spending and a welcome to "this week in defense news," i'm vago muradian. a new bipartisan report makes the case for a grand strategy to improve america's national security. we get the details from one of its editors. plus why defense contract audits are down despite more money and auditors. but, first, defense strategists have long maintained that cyber space constitutes the fifth domain of warfare after land, sea, air and space. now america's role in cyber operations is coming out of the shadows. last month a leading russian malware company discovered a highly sophisticated virus called flame that it claims was design today gather intelligence on russia's nuclear program. reports tied this to cyber attacks on iran's nuclear facilities directly to the

white house and raised the curtain on what has been a top- secret u.s. capability. is this the dawn of a new era of warfare and what will it mean for u.s. national security? joining me is jim lewis, a senior fellow for the center of strategic and international studies who is one of the world's leading experts on u.s. military cyber operations. jim, welcome to the show. >> thanks for having me >> what do we know about flame and the stuxnet and the role. >> flame and stuxnet are very different. it was a program used to collect intelligence. this morning i was trying to think how many of these i've seen. i got up to 12 when i stopped. this is just part of espionage in the world today, big programs that collect a lot of information. stuxnet was different because it had a special part that went directly after industrial control systems. it destroyed machinery, so stuxnet was like a weapon, flame was like espionage. >> which has been a tool that's been universeally applied whether it's from %b'xsiowovm@

it really wasn't that big a deal. >> how successful have these offensive cyber operations and stuxnet is the one we know the most about, but it's been reported there are numerous other ones that have been used, how successful have they been in disrupting iran's nuclear program? >> probably not as successful as people would like, but they have had some effect and they have slowed it down. we don't know enough details to know where they've worked and where they haven't. but this is a new and politically attractive way to interfere with things because you don't have to worry about downed aircraft or captured pilots or any of the political consequences you get with kinetic weapons, so that makes cyber, even if it's a little less destructive, it makes it a little more attractive. >> what are the dangers of these sorts of systems, for example, even stuxnet which was relatively short, very elegant,

very highly sophisticated coding, that if it gets out could contaminate other systems and capabilities. i mean, it would be generally more damaging. >> it's not clear to me that what's publicly available about stuxnet would be enough to cause damage because there was a strong research effort that looked at industrial control systems, at what they call scatus software, that would be hard to duplicate for anyone but a big country. that said there's a lot of neat stuff on the black market and so we're approaching the point where hacker groups or cyber criminals could do some real damage. >> especially, and also like damage hardware, right? traditionally hacking has been something different from actually seizing up hardware which is what stuxnet was designed to do. >> we're get close to a net that things are going to be able to do damage with things that are practically commodities. >> you mentioned political motives. i wanted to talk to you what

eugene katurski, he says such viruses as cyber terrorism, calling for international talks and treaties to limit their spread. how likely is that? >> almost totally unlikely. now, there are international talks going on now. there's by lateral discussions with the russian that are going pretty well. in fact, they're going on this week. there's bilateral discussions with the chinese that have made some progress. there's an effort in the u.n., there's something called the london process, a lot of talking going on. but no one in their right mind advocates a treaty. how would you verify it, how would you know? is a teenager with a laptop a weapon? so treaty just not a serious proposal. >> does -- it's been reported that the president himself has been the one who's been authorizing these sorts of

action, when you think about the president authorizing an intelligence agency, using intelligence authorities, he's the one that signs. this shows just how they have worked out a chain of command for authorizing the use of these weapons and it leads to the president. >> do you -- the pentagon itself in something we reported last week has adopted what's called a transitional cyber space operations command and control concept. amiliar with that. what is the aim 4g >> it's e operations, under what circumstances, what are the legal ñ:y4÷ conflict ]:bwtehl÷oapply, cyber command, is it restricted in theater. so they've wrestled with a whole set of real operational issues and this is a first slice at trying to figure out we have a new weapon, how do we use it.

