Thank you, John [Allen], for that kind introduction and for the opportunity to speak here today.

I especially look forward to engaging in questions and answers after my prepared remarks -- so I will get right to the point.

Three days ago the Army unveiled our budget plan as part of the overall Defense Department submission for Fiscal Year 2020. It is still being assessed and picked over -- and, in some cases, picked at -- given the significant changes it contains.

Now, over the years this town has heard its share of talk about defense transformations, pivots, rebalances, offsets, shifting paradigms… and much more.

But if you look at the totality of what we are proposing, it is arguable that this budget plan represents the most consequential shift in the way the U.S. Army is organized and equipped in more than 40 years; a shift towards what is required to compete with, deter, and -- if necessary -- defeat our most likely and lethal adversaries in the European and Pacific theaters.

So, this afternoon, I will:
• Provide the strategic context and real-world military rationale underlying the Army's modernization vision;

• Then, highlight some of the key shifts and decisions undertaken by the Army leadership team -- in research, development, and procurement especially -- to make that FY 20 budget plan executable -- and affordable.

•And, finally, discuss the extensive modernization opportunities that now exist based on these decisions.

As a starting point, and in some respects, the Army has been in this position before. In the wake of Vietnam the Army saw a revolution in doctrine, organization, training, and equipping -- the latter most famously being the Apache and Blackhawk helicopters, Bradley Fighting Vehicle, M-1 Abrams tank, the Patriot air and missile defense system -- the so-called "Big Five" plus the Multiple Launch Rocket System.

But, the Army must again confront the potential for conflict against a modern military force which, unlike the U.S., has not spent nearly two decades fighting insurgents; potential adversaries that have studied U.S. strengths and vulnerabilities, and are steadily chipping away at our technological advantage.

Once again "great power competition," as the National Defense Strategy put it, drives our priorities.

The People's Republic of China - our long-term strategic pacing threat -- is aggressively modernizing capabilities to expand their military reach within and beyond the First Island Chain.

U.S. ships, combat aircraft, and installations in the region are now vulnerable to thousands of Chinese missiles with increasing range and accuracy.

For the Army this puts a premium on integrated air and missile defense systems, long range artillery and other ground capabilities that can be forward deployed to thwart Chinese attacks, disrupt Chinese movement and limit Chinese options. To state the obvious, it is very difficult to sink or shoot down an island

Our more immediate high-end pacing threat -- and the driver of most of the Army's near-term initiatives for training, equipping, and modernization -- is The Russian Federation.
Russia is able to use its short interior lines to project military might beyond its borders, and present operational challenges if we must respond to incursions against our NATO allies.

On the ground:
• Advanced Russian cyber and electronic warfare capabilities could play havoc with our space- and network-dependent systems;
• Sophisticated Russia air-missile defense systems -- radars, surface-to-air missiles and more -- would hamper air support and movement of U.S. ground forces; and
• Their long range field artillery and anti-armor weaponry present threats to our heavy formations in ways not seen since the latter years of the Cold War.

Both Russia and China are leveraging new tactics and technologies -- military and otherwise -- to create effective forms of standoff.

However, each still faces significant military disadvantages -- at least compared to the U.S. -- along with domestic political and economic challenges. Being the proverbial home team means Russia and China just need to inflict high enough costs to cow U.S. allies and damage our credibility.

The Army of today -- as battle-hardened as it may be -- lacks the next-generation weapons and other capabilities that are needed to confront these most sophisticated adversaries as part of truly Joint and networked force.

We are reaching the limit of what can be added to and improved on platforms that have been the mainstay of the Army for decades.

In all, "going to war with the Army you have" with another modern military in the future is a losing, if not a calamitous proposition.

Consequently, the Army is faced, once again, with the challenge of making the investments and hard choices necessary to win against modern adversaries while recovering and maintaining a high state of readiness.

Unlike after Vietnam, we must do so in a way that retains the hard-earned understanding that will allow us to adapt, if needed, to deal with the irregular warfare missions that have inflicted such a steep cost on the Army over the past Century.

For example, we recognize that training and advising the militaries of partner nations -- whether in a counterinsurgency or peacetime setting -- will continue to be an Army requirement.

So the Army is committed to the Security Force Assistance Brigades, which were created and manned for just that purpose, so we are not forced to stand-up ad-hoc structures in the future.

