i H A S C No 116–56 DEPARTMENT OF DEFENSE’S ROLE IN COMPETING WITH CHINA COMMITTEE ON ARMED SERVICES HOUSE OF REPRESENTATIVES ONE HUNDRED SIXTEENTH CONGRESS SECOND SESSION HEARING HELD JANUARY 15 2020 U S GOVERNMENT PUBLISHING OFFICE 40–508 WASHINGTON 2020 COMMITTEE ON ARMED SERVICES ONE HUNDRED SIXTEENTH CONGRESS ADAM SMITH Washington Chairman SUSAN A DAVIS California JAMES R LANGEVIN Rhode Island RICK LARSEN Washington JIM COOPER Tennessee JOE COURTNEY Connecticut JOHN GARAMENDI California JACKIE SPEIER California TULSI GABBARD Hawaii DONALD NORCROSS New Jersey RUBEN GALLEGO Arizona SETH MOULTON Massachusetts SALUD O CARBAJAL California ANTHONY G BROWN Maryland Vice Chair RO KHANNA California WILLIAM R KEATING Massachusetts FILEMON VELA Texas ANDY KIM New Jersey KENDRA S HORN Oklahoma GILBERT RAY CISNEROS Jr California CHRISSY HOULAHAN Pennsylvania JASON CROW Colorado XOCHITL TORRES SMALL New Mexico ELISSA SLOTKIN Michigan MIKIE SHERRILL New Jersey VERONICA ESCOBAR Texas DEBRA A HAALAND New Mexico JARED F GOLDEN Maine LORI TRAHAN Massachusetts ELAINE G LURIA Virginia ANTHONY BRINDISI New York WILLIAM M ‘‘MAC’’ THORNBERRY Texas JOE WILSON South Carolina ROB BISHOP Utah MICHAEL R TURNER Ohio MIKE ROGERS Alabama K MICHAEL CONAWAY Texas DOUG LAMBORN Colorado ROBERT J WITTMAN Virginia VICKY HARTZLER Missouri AUSTIN SCOTT Georgia MO BROOKS Alabama PAUL COOK California BRADLEY BYRNE Alabama SAM GRAVES Missouri ELISE M STEFANIK New York SCOTT DES JARLAIS Tennessee RALPH LEE ABRAHAM Louisiana TRENT KELLY Mississippi MIKE GALLAGHER Wisconsin MATT GAETZ Florida DON BACON Nebraska JIM BANKS Indiana LIZ CHENEY Wyoming PAUL MITCHELL Michigan JACK BERGMAN Michigan MICHAEL WALTZ Florida PAUL ARCANGELI Staff Director MATT RHOADES Professional Staff Member KIM LEHN Professional Staff Member EMMA MORRISON Clerk II CONTENTS Page STATEMENTS PRESENTED BY MEMBERS OF CONGRESS Smith Hon Adam a Representative from Washington Chairman Committee on Armed Services Thornberry Hon William M ‘‘Mac ’’ a Representative from Texas Ranking Member Committee on Armed Services 1 2 WITNESSES Flournoy Miche le A Co-Founder and Managing Partner WestExec Advisors Former Under Secretary of Defense for Policy Hunter Andrew Philip Director Defense-Industrial Initiatives Group Center for Strategic and International Studies McDevitt RADM Michael USN Ret Senior Fellow CNA 3 7 9 APPENDIX PREPARED STATEMENTS Flournoy Miche le Hunter Andrew Philip McDevitt RADM Michael DOCUMENTS SUBMITTED FOR THE RECORD There were no Documents submitted WITNESS RESPONSES TO QUESTIONS ASKED DURING THE HEARING Mr Courtney Mr Turner QUESTIONS SUBMITTED BY MEMBERS POST HEARING Mr Mitchell Mr Waltz III 55 68 76 91 91 95 95 DEPARTMENT OF DEFENSE’S ROLE IN COMPETING WITH CHINA HOUSE OF REPRESENTATIVES COMMITTEE ON ARMED SERVICES Washington DC Wednesday January 15 2020 The committee met pursuant to call at 10 00 a m in room 2118 Rayburn House Office Building Hon Adam Smith chairman of the committee presiding OPENING STATEMENT OF HON ADAM SMITH A REPRESENTATIVE FROM WASHINGTON CHAIRMAN COMMITTEE ON ARMED SERVICES The CHAIRMAN I call the meeting to order I thank you all for being here for our first public hearing of the new year Welcome the committee back I look forward to a productive year And to kick it off we are going to have a hearing talking about the threat that China poses and most specifically how we can best counter that threat and deter what China is trying to do and what—you know what should the Department of Defense’s plan be for meeting the threats that China poses And to discuss that question we have three excellent witnesses with us this morning I want to welcome back Miche le Flournoy who is the former Under Secretary of Defense for Policy Andrew Philip Hunter who is the Director of Defense-Industrial Initiatives Group for CSIS Center for Strategic and International Studies and Rear Admiral Michael McDevitt U S Navy retired a senior fellow at CNA—all eminently qualified for this discussion And the bottom line is China is a threat to the basic international order They don’t play by the rules and they attempt to set their own rules They really threaten international institutions and international norms and we need to figure out how best to contain that threat and help you know get back onto the rules that we think that the world should be following China’s approach is autocratic to begin with They don’t believe in democracy They do not obviously protect intellectual property and they have a very detailed plan for expanding their influence in the world And there is nothing per se wrong with that They are a rising power They are going to have greater influence in the world But the way they are doing it is a fundamental threat to global stability Just take the businesses example They steal intellectual property They do all manner of different things to try to undermine any sort of rules-based trade or business system 1 2 Then of course most notably they are claiming territory that is not theirs throughout the Asian region and coming into conflict with you know more than a half dozen countries in their neighborhood and resisting any sort of international sort of normal system of resolving those differences Now for the purposes of this committee obviously we have jurisdiction over the Department of Defense and the military and what role does the military play in containing that threat And one of my concerns as we look at this is we war-game a lot of things out for how we would be able to win a war with China if it came to that and I understand the utility from a deterrent standpoint But in all likelihood we are not going to be going to war with China It is going to be more a battle on other planes and if we are spending all of this money and all of this time and effort focused on that what are we missing You know what are we missing in terms of being able to build the alliances to stop the land grabs that they are doing down there to you know protect intellectual property And also there is the simple matter of you know we have scarce resources and I know I talk about that a lot on this committee I think it is a mistake to look at a problem and say we can’t be constrained by resources we have to address the problem in any way we can Everybody is always constrained by resources and if we get into a very expensive arms race with Russia and China while we are also trying to contain very real threats from Iran and North Korea and transnational terrorist groups can we do that or does that undermine our ability to actually be an effective power in setting a different example than China has So there is a lot of difficult questions here and I have a lot to learn—I can’t speak for other members of the committee—and I am very pleased that we have three knowledgeable witnesses that will help lead that discussion and help educate us on what the best way for the Department of Defense to operate what we should fund and how we should go forward in terms of deterring Chinese aggression and dealing with the challenge and the competition that China poses to us And with that I will yield to the ranking member Mr Thornberry for any opening statement that he has STATEMENT OF HON WILLIAM M ‘‘MAC’’ THORNBERRY A REPRESENTATIVE FROM TEXAS RANKING MEMBER COMMITTEE ON ARMED SERVICES Mr THORNBERRY Thank you Mr Chairman I agree with you that this is an excellent panel and I appreciate all our witnesses being here today I have learned from them and from the organizations they—with which they are affiliated or have been affiliated for a number of years I also agree that a hearing on China is a good way to start the year We have a National Security Strategy a National Defense Strategy National Military Strategy that places greater emphasis on great power competition 3 And I think what that means is we have to pay more attention to countries like Russia and China Not that they are the only thing that we have to pay attention to as events of the past week or two remind us But if China is indeed the pacing threat then part of the responsibility of this committee is think about the personnel and equipment and training that is needed to deal with that pacing threat and the assumption I guess would be if we can deal with that we can deal with other lesser threats as well So I think this is a good way to start And one other point I have read all the witnesses’ testimony I think they have a number of specific items that this committee and this Congress can act upon this year that will help put us in better position to deal with the challenges coming from China And so I hope that we can follow up on a number of the suggestions that they have It is not just a theoretical thing It is work for us in fulfilling our job under the Constitution this year So again I appreciate them being here and look forward to their testimony The CHAIRMAN Thank you Ms Flournoy we will start with you LE A FLOURNOY CO–FOUNDER AND STATEMENT OF MICHE MANAGING PARTNER WESTEXEC ADVISORS FORMER UNDER SECRETARY OF DEFENSE FOR POLICY Ms FLOURNOY Great Thank you so much Chairman Smith and Ranking Member Thornberry distinguished members of the committee It is really an honor to be here particularly to talk about this topic I can’t think of a more—an issue that is more important to U S economic prosperity and national security over the coming decades than the question of the competition with China As you all know the strategic competition with China has many dimensions I think primarily it is economic technological but there are also political ideological and military dimensions and any successful strategy has to address all of those dimensions in an integrated way We need a whole-of-government approach a whole-of-nation approach not just a defense approach to China As we craft that strategy we also have to remember that China will remain an important partner for us in key areas where we are trying to achieve our objectives whether it is nonproliferation or climate change or North Korea So we have to think about how do we compete while also maintaining possible areas of cooperation in areas of mutual interest So I want to start by just highlighting three principles that I think should guide how we approach the strategic competition with China The first and most important is that I think the number one thing we can do as a nation is to invest in the drivers of our own domestic competitiveness research and development science and technology incentives to get private sector—the private sector to increase their investment in key technology areas higher education STEM science technology engineering and math education—broader access to that—21st century infrastructure like 5G smart immigration policy 4 So my point is there is a lot we can do here at home that frankly I think the American people would welcome that would do the most to position us well to compete against China I think this is a moonshot moment I think we need the national leadership the call to action and smart investment plans by this body to enable America to compete and win Second I think we have a huge strategic advantage in the network of allies we have around the world not only in Asia but in Europe and elsewhere The best way to deal with the challenges posed by China is to do that—do so by making common cause with our allies and partners wherever possible We are infinitely stronger when we confront China together when they violate the rulesbased order or norms et cetera Third I think we should still maintain our leadership role in protecting and adapting the rules-based international order that has served us and so many so well for so long adapting that for the 21st century We need to be at the forefront of upholding norms like freedom of navigation and peaceful resolution of disputes in order to ensure that a might-makes-right approach does not take hold in the IndoPacific Turning to the military though because I think that’s where this—obviously this committee is focused I think the challenge for the military is that we have to rethink fundamentally how we deter and if necessary fight and prevail in a conflict with China America’s military advantage is rapidly eroding vis-a-vis China in light of their modernization efforts In fact if we just stay the current course a rising China will likely achieve overmatch in a number of key capability areas undermining or at least calling into question our ability to deter effectively to defend our interest to protect our allies and partners and ultimately to prevail at acceptable levels of cost and risk So the number one military objective in my view is figuring out how to reestablish credible deterrence and as Representative Smith said—Chairman Smith said—also figure out how we are going to compete below the level of conflict So in doing this DOD Department of Defense faces several key challenges I have laid them out in much more detail in the testimony but I will just highlight them here China’s substantial investment in anti-access area denial capabilities which means that the United States can no longer expect to achieve airspace or maritime superiority early in a conflict We will have to fight our way to gain it and maintain it as we have faced constant efforts to disrupt and degrade our battle management networks Second China’s policy of civil-military fusion They don’t have something comparable to the gap between Washington and Silicon Valley in their system They have civil-military fusion which mean any technology development of interest to the PLA People’s Liberation Army goes to the PLA We have to figure out what our answer to that is It is not going to look like their answer but we need to do a better job bridging that gap 5 And then finally doctrinal innovations They have come up with this idea of system destruction warfare which means they will be looking to cripple our battle management networks to use cyberspace attacks to keep us from ever leaving port projecting power basically keep us from ever reaching the theater and so forth So in the face of these challenges we have to do a better job of really prioritizing what do we need to develop acquire and demonstrate and we need to think in two timeframes In the near term how do we think creatively about what we already have and use it in new ways new concepts to reestablish deterrence in the next 5-year timeframe Over the long term we have to think more about how do we transform the force for a very different type of challenge in the future to dramatically increase the cost that any aggression would have So investing in fundamentally transformational technologies In terms of how we are doing I think we are underinvesting still even though—you know hats off to this committee for getting your bill passed for really starting to move the needle towards the future but still we are underinvesting in the new technologies that will ultimately determine our success in deterrence and we are still overinvesting in legacy platforms and weapon systems that we will not need or will not be as relevant While we have made substantial progress in tech scouting and bringing some of those cutting-edge technologies in from Silicon Valley and elsewhere there is still what I call the valley of death between the successful prototype and getting to be in the program of record for some of these new technologies We are still lacking the technology—the technological talent that we need to be smart buyers and developers and fielders of new technologies nor have we—you’ve given the acquisition workforce tremendous new flexibilities in procurement authorities but the Department has not yet adequately trained that workforce or incented them to actually use those authorities fully and at scale Mr Chairman I see the flashing light flashing at me I have made seven very concrete recommendations to Ranking Member Thornberry’s point I would urge you to look at those I am happy to walk through those if there is a question along those lines in the future The CHAIRMAN Actually it would be helpful actually Ms FLOURNOY Okay Let me just do—— The CHAIRMAN If you could do the Reader’s Digest condensed version I think that is—— Ms FLOURNOY Two—a few minutes on recommendations The CHAIRMAN Yes Ms FLOURNOY What do we actually do So the first is I do think the Department needs to implement a series of reforms in terms of acquisition investment and workforce development to really create the innovation ecosystem that we need to maintain the military’s technological edge Huge focus on training the acquisition cadre and incenting them differently Huge effort needs to be taken to actually attract the technical talent that we need to do that Lots of things that are already in place like scholarships and debt relief for—to attract cyber talent We need to broaden that to cover a much broader range of 6 emerging technologies Reforming the security clearance process is also a key part of that I know that is a big windmill to tilt at But we’ve got to do that if we are going to get tech talent in the door to help Second ramping up our efforts to develop and test service-specific operational concepts to drive the rapid fielding of game-changing technologies We have the concept of multi-domain operations The services are starting to put meat on those bones But this will require a continuous cycle of war gaming prototyping experimentation Congress could help by providing the services with more robust funding to be able to field small numbers of emerging capabilities prototypes to develop early-stage concepts and to actually do robust fleet and field experimentation Third the Department needs to be pushed to adopt best practices and lessons learned from the commercial technology sector in terms of how to do agile development This is a new thing for the Department of Defense and they need to get much better at doing that There are ways to incent that Fourth budget realities as you noted are going to require some hard choices both from the Department and this body to make the urgent tradeoffs we need One way I like to think about it and I would offer it for you is we need to be thinking about in every major platform area where is the knee in the curve Where does it make sense to forgo the next fill in the blank— aircraft carrier tank battalion you know whatever—amphibious ship—and instead take that money for that major investment in legacy system and plow it into the emerging technologies that will make the legacy systems we have that are going to stay in the force for 20 30 40 years that will make them survivable again relevant again effective again The knee in the curve is where I think those tradeoffs need to be made and we need the analytic work to do that and the political courage to do that Fifth we need to continue to adapt and enhance our overseas posture to shore up ally and partner capability in a more contested environment We can talk about what that might look like Sixth we need to shore up our near-term vulnerabilities This is again not just focus on the emerging technologies that will help us in 10 years but what are we going to do today and tomorrow with what we have in creative new asymmetric concepts to deter better today Finally the Department needs to be much more active in setting norms and standards for emerging technologies and participating in security dialogues that set the new rules of the road So let me stop there and again thank you for the extra time and look forward to the discussion The prepared statement of Ms Flournoy can be found in the Appendix on page 55 The CHAIRMAN Thank you Mr Hunter 7 STATEMENT OF ANDREW PHILIP HUNTER DIRECTOR DEFENSE–INDUSTRIAL INITIATIVES GROUP CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES Mr HUNTER Well thank you very much Chairman Smith