General Casey: Thank you. And thank you, Sully, for pointing out that I was in a different hotel. [Laughter]. It's always great to know where you're speaking. And as Sully said, you know it's that time of year when breakfast is your second meeting of the day. [Laughter].

This is always a good opportunity coming at the beginning of the year for me to share with you kind of what we're thinking about and what we need to get done in 2010. It falls at the end of a little sequence here because I just came from Fort Bliss yesterday where the Sergeant Major of the Army hosta all of the nominated sergeants majors. So I was out there with 300 sergeants major from all across the Army from our most senior positions, and across the combatant commands. The Secretary and I both start every year talking to them about where we're going and so this is a great opportunity to share that with you all.

I'll tell you that Secretary John McHugh and I are working on a document that we will transmit probably in the next week or two to the Army saying these are our objectives that we want to accomplish in 2010. I'll share some of that thinking with you here.

The first of the year is always a good time to take a step back and assess and look at where you are and figure out where you need to go. And this is a particularly interesting year. As you well know, the 2011 budget is in the can. It will be submitted to the Hill in about 30 days or so, and we'll begin the defense of that budget. So what I'm going to talk to you about is really focused on what we're going to do to build the '12-'17 program.

We've looked at this and assessed the environment and asked ourselves: Where are we' We have been at war for eight and a half years...the Army continues to be stressed and stretched. No question about that.

But, we have also been transforming; we've had significant organizational change since late 2003, early 2004. And the intellectual work for that change was done in 2002, 2003. Is there anybody out there who doesn't think that we know a heck of a lot more about 21st Century warfare today than we did back in 2002 and 2003'

We are actually at a point with the closure of this '11 budget where we can see the completion of the effort we undertook in 2004 to modularize the Army. And we made a conscious decision to press on with that change and with the rebalancing of the skills within those organizations, and to complete it. And really, for the first time, I can see that completion. By the end of FY11, we will have converted all but a handful of the 300 brigades in the Army to modular organizations.

We will have completed the rebalancing for all but a handful of units. This is moving Soldiers out of organizations that were very relevant in the Cold War -- but not as relevant today -- and standing up other formations. We have actually stood down, for example, over 200 tank companies, artillery batteries, and air defense batteries; and we've stood up a corresponding number of Special Forces, civil affairs, psychological operations, military police and engineers.

This is already a fundamentally different Army than it was in 2004, and we'll complete that change in 2011. But as I said, we've learned a lot in the intervening five years, so this is now a good opportunity for us to consolidate where we will be at the end of '11, assess where that is, and then discuss how we adapt ourselves for the '12-'17 program, which is really adapting ourselves for the second decade of the 21st Century. There are some great opportunities here for us.

The second most important element that is influencing us, right now, is with the President's decision on Afghanistan and the drawdown in Iraq. We have a level of clarity in our force requirements for the next several years that we have not had since the surge. And, believe me, that is a great enabler as we look to the future. Most importantly, because it allows us to actually implement this Army Force Generation process in a sustainable way, which is something we just have not been able to do because demand has remained so high.

Let me give you some numbers on that.

Today we have a little under 100,000 Soldiers in Iraq. Eight months from now, we'll have less than 50,000. That's a huge impact. Our portion of the forces going into Afghanistan is just a little over 20,000. We have grown by about 40,000 Soldiers since 2004 and we have about another 17,000 to continue to grow in the next couple of years with the 22,000 additional Soldiers the Secretary of Defense has given us.

So when people ask me how we can execute this additional plus-up in Afghanistan without significantly impacting the stress on the force...that's how.

When we finish this [temporary growth of] 22,000, that's almost 100,000 more Soldiers for the Army than we were in 2004.

So while we've been fighting these wars, this transformation and this growth has put us in a position where it actually is starting to make a difference, and that's very important for us.

The third element -- and this is mostly internal -- is that you don't send 150,000 Soldiers over and back to war every year for five years, and you don't undertake transformation as significant as we have undertaken in the last five years, without having a few loose ends that you need to tie up.

The folks here in uniform know that we are starting to come to grips with the second and third order effects of a modular Army. What's that mean to Family support' What's that mean to training' What's that mean to leader development' That's all different than the division-based Army that most of you all are familiar with, and we have to adapt ourselves to deal with that.

