29 May 1999 Source: http://www.access.gpo.gov/su_docs/aces/fr-cont.html See full report of this excerpt: http://jya.com/s1059-pigs.zip And report of Defense authorization bill: http://jya.com/hr106-162.zip ----------------------------------------------------------------------- [Congressional Record: May 27, 1999 (Senate)] NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 2000 The PRESIDING OFFICER. Under the previous order, the Senate will now resume consideration of S. 1059, which the clerk will report. The legislative assistant read as follows: A bill (S. 1059) to authorize appropriations for fiscal year 2000 military activities of the Department of Defense, for military construction, and for defense activities of the Department of Energy, to prescribe personnel strengths for such fiscal year for the Armed Forces, and for other purposes. [Excerpts] Mr. LIEBERMAN. Mr. President, I rise in support of the FY 2000 defense authorization bill. As the challenges facing us today demonstrate, the effectiveness of our military, and its readiness to act immediately to protect our national interests, must always be a priority concern for Congress. The $288.8 billion proposed in this bill is a 2 percent real increase over last year's budget and is the first real increase in topline defense funding since FY 1985, the middle of the Reagan administration. After fourteen years of declining, or flat defense spending, we increased authorization for readiness programs by $1.1 billion, we increased authorizations for procurement by $2.9 billion, and we increased authorizations for reasearch and development by $1.5 billion. I firmly believe this bill makes an important statement at a critical time, affirming our commitment to having the best trained, best equipped, and most effective military in the world, both today and tomorrow. Under the excellent leadership of our colleagues, Senator John Warner, chairman of the Senate Armed Services Committee, and the ranking Democrat, Senator Carl Levin, we stepped up to our responsibility to provide what our soldiers, sailors, and airmen need today, and we took some very important steps to move toward the military that will protect our nation in the next century. The past 14 years of inadequate defense spending has taken a toll on the readiness of our force today. We simply were not able to keep our training and maintenance at the levels that our role as a superpower demands. The struggle to do so, and the increasing need to use our forces to meet the many challenges of the post cold war world has taken its toll not just on equipment, but on our people in uniform. Simply put, the morale of our forces is suffering. This past year, we not only sought out and listened to our nation's top military leaders as they outlined the problems facing our military, but in this bill we addressed the most critical of those problems, including falling recruitment and retention in critical skill areas; aging equipment that costs more to keep operating at acceptable levels of reliability; a need for more support services for a force with a high percentage of married personnel. So I am pleased and proud that we reversed the 14 years of declining defense dollars and added the money to readiness and procurement to fix the most urgent near-term readiness problems. But many of these problems are not simple to address, and simply adding money to budget lines will not fix them any more than adding money to welfare programs fixed the underlying welfare problem in America. Adding money was necessary, but it won't be enough. How we spend the money we spend is as important as how much money we spend. We will have to be sure that we are alert to how well the provisions we have included here are working to have a positive effect on those critical problems we must solve. This will be more difficult than it has been in the past. We are now in an era of fundamental change for our security and our military. The collapse of the Soviet Union in 1991 and the unprecedented explosion in technology are now redefining what it is we are asking our military to do, the threats that it must overcome to do what we ask of it, and the capabilities that our military will bring to bear to successfully accomplish its mission. This body has been in the forefront of demanding rigorous assessments about our needs and our potential. We directed, in the Military Force Structure Review Act of 1996, the Secretary of Defense to complete a comprehensive assessment of the defense strategy, force structure, force modernization plans, infrastructure, and other elements of the defense policies and programs with a view toward determining and expressing the defense strategy of the United States and establishing a revised program. This assessment, completed by the Secretary of Defense in 1997, declared that our future force will be different in character than our current force, and placed great emphasis on the need to prepare now for an uncertain future by exploiting the revolution in technology and transforming the force toward that envisioned in Joint Vision 2010. The independent National Defense Panel report published in December 1997 concluded ``the Department of Defense should accord the highest priority to executing a transformation strategy for the U.S. military, starting now.'' These assessments, and others that have come to our attention, have reinforced the wisdom of Congress in passing in 1986, over the Pentagon's strenuous objections, the Goldwater-Nichols act