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next on this week in defense news, a look at

britain's defense cuts welcome to this week in defense news. stabilizing afghanistan includes suring up its economy. we'll talk to one la gistics contractor who is trying to do just that. plus, what to expect in america's biggest defense show. the association of the united states army conference that starts in washington monday. but first, britain last week released its much anticipated strategic review and while the cuts weren't as deep as many expected, they still stunned the world. prime minister, david cameron vowed that britain would remain a first rate military. but cuts were needed.

the review rimeds cutting overall spending by 8% over four years. slashing personnel. retiring tanks and artillery. withdrawing from germany. retiring jump jets and surveillance and immediately decommissioning the flag shift aircraft carrier ark royal and warships. finally, britain scrapped plans to buy the short takeoff and vertical landing of the joint strike fighter opting for the carrier version instead and installing arresting gear on its future aircraft carrier. the number of jets will be reviewed as one of the carriers being sash, thanks very much for joining us. we really appreciate it. let me start off, the strategic -- the last strategic review took two years to complete. this one seems to be coming together at the last minute in

many respects. was this a strategy driven review or a budget driven review? >> i think the ministry of defense had a lot of opportunity to make this a strategy driven review. they had warning for well over a year. at the end of the day, a lot of the decisions were made because the budget situation in the uk is tough. in particular, the defense made it a priority to bring the defense budget under control and kill this 38-pound black hole that has been identified by the national office. >> which is the amount of money they don't have funding to cover it? it's an 8% cut, but there are some commentators saying it's a 16% cut. where does the total cut figure end up at the end of the day? >> the 8% cut is the real

terms cut out to 2015. but what is slightly concerning is that although the budget goes up in absolute terms, very slightly over the next couple of years, it does turn down at the end of that period. so it is going to get worse in 2014, 2015 rather than starting to get better. i think that's where the real concern on the budget lies. >> prime minister cameron said at the end of the day, he wants british forces to punch well above their weight. what do these cuts mean for the industry that supplies it? >> look, i think for the british military, the winners have been the army. the army stays untouched in terms of operational capabilities certainly until we manage to withdraw from combat operations in afghanistan. a lot of the major army programs, including programs like the frez armored vehicle, look to be fairly untouched. clearly there are cuts in terms of the equipment holdings of

older, heavy armor, but the army comes out of this pretty well and so do its suppliers. the losers, definitely the air force and navy. big cuts to existing programs and certain cuts to their ambitions. that affects all of the supplies to those two forces. >> but the army, is it fair to say the army is going to be the one receiving the cuts in the nec cut round post 2015? >> look, post afghanistan, the big question is then really, do we still need 100,000 men and all of the equipment that has been put into afghanistan or not. the army will really have to start justifying their case post 2015. the air force and the navy have done that in the last four to five months or so. they are the ones who have been under pressure early on. >> what has been the reaction to folks in the uk to the review and what is the reaction you can getting also from your sources both in the united states and elsewhere in europe? >> the big focus in the uk has

been on the aircraft carriers. the idea that we could build aircraft carriers and not have any capability to fly aircraft off those until 2020. the idea that we might take a near ten-year holiday in terms of our carrier capability has been the dominant feature of comment on these defense cuts. and it is certainly a very, very big risk that the government is taking there. probably the single biggest risk in this entire defense review. i think in terms of commentary coming out of the states and feedback i have been receiving, some of it has been a little bit over done. i think it's important to remember that actually in terms of the uk's core combat capabilities, we are still committing to supply 30,000 men for a large scale direct intervention. you won't find any other ally that would be able to, let alone have the ambitions to supply 30,000 men for a major

operations of the likes of iraq in either the first or the second wars there, whenever you look. and i was very surprised that we retained that. we also retained the ambition and ability, that's why the army stays large to provide a brigade for a long-term sustained intervention operation such as we are doing in afghanistan. it's true that the numbers in iraq and the numbers in afghanistan are above what we are currently planning to do. but they always were. we always committed more to those two places than we ever planned to. i think that in an emergency, you should expect the uk to do that again. i think that's misunderstood in the u.s. >> is there growth room or is there capability to bring programs back in line at the end of this review? will some of this equipment be moth balled or scrapped? for example, the surveillance aircraft and things like that. >> i think that the issue of the surveillance aircraft is going to be one of the most

closely watched capabilities. i do think that both aircraft probably suffered from being too focused on precold war, heavy war capabilities, but i think it's unlikely that the ministry of defense will scrap them right away. whether they can regenerate or not or work out in different ways of doing those jobs, my feeling would be it's more likely to be the latter. what is interesting is the uk does have a clear ambition to regenerate a lot of its capabilities in terms of the carriers, in terms of the heavy army, the armor and everything that goes with it and in terms of its surveillance target acquisition capabilities longer term. although programs -- >> we have about 30 seconds left. let me quickly ask you. the biggest shift, the biggest bombshell was the uk backing out of the short landing,

