CARSON: Well, thanks (INAUDIBLE). Thank you all for coming today. It's nice to be here at CSIS (Off mike) your thoughts and the wisdom you have about the things I care deeply care about and work in (ph) now. So a pleasure for me to be here.I do feel like I should be paying tuition to the audience, rather than having me talk, because just the people I know here -- in the front rows, we have retired general officers and former undersecretaries of the Army, Woody (ph), who knows the Army better than probably all of us combined, having been around and caring for the institution for such a long time.I know we have fellows here who are active Army officers and people from other services, too. So thank you. And I can say, having been in the office now a year, I have learned tremendously from many of the people I just called out and from the junior officers who have made me much smarter by coming to my office, as well.What I thought I might talk about today is innovation in the larger sense of that, and you know, this is the anniversary this very month, the 150th anniversary of the end of the Civil War. And whenever I go to Barnes & Noble, there is a spate of books out about the Civil War to celebrate this momentous occasion, and they will often have on the cover a picture that, even though of fairly recent vintage, has become almost iconic, and it is called "The Surrender."And it is Grant and Lee at Appomattox courthouse -- Lee, of course, looking regal, as history remembers him to be, Grant looking more assembled than his personal life would otherwise suggest to us he probably was. Fourteen other people appear in the portrait, who by all accounts weren't actually there, but played some role in the day's events -- an important portrait, and it again speaks to the end of that conflict.There's another portrait there that I have always admired more about the Civil War. It was painted contemporaneously, really, with the events it depict, by George Healy in 1868, and it's called "The Peacemakers." And it shows sitting around, not much different than Maren and I are here, William Tecumseh Sherman, Ulysses S. Grant, now forgotten to history, David Porter, a rear admiral, and President Abraham Lincoln.And it occurred one month before the Appomattox courthouse, and the event, which Sherman recounts in his memoirs, was to discuss the last few weeks of the war, as well as, as importantly, plan about what the months or years after this conflict ended, and how it would play out.That portrait, not that well known, of those four men hangs now in "the tank," where the Joint Chiefs meet to decide weighty issues. It has become famous over time because a version of it is in the White House. George W. Bush referred to it as something that meant a lot to him after September 11. And I'm now told it hangs in the private dining room of President Obama, "The Peacemakers."I think of that because we are now, although reengaged in Iraq, in the Army thinking a lot about what the Army will be as we leave now 14 years of hard conflict, conflict that all the services have played a major role in, but no one moreso than the U.S. Army that has fought and bled. When you go to Section 60, Arlington National Cemetery, you'll see a lot of Army soldiers there. We have sacrificed so very much.So we think about what the future is going to be. And if the chief were here today, he would say that is deeply on his mind in the last few months of his tenure. We have initiatives that are publicized for those who care about the defense matters, such as Force 2025 and beyond. We have a new Army operating concept.General McMaster has been on this very stage. He's much easier to get ahold of than me, actually. He is a terrific salesman, and not only a salesman, he's the product development (ph). It is from his mind that many of these ideas about the future really spring, and he is an awesome spokesman for how the Army is thinking about these things.I thought we'd talk about how I think about it and think in terms of those four men who are in that George Healy portrait must have thought about it because, you know, with just a little bit of imaginative sympathy, you must think that they were awed by the four years that had preceded them.They could never have imagined how the world would change so dramatically. A U.S. Army that at the beginning was engaged in infrastructure projects for the United States, constabulary operations, coastal defense, where people were called up to fight at Manassas, and senators and congressmen and their wives would go watch on the hills nearby, called up for just a few weeks.By the end of this, with railroads and telegraphs and the proliferation of rifles, mass industrial warfare that previewed the conflicts that we would see over the next 50 and 70 years in World War I, World War II, the war between Russia and Japan, the Boer war, the Franco-Prussian war.You know, the fact that Sherman himself, right, who became not simply a pioneer of tactics but almost a person who embodies the idea of total war that the 20th century came to apply (ph) in such a bloody fashion. You'd think they must have really been awed at the transformations that they had seen.The Army finds itself similarly today in a position where it is easy to be awed by the world we confront. You know, the new slogan for the Army is "Win in the complex world." General David Perkins, the four-star general who is in charge of training and doctrine command, will talk a lot about this issue.And I think it is a fascinating thing. It is easy to be arrogant and think that we are in some unique time, that the world is changing underneath us more so than it was 50 years ago or 100 years ago. It is easy to be arrogant, but it does seem as if there is something afoot. This revolution in communications that allows the world to act in simultaneous fashion -- now, that is something that is truly new. Small autonomous groups that once had a collective action problem, that they couldn't formally get together and work and surmount the obstacles of coordination now use information technology to do just that.There are real changes afoot. Where not that long ago, just a couple hundred years ago, war was led by men who fought with individual weapons, sometimes leading from the front themselves, offering leadership more by moral example than any kind of, like, tactical or strategic expertise (inaudible) is now fought not simply by systems, but systems of systems, require greater and greater specialization from all of the services.In World War II, there were just a few dozen MOSs across all of the services. Today there are hundreds of MOSs. We have specialties of specialties of subspecialties. All of these require technical expertise. They demand of commanders to know more and more.The