To strike that balance the Army needed first to have the right institutional structures, processes, and priorities in place. In the last two years, the Service leadership -- civilian and uniformed -- have:

• Used the budget relief provided by this administration in FY 2018 and 2019 to remedy severe readiness gaps across the force (to include increasing the number of units going through Combat Training Center rotations); then

• Defined and institutionalized a concept of "how we will fight" in this environment against a defined threat -- we call it "Multi-Domain Operations" or MDO; and

• Stood up Army Futures Command to focus and rationalize Army modernization, by integrating our concepts and capabilities against our priorities; and, finally,

• Scrubbed and aligned billions of dollars to the Army modernization portfolio -- to focus on six major priority areas and 30 signature programs; these modernization priorities will get more funding now and protection from becoming "bill-payers" in the future.

Investment Opportunities exist within our six major modernization priorities over the Five Year Defense Plan, or FYDP. A few programs to highlight under each priority are:

First, nearly $5.7 billion total -- including $1.3 billion in FY 20 -- for Long Range Precision Fires. That will fund:
• Fielding hypersonic systems that can stay ahead of recent Russian and Chinese advan�ces and put their forces at risk from a distance;
• A Precision Strike missile that doubles the firepower and increases the range of existing missile artillery systems like MLRS and ATACMs; and
• Extended Range Cannon Artillery with the capability to fire accurately and with volume up to 70 kilometers.

Second, more than $13.2 billion -- including almost $2 billion in FY 20 -- for Next Generation Combat Vehicles, to include a robotic and optionally manned combat vehicle that includes artificial intelligence.

Third, more than $4.7 billion -- including almost $800 million in FY 20 -- for Future Vertical Lift to replace the Army's ageing helicopter fleet and provide aerial platforms with greater speed, maneuverability, and lethality. Specifically, an attack/recon aircraft and a long-range aircraft with a generational leap in capability including optionally manned.

Fourth, more than $12.5 billion -- including $2.3 billion in FY 20 -- for a new command, control, and communications network that will leverage commercial technologies and space-based systems, to provide needed capacity, resiliency, and agility while reducing force's electromagnetic signature.

Fifth, nearly $8.8 billion - including $1.4 billion in FY 20 -- for modernizing air and missile defense. The Army can no longer presume to operate in an environment -- as we have since the fall of the Berlin Wall -- in which the U.S. has air supremacy. This will revitalize atrophied short range air defenses, and support procurement of an Integrated Fire Protection Capability like Iron-Dome and others.

Sixth, but certainly not least, more than $6.7 billion -- including $845 million in FY 20 - for Soldier Lethality for those at the tip of the spear. This funding supports:
• An Integrated Visual Augmentation system (IVAS) that employs artificial intelligence and digital-fused images to give infantrymen superior battlefield awareness, to include real-time performance data to improve decision making. This is a life-saving system for American soldiers and Microsoft is fully committed to this program; and
• A next generation squad weapon and rifle that will leap beyond the current World War II-era physics still used in most of our small arms.

FY 20 DELIBERATIONS

This brings us to the perennial challenge of any modernization investment strategy -- how to pay for it and from where.

First, we needed to prioritize requirements -- for near-term contingencies and longer-term threats; then, second, exert the fiscal discipline to divest legacy programs and make other tough choices needed to meet those requirements without going back to the White House or Congress later for additional funding.

Recognizing that defense budgets will, in all reality, stay relatively flat or potentially decline, resources would need to be found within the projected Army top line budget -- more than $30 billion across the FYDP.

So the Secretary, General Milley, Vice Chief General McConville, the major commanders, and I spent last spring and summer scouring every corner and crevice of the Army budget. The process has been referred to as "Night Court" because everyone advocating for a program was required to make their case in person to the four of us; to be clear, this was not a staff product.

In over 70 hours of meetings, we went through more than 500 programs in all, looking at each one, assessing and asking ourselves if it was more important than our top modernization priorities or if the program in question enables the Army to execute multi-domain operations. Nothing was sacrosanct.

Over five years, it all added up to real dollars.

This includes more than $8 billion in cost avoidance measures; which in English, means we found ways to curb the projected rate of spending from prior budget plans.

We slowed the Army's projected growth in end-strength to 2,000 year over year starting in FY19 at 476,000 to 488,000 active component Soldiers by FY 2024.

This approach means we are not rushing to fill the ranks, and will have more consistent quality in our recruiting.

