Thanks, Sully. Thanks for that kind introduction. I'd just like to recognize a few folks here. First, Congressmen Silvestre Reyes, from El Paso, Texas ... Chairman of the House Permanent Select Committee on Intelligence, member of the House Armed Services Committee, and a great asset to our Soldiers and Families out there at Fort Bliss, Texas. Thank you very much for your support.

My boss and partner, Pete Geren, great to see you ... and wonderful speech yesterday. Now, some of you are out there probably wondering how he can be a boss and a partner ... you're obviously not married.

I'd also recognize my fellow 4-stars on either side here. These are my band of brothers. And in about a month, it'll change to a band of brothers and a sister, and so we look forward to that.

I'd also recognize our Guard and Reserve leadership here that's on the dais. Thanks for all you do.

Two more groups that I'd like to acknowledge. First are my predecessors. There are three former chiefs here, and I can tell you that, after eighteen months, there is no doubt in my mind that we all stand on the shoulders of our predecessors. And without their courage, their vision, and their commitment, we would not be what we are today ... the best Army in the world.

So I ask each of them just to rise and be acknowledged here as I recognize them. General Gordon Sullivan, chief from June 1991 to June 1995 and currently serving as AUSA president. General Denny Reimer, who followed General Sullivan. He was also a participant in the Army 10-miler yesterday. And my immediate predecessor, General Pete Schoomaker. Every Soldier is a Warrior today because of Pete's leadership.

Also just to recognize our Sergeant Major of the Army, Ken Preston, and former Sergeants Major of the Army Jack Tilley and Bob Hall. How about a big hand for them.

You know, as I travel around the Army and I look at what we've accomplished over the past seven years at war, it's clearer and clearer to me that it is our noncommissioned officer corps that is providing the glue that's not only holding this force together at a difficult time, but enabling us to accomplish the near impossible every day. And that's why next year we will celebrate their contributions to our Army.

Nick Chabraja, Chairman of the AUSA Council of Trustees, nice to have you here. And also to all my international colleagues, great to see you here. And I would recognize one who's also an old battle buddy, General Nasr Abadi, who is the Vice Chairman of the Iraqi Armed Forces. Thank you for what you and your courageous army are doing in Iraq.

Friends of the Army and fellow Soldiers, as Gordon said, the theme of this year's conference is "America's Army, the Strength of the Nation." And at no time in our history is that strength more necessary than it is today. Today marks the seventh anniversary of Operation Enduring Freedom, when the United States and its allies responded to the horrific attacks of September 11th and when our Army began a new chapter in its long history of defending our freedoms.

We've been at it continuously for seven years. Over one million men and women have deployed to combat; over 4,700 have sacrificed their lives; over 11,000 have been decorated for valor-including 2 Medals of Honor, 14 Distinguished Service Crosses and over 500 Silver Stars. That our Soldiers and Families so willingly sacrifice to preserve our way of life and to secure a better future for others says much about the Army's strength - a strength that comes from our Values, from our Warrior Ethos, and from our People. This strength is making a difference in the Nation's fight against global terror, and it is what gives me great confidence that we will prevail in the current fight, and that we will handle and deal with the challenges that we face in the future.

Now, a few weeks ago, President Bush dedicated the Pentagon Memorial to those who were killed there on September 11, 2001. And I was struck as I thought how much our lives have changed since that day, and I found it useful to remind myself what was, and still is, at stake. Because at stake is nothing less than the power and the values of our civilization - exemplified by the promise of America - to confront and defeat the menace of global terror.

At stake is whether those who treasure the rights of free individuals will stand firm against the ruthless and pitiless men who wantonly slay the defenseless. At stake is whether the future will be framed by the individual freedoms that we hold so dear or dominated by violent extremism. And at stake is whether freedom, opportunity, and decency will come to those who thirst for them or whether the darkness of terror, oppression, and extremism will blot them out. I know that our Soldiers and Families recognize what's at stake because they are making a difference in the struggle every day. I sometimes pray that the other 99 percent our countrymen and women believe this too.

Today I'd like to focus in my remarks on two questions. And they're two questions that I get all the time as I travel around the Army. The first question is "How's the Army doing'" And the second question is "Where's the Army going'" I'd like to answer both of those from my view today.