information flows are therefore greater. The ability to create some form of knowledge or wisdom out of that data becomes an incredible intellectual challenge that is solved only by having rules of thumb, heuristics that allow you to kind of put these in some place, which are central, but if in error, can lead to terrible, even tragic decisions.The Army is confronting a new world where we not only have a revanchist Russia arising, China, of course ISIL, Yemen in flames. We have non-state actors that are expanding their capabilities, access to technology that was once unthinkable. At the same time that globalization has taken real root, we see a return to primitive identity formation that attacks the nation-state from below just as globalization attacks it from above.This is the world the Army finds itself in and tries to adapt itself to. So for me, I would say there are three challenges that might be worth mentioning today. One is material, the second is managerial, and the third, for lack of a better term, is metaphysical.The material one is obvious to all. The Army has a budget this year of about $120 billion. That's a lot of money, not as much as the Navy and the Air Force are getting, but more than any other cabinet agency with the exception of Veterans Affairs. The Army is still a big place. And then you have $20 billion in OCO funds to add to that. A lot of money but far less than we thought just a few years ago, where the anticipated budget for this fiscal year was expected to be $150 billion.So over the last few years, we have found in our planning processes about a $30 billion cut for us to make. As a result, there are real consequences, mostly in what we think of as materiel. The modernization, the research and development programs for the Army, right, don't have near enough funds for them.Over the next five years, we'll spend maybe $120 billion on modernization, the major drivers of that being aviation, (inaudible) the network, air and missile defense, vehicles. But there's not enough to do all of these kinds of things, the very expensive programs.And we have a challenge in thinking through how we prioritize among them, how we move into new programs that don't threaten to consume the entire budget. If we want a future fighting vehicle for example, how you reconcile the cost of that with the other programs, with the Abrams and the Strykers, not to mention other parts of the acquisition (ph) portfolio. So there's a real material problem in that respect.There's a managerial issue, as well. My challenge, and I think Secretary McHugh and the chief's challenge, they say, too, is to create an institutional Army commensurate with the operational force.The operational force is great at planning. They move out and do things, the tactical acumen, the leadership of people in the field is incredible. The headquarters, by contrast, is not nearly as agile. It is not just arthritic, but so sclerotic at times, right, that blood is barely reaching the various appendages of the bureaucracy.And so how you get things done, how you make decisions, how you push things through as a leader, rather than simply react to matters that rise up to you from the Council of Colonels and the one-star general officer meetings, the two-star general officer meetings the three-star general officer meetings, by which time anything interesting has often been rounded off in the Powerpoint slides and you're left with nothing to do but acquiesce in decisions that present no real alternatives to you.So how do you manage the Army in a better way? We've tried to do that. Part of it is by slimming down the headquarters. The Army took very seriously what Secretary Hagel ordered us to do, so the headquarters has been reduced by more than 20 percent and will be executed over the next four or five years to do that.And we haven't just gone through and demanded people make arbitrary cuts. We have tried to reduce the number of echelons. There were in the headquarters often nine echelons between the chief and the secretary and the lowest-level people, sometimes even SESs (ph), our senior executives, people who are the equivalent to general officers, the echelon six or seven, very far down in the organization, where you wouldn't think a leader of that stature would otherwise be.We have spans of control, people who were managing one or two or three people, when Army regulations contemplates managing 10 to 12 as a minimum, and best practices in the corporate sector suggest 6 to 8. We've changed that to where now everyone in the headquarters, with few exceptions, manages at least 8 people.We had people reporting to others of the exact same grade, GS-15s reporting to GS-15s, reported to GS-15s, or colonels to colonels to colonels, things that put the entire planning of careers and information transmission on hold.And therefore, it is a belief of mine -- and it comports with research from the business community -- that every echelon a message is transmitted, you lose perhaps 10 percent or 15 percent of its fidelity. So you could imagine sending a message down to echelon nine and having it chop (ph) all the way back up, all right? The noise-to- signal gets way out of balance.And so managing the Army in a better way. We've instituted the Army Management Action Group, the Army analog to what Bob Work's -- deputy secretary -- the Deputy's Management Action Group, where the vice might chair, and we try to have meetings about the really important decisions.The Army plan -- 60 years, it has existed. It was read by few. Although people in the G357 (ph) and the G8 and others spent, you know, many years upon many years creating it. We've completely revamped that, doing an Army vision which will be released in the next few weeks.Trying to make strategic planning as vigorous at the headquarters as it is in our subordinate commands out in the field -- real strategic planning, not simply one (ph) to end (ph) lists or the discussion of important questions, but a plan that deals with the real obstacles we face. These are the managerial challenges of how you put your imprint on the Army as a senior leader.And as I said, metaphysical -- by which I mean the Army is in one of its periodic identity crises. This happens after every major war, when people seem to turn away from the need for land power, where the consequences of these conflicts make people say, We'll never do this again, whether it's after World War II or Korea or Vietnam, and now after Iraq, as well.And the consequences are very real. We see that, right? I mean, the VA -- the budget, I mentioned, has grown larger than the Army's. That's really a recent development over the last decade. You've seen the VA budget explode. And we will be feeling (ph) these wars for not just years, but decades to