Prepared Statement by Hon. Jacques S. Gansler
Chairman Inhofe, Senator Robb, members of the subcommittee, and staff, I want to thank you for
the opportunity to appear before the Subcommittee on Readiness this morning to report to you on
a number of issues related to your oversight of our nation's combat readiness, including the
question of public depot maintenance. I have been in my position a little more than three months;
this is my first appearance before your subcommittee, and I am honored to be here.
I am pleased to have with me Darleen Druyun, Principal Deputy Assistant Secretary of the Air
Force for Acquisition and Management, who will report to you, in greater detail, on specific
depot maintenance programs and policies on the agenda today. General George T. Babbitt, who
directs the Air Force Material Command, is also here with us. After my brief remarks and those
of Ms. Druyun, the three of us would be pleased to respond to any specific questions you may
wish to direct to us.
Mr. Chairman, as you know, the Department of Defense has embarked on a massive
transformation: a transformation designed_not only to maintain_but to enhance our current
military superiority. Our goal is to build on our current strength in order to create a 21st Century
combat force that fully meets the strategic objectives of our nation and is sustained by a support
structure that provides the required readiness and responsiveness_ but to do this at much lower
In the next few years, our nation will face new_and I might add, very real_threats from a variety
of sources of aggression: some traditional, others radically different, and all of them increasingly
unpredictable. The new actors_terrorists, transnational aggressors, and rogue nations_can unleash
firepower in many ways as terrifying as that of a major global power.
To counter this threat, the U.S. military must be prepared to conduct multiple, concurrent
contingency operations worldwide. It must be able to do so in any environment, including one in
which an adversary uses asymmetric means, such as nuclear, biological, or chemical weapons,
or sophisticated attacks on our information infrastructure. Thus, our combat forces must be
multimission capable; and, to do so, they must be organized, trained, equipped, and managed
with multiple missions in mind. They must also be equipped with modern, state-of-the-art
weapons and systems, many of them specifically designed to counter the threat from
non-traditional forms of aggression. Because this aggression is unpredictable, our forces must
rely on a modern logistics team that is fully adaptive to the needs of dispersed and highly mobile
combat teams_to combine advanced, secure information technology and modern transportation
systems to deliver rapid crisis response, track shipments en route, re-deploy them if necessary,
and provide sustainment directly to all levels of operations; again, all at far lower cost.
Our vision for the 21st Century is a warfighter who is fast, lean, mobile, and prepared for battle
with total battlespace information awareness and assurance. Our military strategy, as stated in the
Joint Chiefs of Staff ``Joint Vision 2010'' posture statement, is to be based on Information
Superiority _real-time intelligence, from ``sensor to shooter.'' This is the backbone of the
``Revolution In Military Affairs'' that will allow us to achieve total battlefield dominance.
Over the last decade, as defense budgets have shrunk, to maintain readiness we have put off force
modernization_cutting our procurement account by 70 percent_and now we can no longer put it
off. However, modernization costs money. With the prospect of a relatively fixed budget, absent
a serious deterioration in the world situation, and the requirement to still maintain a high degree
of readiness and flexibility, the only answer is to shift significant resources from infrastructure
and support to modernization and combat. Thus, we must shift tens of billions of dollars annually
from infrastructure and support to modernization and combat; while, at the same time, improve
our support performance. This will not be easy, but I believe it can be done. It must be done. We
have no choice. To pay for our Revolution in Military Affairs, we must wage a Revolution in
Business Affairs_in all areas_and simultaneously.
Mr. Chairman, I know that both the Congress and the Department of Defense consider readiness
to be a prime concern as we deliberate the issue of transformation and modernization. All of you
have begun to hear reports from the Services of readiness problems_such as shortages of spare
parts, particularly within tactical units. Our equipment is clearly aging. As a result of putting off
our required modernization, our maintenance and sparing requirements are growing rapidly.
More frequent deployments only aggravate the problem of maintaining our combat forces at the
highest level of operational and strategic readiness. The Chairman of the Joint Chiefs of Staff has
spoken to this issue and has expressed his determination to improve our ability to track and
remedy any problems which, in the short run, may exist. I might note that we have included an
extra $1 billion in the Defense budget this year for spare parts in order to improve this situation.
Additionally, better tracking of readiness and total visibility of all our assets are two actions
which we are taking to help us keep ahead of future problems. I want to assure the Subcommittee
that solving this immediate problem is at the top of my list and is fully supported by Secretaries
Cohen and Hamre as well.
In the long run, however, we must radically change the way we do business if we are to
dramatically improve our logistics support. Why is it that we continue to experience bottlenecks
and slow response time when private companies manage to smoothly achieve millions of
deliveries overnight? Why is it that we must maintain huge and costly inventories when private
industry has learned to use advanced information technology to resupply quickly and
efficiently_and keep inventories and costs down?