and have provided us here with a compelling argument that the future security environment will be different and that environment requires new capabilities. In last year's defense authorization bill we sent a strong signal to the Pentagon that we must begin to build the fundamentally different military by including a provision strongly supporting Joint Experimentation to objectively examine our future needs and how we can best fulfill them. This year, once again, Congress is stepping up to the responsibility to ensure our future security. By establishing this year the Emerging Threats and Capabilities Subcommittee, Senator Warner addressed the growing consensus that transformation of our military to deal with the uncertain future we face is one of our most important objectives and that promoting innovation is among our greatest challenges. Under the leadership of the subcommittee chairman, Senator Roberts and the Ranking Member, Senator Bingaman, we focused on the critical threats facing our nation and the emerging capabilities to deal with these threats. I would like to highlight what I think are important legislative provisions that this new subcommittee placed in this bill that further both transformation and innovation. An ongoing initiative of transformation supported by this bill is joint experimentation. The committee recognized the program's progress in developing joint service warfighting requirements, doctrinal improvements, and in promoting the values and benefits of joint operations for future wars and contingency operations. We need to continue to identify and assess interdependent areas of joint warfare which will be key in transforming the conduct of future U.S. military operations, and expanding projected joint experimentation activities this year will be a strong base for future efforts. To this end the committee approved provisions that built on its previous support for Joint Experimentation by adding $10 million to accelerate the establishment of the organization responsible for joint experimentation, and to accelerate the conduct of the initial joint experiments. The committee also modified the reporting requirements of the commander responsible for joint experimentation to send a strong signal that we expect him to make important and difficult recommendations about future requirements for forces, organizations, and doctrine and that we expect the Secretary of Defense fully inform us about what action he takes as a result of these recommendations. The bill also includes very important provisions to stimulate a greater degree of [[Page S6262]] technical innovation faster within the military. It is my belief that the explosive advances in technology provide the basis for not just a ``revolution in military affairs,'' but ultimately a complete paradigm shift. The opportunities provided by technology give us the promise of achieving an order of magnitude increase in military capability over that which we have today. The U.S. military of 2020 and 2030 will be based on the science we begin to develop in the year 2000. But to take advantage of this promise and defend ourselves against its use against us by future adversaries, we need to transform our R&D enterprise from its antiquated cold war structure to a fast-moving, better-integrated structure and a process that can seize the leading edge of techno- warfare. The Defense Innovation provisions in this bill establish a new vision for military R&D that is based more on how we want to fight in the future, and begin to change the structure of the military R&D enterprise to achieve that objective through better integration and less inefficiency. To help establish a new vision, the provisions require the Secretary of Defense to determine the most dangerous adversarial threats we will likely face two to three decades from now and what technologies will be needed on our part to prevail against those threats, and merge the strategic and technological decision-making processes. To help lay the groundwork for a new organizational structure for R&D, the Department of Defense is to develop a plan which ensures the crossflow of technologies into and across R&D labs, and close the gap between the R&D pipeline and the acquisition pipeline, to ensure the customer is involved in the entire R&D process. Our R&D structure needs to be revamped now so that leading edge techno-warfare can emerge. Along the same lines as innovation, this bill has provisions that ensure we continue to step up to our responsibility to oversee the transformation of our military to the future force that will protect our security in the 21st century. We need a permanent requirement that the Secretary of Defense conduct a Quadrennial Defense Review at the beginning of each new administration to determine and express the defense strategy of our nation, and establish a revised defense plan for the next 10 to 20 years. Complementing the QDR will be a National Defense Panel that would conduct an assessment of the defense strategy, force structure, force modernization plans, infrastructure, budget plan, and other elements of the defense program and policies established under the previous quadrennial defense review. Based on our previous experiences with the QDR and NDP, and the debate they raised, it is obvious that any one time assessment is not going to provide all the answers we need. Periodic assessments as prescribed by this legislation will continue to provide Congress with a compelling forecast of the future