come. We're still paying, after all, widows' benefits to a survivor from the U.S. Civil War.And given the way lifespans are increasing, there is every reason to doubt that not only my son will see people who receive these benefits, but my son's son's son well into the next century will have people who exist around him, right, who are receiving some benefit that flows from the consequences of Iraq and Afghanistan.But the Army's trying to figure out where it goes. That is why I mentioned General McMaster's great work, General (inaudible) great work, in the Army operating concept. What is the Army? What is our role? If a country believes that the Pacific theater is the future, (inaudible) the Army's place in it? What traditions do we revitalize? What lessons do we learn from Iraq and Afghanistan that we want to make sure we don't forget, as some would say we forgot after Vietnam.How do we institutionally change? How do we become more innovative? How do we become agile and adaptive? What do these terms really mean, to be agile? You know, that's a great term. One doesn't want to be not agile. Yes, I accept that. But what does it really mean in terms of what we program and how we think about these things? To ask those kind of tough questions is what we're doing.And trying to also convince a nation that is no doubt fatigued by fatigued by a decade-and-a-half of these conflicts, that land power is going to be really essential because, in the end, the Army has a singular competitive advantage -- no other service has this -- which is we can make you change your mind when you otherwise don't want to.Other services can perhaps have offshore presence and do aviation, bomb you and perhaps make you change your mind, persuade you that the costs of this outweigh the benefits. But the Army can kick in your door and make you stop doing what you want to do when you'd otherwise like to continue. And we can do that in a sustained, massive way, and there is no other service that can do that.All the services have a unique advantage, but that's the Army's, and that is a capability no great power would want to be without. And we have to do a great job of explaining that.And let me conclude with this about trying to explain ourselves better. And this has resonance for me, and it is street fighting math, not exact math, so one can try to reconcile it later. Oftentimes, I'll talk (inaudible) to my father, who's a veteran of 1st Infantry Division. And we'll have say we have 500,000 people, or less, in the active component of the Army. That's a lot larger than nearly every Army in the world, with the exception of a couple. So that seems like a large amount of people to have.So why can't you get by with 400,000 or 300,000, or some people (inaudible) things have said, you know, a 250,000-person U.S. Army in the active component. And honestly (ph), you know, it does seem like a lot, but those of you who know how the Army really works, the numbers are not quite as significant as they seem because of that 500,000, we have 70,000 who are in the generating (ph) force, who are manning, training and equipping.We have another 80,000 or so who are trainees, transients, hospitalized or students. There's 150,000 who are right off the table. We have 30,000 special forces doing their own kind of missions. We have another, let's say, 30,000 or 40,000 doing other national missions, Patriot batteries, bad (ph) batteries, the old guard, these kinds of things.So now you're down to maybe, you'll say, 300,000 people. Well, if you're going to rotate these folks through, which we believe we have to do for both effectiveness and out of basic humanity, (inaudible) 2-to-1 ratio in the active component. That's 100,000 people that we can put into combat today while the other 200,000 are back home training, getting ready to go.Well, at our peak in Iraq and Afghanistan, we had 183,000 soldiers deployed. So that 100,000 doesn't even get us to where we were.Now, there are ways to manipulate that. People can be in it to win it (ph). And we can manipulate the so-called, what we call boots on ground (INAUDIBLE) ratio for (INAUDIBLE) the deploy to (INAUDIBLE) ratio, B2 (ph), right? Everything is an acronym or shortened. So the B2 ratio, right? There are ways to do this. And of course, the reserve component plays a key role to help augment our capabilities, too.But it's a way to think about how rapidly we can consume U.S. Army forces, even a 500,000-person force, which is (INAUDIBLE) a lot of people in the active component, right? But we use them, and it can go very quickly.So those are the great challenges I see for us going forward, a tumultuous time for the Army, both inside as we think about ourselves confronting a world that does seem to have some kind of step (ph) change in the last 30 years, to a new place and how the Army deals with it, how this country deals with it, is something that we grapple with, so...LEED: Thank you. That was -- that was a massive amount of information.(LAUGHTER)Very much appreciate the scale and scope of your comments. And I know there are lots of questions out there, so we will get to those in just one moment.I want to exercise the prerogative of the chair and ask you something you didn't talk a lot about, about your specific role -- so it's a two-part question about your specific role as the undersecretary, a position which has a lot of latitude. It's been interpreted very differently by many of your predecessors, and varies across the departments, arguably, despite having the same sort of (INAUDIBLE) guidance.And so I wanted to ask you about what you see as your primary responsibilities and priorities as the under, and then ask you more generally about -- Senator McCain was here last week talking about his desire to relook at Goldwater-Nichols. There seems now to be growing consensus that some of that ought to be relooked (ph). And I believe numerous service chiefs have talked about their views on some of the things that ought to be changed. So I wanted to get your perspective on whether, either within the context of Goldwater-Nichols or otherwise, you think we have the balance of secretary -- secretariat versus the rest of the enterprise, responsibilities, roles and responsibilities about rights (ph). And then same question for within the Department of the Army specifically.CARSON: Well, the role of the under is what you make of it, or what your principles lets you make of it. In some way, it's like being the vice president. You can be, as John Nance Gardner (ph) once said, it's worth nothing more than a warm bucket of spit when he was not given any responsibility by President Franklin Roosevelt, or he could be, as it has been in recent years, where you have people like Al Gore and Dick Cheney who exercised tremendous influence.So