The Army, for example, stocks numerous parts manufactured by Caterpillar. Average delivery
time for those parts, when a base runs out, ranges from 21 to 36 days here in the United States
and 50 to 68 days overseas. Caterpillar itself resupplies domestic commercial dealers in 1 or 2
days and overseas dealers in 100 countries in 2 to 4 days at most_or they pay for it. To
achieve these results, they use modern information technology and rapid transportation, instead
of carrying huge inventories. And our excuse can not be volume. During the height of Operation
Desert Storm, military requisitions peaked at 35,000 deliveries per day (on a 3-day moving
average)_far short of the performance of commercial package systems (such as FEDEX and
UPS) that handle millions of packages overnight.
One of my top priorities as the Under Secretary of Defense of Defense for Acquisition and
Technology is to bring about a major improvement in our logistics response_from ``factory to
foxhole.'' Our likely combat scenario_both now and in the foreseeable future _is not the World
War 11 model of long, drawn-out conflict, but, more likely, a short, fast, come-as-you-are
conflict with a surge requirement focused on spare parts and expendables as opposed to new
weapons systems or major repairs on damaged equipment. Again, in terms of rapid response to
unexpected situations, we can look to successful commercial companies for lessons in how to
respond to surges and emergencies.
To meet the anticipated threat posed by nontraditional aggression against our nation, we must
totally reengineer our logistics support. We must equip and sustain our troops faster, better, and
cheaper to provide our warfighters with total battlespace dominance strategically, tactically, and
All this, Mr. Chairman, leads to the issue of defense infrastructure and the question of public
depot maintenance workload and capability, an issue which I have inherited and for which I now
carry full responsibility, as Under Secretary of Defense. I would like to assure the Subcommittee
that I believe there is a role both for maintaining adequate organic depot maintenance capability
and for increasing our reliance on competition to support our overall maintenance and repair
capability. Depot maintenance and competition are not mutually exclusive terms. Our overall
objective _and I believe you share this goal with me_is to provide better performance at lower
cost. We owe it to the men and women who are out there in peril to know they have the best
equipment_on hand and ready_at all times. Fair competition and competitive market forces are
the keys to assuring maximum combat support at minimum costs. Furthermore, our policy of
requiring that we seek the best value for our limited maintenance resources insures that we
continue to maintain core capabilities in our organic facilities and enlarge our competitive base to
optimize_through the play of market forces_the performance and efficiency of all DOD support
operations. Our equipment maintenance policy is based on the realization that, in the future, we
will incorporate greater reliability into the equipment we design and produce; require longer and
more comprehensive warranties on systems and subsystems we purchase; and drastically shorten
repair cycles and delivery time on parts and equipment we own. This reengineering will result in
less maintenance work for both private and public facilities. Both will need to compete in order
to secure the limited work that will be required.
Competitive sourcing is one way we see an opportunity to achieve better performance at
significantly lower costs. For example, DOD has used public/private competitions (under the
provisions of OMB Circular A0976) in more than 2,000 cases, which have resulted in about a
50/50 split on public/private winners; with a 20 percent savings when the public won and a 40
percent net savings when the private sector won_and, most important, with significantly
enhanced performance in both cases. These results (20 to 40 percent savings with enhanced
performance) have been found by both private and public institutions (Federal, State, and local)
and by our allies as well. And, significantly, empirical data show that the larger the scope of the
competition, the more likely one is able to achieve greater cost and peformance benefits. The
ultimate winners, of course, are our fighting forces. They will see these improvements in the
field_equipment that is better; repairs that are less frequent; and sustainment that is on time in the
Using competitive sourcing and reengineering our logistics processes, along with other enhanced
acquisition actions_such as encouraging wider acceptance of dual use (civil and military)
products, technologies and processes_we can shift tens of billions of dollars a year to
modernization and combat while actually improving our support to the forces!
In closing, I want to assure the subcommittee of my personal commitment to assuring fairness to
both public and private competitors in our maintenance program. My major concern is over the
integrity of our contracting system and the need to maintain strict standards over the bidding
process. I am aware of Senators' concerns about recent GAO requests for access to information
concerning this process. We regret that there have been some problems with this in recent
months. I intend to remain cooperative and to authorize full access_consistent with our need to
maintain fair procedures and protect proprietary information. We will work with the General
Accounting Office to develop procedures to insure future access to documents that are
requested_within the time frame required by the Congress to fulfill its oversight role.
Mr. Chairman, I believe that we share the same goal: better readiness at lower cost. We will
work closely with the Subcommittee On Readiness and the full Senate Armed Services
Committee toward that common objective. I appreciate the opportunity to appear before your
committee and look forward to hearing your views on the issue of combat readiness.
I now wish to turn to Ms. Druyun, who will brief you on specific depot maintenance issues and
Thank you very much.