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FRANCIS ROSE: Gentlemen.
Welcome to all of you. Please have a seat, gentlemen. It’s great to see people anywhere in person – (laughs) – at this point in time. Thank you all for coming. I see a lot of familiar faces in the audience and I see just a lot of people that have a lot of questions. And so we will get underway in just a moment and we will have an opportunity for all of you folks to talk to my colleagues on the panel.
We’ll begin, gentlemen, with a few opening remarks from each of you. We’ll start with General Berger, Admiral Gilday, Admiral Schultz, and then I’ve written down a few things I’d like to discuss. Commandant Berger?
GENERAL DAVID BERGER: Sir, first, thanks for the Navy League’s organizing this event. Not easy, I’m sure, coming out of COVID to assemble a crowd like this and pull it off. They did so. I’m really grateful that the three of us have a chance to chat with the folks that we work with every week.
We were down, several of us – in fact, all of us were down in Tampa on Friday for change of command and retirement for General McKenzie, and a couple of us were talking about the volume of documents and information that’s come out in the last two or three weeks. It’s never even paced, in other words. In the last couple weeks, the combination of a National Defense Strategy, national – or, the Global Posture Review, Nuclear Posture Review, and the budget all in a few weeks’ time. Struck, you know, a couple of us as that’s a lot of information. We work on, of course, those things for six months, so it’s – none of it is new to us, but if I were on the receiving end of all that, trying to stitch that together in a – in a short span of time.
What I think – you know, a couple of takeaways from my perspective. Although it all seemed to be released all at the same time, of course it was developed in parallel. For us, the reason I bring that up is I think it is – it’s very clear to me that this is a strategy-driven budget; that you can draw connecting files between the last National Defense Strategy and this current one and the budget that supports them that it’s – that it is a threat-informed, strategy-driven budget. Working backwards, in other words, is helpful, or forwards – either way.
For us, this is our third year of a long-term effort of force design in the Marine Corps. So a look through the lens of the last – this strategy and the previous strategy should inform those who are wondering, you know, what is the basis for it and where are we going. It’s all apparent, I think, if you lay it all out on the table and look at it all in one whole picture.
A couple of things I would – I would say to add. Last year, we published a talent management plan that’s a parallel plan to force design, and this year we’ll do one for training and education. So all of them – those three put together – is the cardinal direction for the Marine Corps.
All that said, I’ll just finish up before the CNO takes over. There is a – there is a scope and a scale to that change in the Marine Corps, but probably worthwhile also thinking about what will not change. And I think my fault sometimes for not explaining the things that will not change. So the core, the ethos: our expeditionary role as a naval service. The level of discipline, the combined arms, and Marine Air-Ground Task Force sort of approach to warfare that we have, and maneuver warfare is our underpinning kind of doctrine. All those things don’t change. But we have to match the cardinal – the character-of-warfare changes that are happening.
So I look forward to the questions. It’s a great venue and I’m really happy to be up here with my partners here.
MR. ROSE: Commandant, thank you very much.
ADMIRAL MICHAEL M. GILDAY: Thanks, sir. I’d like to thank the Navy League as we begin this session this morning. This looks like a full house, standing room only. It’s good to see everybody back here in person. This is a great opportunity for the three of us to talk about where we’re headed as a maritime force.
I think it’s worth pointing out upfront – because I know that we’re going to talk about our proposed budgets and what has influenced our thinking with respect to how they were constructed. It’s easy, and some do take a look at those budgets in and of themselves for a particular fiscal year. And I think – with respect for the Navy, I think you have to go back seven or eight years and take a look at the journey that we’ve been on with respect to understanding how we would not only compete or campaign, but also deter and potentially fight a near-peer competitor – which is a significant change from what we did after the fall of the wall for the period of almost two decades.
And so the Navy’s journey with distributed maritime operations really began with the understanding that we were going to fight as a fleet under, above, and on the sea, and that would be driven by a fleet commander – and not just whether it’s a(n) amphibious ready group or a carrier strike group. So it was thinking about how we would operate across the physical domains, across the virtual domains, and perhaps even transnationally against a given peer competitor.
So that journey has influenced us because, I would argue, in order to resource a fleet you have to understand how you’re going to use the fleet, how you’re going to fight the fleet. And so that journey has been incredibly important for us in terms of looking at ourselves and understanding how we’re going to both – how we’re going to operate, train, and then potentially fight.
I think as you take a look at our budget proposals, they are consistent, as the commandant said, with the strategic guidance that the secretary of defense has given us in the NDS that’s about to drop. And I’d just make three points about that.
I think, first, it’s important to think about the pacing threat. He’s been clear it’s China. And so, given everything that’s going on in the world right now, in Europe, I think the three of us would still say keep your eye on China.
The second is his talk about deterrence. And I think what that boils down to is fielding and investing in a combat-credible force that can deter.
And then his last point, really, is about campaigning or how – the means by which – the ways by which you exercise the joint force on a day-to-day basis to deter using that combat-credible force.
And so I think if you take a look at the investments that we’re making and the force that we are fielding in this decade during this FYDP of the next five years; and then, if you think about with respect to the three of us the transition period between, let’s say, 2028 and 2032, whether it’s – whether it’s laws or whether it is LAUs or whether it is unmanned, whether it’s DDG(X), those transitions we’re making to a force design that’ll really, we hope, come alive in the 2030s for all of us.
And so, again, this is an evolutionary process for all of us. I think our budgets – our budget proposals and what we’re fielding reflect that.
I look forward to the questions and answers today as we get deeper into this so that we’re able to peel back – peel back into the specifics.
MR. ROSE: Sir, thank you very much.
ADM. GILDAY: You’re welcome.
MR. ROSE: Commandant Schultz?
