gram is well in hand, and this will produce the first initial production by, I believe, in '96. The Burkeclass DDG-51 destroyer continues. The C-17 aircraft is a vital program for us to replace the C-141. We flew the wings off those in the gulf last year, and we badly need to bring on line this new strategic-lift capability. The other programs on there, I think, speak for themselves. The B-2 bomber is listed because we are spending money on it in '93 in our proposal to close out the buy.

One program that's not mentioned here that should be mentioned — the chairman may want to say something about it when he gets up: We have included in the budget as well significant funding for new sealift to enhance the mobility of our forces in connection with the priority that Congress has established in past years.

The other programs are listed here. We can get into that in more détail if you want. The same basic concept that we've applied here will apply to these other programs.

In addition to programs that are being terminated or modified significantly as a result of our new acquisition strategy, there were a number of other programs, 17 in particular, that are being terminated this year. These decisions were made through the normal defense planning review process. Some of these, such as SRAAM-2 and the Peacekeeper rail-garrison systems, were systems that the president decided last fall in his nuclear initiative announced September 27th to cancel. This simply implements those cuts.

A reminder of some of the major program terminations that we've undertaken in the last couple of years, '91, '92 — the Apache helicopter, the M-1 tank, Trident submarine — in many cases these programs came to fruition, and we had produced enough or we changed the buy or reduced the programs in line with our changing force structure. In some cases, the A-12, for example, we had major problems with the program, and it was canceled for those reasons. It's important clearly at budget time, though, to remember what we are going to fund as well as what we're not going to fund. And contrary to some of the reports I'm sure none of them filed by anybody here today — that we were going to cancel all procurement ... we are going forward with a number of programs that we think are important. The Strategic Defense Initiative continues to be a high-priority item for us. Given the development of ballistic missile capabilities in the Third World and the breakup of the former Soviet Union, we have to anticipate, I think, that there will be a proliferation of new weapons capability, including ballistic missiles, to nations that don't currently have it. The building and deploying SDI, GPALS, the Global Protection (Against Limited Strikes) system, I think, is a crucial item for us, and it is fully funded in this year's budget.

The F-22 we want to continue with, of course, the next-generation air-superiority fighter. That pro

Personnel Reductions

The reductions we planned with respect to active duty and reserve personnel and civilian personnel within the Department of Defense will continue. There are some adjustments in the profile, the pace at which we're taking down the force, partly as a result of Desert Storm and Desert Shield. Going through the war in the gulf, we had a stop-loss order out that of course meant we couldn't take down the force as rapidly as had originally been planned. Once we got through the war, we still have to get down to the end-strength numbers originally envisioned in our base force. So we're actually accelerating the reductions in some areas.

With respect to the guard and reserve, we didn't get the full reduction that we asked Congress for last year, so we've got to come back at that again this year, and we will continue to press Congress hard to give us the authority and the flexibility to take down the force in an intelligent fashion. Gen. (Colin) Powell (chairman of the Joint Chiefs of Staff), as I mentioned before, will have some comments in this area during the course of his remarks.

Finally, let me review briefly the status of our strategic nuclear forces. This is just a recap of the president's decisions announced

last Sept. 27th. All of those steps that we took at that time unilaterally to reduce the size of the U.S. stockpile and to encourage the Soviets to do the same — I might say we've been pleased with their response to date.

This includes everything from eliminating our ground-launched tactical nuclear weapons, a process that's now well under way, withdrawing our tactical nukes from our sea-based system, standing down the bomber force from alert, deactivating eventually - first standing down, then deactivating — our Minuteman Ils, 450 of our ICBM launchers, etc. That was the September initiative. The actions that the president announced last night, of course, build on that to a large extent. This is just a summation again of what was in his speech last night, terminating the B-2 at 20 aircraft, canceling the small ICBM program, terminating further production on the advanced cruise missile - and we'll have 640 of those instead of the thousand originally planned — and eliminating the need for further development of the W-88 warhead — that's the heavy warhead for the Trident missile. We are going forward with the D-5 missile production, so we won't be deploying any more of the W-88 warheads on that system.