I see my job as making the secretary and the chief able to make better decisions. That's (ph) not codified in any general order or in the statutes, but that's my job, is to make -- allow them to make better decisions by assimilating information, by pushing back, by ensuring that presentations accurately reflect the real choices, that dissent within the Army staff or the secretariat is noted, that they fully understand all the implications of this.They get to make the decisions, unless they expressly delegate them to the vice or to me or to others, but to allow them to make better decisions is how I see my role. Of course, I have a statutory role that you alluded to at the outset, where as chief management officer, I'm responsible for these enterprise resource programs and the auditability and the management of it, so there's a very technical aspect, extremely important aspect, something that the unders working on business transformation in the services, by which we mean more or less the rolling out of IT programs to improve our efficacy and is something that I see myself as doing.So I have a great relationship with Secretary and the chief, and because of that, they give me a lot of latitude to try to do things that I think are interesting. But I never forget that in the end, the secretary and the chief get to make the important decisions. And for me, it's about advocating for certain changes. It's about understanding what they want to do and making sure, as their action arm, that the Army staff or the secretariat does it. So fixing problems is how I see the role as being.On Goldwater-Nichols, I didn't see what Senator McCain had to say about it, so let me take a more agnostic approach that this is going to be very interesting to watch how Goldwater-Nichols plays out because we never have seen it, right, in a world really where there wasn't plentiful resources, where service chiefs and others could not kind of get along, right, in divvying up the resources ABOUT (PH) THINGS.And now we're in a world where, right, the pie has gotten smaller and the demands are anything greater, right? We don't even have money for the Ohio class submarine replacement, zero money for that, much less the other billions that the Navy needs for ship-building. You know, you have the long-range strike bomber coming on line, the KC-46 (ph), the F-35. It goes on and on, so resources are scarce, so it's going to be interesting to see whether the comity that has been over the last few years is something that can continue.Is the balance right within the secretary and the Army staff or the services? You know, I find this to be an environment where it's all about the personalities. Secretary and the chief get along very well (INAUDIBLE) gets along famously. Right, you have to fight for your prerogatives at all times. You have to fight for your oversight roles. You have to fight to be involved in the action.You have to add real value to it because the great thing about the Army -- perhaps all the services, I see the Army -- they get things done. You know, these are people who are used to getting things done. They move out. They fix it. You know, they have a plan. They're energetic. They have a biased optimism. You know, they fought (ph) through leadership. And so people get things done and you have to get with the program because there are projects that have to get done and somebody (ph) will do it.And so I think the balance is good. (INAUDIBLE) changes from the administration -- the administration. New people come into any particular job. And we all have, right, exact complements on the Army staff. So I have the vice. You have the manpower and reserve affairs and the G1. And that relationship is going to be about the people because in the end, that's what the Army's about. General Campbell (ph), former vice, now in Afghanistan (INAUDIBLE)It's all about relationships and having good relationships allows this very unwieldy beast, where you have two parallel organizations, the secretariat and the Army staff, more or less charged with doing the same thing, right? How this all works and doesn't become just, you know, bureaucratically a nightmare or burdensome is all about the willingness of people to work together and having a strong relationship.When those don't exist, I think things can fall through the cracks, be frayed (ph), tempers rise. But I've seen it work really well, and that's a testament to the Secretary and the chief and the people that put them in these jobs.LEED: OK. Thanks.Audience questions -- I've got a couple already by e-mail, so -- get your hands up quickly (INAUDIBLE) All right (INAUDIBLE) But let me ask you one. All right, can the Army reap the benefits of innovation if it does not improve institutionally its tolerance of failure and thereby encourage risk-taking and real creativity?CARSON: No. By definition, to be innovative is to court failure, to be vulnerable, and we have to do that. The larger question is, does the Army really not tolerate those kind of things? It goes back operationally. I think,operationally, we do tolerate failure. You know, the first thing -- you'll talk to people in the field, right, this is not a zero-defects mentality. People make mistakes, right? There's fog and friction and perfection is unattainable. And we reward innovation, and I think it exists.Institutionally, it's a little bit harder. (INAUDIBLE) in the acquisition realm especially, and perhaps in, like, the intellectual real, too, which I'll talk about. But in the acquisition realm, the processes are not -- they grind on. So it's not that they don't reward innovation, it's that innovation and new ideas don't naturally arise from it because there's a risk aversion not about fear of failure, but everybody wants a piece of it. They want to add their requirement to it. And it's really hard to get the requirements process right.Intellectually, there's incredible ferment in the Army. You read Military Review, you read other things, you read (INAUDIBLE) you read Small Wars Journal, right, every major and Lieutenant Colonel's writing interesting pieces that are at odds, often, with what the secretary and the chief are saying, or I or the vice are saying. And that's a great thing. And the Army has this incredible ferment.Do those people stay in the Army? Are they punished for it? I never really see that. The Army is a culture, like all the services are, and so I have no doubt there are certain cultural biases toward things. We work strongly to try to not affirm those, and there's a great culture out there of doing it.So I don't know that -- innovation by definition involves risk taking and failure. I think the Army is interested in that, and that we do reward it, but how you make it scalable to the U.S. Army, how you, you