saying they wanted the carrier version for their aircraft. that was supposed to be 138 aircraft and the marines and brits were close joined up making sure that capability happens. what impact does that have overall which is a priority for the united states? >> i think it's going to have significant impact for the f35b. it's probably post the f35c. i think the uk has been disillusioned with the vertical takeoff aircraft. poor performance, a very poor flight test program. it's a lack of confidence in the joint program office. and that was seen in the decision to go for the heavier, more conventional aircraft that the u.s. navy will be using. >> sash, thank you very much. you are welcome back up next, how one contractor is te

♪ where'd you learn to do that so well. ♪ ♪ where'd you learn to do that so well. ♪

the new cadillac srx. the cadillac of crossovers. cadillac. the new standard of the world. one key to a successful counterinsurgency strategy in afghanistan is helping afghans build the skills they need to sustain and grow their economy. one company in afghanistan is trying to do its part by sharing logistics skills with afghans. transport fuel to afghanistan and across the entire country. unlike some competitors, the company prides itself on hiring afghans and training them. here to tell him about the company's strategy is tommy. thanks very much for joining us. >> thanks for having me. >> before we get to the specifics of growing afghanistan's capabilities. i want to start with the fact that most of the supplies come through pakistan. but that -- pakistan closed the

border crossings. tanker trucks and cargo have been hijacked, burned, you guys have lost crews and vehicles. how do you get supplies to afghanistan to help afghanistan if the pakistan border crossings aren't reliable? >> well, keep in mind that doing business in any type of war zone is always difficult, you know, doing business in that part of the world has been defense a defense contractor, making sure our troops are supplied has never been an easy task, but it is a war zone and we mitigate the risks as much as we can, but there are no guarantees in making that happen. if you take a step back and look at the overall big picture, you have to keep in mind that 2,000 to 3,000 trucks move on a daily basis. less than 1% of that is loss due to attack. all in all, pakistan is a very viable supply trade route for us and it also is a reliable partner to us in getting goods

and supplies in. having said that, the u.s. has been sharp and judicious about making sure there are alternate supply routes in getting goods into afghanistan. just until a few years ago, 80% of the goods came through pakistan tan, that has been reduced to 40% now. >> oh really? >> 40% comes through pakistan to afghanistan, the other percent comes through the northern countries with the remaining 20% by air. the u.s. has been very judicious about making sure when the episode, for example, of the nato incident that occurred recently takes place, there are alternate modes to getting supplies. >> and you are saying the risks are not as great as some of us in the media think they are. aside from being a logistics contractor, you are helping improve afghan capabilities to sustain their own economy. nato has a program called afghan first. it is on the iraqi first program that we saw.

what is the driving goal of the program? what are the deadlines and how different is it from the program we saw in iraq? >> over the past several months, we have seen a shift in the u.s. government's policy and focus on this afghan first initiative which really boils down to, rebuilding afghanistan from within, hiring, building in country walls, in country sustainability and with the end goal of being able to bring home our troops. so the afghan first initiative, i think, is a very important one. it's a very important step we have to take. the administration made it clear that beginning of july, they want to begin to wind down of troops in afghanistan so the afghan first initiative plays a strong role so that as our troops come back, as they come home, afghans still have a working class. that there is still an economic and viable country for them. > that's part of the passion. >> quite a mixture. >> exactly. how long before afghans are really able to do for themselves and be able to sustain their economy from some

of the stuff that they are learning from you and other companies? >> that's a difficult question to answer. that would be up to our president and commandeers on ground to make that decision as to how long this war will continue going. at the end of the day, our job is to continue supplying our troops, continue training, giving support to afghans. building their skill sets so they can continue growing and keeping a sustainable country for themselves. >> there are many logistics contractors who have been criticized for hiring third country nationals instead of afghans. you guys have done that. at what point -- you are also a company in profit, how do you balance the u.s. government's aims with your profit aims? >> well for us, we are actually in a very special thing. we have always been an afghan first company. we always operated, managed, and worked with only local nationals. so for us, this is nothing new. i think for a will the of the

other contractors, there will be a process in which they'll need to transition out from third country locals, nationals, to local nationals. >> we have 30 seconds left and i wanted to ask you, what do you do after afghanistan? you guys obviously have been a prominent player, but in 2011, we will see a draw down and some are saying 2015 is the end. what's next? >> there is opportunity in afghanistan as well as the rest of the world. for us, even with the withdrawal of the troops and with the military withdrawing, there will be a lot of work as far as rebuilding afghanistan and recreating stabilization. >> thank you very, very much.

