Shortlist Sketched for DoD Team
Sources Expect Obama To Focus First on Wars
By JOHN T. BENNETT
Published: 10 November 2008
Even as U.S. defense insiders and observers speculated about possible picks for the next administration's top Pentagon jobs, they noted that the team's first-year focus will be pretty clear: fulfilling Barack Obama's campaign pledges to draw down in Iraq and devote more resources to Afghanistan.
But they said DoD appointees also must be ready to tackle a slew of unresolved budgetary and weapon-purchasing issues, including:
■ What is the proper use - and size and scope - of wartime supplemental spending bills?
■ Will other federal priorities squeeze DoD budgets?
■ How can DoD rein in skyrocketing weapon program costs?
■ Does the military need more F-22 Raptor fighters than the 203 the Air Force now has funded or partially funded?
■ Shutter the C-17 Globemaster cargo plane or shutter the production line?
■ Are major cuts needed to high-profile and costly programs such as the Army's Future Combat Systems (FCS) and the Air Force-run Transformational Satellite (TSAT)?
"They're also going to be under intense pressure to take action on F-22 and KC-X" tanker, said Christopher Bolkcom, a defense and aerospace analyst at the Washington-based Congressional Research Service. "C-17 will be right there, as well, but it's not as time-sensitive."
Most of the other immediate decisions the Obama Pentagon team will face are "of operational import, not acquisitions," yet those choices will shape future budgets, Bolkcom said. For example, money freed up by curtailing efforts in Iraq could be used to spare programs from the chopping block.
Analysts and former officials said the new Pentagon team must be well-versed in the nitty-gritty details of troubled programs in limbo, the ones about which the Bush administration made no final decision: TSAT, the Air Force tanker, and the Air Force-run Combat Search and Rescue helicopter.
Other issues ripe for policy decisions include the F-35 alternative engine program - which the Bush team loathed but Congress supported - as well as whether to continue the Navy's DDG 1000 destroyer effort or build upgraded DDG 51s.
Few Cuts Expected Soon
No large program cuts are generally expected in the 2010 budget proposal, now being prepped for delivery to Congress early next year.
"Obama has apparently agreed with his defense [advisers] that he will not cut the DoD budget within his first 18 months in office," Morgan Stanley defense analysts wrote in a post-election report.
But few expect Obama to boost defense spending - "the days of large year-over-year DoD budget increases may be over," the analysts wrote - and cuts could arrive in the 2011 or 2012 budgets.
"The Obama administration intends to curtail defense spending growth, with an eye for a potential defense budget peak possibly in 2010 or the year after (FY11/FY12)," they wrote. "Obama's defense [team] intends to attack management of the highly inefficient O&M accounts, which if successful could yield more dollars to support weapons funding."
Defense analysts were already speculating about winners and losers. Many said the Air Force and Raptor-maker Lockheed Martin face an uphill battle in convincing the new administration to buy more of the fifth-generation fighters. The Morgan Stanley report also listed FCS and missile defense as having a "questionable outlook."
Winners identified by the investment firm included the triservice, international F-35, Navy surface ships and submarines, UAVs, space programs and tools for cyber warfare.
Winning and losing firms alike will face more pressure to perform, said Carter Copeland, a defense analyst with Barclays Capital.
"It's pretty clear that it is as important as ever [for defense companies] to have more and more contracts performing on time and on budget.
To ensure a smooth transition, special procedures were put in place earlier this year that allowed the Republican and Democratic campaigns to pull together groups of individuals who were expected to do transition work. They received security clearances but were kept apart from other campaign members to protect classified data.
Familiar Faces
As DoD officials late last week made final arrangements to begin working with Obama's transition team, defense insiders in Washington said the list of individuals who could lead his Pentagon team was shortening.
Asked who might be Obama's defense secretary, national security insiders last week bandied about names such as Robert Gates, the incumbent; Richard Danzig, former Navy secretary; John Hamre, deputy defense secretary under President Bill Clinton; Sen. Jack Reed, D-R.I., chairman of the Senate Armed Services Committee's emerging threats and capabilities subcommittee; and Sen. Chuck Hagel, the Nebraska Republican who briefly ran for president and has broken with the party line on the Iraq war.