ADMIRAL KARL SCHULTZ: Yeah, Francis, thank you. And I just want to echo on the CNO and the CMC’s words to the Navy League. I think there’s 1,800-plus folks here eight months after we did this last time and 2,500 young men and women students here for STEM yesterday, so this is a great opportunity.
About 15 months ago, the CNO, the CMC, and I signed out “Advantage at Sea,” the Tri-Service Maritime Strategy, and I think we’ve found the Coast Guard linked in here with the naval forces unlike never before. The timing with the ’22 budget, you know, penned a couple weeks ago by the president, ’23 budget on the Hill on the 28th I think is very opportune.
You know, from a Coast Guard perspective, almost four years ago, when my leadership team sort of took over, we talked about a Coast Guard that was ready, relevant and responsive. And we’ve been on a readiness narrative incessantly for the last four years. I think the last few budget cycles, I think that narrative is being heard. We’re a Coast Guard that has unprecedented demand on our services, both domestically and internationally, globally. And I’ll maybe just split the world into those two genres a bit, just to chat about it.
Domestically, you know, we all know about 95 percent of all the goods commodities in this nation come by sea. We’ve seen the supply-chain pressures here in the past year. It’s about 30 million jobs tied to the waterfront, the maritime industry; about $5.5 trillion of annual economic activity.
So we are busy at home. We’re busy building out a cyber force to ride the backbone of the .mil domain with our DOD colleagues. And really that regulatory function here, as we think through cyber and the shipping industry, the vulnerability to ports, you look just at LA-LB, Los Angeles-Long Beach. Forty percent of the goods in this nation come through that one port. So cyber protection is critically important there.
Sort of going to the away game, an increasingly global Coast Guard across the world, I don’t think we’ve ever been in higher demand with the numbered fleet commanders. We’ve got new vessels operating in the Indo-Pacific. We’ve sailed National Security Cutters over there for Phil Davidson, now Admiral Aquilino, on an increasing basis. And when we send a ship there, you know, it is under the tactical control of the fleet commander. We’re excited; burgeoning opportunities in the Arctic. I think recent world events even put more clarity on the criticality of the Arctic.
When you can run commercial cargoes out of Shanghai, up across the northern sea route, and knock off 11, 12, 13 days versus the Suez, that will be an attractive option in the future. And, you know, the largest territory holder for the Arctic is Russia, and they’ve got a fleet of multi-dozen icebreakers. We’ve got a 45-year-old heavy breaker, medium breaker. We’re building new ships. There’s a good emerging story there. But we have not been under higher demand, I think, in my 39 years in the Coast Guard.
So very excited to be here today. We’re in our most prolific shipbuilding period since the Second World War. So we’re going to finish up the last two National Security Cutters. We’re going to award a phase two on OPCs and take delivery of that ship a year and a half or so down the road, probably splash the first hull of the Argus here sometime this calendar year; going to award a contract for Waterways Commerce Cutters. We’ve funded through 64 Fast Response Cutters. The Congress just put two more in the ’22 budget for us; and a lot of good things going on with aviation.
So Francis, at the risk of being long, I would just tell you, very excited about working with the commandant, the CNO, here under the umbrella of the tri-service strategy, putting the Coast Guard into the fight as a part of the joint team, not by law but I think from a contribution standpoint to the numbered fleets.
All three of you referenced the transitions or changes that your services are going through and what warfighting looks like, what defense looks like. And CNO, you used the ’28 to ’32 timeframe. I’ll start with you, Chief. How does the budget request that just came out fit to that? You addressed it a little bit, but if you would describe that in a little more detail, please.
ADM. GILDAY: I think it’s important to think about the Navy across at least three domains – under, above and on the sea; to also think about the investments we’re making in the information-warfare area, which would include cyber in space, so the virtual battlefield as well; and then, lastly, the human weapon system, the investments that we’re making in our sailors and civilians that are absolutely critical to moving forward in this key decade.
So if I take a look at under the sea, the investments we’re making – I’m very proud of the investments in undersea warfare we’re making with our fielding Virginia Block IV and Block V submarines; Block Vs, mid-decade, or actually by 2028 we’ll have hypersonics. So we’ll have that capability fielded from our most stealthy strike platforms under the sea.
There’s an article in this month’s proceedings from Admiral Wyman Howard. He’s the commander of Naval Special Warfare Command in Coronado, California. And he talks about the Navy’s commandos pivoting back to their roots as frogmen. It’s an interesting piece to read. And it talks about how we’re leveraging those skill sets, not just in the counterterrorism fight but also under the sea in that critical domain where we need to keep overmatch against our adversaries.
And lastly with respect to the undersea, the investments we’re making in AI are proving to be very, very useful against an increasingly sophisticated adversary, and also the investments we’re making in an advanced weapon under the sea.
On the surface, similarly, we’ll be fielding the Constellation-class frigate. We just christened our first Flight III DDG with an enhanced weapon system and radar combat system last week down in Pascagoula, Mississippi. We’ll field hypersonics on Zumwalt by mid-decade.
We’re making investments in SM-6 Block I Bravo and Maritime Strike Tomahawk. This budget tries to maximize those domestic production lines so that we’re putting weapons in magazines; of course, readiness being our number one priority.
Above the sea, we continue to make investments in the F-35 and also upgrades to our existing Super Hornet fleet. We’re in our second F-35 deployment right now, so our second integrated wing. By mid-decade, half of our wings will be integrated with fourth- and fifth-gen aircraft. By later on in this decade, they’ll all be integrated. That’s a substantial capability over our adversary; the weapons that we’re investing in – LRASM, JASSM-ER – again, maxing out domestic production lines; and then, lastly, the MQ-25 onboard our carriers, A, as an autonomous vehicle in a refueling role frees up two or three strike fighters from that role and gives us more of a combat punch, extends range of our airwing in conjunction with those longer-range weapons.