and Ranking Member Thornberry for the opportunity to testify today It is nice to come home to the House Armed Services Committee I applaud your decision to approach the topic of this hearing what my colleagues at CSIS have called meeting the China challenge broadly China is challenging the world and the United States militarily and economically and while DOD’s role is most significant in military domains it has a significant role to play in the broader competition especially in the key technologies that will form the commanding heights of future global markets I am going to focus my remarks on the ways in which the defense acquisition system can support success in competition with China We very much agree with the remarks that both the chairman and the ranking member made and Ms Flournoy made about many other aspects of the competition with China that are incredibly significant and I would be happy to get into those in the questions For the acquisition system a lot of the roles that are going to be critical are very familiar So the system will still need to be able to develop systems that meet exacting specifications that are required to operate in the most challenging conditions and by that I mean examples such as nuclear weapons systems and long endurance undersea systems large submarines and unmanned systems among others where the defense requirements are so challenging that an off-the-shelf solution is not going to get the job done and we need to develop systems unique to the military That is a very traditional role for the acquisition system The system also needs to be able to pioneer breakthroughs in fields such as artificial intelligence quantum computing directed energy and hypersonic systems where fundamental challenges that relate directly to defense requirements remain DOD can play a critical role not just on defense requirements though but also in support of the broader economy that is advancing these technologies particularly in the art of testing and evaluation where there are some fundamental limitations right now with these technologies But in addition to these familiar roles the acquisition system is going to need to be able to perform new roles in this competition It must allow the U S to follow fast understanding and catching up to breakthroughs achieved by the Chinese in key areas The scale of their effort on their investment means they will get ahead of us in certain areas if they continue on course But perhaps the most critical role for the defense acquisition system is building a strong connection to commercial technology providers so that DOD remains in touch with the cutting edge of technology The competition with China features a struggle to shape and master global supply chains across a range of today’s key industrial sectors such as semiconductors networking technologies including 5G advanced materials data analytics big data as well as key in- 8 dustrial sectors of tomorrow such as quantum-based systems intelligence systems and synthetic biology The defense acquisition system will need the ability to manage supply chains in a more complex business and security environment than ever before and it will need to do so in a manner that does not divorce DOD from commercial suppliers Now China has developed structures for providing all of the defense acquisition capabilities I have described China’s progress in defense technology however is not supernatural The U S and Chinese timelines for developing new purpose-built defense systems appear to be quite similar China’s advantages in growing defense resources lower costs access to technology shortcuts is offset by weaknesses in corporate structure manufacturing quality and sophistication and experience But the size and growth of the overall Chinese markets serves as a key reinforcement function for its efforts allowing China to progress despite sometimes deep flaws in the design and implementation of its programs and to capture market power over key supply chains This is why DOD’s role must go beyond the purely military dimensions of the competition As to what we are doing DOD’s acquisition—Adaptive Acquisition Framework appropriately creates multiple pathways to achieve the many objectives for the acquisition system I have described But a key test would be DOD’s ability to field and deploy capabilities developed through alternative pathways something which has not yet been demonstrated at scale especially for software acquisition Something that I call an adaptable systems approach which I can describe in more detail later within the current Adaptive Acquisition Framework would especially help DOD accelerate the deployment of new capabilities to fielded systems Another key is the national security innovation base identified in the National Security Strategy While the overall situation with commercial technology firms is one of increasing engagement workforce issues are a challenge as has been demonstrated multiple times and the research university component of the national security innovation base is deeply engaged with DOD but has many challenges with foreign students and foreign researchers This shows that management of human capital is one of the key issues in the strategic competition with China The U S and DOD and our competition for talent and industry as well—are in a competition for talent and must protect access to the best technical talent as a core asset The clarity on key technologies provided in the National Defense Strategy NDS is great But while DOD’s investments accounts have grown this growth has been concentrated in existing production lines and prototypes of military systems Investments in the NDS technologies have been modest by comparison particularly given the fundamental science and engineering challenges that confront both DOD and the commercial sector And China’s aggressive use of cyber theft counterfeit parts has led to defense supply chain efforts that are valuable but if poorly 9 implemented could unintentionally cut DOD off from access to commercial markets A close and continuing dialogue with industry is required to build effective supply chain awareness and enable sound supply chain management Finally I recommend that the committee establish performance metrics for meeting the China challenge At a minimum such metrics should include the level of DOD investment in key NDS technologies and success in leveraging commercial research and development measuring performance in developing and fielding purpose-built military systems as we sometimes do or have done in the past measuring DOD’s engagement with different elements in the national security innovation base and measuring risk in DOD’s supply chain The prepared statement of Mr Hunter can be found in the Appendix on page 68 The CHAIRMAN Thank you Admiral McDevitt STATEMENT OF RADM MICHAEL McDEVITT USN RET SENIOR FELLOW CNA Admiral MCDEVITT Thank you Chairman Smith and Ranking Member Thornberry It is my pleasure to appear before you today I am appearing in my personal capacity and my comments reflect my personal views not those of the CNA certainly not the U S Navy Both the National Security Strategy and more recently the Indo-Pacific Strategy Report from DOD say that China seeks to Indo-Pacific regional hegemony in the near term and ultimately global preeminence Let me make a word or two about regional hegemony China already militarily overshadows and intimidates its neighbors especially if its army can walk or drive to their frontier In every case China is their largest trading partner Economically China’s neighbors need China much more than China needs them China has the ability to wreck their economies These realities provide Beijing with tremendous regional political diplomatic and economic leverage It is important that the U S be comprehensively engaged in the region to reassure our allies and our friends those that live in the shadow of China that they have not been written off That includes our military posture Peacetime military presence is very important as is continuing to demonstrate that we will fly sail or operate wherever international law permits But we cannot forget that our friends and allies can also count They understand that China is after all the home team and its entire military is right there Our regional first responders like the U S 7th Fleet or the 5th or 7th Air Force or 3d Marine Corps Expeditionary Force are numerically outnumbered But—and we can’t match them number for number What we can do is try to improve our qualitative posture especially in areas where we have a clear advantage such as with our forward-deployed submarine force 10 Submarines are our greatest operational advantage and we should do everything we can to capitalize on that by increasing their day in and day out presence in the region We should also take a look at capitalizing on the opportunity created by our post-INF Intermediate-Range Nuclear Forces Treaty environment to help offset the strategic rocket force unchallenged advantage that they currently enjoy That means getting on with the planned deployments of Army land-based conventionally armed ballistic and cruise missiles in the Western Pacific Importantly China’s ability to be militarily preeminent globally beyond East Asia becomes much more problematic once its forces move away from China and are forced to operate beyond the umbrella provided by its land-based air cover or its ballistic missile forces China is certainly not preeminent in the Eastern Pacific the Indian Ocean the Mediterranean Sea or the Atlantic Ocean But it is working on it China is beginning to field a capable expeditionary force that could be used throughout the Indo-Pacific and along Africa’s littoral—marines large amphibs carrier air logistics ships et cetera et cetera Some of them are already in place and they are growing In response DOD might offer assistance and encourage friends and allies to adopt a concept from the PLA and adopt their—develop their own local anti-access area denial concepts to protect their own maritime approaches Australia provides a good example today General Secretary Xi’s official goal for the entire PLA is he wants it to become world class by 2049 Significantly he wants China’s ongoing modernization to be completed by 2035 which is just 15 years from now He is in a hurry and the military-civil fusion policy that China has implemented will ensure that the PLA has the benefit of any innovations—the technical breakthroughs that China makes will be able to contribute to the PLA Neither Xi nor other senior officials have defined what world class means But world class carries a connotation of second to none or being top tier or being the best in the world and a global foundation to support a world-class military is already being laid We know about the base in Djibouti and that is probably the first along the Indian Ocean littoral As of today as part of China’s naval buildup it has commissioned or launched over 130 modern blue-water—I am just talking about blue-water—warships that are capable of operating throughout Indian Ocean or for that matter anywhere in the world and remain on station for months at a time Today this is far and away the second largest and most modern blue-water navy in the world DOD should become encouraged to become more outspoken about China’s world-class military ambition and specifically address what does that mean for U S security A section in its annual report to Congress that addresses the world-class military would be a good place to start In conclusion the long-term challenge to important U S national interests come from China and we must adopt a long-term plan to 11 address this challenge It should be a whole-of-government approach as Ms Flournoy mentioned Central to this DOD must be able to count on a predictable level of funding whatever you decide it is I am not sure what that number is but it should be predictable that the Department can count on day in—year in and year out In this regard the Indo-Pacific Security Initiative that has been authorized but not funded needs to—awaits a DOD input as to how that money would be spent and I encourage you to encourage DOD to get on with providing the requested plan—funding plan so that this initiative can move forward DOD also needs a China strategy for the long term I think a reasonable starting point is the aforementioned 2019 Indo-Pacific Strategy Report Now trust me this is a far from perfect document It is too glossy It is too long It seems to be more about public relations than strategy But it does lay out some sensible strategic concepts I suggest that it be recast shortened to not more than 10 pages vetted on Capitol Hill and approved by the White House not the Acting Secretary of Defense as this one was In the interests of time I have not mentioned China’s ambitions in space its concept of military-civil fusion only in passing or its military modernization and global influence ops and I can address those in your questions Thank you The prepared statement of Admiral McDevitt can be found in the Appendix on page 76 The CHAIRMAN Thank you We will now move into questions For the witnesses’ information we try to keep everyone 5 minutes and that means that the whole time should be 5 minutes—you know the whole—you know ask the question for 4 minutes and 59 seconds and then get a 5-minute answer It is inconvenient because I don’t want to cut you off in mid-sentence But the people down in the bottom row start sending me texts if I don’t because they want to get a chance to ask a question So if you see the 5 minutes go off if you could wrap up quickly so I don’t have to like interrupt you that would be greatly appreciated Admiral McDevitt just a quick example What are we spending money on at DOD If you look at it from a perspective of what you all just said about the threat from China and having that Chinacentric focus can you give us an example of something that we are spending money on at DOD that we shouldn’t be and then something that we should be Okay You look at this problem Okay we are not addressing it here Clearly shouldn’t be doing that we should be doing this instead Do you have a concrete example of that that would help guide us basically Admiral MCDEVITT Actually I am probably not the person to ask what we should or should not be spending money on But what I would suggest to you is looking at the future I have been struck by the fascination with hypersonic weapons and I think we need to be sensible about that 12 At the technical level hypersonic makes a heck of a lot of sense You can shoot somebody very quickly before they can shoot back At the strategic level we have hypersonic weapons They are called ICBMs intercontinental ballistic missiles And we don’t need any more hypersonic And so if we are going to focus on hypersonic we ought to focus on what is tactically useable The second thing I think I would suggest is keep in mind if you want to establish or reestablish deterrence China is becoming as dependent as we are on space cyber networks And so without their ability to surveil the open ocean they can’t use their anti-ship ballistic missiles They don’t know where to vector their—the diesel submarine They don’t know where to launch their land-based aircraft in what direction So we should not wring our hands and say that it is too hard All we have to do is make that system not work The CHAIRMAN I think you actually are a very good person to answer that question That was very helpful Thank you And building off of that last point is just something that Ms Flournoy pointed out—that the command and control issue I think is one of the biggest issues facing us going forward When we talk about you know investing in new technologies versus investing in legacy systems a lot of times that can get blurred and not actually mean anything But I think the biggest thing that it means is in this area because everything we have now is dependent upon that command and control system and as the admiral just pointed out same goes for China If we can take down their command and control system that is an enormous advantage If we can protect our own same thing What are the keys and you mentioned a lot of different reforms and different pieces but if you had to mention any one of you one or two things that is the absolute key to winning that command and control back what do we need to invest in to be able to defend our own systems and to invest in to take down an adversary system I don’t know—Mr Hunter why don’t you go ahead and start and then Ms Flournoy can—— Mr HUNTER Yes So we are—I naturally first go when you ask that question is the idea of really doing software acquisition well being able to build robust resilient networks because both in the offense and the defense it’s about taking down the networks that both sides have developed to pass information to do command and control So it’s about the cybersecurity of those networks and it’s about the ability to rapidly adapt those networks as technology evolves and as we see the kinds of attacks that are likely to be posed on our C2 command and control systems And this is an area where we really struggle and we struggle because as Ms Flournoy mentioned in her testimony we are struggling to adapt some of the agile development techniques—DevOp techniques—that have been successful in the private sector and in some cases it is our bureaucratic structures that make that so hard for example the budget structure 13 The way that we do building of budgets makes it very hard to say we have got this budget for—you know for doing upgrades and new features on our software system but we don’t know yet which features we are going to select We may have a menu of 20 but at the end of the day 5 are going to be the critical ones and we won’t decide that as we are building the budget We are going to decide it when we start to write code and are trying to write that code very quickly in weeks not in years So that would be something I would highlight The CHAIRMAN Okay Ms Flournoy Ms FLOURNOY I would agree that building the you know Advanced Battle Management System that the Air Force and the Department are talking about is really the long pole in the tent for the vision of multi-domain operations It will require rapid advancements in sensor integration data processing artificial intelligence network connectivity to all the different shooters and actors and cloud computing These are all areas where the Department has to let itself learn from the private sector companies and entities that have really pioneered these technologies We have to get much better at spiral development creating you know prototypes that enable substantial feedback and interaction from operators before we move forward to further specify requirements This is not something where you can architect it from the top down perfectly take 5 years to define requirements and then build to that the way we do This has to be a spiral development process where you are going to learn and adapt along the way But it means that the Department has to change but also how defense industry works has to change We have to move towards much more open architectures and much more iterative agile development So that is the long pole in the tent The thing that you all can do I think most importantly the services are asking to shift money to these efforts whether it is you know the Air Force moving $9 billion towards this whether it is requesting your help for spiral development and experimentation These are things that it is tough because it is taking money away from legacy programs But these— we have got to move serious money into this area if we are going to make progress on the time and scale that we need to The CHAIRMAN Yes and