know, and how those ideas, the good ideas, come to the fore I think is another challenge. But that's not unique to the Army. It's just a bureaucratic problem.LEED: OK.All right, I'm -- (INAUDIBLE) got one here (OFF-MIKE) turn to another.LEED: Can you...UNKNOWN: Oh, thank you. Thank you so much.Hello, Mr. Undersecretary. Wonderful remarks. I'm Nigel Sutton (ph) from (INAUDIBLE) As you were talking about balancing your core missions and then your innovation project you mentioned, where do you feel industry can help you on this? Where do you feel that we can come to the table? If you called a meeting this evening and said -- with certain main industry players, what would you ask them right away how to be able to help you, in which areas?CARSON: I think you have to help us understand the future better. So from the industry standpoint, you have to help us understand the boundaries of the technically feasible, for example, which has often befuddled the Army in the past as we had grandiose visions of how -- how technology would develop that didn't come to be realized. So that's one thing you can do.Industry is filled with people like yourself and others who know the Army well, know the services well. The challenge for the Army -- and it goes to this risk-taking question -- is we have to make a decision about what the future kind of looks like and plan for that, while realizing that one can't plan for every contingency and be willing to branch off to do something else. That's the greatest challenge.You know, the question I often ask, and it's kind of a similar question I ask, is when you say to me, What size should the future fighting vehicle be, 20 tons or 80 tons? How do you adjudicate that question? How do you even begin to wrestle with it? Should protection be on the front, the side, the bottom, the top? How do you adjudicate that question?Well, it presupposes a vision of how future war could look, and that's what one has to grapple with. And that's very hard work to understand the trends, to maintain flexibility, where you're not wedded to one course when it turns out that you were wrong about it. So that's the challenge we have, and industry can help us with that. And the boundaries of technical feasibility are an input to that.But that's what we have to do in the Army. And that's what I spend a lot of time -- I speak with HR or Dave Perkins to say -- you know, tell me what future war is going to look like, and I can tell you whether I need a 20-ton or 80-ton or perhaps a 20 and an 80-ton vehicle, you know, or something in between. Otherwise, it doesn't help me make the difficult tradeoffs.We speak often about lethality, agility, protection, mobility. And look, I'm for all of these things, right? They are all unabashed goods. Unfortunately, they are not always perfectly complimentary, either, and they are substitutes on the margins. So which do I choose, lethality or protection or mobility?These are interesting questions. They go to the heart of our enterprise. And when I say we're not good at innovation in the acquisition process it's because people say we have to have all of these things. When you have all of these things, you have nothing, right? It becomes unusable. This BMF (ph) proliferates in costs and proves to be, you know, unusable.Difficult choices have to be made, and the only way I know to arbitrate those matters is by thinking, like, this is what war is likely to be like in the future. Here's the threats and here's how we build options within our choices where we don't become so path- dependent, you know, that we are this way and can't go another in 10 years. But that's what industry can help us do.And this is the challenge. (INAUDIBLE) to the commercial sector -- I was once a business school professor -- they famously think quarter to quarter, year to year. And the Army and all the services, we think decade to decade. We're already talking the 2030s, 2040s, and what we're going to be doing in that. The world changes so much. That is an incredible challenge.And that we don't always get it right should not be surprising, given the difficulty of the project. But that's what we're trying to do, and industry can help us do that because you think even more deeply than we do about, like, how the world is developing. What's the -- you know, the technological limits of what we can do? And we try to move there. So that's the things I think that industry can do.LEED: OK. Ray (ph)?CARSON: Go ahead. Another former undersecretary of the Army.(CROSSTALK)UNKNOWN: Thank you, Mr. Secretary. The membership of the Commission on the Future of the Army was announced in the past week. Certainly, the purpose for the commission was to address, is to address the ACRC, and more particularly, the active Army versus the Army Guard balance...CARSON: Right.UNKNOWN: ... capabilities, where should they reside, end strength, et cetera. Were you to be called to testify in front of the commission, how might you address the Army active, Army Guard issues, number one? Number two, would you also want to suggest to them that they have an opportunity to look at the future of the United States Army active Guard and Reserve in the context of both the Army, the special operations forces and the Marines, the land power triad?CARSON: We are going to be both eagerly engaged with and waiting with bated breath the report next February of the national commission. It's not only going to look at the AC/RC mix, but a related issue to that, which is our aviation restructuring initiative and their opinions about that.I think the commission is stocked with exactly the right folks, who are deeply committed to the total force and understand the active component well and the Reserve component's contributions, too.If called to testify myself, I would say what my own experience is as a Navy Reservist. As Maren mentioned, I served with the 84th (INAUDIBLE) battalion in Iraq, so an Army unit. I know the role of the Reserves. I'm a proud Reservist. I don't think of myself as a substitute for an active duty sailor or an active army EOD tech, for example, or EOD intelligence officer -- intelligence officer, which is what I was. I'm not a substitute for that person. I'm a compliment in some ways, and with the right amount of training, perhaps a significant amount of training after mobilized and the work (ph) up a year (ph) to it, right, I can almost be a substitute for that.So I think what I would tell the commission is the Reserve component is an important operational part of the U.S. Army. That will not change. If anything, going forward, in these austere budget times, and seeing (ph) the contributions of the Reserve component over the last 15 years,, the Reserve component will grow in importance, not diminish in any way. And they're going to