Property accountability: Whooo. We've been making great strides in this area, but I said to the sergeants major yesterday, I haven't been out there opening Conex's lately, but I be we've got some stuff in there. [Laughter]. Just coming out of Iraq - we set ourselves out here a year or so ago to really establish some stewardship principles that allow us to capture the investment of the last several years that's in Conex's and motor pools in Iraq because we have to distribute it to the rest of the force. So we've got some tightening to do there.

Leader development: We've got leader development backlogs in officer and non-commissioned officer education -- largely because those systems weren't tied to an Army operating on a rotational cycle. General Marty Dempsey is looking at that and working that very hard.

The other thing we're seeing, and this is kind-of a plethora of riches in one regard, is when you're rotating Soldiers on a one-year-out, one-year-back, we've got some great combat-seasoned young officers and young non-commissioned officers who haven't operated in garrison. And while they're combat-seasoned, it's been a while since they've set up a training event for themselves. It's been a while since they've done motor stables. And they're just not familiar with operating in a garrison environment. When I talk to the sergeants major, that's a concern for them.

The Army I grew up in in the '70s had a lot of folks who knew their way around garrison but didn't know how to fight. So again, it's something we have to work on, but I'm not ready to throw my hands in the air.

So all those things together set the context for how we're starting to look at 2010.

I'll tell you six things that we're thinking about.

First of all, our primary objective through the end of '11 will be to complete our efforts to restore balance to the Army. We have to do that. You've heard me since 2007 saying we're out of balance. We're so weighed down by current demands that we can't do the things we know we need to do to sustain the all volunteer force and to prepare ourselves to do other things.

As we gradually build dwell -- one year out, two years back for the active force; one year out, four years back for the Guard and Reserve -- we will steady the ship. I can see us getting to a point whereby 2011 we will meet our objectives of one-year-out and two-years-back for about 70 percent of the active force . . . and those that don't make it will be in the 18-to-24 month dwell mode rather than the 12-month dwell mode . . . and for about 80 percent of the Guard and Reserve. And we should have everybody there by 2012.

Now that's based on the plus-up in Afghanistan and the drawdown in Iraq. If something else happens, that's a different story. But I can see us attaining those objectives in '11, and that's hugely important for us as a force. We will continue our efforts to do that, and as I said, it's in the budget, it's planned, and we just need to execute that.

Secondly, we have to continue to prepare our soldiers for success in both theaters. When I was in Iraq right before Christmas, there was a lot of concern that ... when you shift the main effort away from someone who's been the main effort, there's always that anxiety of loss -- that everybody's going to forget about them. Well, we still have 100,000 Soldiers in there. That's more than we have in Afghanistan. I assured them that nobody's going to do anything stupid. That the gains we've achieved in Iraq are too precious, and we'll make sure that they're appropriately resourced as we go through this.

So we have to execute that drawdown and do it in a way where we exercise good stewardship over the resources and get the equipment out, get it processed, and get it back into the rest of the Army. That is a huge task, and I will tell you, that General [Glenn] 'Fuzzy' Webster in 3rd Army is doing an absolutely magnificent job. The Army Materiel Command -- General Ann Dunwoody's folks -- are integrated with 'Fuzzy' in Kuwait, and we are well-postured to implement the drawdown and he's also leading the efforts for the Afghan plus-up to set the theater for that. So that's the second element.

Third, and even though it is one of the imperatives -- Sustain, Prepare, Reset and Transform -- we have to maintain our focus on sustaining our Soldiers, Families and Civilians. And in this, there are some significant programs that we need to push and implement in the next couple of years.

The primary one is Comprehensive Soldier Fitness. This is our program to give all our Soldiers the skills they need not only to deal with the extended deployments and rigors of combat, but also to be better soldiers. So, it's to build resilience and enhance their performance.

Comprehensive Soldier Fitness includes an on-line survey that we put on-line the first of October, and already more than 100,000 Soldiers have taken that. And there is an assessment tool for Families that will go on-line tomorrow. There will be one for [Army] Civilians that will come on-line in about 90 days.

As we have all been working the suicide issue, it has become clearer and clearer to us that if we don't do something on the front end to give our Soldiers, Civilians and Families the skills they need to wrestle with the difficult problems that they're facing, we'll never get ahead of it. So that's a significant priority here for us.

