On Tuesday, May 3, 2011, Northrop Grumman Chief Executive Officer and President Wes Bush addressed the Institute for International Strategic Studies in London. Below are his remarks.

Changing Global Security Environment: Challenges for the Defense Industry

I’m very pleased to be here to talk about our world’s changing security environment and its implications on the partnership between industry and government. And I think this is a good place for this discussion, because I believe that meeting the challenges of this changing security environment also will depend heavily on the relationship between our countries.

Of course, the so-called “special relationship” has been an important feature of our collective security for generations now. And, I feel that, years from now, we may well conclude that our mutual dependence was as important to our security this century as it was at the height of the Cold War. 

So, for the next few minutes, I would like to talk about this new environment:

  • The effect of its rapid evolution on defense and technology companies like the one I lead; and
  • What steps we need to take to ensure that we harness those changes to the advantage of our two nations – their economies and national security – and the free world itself.

Most agree that much has changed in the manner in which our nations defend our citizens and interests. Two decades ago the Soviet Union fell, and with it fell a relatively tidy geostrategic situation. Back then it was easier to spot the bad guys. Most had armies, navies and air forces to analyze and to counter. And it fell to UK and US your defense industry and ours to supply our nation’s leaders and armed services with the capabilities to do that.

Though the Soviet Union has disappeared, the framework of enduring security needs associated with the Cold War has not. We will always need to assure military dominance through power projection, strategic deterrence, global access, and global awareness.

What has changed is the advent of a new body of security requirements added to those more familiar ones. I’m talking about threats to what might be collectively called the global commons.

Think of the global commons as those elements of geography, resources, even cyber-space, upon which all people depend, and to which all people presume access. Examples of the global commons would include the familiar ocean domains and outer-space, but would also include cyber-space, and energy resources; areas under environmental threat; and food and water-rich areas among a world population that grows every year in numbers, desperation, and technological savvy.

Perhaps our nations do not have direct current interests in some of these areas, but our elected leaders understand that they nonetheless hold strategic importance. For example, the U.S. Government has determined that climate change is a national security issue.

It is clear that the instability caused by such upheavals and disruptions has real strategic implications that must be managed. These are new challenges unknown to the Cold Warriors of years past. And they require new tools and approaches.

In this new age, a Nimitz-class aircraft carrier still plays an important role, but the large-scale force structure it represents is no longer enough. Indeed, the changing geo-strategic environment is driving the development and application of new technologies, and the use of traditionally military technologies in non-military roles.

Let me offer a couple of examples:

  • A decade ago, I don’t think anyone would have foreseen requests by allied governments for the services of high-altitude, long endurance, unmanned reconnaissance aircraft over troubled nuclear reactors; or
  • To monitor weather patterns and climate change; or
  • To monitor earthquake damage and help find survivors in Haiti;
  • Not to mention the use of other models of UAVs as attack platforms for long-range counter-terrorist operations.

Advances in technology have revolutionized unmanned systems. And those systems have, in turn revolutionized counterinsurgency operations. They have enabled the collection of intelligence for use against insurgents and terrorists in both conventional military and non-military contexts. And they have given us and our allies access to satellite-style capabilities at air-breather prices, for uses both military and civil.

As for that aircraft carrier I mentioned a moment ago, UAVs will eventually increase its capability by orders of magnitude while reducing its operations costs and personnel risks.

The need to patrol and defend this global commons was much more limited a generation ago, when the world was divided among a mere two or three contending spheres of influence. But today that geo-strategic clarity is no more. The threat is now diffuse and its equally diffuse challenges must be met.

And, as western nations usually solve such needs, many of the solutions are technological. UAV technology has proven to be importantone way, but it must be complimented with something else – something the U.S. calls “C4ISR.”

As you know, C4ISR is a ponderous acronym for Command, Control, Communications, and Computers, Intelligence, Surveillance, and Reconnaissance. It is a broad category of technologies that amounts to situational awareness, and the ability to engage in an assured manner utilizing that awareness.

The advantage of having such awareness, and being able to utilize it effectively, is that it obviates the need for huge numbers of troops stationed in every conceivable hot spot or area of interest throughout the global commons, be it a battlefield, a power grid, or a darkened city street.

And let me stress that C4ISR has proven itself in civil roles as well as military ones.

