Lynn Live

Deputy Defense Secretary William Lynn spoke Wednesday evening in New York about managing the defense enterprise in a drawdown as the Obama administration seeks to cut security spending by $400 billion by fiscal year 2023.

"To undertake this evaluation, we have begun a comprehensive review to frame our choices in terms of strategy, missions, and capabilities rather than budget targets alone," Lynn said. (His speech is here.) "This review will focus on how to ensure that we preserve a superb defense force to meet national security goals, even if fiscal pressure requires reductions in size."

DOD must reject the traditional approach of making unbalanced reductions or applying across the board cuts that preserve overhead and force structure yet hollow out the force and harm the industrial base, Lynn noted.

The review will lay out key "policy choices," he said: "What missions are we doing today that we will not do tomorrow? What are the implications for our force structure and overseas deployments? What capabilities will be essential to meeting future national security threats? How will we balance the threat from near-peer competitors against that posed by low-end actors?"

The Pentagon must avoid embarking on unaffordable programs, but also "pare back" its missions to those deemed "essential," he said. DOD must "balance reductions across force structure, operating, and investment accounts," he noted, adding the department must "not to cut too much, too fast, especially from core mission areas."

DOD is not looking for further consolidation in the top tier of the defense industrial base, though it is not necessarily opposed to consolidation, he said. Also key to the industrial base: international sales.

"For us, the issue is how to slow defense spending responsibly while retaining the most effective fighting force in the world," he said. "For industry, it is how to adjust to a less robust defense market while maintaining their technological prowess."

DOD needs industry partners "interested in sustained performance, not highly leveraged companies who ignore risk in pursuit of profits," he said. "We are in this for the long haul, and need industrial partners and financial backers who think and act likewise. In this respect, our viewpoint is similar to long-term investors, not short-term speculators."

"Think Warren Buffet, not Gordon Gekko," Lynn said.