play an incredibly important role in the national security of this country.In many ways, they are not substitutes for active duty DCTs (ph), but complimentary to them. They have unique skills that are essential to our success, but are not one-for-one substitutes for them. So that's what I would, I think, tell the commission, if called to testify for that.The Reserve component is an unbelievable tradition. The sacrifices that the RSC has made is quite incredible. And when I look toward the future, the kind of conflicts we're going to be in -- that question I answered a moment ago about what's the fundamental thing we're after, which is we have to envision the future -- I cannot envision a future where the Reserve componnt does not play a extraordinarily significant role in Army operations because what we're going to be called upon to do, we find in the RSC those skills.I mean, think, as an example, cyber. (INAUDIBLE) very difficult to recruit cyber people into the active duty workforce, given the other options that they might have. We know that cyber is a growing domain. The Army is strongly committed to expanding it. General Cardoon thinks about this, right, every moment of his day.You know, you can see the RSC being a place where much of that capability resides because people can be software engineers on the side while still serving in the California National Guard or the U.S. Army Reserve. That's just a way to access certain skills that we wouldn't otherwise have.So that's what I would say, is that going forward, the RSC is going to play a major role, just as they have in the past and that in no way will we devalue their service or try to say in any way that they are not part of the total force and as valuable to us as all other components might be.UNKNOWN: (OFF-MIKE)CARSON: I don't know. I mean, you can see a major role for the Reserve component (INAUDIBLE) with already special forces reserve units, right, were out there in civil affairs and things like that. So I mean, I think there's a role for them in that because that's where, again, many of these key skills are going to reside for us, from languages to other things like that. So I think there's a key role about (ph) that.You want to add more of your thoughts about how they can be used in that?UNKNOWN: (OFF-MIKE)CARSON: OK.(LAUGHTER)LEED: We'll have the (INAUDIBLE) blog (ph) event (ph) next week.CARSON: All right.LEED: So We have a question from Lieutenant Colonel Chuck Rush (ph), who's a student at the Army War College.CARSON: OK.LEED: Says, "For many of the conflicts that we found ourselves in, the traditional notion of victory and winning seems out of place. Do you believe we need to rethink our theory of victory for these conflicts that seemingly will be persistent, and traditional notions of winning and victory may not really fit?CARSON: Well, perhaps it goes back to the portrait I mentioned. How many more Grants and Lees at Appomattox or USS Missouri treaty signings will we have in the future? That is the result of high-end, high-danger kinetic conflict, of which I'm hopeful there will be less and less of going forward.One of the reasons there's less and less of it is because we are so damn good at it. You know, that's one of the major things. It is true. And this is -- I know many in this room would appreciate this, but you often hear out in the broader population, Well, no one's going to take us on, armor column on armor column, in the future. And I say, yes, that's because our armor column always wins. If we didn't have that armored column, right, they might choose to engage us in tank warfare. But they know that if they choose to go that route, we would -- we would quickly prevail. I mean, that capability, even latent, is one you don't want to give up.So I hope we don't have high-end kinetic conflict. That does (ph) a good thing for the world, good thing for the U.S. Army, and those kind of peace treaties that result from it are iconic and historic for a reason.So do we have to redefine our sense (ph) of victory? I don't know what that means, really. I don't have a theory of victory, unless you mean it in this term, that victory is that the strategy has been successful. So the tools at my disposal have been closely linked in prosecuting successfully a political end, of which those don't o ften end these days on the, you know, deck of a carrier and signing a treaty, but that the political goals have been achieved.That, to me, is a victory. It doesn't end, again, with -- it ends with a SOFA agreement, probably, right, or something like that. So no, I'm hopeful that we won't have too many more Appomattoxes. And I won't -- I won't lament their loss. And the reason we don't have more of them (INAUDIBLE) of the U.S. Army and the capabilities that the U.S. military has. It prevents those kind of things from happening in the first place. And that is a victory in and of itself.UNKNOWN: Sir, hi. George Nicholson (ph), a special operations consultant. Several weeks ago, the secretary of the Army alluded to failures in the acquisition program in the Army. And as an example, I looked back on what happened to the replacement for the OH-58 coming out of Vietnam.The original replacement the Army selected was the Cheyenne -- built, flown, by Lockheed, then canceled. And then the next program (ph) (INAUDIBLE) was the Comanche, right? Sikorsky and Boeing, built, flown, canceled. The next one was the -- the LARH, built by Bell -- built, flown and canceled.What's the Army learned from that, particular now, going down the path of looking at the future replacement of the Blackhawk, whether it's going to be the Defiant or whether it's going to be the Valor?CARSON: Well, you're kind to us. You could have (INAUDIBLE) some other programs in there, but (INAUDIBLE) in the media (INAUDIBLE) right (INAUDIBLE) talked about Comanche. There's the Crusader. We have a number of famous programs that when you list failed acquisition programs, the Army, despite spending far less on acquisition than other services, has a number that crowd (ph) their way to the top.So what have we learned? Well, my job is to make sure we learn the right lessons from it. And I think when you speak to people who've thought deeply about acquisition -- and we're trying to do more and more of that at the Department of Defense, where you have, you know, root cause analyses going on and (INAUDIBLE) our failures, but you have the Zumwalt class gets to be so expensive, Harley (ph) F-45 (ph) has grown in cost, all these programs, ones much more obscure than either of those other two.It comes down to your assumptions about things, right, about how the world works, assumptions that are part -- so embedded in an organization that they are part of the mental furniture, in a way, right? They're