and, you know, one thing is that there was a couple of people used the term market failure before. and i realize that it's a term that has a specific economic meaning. but it kind of rubs me the wrong way from a colloquial sense. because a lot of what's actually happened is rampant market success. that's caused this problem. you know, part of why ad rates have gone down is that advertisers no longer have to waste half their ad budgets on things they don't know whether it works. part of why the unbundling happening with the newspapers is people don't have to pay stuff for things they weren't interesting interested in. -- interested in. and advertisers can go directly to the product they want to be associated with. in a lot of ways, what's happened is 100 very, very positive things all adding up to create this one very serious problem with accountability journalism. >> since i'm one of the people who used the term "market

failure," i just want to explain -- market failure in this sense means a problem that the free market on its own may not solve. and in particular, there's a focus on public affairs, news because there are -- there's a possibility of free writing for news that relates to how to voters in what they want in terms of civic news. if i'm a voter, i can be rationally ignorant of how i should vote in the election because i can say the chance that my vote is actually going to make a difference is of infinite. so i'm not going to invest my time and energy in finding out all about, you know, who i should vote for and all that kind of stuff. i'm going to free-ride on those guys down the street who i know follow this stuff pretty closely and i generally agree with them on things. so i'm not going to pay money. i'm not going to demand news about that.

and this is an issue that has been studied. and is a potential source of insufficient consumer-demand for public affairs reporting. the basic concept of this type of market failure is there's free-riding so you don't get sufficient consumer demand. the other part is, yeah, we're all delighted with the vast quantity that's news that is available for free on the internet. unfortunately, free doesn't pay for a journalist's salary so that's another part of the problem. >> okay. we're going to have to call an end to it here and continue this in the coffee break. please join me in thanking our wonderful panel and a great discussion. [applause]

[inaudible conversations]

[inaudible conversations] >> and we'll take you on over to the center for strategic and international studies in washington. in washington. looking for -- looking in on a conference -- looking at pentagon efforts on logistics and efforts to operate more efficiently using new technology. the featured speaker in this portion of the conference is the defense department undersecretary for logistic ashston carter. it should be getting way here. one of the first two live events and the second one coming up at noon and that is daniel benjamin who is the coordinator of counterterrorism at the state department. that will be live noon here on c-span2. the president today heading to charlotte, north carolina, to talk about jobs this as the jobs number just comes out from march. the associated press reporting the unemployment rates staying at same at 9.7%. the president is headed to charlotte, north carolina.

visiting a lithium ion battery plant that the associated press said received money to hire new workers under the stimulus. that will be live under the stimulus on c-span. >> ladies and gentlemen, if you would kindly gather up your next round of meal, your extra cup of coffee. we're not -- we're not exactly ready to begin, but i know that it takes more than 11 seconds for folks to find their seats. you know, one of the beautiful things about coming out of the national security culture is that you give requests and people think it's an order and they follow it. it really makes life so much easier. and i really appreciate that. there was a time in my life when i was a fifth grade teacher. and i will tell you it's the only job i ever had where i had to neil down and pray for the strength to make it through the day. so anytime since then when i --

after i came to washington that i had the potential for a difficult day, i just remembered that and it makes it a lot easier. plus, of course, teaching fifth grade is really very, very good preparation for working in washington because there is so much fifth grade behavior that goes on here. [laughter] >> attention span, focus on real outcomes, et cetera. welcome to csis and welcome to our event on defense modernization and information systems in the 21st century. i have a couple of housekeeping items that i would like to lay out for you. the first is please take your cell phones, your pagers, your other electronic devices that tend to interrupt or make noise at inappropriate times. and either turn them really loud so we'll know who to blame or turn them off all together. [laughter] >> i actually should do that to my own as well while i'm saying that to you.

secondly, you'll see that we actually have quite a full agenda. and i'm really grateful to all of you for coming out here this morning. it's, you know -- good friday is a difficult day. it's a day where a lot of people have other plans and other opportunities. and so we want to make sure that we recognize the value of the sacrifice you make for being here today. our agenda has one break in it. it's between the two panels. and i would encourage you to recognize that and to conduct yourself accordingly. if you need to take your own break independent of that, please try to do so so in a nondisruptive manner, i think a lot of us will appreciate it. the reason we're doing it at csis -- our charter actually calls for us to foster public discussion and debate on critical national security issues. and international issues. and certainly the question of logistics and logistic support to operations is in that category.