just the challenge there of course is you know shift it from where because that is when everyone is like you got to take—no not from there not from here not from there You know that is the tougher part of the choice that I think we need to focus on But I just want to emphasize and appreciate your testimony emphasizing it It is crucial that we do that—that that shift has to happen Mr Thornberry Mr THORNBERRY Thank you Mr Chairman I just want to get a little bit more specific on three ideas one from each of you kind of that I just plucked out Admiral one of the points you made in your written and your oral testimony was funding the Indo-Pacific Security Initiative 14 We authorized that several years ago under kind of a thought that well it is working pretty well in Europe—why not look at doing it in the Pacific And yet it has never been funded and I don’t think the Department has taken it particularly seriously But can you elaborate just a little bit Is this worth fighting with them over What are the benefits Admiral MCDEVITT I personally think that there are great benefits for the Indo-Pacific commander and if I am not mistaken I came across an article or something that showed up on the press anyway from INDOPACOM U S Indo-Pacific Command in which there were a whole list of initiatives that they were talking about wanting to have funded Why they have not turned that into a budgetary request is beyond me I don’t know My recommendation would be to rattle their cage quite frankly and say tell me why you are—why you are dragging your feet on preparing Take a look at what EUCOM U S European Command has done and copy it for goodness sake and give me a plan on how you intend to use these dollars Mr THORNBERRY I think the answer is what the chairman said Everybody is afraid they are going to rob their piggy bank in order to fund this But sometimes—— Admiral MCDEVIT That goes on every day in the building Mr THORNBERRY Yes Yes We just have to fund it Mr Hunter I was going to ask you about something else But I want to follow up on software because we hear that a lot and both you and Ms Flournoy have talked about the people part of software—attracting the right people And maybe that is the only answer But is there some other concrete step we can do this year that would push the Department forward on having its own software capability Mr HUNTER I think there are and again I didn’t want to harp too much on the budgetary piece but I really think it is critical because as was mentioned and as this committee well knows there have been a huge number of flexible authorities provided to the Department for things like contracting doing contracting quick removing bureaucracy from the acquisition process Where we haven’t done really almost any of that is on how to use money to actually support those approaches So it is still the typical programming budgeting planning appropriating cycle And ways we get around that we have reprogramming authority that allows us to move money A huge piece of that is chewed up and churn on just recoloring money from procurement to R D research and development from R D to procurement from O M operation and maintenance to one of the other colors because the thing you need to do is not the thing you thought you needed to do 2 years ago when you built the budget is not the thing you need to do in the year of execution And I think a lot of that churn can be minimized by simply opening the aperture a little bit on these fuzzy lines between what is R D what is procurement Mr THORNBERRY Okay So you are not talking about a fund for software development You are talking about program by program a little more flexibility so that it is available—— 15 Mr HUNTER Exactly and to be clear I like the idea of a fund for software development But I know it can be—it could be a real challenge and I think we can do something very concrete with clarifying some of the reprogramming needs eliminating some of them with color of money and then secondly on new starts It is a—I am trying to think of a polite way to say it—no one knows what is going on with new starts There are 15 different definitions of what they are and people tend to take the most conservative approach which means that they are constantly holding and waiting for approval on things that should be moving out Mr THORNBERRY Yes No and CRs continuing resolutions emphasize that because you know no new starts Ms Flournoy I want you to talk to us a little bit more about bridge funding because you had talked about we are doing better on experimentation you know some of these areas But still there’s a valley of death going between an experiment and making it real having somebody—some service to pick up the ball and run with it So could you elaborate on that Ms FLOURNOY Yes I think the first thing is to try to get services directly engaged as sponsors early in the game This is working through SBIRs Small Business Innovation Research contracts That is actually working DIU Defense Innovation Unit is doing a better job of having service sponsors alongside them So there is a sense of ownership from the start But in terms of bridge funding you know what I am finding talking to a lot of tech companies who actually want to work in the national security space they want to help DOD is they have a great experience through SOFWERX or DIU or whatever getting to the demonstration phase They win the prototype competition Great we love you and that is in like fiscal year 2019 And then they are told okay we are going to submit—we are going to have an RFP request for proposal for you in 2021 and they are like okay but what do I do in 2020 I have got a 10-year hold in my business plan and my investors are pressuring me to drop the work on DOD because it is too slow it is too small dollars You can make more money in the commercial sector just to drop it And so we have got to figure out—there has got to be some areas where we know we have got to attract commercial industry whether it is you know AI artificial intelligence or cybersecurity or quantum computing or 5G or whatever to have some bridge funding where you can take the winners and continue to invest in them developing things until you get to the big RFP where they can compete at scale because what is happening is a lot of companies who try they get stuck and their investors pressure them to pull away So that is the concept If I could just say I also endorse putting some software development moneys into each of the services and then requiring them to report on how they are implementing agile development processes If you couple that with some smart tech talent efforts to bring in mid-career people from the tech field for tours of duty people who have experience in software project and program management and you couple that with you know educating national security 16 leaders how to manage that tech talent you know create more viable career paths for them in the public sector and oh by the way again reforming the security clearance process Right now you have again tech talent who wants to serve and they are told they got to wait a year and they end up saying hey I’ve got to—I’ve got to have a job I can’t wait And the biggest barrier for them right now is security clearance process Mr THORNBERRY Yes ma’am We hear—we hear that all the time too Thank you The CHAIRMAN Mrs Davis Mrs DAVIS Thank you Mr Chairman Thank you all for being here I want to commend your really very strong attempt at a comprehensive look here I think we just feel like you know trying to—trying to really pick from that where we can be the most effective is really a key Ms Flournoy I wanted to ask you a little bit about the civil-military fusion issue which we are very well aware of and you know I think the question really is you know so what should our civilmilitary fusion look like and maybe the other question is what should it not look like which may be pretty much what we have been doing all along We have a different system obviously We are not going to be China in this at all We don’t want to be So where do we go from here with that Ms FLOURNOY So the Chinese approach would not work for us which is fine But what we—I think the DOD has to do a better job of appealing to our tech community in terms that they understand and respond to So one of the best ways to get tech talent and military folks or DOD folks working alongside is through challenges through—to say we have a problem and we want the best talent from across the board to come and work this problem set together And at the end there is either prize money or there is a contract or there is a way forward to take this solution into further development That is a language that universities understand tech community understands So we need to do a better job of reaching out and engaging that Mrs DAVIS I guess part of my question would be why haven’t we done that What is it Is it cultural Is it—— Ms FLOURNOY We have done it at a very small scale but we are not doing it at scale and across the board Systematically removing some of the barriers for tech talent to serve that we have talked a little bit about I am actually working on a study on this right now and will be happy to come brief you all informally when we are done But I also think you know using a scalpel and not a sledgehammer with our own industry So I am all about protecting our crown jewels— national security technologies I am all about making sure we are very careful about the kind of Chinese investment we allow in our tech community But right now there is an environment of extreme risk aversion such that I fear we are actually cutting off things like completely passive investment that gets no access to IP intellectual property 17 no controlling interest no board seat no ability It is just money flowing through the bloodstream There are some CFIUS Committee on Foreign Investment in the United States calls that I think are being made badly that are going to hurt us by cutting off money for our industry There are some export control examples where old technology licenses that have been you know granted for 20 years suddenly they are being disapproved because—not because you know the technology is relevant to the Chinese military or because it can be reverse engineered or because there is any real IP theft threat It is because someone in the bureaucracy is afraid to approve anything going to China And so I worry we are creating an environment where we are going to hurt our own industry if we are not careful So I just sound that as a cautionary note Mrs DAVIS How do you think we can best oversee that to sort of catch it in process Ms FLOURNOY You know I think—I think making sure we are highlighting Andrew’s point that yes there is a military dimension of this competition but fundamentally this is an economic and technological competition and we need to consistently be asking— looking at any tradeoffs we are imposing for our own industry in their ability to compete And so I think having—digging into this you know what are the right ways to protect the supply chain versus the heavy-handed stupid ways to do it—— Mrs DAVIS Sledgehammer ways Right Ms FLOURNOY continuing You know and get people—get people into the details and to hear from you that you are not going to haul them up here and—you know and punish them if they make more nuanced thoughtful judgment calls Mrs DAVIS Anybody else Yes Admiral Admiral MCDEVITT Just wanted to make a quick—when you asked your question Congresswoman Davis you talked about civilmilitary fusion In China it is military-civil fusion and that order of words is very important because in China the companies that are doing the technology and the innovation they don’t have a vote They must cooperate Mrs DAVIS Yes Big difference Yes thank you Mr Hunter Mr HUNTER I just wanted to say we should also understand that China’s push towards military-civil fusion they are actually seeking to replicate what they see as the U S model You know they look at Boeing and they say we want something like that We want a leading aviation company that is also our military aircraft supplier So we aren’t so terrible at this right There is a background here where we do know how to do this We have been effective at it I think where we are really challenged to do it is with companies that haven’t worked closely with the Department of Defense The CHAIRMAN I am sorry Excuse me for a moment Mrs DAVIS Thank you Thank you Mr Chairman The CHAIRMAN The gentlelady’s time has expired Mr Wilson 18 Mr WILSON Thank you Chairman Smith and thank you for calling this very important hearing and we look forward on Friday to providing a very warm welcome to Chairman Smith to South Carolina And I appreciate each of the witnesses today and Secretary Flournoy I appreciate you pointing out that we can be partners America and China have been partners in the past My dad served in the Flying Tigers in World War II in Sian Chengdu Kunming and I am really grateful that it was Chinese and American forces together to resist aggression at that time and still today there are monuments across China recognizing the U S Army Air Corps what they did to save millions of Chinese lives And so this is appreciated and we hopefully can build on that And Admiral McDevitt I want to thank you for your 34 years of service for the Navy We are also thankful for President Donald Trump’s leadership and the bipartisan support of Congress to pass the NDAA National Defense Authorization Act the signing on December the 20th for the 58th consecutive year to protect our country And a question Admiral This week Admiral Michael Gilday the Chief of Naval Operations said the Navy needs more funding to compete with China’s growing navy This is at a time where the goals are presented in coordination with the National Defense Strategy as we transition to a great power competition What ways should the Department of Defense offset China’s growing naval fleet in the anti-access area denial strategy Admiral MCDEVITT Well I have addressed some of the anti-access already about figuring out a way to make sure their anti-access surveillance piece of it doesn’t work and in an open environment probably that is about as far as I want to go The other part of it is numbers do matter and so I think the Navy is enthusiastic about the administration’s 355-ship goal Now the reality is whether we ever get there or not I think the Acting Secretary of the Navy has been clear that he is worried about efforts to rush the 355 to get to it before—I think the original year was 2034 which coincidentally by the way is when China in 2035 is saying that their military modernization will be completed We don’t know how big their navy is going to be It’s a state secret and so—and they won’t tell us At least they haven’t told me and a lot of other people who have asked We are trying to find out They may not even know But it is going to be big I did a back-of-the-envelope calculation You know that has become a parlor game I think But about—in 2035 about 420 ships That is not all blue water but I mean that is about—so it will be the largest navy in the world There is no way we are going to have a bigger navy period full stop So we have to have a better navy and part of that is readiness improvements and part of that is continuing along with the plans for example on the—I know the LCS littoral combat ship is not the greatest ship in the world 19 I guess I can speak candidly there There is a lot of critics of the littoral combat ship But we own 25 or 35 of those things now and we ought to do the best we can for making them effective as opposed to just writing them off and saying well we will get something better And so because otherwise we can’t even count them in terms of being a credible combat warship So those are the things that strike me as—I don’t—I am not in a position to comment on what type of ship this—ship Y ship X Whatever we build though it ought to be able to survive and it ought to be able to have an offensive punch that we can actually fight and win successfully Mr WILSON Thank you very much And Mr Hunter since 2004 China has established Confucius Institutes at American universities at over a hundred some close to the proximity of our technology centers Do you see this as a problem for our country Mr HUNTER Well I think anytime that you have a situation where academic freedom is being constrained that has real implications for national security because fundamentally open research is what provides that foundation for the technological advances that we are depending upon both economically and for the military So Confucius Institutes tend to be you know focused more on you know IR international relations and political science type issues But I do think that injecting that sort of element into the academic environment does have risks There was just a JASON’s report that came out last couple of days where they have been evaluating how do we—how do we have the right kind of research for collaboration The CHAIRMAN Thank you I apologize for the interjection Mr WILSON Thank you Mr Chairman The CHAIRMAN The gentleman’s time has expired Mr Courtney Mr COURTNEY Thank you Mr Chairman and to the witnesses for being here this morning Ms Flournoy when you started out—again I was pleased you were framing the question of that region of the world that our mission should be to create common cause to stand up for rules-based order and norms I think one of the biggest glaring shortfalls we have as a country is again that we still have not ratified the Law of the Sea Treaty which again every commander serving in the Indo-Pacific region and Admiral Davidson who is there now at his confirmation hearing called on Congress to move forward to do that His predecessor Admiral Harris now Ambassador Harris was almost militant on the question of the need to do that He was quoted as saying ‘‘I think that by not signing onto it we lose the credibility for the very same thing we are arguing for accepting rules and norms in the international arena ’’ And the biggest court case or maritime ruling against China the Philippines case the U S was actually denied not only party status but observer status We had to rely on Australia to be our proxy during that proceeding and China definitely sort of throws it back in our face any- 20 time that ruling is cited certainly by us that well you know you are not part of this So you know there is now new issues like rare earth mineral seabed mining which is now a gold rush out there in the Pacific region which again we are shooting ourselves in the foot in terms of not being able to be part of a legal framework so that we cannot allow China to overreach in that area Again just sort of—we have House Resolution by the way calling on the Senate to move forward on this H R 454 which is bipartisan I was just wondering if you could comment Ms FLOURNOY No I agree it is not only ironic but damaging that the primary rules that we use our ships and our forces and our diplomatic clout every day to enforce come from a treaty that we haven’t ratified and that—and that I do think it undercuts our standing on this issue somewhat I think it would be very powerful to get that treaty ratified We are already spending lots of mindshare and resources to enforce it We should have the benefits of being a full part of the treaty There are absolutely no downsides that I see to that whatsoever Mr COURTNEY I just wonder if the other witnesses could just sort of comment on that point Admiral MCDEVITT A topic near and dear to my heart Absolutely we should—we should ratify it It is important to keep in mind that at some point in the future—I don’t know when—there is probably going to be another U N United Nations -sponsored commission