, “hey, I want to re-look.” You know, I think he said he wants to redo the Nuclear Posture Review. All leaders have a different set of priorities.

 

We'll work with him very closely and, you know, I think he was talking about low yield, so get on board and we'll start to, you know, answer questions. I think we've got a good baseline to work off of.

 

Q: What would be your priority that there was a trade-off that you wanted in terms of nuclear modernization?

 

MR. SHANAHAN: I need to hear what he's thinking there. When I think about the National Defense Strategy, we had tremendous alignment. So I don't feel like they're fundamental changes, but there are things probably on the margins.

 

And then you know his point was affordability, affordability, affordability, and you know, I look forward to, you know, hearing, you know, where his priorities are on that.

 

Q: You said for a while that the F.Y. '20 budget is going to be the masterpiece budget right, it’s the strategy-driven budget

 

MR. SHANAHAN: Yes.

 

Q: If you're stuck at 700 or Representative Smith pushes to go even below 700, which I think he's discussed about previously, can you still have that masterpiece budget?

MR. SHANAHAN: It’ll be a masterpiece.

 

Q: So, sir, can you do all the stuff and do what you need to do at 700?

 

MR. SHANAHAN: It's all timing, right? Here's what I feel good about, Aaron: we're starting from a position of where we have a tremendous amount of alignment, and then there are going to be pieces that there's disagreement.

 

But that's not like the 75 percent, that's a much smaller percentage. When I think about the actual end game here, there's certain things that I think everybody will be aligned on the security environment,.

 

That part of the world hasn't changed, and if anything, it trends towards being more risky. And then we have this whole issue around affordability. There's -- you know, if you look at insurance rates going up, an increasing deficit, these are all things you have to balance and sometimes Secretary Mattis says you can afford security.

 

So I think in the end we'll end up in a good spot, but there's going to be a lot of back and forth and work.

 

(CROSSTALK)

 

Q: So it seems like most of what the troops are doing, especially in Texas, is just putting up concertina wire. How much -- how many more soldiers need to do that and how much longer? Are we going to start seeing people coming back now that, you know, they've just been putting up concertina wire and -- and blockades?

 

MR. SHANAHAN: Right, right. So the -- as everybody is well aware, the mission has been to support the Department of Homeland Security and I think that, looking at Joe, we’re pretty much peaked in terms of the number of people that are down there right now.

 

And the way we've worked it is there's been a formal request that was made of the Department, and that runs through the 15th of December. There's still a number of days between now and the 15th of December, so that can always be amended.

 

Q: What other tasks are they going to be doing up until the 15th? Is there that much need for -- for them to be down there doing what they've been doing so far?

MR. SHANAHAN: So you know when you think about the logistics part that you described and then, you know, setting up all the facilities that they're setting up -- and also, doing the -- the training, the drilling.

 

That's -- that's all the work that they're doing right now.

 

Q: You're talking about the -- the -- you're saying that the numbers have peaked, and yesterday NORTHCOM said there was about 59,000 troops down there. But we had heard from the President there were going to be 10,000 to 15,000 troops.

 

So why is there such a discrepancy in what was announced about the deployment versus the numbers that are -- are now -- are now down there?

 

MR. SHANAHAN: Yeah, I don't know how to reconcile the two, but if we talk to General O'Shaughnessy, I bet you we could get back to you and give you an answer on that.

 

(CROSSTALK)

 

Q: As you build a $700 billion budget. Are there any categories of modernization that you're looking to shield from cuts?

 

MR. SHANAHAN: The answer is yes, I'm just trying to think about how to describe that in a -- in a -- not a geeky technical way. The ...

 

Q: That works for us, by the way, geeky, technical ...

 

MR. SHANAHAN: Sometimes when it gets, you know, written down it sounds disjointed, but I'll give you things that are my priority: cyber. It's why I feel good about. Space; space is a very, very high priority.

 

It's why I feel confident about the way we call it the Space Force or how space is a super high priority. The number of the priorities in the Army modernization plan – I just finished a technical review there. So there are certain elements that are on a critical path -- hypersonics, but you know, this is in the mix.

 

(CROSSTALK)

 

Q: One last follow-on budget perks real quick? Because you had said you were going to get into it on Monday. I'm sure you've got to have some sort of an idea of what are the things you're going to be cutting. Can you tell us some of those things that are not going to make it into that $700 budget that are in the 733?