In the human weapon system, the investments we’re making in ready, relevant learning and live virtual constructive training are significant; in fact, groundbreaking.
And then, lastly, in terms of space cyber and that domain, we’ve just started our Maritime Space Officer Corps. We are making investments in a float targeting cells that are groundbreaking in terms of what they deliver a fleet commander in terms of being able to create effects downrange.
So all of that – all of that moves from this FYDB into the next with a bigger transition into unmanned and automated.
MR. ROSE: Thank you, Chief.
General Berger, same question: How does what we saw last week fit with where you want the force to be in the – I assume 2030 is your target date, sir?
GEN. BERGER: Target date – just to be clear, I think all of us have to have a force that’s ready now. We can’t take our forces off the field for five or six years, reshape them and then put them back out on the playing field. So it’s not a now or then. As the CNO and others said, it’s now and then.
This is the third year into our force-design effort. But as CNO did, we would not have been able to even begin that effort if it hadn’t been for the hard work that General Neller and the Congress did to rebuild our readiness for four years before he and I changed out or we would not be on the path that we’re on. So he took four years to rebuild us from the Iraq-Afghanistan conflict into a ready force and then started the modernization. This is then third – you could say the fourth year into that effort.
The approach that we took, based on where we were, was if you’re going to match the speed of the change of the character of war, meaning the threats, technology, everything that’s involved in the operating environment we’re going to face in the future, then if you’re going to accelerate, then you have to divest of some platforms. You have to adjust your force structure. You have to do things up front that will create the resources and then pour them back into the force.
This is the third year in which Congress and this administration has allowed us to keep those resources and pour them back in. Those – of course, all those changes are not without risk. The risk is that you have to be ready now, which we are. So you have to retain the crisis-response capability – responsibility that the Marine Corps has, but also be ready four, five, six years into the future.
I think General McKenzie really captured it on Friday. He said I’m a combatant commander. I have to be ready this afternoon. I really don’t have a vested interest five, six, seven years into the future. And he acknowledged that the service chiefs have both. We have to give them the forces, the capabilities, now and five years, six years from now. None of us – just to go back to your start point, none of us have a belief that we can wait until ’28 or ’30 or ’31. The capabilities, the forces that we’re fielding now, are now – ’22, ’23, ’24. It’s on a very rapid pace.
The last part of that, I would say, in order to move at that speed, you have to learn at that speed, which means a lot of experimentation, a lot of wargaming, a lot of trial and error, and the mechanisms to feed it back into your force-development process to make adjustments along the way, which we have.
So we have an aim point that’s out 10 years out. But we have, inside the Marine Corps, the ability to turn what we’re learning, even from what’s happening in Ukraine, the exercises that we’re doing in Norway, what forces – what the forces are doing in the Indo-Pacific – you have to be able to plug that back into your learning process and make adjustments on – as you go, which this budget allows us to do, keep that momentum going.
MR. ROSE: Commandant Berger, thank you.
Commandant Schultz, same question. You referred to the away game. And it sounds like the tempo is faster, in addition to the force being more dispersed than it’s ever been before. How does your budget request feed that, sir?
GEN. SCHULTZ: Yeah. Thanks, Francis.
I would tell you, just for a little context, sort of 2011 Budget Control Act and sequestration in ’13, we had a tough seven, eight years that followed that. We lost about 10 percent of purchasing power in our operations – support operation and maintenance budget. And I think we have turned the corner. In 2018, when it was the 12 percent plus-up for DOD, we were sort of outside of that sitting in DHS. But last few budget cycles, I think we’ve sort of turned the corner; ’22 put us on about a 7 percent uptick; ’23 builds on that.
So I think the conversation about what kind of nation does the Coast Guard need is sort of now walking into the resource arena. I think 3 to 5 percent outyear growth, we could continue to deliver that Coast Guard.
Where we’re challenged, Francis, to be frank, is critical infrastructure. We’re a, you know, 232-year-old Coast Guard come this August, and we’ve been patching roofs and other things. So as we cite new cutters, as we, you know, deal with – most of our infrastructure investment is where we’ve been whacked by hurricanes. You know, the folks that are in the Great Lakes are praying for hurricanes to come up there so they can get some new infrastructure. That’s not a good model to have here.
So we’re really working hard to have a conversation about the readiness of the Coast Guard. We’ve made progress. Now it’s sort of to get ready, we’ve got to continue on a trajectory and we’ve got to get after some of this baggage we carry. I think – I talked about readiness before, but, you know, I talked about a relevant, responsive Coast Guard, the people thing. We’re going to push this Ready Workforce 2030. It’s at the printers now.
But it’s really how we think through finding sufficient young men and women to be recruited into the service. How do we train them, modernize ready learning for us, and how do we retain them? You know, we have the highest retention across the services, but we’ve got to do better there. And I think there’s a piece, ’23 budget, where the numbers aren’t big proportionately to the whole budget. There’s money in there for people.
How do we create a Coast Guard that looks more like the nation we serve? How do we get after health, mental health? How do we get after some of the challenges that our Coast Guard families and our service families are realizing? This is going to be a tough PCS season. You know, housing costs – as I transition, I look out there and say, boy, this is just a tough place even to find how you uproot and go somewhere.
So I would tell you, budgetarily, Francis, we’re having the right conversation. The ’23 budget on the Hill puts some monies out there for the Atlantic partnership. It talks about the Arctic, talks about the Coast Guard in the Indo-Pacific. That’s sort of forward-leaning. We generally go do things for a few years and then we have a conversation about what do you want to pay for us to continue to do it.