>> what it does basically is to set up these sort of command and control centers that each one of the combatant commands that in turn would coordinate with one another and basically end u.hdeadquarters to assume there's a better integrated v]uy9!$cb50oñh response. strategic /ñj that or does the force get ú"the regio combatant commander, and so ?=x÷=ljmrwrvj these shus. the region are the ones who will have the lead in some of these activities. # some éj has been senator mccain about the leaks, vas0ñ÷ leaks, but the accusation is thi information for political gain. but there are others who make the argument that actually this is just a new domain of warfare, there's a lot of activity and there's a lot of stuff that we're even picking up and reporting that doesn't ew4÷ly come

official outlet. talk to us a little bit g= you know, are folks talking too much, is it time for them to be not? >> i don't think it's bad that >kwwe've had this discussion. on ÷$n÷country with this capability. there's probably at least four or 2# talk have a new kind of weapon, and we need to know how the rules apply. and being open about this thing is a good thing. in general i think a lot of us feel that a covert action probably should stay covert, but there's >cn6svalways a de there. in this particular case, in the been following the iran story and the covert actions "sn iran since tr administration, so -- >> one thing leads to another. >> yeah. you start out looking at hx> it's a giveaway. let me 'lsy]>x)$ñnask úduzhl =ehr

you're saying, and years ago when we were ptp2 that some of these folks actually know you have these capabilities. does that yñil9,ñékserve as a d úljgreat powers in this can uñncx ogood, 4x it off a little bit? >> i think they've gotten to the point that they realize this and as far as what i can íc /@ treating it as another weapon, just as you wouldn't send an airplane against the u.s. or a missile nftspu(s" unless you really meant business, you're not going to l start a cyber attack. in that sense they've come to but it would be good to sit down and laws of war apply, here's what - discrimination means, here's done so this disclosure probably some progress. >> sir, thanks very much for joining us. we really appreciate içuz what qeil5u

administration's national security strategy be? that's next. = i didn't quite know thiwhat to expect.our. i'd seen the images on tv, but until you're in the thick of it... anyway the guys in my unit who'd been here before, told me just ride it out, keep my head down and remember the reason i'm here. and we're paying for it all with my cashrewards card from navy federal. we're earning cash back! bring it. brought it. brung. 4 million members. 4 million stories. navy federal credit union.

before the last presidential election, the center for a new american the case for an integrated national security. four years later the world is a different place. bm÷s have crashed, america is out of iraq, revolutions have swept the arabworld, osama bin is dead, washington and its allies are drawing down their

involvement in afghanistan and countries á)'÷c6 brazil and turkey continue to rise. cnet has pulled together a$ strategists to define america's core interests and how best to protect those interests in the future. kristhe next administration, kd÷wmuc joining us. >> thanks for having me. >> i should say it áíyour own. >> it was. >> it's been 2?b?v z[÷> you did the last what's different from the last strategy dk#'új issued four years ago. >> what we did four years ago w0 was two brought together a diverse group of scholars and thinkers and asked them what does yrzy8lamerica v2o,min the what are american interests, how interests and how should we achieve them. four years later we thought it was very important at this moment together a similarly diverse the same questions. and in doing so we hoped to

changed, how has america's role in the world changed, how do we think about our future and how and what we find is that given this diverse group of authors, america's interests are, however, they o)"b to four years ago, we 7['f?ñ even though america's -jz,es,m more important issues that a new president or new administration will grapple with are really quite different. >> let's start off, what is the kind of world that america faces now? what should its core interests be in this ç÷xn ñ what does qú those interests? >> i think if >]út,wyou look ba over the past several presidential administrations and even before then, pùh8 that america's interests in the world remained largely the same 30,000-foot level. and wñ of our citizens, the security >$%gh÷ñnour par allieses around the world, to

ensure that america has a strong and process kv prosperous economy - xhxzmyl s] compete freely and we can be as prosperous as we can together. >> a rules-based economy. >> exactly. a free .jwv 1;gc 1;gc 3grm the world. and then the third thing is to protect universal values, both at home and abroad, and sometimes we find these interests intention with each other and that's where the real challenge for policymakers come. but as we look across any ñaóíx administration in the past u&ñnury, i these are really the core interests that america keeps trying to protect, it's just ;h"obñrñj change. >> when you )íc.

application or í"czz> well, all of them to start with believe america should play a and it's american leadership in but within that general context, they do have some different takes different so, çñibvf professor, says that america selective engagement. the united states oneeds to remain world, that this will best -vvúñ protect america's interests, but we can't do everything. and what we ought to prioritize as a country, he says, is to provide those çnry%$ecoq5

america, he says, but also the world. then we look at someone like richard betts. richard betts would agree that america should maintain ríí3cñn leadership position, but he has a different take. he says if we look at the world, we're actually a lot safer and more v# have been in

but underneath it all it ought to be sort e(,tñ,mof a very str military, and he worries and spills omore ink than the othe authors about, for instance, cutting the defense budget. and then emily slaughter takes a very different take from all the 3oú she says make america strong '"7hd"kl>ñn course, a strong economy and, of ">q,