 

MR. SHANAHAN: I'm not talking about the actual process that we're going through, and I think that that'll highlight some of this. Because I really have to wait for the input from the services, but these are the knobs they have to twist. End strength. So that'll come back.

 

Quantities on capacity that we're procuring right now, so I don’t want to say “tanks” and I don't want to say “combat vehicles,” because then everybody who builds one of those thinks that that's something that's an imminent decision.

 

But then we have the modernization piece there, and then we have available to us things like pay, right? So those are all elements that are within the services. Then you turn to things like the fourth estate, where in many areas, there's a discretionary work statement.

 

And so we expect there -- that'll look more like a targeted cut than a specific line item. So to answer your question, by Monday we'll have a better feel for which trades the of services want to make, whether it's end-strength, or capability or capacity.

 

And then we'll have to look at, you know, how much we suck up the in discretionary cut for, like, the fourth estate.

 

Q: OK, and then I have just one other question, totally unrelated, but I read an article that there's a rule now, that you signed, saying that only one officer and one civilian in this building can do some sort of public engagement in the same day. What made you decide to sign that and why is that still going on?

 

MR. SHANAHAN: Last December I went to a conference and there were more people at the conference than there were in the Pentagon, so that's tongue in cheek, but I'm really big on like “let's not travel too much.” We get a lot of people that want to travel to the conferences. I make being here a priority. That doesn't mean that we're like -- having a strict compliance where somehow there isn't any overlap, and we discourage people from, you know, traveling to any kind of conferences, but work is the first priority.

 

(CROSSTALK)

 

Q: Is it flexible -- is it more flexible than the one -- one a day, because ...

 

Q: Mr. Secretary? Can I follow up on border -- a couple of border things?

 

MR. SHANAHAN: Sure, sure.

 

Q: But I also want to ask you to address the ongoing rumors that you're leaving the department, and possibly going to OMB.

 

MR. SHANAHAN: Yeah, yeah.

 

Q: But before you address that, on the border, you -- I mean, you said 5,000 at its peak, so something leads you to come to that conclusion, that it's at a peak. The secretary...

 

MR. SHANAHAN: The -- the discretionary, you know...

 

Q: On the number of troops.

 

MR. SHANAHAN: Yeah. So the agreement we have, and you can appreciate this part of it. You know, the -- the Joint Staff puts together a rigorous plan so there's a, you know, planning order that says: go to support the Department of Homeland Security. That's what's driving the -- the 5,900.

 

Q: That's OK, OK, so the secretary yesterday said, "Yes, but it could go to 7,000," and the president, to follow up, has said 10- to 15-. So what are we not seeing there in an additional phase that could lead to extra troops? And can you absolutely rule out, definitively, that troops will continue not to be engaged in law enforcement? What's the next phase that's leading everybody to say 7-, 10-, 15-, and law enforcement?

 

MR. SHANAHAN: Yeah. I don't think we're engaged in law enforcement. Yeah.

 

Q: No, no, I'm asking you, can you rule that out for the future? Can you rule out that U.S. troops on the border will continue not to have law enforcement functions?

MR. SHANAHAN: I would defer to the “rule out piece” to Secretary Mattis. 

 

Q: OK.

 

MR. SHANAHAN: OK? But you know, back to your question about, you know... 

 

Q: What are -- what's driving these additional numbers of 7-, 10- or 15-? (inaudible)

 

MR. SHANAHAN: I think it's probably maybe from his interaction with, and I'm speculating here, with Secretary Nielsen. And that's really where the statement of work is driven from, is the Department of Homeland Security.

 

Q: And can you address the ongoing rumors that you might leave the department; that you might be the next OMB director, or leave the department and do something else?

MR. SHANAHAN: Yeah, I can. I will absolutely be here. I am 100 percent confident in that.

 

Q: OK.

 

MR. SHANAHAN: I'll run through the tape. How about that? 

 

(LAUGHTER)

 

(CROSSTALK)

 

Q: I have, I guess, a nerdy cinematic question regarding the Space Force, and that would be, most of the people -- not -- all the people, excuse me, in the military there are volunteers. They volunteer for the Air Force, the Navy, the Army and so forth. Under the proposed plan, some of those folks will be shifted to a Space Corps, Space Force. How does that work, if you'd signed up for one branch of service, and you're ordered to go to another, or how -- have you thought of doing that? I know it's a secondary issue, perhaps, but...