I think it’s very encouraging that the administration, the Hill, is embracing the fact that, hey, a ready Coast Guard that can do some unique things, given all our authorities, needs to be funded properly. So I’m actually quite encouraged. The piece that really keeps me up at night a little bit is just this infrastructure challenge we put forward. That is going to be a hot baton handoff to my successor to continue to message into that. I’ll be messaging to that in my budget hearings in the coming week, sir.
MR. ROSE: Thank you, Commandant Schultz.
You’ve all mentioned, at one level or another, the new National Defense Strategy, the classified version transmitted to Congress and the unclassified version coming. And the fact sheet from the department says the department will advance our goals through three primary ways: Integrated deterrence, campaigning, and actions that build enduring advantages.
CNO, you referred to China. And no one is surprised by that. But what we’re seeing in Ukraine strikes me as informing the way that we all should be thinking about each of those three elements.
Commandant Schultz, you are interacting with Russia in the Arctic on ongoing, I imagine almost daily basis. What do you learn? What do you take from what is happening in the world broadly, especially given what you’re trying to do for the United States in the Arctic?
ADM. SCHULTZ: Yeah, Francis, I would tell you, currently, because of what’s going on and, you know, the unjust acts in Ukraine by Russia’s – you know, the Arctic Coast Guard Forum, the Arctic Council, where Russia holds a chair, you know, I was supposed to have met with them in April, and that’s obviously on hold for very obvious reasons.
But, you know, a pragmatic relationship with Russia in the Arctic, a pragmatic relationship with China on, you know, operations – you know, international fishing, U.N. sanctions against illegal fishing – you know, we need to have a pragmatic relationship; our proximity with the 17th district based out of Juneau, Alaska on the maritime boundary line.
We still work functionally, pragmatically. But I think it’s a stress period. I think, you know, how does that play forward going – that’s something we have to think about. But in the Arctic, you know, like I said, it’s inarguable, Russia has a lot of clear Arctic interests, and they’re deriving about a quarter of their GDP from the Arctic.
So what does 20 years down the road – you know, are we looking at freedom-of-navigation operations potentially in the Arctic? And as we build out a fleet of a minimum of three Polar Security Cutters that are on a good budgetary trajectory, that needs to really be a conversation about six-plus heavy breakers. And we need to have a conversation about some medium capabilities.
We need to be teamed up with Mike’s team in the Arctic and, you know, the Marines and the Navy, you know, back from Trident Juncture to the recent operation. I think the Arctic is absolutely an area of increasing geostrategic importance. And I think recent weeks – you know, the month-plus of events now – just put a point on that. We need to really be thinking into that with more strategic, you know, clarity than ever before.
MR. ROSE: Thank you, Commandant.
Commandant Berger, I’m curious about the three elements that I mentioned of the National Defense Strategy, and directly in reference to Force Design 2030. You’re aware of the controversy about it in some quarters. How does what you envision and the Corps envisions through that Force Design 2030 get you to fulfilling the vision of the National Defense Strategy and a greater deterrence campaign building enduring advantages, sir?
GEN. BERGER: For those of us seated up here, this is – and a few others in the audience – this is the second time in my career we’ve had a pacing challenge. I think for the first decade or so it was the Soviet Union. And I remember, as a lieutenant and a captain, that you had cards like this. You had to study their formations. You had to study all their weapon systems. We knew their tactics. We knew their leaders. And that arguably helped us in 1990 and ’91 and beyond. So this is not déjà vu. It’s a different framework. But still for us it’s the second time we’ve had a pacing challenge.
For the Marine Corps, fitting into the National Defense Strategy in an ends-ways-means sort of way, we are – in terms of campaigning, you need – the nation needs a force forward persistently, I would argue, that is also expeditionary and has a forcible-entry capability. Why? Because that’s your first opportunity to deter.
In other words, having a Coast Guard-Navy-Marine Corps presence, and I would argue Special Operations as well, forward all the time, not fighting their way in but forward all the time, gives the secretary a better picture of what’s in front of him. You’re already in places they want to be. If they want to extend beyond the South China Sea if you’re the PLAN or Iraq or Russia, if you want to extend your fence line further and we’re already there, it makes it much more difficult.
But it has to be credible, the way that these two gentlemen point out. The campaigning part is part of the deterrence part. It’s not campaigning for campaigning’s sake. You’re doing it with a purpose in mind, that you’re posturing the force all the time to be ready to respond in a crisis, but your positional advantage gives you a deterrent capability. It alters the thinking of the threat. And Admiral Paparo, who’s sitting right here, probably better suited than me to come up here and tell you how he’s using – he and Admiral Aquilino are using those forces in the Indo-Pacific forward all the time, rather than fight your way in. You have a better picture. You can respond to crisis faster.
MR. ROSE: CNO, one of the elements of those three components is conversation about your force structure. The number for a long time was 355 ships. The most recent number that I believe I heard was 500, including unmanned. What does that look like today? How does the budget get you to that? And how does that structure in, and then what those ships are, fit into those three components of the NDS, sir?
ADM. GILDAY: Yeah. If I could, before I answer that directly, if I could just add on to something that General Berger just talked about with respect to campaigning. The deterrence piece is really important, fundamentally important, because it’s a cornerstone of the secretary’s strategy. But I also think, in a world of gray-zone competition, I also think our presence forward allows us to be in the way and to expose malign behavior by China.
Think about how important it was for the United States, and the world really, with respect to Russia’s activity into Ukraine. We took away his strategic surprise. We took away his operational and tactical surprise. We pulled a rug out from under Vladimir Putin with respect his ability to use false flag operations as a pretext to cross the border and invade Ukraine.