Secondly, we've got to continue to press hard on implementing the Army Family Covenant. The Families continue to be the most stretched part of the force. There's a great article in USA Today about the challenges and stresses and strains on the Families left behind, and that's very real.

And finally, we'll continue our efforts to improve what we're doing for surviving Family members. We started a program about 18 months ago called Survivor Outreach Services when it became apparent to us that -- after five years at war -- we were really still doing casualty assistance. That was about what we were doing. As we went around and talked to surviving Family members, it became clearer and clearer to us that they consider themselves part of an Army family, and more and more of them want to remain attached to that family, so we're putting in place systems that allow us to do that.

So, those first three objectives [for 2010] are focused on really setting the force over the next couple of years.

The last three [objectives for 2010] are focused on setting the conditions for the future. The first of those is to establish an integrated Army Management System for our business operations. And Under Secretary Joe Westphal has taken this on with a vengeance, and we are in the final throes of marrying the congressional requirements to establish a Chief Management Officer with the enterprise efforts that we have been undertaking for the last two years. Like I said, Joe Westphal has been given the mission by [Secretary] John McHugh and he's got the bit in his teeth and he's moving out. But, we have to manage ourselves better.

For me, that has several elements. One is we have to get the right business management structure in place.

Two, we have to use the enterprise in this management process to synchronize the supporting resources to organize, train and equip forces for an Army operating on a rotational model.

How do you get the people to the right place at the right time so that they're for training and for deployment' We've been scrambling to make that happen, but there's not a routine system in place that allows that to happen. How do you get the right equipment there ... the right equipment to the right place at the right time' This is a big internal change for us.

The third key element of this is fixing our requirements process. Some of you know General Bill Reno, and I asked him -- this was probably a year ago now -- to undertake a study of our requirements process. And as only Bill Reno can do, he produced a very, very thorough look at how we develop requirements and gave us some very, very thorough recommendations about how to do that.

But the reality is that we have been developing requirements without having a way of assessing the value of these different requirements across the different silos of the Army. So it's very difficult for me and for the Secretary to answer conclusively: Is this ... putting our money here ... does that give us best value to the Army' And he gave us some very good recommendations to do that, but we have to do that.

Why am I so concerned about this now' There are enough military folks here, I'll use this analogy. Have you ever been in a unit where you had to have two battalions in the same motor pool' You're all packed in there but you're doing your business. Then one of those battalions moves out. So you spread out. Every XO has his own office, and you're feeling pretty good, right' Then the colonel comes in one day and says, 'hey, we've got another unit coming on the post, we've got to put another battalion in your motor pool.' No way. [Laughter]. There's absolutely no way we could ever do that. [Laughter]. We just can't. It's impossible.

Our budget in 2001 in the Army was $70-plus billion. Our budget today is over $230 billion -- base and supplemental. Does anybody here think that's going to continue indefinitely' We're going to get another battalion coming into our motor pool. Right' [Laughter]. We have to have our management systems in place where we get best value for our money. Otherwise -- as the former Chiefs [of Staff] who are here know -- the only choice the Chief has is to take down force structure.

I went back and had the Center of Military History do a study of what's happened to the Army after every war since World War I, and you know what's happened' The Chiefs have been very creative. But, you have two basic choices. You either take down the number of units you have or you hollow out the ones that you have. That's it.

We don't have big aircraft carriers. We don't have big airplanes. Ours is in force structure.

So if we can't figure out how to manage ourselves better, and look, this is not two sheets of toilet paper per person. This is $100 million-type decisions. [Laughter]. And it's hugely important to the future of the Army, so that's why we're taking it on.

The fifth element then is to implement the leader development strategy that TRADOC has been working on for a long time. One of the things that has given us the asymmetric advantage that has made it so successful in this very complex environment is our leaders: officer, non-commissioned officer, warrant officer, and civilians. We are perilously close to having a strategy that we will one, integrate with Army Force Generation. Two, when we do that we'll have a great ability to impact the backlog of both officers and non-commissioned officers who have not been able to attend their leader development courses. And then we've got to synch the professional military education policies and the personnel policies, and again tie those folks back to ARFORGEN. But our commitment to leader development at the highest levels of the Army remains.