We slimmed headquarters and administration functions while adding personnel to areas where they were needed -- such as recruiting and military specialties that will be in high demand for the multi-domain fight.

Our reform initiatives netted some $22B in savings. This included divesting from many incumbent programs - more than 90 programs eliminated and just as many reduced. Many of these systems continue to serve the Army well, but fully funding the present and future at the same time is simply not possible.

So this budget plan stops further production and block upgrades of the Bradley Fighting Vehicle by 2023. Its frame and chassis date from the early 1980s can no longer accommodate - or power - the extra capabilities and greater firepower needed to counter Russian defenses without a costly and inefficient overhaul.

We are also halting further modernization of the CH-47F cargo helicopter. Although the platform originally dates back to the 1960s, the Army's recent investment in the Block I upgrade make it the youngest fleet in the Army… a de-facto service life of less than eight years. The CH-47F Block I provides an extremely capable heavy lift capacity and the Army currently has over 10 percent more Chinooks than required.

Finally, the Army is reducing planned spending on the Joint Light Tactical Vehicle Program by nearly $800 million over the FYDP. This reduction will result in roughly 1900 fewer vehicles procured over the program life. Unlike the Cold War-era platforms just discussed, the JLTV is a new vehicle -- more survivable than a Humvee, more maneuverable than an MRAP.

There's no doubt the Army needs it in the future -- just not at the numbers of the original program of record when the requirements of a high-intensity land conflict are considered. By 2028, this shift will give the Army a fleet mix of 55,000 Humvees, 49,000 JLTVs, and 800 Infantry Squad Vehicles -- more than 100,000 troop transport vehicles in all.

Other cuts included everything from trailers, trucks, forklifts and other equipment. In these cases it was less a matter of warfighting strategy than the simple fact we had more than was needed. Not every unit, based on their function, needed a full complement of the most advanced and expensive kit.

Under this plan, the share of the Army modernization budget will shift, slowly but inexorably, from production and upgrade of existing systems, about 80 percent of the portfolio now, to new programs and capabilities, which should make up roughly half of all modernization funding by FY 2023.

Forthright -- and ruthless -- realism underscored these decisions.

And, our leadership has pledged that if Budget Control Act driven cuts return, if risk must be taken in the Army budget, let the risk be taken elsewhere, not in the weapons and equipment our soldiers will need to fight and win.

It was not lost on us the consequences associated with these decisions -- or the symbolism.

FY 20 marks when the Army began to transition from the Big Five -- and many other legacy systems developed since -- towards capabilities designed and needed for the 21st Century.

To be sure there will be some economic dislocation as a result of slowed or, in some cases, shuttered production lines.

But as I illustrated in that earlier, and purposefully long, discussion of the areas where funds are being added for future growth, this budget plan represents a tremendous opportunity as well. Especially for those in industry who are willing to step up their R&D investments, innovate, and partner with us in this venture.

In all, more than $57 billion over the course of this FYDP are dedicated to the modernization priorities and our signature programs, not including opportunities such as Artificial Intelligence, Directed Energy, Quantum Computing, and Space.

Looking ahead, when it comes to Army reform and change, we are -- to paraphrase Churchill -- closer to the end of the beginning than vice versa.

• As Secretary Esper has said, the Army's industrial-age personnel system is the next big institutional reform priority;

• The Army will take a hard look at its force structure as well -- the balance between heavy and light, fire and maneuver, the number and composition of brigade combat teams and other formations; and

• We will continue to press ahead with organizational reforms and efficiencies -- with a savings target of $10 billion over the FY 21-25 FYDP.

Even as we make this long-needed shift to modernization, the focus on readiness will not waver -- in equipping, training, and sustainment. It remains Job One.

The plan just discussed extends past individual Army leaders and even administrations. And, like anything else in government, it will be affected by fiscal circumstances beyond our control. But I can say with some certainty that the core elements and main strategic choices in -the budget of Fiscal Years 18, 19, 20, and the work beginning in FY21, with the support of the administration and the Congress, will set shifts in motion that cannot be easily undone; changes designed to field the Army capabilities needed by 2028, understanding that innovation and reform will and must continue beyond the next decade.

And let there be no doubt the Army leadership -- uniformed and civilian, with the full backing of Acting Secretary Shanahan -- own this budget, believe in this budget and will fight for it.

That much we owe Soldiers and their families, those who have borne the brunt and human cost of America's wars since 9/11, together we will confront the threats to our nation that lie ahead.

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