And so, our ability to do that on a day-to-day basis in the Western Pacific, I would argue, is critically important, and you can’t do that virtually. You have to be there to assure allies and partners, to see that activity, to expose it, and so that’s another element of why a forward force, I think, is critically important, in conjunction with General Berger’s comments about being ready to support the fight tonight and to make President Xi think twice about whether or not he’s going to make a malicious move.
With respect to the size of the force, so the Navy’s priorities are and have been steady for the past three to five years. Readiness, modernization, and capacity – in that order. I think that those priorities have served us exceedingly well. Why? Because we need a ready capable lethal force more than we need a bigger force that’s less ready, less lethal, and less capable. In other words, we can’t have a Navy or a Marine Corps larger than one we can sustain. That’s important. So, let’s keep it real with respect to what we’re going to field out there.
So, if you take a look at our investments, right, we are trying to do divest of those given our topline and given the fact that we can only have so many ready ships that are manned properly, that are trained properly, that have ammunition in their magazines, that have the proper maintenance. In order to do that, we’ve had to make some very difficult decisions about divesting of some platforms. It’s more than just a numbers game. It is a capabilities and a numbers game about fielding a combat-credible force that can deter.
If we want to talk just about capability and you want a force that can’t – that’s ineffective, take a look at the 125 BTGs that Vladimir Putin has positioned around Ukraine. That’s not the force that any of us want. And so, the investment strategy – if we want to flip that and make capacity king, you’ll end up with a force like that because you’ll pay for it with people, with ammunition, with training, and with maintenance.
We’re maxing out the production lines of all of our long-range weapons with high speed in this budget – whether they’re advanced-capability torpedoes, SM-6 1-Bravo, Maritime Strike Tomahawk, JASSM-ER, LRASM. In all three domains we’re maxing out – trying to max out those production lines. We are trying to make sure that the fleet today is ready to go, and 70 percent of that fleet we’re going to have 10 years from now.
So, the investments that we’re making in hypersonics to deliver that capability by mid-decade as well as the critical R&D in microwave and laser technology that gives us an enhanced capability to defend that fleet have become indirectly important. I personally think they’re on the right path. That path is not popular with everybody in this room – it’s certainly not on the Hill – but I believe it’s a responsible path. And I think it both fields a force today that’s ready to go and it invests in a force mid-century and beyond – mid-decade and beyond that will serve us well.
MR. ROSE: Chief, thank you very much.
We have some time for some questions from the audience. I now need glasses to see the audience and the microphones.
Microphone people, can you raise your hands, please? Terrific.
If you would like to pose a question, the microphone will come to you, just raise your hand, and I’ll ask you to state your name, the organization that you’re with, and then direct your one question – (laughter) – one question to one or more of the speakers.
Q: Hello. John Conrad with gCaptain and a U.S. merchant mariner.
Last time we faced this issue, John Lehman was secretary of the Navy, and he was a hedge fund manager. I just got back from the biggest shipping conference with finance people, and Admiral Schultz had many representatives there. There was not a single naval officer. The PLA is using credit default swaps and coded capital in order to use the financial instruments with the commercial fleet to push a shipbuilding plan for their Navy. There are four flags behind you, but only three service chiefs.
Where is the commandant of the U.S. Merchant Marine, and when we are we going to put our people into shipyards in Korea and China to learn those lessons of efficiency and finance that are commercial?
MR. ROSE: Would any of you like to take that question? (Laughter.)
ADM. SCHULTZ: I guess I heard my service mentioned. I think from a Coast Guard perspective – back to my initial entry comment about the global maritime commerce, the importance of that – you know, when you think about the largest navy in the world, the largest coast guard in the world – China’s Coast Guard is more than 200 ships. The China government will have more icebreakers than the United States government because of their wherewithal in their shipbuilding. So, I think there’s a lot to think through in that case.
Obviously, you know, need to sit down with Secretary Buttigieg and – you know, as they seat their MARAD administrator. I think your points are fair. I think we have to sort of think about the whole of government response and a pacing threat of China. I think absolutely it’s all stakeholders at the table and think about this through a very comprehensive lens, maybe more – arguably more so than we have in the past.
So, I think your point is fair, and it’s something we all need to, sort of, take for consideration.
MR. ROSE: I lost a bet. I bet a colleague of mine at work that the first question would be about Force Design 2030 and I lost big. (Laughter.)
Q: Good morning, gentlemen. My name is –
MR. ROSE: Sir.
Q: Good morning. My name is Reid McAllister (sp).
I have a question about being agile in acquisition, agile in requirements, and agile in our budgeting. And what is it that we’re going to do with continuing resolutions always hampering us? How are you preparing for a means for us to be more agile as we’re finding greater capability coming against us in order to get after our adversaries? Because they tend to be – appearing to be turning inside of our diameter. And what are we going to do to get more agile in that area?
MR. ROSE: Thank you, sir.
ADM. GILDAY: Sure.
I think it’s difficult to take a look at that across the entire United States Navy. Let me give you a couple of examples of things that I think are going well that we can learn from and things that we are trying to become more agile.
First of all, I think with respect to our large platform – submarines and ships, as an example – I think predictability and stability for industry and for the United States Navy is critically important. I think that we’re achieving that with respect to submarine build rates, right? They’re predictable out to 2037 – a boomer a year and two fast-attack subs. That allows industry to plan their investments in infrastructure and their workforce, and they have a set headlights that goes out 15 years or more. It allows the repair side of the house – whether it’s a public yards or whether it’s a private yards in Connecticut and Hampton Roads, VA – to understand what that demand signal looks like and to plan for that.