security environment and the military challenges we will face. The requirement for the provisions I have mentioned is paramount. The need for renewed emphasis on innovation and transformation has never been more apparent to me than after my time this year as the Ranking Member on the AirLand Subcommittee. That committee, under the excellent leadership of Senator Rick Santorum, examined many modernization issues affecting the Army and the Air Force. Some of the findings were disturbing, and reinforce the fact that despite the widespread and growing consensus that transformation is essential to our military, our budgets continue to look much as they have for a decade, focused on today's force at the expense of tomorrow. I would like to discuss some of the disturbing findings, and some of the important provisions we included in the bill to begin to address these concerns. We found that some responsible voices are concerned that the United States Army is facing a condition of deteriorating strategic relevance. The Army force structure is essentially still a cold war force structure built around very heavy weapons systems. The Army modernization program is based on incremental improvements to this force and is largely unfunded due to hard choices made in the past. This has resulted in inefficient programs and extended program timelines. Consequently we have a force that looks essentially the same today as it did yesterday, and that doesn't have enough money to maintain an increasingly expensive current force and invest in the Army After Next which is the future. Kosovo is an example of the future the Army will surely face; operations that are increasingly urbanized, with growing deployment and access problems, and the need for lighter weight, self-deployable systems becomes compelling. We reviewed the Army's modernization plan to understand the relationship between the current service modernization program and projected land force challenges. The Army's modernization plans do not appear adequately address these issues. So we have required the Army to take a renewed look at its modernization plans generally, and its armor and aviation modernization programs specifically, to address these challenges and to provide us with modernization plans that are complete and that will be fully funded in future budgets. We direct this analysis include the operational capabilities that are necessary for the Army to prevail against the future land force challenges, including asymetrical threats, and the key capabilities and characteristics of of the future Army systems needed to achieve these operational capabilities. We are especially concerned about the ability of the Army to maintain the current fleet of helicopters that is rapidly aging and we have included a provision to require them to provide a complete and funded program that would upgrade, modernize, or retire the entire range of aircraft currently in the fleet, or provide an alternative that is sufficient and affordable. Similarly, the Army's armor modernization plan seems to be inadequate to modernize the current armor force while designing the tank of the future, and leads me to believe that the Army must reassess armor system plans and provide us with the most appropriate path to accelerate the development of the future combat vehicle. The Air Force has fewer apparent modernization problems than the Army, but I wonder if their modernization plan is on the right track. Our hearings strongly suggest that the Department of Defense needs to answer several questions about our tactical air requirements, not the least of which is the characteristics, mix, and numbers of aircraft best suited for future conflicts. Kosovo is an example of how important the right mix of platforms and weapons really is to success on the battlefields of the future. We are embarked on three new TAC air programs which may report increasing costs coming dangerously close to the cost caps we have established, and in the case of the F-22 we must be alert to the danger that we will delay critical testing in order to not exceed the caps. And in the out years, the combined costs of these programs will consume a very large share of the overall procurement budget. We must make sure that we are not sacrificing other leading- edge capabilities, like unmanned aerial vehicles, information technology, or space technology. The specific aircraft programs will require close scrutiny as will the strategy for their use as we attempt to decide on the right course in future authorization bills. We must overcome our cold war mentality and further examine and direct our trek into the 21st century. The provisions in this bill concerning innovation and transformation lay the foundation for the required changes in our defense mind set that will become mandatory as we face far different conflicts in the future--and, as we see on CNN everyday, much of that future is already here. In closing, I express my appreciation to the committee for agreeing to include in the bill a provision to extend and expand the highly successful Troops to Teachers program, which I joined Senators McCain and Robb in sponsoring. As my colleagues may know, this program was initially authorized by Congress several years ago to help transition retiring and downsized military personnel into jobs where they could continue their commitment to public service and bring their valuable skills to bear for the benefit of America's students. To date Troops to Teachers has placed more