to look at revisions and updates to the Law of the Sea Treaty and we are not going to have a seat at the table We had a—we played a huge role in the first law—the extant Law of the Sea Treaty in terms of helping shape the debate and getting concerns of the maritime powers on the table and what have you If we are not there the next time around it will be the Russians and the Chinese who will essentially be in charge or be the leading voice in those negotiations Mr HUNTER I also agree and I think your point about seabed mining raises the fact that these kinds of international agreements help to shape where global markets go and technologies that are developing and resource extraction technologies that are coming online And so I would point—if we can’t do Law of the Sea I think it presents challenges for us in areas like space where there are inevitably new international agreements coming with the explosion of commercial space and if we don’t make ourselves an active party in that we will disadvantage ourselves in this competition with China Mr COURTNEY Thank you I just wanted to follow up on Mr Thornberry’s question on the Asia Reassurance Initiative which again passed unanimously last year was signed into law actually right around New Year’s Day last year so it is about a year old I mean in the meantime we have seen this administration getting into a food fight with South Korea about wanting a fivefold increase from Korea 21 I mean there was such a disconnect in terms of you know what Congress called for which was to boost you know investment in that part of the world and then what—you know what policies we are seeing play out publicly by the administration I just wondered if you could comment on that sort of contradiction Ms FLOURNOY Yes No I do see the contradiction and I think we are—South Korea actually makes one of the largest contributions relative to other allies—it also hosts U S troops—than any other country I mean they are a very good partner in terms of financial support as well as military and operational cooperation So we should not be beating them about the head and shoulders on this issue On the—— The CHAIRMAN I am sorry You can—maybe that is for the record Ms FLOURNOY I am sorry Okay The information referred to can be found in the Appendix on page 91 The CHAIRMAN But the gentleman’s time has expired and I want to try to get to everybody Mr Turner Mr TURNER Thank you Mr Chairman Ms Flournoy thank you for being here Good to see you again Appreciate your continued contributions to policy and the discussions of our national security In reading your testimony one of the most important themes throughout it is the issue of deterrence—what does the United States need to do to continue to deter China You raised the issue of the technology Obviously their surveillance society represents a threat with Five Eyes and our allies and backdoor opportunities for China to freely access our data our information And certainly they have been very forward leaning in their hacking activities with even the OPM Office of Personnel Management records that were being taken of Federal employees attributed to China And then we look at technologies and on page 2 you said you know China is investing tens of billions of dollars from hypersonics and robotics to quantum computing and for example hypersonics is not really modernization That is new technology and we have fallen short in that In fact they have stolen a lot of what has allowed them to advance I would like you to talk for a minute about deterrence and what we need to do You know as they have hypersonics most of our Chinese strategy has been basing in the area As you point out in your testimony their ability to hold us at bay or threaten our troops in the area land- or sea-based is based upon the new technologies What do you see in our opportunity for hypersonics that may also hold them at bay Do you think that they see as we fall behind technologically that they have an edge that could give them the ability to be adventuresome in the area Ms FLOURNOY Yes I think that that is what they are hoping for and I guess this connects to this I think that numerical targets 22 like 355-ship Navy X number of Air Force squadrons you know those are the metrics of the past and if we—you know if we hold to those we will get this wrong That is not the right measure The right things that we should be measuring are the time and scale of outcomes we can achieve that contribute to deterrence So can we hold the Chinese fleet at risk at scale in a 72-hour period That is a pretty strong deterrent You know so what does that look like In the near term it may be cobbling together—it may be putting a Navy munition like LRASM Long Range AntiShip Missile on a bunch of Air Force B–2 bombers It may be—you know in the longer term it may be the Army playing a totally new role or the Marine Corps of fielding distributed you know long-range artillery missiles perhaps some of them hypersonic across the Asia-Pacific that are outside the Chinese threat ring but can hold those ships at risk I am not suggesting we sink you know the Chinese fleet in one day What I am suggesting is that if we could say to them if you undertake this act of aggression you are putting your entire fleet at risk immediately—do you understand that That might be pretty good for deterrence So we really have to rethink our metrics to look at what are the outcomes that we can achieve that would really meaningfully help deterrence That is what we should be measuring ourselves against not the number—the size of different parts of the force structure Mr TURNER Two quick things Russia is again not modernizing their nuclear forces They are actually deploying new capabilities— hypersonics Skyfall Poseidon China is looking obviously for a nuclear option for their new hypersonics capability which are all first strikes capability One do you see an opportunity for us as we see Russia breaking out from our nuclear limitations agreements to be able to include China and try to lessen the arms race that we are obviously well behind in And secondly with—there wouldn’t be a nuclear North Korea but for China what should we be doing to encourage China more on North Korea Ms FLOURNOY Okay On traditional arms control with Russia I actually think we want to extend START Strategic Arms Reduction Treaty keep that cap in place because it does constrain a lot of things It does give us you know verification intelligence et cetera and we don’t want to reopen those areas of competition But in these other areas new technologies like hypersonics like cyber like space where they will have an impact on the domain of strategic stability we absolutely should be having bilateral and multilateral discussions with the Russians and the Chinese to get—can we take certain really catastrophic scenarios off the table Like we do not want to go there because it would be very bad for you and it would be very bad for us so can we just put that aside Now we won’t succeed in everything But I think exploring that area of how new technologies affect strategic stability is really really critical 23 The CHAIRMAN And again I am sorry Ms FLOURNOY Yes Sorry Sorry we can’t get to North Korea The information referred to can be found in the Appendix on page 91 The CHAIRMAN The gentleman’s time has expired Mr Carbajal Mr CARBAJAL Thank you Mr Chair Secretary Flournoy in your prepared testimony you mentioned that the U S should leverage the unique strategic advance of having many allies and partners around the world but that this administration has departed from that approach I agree with you and believe that the departure from previous administrations’ focus on a multilateral approach to China is undermining our long-term success How else do you see or would you say that this administration has diverged from the approach of the previous two Presidents Ms FLOURNOY Well I think that the administration has paid a lot of attention to one metric which is what allies contribute financially and they have sort of embedded the military contribution inside a discussion of trade deficits I think that is way too narrow a view We have to consider that you know an organization like NATO North Atlantic Treaty Organization declared Article 5 for us after 9 11 They came to our aid We would not have had the troops we needed in Afghanistan if not—if NATO didn’t pony up 40 000 troops We have allies and partners who have fought and died alongside us That sacrifice that willingness to be there—look at Australia who has come no questions asked You are going You are asking We are coming with you I mean that should count for something not just the financial dimension of the relationship And the problem is you know there is no national security problem that the United States can solve no matter how powerful we are alone We need allies and partners And so I would really endorse your committee’s efforts to say how do we really leverage a more strategic approach to security cooperation and investing in allies and building their capacity their ability to defend their own sovereignty throughout Asia I think that is a really important project for the future Mr CARBAJAL Thank you Mr Hunter how much of the U S reemphasis towards hypersonic development comes from meeting a warfighter requirement or peer competition with China and their development allegedly being ahead of the United States Mr HUNTER Well you know the U S has been pursuing hypersonic systems for quite a while But it’s been a very slow pursuit And so what happened is the Chinese made a very quick effort and so they have been able to demonstrate some things that we had not as yet demonstrated But the core of the technology was really developed in the United States and if we choose to commit significant investment dollars I think we can make equally rapid progress to them going forward I think you ask a really good question which is what commander need does that capability fulfil and it could vary differently across different regions 24 To my eye it does look attractive in the Indo-Pacific because of the ranges that are involved there Other systems have a hard time reaching the fight from secure areas And so hypersonic systems do seem pretty promising there But I wouldn’t want to get out ahead of the PACOM commander—INDOPACOM commander—in making that judgment It was referenced in an earlier point with the security fund about how do we meet—how do we help spur on meeting the INDOPACOM’s requirements A big piece of what that has been over the last several years has been the Strategic Capabilities Office SCO A lot of their initiatives came out of INDOPACOM combatant commander requirements So I am concerned that there has been an effort to kind of divorce what SCO is doing from combatant commander requirements I think that tie is really important to us delivering a set of capabilities in the hypersonics systems area that actually have utility for the warfighter I think you really need that connection And let me just say on your question about the alliances we have a very robust set of industrial—defense industrial cooperation alliances with the—with the Republic of Korea with NATO allies with Australia and it is key to a lot of these technologies that we are talking about Samsung is a world leader in microchips and 5G You know the Australians are world leaders in quantum computing Mr CARBAJAL Let me get another question in before my time is up What drives the U S need for hypersonic weapons and how is this driver different or the same for China in developing hypersonics Mr HUNTER I think part of the answer is that we need a diversity of approaches to solve the operational problems that we have in the Indo-Pacific So I do think hypersonic systems give us options in the case of a high-intensity fight that we wouldn’t currently have So I don’t know that they are going to be necessarily critical to victory or failure But they definitely open up a space that do—can operate you know with a deterrence function to make the Chinese doubt that they might be able to succeed in some of their more aggressive plans that their military writers have written about that they could engage in in those island chains Mr CARBAJAL Thank you Mr Chair I yield back The CHAIRMAN The gentleman’s time has expired Mr Lamborn Mr LAMBORN Thank you Mr Chairman and I certainly agree with you Mr Chairman when you talked earlier about our resources are not infinite With that in mind I am so glad that we have a strong economy record low unemployment There is a direct correlation in my opinion between a strong economy and a strong defense The stronger the economy the stronger the defense and that is why we can have these well-funded budgets of last year and next year So let me follow up on the great questions and the great answers already on hypersonics and Ms Flournoy let me ask you We tend 25 to concentrate on the offensive capability of developing our own hypersonic fleet But what about the defensive capability of using missile defense type technologies to cast doubt in the minds of the Chinese if they ever consider a potential first strike and to show that those plans would not be something they could rely on Ms FLOURNOY Right So I do think we have to as we develop these technologies and as the Chinese do we do have to think about how we would also defend against them And here again I think there’s ample room for innovation You know I think there is a lot of interesting research and development going on in the area of directed energy and electric weapons If some of the electric—if some of the particularly electric weapons for ship defense if these are borne out—and it’s going to take some time these are not around the corner—but you know if these are borne out over the coming years it could fundamentally change the basic cost calculus of offense and defense and give the defense a real advantage in terms of much lower cost high magazine you know ability to defend our ships at sea who would otherwise be vulnerable Mr LAMBORN Okay Thank you so—thank you so much Now you have all referenced the military-civil fusion between the PRC People’s Republic of China and Chinese businesses So for any one of you the Chinese are paying close attention to the DOD’s outreach to innovative agile companies in the private sector which sometimes rely on venture capital And last month Michael Brown director of the Pentagon’s Defense Innovation Unit said he discovered that the Chinese were tied up in 15 percent of all venture capital deals So how should the Department of Defense handle relationships with private sector companies that are using venture capital with this as a possible source of influence by the Chinese or subterfuge by the Chinese Any one of you Mr HUNTER Okay Yes I mean this gets to the issue I have focused on for a while which is the opacity of a lot of the financial arrangements that go on in some of these mergers and acquisitions and investments because private equity funds may be based in one country but fundamentally the money is coming from somewhere else and in many cases we don’t know that information It is knowable We can require them to report it And so if a transaction comes into the CFIUS process the government usually as probably I would expect them to be successful in obtaining that information But because there is a lot of voluntary compliance in the CFIUS system the concern is there could be transactions going on that we simply don’t know about that don’t come into the process and don’t get that level of scrutiny So I do think that is a core issue with the increase in a lot of these big hedge funds and private equity and sovereign wealth funds is we don’t have good understanding of where the money is coming from and I don’t have enough expertise on the financial side to know exactly what the right solutions there are But the problem is very clear 26 Mr LAMBORN Ms Flournoy Ms FLOURNOY If I could just add I absolutely agree we have to know where the money is really coming from But we also have to make distinctions between entirely passive investment that is just interested in a good return on investment The vast majority of Chinese funding in Silicon Valley through venture capital is passive return on—it is a good way to make a return on you know investment Better than the stock market right But we need to be able to find are there cases where it is something else They are getting a board seat They are getting a controlling interest They are getting a decision-making right—set of decision-making rights They are getting access to nonpublic intellectual property Those are the cases that we absolutely want to use CFIUS to restrict But if we don’t make that distinction you know you are going to cut off a huge amount of blood flow in our own innovation ecosystem that does no damage because it’s completely passive So I just—we have to—this is where we have to be—use the scalpel not the sledgehammer Be nuanced in our understanding Mr LAMBORN I thank you all and thank you Mr Chairman I yield back my 3 seconds The CHAIRMAN Thank you And Doug you get the gold star for the day You got it done on time Mr Moulton Mr MOULTON Thank you Mr Chairman Ms Flournoy I thank you very much for being here It is great to see you and I want to talk a little bit about reestablishing credible deterrence which you said is the number one priority that we have with China Now I was just refreshing my memory as to how many nuclear warheads our countries possess America has 6 184 according to armscontrol org China has 290 That is a big difference We have about 21 times as many warheads as China It is also a huge investment and it is an investment that we are reinvesting in to the tune of trillions of dollars which is something that to some degree we have to do But I am curious how effective is this deterrence against China Ms FLOURNOY You know I think—I think nuclear deterrence for both sides puts the specter of escalation to nuclear conflict on the table and that is useful But unfortunately I think China has been consistently testing us as to what level of coercion aggression provocation can I get away with without the U S responding militarily and they have been pushing the bar higher and higher and higher And so my worry is they might miscalculate and think I can take Taiwan back by force and the U S isn’t going to respond because you know they have shown—you know because—so I am talking about conventional deterrence I think we have strong deterrence at the nuclear level—— Mr MOULTON So just to—— Ms FLOURNOY continuing We may have overkill at the nuclear level We probably do 27 Mr MOULTON Well just to put this in concrete terms has this— has 29 times as many nuclear warheads as China stopped them from building islands in the South China Sea Ms FLOURNOY No No it hasn’t Mr MOULTON Has it stopped them from doing—— Ms FLOURNOY It is really—it is a question of whether it would stop us from going to all-out conflict and put each other’s homelands at risk Mr MOULTON Right and I understand Has it stopped them from stealing—— Ms FLOURNOY Yeah No Mr MOULTON continuing Our intellectual property Ms FLOURNOY No Nuclear deterrence is—I think nuclear weapons are for deterring other nuclear weapons—— Mr MOULTON So if I look at this chart that Russia has—— Ms FLOURNOY continuing And to make us hesitate to get on the escalation ladder to war Mr MOULTON Right So Russia has 6 490 nuclear warheads I happen to be a Member of Congress who thinks that Russia is an enemy of the United States—— Ms FLOURNOY Mm-hmm Right Right Mr MOULTON continuing And they are doing things to try to undermine our democracy We need to have those weapons to deter Russia I get that But if—— Ms FLOURNOY Yes Yes And they also add