So, I think that predictability and stability there are really important. I would like to have that in the surface force. And so, as we take a look at our major investment lines – Flight III DDGs, FFG-62, potentially DDG(X) by the end of the decade, right – I want to be able to count on two or three of those types of ships a year with plenty of overlap between Flight III DDGs and DDG(X). We’re pushing out great capability to the United States Navy and for the nation. At the same time, we’re giving a nice feather predictable plan for industry so that we’re not taking high technical risk.
I think driving down technical risk in shipbuilding programs is really important, and I think the example that I gave of comparing the submarine build with the surface build is an important one that we can learn from.
With respect to agility, what we’re doing now with unmanned is exactly where we want to go with (destructive ?) technology. So, instead of fielding unmanned in the same kind of deliberative long lead time frames that we have for those larger platforms – we’re experimenting with the Fleet CTF 59 in the Middle East right now. Last year – last month, the largest unmanned exercise in the world – a hundred different platforms, 10 different countries, dozens of vendors – taking a look at how we can connect software AI with a variety of platforms to enhance maritime domain awareness.
In other words, to both sense and make sense of the environment we’re around in a much – in a way that we can deliver capability to the warfighter, whether they’re ashore like the Marines or whether they’re afloat like the Navy and the Coast Guard – at the same time, taking a look at problems outside the FYDP, large unmanned vessels as an example that provide us that floating arsenal – or will provide us that floating arsenal of weapons. It doesn’t necessarily have to be completely unmanned. It will be minimally manned for a while. It just needs to be evolutionary.
But land-based prototyping that we used successfully with Colombia and DDG-51s, where we take an engineering plant and we run the hell out of it, so that we understand that it’s reliable and capable, before we scale it and put it on a large unmanned vessel. Same type of idea.
And I would tell you that Project Overmatch, which most of you are familiar with, is also getting after the C2 challenges that we need to resolve before we scale in a big kind of way with unmanned.
So, that experimentation that’s ongoing with small unmanned and the prototyping that’s the kind of agility we need to deliver stuff quickly in a critical decade.
I took a lot of time, and I apologize for –
MR. ROSE: No, no.
ADM. GILDAY: – maybe you’re happy I just, you know – that filibuster burned up like five minutes. (Laughter.)
MR. ROSE: No. (Laughs.)
Commandant Schultz, you talked about some of the platforms that you’re bringing online and the timelines and so on. What do you – regarding the question about agility and acquisition, agility, and requirements, what have you learned from those? And what have you learned from maybe some of the things in the past that didn’t work the way you wanted them to that’s put you on this trajectory to be more agile in acquisition and requirements and so on?
ADM. SCHULTZ: Yeah, well thanks, Francis.
I think Mike was spot-on. I think for us – smaller service, you know, stable, predictable funding is critical. We’ve sort of been in the good spot in that in recent years. I think for us locking in requirements – we don’t build ships that frequently, and we’re in a period of prolific shipbuilding. It’s important that we have those locked on. I think as we’re, you know, moving the design forward in the Polar Security Cutter, that’s been a little bit of a delay. That’s a complicated ship, a lot of foreign pieces in that, but we’re excited to hopefully start cutting steal.
I think the piece that’s interesting, you know, that’s outside of the Coast Guard control, outside the naval control is, you know, for us when you get a budget halfway into the fiscal year, you know, that’s challenging, and it used to be you didn’t get a budget, you know, 90 days in the first quarter. You know, when we go out and compete for ship repair work, you know, the scale of our shipyard repair is much more than a navy combatant coming in. Sometimes it could be for the same places.
So, if you’re making decisions as the Coast Guard, you’re making decisions as a ship repair industry, you might wait for the Navy contract. So, for us we got a little bit of two-year monies. We need to expand that. We need to go back to Congress and double down on that. I do worry a little bit, as we buildout, the ninth or 10th and the 11th National Security Cutter or a fleet of 25 Offshore Patrol Cutters, which is, you know, a 4,500-plus ton ship – big ships. We’re going to be competing for these same shipyards, and we need to think through that a bit.
You know, only in Washington can you have a continuing resolution that expires on a Friday, you pass it on a Thursday, you’re still five-and-a-half years in and that’s still a budget success, but you’re halfway through the fiscal year.
So, we got to get, I think, a little more clarity as a nation about the importance of getting a budget at the start of the fiscal year, to the extent that’s not just a delusional dream here. It impacts a smaller service like the Coast Guard, I think, exponentially so. I know it affects Mike, you know, and the ship repair industry, shipbuilding as well.
Commandant Berger, how is agility and requirements and acquisition in the – and the other elements impact in the Corps? How are you thinking about those issues and applying them, sir?
GEN. BERGER: The first part I would say in answer to the question – out of time to think of course, which is always helpful – (laughter) – but I think the best thing we could do, relatively, to speed up our acquisition is actually find a way to convince the PRC to adopt our acquisition process. (Laughter.) That would be huge – (laughter, applause) – if we could just do that.
But I think – you know, all that aside, a couple of things. First, the Marine Corps benefitted from some really brilliant moves 30 years ago to put acquisition, and requirements, and manpower, and training, and education all at the same base in Quantico, Virginia, which is not far from the Pentagon. So, they can collaborate at speed. We’ve been able to do that for decades. It’s just a huge advantage, really great foresight.
Second, I would say – and again, a great question for Admiral Paparo or others to validate or not, I think you have to actually get something in the field and demonstrate it as early as you can rather than take two or three years to develop it and work on it and engineer it. Last summer, Admiral Aquilino pressed really hard to get a demonstration of the NEMISIS system for us, which took a lot of coordination between the Navy and the Marine Corps in Hawaii to pull off, but in the end, very early on in the process of something you actually show what it can do.