than 3,000 retired or [[Page S6263]] downsized service members in public schools in 48 different states, providing participants with assistance in obtaining the proper certification or licensing and matching them up with prospective employers. In return, these new teachers bring to the classroom what educators say our schools need most: mature and disciplined role models, most of them male and many of them minorities, well-trained in math and science and high tech fields, highly motivated, and highly capable of working in challenging environments. The legislation we introduced earlier in the year, and which the President has endorsed, aims to build on this success by encouraging more military retirees to move into teaching. It would do so by offering those departing troops new incentives to enter the teaching profession, particularly for those who are willing to serve in areas with large concentrations of at-risk children and severe shortages of qualified teaching candidates. Even with the new incentives we are creating, which we hope will recruit as many as 3,000 new teachers each year, we recognize that Troops to Teachers will still only make a modest dent in solving the national teacher shortage. The Department of Education estimates that America's public schools will need to hire more than two million new teachers over the next decade. But we are confident that, with an extremely modest investment, we will make a substantial contribution to our common goals of not just filling classroom slots, but doing so in way that raises teaching standards and helping our children realize their potential. I can't think of a better source of teaching candidates than the pool of smart, disciplined and dedicated men and women who retire from the military every year. What's more, with this bill, we may well galvanize support for a recruitment method that, as Education Secretary Richard Riley has suggested, could serve as a model for bringing many more bright, talented people from different professions to serve in our public schools. This really is an ingenious idea, helping us to harness a unique national resource to meet a pressing national need, and I think we would be well served as country to build on it. In putting together this bill, once again hard choices had to be made. We closely examined and analyzed the critical defense issues, and we ended up with are effective and affordable defense authorization bill which meets the growing readiness and retention challenges facing our armed forces, and augments our investment in the research, development, and procurement of the weapon systems necessary to maintain our military superiority well into the 21st Century. This bill compensates our most valuable resource, our service men and women, plus lays the groundwork for a sensible and executable programs for our military. I urge all of my colleagues to support this legislation and send an unequivocal message of support to our troops and their families. ***** Mr. LIEBERMAN. Mr. President, I rise to discuss several provisions within the FY2000 Defense Authorization Act. These provisions can be found in Title II, Subtitle D, Sections 231-239 within the FY2000 Defense Authorization Act. The provisions are intended to stimulate intense technical innovation within our military research and development (R&D) enterprise and hence lay the foundation for revolutionary changes in future warfare concepts. Before giving an extended introduction to these defense innovation provisions, I would like to thank Senator Roberts and Senator Bingaman and the staff who have worked on this subtitle--particularly Pamela Farrell, Peter Levine, John Jennings, Frederick Downey, Merrilea Mayo, and William Bonvillian--for their hard and thoughtful work on this legislation. The technical superiority of our military is something we have come to take for granted, yet it is founded in an R&D system that has seen little change since the cold war era. These defense innovation provisions attempt to reposition our R&D system so that it can keep up with the pace of technological change in the very different world we are in today. It is my belief that the explosive advances in technology may provide the basis for not just a ``revolution in military affairs,'' but a complete paradigm shift. With advanced communication and information systems, it may become possible to fight a war without concentrating forces, making force organizations impossible to kill. With advances in robotics and miniaturization, it may become possible to fight a ground war with far fewer people. With advances in nuclear power, hydrolysis, and hydrogen storage, it may be possible to create virtually unlimited sources of on-site power. These opportunities are complemented by numerous challenges, also brought forth by technology: urban warfare, space warfare, electronic/information warfare, chemical, nuclear, and biological warfare, and warfare relying on underground storage centers and facilities. As the variety of opportunities and threats continues to climb, and as increasing numbers of nations emerge into the high tech arena, I believe the military arms race of the past will be replaced by a military technology race. Instead of simply accumulating ever greater numbers of conventional armaments against a well- established foe, as we did in the Cold War era, we will have to concentrate on producing fewer, but ever more rapidly evolving, and ever more specialized weapons systems to counter specific asymmetric threats. To