Institute, this is one hour. [indiscernible] im honored to have with us to have with us the assistant secretary of the navy, the navy comptroller, Russell Rumbaugh. Weve been friends and colleagues for many years. He has worked in a variety of positions at dod, on the hill, and think tanks, and he most recently came into the department of the navy from aerospace corporation. Previously he had worked at the Simpson Center and other places here in d. C. , the Congressional Research service for many years, and he began his career as a u. S. Army infantry officer. You dont talk about that with the navy folks. Navy i will ask you a few things about the army budget and how much the navy took from them this year. [laughter] its a pleasure to have him here for this discussion. We will also be taking discussion from the audience in the room and online. So, when we turn to that, if you are online you can go ahead and start asking questions on the site where i get to read the questions off the ipad here. Then we will open it up for questions in the room later on. Lets jump right into it. I will start grilling you, all right . [laughter] this was, obviously, a more difficult than usual budget year , preparing the fy 25 budget requests. Not only did you have to prepare it not knowing what fy 24 would be, because congress was late appropriating, you also had to reduce how much were in the budget. Overall for dod, its 10 billion last. The navy seemed to fare pretty well. Within the department of the navy, the navy service was up slightly, relative to last years projection for fy 25. Marine corps, down slightly. You did a lot better than say the army, which was losing ground in the budget. So, my question for you is, why did the navy do so well relative to the other services and what does it mean in terms of dod priorities and how the navy fits into them . Mr. Rumbaugh such a great question, though i should have interrupted you to do my own. Thank you to you and aei for having me. I was worried how he was going to describe the bio with certain judgments, like when he didnt actually produce good analysis. Im glad to have skipped past that. Its a great question and, i think, a great story about where the nation is. We are at a time where we are a maritime power and we know the challenge is china and what we are seeing is actual strategic choices. We are budgeteers and the standard thing that we do is we have these strategic words, but when we go and find the numbers, its not supported. The easiest way you could always hoist someone is the service shares stayed the same. No war, cold war, why is there no change to that . What you are seeing is there is no change to that. They are trying to debate me into at the expense of the army. But thats not an important part of what it rings to the nation, that what we need more of our Nuclear Deterrent submarines, fast attack submarines, destroyers sailing in the red sea, a marine corps that can respond to a crisis like gaza and be there immediately. Someone who can be there with their new force design. When you run it down, you see how many of the efforts are in the need, its a huge credit to everybody up and down the line and in the legislative branch for recognizing the fundamental distant difference. You mentioned the red sea. Lets go into some tactical things going on right now. The navy has been doing a lot of work in the red sea defending against who the missiles, houthi missiles. I dont think we know the exact numbers or anything, yet. What is the navy going to need in terms of replenishing stock because of these operations in the red sea . Should we expect to see that in a supplemental request sometime in the next year . Mr. Rumbaugh in the next year . How about right now . Its like did they shoot anything last night . The number keeps changing and we are using expensive missiles, tomahawks, those things are pricey. First thing you have to say is would you rather expend them or have the bad guys stuff land . We obviously need to come up with new answers. The secretary of the navy has already been down to look at other answers. Having those ships and sailors in harms way, sorry, you will have to put up one of the navy cliches. Its an economy floating on seawater. To your point, the budget tactic of we are waiting on the fy 24 supplemental right now, something we appreciate congressional action on. You saw that, the navy got a 5. 4 percent increase over the base last year. So, from base to base, a 5. 4 increase. This at a time when cpi is 2. 4 . We are getting a real growth that secretary gates called for. You and i can agree that he kind of made that number up. Nonetheless, its a pretty good metric to use. We will lose that real growth if we have to replenish those stocks, the standard missiles and tomahawk built in south dakota, if we have to replenish those from within our own instead of congress realizing this is an extreme situation giving us that money. The shells builtin garland, texas, scranton, pennsylvania, money is in the senate path supplemental to replenish those stocks, even with the challenges around. We are you and i have grown up in a world where supplementals have been a regular thing. That supplemental is on the hill right now awaiting action. That is the first and most important answer to your question. You are mr. Harrison you are saying you need to 24 supplemental first and then we can come back and look at the 25 supplemental . Is that the game plan . Mr. Harrison is there a 25 . No, we are not in 25 yet. Are the level of operations going to continue . We know they can be. We will have a conversation on how to do that, especially with 25 being the cap year if we have these elevated global responses, where we have to be open to that. For now, and i feel sorry for my colleagues on the appropriations staff, the same joke i started with. What do