but as many of you know, because most of you are in that business, logistics often gets shorted when it comes to real visibility and public discussion and even recognition of the importance of the process. you're all familiar with the old song that says amateurs do strategy professionals do logistics. and that, in fact, i think, proves itself time and time again when we get into real operations. i think the criticalality of the subject matter is essentially. i come from alligator country. that's where i grew up. and i think often about that when i hear people criticizing the tail and trying to emphasize the tooth as if somehow they're not connected. if you watch an alligator kill, you'll know the tail is as important as the teeth to doing that killing and eating. the survival of the alligator critically depends upon a robust powerful tail. and i think that's the way i like to think about logistics and i think you'll see as we go

through the course of the morning that much of that comes into bear. we also for both our speakers and our panels we have anticipated leaving time open for questions from the floor. i would like to ask you to have those questions be guided by the subject matter of the day. and let's focus on the logistics. there's plenty of national and security topics that are always prominent and easy to get at. but this is -- this is the day for logistics and i would hope that we'll take advantage of the opportunity with the excellent panelists and speakers we have here today to focus on those questions. so with that i welcome you all. i'm going to turn the microphone over now to my boss, dr. john hamre, the president and ceo at the center of strategic and international studies. dr. hamre? [applause] >> good morning, everybody. gosh, it just shows what a free breakfast will do to bring out a crowd. i can't imagine on good friday having an audience like this. but ash, it's got to be you. it's the only reason.

no, seriously. i'm delighted to have you all here. it's an important -- such an important topic. i used to quite regularly go out to national training center out at fort irwin. you know, i'd see the -- you know, the brigade commander beginning, you know, and i'd see the after-action. he really whopped and it wasn't because of material he hadn't kept track of. and it's such an important part of the world. and we don't pay public policy attention to it. i had a conversation with ash about this. and we were -- i guess i was probably teasing about the endless tanker process. and he said i'll come over but i don't want to do anything about tankers. and i said well, let's do something about logistics. and he said i'd actually like to do that. i spent far more of my product

time so ash, thank you for agreeing to do that. ash and i go back a very long ways. and i will tell you my first experience with ash is when he was at -- what we called pnae and now we call it cat or cape. ash was interviewing me and he decided i was not at all qualified to be working for him which was -- and he was right. because he needed far more technical competence than i had. and he's brought that technical expertise to every one of his positions. and i think now he's just doing a fabulous job. ash, we're delighted you're here. this is -- you know, it is an unusual thing to be having a conference especially with this sort of a turnout. the quality of this audience is remarkable. and i think it's a testament to you and the topic. ash, why don't you come and join us. [applause] >> thank you, john. and csis for having me.

my -- i've learned so much from john hamre. and every day i look around the department of defense and there's one of his managerial accomplishments, one of his managerial creations in front of me. one of the best, most skilled stewards and coos the department's ever have. i see jack gansler a predecessor who added l to at & l. and among many other things jack did. jack, i have to tell you my children are already dismayed at the length of the title. they tell their father is undersecretary of defense. of course, no one knows what an undersecretary is. and it sounds very beneath. so underneath, underwear, undersecretary. and then it's acquisition technology and logisticses way too long and obscure for an 18-year-old and a 21-year-old to explain. they always say why can't you be cia director?

[laughter] >> it's got some zip to it. i'm very grateful to have the opportunity to come here. it is a pleasure. and a welcomed relief to talk about something other than the tanker competition or the joint strike fighter. or any of the other acquisition programs. and it's particularly welcomed to me because what i want to talk about today is something very dear to my heart which is the role of acquisition of technology and logistics support in the current wars we're here. so when john gave me the opportunity to speak about that subject, i leapt at the opportunity. last january 5th, it was, that secretary gates offered me this job -- and one of the things he said to me at that time he had

said publicly many times which is, ash, the troops are at war and the pentagon is not. and especially at & l. and i took that on board. and i've tried to make it a priority of at & l to support the wars. and i'd like to share with you the ways in which we are trying to do that. first with rapid and responsive acquisition support to the war fighter. secondly, with management of contractors on the battlefield, contingency contracting. third, the special case of countering improvised explosive devices, ieds. and then fourth and for most of what i have to say, the topic of this day's conference, which is logistics. but let me say something about rapid acquisition and contingency contracting. and counter-ied first.