Hagel and Reed, in what was billed at the time as a tryout for posts in an Obama administration, accompanied the president-elect on a trip to Iraq earlier this year. Danzig also joined Obama on that trip, which included stops in the Middle East and Europe.
The president-elect's defense team will be shaped, in part, by a conversation he is expected to have soon with Gates. Obama is slated to be in Washington on Nov. 11 to meet with President Bush and tour the White House.
Gates has sent a mixed message about whether he would serve in the new administration if asked. One Pentagon official said, "It would not be easy to convince [Gates] to stay on."
The remaining names on the short list are all familiar with the Pentagon. Danzig was one of the new president-elect's top national security advisers during the campaign. Sources say he has become close to Obama.
"Because they're close, and because Obama has come to value Richard's views," one former Pentagon official said, "it would seem if Richard wants to be defense secretary, he could have it."
Other defense insiders contacted this week said Danzig recently has expressed greater interest in two other high-level jobs: national security adviser and secretary of the Homeland Security Department.
Several sources who advised Obama during the campaign floated a scenario under which Gates would stay on with Danzig as the deputy secretary.
As for Hagel or Reed, the former Pentagon official noted a Gates departure would likely leave Obama eager to install a "national name" in the E-Ring to lead his desired Iraq withdrawal. Both would meet such criteria.
Putting Hagel in as the defense secretary would take care of a few things, sources said. First, it would fulfill an Obama campaign promise to populate his Cabinet with both Democrats and Republicans. And second, as Douglas Macgregor, a retired Army colonel, put it, "Hagel would become the Democrats' Republican shield that they could hold up while withdrawing from Iraq."
Macgregor now writes on military reform for the Washington-based Center for Defense Information.
Hagel also is cited as a dark-horse pick for secretary of state.
Hamre is viewed as a strong, nonpartisan manager who would be a fine pick for any defense or intelligence agency.
And Reed is viewed as a former Army captain and longtime congressional defense expert who has the expertise and personality to bring reform to the Pentagon.
An oft-mentioned wildcard pick for defense secretary - as well as for other top jobs like national security adviser - is Colin Powell, a former secretary of state and former chairman of the Joint Chiefs of Staff.
Insiders also are beginning to narrow the list of officials likely to make the final round of consideration for the deputy defense secretary and Pentagon acquisition executive posts.
A top name mentioned in such discussions is David Oliver, EADS North America chief operating officer and a former principal deputy undersecretary of defense for acquisition, technology and logistics.
Also on that list is another Obama campaign adviser: Paul Kaminski, a former undersecretary of defense for acquisition and technology, who now heads Technovation, a consultancy. John Douglass, a former Navy acquisition chief who also served as president of the Aerospace Industries Association, is another individual sources say is being eyed for a top defense post.
Other frequently mentioned names were Jacques Gansler, a former Pentagon acquisition chief, and Whit Peters, a former Air Force secretary. Both advised Obama during the campaign.
Some say Obama and his team might ask the incumbent Pentagon acquisition chief, John Young, to stay on. Copeland said Young and his staff "seem to really be tackling a lot of the acquisition problems," and noted that the endorsement of a new president and defense secretary would give Young even more juice to push reform efforts.
Leading speculative candidates for the post of undersecretary of defense for policy include Michèle Flournoy, who was principal deputy assistant secretary of defense for strategy and threat reduction and deputy assistant secretary of defense for strategy under Clinton, and Kurt Campbell, several sources said.
Both are charter members of the brass at the still-young Center for a New American Security (CNAS), a Washington-based think tank. Flournoy is its president and Campbell is its chief executive officer. Both also are rumored to play large roles in Obama's Pentagon transition team.
The former Pentagon official noted it likely will be a few weeks before the nominees are known for jobs like deputy defense secretary, Pentagon acquisition executive and defense undersecretary for policy.
"When you get down to that level, it really, in large part, comes down to the discretion of the secretary," the former official said. ■
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