thanks very much for joining us. we cú up next, why more auditors isn't translating to more savings

on coming to office, the obama administration promised to increase oversight of government contracts, increasing the work force that the defense contract auditing agency to review payments and new contracts. given the pentagon annually spends about $400 billion on goods and services, the administration hope td could recoupe billions of dollars each year by improving contracting accountability. but instead the number of audits has plunge add and savings are dwindling. sarah has been digging into this in the political times. welcome to the show. thank you for having me. >> there have been more auditors than we've had, why are they producing fewer audits? >> i'm not sure if there are more than we've ever had, but definitely the number of auditors has increased by about 20% in the last five years and

the audits reviewed is about 1/3 of that over the last five years. so two real main reasons, the increase of d.o.d. spending in that time and therefore the number of audits they have to perform. also they're really focused on thorough audits, producing more comprehensive reviews of these audits and that's going to slow you down. >> and so they're kind of caught between a rock and a hard place, if they don't audit them well enough, people claim they are inaccurate, and if they overaudit them, it takes too much time. >> that's exactly right. that's the feedback they're getting from congress. what's the practical impact on this on d.o.d. and its suppliers. >> so of the backlog that's about $560 billion, the contracts that they've paid on that are not being reviewed, so there's billions within that that could be considered improper that they are not recouping now and may never recoupe depending on the time that it takes to perform an audit. for suppliers, this is a liability. these contracts date back to

2007, so you're on the hook if the government comes back and says, you know, this is an improper cost. they have some risk there just being -- holding up those contracts. >> they're either held up in payment or whether they're going to have to return to the government at some point eventually. >> right, exactly. >> how long is it going to take for the government to sort of eat its way through this and sort of resolve the whole issue? >> so dcaa has plans, they're increasing their work force by hundreds, close to 1,000 qx" possible. and so some of the concern is that they're going to create a threshold under which they won't review audits or they might do a cursory review, not a full audit. >> what does that mean, sort of a lesser audit, like where are they going to make some of those tradeoffs. >> so right now they have

already done some of that with the defense contracts management agency, the audits that they do before an award to make sure that the contracting officer can negotiate better prices. f]nhm?" pushed those through the dcma and they're doing a desk review. >> is the increased accounting or accountability or anything, increased auditing finding more problems or does the system actually work pretty fair and pretty honestly? a lot of senior executives have told me i'm really invested to get this right because they can -- i can get into a lot of trouble and i don't want to get in trouble with my primary customer. >> e4(c+n

officer and if it's going to return a greater amount of savings. and, again, when you go back that far, there needs to be records pulled or receipts found, employees contacted and some of that becomes questionable. >> when -- by definition, though, aren't all audits thorough? i mean, when they say the greater thoroughness of an audit, what do they exactly mean by that? >> there are audit that is have been thorough. what they mean is they are you go up to the right level, right chain of command and so they're making sure that that level of thoroughness is evident in the work that they do. again, though, that's a lot of documentation that takes time. >> sarah, thanks very much for joining us. i appreciate it. coming up,

for the first time since renewing its focus on asia, u.s. defense secretary leon panetta and the chairman of the joint chiefs of staff, general martin dempsey fanned across the pacific to explain america's new strategy. they stressed washington would boost manpower and resources in a vital region after a decade of war in afghanistan and iraq. and they avoided pointing fingers at china as the principal driver of the strategy, china remains america's leading trading partner and panetta hopes to visit china after recently hosting chinese defense minister at the pentagon. still, china remains the 10,000- pound tiger in every room where pacific security is discussed. its roaring economy has underwritten robust military growth that combined with sweeping territorial claims and

belligerent actions have worried its neighbors. in cooperates, america has welcomed beijing's intimidation and continued regional stability. u.s. ships will operate from singapore, marines will deploy to australia as the philippines and vietnam warm to hosting u.s. forces and ships on a rotational basis. japan will remain a cornerstone ally. but washington must tread a fine line that reassures allies without becoming china's rational dll e for even more belligerence, especially as the economic growth that has been so critical to maintaining chinese internal stability cools. thanks for joining us for "this week in defense news." i'm vago muradian. you can watch this program online at defensenewstv.com or you can e-mail me. before we go, a very happy 237th birthday to the united states army. i'll be back next week at the same time. until then, have a great week.