i'll start with the question that secretary gates posed in his foreign affairs article about a year and a half ago. that jack gansler had posed before that in a very important science board study on the same subject. and that was, why is it necessary to bypass existing institutions and procedures to get the capabilities needed to protect u.s. troops and fight ongoing wars? why is it necessary to bypass the existing institutions? i experience this every day. and we are -- to get back to dave and his alligators. busy fighting the alligators but also trying to drain the swafrn. -- swamp at the same time and fix this same problem in a more structural way. let me describe the catch-22s that one comes to as a department in trying to respond rapidly to urgent needs from the theater. the first is a catch-22 to get

over is how do you know what the requirement is? how many uav caps do we need? how much persistent surveillance do we need? how many mraps do we need? in many cases for an ongoing and evolving conflict and a piece of equipment that we're just beginning to learn how to use, that's an unanswerable question. when one embarks upon the acquisition. we don't know. we know we need some. we don't know exactly how many. and yet we have a system that won't get started until it knows what the final answer is. and i'll give you an example in a moment of getting over that. that is if you don't know the requirement, how can you begin to acquire? but in some cases it's unreasonable for us to know what the requirement is. we just know we need to get started. and every day you spend trying

to decide ultimately how many you need is another day you're waiting to get started. another day that piece of equipment isn't in the war fighter's hands. second catch-22 is, wouldn't it be worth waiting for something better? and, of course, in time you can have something better. but right now i'm focused on the next weeks and months in afghanistan. so something that's better that delivers next year or the year after i'm not interested right now. so the 80% solution secretary gates says is something one has to learn to manage to in the case of support to rapid acquisition. the third is, well, we could get this but? -- but is this something we want in the long run, to fit in the long-range vision of the marine corps table of equipment? maybe not. maybe it's just for this fight.

which if we win the fight, it will be worth having something that doesn't quite fit in to the long-range future. and the last, of course, is how do we get money quickly? congress provides the money. congress appropriately keeps a close eye. doesn't give us open-ended ability, open funds and so forth. and so there's a constant interaction with the congress and an urgency in what we're doing and when we're able to do, then we don't have to hold the delivery to the war fighter. an example i would give you in getting over these are four catch-22s which every day this is blocking and tackling. i say my job is -- i guess thomas edison said of his job 90% perspiration, 10% inspiration. i'll give you an example of the

mrap atv which is the all-terrain vehicle mrap that we are fielding right now in afghanistan. and just to show you how fast the system can go when we really light a fire under it. we completed the source selection for the mrap atv in july, last summer. the first atvs arrived in afghanistan in september. and we've already accepted more than 5,000 atvs. and almost 1,000 of them have actually been fielded, that is in the hands of soldiers by now. that's very different from your 10 and 15-year program of record. that's less than a 10-month program of record. vehicles actually fielded and in the hands of the soldiers. initially when we set out to say how many are we going to buy and

how many are we going to produce per month, the -- our logicians were saying and the commanders they could only field 500 vehicles per month. the reasons for that are -- you logicians will understand it's for want of a nail phenomenon. you can't bring the vehicles in because you don't have a place to park them. you don't have a place to park them because you don't have the concrete. you don't have the concrete because they don't make concrete in afghanistan. you got to go to pakistan and get your concrete and truck it in. so you have to have the trucks. you have to have the parking lot for a truck and around and around and around you go. everything is like that in afghanistan. and so it wasn't that we couldn't produce more vehicles. it's that at that time we didn't think we could absorb more. nevertheless, i decided that we were going to produce them at a rate of 1,000 a month anyway.

if we had extra vehicles in charleston or at oshkosh or in kandahar or at bagram, okay. better an mrap without a soldier than a soldier without an mrap first of all. second, we could use the excess vehicles for training so that every soldier -- and this is now the case in afghanistan. the troops that are arriving have their driver's license on the mrap. they don't have to be brought out from the field, taught to drive the vehicle and then sent back out in the field with the vehicle. they arrive ready to go. they fall in on the vehicle. it's a familiar piece of equipment to them. so i thought we ought to buy them for the training ranges. so out at fort irwin where i was at a couple of weeks where john mentioned earlier there are mraps and 29 palms for the marines there are mrap atvs. they are there so the soldiers

can learn how to use them. so i wanted to buy more than we thought we could field. and we did. and i also had in the back of my mind, you know, i'll bet you we'll figure out a way to increase that number from 500 per month to a larger number. because i think when the troops get them, they'll like them. when the commanders see them, they'll like them and they'll figure out a way how to get them. and it begins in oshkosh and ends up on a fob in afghanistan. every piece of that and tried to see if we could widen that artery and we have now. so we're now up to being able to absorb 1,000 a month. so it's a good thing i'm making 1,000 a month. but there's an example of not waiting for the final answer. but beginning to acquire and ramp up to the 1,000 a month level figuring -- we'll figure it out later.