a deterrent benefit for others—other nuclear powers that might consider using nuclear weapons But I don’t—but I don’t think it is the way—— Mr MOULTON But I don’t see how we are making the mark with the—— Ms FLOURNOY I don’t think China is the sizing mechanism for our nuclear arsenal Mr MOULTON Right But this is the problem This is the problem If China is our number one adversary and our number one investment in deterrence is nuclear weapons then I just don’t see how we are making the mark So what kinds of investments do we need to make to deter China not just to deter Russia Ms FLOURNOY Well I think we have to try to keep nuclear weapons deterrence in the background and we need to make the— only the investments that are necessary to keep a safe secure and effective deterrent and no more We need to use arms control to try to keep the constraints on or drive them lower because we don’t—any dollar that we spend more on nuclear—— Mr MOULTON Right Ms FLOURNOY continuing Capabilities we don’t need is taking away from the investments we should be making in the conventional deterrents and the emerging technologies that will really make the difference in terms of preventing war Mr MOULTON So what kinds of other transformative deterrence structures or technologies can we make to actually be effective at deterring China not just Russia Ms FLOURNOY No I think—and this is where I think in the near term it is looking at concepts of operations and tweaks in thinking asymmetrically to say how do we impose costs on China 28 that will prevent them from launching an act of aggression I gave the one example of holding their fleet at risk But this is—we went to school on the Soviet Union We have all read the books of—that were written about how to deter the Soviet leadership We have not gotten inside the Chinese leadership their strategic calculus with enough precision and understanding—depth of understanding to know how do we really affect their cost calculus in the near term with what we have and in the long term with what we are investing in That is the work and most—in my mind most of that if not all of that is nonnuclear in nature Mr MOULTON I mean it is extraordinary to me for example how much money effort time and government resources they are putting into controlling their population Ms FLOURNOY Yes Mr MOULTON The Uighurs for example Ms FLOURNOY Right Mr MOULTON What is our—what is our deterrence strategy visa-vis that clear critical vulnerability Ms FLOURNOY Right Well it also—deterrence is not just military You have to think about how are we using our political influence our ability to compete economically We haven’t even talked about One Belt One Road and how we respond to that how we use human rights violations and their record on that to constrain their influence more broadly Those are all really important questions Mr MOULTON Thank you very much Mr Chairman Mrs DAVIS presiding Thank you The gentleman’s time was up Mrs Hartzler Mrs HARTZLER Sure Well it is great to have you all here and to see you again Appreciate your expertise Very important discussion I would like to talk a little bit about the Chinese theft of sensitive U S military technology Obviously this is a very real concern maintaining our competitive edge China as you know has developed two fifth-generation fighter aircraft the J–20 and the J–31 which draw amazing comparisons to our F–35 So in your opinion is DOD doing enough to protect our fifth-generation capabilities from theft and if not what more should the Department be doing Mr HUNTER Yes So there is no doubt that the protections were inadequate in the past I would not venture to say that we have solved the problem yet But you are right I mean there were massive thefts of intellectual property and other information from U S defense industry and other parts of U S industry more broadly that the Chinese have taken advantage of In my testimony I mentioned shortcuts and that was what I was alluding to Have we tackled this problem We have not and it is a tough one because you know we often focus on the cyber threat and how this stuff can be stolen electronically and that has absolutely occurred 29 But that is not the only way You know the Chinese have obtained information by going into bankruptcy proceedings and getting access to—as evaluating—you know being an acquirer they can look at information about a company and then don’t even have to acquire it There is many many avenues by which they have the ability to gain information about U S industry But certainly cyber stands out as a critical one and the Department has this cyber maturity— cybersecurity maturity certification that they are setting up which is the right thing to do to make sure that industry focus on that I do have some concerns about how that will be implemented especially getting it stood up that we don’t end up forcing commercial companies out of our supply chain because they don’t—can’t go through the hassle of getting the certification on the front end and then end up you know declining to participate in our weapons systems programs because the certifications is not something that makes sense for them from a business perspective I think some of those issues will settle out over time But there is a real issue on the initial implementation that we need to pay attention to Mrs HARTZLER Anybody else want to share a little bit Ms FLOURNOY I would just add there is the human capital dimension as well the Thousand Talents program which has sought to kind of recruit people recently retiring from industry to come over and lecture and spend time in China There have been efforts to use academic research collaborations to get at sensitive technologies And again the scalpel not the sledgehammer There is a lot of flow—there is a lot of academic research collaboration in many fields that is actually—like health that is actually beneficial to both countries But in areas where there is a national security application we want to be really careful and look at the human capital dimensions of the problem as well Mrs HARTZLER And I am so glad you brought that up because that was my next question I have real concerns with some of the Chinese students that are coming into our country and doing highlevel research at our universities and the potential threat that we have there So you would suggest—what would you suggest Ms FLOURNOY Yes I mean I think we have to do—I mean I think the vast majority of Chinese students coming are honestly not there for espionage They are there because we have the best education system on the planet In the past we have done a really good job of recruiting the best and brightest to stay and become Americans and bring their talents here Right now our immigration policy is working against that and that is you know—you know shooting ourselves in the foot But I think we do have to do a better job of vetting and we have to be very careful in terms of what kinds of work they are allowed to do and whether truly sensitive research that is going on we want to make sure that we know exactly who is allowed into those labs Mrs HARTZLER Is that a State Department—just to follow up a little bit is that a State Department on vetting Ms FLOURNOY No I think—I think that it has got to happen more—providing—helping universities have the tools to better un- 30 derstand the backgrounds of their students But you may have ideas on this as well Mrs HARTZLER Yes Admiral Admiral MCDEVITT This past year—2 years—— Mrs HARTZLER Could you—I can’t hear you Admiral MCDEVITT I am sorry This past year the U S -China Security Economic Review Commission looked at this problem and in their annual—I am no longer on the commission but in the annual report it recommends two things one that the National Security Education Board that was—Higher Education Board that had been established in 2005 but was disestablished in 2018 by the director of the FBI be reinstated to take a look at this issue broadly to talk to university presidents and what have you And the other recommendation is that the GAO Government Accountability Office take—somebody needs to gather the data quite frankly Mrs HARTZLER Somebody needs to be what Admiral MCDEVITT Somebody needs to gather the data—— Mrs HARTZLER Oh Admiral MCDEVITT continuing On how many students there are how many are in STEM courses The CHAIRMAN presiding I am sorry Again we are going to have to leave that there The gentlelady is out of time Admiral MCDEVITT Anyway it is in the report The CHAIRMAN And we will go to Mr Golden Mr GOLDEN Thank you I wanted to quote the 2018 National Defense Strategy Commission in saying that because gray-zone challenges combine military and paramilitary measures with economic statecraft political warfare information operations and other tools they often occur in the seams between DOD and other U S departments and agencies making them all the more difficult to address Similarly in February of 2019 in testimony before the Senate Armed Services Committee the INDOPACOM commander Admiral Davidson testified that quote ‘‘Our adversaries are pursuing their objectives in the space between peace and war using fear and coercive actions across the instruments of national power to revise the rules-based international order without resorting to armed conflict ’’ Alongside like-minded allies and partners U S INDOPACOM and the whole of U S Government must compete in a gray zone between peace and war to win before fighting I think the point being that it would better to win this competition without a fight China’s gray-zone activities such as the Belt and Road Initiative information ops and broader and more involved military exercises pose risks not only to us but I think just as importantly to our regional partners—perhaps more so to our regional partners So I wanted to ask the panel in your assessment what is the Department doing well and what else should it be doing working with the whole of the U S Government to better empower our regional allies not only to compete but to push back against these coercive efforts that they are facing from China What do they need from us in order to make this an easier competition for them 31 Ms FLOURNOY I will just say I don’t think it’s a Department of Defense lead actually I think that this requires an integrated whole-of-government strategy You know first of all we have to decide where do we care to compete You know we are not going to counter every One Belt One Road initiative nor should we But there are some that are—touch on our strategic interests and there we need to think about what is our response It is not going to—you know maybe the Chinese are building you know a soccer stadium and a bridge to nowhere But maybe we could go in with digital infrastructure that really makes—helps a country join the sort of transparent open information system that frankly will ultimately counter the Chinese influence that they are trying to exert through their construction projects So we need to have a strategy is my point and then we need to look at what are the instruments we need to beef up—most of them will be nonmilitary if not all of them—to really allow—you know to be able to compete effectively where we need to Mr HUNTER And I would say I agree that DOD is not the locus within the U S Government nor should it be But it is a player in the conversation It is a participant and I would say in some of our allied partner nations it is much harder for their ministries of defense or their military to be involved Their governments just aren’t structured in a way that really supports that So I think something DOD can do working with partners and allies is help them bring those national security perspectives into their own government conversations in a way that will help Admiral MCDEVITT DOD—well DOD actually does conduct our own sets of gray-zone operations If you listen to what the Chinese say our reconnaissance flights around China in their EEZ exclusive economic zone that drives them crazy we continue to do it We continue to ignore their concerns about it credibly The State Department or whoever coined the term debt-trap diplomacy was a great example of gray-zone pushback if you will on BRI Belt and Road Initiative and it caused China to really rethink the whole approach And so it’s not that we are—it is all episodic though There is no central coordinating body Obviously that has to come out of the White House the NSC National Security Council or something Mr GOLDEN Thank you Obviously the point being that we want to keep our allies in the region feeling confident in us as a partner and keep them in alliance with us Ms FLOURNOY Absolutely Mr GOLDEN Real quickly I just wanted to point out to the committee as we talk about deterrence and everyone is always thinking about hypersonics about you know Navy ships what does the fleet of the future look like the Commandant of the Marine Corps General Berger has put out a white paper where he is talking about pivoting the Marine Corps back to naval expeditionary purpose that was its original mission and one that it has not been focused on for some time and he has specifically said that he wants to build a force that can facilitate sea denial and assured access in support of fleet and joint operations 32 I think that that is a likely potential successful deterrent if we support that pivot and I hope we will have some opportunity to talk about it in this committee in the year ahead The CHAIRMAN Thank you Mr Scott Mr SCOTT Thank you Mr Chairman and I want to thank the panel for being here We are finally getting to the issue that I want to talk about more which is the Belt and Road Initiative—what some refer to as the debt-trap diplomacy what I refer to as the recolonization of Africa and other parts of the world through payday lending schemes orchestrated by the Chinese Communist Party And Admiral McDevitt you wrote in your testimony it is difficult to overstate the important role that BRI plays in enhancing Chinese influence globally In the case of BRI seaport enhancement projects stretch from Greece to Malaysia I have been to Djibouti I have been to several of the countries in that part of Africa I have also been to West Africa Secretary Flournoy the one thing I would add to your statement is that when you talk about Indo-Pacific and the partnership need there I would simply add Africa to that as well And perhaps it is just that I have spent more time there than I have in the IndoPacific But I no longer believe that China is interested in operating in universally accepted global interest as some believe some didn’t believe that when their economy took off that they would be—that they would be good stewards But I want to ask you there is—the debt-trap diplomacy what I refer to as the recolonization of vast areas of the world through the payday lending scheme—the BRI of Communist China—as we talk about other ways to build partnerships one of the things that is being discussed right now is moving U S troops out of Africa I have been with some of those U S troops in Mali Niger Nigeria and that Lake Chad Basin area and MINUSCA United Nations Multidimensional Integrated Stabilization Mission in the Central African Republic which is the largest U N peacekeeping mission in the world if I am not mistaken The one thing I remember very well from that trip is the discussion about the damage that China is doing throughout that part of the world with effectively using the Belt and Road Initiative to steal the countries’ assets—to steal countries’ assets without any benefit to the general public What is the best way for the U S —not just the U S but the globe the rest of the world powers to counter that in both Eastern Africa and Western Africa and how do you counter it if you actually pull the U S troops out of there Ms FLOURNOY I will take a stab at it I do think again you need a whole-of-government approach Some of the most powerful instruments will be USAID United States Agency for International Development programs—— Mr SCOTT I agree Ms FLOURNOY continuing OPIC Overseas Private Investment Corporation programs to help incentivize private sector investment in the areas we care about the whole digital development initiative that has been started 33 So I do think those economic instruments and particularly things focused on digital infrastructure are very very powerful tools that we are underutilizing But I do think that where we have either interests—counterterrorism interests or we found partners who actually want to take on the fight on their home soil but they need some help—they need some training they need some enablers they need some support— that that is a very cost effective way for us to protect some of our interests and gain the political influence that comes with that without making—putting our guys kind of on the very front lines of combat in areas where you know others are willing to step up So I do think our troop presence carefully tailored makes a difference Mr SCOTT Would you agree that our troop presence is what allows USAID to operate and what allows other nongovernmental organizations to operate Ms FLOURNOY Depends on the area In high-conflict areas—— Mr SCOTT It is a fair question A fair statement Ms FLOURNOY continuing It certainly is relevant In others less so But we want to make sure it is integrated for sure in terms of looking at all the dimensions of strategy and how we approach individual countries Mr SCOTT My concern is that if we pull—if we pull what amounts to a very small number of troops out of certain areas that nongovernment organizations that provide services to the public— health care education—— Ms FLOURNOY The security environment may not be—— Mr SCOTT continuing Then they will not be there And I would just point out Admiral that you accurately state you know China has the ability to wreck their economies—talking about China’s neighbors If China would intentionally wreck an economy of one of their neighbors then you can bet your bottom dollar they will wreck the economy of a country in Africa and we need to make sure that when it comes to trade agreements and other things that we are providing some information that maybe less sophisticated countries need when they are engaging in that fashion with China The CHAIRMAN And the gentleman’s time has expired Mr SCOTT Thank you The CHAIRMAN Ms Houlahan Ms HOULAHAN Thank you Chairman and thank you Mr Scott for your questions Mine are going to follow up largely on those questions as well and largely be directed to Ms Flournoy I am also really curious as a member of both this committee and also the Foreign Affairs Committee specifically on the Asia and the Africa Subcommittees about if we have any real understanding of how the investment of China in Africa—what implications it has to our own national security Has there been any sort of overall study or understanding of that that we can reflect on is my first question Ms FLOURNOY So I think there has been some great outside work I know that my old think tank CNAS Center for a New American Security has done some very good work looking at this from a strategic perspective and making recommendations I am 34 sure that others like CSIS have as well and perhaps CNA I don’t know So there is good think tank work out there that I would commend to you But I think there—I do want to add that the—we do need a strategy We need priorities We can’t counter it everywhere nor should we There is a very powerful tool we have in transparency The more people understand the terms that China has imposed on some of these countries the more wary that others will be in going down this road So that transparency advertising it making sure people know what they are walking into providing that technical assistance in