Talk about how the Army's doing. A year ago, I reported to you what you already knew ... that our Army, while a committed, resilient, combat-seasoned, and professional force, was out-of-balance. The demand for our forces exceeded the sustainable supply, and we lacked sufficient strategic flexibility to respond to other contingencies as rapidly as we would've liked. We were unable to provide a sustainable deployment tempo for our Soldiers and Families. And our support systems, designed for a pre-September 11th peacetime Army, were stretched and stressed by the demands of repeated deployments. Overall, we were consuming our readiness as fast as we were building it.

We initiated a plan last year to restore balance, and this plan was founded and based on four imperatives. We said that we had to sustain our Soldiers and Families; that we had to continue to prepare soldiers for success in the current conflict; that we had to reset them effectively upon their return; and that we had to continue to transform ourselves for the demands of the 21st century.

At that time, we acknowledged that these imperatives would require several years, considerable resources, and sustained national commitment because what we were attempting to do, and will attempt to do in the next three years, is to: one, complete our growth of the Army to 1.1 million people; two, to establish an acceptable balance between deployments and time at home; three, to substantially complete our modular reorganization and our rebalancing; fourth, to complete the Base Realignment and Closure activities and all of our restationing actions; and then finally, to fully implement the Army Force Generation model.

Now, that was and is a tall order, but I'm pleased to tell you that over the past year, we have made very good progress to accomplishing these objectives.

Now, bear with me for a minute, because I'm going to run through some accomplishments under each of the four imperatives. But I think it's important that we all get a sense that this Army continues to move forward, in spite of how stretched and stressed that you might think it is. So let me just hit a few things under each of those.

First, Sustain. Now, we knew that to sustain our force, we knew we had to recruit and retain quality people. Last year, almost 300,000 men and women enlisted or reenlisted in the Army, the Army Guard, or the Army Reserve. To help offset our growing requirements for field-grade officers, we offered retention incentives to Captains. We achieved a near 90 percent retention rate.

We recognized that we were asking our Families to bear a significant burden. And last October, we unveiled the Army Family Covenant. We moved Army Soldier and Family programs underneath Installation Management Command, and we doubled the amount of money that we put toward family programs. I had a session with Families yesterday, and we are definitely moving forward in this area. We also began to improve our support to the Families of our Fallen Soldiers, helping them stay connected to the Army as long as they wanted.

We established 35 Warrior Transition Units. We set out to reduce the stigma wrongly associated with Post-Traumatic Stress and Mild Traumatic Brain Injury, and we continue to work hard at demystifying and simplifying the physical disability processes for our Wounded Warriors. We're making great progress in sustaining our Soldiers and Families.

Second is Prepare. We saw that building time at home was the critical component to preparing forces for success, so we pushed hard to accelerate our plans to grow the Army to 76 brigade combat teams and almost 225 enabling brigades. We did this while simultaneously working to reduce the amount of time our Soldiers spend deployed. Your national leadership, the President and the Secretary of Defense, supported both of these initiatives, and their decision to accelerate the growth of the Army by two years and to reduce deployments from 15 months to 12 months will begin to reduce the strain that we're seeing on our forces.

We've also received great support to provide our Soldiers with the best equipment and technology available. Last year, we fielded over one million items of new equipment to our deploying Soldiers, including over 6,500 MRAP vehicles, providing our Soldiers with the best capabilities available.

We also continued to make improvements at both the Home Station and our Combat Training Centers in our training programs, and the innovation and resources that we've put into these have combined to increase the realism of our irregular warfare training, and at the same time, we are beginning to reset our Combat Training Centers for conventional operations.

So we continue not to flinch in our commitment to ensure we send well-trained, well-equipped soldiers in harm's way.

Third element was Reset. And seven years of combat has taken a toll on our people and our equipment. And our ability to reset our forces effectively will be a significant determinant in our ability to sustain this force for the future. Over the past year, we reset over 125,000 major end items of equipment, and we intend to sustain this pace for as long as we have substantial forces deployed.

We also recognized that we needed to standardize our reset procedures, and we initiated a reset pilot for 13 units. During this pilot, units spend their first six months (for the active force) or 12 months (for the reserve force), following their deployment with no readiness expectations and with no Army-directed training, so that the units can focus on reorganizing, education, property accountability, services ... and on reconnecting with their Families. At the end of this six- to twelve-month period, we intend to fill the units with sufficient personnel and equipment so they can begin training for the next mission. Given the very positive feedback so far, we plan to extend this program to 20 units in the next year, and to all resetting units by 2011.