meet these new challenges, we need to transform our R&D enterprise from its antiquated Cold War structure to a fast-moving, well- integrated R&D machine that can seize the leading edge of techno- warfare. For this reason Senator Roberts, Senator Bingaman and I have inserted provisions within Title II, Subtitle D of the FY2000 Defense Authorization Act whose purpose is to stimulate a much greater and faster degree of technical innovation within the military. The defense innovation provisions address three goals--establishing a new vision for military R&D, changing the structure of the military R&D enterprise, and correcting the driving forces for R&D in our current system. For the first task, establishing a new vision, Section 231 of the FY2000 Defense Authorization Act requires DoD to determine the most dangerous adversarial threats we will likely face two to three decades from now, and what technologies will be needed on our part to prevail against those threats. Given that it takes 20-30 years to translate basic science to fielded application, our R&D vision needs to be founded on a set of required operational capabilities that is equally distant in time, and far beyond the 5 year vision of our current Program Objective Memorandums (POM's). We need not strive for perfect clairvoyance in this exercise; however, we should be able to create an open conceptual architecture which successfully frames the many potential future opportunities and threats. Once the far future threats and hence far future operational capabilities are outlined, Section 231 asks DOD to give Congress a roadmap of future systems hardware and technologies our services will have to deploy within two to three decades to assure US military dominance in that time frame. From the first roadmap, we are requesting DOD derive a second roadmap--the R&D path that DOD, in cooperation with the private sector, will have to follow to obtain these new defense technologies and systems. To add depth and perspective to the results, I encourage the Secretary of Defense to utilize an independent review panel of outside experts in these exercises, to complement the work done by in-house personnel. The broader our vision, the more likely it is to be inclusive of whatever surprises the actual future may bring. A second goal of the defense innovation provisions, Subtitle D, is to lay the groundwork for a new organizational structure for R&D. Unless we fix the innovation structure, we will be unable to deliver to DOD the rapid technological advances it will need to secure and maintain world dominance. To meet the challenges of the upcoming decades, the Defense Science Board has recommended that at least one third of the technologies pursued by DoD be ones that offer 5 to 10 fold improvements in military capabilities. However, the current structure, which was founded on Cold War realities, will require large organizational change to enable it to pursue revolutionary, rather than evolutionary, technology goals. The segregated and insulated components of the military R&D system will need to be seamlessly interwoven, and the system as a whole will need to be much more flexible in its interactions with the outside world. We can learn from the success of the commercial sector, which takes advantage of temporary alliances between competitors and peers to develop technologies at a breathtaking pace. The defense innovation provisions ask DoD to formulate a modern blueprint for the structure, of not only its laboratories, but of the extended set of policies, institutions, and organizations which together make up its entire innovation system. As noted earlier, the Defense Science Board has [[Page S6258]] called for the military R&D system to increase its focus on revolutionary new technologies. The overarching goal of the new structural plan requested by Section 233 is to deliver the conceptual architecture for an innovation system that is capable of routinely providing such revolutionary advances. Section 239 requests an analysis by the Defense Science Board of overlaps and gaps within the current system. Section 233 asks the Under Secretary of Defense for Acquisition to develop the plan for the future innovation system, one which ensures that joint technologies, technologies developed in other government laboratories, and technologies developed in the private sector can readily flow into and across the military R&D labs and the broader innovation structure as a whole. Section 233 emphasizes the need to develop better processes for identifying private sector technologies of military value, and military technologies of commercial value. Once identified, there also need to be efficient processes in place for transfer of those technologies, so that the military may reap the respective military and economic gains. Also in Section 233, the Under Secretary is requested to deliver a solution to the major structural gap which currently exists between the R&D pipeline and the acquisition pipeline. Development of the best technologies in the world will not help our future military posture if those technologies are never adopted, or even seen, by the acquisition arms of our services. Finally, to better merge the strategic and technological threads within the military's decision making process, Section 233 in the FY2000 Defense Authorization Act requests a DoD plan for modifying the ongoing education of its future military leadership (i.e., its uniformed officers) so they may better understand the