 

MR. SHANAHAN: No. It a secondary in terms of the phasing. 

 

Q: Yes, yes.

 

MR. SHANAHAN: OK, so, you know, this is back to, you know, as -- as you kind of write the stories, like, what are the major segments of putting together this proposal? So you know, and I -- so if you went to the Space Governance meeting, we have kind of all the representatives of the department, but it's mostly, you know, Joint Staff, Air Force, R&E, you know, kind of the -- the -- and the principle services. We talk about, first and foremost, the timing of standing up the Space Command, and that's more mechanical, and then this Space Development Agency. So most of our energy has been into the, what is the benefit of consolidating resources so you can field capability sooner? That's been where the bulk of our debate has been.

 

Then after that, which is kind of where -- where your question comes from, is if you were going to transfer all of these people into a Space Force, what does that process actually look like, and how long does it take? And what General Selva shared with me, and I just don't have the -- the institutional knowledge in this area, it takes quite a bit of time to change from one department to another. So that's a -- a process that could last a -- you know, over a year just to -- just to move people.

 

So there's thought going into how much time it would take. You know, it worked to the level of this process like, how does it affect the individual? So we're really looking at scale and timing, because that gets back to this whole aspect of cost. So if you said we wanted to create a new structure -- and this goes back to the Adam Smith comment, like, well, “how much is this going to cost?” You have to start to look at what are those transactional costs to move people? And then, what are the structures you want to put in place to support those people? Now you have a different...

 

(UNKNOWN): Yeah, and when the Air Force was created, they took -- they took the folks who were in the Army Air Corps, essentially, and just made them the Air Force, and that was somewhat of an easier gig, because they were already doing the same...

 

MR. SHANAHAN: Right, yeah.

 

MR. SHANAHAN: This is trickier.

 

(UNKNOWN): It's a little trickier.

 

MR. SHANAHAN: Yeah.

 

(UNKNOWN): I mean, they'll be doing some of the similar roles, but it's multiple branches of service that will be feeding into this.

 

MR. SHANAHAN: And then it gets complicated with the Guard. 

 

(UNKNOWN): Yeah.

 

MR. SHANAHAN: You know, there's a number of those things. 

 

(UNKNOWN): OK.

 

MR. SHANAHAN: So the way -- the way we treated this portion of the planning is time was our friend there. When you think about capability and fielding things that have to survive in a contested environment, that's what's on the critical path.

 

(CROSSTALK)

 

Q: In the 1601 report, you -- you said the U.S. Space Command and the Space Development Agency were things that you could do on your own authorities without going to

Congress. So is that moving on a separate timeline than the Space Force as a service? And what is that time?

 

MR. SHANAHAN: Yeah, so the timeline for Space Command -- so when you look at the ability to get a Space -- you know, the combatant commander confirmed, the timeline is really more first quarter of -- of calendar year '19.

 

Q: OK.

 

MR. SHANAHAN: OK? The Space Development Agency is really, it's more imminent in terms of making the decisions on who's going to lead the effort. That's really kind of the discussion we're having right now, is like what is that work? And then, who would we assign to lead that effort? So you know, within the coming months.

 

Q: So that's going to be the first quarter of '19, also?

 

MR. SHANAHAN: I'd love to make it this year.

 

Q: And -- and you don't -- you don't expect any pushback from Congress on that at all? MR. SHANAHAN: No, not on that.

 

(CROSSTALK)

MR. SHANAHAN: Then the other part to your question is what we're really targeting is to submit the legislative proposal so that Oct.1 of next year, we can say, "Here's the birthday of the Space Force."

 

(CROSSTALK)

 

Q: The audit --

 

MR. SHANAHAN: We did it. We did it.

 

Q: We did it, I know. But what were generally one of the conclusions, good, bad or ugly?

 

MR. SHANAHAN: I haven't read all the reports that came in last week. So in terms of like, really going through the reports, I'm saying it's so ugly, OK?

 

Q: How about less than beautiful? (LAUGHTER)

 

MR. SHANAHAN: On that, I generally view the world as always opportunity. But let me -- I want to answer your questions, Tony .