not even questioned or interrogated or decided upon. They just are the way the world works, in the same way that gravity is a force we feel, but no one's really, you know, acknowledged on a moment-to-moment basis.So if you ask me what the major problem in Army acquisition has been -- and this is true for the aviation programs and it's something we're thinking about for (ph) future vertical lift because we're cognizant of it -- it comes back to what I said. One has to have a vision of future warfare.You know, who has to be on this bird? What's it going to be used for? What's its distance? What's it going to be doing? Is it going to be intra-theater lift? Is it going to doing inter-theater travel? What's it going to be doing? You know, what kind of Army are we going to have? Are we going to be garrison-based and try to get a division to you in -- in, you know, a matter of weeks and (ph) a BCT (ph) in hours? You know, what are we going to be?Or is there a case -- and you'll hear people occasionally like this (INAUDIBLE) you know that the Army does? We're about the ro-ro (ph). We don't come fast, but we come, right, in spades, and we come and we come off these boats and we come, we stay for years at a time, right, and show the full might of American power, right? There's a case for that.So the issue is, like, what kind of Army are we going to be? And if you can't agree on that question, all these acquisition programs, right, become questionable because they are derivative of this larger vision about what kind of Army you want to have and what capabilities you need in it (INAUDIBLE) come back from this idea what future war is going to look like.So future vertical lift is something we think a lot about. You know, we've gone to school on the F-35 lessons and what went well and what didn't go well there, these other acquisition programs. But it comes down to the assumptions about -- the assumptions about how programs operate and of how the world works that are really -- they are at the genesis of all of these failures.And we have to be better about that, mostly, again, by being smarter, being more intellectual and being aware of the cognitive biases in any organization, but ones that are also in our organization and that lead us astray.LEED: Can I ask a follow-on to that about -- Deputy Secretary Work issued a memo three or four weeks ago about war gaming, and reinvigorating war gaming. And the Army has a long tradition of war gaming, and so, A, I'm curious about the degree to which you feel that Army war gaming informs those kind of considerations for you and for the other senior Army leaders.And Secretary Work's memo seemed to suggest that -- and he -- and it was very broad -- I may be overinterpreting -- but that that set of activities across the enterprise was insufficient. So I'm interested about whether you have found it specifically to be so in the context of thinking about the future, thinking about differen t ways in which the Army might operate, and then any thoughts you have about how the Army's war-game activities (ph) might/should evolve to better meet Secretary Work's intent.CARSON: War gaming is a critical part of all that future planning I mentioned. The work that HR, Dave Perkins, is doing is informed by the war gaming they are doing as we speak. These war- fighting concepts that are being developed, the centers of excellence in the Army where (INAUDIBLE) the expertise in various areas lie are deeply engaged in war gaming and trying to think through the future.That is the question that General Perkins and General McMaster are wrestling with. It's what's the future look like? Let's war game it. We'll think it through. What kind of doctrine do we need to have? What kind of materiel solutions need to exist? What kind of personnel system must go into this?So we are ourselves engaged in a renewed effort of war gaming, and war gaming has always been, as you said, a great part of the Army tradition. But I think you see in this Force 2025 (ph) and beyond the Army operating concept, a renewed emphasis on its importance and you're going to see a lot of it and a lot more of it. And people in this room will probably be quite involved with it.I think there's a general lament across the Department of Defense that war gaming life (ph) have atrophied over the course of the last 15 years, and as we were engaged in this conflict, as opposed to thinking out long term, as the imperative was to meet the demands of Iraq and Afghanistan. And so did it atrophy? I don't know. I wasn't around for all of that. There is kind of a sense -- got (ph) a lot of evidence in support (ph) of it (ph) -- that we could be doing better or that skills that were once more easily found in the department are not so present anymore.And so I think he's right about doing that because, well, what Bob Work is doing, especially(ph), has brought a bigger vent (ph) version of what we're thinking of here, right? The third offset (ph) strategy, what's the next step? What are the future threats? You know, how do you deal with these things (INAUDIBLE) basis, but across (INAUDIBLE) all aspects of military life. And war gaming has to be a part of that.The Naval War College does (ph) some fascinating work about China and others that I'm often privy to. So there's a great effort, I think, to reinvigorate a tradition. whether it was a moribund tradition, I will let others decide. But I do know, going into the future, you're going to see a lot of emphasis on that.LEED: OK. Question right here.UNKNOWN: Thanks, Maren. John Evans (ph) from Brookings. And in the interests of full disclosure, I'm an active Army colonel. I'm one of the chief's (ph) senior fellows.Sir, I'd like to turn the conversation to people for just a minute, if we could. So I think we're all kind of aware, and certainly you are, that with regards to our sessions (ph) process, our recruiting process, in particular, pretty easy to go to the heartland of America and recruit soldiers, pretty easy to go to the deep South and recruit soldiers.But what we are beginning to see, I think, is that on the peripheries, where we're seeing pretty significant demographic changes across our society, it's harder and harder to bring diversity into our ranks.Are we at risk 30, 40 years hence of becoming a Praetorian guard for America that doesn't represent the diversity of our society because we're struggling with that aspect?CARSON: (INAUDIBLE) Oklahoma, where we have a great tradition of service, and when you see the recruiting numbers from Oklahoma, Texas, Arkansas and Louisiana, we pull a disproportionate weight in the enlisted ranks, although I often point out that most of the senior leaders in the U.S. Army today are New Englanders because we have the vice from Maine, Perkins from New Hampshire. We