In addition, of course, last night the president proposed certain bilateral actions, steps we're prepared to take if in fact the Soviets, the former Soviet Union, Commonwealth of Independent States, Russians, agree to reciprocate. We are prepared to continue to pursue our objective of trying to de-MIRV (multiple independently targetable re-entry vehicle) the landbased missile force, specifically eliminate all 50 Peacekeeper missiles, download the Minuteman Ills from three warheads to one,

duce planned submarine warheads by a third — and that, of course, is a significant new development that previously had never been proposed by an American administration and to shift many of our strategic bombers to primarily conventional roles.

We've asked the Soviets in turn to agree to eliminate all MIRVed land-based ICBMs, to reduce strategic nuclear force levels

consistent with the change in the threat from the West. I might say, as the White House has already announced today, we have been pleased with President Yeltsin's statement in Moscow this morning; we think it's a very positive forward step in moving in the direction of reducing the stockpiles on both sides, and we look forward to having the opportunity to discuss that with him this weekend up at Camp David.

If you sum up the overall level of effort with respect to the total number of strategic warheads as a result of the proposals that are now on the table, the president's initiative of last night would reduce U.S. strategic warheads -- and Gen. Powell will have more detail on this in a moment —reduce overall strategic warheads to a level 40 percent below START (Strategic Arms Reduction Treaty) counting limits, and actual warheads — that is, the START counting limits of course contain certain discounts but actual warheads would be some 50 percent below those levels that had originally been planned after the START treaty was fully implemented.

So the strategic initiative that's now on the table is indeed, I think, one of historic proportions. It has major ramifications if we are going to successfully implement it. And i think it is a subject that should not be overlooked at a time when we're in the middle of the normal budget cycle and State of the Union process.

At this point I'd like to call on Don Atwood, the deputy secretary, to say a few words about our new acquisition strategy, and then ask Gen. Powell to comment.

engineering, manufacturing, development and then on in to production. It at best is a complex system, but one necessary in order to establish all of the criteria that we need before we go from one phase to another. There have been many problems, because mostly this has been driven by the fact that we have felt the great urgency to continue the development and incorporation of new technology in our weapons.

The Soviet Union always seemed to be either just behind us or, according to the records, just ahead of us. And we were driven by this, so that almost every program that entered this cycle was aimed toward production. There are many things that we've done over the past three years in order to improve this.

In particular, we have streamlined the reporting channels, according to the Packard commission report, within the services ... SO that a program manager who runs the program reports to someone directly, to the service acquisition executive, who in turn is responsible to the undersecretary for acquisition. It's greatly streamlined, greatly reinforced as far as the channels of communication are concerned.

Secondly, we have set premilestone criteria. They're set in advance before a program can go from concept into demonstration and validation, or from demonstration and validation on into engineering and manufacturing and so on.

Each program must indeed meet these milestone criteria. And we have in fact been disciplined in the approval given to these programs. The pressures are always great,

because of the advent of new technology and the desire to get this into production, to often bypass those milestone criteria — with the excuse ... if I know it didn't meet certain requirements, or I know all the prototypes weren't tested, but if we don't go ahead, the program will be late. And of course that's just nonsense. It will be late because we didn't do our job.

So we have in the past disciplined them. That's the present system. It does have a lot of bureaucracy inherent in it. We're faced now with a different world situation in which we are no longer being chased by the Soviets or by the Russians in the development of new technology. We have weapons which have proven themselves to be the finest in the world. And we don't have to get into production on new ones just because we're chasing someone or they're chasing us.

I think the main point I want to make out of this is that the new approach to acquisition is going to put greater emphasis on research and development.

In particular, we will be putting increased funds on research into new and advanced technologies for application and future weapons systems. We will be starting more technology research programs. All of them or most of them will not go into production in the immediate future. But it will allow us to have a better store of these technologies for future application. There will be increased emphasis on the development and the evaluation of technology demonstrators and prototypes. And these demonstrators and prototypes will be not just to check out technology for product design, but also the technology

New Acquisition Strategy

Atwood. Thank you, Dick. I'd like to spend just a moment before we talk about the new approach to acquisition to talk about what our present system is. ... The multiphase program that we presently employ starts off with a statement of the mission needs established jointly by the services and by the Joint Requirements Operations Council.

It then enters the acquisition cycle and goes through a series of phases, including concept exploration, demonstration and validation,

needed for new manufacturing techniques. Once we have this store of technologies, then some on a selected basis will be incorporated into present systems. They will be incorporated into those present systems provided the following take place: No. 1, that those technologies have been proven out, both in analysis and in tests.