some cases that is very important Ms HOULAHAN And you touched a little bit on it with your conversation with Mr Scott in terms of the fact that we can’t necessarily respond directly to every single aspect of China’s Belt and Road Initiative but maybe we should be more strategic about how we respond and you talked a little bit about the digital response as an example Are there any other examples of those responses Have we studied anything Sir you seemed very interested in that Admiral MCDEVITT I just read something this morning that one of the success stories of Japanese-U S cooperation is with Myanmar Burma and sitting down and talking with them and empowering them to renegotiate the deal that they had already made with China and vastly improve the financial implications for Burma And those are the sorts of things that we have been trying to do piecemeal around the world where people are willing to listen The truth of the matter is as I put in my testimony given the fact of Chinese largesse no-questions-asked lending and what have you they have a whole bunch of people around the world that are willing to toe the line on Taiwan and Tibet and Xinjiang and not do anything to upset the Chinese in order to keep that noquestions-asked-funding flowing to keep their internal developments going And so China shows up with a credit card and a full billfold and it is very difficult to—for countries that can’t get the money anywhere else Ms FLOURNOY I would just add though the important—the big point here I think is we shouldn’t be doing this alone We should be doing this with our allies who have very shared interests in this area where we can put together a coalition with the Japanese the Australians—you know others who can collectively fund alternatives We will be much—have a much better chance of competing successfully Ms HOULAHAN And with my remaining time I was wondering if you all had any comment on what the implications of our current combat operations are current movement in the Middle East has towards our posture towards China Are you worried about that at all as we—the strategy of the current administration was to look to China and Russia and now seems to be going somewhere else Admiral MCDEVITT There is only so many ships can be only so many places and every time you have a large naval buildup or an 35 Air Force buildup in the Middle East that is—those are the same rotational forces that could be assigned to the Western Pacific or elsewhere in the Indo-Pacific that aren’t there Ms FLOURNOY Also a matter of mindshare and senior leader bandwidth These crises you know wipe everything else off the agenda And so you know Secretary Esper was out in the Reagan Forum saying my number one priority is China China China When he has a week like he had last week he is not spending a lot of time on China because—you know so I think there are real costs in both resources and in mindshare and what we need right now is a lot of creative thinking about Asia Ms HOULAHAN Thank you And Mr Hunter do you have anything Mr HUNTER Well let me just say briefly on the—kind of the Africa point that I think there is a strong role actually for DOD engagement there although I agree that it is a whole-of-government problem and the ally point But we do have to be careful because when we work with partner military organizations in Africa there is a possibility—a potential— that that can lead to coups and other things Where I think we have had a lot of success is with the Department’s logistical capacity So when we have gone to Africa and helped with the health care emergencies they have had because we can bring in medical supplies and that logistical capacity through things like LOGCAP Logistics Civil Augmentation Program can be really helpful Ms HOULAHAN Thank you and I have run out of time and I yield back The CHAIRMAN Thank you Ms Stefanik Ms STEFANIK Thank you Mr Chairman Secretary Flournoy I wanted to drill down on a particular emerging technology and that is artificial intelligence We have worked very hard to encourage and mature the Joint AI Center JAIC to have a more comprehensive strategy from the Department Can you give your assessment on the JAIC And I also want your recommendation I am going to visit the JAIC pretty soon here and what questions if you were me would you ask of folks when I do visit the JAIC Ms FLOURNOY So I think that General Shanahan has done a fantastic job of creating something meaningful out of nothing and under initially severe funding constraints—and I applaud the additional funding that you have been putting into the organization as it matures I think that the JAIC has a lot of promise I think it is very very important to you know inform setting of common standards and ethical principles policies and you know set priorities for what we are doing in AI across the Department I think one of the biggest things you may ask about is what kind of senior and mid-level kind of program manager kind of tech talent do they need and what could Congress do to better support them accessing that talent Very hard to take someone who has never managed a software development program who comes from you know a traditional ac- 36 quisition background put them in that role for 2 years and expect them to be successful So there is a training component There is an attracting talent component There may also be a financial component But I think— I think at this point the long pole in the tent is getting the right talent You now have a fantastic CTO Chief Technology Officer who is incredibly well regarded in Silicon Valley He—just him being there will attract people to come want to work for him But we need to make it a lot easier and reduce some of the obstacles to getting that talent Ms STEFANIK Thank you for that Switching to cybersecurity and a technical question—and this is again for Secretary Flournoy—are there any discussions or concerns about the potential installation of Chinese optical fiber and related Chinese photonic components in a DOD network or through our private contractors who are contracted to work with the DOD network I see folks nodding their heads So if others want to answer as well Ms FLOURNOY Short answer is yes and I think this is where we need to really scrub any dependency we have on any Chinese supplies and parts Some may not matter It may be fine Some of them are really not okay at all and could be very compromising either—you know from any number of perspectives But if there are others who have looked at this more closely and want to comment I am happy to let you do so Admiral MCDEVITT I would just say that the undersea cable networks that connect the world are all done by—are all privately owned There are no state owned And these are private contractors who are building this And so yeah we are liable to wind up with Chinese optical—Chinese material that is in some of these cables that are being laid And I honestly don’t know what the fix is but if the material itself gives—creates a situation where that data could be stolen or interrupted that would have huge financial implications for the world Ms STEFANIK And I just have a slight time left so I am going to jump in here We have touched upon the importance of allies and partnerships and as we think about countering the One Belt One Road Initiative when we think about countering China’s significant state investment in emerging technologies I believe that one of our greatest strengths is those partnerships and working with our closest allies I look at the effective R D that we have pursued between the U S and Israel for example What are specific initiatives that you would recommend we make investments in and with which particular countries Because there are countries that are leading in different sectors Mr HUNTER Yes So one recommendation—it may or may not require legislation but we have developed these OTA other transaction agreement arrangements which have the potential to be incredibly useful for working with allied and partner nations and national champions or technology leaders in other countries But I am 37 unaware as of yet that there is an OTA consortium that includes a foreign firm I think we should have those We should have purpose-built OTA consortia so we can work on those kinds of issues with partner nations where they have leading firms in key technologies Ms STEFANIK Thank you Secretary Flournoy 15 seconds Ms FLOURNOY I would just add I do think that in each of the technology sectors we want to identify who are the leading allied technology partners and seek to use things like OTAs and other funding authorities to try to really leverage their assistance and have some more in the way of joint projects Ms STEFANIK Thank you Yield back Mrs DAVIS presiding Thank you Mr Brindisi Mr BRINDISI Thank you Madam Chair Building on some of the questions regarding investments in information technology I am particularly concerned about DOD keeping pace—keeping pace with China in terms of our investment in information technology specifically quantum sciences It has been fairly well documented that information warfare is a core strength of the People’s Liberation Army and in recent years China has aggressively invested and increased the pace of its quantum research It has been publicly reported that China has surpassed the United States in many areas of quantum research which is deeply troubling because there is no doubt that early adopters of quantum technologies will gain significant military advantages For example quantum computing could be used for more effective artificial intelligence algorithms highly secure encryption of communications to defend against hacking and accurate navigation that does not require GPS Global Positioning System signals So Secretary Flournoy I am worried that we are slightly slow to fully recommend the massive importance of quantum technologies and invest accordingly Do you feel we are investing adequate resources fast enough in order to keep pace with China regarding quantum information science research Ms FLOURNOY I will say I have not looked at this at the level of detail that I can definitively answer that question But I do think this is an area where we absolutely must compete I think DOD using its own research and development moneys has a role to play But I also think we need to be using things like tax incentives and civilian R D university research R D to try to pull more effort from both universities and the private sector into this area Because I agree with your assessment It is absolutely critical that this is an area where we keep our edge Mr BRINDISI Any other Mr HUNTER Yes I would add you know quantum is really hard I think there is a general perception you know when you look at these key technologies that are identified in the NDS they are all important some of them much more near term than others and I would probably say of those quantum is more of a reach than some of the others 38 Having said that I also think in that respect DOD’s role here could be larger because I think it is going to take some time for you know the VC venture capital sector and others to really see the kind of return on investment they are looking for in these technologies So there is an opportunity for DOD to take a leadership role and shape the development of the technology globally and in the United States and that is something we should seize on That doesn’t necessarily require a massive investment of dollars but it does involve you know a commitment and having a clearly identified research community within the United States with DOD involvement to push forward on it Admiral MCDEVITT I would just say that my—I wish my 15year-old grandson was here because he is really into quantum I don’t understand what he is talking about But no seriously—— Mr BRINDISI He can educate me too Admiral MCDEVITT continuing That really is—— Laughter Admiral MCDEVITT I was a history major Give me a break Mr BRINDISI Me too Admiral MCDEVITT But the reality is this really is something that China is putting an incredible amount of effort into And so they see great advantages by—to taking the lead in this So this is one that I think that we definitely do not want to find ourselves behind the power curve Mr BRINDISI I know you mentioned the NDS The 2018 National Defense Strategy outlines that we must prioritize research and development of emerging technologies like quantum science artificial intelligence and machine learning China seems to have taken a much more whole-of-society approach than we are China’s military-civil fusion program seeks to explicitly foster ties between the military and civilian enterprises in order to improve military technology drive innovation and foster economic growth China is showing a clear commitment to investing heavily in game-changing technologies like AI machine learning quantum computing and while I am encouraged by recent steps in the right direction that we have taken I also believe that the United States needs to double down on its commitment to develop these technologies before our adversaries Mr Hunter part of my reason for my amendment to create a new Quantum Information Sciences Innovation Center in this year’s NDAA was to foster these collaborative relationships in order to accelerate quantum research Do you believe there are—there is an adequate amount of collaboration on the research and development of quantum AI and machine learning technologies across the different departments industry and academia currently Mr HUNTER I would want to maybe distinguish between quantum and AI in that I think—I think there is more we can and should be doing in AI On quantum I think we have been pretty proactive By we I mean the U S Government and the Department of Defense has 39 been pretty proactive working with the key industry players and being aware That doesn’t mean we should stop or that we don’t need you know—and then I would also add the international piece to this because you know the Australians have quite a bit of capability with quantum and we can leverage our alliances there to help as well Mr BRINDISI Thank you Mrs DAVIS Thank you very much Thank you Mr Banks Mr BANKS Thank you Madam Chair Biometric identifiers such as fingerprints and facial recognition DNA retina and other personal markers play an increasingly important role in military technological capabilities and threats In December the DOD issued a directive advising U S service members against using genetic testing kits such as 23andMe The memo states quote ‘‘The test could expose personal and genetic information and potentially create unintended security consequences and increased risk to the Joint Force and mission ’’ end quote So whether it is TikTok or facial recognition apps on an iPhone or 23andMe DNA testing kits Ms Flournoy what could the possible national security implications be if an adversary like China gained access to the genetic makeup of our U S service members Ms FLOURNOY I think the risk is that the development of bioweapons or potential bioweapons is moving into the realm of using genetically modified approaches So if there were significant genetic differences between say you know the American population in general and the Chinese population in general and something could be designed that would you know be very damaging to an American but you know a Chinese person would be relatively more protected or less susceptible or what have you you know you could imagine going down that road It sounds very sci-fi like but that is where the cutting edge of the research could go I think in this country there are ethical constraints and legal constraints on going there but in other countries that may not be so So I think that is what you know people are worried about is you know is there information that we think is harmless today but could be really misused in the future against us Mr BANKS Mr Hunter maybe you can—could you maybe elaborate or speculate more on why the DOD wrote the memo advising our service members not to participate in Ancestry com or 23andMe type genetic testing kits Mr HUNTER You know when you consider what could be done with this information I think we all on a daily basis—you know you read the articles about the way in which we can all be tracked by people getting access to our cell phone information and the pings that our cell phones are sending out every day and someone can completely map out your life So from an espionage perspective if you know where someone is spending all their time and you know first of all you can go find them there Secondly you might discover things that would be personal reliability risk factors If they have—if they have health issues maybe in the family maybe that is something that could be leveraged from an espionage threat perspective 40 And you know when it comes to genetic information you are going to—they are going to find out a tremendous amount about someone’s family and their structure and that could again pose a risk for being targeted for espionage Mr BANKS Ms Flournoy in your opinion is the DOD adequately resourced to counter China’s biometric warfare efforts Ms FLOURNOY Honestly I haven’t looked at it to know and give you a good answer I am happy to—I am happy to look into that But I think it is certainly an important area where both our intelligence community and our broader defense and national security community we need to take care Mr BANKS Mr Hunter Mr HUNTER You are asking about biometric with respect to— could you just—I am sorry just repeat—— Mr BANKS Are we adequately addressing this threat and what can we do to better resource the DOD to battle back against it Mr HUNTER Yes Well I have to admit when I think about biometrics it’s usually from the perspective of how we leverage it You know we did a tremendous amount of use of biometrics in Afghanistan to try and understand who we were working with and to identify people coming onto U S FOBs forward operating bases And so you know a lot of the effort within DOD has been how to leverage that information how to share that information because it is really challenging to do all the data transfers necessary to actually—when someone walks through a door you identify them to get that information to the person who can do something about it if they are a threat Well if you flip it around and say what is the risk of you know Chinese technology being used to track and monitor U S personnel I agree that is one I haven’t spent as much time thinking about how we would get after that problem Mr BANKS Thank you very much I yield back Mrs DAVIS Thank you Mr Gallego Mr GALLEGO Thank you and Rear Admiral you kind of hit upon this earlier When Ambassador Harris was Admiral Harris he advised the committee that the area in which we had the most significant dominance was in undersea domain In an environment where our surface assets are threatened is there a coherent strategy relying on those undersea assets to maintain deterrence Admiral MCDEVITT Do you mean undersea—do you mean submarines Mr GALLEGO Yes Admiral MCDEVITT Right now at least on the 7th Fleet fact sheet that is on the internet they say that on an average day there is somewhere between 8 and 12 nuclear attack submarines in the Western Pacific and in my testimony I suggested that needs to be increased to say 10 to—or 12 to 15 And it would be useful I think to have four of them homeported in Japan We have four in Guam and put four on Japan At 20 knots if a submarine leaves Pearl Harbor it takes 9 days to get to the Taiwan Straits and so that is a long time if you are 41 looking to plus-up the number of resources that you have there because—to deal with Chinese ships and what have you So is there a strategy Obviously the Navy has a force assignment and allocation