I think that’s the confidence builder sometimes that Congress and others need to see it. It’s also great because – the second half of that is – as the other two gentlemen know, is you’re putting things in the hands of operators early. They’re going to give you feedback on that system and say that’s in the wrong place. It needs to be moved over here. Or that’s not functional, I need it bigger or smaller. So, I think you have to demonstrate it.
We have to get it into the field as quickly as possible for both of those reasons, to build confidence in that – in those resources, but also to get it into the hands of operators so that the feedback – we’re not waiting two or three years for feedback, we can make the changes early on.
We have one more audience question. I saw a hand in the back there.
Q: Good morning.
MR. ROSE: There you go.
Q: Yep, over here. Megan Eckstein with Fox News.
MR. ROSE: Hi.
I wanted to ask about beginning to change your operations to reflect things like campaigning forward and distributed operations. As you try to do those things with today’s fleet, are you looking at different force generation models or different ways of employing today’s ships and forces?
ADM. GILDAY: If I take a look at the operating concepts of our fleets forward, they’re signed by not only the fleet commander – the numbered fleet commander, but also the numbered Neff commander, and so these are integrated warfighting concepts that we are now using on a day-to-day basis, right.
With respect to campaigning and the JTF concept that Admiral Aquilino is exercising out there in Hawaii with Admiral Paparo, acting almost as a de-facto JTF commander supported by the other services – it’s caused us to think hard quickly about how we integrate our forces, how we integrate our naval forces better.
I’ll tell you, besides that NEMISIS firing those two missiles – which I was fortunate enough to be in the range and watch, which was awesome – right now our deputy commander – right now, our Joint Force Maritime Component Commander in Naples, Italy, which has some 30 ships under their command right now, the deputy commander is a Marine officer – a Marine general officer, and that staff – our JFMCC staff is infused with Marines from European – from MARFOR Europe. I would say the same thing for Admiral Paparo’s staff on Hawaii as – the same thing with the Admiral Koehler’s Third Fleet staff in San Diego. We are working together with those MEFs. Operationally, we’re testing stuff. We’re doing experimentation. We’re operating together. That’s where you’re seeing the preponderance of the Navy-Marine Corps integration going on, is at that level. We’re quite honestly, probably most important for today, and what we’re learning from it, that’ll inform what we’re resourcing tomorrow.
GEN. BERGER: I’ll just add – we are – to answer the question, we are talking about the process we use right now for Global Force Management and the process we use right now to assess readiness, both of which we need to upgrade, we need to bring into – a way that’s much more helpful to the secretary. And he has the tools that he has now, but we can do a better job of portraying the risk for him. Because a combatant commander is going to ask for this and say, if I don’t get it, I can’t articulate the risk. The onus is on us for not countering that but to say, if you do that here’s the impact on long-term readiness and the impact on risk long-term to force generation and force development, so that the secretary has the complete picture and can make the right calls. He makes them right now with the information that he has, but I think we can do better.
It’s just an evolutionary process, in other words. It’s about understanding risk globally, managing that risk, and giving the secretary, the senior decision-makers, as accurate a picture as can, so they get – they can make all the right calls all the time.
MR. ROSE: Commandant Berger, thank you for that.
I want to give you and the CNO a chance to correct me in a moment – to answer the questions I didn’t ask you.
But Commandant Schultz, I want to start with you because this will probably be the last chance that I have to talk to you while you’re still the commandant. You’re transitioning out shortly. What will you take away primarily from your service? You all have talked in the various times I’ve spoken to you over the years about leaving the service better than you found it. How do you believe that you’ve done over the time that you’ve been the commandant and your entire career, sir?
ADM. SCHULTZ: Yeah, thanks, Francis.
I wasn’t expecting that. You know, as I reflect back, I think all the senior military leaders, all the service leaders, you know, it’s been an interesting time here. So, I’m an 18-22 guy, the four years, and we’ve had some challenging periods. You know, from a Coast Guard standpoint I never expected to stand in front of 55,000 people and explain why they weren’t getting paid for a little bit, you know? And you stand the watch, we’ve stood tough. You’re resilient. Our families are phenomenal. I think I reflect back on just how resilient the military family has been in recent years, and I think we talk about an environment where, you know, 75 percent of America’s youths 18-26 are ineligible to serve, so 25 percent are, and then within there, you know, a decrease in number have a propensity to serve – 9, 10, 11 percent. And we’re all out there trying to encourage these bright young men and women to come forward and wear the cloth of our nation and serve.
So, we have invested heavily in our people, and we’ve got a lot of work left to do. When I talk about readiness, there is a clear people piece, and we talked about this Ready Workforce 2030. It’s about more portability, permeability. We’re striving to be a Coast Guard reflective of the nation, and we’ve got to go recruit different places. We kicked off in 2020 what we called the tech revolution. I announced that – I do an annual state of the Coast Guard.
And you know, these bright young men and women that want to serve, you know, they don’t want to have more mobility on their personal device than you give them at their desk or in their job, so we have worked very hard to put some mobility out in our people’s hands. We’re looking at data. You know, AI and data analytics, I think that’s how we move forward and make the best decisions.
I think the shipbuilding we’ve maintained pace. I think – as I reflect back, just – at the risk of getting long-winded – I think we’ve managed a service – we’ve all managed our services through some pretty challenging pandemic periods – you know, sending a National Security Cutter or a DDG, Marines on an amphib downrange, N-95s, away from families in an uncertain environment in the first months of COVID. You know, we’ve been as busy as we’ve ever been in the last 24 months, so I’m excited that we did that safely. We tried to attenuate the risk and the stress on the families, and then we constantly went back to our four-year plan. We’ve had a four- year strategic plan about a ready Coast Guard.