Secondly, that there's a definitive need because of an improvement in reliability or an improvement in performance, but something specifically needed in existing weapons before we'd incorporate these new technologies.

just the

Emphasis on Technology

And then, of course, it has to be cost-effective. Some of them will go into production. I know there's much talk about this will affect the defense industrial base. The simple truth is we will continue to make new systems. We'll continue to produce them, but at a much reduced level than we have in the past. We'll be putting more emphasis on the technology, on the building of demonstrators, the building of prototypes and proving it out, and only going into production when there's a definitive need.

The secretary has used, and I use, too, an example of the tanks. We have 8,000 M-1 tanks in our inventory. There is no need for more tanks for the foreseeable future.

It has proven itself to be the finest tank in the world. Therefore, there's no great urgency to incorporate a new technology into those tanks. Yet we have available prototypes of a Block III (Army armor-modernization program). We will be building some and testing them to demonstrate the technology and demonstrating the manufacturing capability, but not going into production until they are needed.

Meanwhile, it isn't just building a prototype and testing it and setting it aside. We continue research and development on engines, on transmissions, on tracks, on armor and on fire-control systems so that the pipeline is full of new technologies should they be needed to reconstitute our forces at a later date.

This to me is a very fundamental new approach to our whole method of acquisition, and I think is going to be widely accepted. Thank you, Dick.

Powell. Let me begin where Secretary Cheney left off with respect to the strategic initiative that the president announced last night and what its implications really look like.

It truly was an historic initiative ... Let me take you back to 1990,

year before last, when we had deployed with our forces some 13,000 individual strategic nuclear warheads, distributed as you see, approximately 4,500 on bombers, another 2,500 on intercontinental land-based ballistic missiles and another 6,000 ... on submarinelaunched ballistic missile missiles aboard our submarine fleet.

The START treaty would have taken this 13,000, and will take that 13,000, down to 9,500, 4,600 in the bomber fleet, 1,400 ICBMs, and 3,500 on SLBMs (submarinelaunched ballistic missiles). Those of you who are familiar with the START accounting procedures know that some of these bombers have discounted values ... .

The initiative last night, 50 percent of this number, 40 percent of this number, and about a third of the submarine numbers ... we would be talking about numbers in the range of 4,700 overall and roughly 3,600 with respect to START-accountable systems, ... somewhere in the neighborhood of approaching two-thirds reduction.

If you take the strategic warheads

and add to them the tactical warheads which are being reduced as a result of the previous initiative, we are going from 21,000 overall just in 1990, ... down to 6,300. This is an historic change, this is unprecedented and is truly, I think, a remarkable achievement which shows the Pentagon's willingness to adjust to the new reality that is facing us with respect to strategic forces.

would need to deal with the geostrategic situation that was emerging before us and to do it in a way that we protected our interest around the world, and we also paid a peace dividend. We gave something back to the taxpayer. And I think you can see just from this display that within the strategic force package, even since we first announced the base force, we are able to make further reductions in the strategic part of the base force, and the chiefs and I can say with certainty, and the commander of the Strategic Air Command also agrees, that at these new low levels we are well able to deter any potential aggressor who might possess nuclear weapons. But let me turn to another part of the base force.

Let me turn to Europe, because that is a place that gets a great deal of attention. In September of 1990, we had roughly 314,000 troops in Europe. As a result of the decisions we made in our base forceposture, we made a judgment to cut that about in half and start those troops heading back home. So that by fiscal year 1995, our plan was to have returned 165,000 troops from Europe, approximately 200,000 dependents, and close approximately 500 sites. So far, since 1 September of 1990, we have brought home 87,000 personnel, over 100,000 dependents. And we have identified foreclosure, 463 of these 500 sites.

Keep in mind now that about a year ago we stopped moving people because of Operation Desert Shield and then Desert Storm. So must of this reduction has taken place just within the last nine or 10 months at a much more accelerated rate than we originally had planned. And when it's over, we will still have two Army divisions and roughly 3 1/2 fighter wings in Europe in addition to, of course, our naval and Marine presence, four fighter wings coming home. Two of the Army divisions are not just coming home — they're going out of the structure and in fact were inactivated in Europe within the past few weeks.