In January of 2009, a U.S. Airways passenger liner ditched on the Hudson River in New York City. It was C4ISR technology that helped ensure the ability of first responders and emergency vehicles to arrive on scene as quickly as they did.

Sixteen months later, in that same city, a terrorist named Faisal Shahzad parked a bomb-laden car in Time Square. Thankfully it failed to detonate. And a chain of C4ISR technologies – beginning with surveillance cameras in Time Square – combined with some great detective work, helped law enforcement agents arrest Shahzad minutes before boarding a flight to leave the country.

And here is another new wrinkle.

Shazad’s case – as have so many others before it – reinforces the demise among our adversaries of distinctions between “fair game” military targets and “out-of-bounds” civilian targets.

Potential adversaries today make no distinction between a traditional kinetic attack on a given nation’s navy, and a cyber attack on the same nation’s domestic power grid, or its financial system. And those attacks might be directed by governments of long standing, by stateless terrorist organizations, by crime cartels, or by disgruntled loners. Today, the threat is truly multi-dimensional everywhere against everything, from just about everybody.

So how did this come to pass?

It is the astonishing speed with which technology is evolving that is the source of both these new capabilities and these new vulnerabilities. And much of the focus of this rapidly evolving security environment – the eye of the storm, if you will – a key element they all have in common – is computing power and the extraordinary connectivity of modern communications.

Computing power is accessible in ways that weapons-grade plutonium, or a tank, or an attack submarine, simply are not. And it is fungible, being applicable to any number of uses.

It can be applied to the mapping of the human genome, the curing of diseases, or defenses against ballistic missile attack. But it can also be used to track and interfere with a reconnaissance satellite. It can be used to steal your mother’s identity, or prevent her access to her bank account. Or, for that matter, to hack into a defense department computing system. 

Today computing power can even trump kinetic systems because many of those kinetic systems are largely at the mercy of computing power.

And combined with modern communications, that computing power, with all its many uses, is accessible to virtually anyone and everyone. And that creates a set of threats and vulnerabilities that change the global security equation.

A previous U.S. defense secretary once warned of the possibility of a “cyber Pearl Harbor.” Imagine the panic that would ensue in the hours after such a surprise attack, when entire populations suddenly had no electrical power; no telecommunications; no access to their bank accounts or health records; no way to communicate with their extended families.

While we can imagine some terrible scenarios, the point is not to create fear about what might occur. Instead, it is to help shape our thinking about our present reality and the actions we must take.

The example of cyber vulnerabilities points out the diminishing relevance of such traditional peace-keeping bulwarks as deterrence through scale, national borders or even treaties.

And that leads to a very important conclusion: No member of the community of free, law-abiding nations can afford to go it alone.

As it has for generations, technology will remain at the heart of our ability to defend ourselves. And the development and application of those new technologies must represent a broad, concerted effort among nations with common interests, and with the intellectual capital and industrial base to contribute.

For this reason, I believe the United Kingdom is integral to the demands of this new security environment and the technologies driving it. The UK is home to a superb base of intellectual capital supported by a university system second to none. These are matched by world-class manufacturing capabilities. And it is all nourished by government policies supportive of strong trade relations with other nations. And our close, trusted relationship enables us to work together in a very unique way.

Perhaps no other program better exemplifies the value of our partnership than the F-35. The U.K. is the only Tier-one partner on this program, and a large percentage of every aircraft built – including those intended for American use – will be built here in the U.K. The company I lead is a major sub-contractor on that program and I can tell you that we look forward to many other opportunities to partner here.

I believe it is in the interests of any American technology company to promote and cultivate the health of this relationship. And there are several things that can be done to do that.

The US-UK Defense Trade Cooperation Treaty is a positive step in strengthening bilateral defense co-operation and will help reduce the barriers to the exchange of defense goods, services and information-sharing, which will speed up the response to operational requirements. The implementation phase of the Treaty is now particularly important and we look to the British Government to work with the US Administration to maintain momentum so that we can use its provisions to the benefit of our UK customers through streamlining of advanced technology transfer procedures.

To the credit of President Obama’s administration, the U.S. has finally started serious attempts to reform the laws and regulations governing our export control – or “technology transfer” as it is often called.