the association of the united states army commonly known as ausa welcomes personnel to its 56th annual meeting this week. here to tell us what to expect

that america's biggest defense show is roger thompson. how is now the vice president of membership and the man responsible for pulling this giant act together. sir, you are expecting 35,000 people to be at the show this year. what are going to be the hottest topics? >> on the floor, the hottest topics are going to be the newest systems that will support an army or an army in a different kind of war than it's been in for quite some time. you will see some emphasis -- more emphasis on precision weapons. you will see a very big thing. there are a number of actions that are sort of pending and i think you're going to see some emphasis by the companies on those. >> combat vehicles? >> combat vehicles is a very prominent one. the armed reconnaissance helicopter, there's a new term for it. >> they call it arh.

>> so do i. that's another one. there will be a lot of interest on that. a lot of network entry stuff. a lot of stuff has to do with command and control and communications in tactical operation center. > in terms of the conference. we talked a lot about families and personnel i think last year. are we going to see a similar focus this year? >> you will see a huge focus on that. at the army display itself, you're going to see a lot of information and discussions with soldiers who have been through the war and they are going to be family forum events. we expect eight army commands to have more than 800 or 900 family representatives there that will attend those forums and have some of their own events that will be in conjunction with this. so i think you're going to see a lot of that as well. resiliency is a big theme. >> folks have been on the deployment wheel for a very extended period of time. let's talk about the growth of

the show. every year, ausa has been getting bigger. it tends to be more packed than its ever been and you run into more old friends than you have in the past doing it. the pentagon is putting pressure on contractors to cut overhead rates. dramatically reduced its footprint earlier this year. what sort of impact do you expect that drive to save money to have on ausa as fewer exhibitors decide to show at your show? >> we are seeing, at least so far we are seeing opposite. we are taking steps for the draw of exhibit space next year. we opened early for the first top twenty companies on our order merit list and they asked for 16% more space for next year than this year. >> so even before this show started, the next show is bigger? >> well, the beginnings of it. we have a space draw that we do this year for next year.

this year because we are growing the space next year as well. we'll be on the top floor exhibit hall and the bottom floor exhibit hall and the walter reid convention center. we will have the whole building and all of the exhibit space. so we are starting to space draw during our annual meeting for next year. >> how do you respond to those who in this modern connected world that we are in, where everybody has an ipad or a blackberry, that shows like this really aren't worth it anymore and they have become dinosaurs. how do you respond to that? >> i think people to people still has a lot to say. there's no better way to interact on discussion of a topic, asking a question of the military leader and an environment where one can have a good interaction than to be face to face. we are seeing business, still come in a big way to have meetings, so you have a lot going on. as you pointed out, the military comes at a reunion, our chapters come with 100 chapters that are coming. you have businesses that are

coming. we'll have 60 meetings that are known now to be scheduled in the convention center. that doesn't even count what they'll do themselves on the exhibit. >> the thousands of side meetings that you will have. >> absolu ly. >> are there going to be major invasions, better internet connectivity and what have you? >> i think all of that. what i said before about command, control communications and the surveillance stuff, i think there's going to be big this year. i think you will see a lot in some of the metallics and the production as it relates to the armored protection that is going on. >> sir, thanks very much. we appreciate it. the show runs monday october 25 to wednesday october 27. admission is free, but limited to qualified persons. to find out more, visit www.ausa.org. tune in next week for our special edition from the ausa show. coming up, why

just four months ago, we taped our program aboard the royal. the royal navy's flag ship. little did we know the ship and britten's entire carrier strike capabilities would be the highest casualties of the country's recent defense review. ark royal will retire immediately. another carrier, the only attack plane that can fly from britain's carriers will both retire next year. britain will build two new

aircraft carriers, stopping them is more costly, but one will enter service around 2020, leaving the nation that invented the aircraft carrier for a decade. it's a short sided decision that robs britain of a diplomatic tool. another bomb shell. britain will equip its carrier with arresting gear to operate the joint strike fighter instead of the joint jump model. that gives britain a more capable jet. but believes the u.s. marine cairns' leading jump jet customer in alert. now the u.s. navy must help its closest ally preserve its highly parishable skills by making available enough hornet finders. that unit would operate as part of the u.s. fleet and from its ships. the cost will be minimal. but the payoff will be enormous by bringing these two great navies even closer together. thanks for joining us. i'll be back next week at the same time. until then, have a great week.