I can't overstate the importance of resetting units and rebuilding their readiness in a deliberate way. It's the difference between having a hollow force and one that's truly ready for future contingencies. And I do believe that an effective reset process will become the cornerstone of an expeditionary Army.

And lastly, Transform. And I'll remind you that our transformation remains a holistic effort to adapt how we fight, train, modernize, develop leaders, and support and station our Soldiers, Families, and Civilians.

We're on path to our goal of growing the Army by 1.1 million Soldiers by 2010. And we've now converted almost 85 percent of our units to modular formations, and we're 60 percent through the rebalancing to skills required for the 21st century. That is the largest organizational transformation of the Army since World War II, and we've done this while fighting two wars. We also recently altered our Future Combat Systems fielding strategy to accelerate delivery of some advanced technologies developed for that system to our Infantry BCTs. And we unveiled the first Non-Line-of-Sight-Cannon - the first of the common-chassis manned ground vehicles that will become the basis for the Brigade Combat Teams of the Future Combat Systems that we will begin fielding in 2015.

We published the first update to our capstone doctrine since September 11. We intend this to help us chart our way ahead. And FM 3-0, Operations, includes a new operational concept for full-spectrum operations, where commanders simultaneously apply offensive, defensive, and stability operations to seize and retain the initiative and achieve decisive results. I believe that this doctrine, this manual, is an important - but not a final - step in a process that will continue our transformation into the future.

We also made Training and Doctrine Command responsible for leader development, and we will soon release FM 7-0, Training for Full-Spectrum Operations, to provide a framework for thinking differently about how we train an expeditionary force.

We continued our efforts to operationalize the Reserve Components to more systematically build and sustain readiness and make deployments more predictable for Soldiers, Families, and employers. While we have more to do, I believe that we are closer to a truly Total Force today than at any time in my service. And I will tell you, nowhere was that more apparent to me than when I met the Army's Noncommissioned Officer of the Year from the Army National Guard and the Army Soldier of the Year, who is from the Army Reserve.

Finally, we recognized that most of our institutional systems - personnel, education, training, healthcare, procurement, family support - were designed to support a pre-September 11th Army, and we recognized that institutional transformation would be essential to cementing the significant changes that we're making across our Army. So we chartered a task force to lead the effort to adapt our institutions to effectively implement the Army Force Generation process, so that we can efficiently generate trained and ready forces for our Joint Force Commanders.

So Sustain, Prepare, Reset, and Transform ... we are moving forward, and I think we are well on a path to bringing ourselves back into a state of balance. But there are still a few tough years ahead, and it's going to take us next year and probably the year after until we start seeing the type of flexibility in our personnel and equipment systems that we're used to. But for the first time, I'm starting to see daylight, and I see how the plans that we have put in place can move us over the next three years to a position of balance, so that we can continue to prepare for the uncertain future.

Now, let me shift gears for a second, and let me start talking a little bit about how we see that future, and answering the question, "Where are we going'" And, frankly, I see the main challenges that I face during my tenure as chief as to first, get us back in balance, and second, to prepare for the future. And that is not something that is new to me. Every chief has a responsibility to leave his successors with an Army that is leaning forward for the future.

I'd also remind you that our transformation is on a very good track. We are moving in the right direction. But transformation is a journey, and we will continue to evolve as we continue to look and see how the future security environment will cause us to continue to adapt.

FM-3 is a great start, but to remain the best Army in the world, we must continue to look forward and adapt. In Iraq we used to say, "If you're not going forwards, you're going backwards." And we need to keep moving forward.

To do this, we have to continue to think and talk about the future security environment and about the character of future conflict, so that we can continually evolve our thinking and adapt.

Why is that important' Because we believe that we are at war with a global terrorist network, and that the emerging global trends will only exacerbate that struggle, and it will lead us to a period of what I call persistent conflict. I also believe that the United States and our allies will be increasingly confronted with complex and unanticipated challenges to both our national and to our collective security.

And while these conflicts will be waged in each physical domain - air, land, and sea - I believe they will increasingly be struggles between, among, and for the allegiance of people. Twenty-first century conflict, therefore, will primarily be conducted, won, and ultimately concluded on land.