technological opportunities and threats they face. The laboratories themselves could and should play a crucial role in our future military. Ideally, the military laboratories are the place where the minds of the brightest scientists meet the demands of the most experienced warfighters. Out of this intense dialogue would then come a clearer understanding of future warfare possibilities, as well as the technological breakthroughs critical to changing the face of warfare as we know it. For various reasons, however, that vision is in danger of becoming lost. One specific problem is DoD's rigid personnel system and the corresponding lack of performance-based compensation, which is causing the labs to rapidly hemorrhage talent to the more competitive and less bureaucratic private sector. To address these issues, a defense innovation provision within the FY2000 Defense Authorization Act--specifically, Section 237--repeals several of the labs' restrictive personnel regulations. The intent of this Section is to drastically reduce hiring times and eliminate artificial salary constraints to the point where defense laboratories can hire new talent in a time frame and at a salary level that is similar to that offered by the private and university sectors. Currently, the two processes are not even close to competitive: the military R&D labs take several months to over a year to extend an offer, with the result that the laboratories, over and over again, lose the hiring race to private sector interests which can hire top-notch talent in one or two weeks. As noted by the Defense Science Board report, the salaries which can be offered by the laboratories are also about 50 percent lower (for higher grade new hires), compared to the salaries those same new hires could obtain in the private sector. It is significant that the hiring time problem, as well as the high grade caps problem, were universally cited by laboratory managers as the key obstacles in upgrading their laboratory talent. In addition to improving the quality of the laboratories' effort by attracting and retaining highly qualified personnel, the defense innovation provisions ask the Secretary of Defense to improve the quality of work itself by developing a system of modern business performance metrics which can be implemented within and across all military laboratories (Section 239(b)). Such metrics can help ensure that the best work and the best talent are identified, so that they may be rewarded, nurtured and used accordingly. As a word of caution, the ultimate impact of science and technology innovation is very hard to measure, especially in the early stages. Overly mechanical assessments inevitably do much more harm than good. Nevertheless, advanced technology companies have been making great strides in better assessing (and assisting) their innovation efforts, and DOD is encouraged to work with industry R&D leaders in implementing this section. Examples of metrics which may be useful for DOD labs include measurement of lab quality through formal annual peer reviews of its divisions, measurement of technical relevance through required customer approval/ evaluation of R&D projects both before and after they are undertaken, and measurement of organizational relevance through annual board meetings of senior military with the heads of the R&D laboratories. The first of these metrics can help capture and bring attention to promising work in its earliest stages, while the last two can help bridge the gap between later stage innovation and new products. The need for structural reform within the laboratories is a pressing one. The above-mentioned reforms are intended to be jump started with a pilot program, found in Section 236 of the Defense Authorization Provisions. This pilot program may address any of the issues mentioned above but is particularly focused on the problem of attracting and retaining the best possible talent for the laboratories. To be more competitive with working conditions in the commercial sector, this pilot program may include such innovations as pay for performance, starting bonuses (e.g., in the form of equipment start-up funds) for attracting key scientists, ability to alter reduction in force (RIF) retention rules to favor high performers, broadbanding of pay grades, simplified employee classification, educational programs which allow employees to receive advanced degrees while still employed, modification of priority placement procedures, and creation of employee participation and reward programs. To attract the best possible outside talent for collaborations with the laboratories, Section 236 also encourages expansion of exchange programs at both the personal and institutional level. Programs for exchanges within DoD, with the private sector, and with academic institutions are all encouraged. Examples of such programs include the sponsorship of talented students through college or graduate school in exchange for later work commitments to the laboratories, expansion of the federated laboratory concept, increased exchanges between the defense laboratories and the war colleges, training programs, and extension of IPA authority to hire commercial sector employees. The Defense Science Board has strongly recommended that the laboratories emulate DARPA in its mix of temporary and permanent workers in order to be able to quickly bring in relevant talent when needs shift. Section 236(a)(2) creates this option and can be used in conjunction with other provisions in Subtitle