You know, I reflect on the last five or six years, from Hurricane Matthew in ’16 – which was a one-off storm after a decade of no storms – to ’17, ’18, you know, 20 being a record Atlantic-based in hurricane season. Your Coasties have stood the watch here throughout those storm seasons, you know. Fifty percent of our reserve force has activated almost each of the last couple years – whether it’s vaccination sites, whether it’s hurricane response, whether it’s part of allies’ welcome. So, I think I’m – I reflect back on the men and women that are serving their nation. You know, 60 percent retention, the Coast Guard. We need to go continue to find them, and I think it’s continually, despite some of the challenges, it’s going back to a plan that delivers that Coast Guard that the nation needs.
And I mentioned domestic before, so I won’t rehash that – really increasingly global. I think when you roll up – and my predecessor used this term. He called it – it’s an era of Coast Guards across the globe. Most of the maritime forces tend to look more like the United States Coast Guard than they do the United States Navy. They just don’t have the wherewithal. So, they’re interested in their sovereign waters. They’re interested in illegal fishery in their sovereign waters that detracts from their own economics. The African continent will have 25 percent of the world’s population here, you know, in the next 25 years. Food sustainment and IUU fishing – there’s some burgeoning opportunities.
And I think we’ve positioned the Coast Guard – we, being the leadership team, the men and women of the service – to be relevant there. You know, I think it’s – the Coast Guard as this unique instrument in national security. It’s trusted access. It goes – is able to go some places where maybe it can’t send a gray hull or an amphib with Marines onboard, but you can get the Coast Guards in there. We can partner at a different level.
MR. ROSE: Mm-hmm.
ADM. SCHULTZ: I think, Francis, that’s what I’d reflect on and say. I think that’s been the work of this team here that I’m most proud of in recent years.
MR. ROSE: Not bad for a question you weren’t expecting, sir. (Laughter.)
ADM. SCHULTZ: Thank you. (Laughs.)
MR. ROSE: Commandant Berger, what should I have asked you that I didn’t, sir?
GEN. BERGER: First, I thought you were going to say I was winding down my tour – (laughter) –
MR. ROSE: No. No, sir, I don’t know anything about that. (Laughter.)
GEN. BERGER: Really. (Laughs.) Sure.
ADM SCHULTZ: I was supposed to tell you that, Dave. (Inaudible) – asked me to tell you this.
GEN. BERGER: (Laughs.)
MR. ROSE: (Laughs.) I don’t know anything about that.
GEN. BERGER: I would say – we grade – I think – the service chief gets graded in two different time frames. We have to give the combatant commanders what they need. Not always everything they want, but what they need now. Grading our homework, do they have the capabilities? Are we organizing the force right? Are we training the force right? The way the commandant spoke about are they the right people? Are we brining in and retaining the right people today, right now? We are.
And I think the ongoing operations – the conflict in Ukraine, for me, validates actually the last couple NDSs in that you need a really strong land force to deter Russia in Europe. We all play a supporting role in that – the air and naval marine elements play a supporting role, but you need a really strong land force in land Europe to deter Russia from just expanding beyond where they are in Ukraine. I counter that to, I think, INDOPACOM, where it’s very much a maritime theater and you need a very strong Navy-Marine Corps team backed up with a supporting role from the Army. But that’s the value of the joint force, right? Knowing what you have and applying it to the environment that’s in front of you.
I think grading our homework, though, probably equally valid to look at it five, six, seven years into the future. That’s the only time you’re really going to know whether the service chief did their homework – made the hard decisions, got rid of stuff that they had to get rid of, put the resources into the right places. You can’t grade it in the near-term, in other words.
I think it’s too early to tell. But you would want to go down the same checklist: do they have the right people five, six, seven, eight years from now? Are they trained as well as they should be trained? Do they have the right capabilities to overmatch the threat, not an even fight but like others posit that you have a clear tactical to operational advantage? And can they stitch it altogether in a combined arms, in a joint way, that makes it really tough for an adversary – as the CNO points out – to take the next step?
So, I think you can’t really grade a service chief’s homework – the second-half – until years down the road, and then you’ll know – then you’ll know whether they organized, trained, and equipped that force to do what it needed to do in the future because the future’s – there’s a lot of unknowns there. We have to make a lot of assumptions and make hard decisions.
ADM. GILDAY: I think I’ll take the opportunity to talk about industry for just a moment, and the first point I’d make for those small companies that are looking for – to find a door that actually you can push open and inform us, educate us, about things that we’re not even thinking about, that you’ve been working on. NavalX is that door to push on, and NavalX has introduced extraordinary opportunities to us in the areas of unmanned, of AI, and cutting-edge software. So, please continue to use NavalX to get to us.
And the other thing is, we’d appreciate your feedback on how we can improve and make that door swing open even easier and faster.
I’ve spent a lot of time going around to shipyards, visiting production lines for aircraft, and a common issue right now is workforce – and attracting and recruiting that talent and retaining it. I’m struck by the apprenticeship programs that you offer in private industry. They are extraordinary. And I would offer this thought to you, as you try to attract talent, think about the hundred thousand Ukrainians and the 124,000 Afghans that are either coming to this country or have already set foot on our shores and reaching out to them and find a path to attract them into those apprenticeship programs. You offer well-paying jobs with a career of advancement that’ll allow them to send their kids to college and to buy a home. Think about how powerful that would be to somebody emigrating to this country that wants to give back. I’d leave that thought with you as something to consider here as you leave the conference this week.
ADM. GILDAY: Yeah.
MR. ROSE: Commandant, Commandant, thank you very much for joining us today.
I want to thank the Navy League for inviting me to be a part of this.
MCPON, thank you very much for the great invitation.
Julia Simpson is here somewhere, who’s done just a wonderful job to put all this together.
Thank all of you for your attention. It’s great to be back in person. Enjoy the rest of the conference. Thank you very much. (Applause.)
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