It follows, then, that Landpower - the ability to achieve decisive results on land - will remain central to any national security strategy. And to be successful in this environment, our land forces - the Army, the Marine Corps, and our Special Operations Forces, supported by our air and naval forces - must be capable of conducting full-spectrum operations, with allies, with indigenous partners, and they must do this in operations ranging from peacetime engagement to major conventional war.

I mentioned persistent conflict. I define persistent conflict as a period of protracted confrontation among state, non-state, and individual actors who are increasingly willing to use violence to accomplish their political and ideological objective. And while I don't see fundamental change in the nature of war in this era of persistent conflict, it seems clear to me that the character of conflict in this area will be decidedly different than the character of conflict that predominated my career.

So what should we expect' I believe we should expect to deal with a range of diverse actors; frequently non-state actors, sometimes operating covertly or as proxies for states. These folks won't be bound by internationally recognized norms of behavior, and they'll be resistant to traditional means of deterrence. And we should expect them to confront us asymmetrically to avoid our strengths.

We also should expect to deal with what I call hybrid threats - diverse combinations of irregular, terrorist, and criminal capabilities - that will be resistant to attack by conventional capabilities.

We should expect civilian populations to permeate the operational environment. Our foes will seek to mitigate our conventional advantages by operating among the people to avoid detection and secure popular support. I believe the norm for us will be sustained operations in tough terrain and sprawling cities, challenging multicultural environments, and increased complexity for our leaders.

I believe conflicts will become more unpredictable, arising suddenly, expanding rapidly, and continuing for uncertain durations in unanticipated, and in austere locations. I would expect they will expand to areas historically immune to conflict, primarily space and cyberspace. And conflict resolution will require not only rapid response, but the capability to build sustained security and social, economic, and governance capabilities. It will definitely require our forces to operate with indigenous governments and indigenous forces ... things we're learning today, but things I believe will dominate the upcoming security environment.

Telecommunications technologies ensure that global coverage will occur for every one of our local conflicts, and this offers the potential for spillover and the concomitant regionally destabilizing effects. And, since the means of violence will no longer be in the hands of state actors, military forces alone will be insufficient to establish the conditions for lasting stability, thus requiring the integration of interagency and intergovernmental capabilities for success.

Now, as I look at the conflicts that we're seeing around the world, I'm drawn to the Israeli-Hezbollah conflict in 2006, and I believe that conflict illustrates a number of these emerging characteristics. The conflict pitted Israel against a terrorist group and a non-state actor, Hezbollah, that was operating inside another state, Lebanon, and supported by yet another state, Iran. Hezbollah embedded itself in the population, employed modern civil technology and advanced military weaponry, which it combined with IEDs and other asymmetric techniques, and it basically denied Israeli forces their objectives.

So as we look to the future, it is becoming increasingly clear to us that the precise requirements for land forces will continue to evolve throughout the 21st century, and that we need to sharpen our thinking to continue the development of our Army. The emerging character of conflict that I just discussed seems to point to several distinct qualities that I believe land forces must possess in the foreseeable future. And I'll talk about six.

First of all, land forces must be versatile because versatility acknowledges that we will only be "about right" in predicting the future. Versatility and versatile forces will enable us to respond to the future as it actually presents itself. Versatile forces are multipurpose and can accomplish a broad range of tasks, moving easily across the spectrum of conflict as the situation demands. The versatility in our modular organizations, supported by full-spectrum training and adaptable equipment are exactly the kind of things we need to prepare us to deal with a wide range of unpredictable threats.

Second, we must be expeditionary. The dynamic and global character of this conflict requires the ability to rapidly respond to unanticipated conflicts and to be able to fight upon arrival. So our land forces must be expeditionary - they must be organized, trained, and equipped to go anywhere in the world, against any adversary, to accomplish any mission. To do this, we need a flexible force generation model that can generate forces to both meet the demands of current operations and to hedge against contingencies. This type of model can ensure that we have sufficient forces that are readily available to respond to a range of missions, and also to sustain our responses over the long haul. Land forces also require an expeditionary mind-set - Soldiers and leaders confident and competent enough to quickly adapt and function effectively in any environment. And I will tell you, I saw this mind-set in play when I visited the 3rd Brigade, 10th Mountain Division, which just had their mission changed from Iraq to Afghanistan. What I saw were quiet professionals who understood the magnitude of their task but were not cowed by it.