have Milley from Boston and McConville (ph) from Boston. And of course, the chief is from New York and Grisoli's (ph) from New York, so all these Northerners leading us Southerners into battle.You know, I don't wake up at night fearing a Praetorian guard that will be somehow separate from the country. The Army -- if any of the services get it right, we get it better than nearly all others do.But it is a recurring challenge to us that our recruiting is based in certain areas of the country. We don't do as well in, say, southern California or south Florida as we should probably (ph) because (ph) We don't put enough resources into those, perhaps, right? We should move there. We need to move our recruiting assets to track the demographic changes in this country.We have to have a better sales pitch. Fewer and fewer young men and women are even capable of serving, between obesity and criminal records. Fewer andfewer aspire to public service of any kind, including (INAUDIBLE) in the military. And then the issue is for that small portion that want to be in the military, making them come to the U.S. Army. Why choose the Army as opposed to the Marine Corps or the Air Force or the Navy.You know, that's the pitch we have to make, right? You know, what -- what are we selling to folks? And so we have to do a better job about that.So I don't worry about us being a Praetorian guard. (INAUDIBLE) for us to be worried about, but if there's any institution in America that has been at the forefront of inclusiveness, diversity -- it's been a model -- it's the U.S. Army and it is still the place -- and this is a remarkable feature of it -- that attracts people who are, you know, first coming to this country or trying to get some toehold on the American dream. You think of the Army as a place to do that. More than any other service, I think, you think of, like, the Army. And it's an amazing thing, and I don't think we're in danger of losing that.But accessions (ph) is a really hard matter for us just because of not the demographic changes, but the psychographic changes. You know, the number of people who want to be in the U.S. military is not what it once was, and the people who can meet our exacting standards are fewer and fewer, too.So we have to recognize the challenge in front of us, but it's a little bit different challenge, perhaps, than the one that you raise. It's about encouraging people to be in the U.S. Army, especially because we do 60,000 a year now. Even at a time of downsizing, you know, the friction in the Army is huge. People are coming in, coming out. And again, this year's recruiting goal is 60,000 young men and women, and no other service, right, has that kind of requirement. And it's a hard thing for us.UNKNOWN: Mr. Secretary, Joe DeFrancisco (ph) from LIDOS (ph). I have a question about the recently released unfunded requirements list from the Army -- not so much what's on it, but what does it say about the cooperation between the secretariat and the Army staff, between the AC and the RC, between Department of the Army and Department of Defense? And lastly, does it have any real meaning, or is it something that Congress wants to just put a mark on the wall with?CARSON: I think it has real meaning, to start with your last question first. It has real meaning in the sense of it shows you where an Army that is stretched thin would like to put more money, where we've taken risk and where we would like to mitigate that risk in the program.So I think it does have meaning, in essence (ph). It's interesting. And it's an important exercise for us. I don't perhaps accept the premise of the question, that there's some kind of underlying friction embodied in it in that I was involved with it, saw it a lot, worked with DOD about it. And you know, it was a fairly seamless task between the AC and the RC, within the R staff and the secretariat, about the UFR list.Congress likes it, of course, to engage in their own battles, in which I used to participate. But I don't know that the UFR list has within it some controversy. I mean, it was -- as we -- we are very good at these kind of things. The Army's (INAUDIBLE) anything, but its UFR lists (INAUDIBLE) end (ph) lists, these kind of matters, right? We use (ph) them. So it was part of that drill. And I think it worked fairly smoothly, with most people being, I think, satisfied with the result of it, including DOD thinking that we had answered the -- their expectation of us.LEED: OK, last question. If not, I'll take one from the Web. OK.UNKNOWN: Sir, Sergeant Major Cantrell (ph). I'm active reserve (ph) major in defense fellowship program. I would just like your perspective, what the Army faces should we face another sequestration. What are your greatest concerns?CARSON: Well, the greatest concerns are we have a $6 billion or $7 billion hit that we're going to take in the upcoming fiscal year right off the bat. And where does that money come from? Because, right, many of our costs are rather sticky. We are downsizing probably from 570,000 to perhaps 450,000 before this is all over. Some even suggest lower than that. But that is a sticky cost. We can't just shed costs overnight in a matter of weeks.And there's only so much we can do each year. More than 20,000 creates unacceptable readiness challenges for us. Our modernization accounts have already been, as I mentioned at the outset, cut to the bone, to historic lows. And those are always the leading indicators of budget downturns and upticks because the money can be easily taken from there.(INAUDIBLE) worry about the readiness of the U.S. Army, and that is what we produce in the end, right? Think of the business of the U.S. Army is. It's ready, sustainable combat units. And so that $7 billion will affect readiness in a profound way. And it's not good for the country.It will also lead invariably to the already skeletal modernization programs being extended, multi-year contracts being broken, to these debates being pushed out into the future about, to you know, how we're going to think of various systems and how we're going to replace it.I mean, all of these kind of things get pushed out and postponed, cut on the margins. And $7 billion for this coming year, that's a big hit to us, again, especially since we are down from where we expected a few years ago. Bit the operations and maintenance accounts are where it's easy to find money, and so readiness will be, right, the immediate casualty of sequestration.Thank you, Sergeant Major, for your service, as well.LEED: Thank you for taking the time to come talk with us today. We really appreciate it. Thanks to all of you for making the time, as well. You're welcome back any time. Come back tomorrow.CARSON: Thank you all for letting me come by. I enjoyed it very much.