Perry's Principles

hen William J. Perry became secretary of Defense three years ago, few observers predicted a happy tenure at the Pentagon's helm.

Perry was inheriting a military and defense industrial base reeling from the most profound drawdown in a generation. The post-Cold War era posed a host of difficult problems for which there were no blueprints, from nationalistic conflict and humanitarian disasters to the detritus of four decades of a nuclear arms race. His commander-in-chief had a troubled relationship with the military. Some observers felt the thoughtful mathematician lacked the necessary charisma for the job.

Three years later, Perry has left office widely lauded as one of the most successful secretaries of Defense in history. In a January retirement ceremony where Perry received the Presidential Medal of Freedom, the nation's highest civilian honor, President Clinton lauded him as "one of the ablest people who ever served the United States in any position."

Perry managed to forge a close relationship both with the military and the defense industry, the two sectors affected most by the drawdown he managed. "Perry represented the only person in the Clinton Administration who was able to articulate a rationale for using military forces in pursuit of national security," says retired Gen. Edward "Shy" Meyer, former Army Chief of Staff.

Harry Stonecipher, chairman of McDonnell Douglas, one of the largest defense contractors in the nation, seconds that assessment. "I think Bill Perry was the best secretary of Defense I've seen since entering this business, and that's been more than 40 years," he said. "He put together the best team, and took a very pragmatic, non-partisan approach to defending this nation."

Just before retiring in January, Perry discussed his legacy with defense reporters, including James Kitfield, defense correspondent for National Journal and a Government Executive contributing editor. The following are excerpts from Perry's last interview in office.

Looking back at your tenure at the Pentagon's helm, how do you assess your legacy in terms of your goals and achievements?

From the beginning, I viewed national security policy in terms of goals and the processes needed to achieve them, meaning doing the things that make the management process work in an entity as huge as the Defense Department. In terms of goals, my No. 1 priority was the issue of the careful and effective use of force. That's an issue I've given a lot of thought to-when and how to use military force, or the threat of military force. That's almost the first job of the Secretary of Defense, because the President relies very heavily on the recommendation of the Secretary in terms of when and how to use force.

Some analysts have drawn distinctions between your views on the use of force and those of former Joint Chiefs of Staff Chairman Gen. Colin Powell.

There have been press accounts that tried to draw a very sharp distinction between the two of us, but we actually have very similar views on the fundamental principles underlying the use of force. Number one, you have to have clarity of mission. Colin was always very explicit on that point. You also have to have very precise and robust rules of engagement. The third principal is that when you go in, you go in with what Colin called "overwhelming force." I have not used that exact term, but if you recall, when we went into Bosnia, I said we were going to represent the biggest, toughest, meanest dog in town. That was another way of saying the same thing, which is if you have a convincing and overwhelming force, you probably will not have to use it.

You've been widely credited by those in uniform for guarding the readiness of U.S. military forces.

Closely related to the effective use of military force is maintaining the force's readiness. That's been a top priority of mine, because in contrast to the Cold War era, I believe today when we are called upon to use military force it means acting now to project force to the other side of the world in just a matter of days. So we have to have a highly ready force, and the air and sealift to get them where they need to go. And in terms of the effective use of force, and force readiness, I feel quite proud and confident about what we've accomplished.

What other priorities did you bring into office?

Another primary goal was to transform our approach to dealing with security problems, particularly those policies associated with the Cold War. During that time the Defense Department was fundamentally oriented around maintaining a nuclear deterrence and deterring a blitzkrieg attack in Europe. That has been transformed dramatically, and my top priorities included reducing the nuclear infrastructure left over from the Cold War. We've achieved big results in that effort during the past four years, including the dismantlement of over 4,000 nuclear warheads.

Many observers point to acquisition reform as a key component of your legacy.

Transforming the way we manage the Defense Department was a key goal, and one very obvious aspect of that change is the way we buy goods and services. That goes under the heading of acquisition reform. There's been a true sea change in terms of how we buy products from our suppliers, and the dramatic changes we've introduced into that system has already saved us literally billions of dollars, with the potential to save us tens of billions of dollars in the future.

But you are viewed as generally supporting the spate of mergers and consolidations.

If I stepped back and rated not DoD, but the defense industry on how well they've managed this consolidation, I think they've done very well. I have two tests for that. First, by our best, objective estimates these consolidations have saved the Defense Department a few billion dollars. And we expect those savings to accrue into the future.

Secondly, we believe the technical capability of the U.S. defense industry is the highest in the world, and quite capable of meeting our needs. If you want a very interesting independent assessment of the consolidation of the U.S. defense industry, look at the reaction of European defense companies. From what I hear from those countries, they are very, very apprehensive that the U.S. defense industry has increased its efficiency and competitiveness and is forging ahead of the European competition.

How do you rate your efforts to shrink the size of the military?

I'm quite proud of what we accomplished in the BRAC [Base Realignment and Closure] process, especially in managing the process in a way that took real responsibility for the effects of base closings on the people and communities involved. That's borne fruit in very important ways. Though it was hardly reported in the media, we also reduced the size of the military by nearly half a million people-and reduced almost as many civilians-with almost no involuntary layoffs or RIFs [reductions in force]. That was supremely difficult, but I think we did a very effective job of managing the drawdown without causing significant dislocations.

You obviously inherited an organization in the midst of profound change, and enacted a very ambitious agenda. What do you believe were the keys to that success?

The process changes we had to implement to accomplish all of these goals were very important. The first key was developing a very strong, effective partnership between the military and civilian leadership in the Defense Department. I assert that we have the best civilian/military partnership that has ever existed in the Pentagon.

When Air Force enlisted personnel awarded you their prestigious Order of the Sword, it recognized what many believe was a special relationship between you and the uniformed rank-and-file. Was that also a personal goal?