I think you saw reports of those inactivation ceremonies. I also have to point out that as these units go out of the structure, the reserve

Base Force

You will also recall the strategic forces and our nuclear weapons posture — that's just one part of our entire base force concept. And we identified the base force as that minimum force we thought we

component units that we maintained in the reserve structure to support them in time of war should also go out of the structure. It makes absolutely no sense to inactivate a corps in Germany, as we are doing, and not inactivate all of the combat, combat-support and combat-service-support units we kept in the reserve components solely for the support of that corps in time of war.

And, as the secretary mentioned, this has been a controversial issue with the Congress, but we see no way around this situation, and we will present our case again this year for prudent reductions in our reserve forces, recognizing that we totally believe in the total force policy and bringing the reserves down from roughly ... 1.1 million ... to about 900,000 really is just backing out that growth that took place in reserve component strength over the decade of the '80s when we really did have a problem with respect to reinforcing Europe.

European Drawdown

Let me show you another way to look at this European drawdown. This is just in Germany, some 350 sites, individual sites, are being closed right now. And as I look at some of these places, my whole military career flashes before my eyes - Fulda, Frankfurt, where had my corps headquarters. All of these military communities, 12 of the little installations and big installations in the Frankfort military community, 25 installations and sites in the Stuttgart military community. So here you see a massive drawdown taking place.

Now, I linger on this because people are saying, "Why aren't you doing it, why aren't you bringing home the troops, why don't you realize the Cold War is over, why don't you folks in the Pentagon wake up?" And the answer we give to that is we woke up in 1990 when we laid this plan out. It's a good plan, it's a solid plan, but it's a plan that also will ensure that when the drawdown is completed, we still have forces in Europe to represent our interests there, to be part of NATO, to be part of the new multinational corps that are in NATO and to make sure we continue to reinforce NATO as the

basic element of stability in Europe at this time. And let's not forget that there are several wars going on to the east of NATO – in Yugoslavia, in Georgia and other places that are still in quite a state of uncertainty and instability. This is not the time to bring it all back home to the United States.

Turning to the Pacific briefly, similarly, our base force plans and some of the Nunn-Warner reductions that were taken into account: Phase 1 of the Nunn-Warner reductions are under way and nearly completed. And Phase 2 reductions — these don't include Korea at the moment because, you know, we delayed our reductions in Korea for Phase 2 as a result of continuing North Korean efforts to produce a nuclear device - we thought it best to delay those reductions for the time being. But when this part of the base force plan is completed, we still will have forces in Korea, Marine forces in Okinawa. We will have air power in the regime. We'll have a carrier homeported, amphibious ready groups as well as maritime prepositioning ships. And also we're looking for opportunities to close bases.

And as you know, we already are in the process of finishing our evacuation from the Philippines by closing down Subic. So we have a good plan, and we're bringing down the force as rapidly as possible. The original number we put out there was 25 percent. We're on our way, but we won't hit that 25 percent for another few years. And it would be very, very imprudent for us to start pulling numbers out of the air and to come

up with a new plan every day because the base force isn't enough.

The base force is a good concept. It's a solid concept. There's a strategy underpinning it. We believe we have prudently planned it in a balanced way to bring the force down. I also have to say that we have several million young men and women out there who are watching this process carefully. They want to make sure that as the force comes down, their interests are protected. They remember that they were the ones who go in harm's way and went in harm's way last year in the sands of the Persian Gulf region. And so as we bring it down, I will be making the case to the Congress that (it) give us the time to do it right, give us the time to make an easy transition for these 500,000 active duty personnel, for the 200,000 reservists, as well as another 200,000 civilians who will be off the Department of Defense rolls over the next three to four years, do it in a sensible way. And at the end of this process, you will have a force that's a great force, a force that can go represent the nation's interests at any time and do it in as superb a way as the force ... (that) operated on Operation Desert Shield, Desert Storm, Provide Comfort and a number of other places around the world in recent months. ...

Questions, Answers

Q. Mr. Secretary, the Russian president Boris Yeltsin has proposed the elimination of the Strategic Defense Initiative as a way to further reduce the former Soviet Union's strategic stockpile. You

does take nine years to build one. And while we have shrunk the size of the force and reduced the total number of carriers, it's my belief that carriers will continue to provide us with an important capability, especially in the crisis-response area, as they did in the conflict most recently in the gulf, and that's a capability we don't want to give up.

are proposing an increase in SDI funding from $4 billion to $5.5 billion in the next budget. Is this Yeltsin proposal something that you're interested in pursuing?