 

So first is, we never thought we were going to pass an audit, right? Everybody was betting against us, that we wouldn't even do the audit. And then, what we've been doing since early on in the audit is we've been getting preliminary findings, OK? And -- and the real work we've been doing is let's not count the findings. We need to put corrective action. We need to develop the plans to address the findings, and actually put corrective actions in place.

 

Let's see. What do they -- what do they think about the stuff we found? With some of the compliance issues are irritating to me because, you know, I just -- the point of the audit is to drive better discipline in our compliance with our management system and our procedures. So, some of those things frustrated me because they have a job to do and we just need to follow our - - our procedures. It's like inventory accuracy. I mean, some of those things -- I come from an industry where we it’s like 99.99 percent so the -- some of the sample size when they did the Navy audit as they found, you know, buildings, you know, that they said were on the books weren't on the books. Does that impact cost? No it doesn't but it's like we should have, you know, that higher level of discipline and that's with missile drive. Cyber, right? To me it's like we need to be better.

Q: Better at what?

 

MR. SHANAHAN: Just all at compliance -- the discipline around cyber security.

 

Q: OK. Are you concerned that the public's going to take these findings and say, why should we give these guys $700 billion as much as $732 billion if they can't even get their house in order and count ships right or buildings right?

 

MR. SHANAHAN: We count ships right.

 

Q: But the reaction, the public blowback part? Potentially.

 

MR. SHANAHAN: I think, you know, if I was -- and I am, you know, as a taxpayer it's like, glad to see you guys are putting into the disciplines that everybody else has. This is about, you know, audits should be, you know, fundamental, to any effective organization. Now, here's - - here's what's amazing, it was audit on the $2.7 trillion organization so the fact that we did the audit is substantial. I think if I'm a taxpayer what I want to see is, that's great you did the audit. OK. And you have all these findings. How long is it going to take for you to fix those? And then show me next year that it takes less to audit and you have fewer findings. That's what I'd want to see.

 

(CROSSTALK)

 

Q: Mr. Secretary: what happened to Mr. Gibson and the business efficiencies he was trying to -- to find? He said $46 billion over five years. Are you still on track to do any of this, or is that out the window now?

 

MR. SHANAHAN: Mr. Gibson resigned and we wish him the best of luck. It will get bigger than $46 billion. I -- well -- I think it will be, if I have my way, much more. But, you know, we talk about these -- these reforms. There are, you know, you have kind of transactional reforms, like I'm going to buy both items more effectively. But the real big reforms are in O&M and how would you sustain them. You think about all this equipment that we have. That's -- that's where we need to have the biggest reform. At some point and time, go take a look at what the Navy's doing.

 

Q: Is it buildings?

 

MR. SHANAHAN: Aviation.

 

Q: OK.

 

MR. SHANAHAN: Yes. It's -- it's pretty exciting.

 

(CROSSTALK)

 

Q: Did you pass or fail the audit?

 

MR. SHANAHAN: We failed the audit. But we -- we did -- we never expected to pass it.

 

Q: OK.

 

Q: Mr. Secretary -- 

 

(CROSSTALK)

MR. SHANAHAN: -- on this one right here. The, you know, the big things on the reforms are O&M costs, figuring out how big those are, and then healthcare. I mean, we spent $50 billion a year on healthcare, and I think what you'll see in the work that we're doing in this -- in this FYDF is we freed up over 20,000 people as a result of the reforms. The amount of -- I'll say -- when I think about reform, it's like, how do we go faster with transitioning the MTFs to DHA, and the implementation of the electronic health care? These things are really going to drive costs out of the system.

And then, you know, probably for another day to come down and talk about all of this stuff that's going on in I.T. because there's -- and -- and it's not as -- you know it's not like we’re buying a common system. We've literally really been shoring up cybersecurity, and then we've been, as an enterprise, now able to establish a -- a higher degree of standardization.

That's why this cloud is such a big deal, and then we've set this foundation for A.I., which you're going to see, you know, as a reformed category. We have a strong strategy there and a plan, that, you know, again, if Bob invites me back, we can come down and we'll talk more about that.

 

(CROSSTALK)

 

Q: Thank you. I -- I think there's a question about whether Space Force needs its own service academy. Are you in favor of a Starfleet Academy? (Laughter.)