D. A new structure and a new vision are all well and good, but if there is no motivation for the new structure to proceed towards the new vision, nothing is gained. Consequently, the third goal of the defense innovation provisions is to correct current forces which tend to drive DoD away from technical innovation. Three of these driving forces are described below. The first ``counter-innovation'' driving force is the lack of a well- defined customer within the military for far future military technologies. Ideally, this customer would be at the Joint Chiefs level, so that broadly sweeping strategies which capitalize on novel technologies can be rapidly incorporated into our existing military structure, doctrine, and systems. Unfortunately, there is little connection at present between that level and the service laboratories. Section 239(b) should be used to improve this situation. Furthermore, as part of the legislation's mandated study on improving the structure of our R&D system (Section 233), we also request the Under Secretary of Defense to address the issue of a suitable internal customer for truly long range R&D. For maximum impact and credibility, this customer-- whether it be a person, position, or organization--should be a bona [[Page S6259]] fide paying customer who has responsibility not just for the long range technology itself, but for the unconventional military options such technology provides. The lack of an internal customer for long range R&D is one driving force pulling the military away from technical innovation. The second is the vacuum-like force created by the absence of an intimate connection between the R&D customers and producers within the later stages of R&D. Specifically, there is an insufficient connection between the program managers who sponsor product development and the R&D workforce performing later stage R&D. In contrast, the industrial experience has shown that if the customer, researchers, and designers share in all product development decisions from the very initial stages of concept design, the degree of innovation is much higher, the product acceptance rate is much higher, and, ultimately, the pace of technological change is dramatically accelerated. Section 233(b)(5) directs the Under Secretary of Defense to identify how new technologies can be rapidly transi- tioned from late stage R&D to product development and prepare an appropriate plan for doing so. One sub-issue within this larger problem is this need to create a DoD customer--DoD researcher--DoD designer interaction that is early enough and robust enough to ensure that maturing innovations can be drawn into product lines on a time scale similar to that experienced in the commercial sector. This sub-issue should be addressed in the Under Secretary's plan under Section 233(b)(5). The third force which drives the military away from technological innovation is the lack of a customer outside the military for innovative military technologies. Were such a customer present, it might partially make up for the lack of the other two drivers in terms of motivating innovation. Currently, the most important external customer for military R&D is the industrial half of the military- industrial complex. However, the structure of our procurement regulations give virtually identical profit margins to these companies no matter how difficult the technical path or how many risks are undertaken in the process of producing a military system. Therefore, the continued production of legacy systems is guaranteed to be profitable, while gambling with innovative new systems is not. Essentially, our procurement regulations are a direct disincentive to innovation, giving the defense industry a strong vested interest in adhering to incremental change. The resulting lobbying by industry, aimed squarely at preserving the ``state-of-yesterday's-art,'' then significantly slows the rate at which the military can innovate. Accordingly, one of the defense innovation provisions, specifically Section 234, Subtitle D, Title II of the FY 2000 Defense Authorization Act, calls for DoD to change its profit margins for acquisitions in order to alter the innovation incentives for industry. Given substantially higher profit levels for the development of innovative systems, than for the continued production of legacy systems, industry could become much more receptive to the idea of cultivating innovation in fielded hardware. Substantive, consistent economic rewards are critical to incentivizing companies to take the necessary and serious technological risks required to produce the innovations DOD must have. In closing, I thank my colleagues Senators Roberts and Bingaman for joining me in develoing a set of stimulating and thought-provoking defense innovation provisions within Subtitle D, Title II of the FY2000 Defense Authorization bill. These provisions should launch us towards a new vision, a new structure, and a new set of driving forces for military R&D. In the past 48 years, DoD has funded the pre-award research of 58 percent of this country's Nobel laureates in Chemistry, and 43 percent of this country's Nobel laureates in Physics. This is a phenomenal base on which to build. However, the Cold War structure and rationale for our R&D enterprise needs to be shed so that leading edge techno-warfare can emerge. The time to do this is now, because, in many senses, the future is already here. The military systems of 2020 and 2030 will be founded on the science of the year 2000. -----