we'll figure out in a few months. we don't have to figure out everything in order to get started with anything. so the matv is an example that -- and i could give you many, many more examples where we have succeeded in supporting the war fighter. but it's always been by hot wiring the system. rather than by driving down an open lane. and it's really true that we have an acquisition system which is -- still has the cold war vestage of it. namely designed to prepare for a future war rather than -- or to conduct a current war. and we're only still eight years into this learning how to have a system which can conduct current wars. learn from experience. respond to stimuli from the battlefield, adapt.

and deliver what the current war fighter needs. we're taking some steps to put that on a more enduring foundation. maybe in another time i'll come back, john, and share our thoughts -- jack gansler had some thoughts on that already. i told the entire acquisition community that responding to operational needs is their highest priority. if you're a service acquisition executive, if you're a peo, your highest priority is responding to those. and also giving them a menu of ways that they can work within the system but work quickly. so i think we're getting the mrap lesson into the acquisition system at large. i'll say something about contingency contractors. i don't need to tell this

audience that the -- that our way of waging war brings with every soldier to the battlefield approximately one contractor. it's interesting to look back on the numbers. in world war ii, there was one contractor for every service member. in vietnam, one for every five. in iraq, one for every 1.2 service members. in afghanistan, one for every.7. in other words, more contractors than soldiers. because of the heavy reliance we have now on building new fobs and construction required to do that, most of the transportation is done by contractors. so there are 107,000 contractors now in afghanistan. of whom about three-quarters are local nationals, which is not a

matter insignificant of the economy for afghanistan. and i think it's fair to say that first in iraq and now in afghanistan, with these ratios, we have been on a learning curve about how to manage a contractor work force that large. and for sure everything has not been done perfectly over these years. and part of that is because it was such a new thing to have so many. part of it is because in war you have to act. and part of it, i suppose, we kept telling ourselves it's not going to go on much longer. and we don't have to get good at this. we don't have to get used to it. we do have to get good at it and we do have to get used to it and we do have to learn how to do this better. and we are getting better. i won't say perfect yet. we have a number of very constructive oversight bodies.

the commission of war fighting, they are going down the same list that we are to improve the quality of the -- the controls and so forth that we apply to contingency contracting without sacrificing effectiveness. i'll give you an example. in afghanistan today, which is the use of cash. cash we used a lot of in iraq. and initially in afghanistan. obviously, that increases the vulnerability to fraud. in the last year, we've reduced our cash payments in afghanistan from 39% to 9%. very dramatic. how are we doing that? we're doing that by banking by phone. believe it or not, in afghanistan, many people bank by phone. and are willing to bank by phone. now we're paying them on their

cell phone rather than with cash. greatly reduces the possibility of fraud. and made very dramatic progress in that regard in just the last year. i'll give you another example. many of you probably know what a contracting officer representative or corps is. the corps isn't the person who writes the contract. the corps is the person who make sure that the contract is being carried out in the required way. any of us could be trained as a corps within a short time. it would take us longer to be trained as a contracting officer. that is to be able to contract on behalf of the united states government. and spend money. corps is easier and can be in theater a part-time job. we've been doing a great deal to improve contracting officer representative presence in afghanistan. this is not a mundane thing at all.

i'll give you some examples. in the last year, since i've been watching these figures, in afghanistan, our contracting officer representing force which at the beginning was only 38% of the requirement is now 84%. so we've got 84%. still not 100%. but 84% of the contracting officer representative posts filled that we should have filled. we are now -- on all the army and marine corps units before they deploy to afghanistan are training within the units, contractor cors. so they deploy with that skill because now it's recognized that is part of the skill-set required for a modern expeditionary force. so they deploy with people who know