process in place but is there a strategy based upon having how many submarines would we like to have on a day in and day out basis to be able to as Ms Flournoy said sink the Chinese navy then I am sure that is—I am sure somebody knows what the answer is but I am sure it is also classified Mr GALLEGO Ms Flournoy yes can you expand I am very interested in your idea in terms of the deterrent factor of for example sinking the Chinese navy Are we actually rightsized for that Ms FLOURNOY If I—if I could just say there is a big important set of force multipliers for the undersea competition and that is unmanned systems—for ISR intelligence surveillance and reconnaissance for strike for counter mine and particularly the larger extra large UUVs unmanned underwater vehicles —and this is a classic area where the Navy needs to be able to have some of these to experiment with to develop concepts and then procure at scale But in terms of—again that was just one example What I am trying to get at is you know when we face or try to deter a nuclear power from going to war over their vital interest and something that we also care deeply about but they may perceive that their interest is stronger than ours what can we hold at risk credibly without necessarily you know walking up the nuclear escalation ladder And so I think—and if you can hold at risk the very assets they would need to launch the aggression or carry it through and that the costs of—to those assets would be quite—not just tactical but strategic then I think you know that is—that is what we need to think about I think if we developed some new operational concepts and made some tweaks we do—you know there are munitions we have today and platforms that we have today that if we were to make them— they’re cross-service but we could put them together in ways that would give us a near-term kind of interim solution or you know option and there are probably others So again the really important part of this is funding the concept development experimentation efforts things like the SCO that take really hard problems of the combatant commanders and say I know maybe I will solve it in 10 years when new technology is here but I don’t have that long I’ve got to solve it today and tomorrow in the next 5 years—how do I do that with what we have and really put some serious effort behind those creative concept work and then technology tweaking and cross-service work to get to some of these solutions The one I gave was just an illustrative example I am sure there are a hundred other good ideas out there Mr GALLEGO Thank you I yield back Mrs DAVIS Thank you Mr Waltz Mr WALTZ Thank you Madam Chair So just to set the table for a moment and to be very candid I think we are in a new Cold War with China They certainly have been with us for some time I think the policies that we are seeing under President Xi has accelerated that dynamic 42 I don’t think the United States in many ways across our whole of society has fully woken up to what Xi has explicitly stated he wants to go and where he wants to go in terms of global dominance But if you look at how the U K United Kingdom essentially peacefully stepped aside as a global leader post-World War II and the United States essentially made that a fait accompli there is a large body of analysis out there that I have seen that essentially wants China or believes that China is going to follow that same model So that if you look at what we are facing over the next 10 years particularly right around 2030 Chinese military dominance on the cusp if you buy—if you buy into the fact that they plan to do this by 2035 our entitlements going upside down our debt reaching 100 percent of GDP gross domestic product if not sooner their navy larger than ours in quantity and possibly in some cases quality as well So it really is a perfect storm in many ways for them to make that essentially a fait accompli for the United States to begin sharing if not stepping back from the world order that I think many take for granted So going back to a deterrence model and what we can do now between now and then Ms Flournoy or really for the entire panel what would be more of a deterrent getting inside the Chinese thinking what they fear the most Is it things like for example a free Hong Kong The Uighurs on its western—on its western flank so to speak in its western boundary A rearmed Japan Denial to our capital markets A unified Korea Are those things— what would deter Chinese behavior and aggression more Things like that or a few more submarines in the Western Pacific Because I would argue—I am probably showing my cards—that it would be the former not the latter and I completely agree with you Ms Flournoy in counting ships and counting planes one isn’t the right metric but number two it is not one on the current economic paths that both countries are on that we could win So I really—I mean I think a lot of this back and forth today has been great and illustrative But I don’t know that this committee is really thinking about or frankly or the administration the American society is really thinking about this in the right way and in a creative way And I would welcome your thoughts on that kind of premise Ms FLOURNOY Yes This is why I started my testimony with saying I realize this is the HASC House Armed Services Committee and we are focused on military dimensions of deterrence But this is a whole-of-government and a whole-of-nation challenge and the Communist Party cares about one thing which is staying in power in China period Mr WALTZ The Iranian regime as well I will throw in there Ms FLOURNOY And—yes and so there are lots of ways that we can help them to be very preoccupied internally and also that we can use their missteps in places like Hong Kong or if they were to overreach in Taiwan to mobilize the world to push back on their coercion and their aggression 43 I think again this is not—we have to think in terms of allies and partners You know the U S trying to counterbalance and constrain China’s negative behaviors is much harder than us rallying other like-minded states—democracies—who want to push back on authoritarian systems in general and certainly don’t want a world order in Asia that is defined by Chinese coercion Mr WALTZ Completely agree And just in the interests of time if there is any hard recommendations I am also on the Science and Technology Committee and we are wrestling with on the one hand dramatically increasing our authorizations and investments on the other hand not using those investments then or finding ourselves in a situation where those investments are essentially supplementing the Chinese who are taking advantage of our very necessary openness So how do we on the one hand make those investments that we need keep it open enough but also block and tackle that—you know those then new technologies running right over to Beijing I am talking National Science Foundation NIST National Institute of Standards and Technology you know those other areas that have frankly from a cultural standpoint have not really kind of bought onto this threat and—— I yield Mrs DAVIS Thank you We are going to have to—we are going to have to stop it there and I know that you have been adding to those questions along the way Thank you Ms Escobar Ms ESCOBAR Thank you so much to our panel for being here this morning Really appreciate your time I have learned a lot through our discussion today I was especially interested in your opening Secretary Flournoy where you talked about how part of what would make us stronger in terms of our competitiveness against China is investing in ourselves investing in our R D investing in STEM Mr Hunter you talked about the challenges in our workforce with regard to so many foreign students and coming from a university that—where I get to boast that the vast majority of our STEM university graduates are American citizens ready for clearance we see the competition with other universities where there are a lot of foreign students And so it makes it more challenging obviously because of the clearance issue Now with regard to the—your testimony Ms Flournoy and Mr Hunter you all mentioned the need for flexibility in contracting when it comes to new technology and smaller innovative companies Can you both share your perspective on whether efforts like Army Futures Command are hitting the mark Also are we doing enough to support the vast array of technologies and competencies like advanced materials manufacturing facilitated by 3Di printing And finally is Congress providing the necessary support for this agility If not what else can we do I know that is a lot of questions Tried to squeeze them in And then Admiral if you have anything to add I would appreciate your thoughts as well 44 Mr HUNTER Yes On Army Futures Command to my mind it is still fairly nascent which is not a critique because it takes time to establish a four-star command I am highly encouraged by the work done by the cross-functional teams CFTs I think it is—you know there are six of them and so—at my last count It could be updated And so I think they are not all the same right They aren’t all achieving the same things I am most familiar with the Future Vertical Lift CFT—vertical lift aviation—because we have done some work with them where I think they have come up with some very creative approaches to make a generational shift to a next generation of technology And I think that the work that the CFTs have been doing is what I right now think of as what Army Futures Command is accomplishing and I think a lot of it is very positive I want—I hope that we reach an outcome where the CFTs and the goodness that they have brought to the Army’s modernization program is sustained and brought forward by Army Futures Command and not supplanted by Army Futures Command and the structures that it puts in place And I do have to say you know the Army has been the leader in the use of other transaction authority agreements So they have been on the cutting edge of these more flexible tools for reaching out to nontraditional partners and they deserve full credit for that So on the whole I would give it a pretty good grade at the moment But we still have to keep our eye to make sure that the bureaucracy doesn’t kind of solidify around some of what they have been doing On additive technologies I do know—I think that is still a huge area of opportunity for the Department of Defense I think the capabilities that additive brings really suit very well to military missions You know the example a lot of folks talk about is having a 3D printing machine on a carrier where they can print the parts and not have to go back into port or ship them out The military applications are really really well tailored to that technology Ms ESCOBAR Thank you Ms FLOURNOY And following up on your question in the spirit of Representative Thornberry’s request for concrete proposals so this committee has done an incredible job of seeding lots of you know authorities types of support to try to spur the Department to innovate I think what we need now is a couple of efforts to kind of really assess what is working what is not I would love to see like an end-to-end analysis to sort of say if you’re a small company and you start with a SBIR Small Business Innovation Research contract in the Air Force then you get an OTA to prototype Then you—like almost an end-to-end how do these—this patchwork fit together into a path that a small—that is repeatable and that companies can be successful moving down Where are the gaps where do they—you know in practice where are they falling through the cracks where are they stumbling and getting disconnected where are they—you know what—so to really assess put it all together as a journey because that is what the experience is 45 for these companies and how do we help them make the full journey those that you know are successful The other thing is sort of traditional you know management consulting portfolio analysis Again lots of things have been tried In some cases it is too early to assess whether Futures Command is succeeding But can we start doing some regular portfolio analysis by this committee to say what is actually working out there where are the wins and how do we double down and start scaling those and if it is happening in one service how do we get it across all the services and so forth Mrs DAVIS Thank you Ms Flournoy I think we really do want to put that piece together I appreciate it Ms ESCOBAR Thank you Mrs DAVIS Mr Wittman Mr WITTMAN Thank you Madam Chairman Thank you to the panel members too for joining us today Admiral McDevitt I would like to begin with you and follow up on your written testimony where you talk about the track for the Chinese navy and where it’ll be in 2035 with essentially 420 ships about 260 of those blue-water ships the other 160 various other types of ships Again I am pretty taken aback by that 420 ships That is a pretty significant navy and that doesn’t include various auxiliary ships minesweepers smaller amphibious ships In fact to put that in perspective just this last Sunday as you know the Chinese commissioned a Type 055 Renhai-class destroyer Now that is on par with our cruisers and they are going to be using that to support carrier strike groups and we saw recently they commissioned their second aircraft carrier the Shandong who allegedly can support 36 fighter aircraft So they are building quite a capacity and if you look at where they are going with large transport ships amphibious transport dock ships with larger platform amphibious ships capable of carrying aircraft they are on track not just to be a near-peer competitor but—and to be a pacing threat but be one that we are going to be far behind as they are pushing with everything they have got to build a 420-ship navy by 2035 and we are doing everything we can just to try to try to get to 355 ships not to mention that the big sucking sound we are getting ready to hear in years to come out of the shipbuilding account is going to be Columbia class And certainly we need that but that is $128 billion that would come right off the top in the shipbuilding account and we had a discussion about that the other day about national sea-based deterrence and trying to not have other shipbuilding programs be the bill payer for Columbia I want to go to Admiral Gilday’s words yesterday at the Surface Navy Association He said ‘‘If we believe that we require overmatch in the maritime if we believe that we are going to execute distributed maritime operations and operate forward in greater numbers now that we need more iron then we need more top line ’’ 46 And to this end I ask you this Can we hope to keep up with the Chinese our pacing threat and not let them so surpass us that we have not the impact we need to deter in the maritimes If we continue down the road of the formula of one-third onethird and one-third for our service branches since in the future or I would argue even today the tip of the spear that capability to be there on station to be able to deter and to react and to act is there in the maritimes with the Navy-Marine Corps team And no detriment towards our Army and Air Force brethren but I just want to get your perspective on that Admiral MCDEVITT You know as a former naval officer—as a retired naval officer one part of me is saying hear hear But in truth I think we need to not be too carried away by the numbers game with regard to the PLA navy I talked about the numbers game just to give some sort of a sense of how big the breadbox is quite frankly But we also need to remember that the Navy we have and that we will have for the foreseeable future—you know the ships that are here today or we are building tomorrow are going to be with us for another 30 years or so—is we still have a qualitative advantage We may not have a numerical advantage And certainly we don’t know how well those ship—the Chinese ships actually are in terms of can they maintain those things when they are out 6 months on deployment Are their sailors really competent to do anything Does the dual command arrangement—where you have a political officer and the commanding officer both of the same rank—how will that work when the chips are down et cetera et cetera There is lots of uncertainties here and so clearly I think that— I didn’t hear what the CNO Chief of Naval Operations said yesterday at the Surface Navy Association but I do know that the U S Navy is really terrified by the prospect of having a hollow Navy And so whatever they need whatever size Navy we wind up with it ought to be fully resourced and ready and not be—not be something that is—we can’t—I lived through a hollow Navy where you can’t maintain the ships where you don’t have enough sailors the spare parts are nonexistent et cetera et cetera et cetera So—— Mr WITTMAN Yes Mr Hunter Mr HUNTER Just two thoughts I mentioned in my testimony— in my written testimony that you know shipbuilding is an area where the Chinese have made incredible incredible progress and to my eye it is directly tied to the fact that they have a commercial shipbuilding industry that is world class They are world leaders in that area And so it is perfectly logical that this is—it is the reinforcing function why I say you have to pay attention to the economic commercial side Secondly on budget share I will just say if you look at contract data and budget data not to say that the Navy has exactly the right share today but I am not as concerned now as I used to be that the services will all just get a third because it has changed quite a bit in the last 5 years 47 And the Department of Navy actually has done well Mrs DAVIS Thank you Thank you Mr Brown Mr BROWN Thank you Madam Chair What an insightful and informative discussion today So I want to thank Admiral McDevitt and Director Hunter Secretary Flournoy for being here today and sharing with us your thoughts on DOD’s role in competing with China We have talked a lot about modernization and procurement force structure technology AI quantum computing—a lot of things—the impact on the budget I want to kind of shift a little bit to sort of current and near-term allocation of resources deployment of forces you know ISR intelligence ground forces and let me just start with a statement that General Votel offered a year ago in his posture statement as you know former CENTCOM U S Central Command commander He said ‘‘We recognize the U S is rightly shifting its resources toward Europe’’—he is thinking Russia—‘‘and East Asia’’—he is thinking China—‘‘to balance great power competition but remain mindful that the CENTCOM AOR area of responsibility represents a geopolitical crossroads and a principal zone for that competition as well ’’ We saw and I think there was a question when I was out of the room that the Pentagon is eyeing a drawdown in Africa I visited AFRICOM U S Africa Command There is some collective anxiety about their troop strength and their role in great power competition I visited SOCOM U S Special Operations Command recently They are sort of creatively describing their mission to meet both the counter VEO violent extremist organization effort which they spent a lot of time and they do a great job but how they also play a role in great power competition and if you’ve had the same experience I have when they try to articulate that they are struggling a little bit So I guess the question is what is the intersection of our requirement to counter violent extremist organizations and to take on great power competition Sometimes there seems to be oh it’s an either or Once we sort of settle the violent extremist organizations and we minimize that threat which we mostly see in CENTCOM but we know it’s in Africa it’s in the