To rely on technological superiority as a strategy, both the U.K. and the U.S., must maintain those things that truly make us superior. However, with regard to technology transfer, the U.S. has for years made the perfect the enemy of the good. We have been so focused on protecting our technological edge that we have actually done severe and unnecessary damage to our defense industrial base.

Case in point: Satellites.

Years ago, we were so concerned about others gaining the “force multiplier” benefit of satellite communications that we essentially made it impossible for U.S. companies to sell communications satellites to our allies. We somehow thought that we had a corner on that technology, but we were badly mistaken. The very policies that were intended to keep this technology secure for us actually encouraged others, who could not buy it from us, to develop their own. In fact, many even marketed their products as “ITAR free.” America lost valuable export opportunities and we are no safer as a result.

The DoD is now promoting what is clearly the better policy – build higher walls around fewer things. The primary motive for such a reform makes eminent sense: to better support our allies, and to codify the technology sharing that occurs every day on the battlefield and in the joint training we perform.

However, I think such reform initiatives should also be promoted for reasons of sustaining the industrial base here and in the U.S. By broadening the international market for our high-tech products, proper reforms will translate directly into the preservation and expansion of the high-tech workforces in the U.S. and the U.K. Any efforts to strengthen our respective industrial bases will keep us safer for the long term, particularly if they lead to even more robust partnerships of the sort I mentioned earlier between our two countries.

Of course, the most advanced and effective technologies are of no use if no one can afford them. And so a concerted effort must be made to protect the affordability of what we produce.

In the U.S., much of the threat to specific defense and security programs is focused on customer exhaustion with cost and schedule performance issues against a backdrop of economic and budget pressures that are as dire as any we have seen in recent memory. I know that you face very similar challenges here in the UK. 

Now, we in the defense industry can’t fix the economy, so we must do something about the affordability of our programs. We have got to aggressively tackle the cost and scheduling issues that encourage the termination, or the paring-back, of so many important defense and security programs. And in the U.S. at least, there is much that can be improved. It requires Government and industry to accept that we must make many changes, together.

Dr. Ashton Carter’s affordability initiatives in the U.S. are driving many of these efforts.

And Bernard Gray’s report on UK procurement highlighted many similar issues and opportunities.

This is all well and good. But how to actually make some of these expensive programs more affordable?

I believe there are several actions, beyond the procurement reforms themselves, that we need to address together.

First, we need to embrace innovation to help address the issues of affordability and schedule performance maintenance. We need to devise new ways to support our customers’ missions that incorporate true affordability as an absolute requirement. Designing to cost is a MUST. This is not just an issue for industry – it takes the collective determination of industry and its customer to pull this off.

The second thing that I think will make a difference in our affordability efforts is to better integrate systems we already have or are already in the works – a particularly attractive option for two countries such as ours. Again, this is a task for our innovators, with real innovation needed on all fronts – technical, business, acquisition, operations, etc.

Doing so could lead to combined solutions for our end users that would give them what they need faster and cheaper, while justifying less expensive and less risky individual components – all the while, providing inherent risk mitigation through layering of capability. It also supports the continuous evolution of systems, which has historically proven to be much more cost effective and mission supporting than the “big bang” approach to new solutions.

It is true that the changing global security environment has grown very complex very quickly with no end in sight to its rapid evolution. The threat is now against every conceivable target with no distinction between military or civilian. The threat may originate – perhaps anonymously – from peer competitors, their proxies, stateless terror organizations, crime cartels, and even unhappy individuals.

But by no means are we powerless. We have at our disposal a tool of incredible power – it is the combination of free-thinking innovation within the nurturing environment of our free-market economies. Added to that, we have a strong moral and ethical component in our arsenal, and we should not forget the importance of the alignment of innovation and motivation. And these powers can be magnified through closer and more rationalized partnerships. We can, together, innovate our way to greater efficiencies, reduced redundancies, and greater affordability.

Today the defense industrial bases of nations like ours are global resources that must be managed and nurtured holistically. They can no longer be managed as stove-piped systems hermetically sealed from the efficiencies of better cooperation.

The obstacles to closer partnerships between our nations are not as formidable as they may sometimes seem. Despite the often-quoted phrase that we are two nations divided by a common language, we have so many common interests and so much shared heritage that we are very well placed to overcome such difficulties. But it needs a constant act of will – one which I hope we will continue to undertake together for many years into the future.