Nominations for top Defense Department positions told the Senate Armed Services Committee at a Tuesday confirmation hearing they intend to support efforts to improve the Navy’s operations and acquisitions as well as Department-wide weapons testing and evaluations.
Thomas Modly, nominated as Under Secretary of the Navy, acknowledged in his opening statement that he agrees the Navy is beset by a “Perfect Storm” of issues threatening its ability to perform critical defense missions. He characterized this as a “dangerous dichotomy” in which the U.S. is facing more capable and diverse adversaries, the government is asking the Navy to do more and protect a higher pace of commerce on the oceans while responding to natural disasters in increasingly populated urban coastal areas, and shift to the Pacific region while maintaining combat operations in the Middle East and Afghanistan.
On the other side, there is federal budget pressure producing insufficient resources to sustain and modernize naval forces in a way corresponding to the increased demands and security challenges.
“The result, I fear, is a force that is carrying far too much risk today and more importantly into the future. Significant course corrections are required,” Modly said.
Modly said if confirmed he would support department leadership and the committee to ensure “that we arrest this trajectory and turn it in the direction that our nation requires and that our Sailors and Marines deserve.”
Modly was one of four nominees at the confirmation hearing, which also included James Geurts to be assistant secretarty of the Navy for research, development, and acquisition (ASN RDA); Robert Behler as Director of Operational Test and Evaluation (DOT&E); and Dean Winslow as Assistant Secretary of Defense for Health Affairs.
Geurts previously served as an acquisition leader for U.S. Special Operations Command (SOCOM). Behler is a retired two-star Air Force general who previously served as chief operating officer of Carnegie Mellon University Software Engineering Institute, president of SRC, and an executive at the MITRE Corp. Modley previously served as managing director of PricewaterhouseCoopers’ [PWC] global government and public services business. He previously served as deputy undersecretary for financial management at DoD and executive director of the Defense Business Board.
Sen. John McCain (R-Ariz.), chairman of the committee, said the two Arleigh Burke-class collisions over the summer “have put a spotlight on major problems in our Naval training and readiness” and while Congress had inadequately funded the services, the Navy leadership also has to be held accountable.
“If confirmed, we expect you [Modly] to commit to implementing corrective actions to fix the problems identified in the recent report on these collisions. When you do so, you will have an ally in this Chairman and this Committee to provide you the resources needed to course correct,” McCain said.
Modly maintained to McCain that he would ensure the Navy conducts an audit. The chairman was frustrated that for year DoD witnesses have told the committee they will conduct an audit but it has not happened. In a recent hearing, the committee was told that up to $50 billion in funding was wasted on canceled and delayed defense programs, the chairman said.
McCain warned without an audit, the committee would start acting to force one by withholding acquisitions and authorizations. He said you cannot run an organization efficiently if you do not know how much it costs.
Modly told Sen. Tim Kaine (D-Va.) that “the audit is important, what’s more important is what you learn from the audit.”
“I can tell you unequivocally, having not seen a single financial statement from the Navy in great detail, that they’re not going to pass this audit,” he added.
However, the service can learn many important things from a first audit and they need to just get on with it. Modly said he would watch that very carefully.
He noted that the audit can produce three main results: building confidence between the organization spending money and organization giving money; find deficiencies as preparing for an audit and become a better business operation with positive cultural changes around use of funds; and once an organization is comfortable with fidelity of funding amounts, internal processes and cultures can change as personnel become more conscious of how they use funds.
Modly said the effort has to continue for years to improve and that he does not “want to pour cold water on anyone’s expectations that there’s going to be a clean auditor unqualified audit.”
Kaine agreed and said the committee would not believe a clean audit was accurate if it was reported.
“Don’t let the perfect be the enemy of the good. I think the key is to start at this process and then not only help the Navy be better but help the audit process be better in future years and I have confidence in your ability to do that.”
Modly said he is in favor of the Navy conducting block buys on items like the Ford-class carriers “if it’s less expensive to do it that way, and it has to be significantly less expensive to do it that way. So if there’s just a marginal increase I’m not sure that the benefit is there.”
Geurts said if confirmed he would look at how the Navy uses a multiyear structure and if it provides enough flexibility to add ships to move faster to the goal of a 355-ship fleet.
Modly told Sen. Roger Wicker (R-Miss.), Chairman of the Subcommittee on Seapower, that the Navy will have to get creative to get to the larger fleet faster than in several decades.
He pointed out mothballed ships in decent condition can be brought back to serve for a lower cost than building a ship. In addition, he is also in favor of the future frigate FFG(X) program looking at existing or proven domestic and international designs rather than starting from scratch.
Geurts agreed that the service needs a “multiple approach.”
“Extend the ships you have as long as you can, aggressively look to increase ship production at the max rate that the industrial supply can handle, and then work closely on those ships we may have in ready reserve that we could activate rapidly to get up on the step.”
Modly said shipyards have the capacity to meet the goal of 355 ships, but they need confidence in a steady government investment towards the goal.
“They’re only going to invest if they know there’s a commitment from the Navy to do this. It only makes sense for them, from a business perspective. And I support their perspective on that, so we have to show resolve that this is what we’re going to do.”
Geurts said it is clear “we will not be able to support today’s ongoing operations, improve readiness and lethality, and recapitalize the Department of the Navy without changing the way we develop, acquire, and maintain combat capabilities for our Sailors and Marines.”
He added Navy challenges “will not be solved overnight and will require an acquisition team that is empowered, mission focused, accountable, resourced, and acts with a sense of urgency.”
McCain suggested Geurts go to Silicon Valley and meet with companies there to drive down acquisition costs.
“They’ve got answers, and they’ve got equipment and they can sell it to you off the shelf. And CIA’s relationship with Silicon Valley has been excellent. DoD’s relationship with Silicon Valley has been – it’ll be another one of these disgraceful chapters that will be written about. That’s where the innovators are, sir.”
“So one of the many disappointments Sen. Reed and I have is the failure of the relationship between DoD and Silicon Valley and, frankly, the success of that story with CIA and Silicon Valley. Look at what they’re doing? Imitation is the highest form of flattery,” he added.
Separately, Geurts responded to questioning by Sen. Elizabeth Warren (D-Mass.) on how he thinks his SOCOM experience can help the Navy.
SOCOM has “a sense of urgency across the entire command because you’re in a Combatant Command. We tend to leverage lots of different tools, we don’t try and perfect one different tool. And then we have a very close connection between the operator and the acquirer. I think all three of those things are absolutely scalable at the service level.”
Speaking separately on the DOT&E role, McCain said it is an important time to have a capable director in place.
“Often, it seems as though the Department is in a rush to push some platforms—like the F-35—through testing and evaluation prematurely, while at the same time delaying the delivery of other capabilities required to help us maintain our warfighting advantages.”
The chairman said he is disappointed DoD has been unable or unwilling to take advantage of recent acquisition reforms mandated by the committee. He told Behler that if confirmed “we will look to you to make positive changes to our testing and evaluation practices to support the implementation of these reforms. We cannot afford unnecessary delays in delivering new capabilities to our warfighters—and yet, we must ensure that we deliver systems that are safe and reliable. We will expect you, if confirmed, to balance those conflicting priorities.”
Behler told Warren that software is a building material of choice in weapons systems development and if confirmed he will try to figure out how to improve software development compared Silicon Valley’s use of incremental development processes.
“If confirmed that is something that I’m going to have to figure out. If we have the right amount of people in DOT&E that understand the deep domain, experience, and understanding in software to start off with”
“Software is developing so fast, our ability to test it is lagging. Our facilities to test it is lagging,” he added.