Indo-Pacific then we will even have more resources to modernize and take on China and Russia Can you share with me some thoughts about the intersection today—current allocation of resources and assets and how the counter VEO threat enables us to compete with China Anybody Admiral MCDEVITT I am going to tee up former Secretary Flournoy because what you’re talking about really in terms of the Department is having to balance risk You have to make a—there is never going to be enough money to do everything There just won’t be So the question needs to be what is—where are you willing to if you will disinvest or take troops out of Africa or wherever it is where you think you can accept that risk and take those resources and apply them somewhere else 48 And so people like former Under Secretary Flournoy are the ones that have to make decisions on how do you accept that risk Ms FLOURNOY I used to advise my boss and he would make the decisions Laughter Ms FLOURNOY But no I do think that we need—after you know 20 years or almost 20 years we do need to sort of take a strategic look at countering violent extremism not only from a military perspective but from other tools and to really assess you know which of these groups directly threaten the United States and the United States homeland which of them you know threaten important allies and partners and we want to assist them in dealing with you know building their capacity and dealing with them you know and which of these are really really nasty groups but frankly it is more important to use our resources we would use to cover down on them say in the special operations community instead to regrow the kinds of Cold War skill sets that special operations had in terms of you know what are they going to do vis-a-vis the Soviet Union So in a great power competition the special ops becomes very important in the gray zone They become very important in any kind of irregular warfare or use of proxies They become very important if it actually came to some kind of confrontation you know behind the lines and in the shadows and so forth Those are skill sets that community has not really trained and practiced on and used for decades now and so they have a very big challenge to start reexercising some of those muscle groups while also keeping a lid on counterterrorism and CVO because we count on them for that And that threat is not going away even if we are willing to manage some risk in that area Mr HUNTER If I could just add you know having been in the Pentagon when we had 150 000-plus troops overseas and we might have a daily variation of 5 000 troops in theater at any—from day to day I am always a little puzzled by having you know really intense discussion about 1 000 troops in this location You know I mean it is just—to me it is a little overblown Not to discount the—you know the mindshare issues that have been brought up And I would also say when it comes to Africa you know it is the fastest—economically the fastest growing continent and likely to be so for some time to come The Chinese are making a huge strategic play for it So I don’t see a U S return on investment if you will by pulling out from there in a meaningful way That doesn’t mean you can’t adjust Mr BROWN Thank you very much I yield back Madam Chair Mrs DAVIS Thank you very much I just want to thank you all I want to thank Mr Smith Mr Thornberry for bringing this together I think there are a long list of people that were here throughout the morning and it has been very informative I can assure you we want to follow up on a number of these issues and thank you very much once again 49 Ms FLOURNOY Thank you very much Mrs DAVIS Meeting is adjourned Whereupon at 12 26 a m the committee was adjourned A P P E N D I X JANUARY 15 2020 PREPARED STATEMENTS SUBMITTED FOR THE RECORD JANUARY 15 2020 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 WITNESS RESPONSES TO QUESTIONS ASKED DURING THE HEARING JANUARY 15 2020 RESPONSE TO QUESTION SUBMITTED BY MR COURTNEY Ms FLOURNOY I do see the contradiction South Korea actually makes one of the largest contributions to defray the costs of the U S troops it hosts relative to other allies They are actually a very good partner in terms of financial support as well as military and operational cooperation So we should not be beating them about the head and shoulders on this issue See page 21 RESPONSE TO QUESTION SUBMITTED BY MR TURNER Ms FLOURNOY China is one of the few countries that has real leverage over the North Korean regime given Pyongyang’s dependence on China for both trade and energy supplies Any serious U S diplomatic effort with regard to North Korean nuclear weapons should aim to bring China on board as a partner in reducing the threats to regional stability that North Korea poses The U S and China have a shared interest in preventing conflict on the Korean peninsula and the U S should seek to enlist and encourage Beijing to use what leverage it has to keep Kim Jong Un from undertaking provocative actions like nuclear and ballistic missile testing and to incentivize him to come to the negotiating table and engage more seriously on measures to reduce and roll back the North Korean nuclear threat See page 23 91 QUESTIONS SUBMITTED BY MEMBERS POST HEARING JANUARY 15 2020 QUESTIONS SUBMITTED BY MR MITCHELL Mr MITCHELL Ms Flournoy in your witness statement you raise concerns about the DOD acquisition workforce its training and use of the flexible authorities Congress has provided in recent years I supported legislation this year that directed the DOD to update its certification and education requirements Do you think this legislation went far enough Do you have any recommendations for future legislation and or recommendations for the DOD as they implement this legislation Ms FLOURNOY I applaud your efforts to require the Department to have more rigorous education and certification requirements for the acquisition workforce My main concern is that leveraging cutting-edge commercial technologies to accelerate defense innovation requires a different approach to acquisition than what the DOD acquisition workforce is traditionally trained to do Acquiring software—and other technologies that use agile development—is a very different process than acquiring an aircraft carrier or weapons system I also applaud the requirement in your legislation for DOD to establish training and management programs for oversight of software development and acquisition That’s a great step in the right direction But I think the Department needs to go farther in three key ways First it should develop a cadre within the acquisition workforce that is trained and specialized to focus on commercial technologies that require agile development processes including but not limited to software As you well know the Department is currently relying on people who’ve managed traditional acquisition programs to oversee software development programs that require a completely different skillset risk tolerance and approach to be successful Second the Department needs to incentivize the new cadre and the acquisition workforce more broadly to use all of the flexible authorities that Congress has provided with speed and at scale In some cases the spiral development process associated with developing and integrating emerging commercial technologies will require program managers and their seniors not to mention their Congressional overseers to be willing to tolerate a higher degree of risk than is normally the case Taking appropriate risk that allows developers to fail fast learn and iterate for more rapid success should be recognized and rewarded Third the Department must provide a viable career path for this new cadre and attractive opportunities for promotion over time QUESTIONS SUBMITTED BY MR WALTZ Mr WALTZ How do we increase authorizations and investments in science and technology research across the U S government while ensuring that those investments are not exploited by the Chinese government Especially for those agencies like National Science Foundation National Institute of Standards and Technology National Oceanic and Atmospheric Administration that may or may not fully comprehend the threat to their data Ms FLOURNOY The surest way to strengthen the United States’ ability to compete with China is to invest in the drivers of American competitiveness This includes investing in science and technology research across the U S government and incentivizing the private sector to increase its R D investment as well In terms of reducing the ability of the Chinese government to exploit that research we should have a clear notion of which areas we need to protect There may be areas where it is fine for us to share and collaborate e g climate change mitigation technologies or ways to prevent pandemics But in areas that touch on national security we should take care to protect against compromise or exploitation along several dimensions First we should require USG agencies to undertake careful due diligence on any foreign research partners Second research teams should be required to show that they have undertaken a cybersecurity assessment to determine whether appropriate measures have been taken to protect sensitive IP from state-sponsored cyber threats Third there should be more fulsome interagency discussions on this subject so that agencies outside the national security community that sponsor or conduct some of this research are aware of some of the national security factors or concerns Mr WALTZ What options do you see for strengthening the scrutiny with which Chinese investment is reviewed by Committee on Foreign Investment in the United States CFIUS Ms FLOURNOY The CFIUS process has been strengthened over the years and I believe it is performing well I don’t have any particular recommendations for how 95 96 to make it stronger In general I think we should focus not on passive Chinese investment but on investments that would give Chinese investors a controlling interest access to non-public IP a board seat and or substantive decision-making authority in companies that have dual-use or national security related technologies Mr WALTZ What do you believe is China’s strategy in Africa and why is it important that the U S maintain a presence in the region Ms FLOURNOY China seeks first and foremost to secure access to strategic natural resources that it relies on for its economic growth Its near-term motivations to gain access and influence in Africa are largely mercantilist in nature That said for the long term it is also seeking access to infrastructure and leaders that can support future growth in its military footprint specifically military bases that could be used for power projection and the securing of sea lines of communication Given the scale and scope of China’s Belt and Road initiative the United States must take a strategic approach to deciding where it is important to counterbalance Chinese influence and prioritize accordingly We also need to be creative about how best to compete for influence in key parts of the continent leveraging new tools like a U S Digital Development Fund This will help ensure that we have the influence we need to protect our interests In the near term we also need to evaluate the presence we require to support important ongoing counter-terrorism operations Mr WALTZ How do we increase authorizations and investments in science and technology research across the U S government while ensuring that those investments are not exploited by the Chinese government Especially for those agencies like National Science Foundation National Institute of Standards and Technology National Oceanic and Atmospheric Administration that may or may not fully comprehend the threat to their data Mr HUNTER The awareness of the Chinese threat to U S R D is currently high among U S government agencies including the civilian R D agencies However the main vulnerabilities associated with this information lies in the entities that perform the bulk of this research which are primarily universities and industry The awareness of the aggressive measures Chinese institutions employ to collect research and technology from U S and other international sources is also growing in this R D community However this awareness comes after a long period of time in which China’s successfully exfiltrated large volumes of U S R D meaning that existing university and industry information protection practices need reform and making these changes can be difficult and sometimes expensive Solutions to the problem are also complicated by the need to distinguish basic science research which is generally published and publicly shared and technology development that requires protection While 6 1 basic research is usually designed for public release 6 2 applied research often has dual use applications and can be harder to assess Usually 6 3 advanced technology development is more focused on applications where military relevance is clear In addition the talent pool for advanced science and technology work is heavily dependent on foreign students including many from China This requires the research community to clearly distinguish between more general scientific work which can be internationally shared and undertaken by international students from more focused research that must be closely protected from espionage For industry engaged in R D activities there is a financial incentive to protect intellectual property so that revenues resulting from the R D can be retained by the firm There are also strict contract requirements and procedures for handling classified information but a significant amount of important information falls outside the classification schema while nonetheless requiring protection The Department of Defense has been increasingly working with industry to enhance security for this ‘‘controlled unclassified information CUI ’’ working to identify this information and develop protocols for protection The civilian R D agencies have recently worked to expand protection of CUI among their research recipients For universities the challenges are more acute The financial incentives around information protection are less clear cut and the challenges steeper There are also less clear mechanisms for enforcement Having said that the university research community is now taking the challenge seriously A recent December 2019 report by the JASONs https nsf gov news special_reports jasonsecurity JSR-19-2IFunda mentalResearchSecurity_12062019FINAL pdf commissioned by the National Science Foundation recommended a path ahead on these challenges It leverages the existing mechanisms in place for enforcing research integrity as a means of ensuring compliance with the need to protect CUI In my view the most effective path to improving university information protection practices is to work closely with universities to identify mechanisms and protocols that work in the university research setting I am concerned that an approach not well coordinated with key research universities will drive researchers away from 97 government work while not substantially increasing security The National Science Foundation does seem the best equipped civilian agency to take on this role potentially with support from DOD’s Under Secretary of Defense for Research and Engineering Mr WALTZ What options do you see for strengthening the scrutiny with which Chinese investment is reviewed by Committee on Foreign Investment in the United States CFIUS Mr HUNTER CFIUS is a highly effective review process when it is engaged In fact the expansion of CFIUS reviews as a result of the FIRRMA legislation have reportedly served to substantially reduce Chinese-connected M A activity in Silicon Valley and elsewhere in the United States The two biggest hurdles for effective CFIUS review right now are resource limitations and the growth of non-transparent investment vehicles such as private equity The CFIUS review process has no dedicated funding source Agencies staff CFIUS reviews as they arise and if the pace of cases increases there is no corresponding increase in the resources available to review them This creates the potential for understaffed reviews at just the point in time they are most needed for example during a surge in overseas investment in sensitive U S industries There has been some discussion of creating a dedicated funding source for CFIUS through a transaction or filing fee I think resourcing this process properly should be a priority One of the main challenges of CFIUS reviews is determining how extensive the potential for foreign influence is that needs to be mitigated Private equity and other investment funds can be used a vehicle through which foreign funding can reach U S companies while presenting either a domestic or non-threatening foreign fac¸ade This issue is addressed in the banking system through ‘‘know your customer’’ mandates This problem could be addressed with disclosure requirements for mergers and acquisition activity in the absence of more transparency in private equity more generally Mr WALTZ What do you believe is China’s strategy in Africa and why is it important that the U S maintain a presence in the region Mr HUNTER China’s approach to Africa is consistent with its broader foreign policy objectives of developing a network of friendly states with political and commercial ties to China in which China plays a leadership role Often these ties work very much to China’s advantage through the development of long-term leases of critical infrastructure such as ports and with preferential access to Chinese industry China sees Africa as a major area of foreign policy opportunity because of historically good ties between China and Africa historically problematic ties between Africa and the West and the dramatic growth of African economies China’s presence in Africa is highly visible and comprehensive My colleague Judd Devermont has written an in-depth look at China’s activity in port infrastructure and the potential challenges this presents to U S interests https www csis org analysis assessingrisks-chinese-investments-sub-saharan-african-ports The United States has seen many of the same strategic opportunities in Africa and past Administrations have sought to leverage these opportunities through increased trade ties e g the African Growth and Opportunity Act cooperation in fighting the AIDS epidemic PEPFAR and support for more effective governance and development through the Millennium Challenge Corporation MCC On the military side U S Africa Command AFRICOM was formally separated from U S European Command in 2007 so that a dedicated command could focus on building security through strong military relationship across the continent AFRICOM was initially structured to facilitate this long-term relationship building with a strong tie to the U S State Department The longer-term relationship and security building aspect of AFRICOM’s mission is probably most important to countering Chinese influence in Africa However operational realities in Somalia Libya and the Sahel region have also made AFRICOM one of the United States busiest operational commands While the footprint of U S forces in Africa has been relative light these operations have been very active continuous and they range widely over multiple areas The U S presence has been important in helping to avoid conflicts spreading across the African continent and in directly countering terrorist influence If the United States were to abruptly abandon these operations without an opportunity to transition them to other forces if any were found willing to take them on it would substantially set back U S credibility on the continent and undermine many of the relationships already established Æ