Cheney. We think that it's very important to move forward with developing and deploying defenses against ballistic missiles. We think it's in the Soviet interest correction, in the Russian interest — to move that way as well. They live in the neighborhood where people are increasingly developing more capable ballistic missiles and sophisticated weapons to go on them. So I think the moving, as the president's strategy has suggested, to a regime in which we have a smaller number of offensive systems deployed and we rely increasingly on defenses offers the prospect for greater stability in the strategic relationship than the old arrangement of operating under a mutual assured destruction.

We're making major progress in taking down the stockpiles, given the president's initiatives and the response from the Russians to date, but I think we'll want to talk with them, as we've been directed to do to some extent by our legislation this year by the Congress, to look to eventual modification of the ABM treaty to allow the deployment of defenses against limitedballistic missile strikes. I think there's an area there where there can be cooperation. They have consistently opposed our going forward in this area, but I continue to be hopeful that just as communism is no more in the Soviet Union, eventually they'll see the light on the importance of defenses as well.

Q. With aircraft carriers, do you expect to maintain 12 carriers and if so, what ... led to this decision?

Cheney. We do expect in the presentation we've made today to continue with the plan that was laid down last year ultimately of 12 deployable carriers and one training carrier. We think that makes sense to maintain a force structure at that level. The budget that we're sending up will have long lead money in it for fiscal year '93 for the next carrier, CVN-76,1 believe, that gets built beginning in fiscal year '95. It's a very long-term proposition. Part of my concern in the area of aircraft carriers is that it

Seawolf Reduction

Q. Mr. Secretary, on switching to submarines, what good is one Seawolf going to do? You say you want to continue with research into the smaller submarine that the Navy's looking at. Is there going to be money out there for R&D for the Centurion in the outyears?

Cheney. Yes. ... Canceling the Seawolf does not involve totally eliminating all of our interests in developing a new submarine, a follow-on attack submarine. We continue to invest in research and development in stealth capabilities for the submarine, in new propulsion systems, continue to do the kind of work that you would to maintain that capability. We're keeping the existing Seawolf because it's already under construction and partially completed. We are proposing to Congress that we rescind the authority for the second and the third. The second was authorized in '91, but it's been tied up in court in a suit between contending contractors. The '92 boat was authorized just last fall. The contract's not yet been let. So in effect we would propose halting after that first submarine is completed, put our emphasis on developing a follow-on system for it eventually. We've got about 85 nuclear attack submarines in the fleet today. We have several, as I mentioned earlier, 13 or 14 now under construction, both at Newport (News) and Electric Boat. We've also got six Tridents still in various stages of completion, and we think that that probably will be adequate in terms of meeting our requirements in the immediate future. Eventually, the existing submarines, which have about a 30-year life, will have to be replaced, and that's why it's important to continue with R&D activities.

Q. Well, the work force in Connecticut is pretty depressed

today. What do you have to say to them about the future of their jobs?

Cheney. Well, I, as we've said before on many occasions in this room, I wish it were not necessary to make the difficult choices that we're having to make about terminating programs, deactivating units, closing down bases, cutting the defense budget. It's not an enjoyable task — with smaller forces and at a lower cost than has been true in the past. I've inherited the job of trying to make these decisions and recommendations, and much as I would like to be able to say to everyone no one's going to lose their job, this isn't going to have a negative impact on anybody's community, I can't do that. The only way to cut the defense budget is to actually cut it. As I've stated repeatedly in my public comments in recent months, the decisions we're making are not just about the economic impact of the choices that have to be made or the impact back home in various and sundry congressional districts that are affected. The choices are about preparation for the next time we go to war. Whether it's five years from now or 15 years from now, that force is going to be shaped by the decisions we make today, and if we make the wrong decisions, if we keep bases open we don't need, if we continue to produce weapons systems that we already have enough of in the inventory or that go beyond our current requirements, then we'll end up spending money on things that we shouldn't have spent it on, and we will not have enough money to spend on those items that will guarantee that the next time that we do, in fact, have to go to war, that we'll be able to achieve our objectives at the lowest possible cost.

That's the quality of the decision that's embodied here, the impact of it, and much as I would like to make decisions based only upon preserving X number of jobs out there in the country, I can't do that. I don't get paid to do that. I get paid to make decisions based upon how we can take limited resources, apply them to the task of providing for the nation's defenses.

Separation Incentives

Q. A question about force reduction. Apparently the Air Force