MR. SHANAHAN: I don't think we can afford one at this time, no.

 

Q: OK, and I noticed that the Space Force is drawing on all of the services except the Marines. Does Space Force need rifles, squads, and other infantry to seek out and destroy other lifeforms? (Laughter.)

 

MR. SHANAHAN: Hold on. Joe, will you take a note, so we can make bring that into the next Space Governance Meeting. (Laughter.)

 

Thank you.

 

Q: Do you have a cost estimate for the Space Force? I mean there was the $13 billion that was reportedly -- came out of that Air Force. Do you have a new updated number 

on that?

 

MR. SHANAHAN: We do, and it is single digits, not a double digit. 

 

Q: Can you tell us what that digit is between five and 10?

MR. SHANAHAN: Yes, but it might be lower than five.

Q: Lower than five?

MR. SHANAHAN: OK? Could be lower than five.

(CROSSTALK)

 

Q: GAO denied the -- the protest of Oracel. Do you have any reaction to that?

 

MR. SHANAHAN: I -- I think we're -- well the -- the reaction is -- I think we have a smart approach in modernizing the Department of Defense. I'm not worried about vendor 

lock, because for -- for person for industry, the last thing we're going to have is vendor lock. We're going to have competition, but it's really about how do we migrate the department effectively through the cloud, and I think we're running a good competition.

 

Q: Can I just quickly ask you respond to commissions report, which is pretty critical of the strategy commission?

 

MR. SHANAHAN: So -- did everybody hear his question? 

 

Q: Yeah.

 

MR. SHANAHAN: So I -- because I read the article yesterday and I was like -- but then I had participated in the -- a lot of the interviews and -- and I know the people that are, you know, writing that report. I went back and -- and kind of re-read -- cause first -- the first time when you read those things, you're like really defensive, like why would -- why would people write that way?

 

But if you really read -- this is -- this is what I -- this is the way I read it. They said you need to work faster on modernization, it said -- and the way I looked at it, it -- it didn't say like oh, you don't win, they're like your degree of dominance is shrinking, so step on the gas in terms of modernization.

And it also said be careful on how you assume reforms on modernization, so it's really important now that you get the right top line. And then they wrote things like, you really need deeper analytics and analysis to support some of your conclusions in -- in the NDS, which I -- I agree.

 

There are probably a couple of things on the -- on the margin where they -- they -- they're mis-stated in the article or maybe I just disagreed with, but I'd say on the whole they were more supportive, but it was -- you know it's critical feedback.

 

So I -- I thought it was fine.

 

Q: They do have a lot of scenarios ...

 

(CROSSTALK)

 

Q: ... that you didn't win. They -- they got a scenario of losing Taiwan and losing it to North Korea. They have a lot of nightmare scenarios in there.

 

MR. SHANAHAN: Yeah, I haven't read through that part yet. 

 

(CROSSTALK)

Q: On the failed audit, what part did the Pentagon fail in the audit?

 

MR. SHANAHAN: How about I give you, like, the technical version of that, -- there are a considerable number of areas where we kind of had a pass, then there's some other ones where they went through and they said we went into your inventory system and we didn't find these things, therefore that's a finding, so you don't have a clean assessment.

 

So -- and -- in a lot of these audits, it's the type of finding that matters. That's why I think we -- what we really need to do is -- is I think some of this is embargoed, you know, I'm getting out a little bit ahead of the inspector general --

 

Q: Too late now

 

(LAUGHTER)

 

Yeah, I know, but he has better stuff, right? But the reports came in last week, so we're trying to, you know, get information out as quickly as possible. It's like the IG, you know -- give his communication tomorrow and then we need to get David Norquist down here and really kind of walk through, do the kind of technical ...

 

Q: ... Friday this week?

 

MR. SHANAHAN: Tomorrow, yeah.

 

(CROSSTALK)

 

Q: Let’s do this in the briefing room next time, we can all sit down. 

 

(CROSSTALK)

 

... we can still do it on -- yeah, on -- yeah.

 

Q: Only in the briefing room.

 

MR. SHANAHAN: OK, yeah, Bob says in the briefing room, so we’ll do it there. 

 

(CROSSTALK)

MR. SHANAHAN: All right, OK?

(CROSSTALK)

 

(UNKNOWN): I think we'll add it to the list. 

 

(Laughter.)