Third, we need agile forces. Agile forces have the capability to adapt quickly to exploit opportunities in complex environments. An agile force requires not only agile units, but also agile minds and institutions. Our leaders must possess the mental agility to react quickly and appropriately to changing situations and complex environments. And our agile leaders and units must be supported by agile institutions. Once a mission's defined, our institutions must rapidly adapt by adjusting training, manning, and equipping priorities to ensure units have both the physical and the mental tools necessary to succeed. Without institutional agility, we won't succeed. And we have some work to do here.

Fourth, our forces must be lethal. Our core competency is to apply lethal force to defeat our enemies. That's why they send us in. And lethality in this era requires the ability both to mass effects to defeat enemy forces, and to precisely apply lethal and nonlethal effects in stability operations. Such lethality requires not only precision weapons, superior intelligence, and situational understanding, but leaders with an offensive mind-set - a mind-set that allows them to see opportunities and challenge, and have the courage to take action.

Fifth, our forces need to be sustainable. Sustainable, because neither the duration nor the character of military campaigns is predictable, and our land forces must possess campaign capabilities to sustain operations as long as necessary to achieve our national objectives. They must have the logistical capability to conduct operations over extended periods, while presenting a minimal "footprint" to reduce the exposure of our support forces. And reducing demand through increased equipment reliability, fuel efficiency, battery longevity, and other technological advances will not only improve our sustainability, but it will improve our performance.

And sustaining long-duration missions also demands that we continue transforming our Reserve Components to an operational force with predictable and assured access to their capabilities at sustainable levels. We've made great progress here, but we have more work to do.

And lastly, we must be interoperable. And when I say interoperable, I'm talking well beyond the capability to operate on the same radio frequencies and utilize the same caliber ammunition. Land forces must be interoperable with all of the other elements of national power. The exceptional planning and organizational capabilities and experience of our land forces ought to be considered national assets. Land forces can use their skills to integrate the efforts of the interagency, allies, and indigenous forces for mission success.

Now, we need to work collectively across our government to start building some of these capabilities into our government, so that we can continue to make progress in the types of operations we're facing in Iraq and Afghanistan.

In an era of persistent conflict, Landpower will be indispensable in achieving lasting and decisive results for our Nation. Versatile, expeditionary, agile, lethal, sustainable, and interoperable forces will be essential to providing the prompt, sustained, and dominant responses across the spectrum of conflict that will be necessary for our security in this environment. While we already possess many of the qualities that we need for the future, we must continue to transform to realize the full potential of our experiences, and to stay ahead of our enemies.

I'd like to close with a word about our People because our People are our ultimate asymmetric advantage. It's our Soldiers' ability both to see opportunities and challenge and have the courage to act in the face of complexity and uncertainty that is making a difference today and will be continue to be essential in the future.

Leadership is paramount to everything that we do, and we have to continue to develop agile leaders and adaptive leaders, who can deal with the challenges of full-spectrum operations. Our leaders in the 21st century must be: supremely competent in their core proficiencies; broad enough to operate across the spectrum of conflict; able to operate in joint, interagency, and multinational environments; at home in other cultures; and, most importantly, they have to be grounded in our Values and our Warrior Ethos. And fortunately, we have many of those leaders in our force today.

Throughout our history, our Army has served our Nation by winning its wars and securing peace. Today, faced with a future of persistent conflict, the Nation requires an expeditionary Army with campaign qualities, adequately sized and supported to enable Joint Force Commanders to be successful across the spectrum of conflict. We are building that force, and we will continue to adapt as we go forward, to ensure that we overmatch any threat.

Over the past year, we began executing our plan to restore balance, and are on our way to achieving our goals. We will continue to Sustain our Soldiers and Families; Prepare Soldiers for success in the current conflict; Reset them appropriately when they get back; and continue to Transform ourselves to become the Army that our Nation needs for a difficult future.

Now, I'll close ... since this is the Eisenhower Luncheon ... with a quote from Dwight Eisenhower. I will tell you, I could not be prouder of the men and women of our Army today and the sacrifices that they and their Families are making in defense of our freedoms around the globe. And I'll read you a quote from General Eisenhower, as he looked at a different generation of Soldiers, right after the liberation of Europe. And here's what he said: "These men came here to storm these beaches for one purpose only, not to fulfill any ambitions that America had for conquest, but just to preserve freedom" ... just to preserve freedom. It's my honor to continue to serve in our Army, where our Nation has men and women who believe in those same values and those same ideals.

Thank you very much for your attention.