I had a strong personal desire to develop a bonding with my troops, particularly the enlisted personnel. And very early in my tenure, I discovered the right mechanism to accomplish that, specifically developing a close working relationship with the senior NCOs [non-commissioned officers] from each service, and accompanying them on base trips every few months.

That has been a great success story, and on the list of things that I made for [new Defense Secretary] Sen. William Cohen to consider doing in the future, I put that very high as something he should consider continuing and institutionalizing.

That sort of hands-on approach seemed to characterize your management style.

The management principle that I brought with me from industry and tried to apply to the Defense Department is what's called management by walking around. The principal is that you don't make big management decisions by reading reports. Whether you're talking with enlisted personnel, foreign ministers or defense industry executives, you base your judgments and decisions on what you learn going out to the field and talking to people and seeing what's happening firsthand.

While you're doing all that walking around, however, who's minding the store?

None of this could be done without having a very strong team at OSD [Office of the Secretary of Defense], beginning with my deputy. Certainly I couldn't have logged 700,000-plus miles without having a deputy here in the Pentagon who was very competent and who enjoyed my full confidence, and who everyone understood had the authority to act for me in my absence. That's the so-called 'alter ego' relationship between the Secretary and deputy that was absolutely key to our success. It's another insight that is high on the list of things which I passed along to Sen. Cohen.

The general principle here, and it permeates down to the rest of the civilian team, is that you cannot truly manage an enterprise of 3 million people and $250 billion. Rather you manage it by setting policies and priorities, and then pick able people to administer them.

Your tenure at the Pentagon has seen a radical contraction and downsizing of the defense industrial base, coinciding with years of declining defense budgets. How do you rate your own leadership in this restructuring of the "arsenal of democracy?"

It's important to realize that we never tried to directly manage the defense industry restructuring. I said from the beginning that the Pentagon would not undertake that task, unlike the defense ministries in a lot of European countries. Our role was to provide industry leaders with honest and detailed information about the size of the market and our budget so they could intelligently plan and restructure themselves.

During this transformation of the U.S. defense industry, have you had to recast the largely adversarial relationship DoD had with its suppliers in the 1980s?

I think that relationship is undergoing fundamental change already, tied not to mergers and consolidations but rather to the reform of the acquisition system. When you go and visit program offices today, many times you see project action teams that include military users, government contract officers and industry suppliers all working together. That will fundamentally transform that relationship.

A number of experts have been warning of an approaching budgetary train wreck for the Pentagon, stressing that the procurement budget which funds modernization has fallen by two-thirds since its peak in 1986. Yet insiders caution that the fiscal 1998 defense budget will do little to alleviate the mismatch between resources and the size and operating tempo of the military.

To be very candid with you, my principal concern with the modernization program which is spelled out in the 1998 budget and future-years plan is not so much with 1998, but rather with the out years. We think our plan is fine, but we have a history of not meeting the out year increases in the modernization account. If you look back in history at why, you'll find that there are two primary reasons. First, poor management of procurement programs in the past have led to huge cost overruns, which took money away from future programs. The other category of problems are unplanned contingency operations, which take billions of dollars away from our procurement account.

We've looked carefully at our own record, and the performance of our procurement programs have improved dramatically in recent years. I'm pretty confident that we're not facing substantial overruns right now.

In the second area of contingency operations, we haven't done so well in recent years. We have, however, made two very important improvements in the past year and a half. First, the bulk of unplanned military operations have been funded through supplemental appropriations. Most importantly, in 1997 and again in 1998, we set up an account and planned and programmed money for these operations ahead of time. While they will not totally relieve pressures to shift money from the procurement account, those two actions represent fundamental improvements.

Implying that our military forces have been stretched too thin by peacekeeping and humanitarian relief operations, many Republicans would prefer to solve the problem by using our forces less.

I don't believe we're overcommitted, nor do I believe we're in danger of being overcommitted. The misconception of overcommitment is based partly on the mistaken belief that a bigger percentage of our force is deployed than is in fact the case. We're talking about a relatively small percentage of the U.S. military involved in these operations. A second misconception is that the forces involved in peacekeeping operations lose their ability to do other types of missions. I dispute that. Based not only on my own observations, but also on the remarks of people actually involved in managing these operations, I believe these operations frequently provide excellent training opportunities.

Yet the Pentagon is involved in a Quadrennial Defense Review to reconcile what many observers see as a mismatch between resources, military force structure and readiness. Do you dispute that the military is stretched thin in meeting all its requirements at its present size and funding levels?

Those are two different issues. I do believe we've reached a limit. Over the last 10 years, we've reduced military forces by about one-third, from 2.1 million personnel to just under 1.5 million. That's a pretty damn big reduction, but we've accomplished it without being destructive of military morale or our fighting capability.

The force levels we're at now, however, are about the minimum required to allow the U.S. to maintain its role as a global superpower. The QDR will obviously address that issue, but my going-in position if I were conducting the QDR is that I would not seriously consider further cuts to our force structure.

Yet you've gone on record in the past as saying that if proposed procurement budget increases and acquisition reform savings do not materialize in the out years, you would cut force structure rather than cut modernization funding or force readiness.

I try and present this issue with what I call an iron logic. If you tell me we're going to reduce the defense budget by 20 percent, then we're going to have to cut force structure next. There's no question about that. If we cut force structure, however, we can no longer meet our present requirement to be able to fight two major regional conflicts nearly simultaneously. To me that means we would no longer be able to carry out our role as a global military power.

Now, I believe that it would be a huge mistake for the United States to back away from its role as a global power. But there has to be truth in advertising in this debate. If we have to cut the budget substantially beyond where it is today, we have to cut force structure, and therefore we can no longer honestly project ourselves as a global power.