The other thing I think you'll see is a more significant effort on the Civilian side. We've been making some headway there, but we have further to go with Civilian leader development than we do with officer and non-commissioned officer development.

The last priority is to refine the Army of the 21st Century. As I said before, we have been on a huge path of organizational change since 2004, and we will complete our conversion to a modular force largely by the end of '11. But we've learned so much in the last five years, we all can look at those modular organizations and say you know, this isn't quite right. That isn't quite right. So that's the discussion we need to have. And really, what we need to do is have the intellectual discussions over the course of this year that will cause us to think through the changes we need to make in the Army for the '12-'17 program, for the second decade of the 21st Century. Again, I know everybody out there has their own lists of things that they would do if they had the con, but we need to do the intellectual work here. We've got to look at the mix of our forces to see if we have the mix right. Infantry for BCTs, infantry, Stryker, heavy. Is that mix right' Have we got the forces properly apportioned between the active [force] and the Guard and Reserve'

We've got to go back to the assumptions we made in 2004 when we started moving in this direction. They're a little different -- particularly with respect to the AC/RC mix, but we've got to go back and look at that. Have we got the right mix of special operations forces and their enablers' Are they properly enabled' So mix is a big question.

Second, and I mentioned this earlier: Have we got modularity right' Are those organizations right' How do we need to change and adapt that' [We have to go back and look at that modularity and get that right, so we have tailorable organizations.]

Third, the network: ... One of the things that gives us the greatest asymmetric advantage is our ability to improve the situational awareness of everyone on the battlefield. And we need to get better unity of effort in our network efforts and in our applications. And we need to apply them evenly across the force.

...Lastly, we need to put ourselves on a rotational cycle. The Army of the 21st Century that we're trying to build is a versatile mix of tailorable and networked organizations operating on a rotational cycle ... because we believe there are three things we're going to have to do over the next decade.

One: sustain our commitment to places like Afghanistan and Iraq [because we have to prevail in our current conflicts]. And even if we're completely out of Iraq by the end of '11 -- and I have no reason to doubt that we won't be -- we're still going to have ten brigades or so deployed in Afghanistan for a while longer than that.

[Two: we have to provide a hedge against uncertainty.]

One of the things we discussed the other day in our Defense Senior Leader Council is all these things we're doing -- Iraq, Afghanistan -- think where you were three to five years before that, and how many of us were thinking that we would be in Iraq and Afghanistan three to five years before we went in there' [One thing we know about predicting the future is that we can only get it 'about right,' so we need a hedge against uncertainty.] We're going to be doing something else in three to five years that none of us is thinking about right now.

[And, three: we need to do these things at a tempo that is predictable for the All-Volunteer force.]

At the risk of being redundant here, I want to put up a slide] at AUSA. If you take a 1.1 million person Army and organize it on a one-year-out, two-years-back cycle for the active force; one-year-out, four-years-back for the Guard and Reserve; that puts you in three force pools: available, 'trained and ready,' and reset across the top. If you look down in the bottom right hand corner [of the slide], that's where the rest of the brigades and the reserve component forces are. They just flow through at a different pace.

So, we're about 90 days away from being able to publish what the force pools look like for '11, '12, and '13. And '11 is going to be a transition year for us and it's not going to be 100 percent matched, but we'll use '11 to bridge to a much closer match by '12.

If you're in that force pool, then you should plan on deploying during that year. For example, if you're in a fires brigade and we don't need a fires brigade but we need route clearance units, then you should plan on changing to a route clearance unit, but still deploy in that window.

That's a much different Army than we were before September 11th [2001]. And it's causing huge internal change and adaptation, but we have to adapt all our supporting policies and reporting systems to support that Army. We've been at this for 24 months. That's where we're going. That will be a huge effort for us, although not too visible on the outside, but it will stand us in much better stead to do the things we need to do in the second decade of the 21st Century.

As I said, we're at a very important point for the Army as we assess where we'll be at the end of '11 and what we need to do differently based on the lessons we've learned for the last five years at war. And then think through those things and operationalize them in the '12-'17 program.

That's where we're headed. It's been great to have an opportunity to share our thinking with you. I look forward to any questions that you might have.