we need . Well, what happened last night . We are constantly updating how big the demand is, we will just have to watch. Mr. Harrison lets talk more about the specific choices made in the fy 25 quest. The navy was somewhat shielded but not entirely, there were some programs suffering reduction based on what was previously planned. One that got to me in particular was a virginia class attack sub. Instead of buying two, the plan is to now only purchase one. You know there is a long tradition in washington of using the monument strategy, where you cut something, you know its going to be terrible in the eyes of congress, they will be forced to put the money back, but then they have to figure out how to pay for it. Cutting the virginia class sub, was that Washington Monument strategy . Or are there serious justifications about why you need to cut it . Mr. Rumbaugh you could not have asked the question better. No, this is a real decision. A real decision that you can see proven out with the santos unproven list coming out and there is no submarine on it. This is not trying to play a game at the budget level. This is the navy and the department recognizing a fundamental reality. We have purchased two of these Division Class submarines since 2011 and for those who have played really paid really close attention, there were a couple of years where the navy did not propose two, but nonetheless we have always had two and that is not what we are hoping to have happen this year. 60 votes already appropriated. 14 already on contract. Tens of billions of dollars a backlog at the yards. And greater demand is coming as we move into full production for columbia as we work with the australians to make this a reality. There is just a fundamental tension and difficulty there that with our Industrial Partners and partners in congress that we need to work through. On basically every other question, we set hard choices, fiscal responsibility act, got to prioritize, but its not true on that class. Its a different dynamic where we are looking at the backlog and throwing more money at it is not going to produce outcomes. To outpace china, we have to get those subs out of the yards and to see. We believe that the best way to do that is to create a break, allow some of that to go through. Keep in mind its not that we are spending less on submarines. 9 billion in fy 25 for the submarine Industrial Base. 11. 1 billion over. We left the advanced procurements of the second vote in to make sure that we could grease the system as much as possible. So, we are instead of putting money into a sub, putting it directly into the yard. This is not walking away from Industrial Partners, not walking away from the undersea dominance. Its to try to get better outcomes. By the way, did i mention in the supplemental, 3. 3 billion dollars . 15 billion over six years. We get nothing from congress. Everybody weaponizes the value of making these direct investments to try to do better and get to better outcomes. It is not a Washington Monument ploy. It is a necessary moment that we with our congressional Industrial Partners need to push through to actually get strategic outcomes. Mr. Harrison a report came out this week, from the navy, looking at the delays in the shipyards. Its not just a virginia class program. Its kind of down the line there are these backlogs and it is taking longer and longer for ships to come out. What is it, now . Five or six years for a virginia class sub . It keeps taking longer. What is the fundamental problem . What do you need from congress in order to help fix that problem . Mr. Rumbaugh lets not just put the onus on congress. The fundamental problem will not surprise anybody. Its all the stuff everybody can see. Its workforce challenges, supply chain challenges, making sure we have the right information at the right time to make good decisions with industry, with congress. Its not some magic. What do we need to do . The same thing i just talked about. We in the department of the navy are a part of this. We are getting support throughout the government for this. That is why you see these incredibly large sums for investment. Workforce, we ask for 450 million for workforce training dod wide. Congress added extra money, right . Saw the money and added it. We know that we have to make investments to ensure even these outcomes. At the same time they have been clear that we need our Industrial Partners to help. We cannot just be putting more dollars on the backlog, reassuring investors that these are going concerns. We need to turn this into outcomes where ships and subs roll off the line. The review that tom referred to came out last night. It absolutely happened when the secretary realized there were a number of programs that were not meeting standards, so he sent them to do a comprehensive look and we have now come clean and said hey, this is where these programs are and we still need to work through the hardcore nittygritty of what we actually do to fix that. Like i said, its easy to see where the problems are. How to solve them is a difficult question. Mr. Harrison relating to that, building on it, the agreement between the u. K. , australians, to getting Nuclear Powered attack subs to australia, its very important, strategically, for balancing china. But does that just further complicate and add to the challenges in our ship ill ding Industrial Base . Mr. Rumbaugh i dont think so. I think we started with the right thing. A great strategic moment, lets get our allies and partners the best things out there. The virginia class runs laps around everything in the water. Thats great. Lets get allies and partners that we can trust with that technology who will go through taking care of of that technology. Thats what you have now, australians working with the navy. Does it increase the challenge in the out years . Yes. The sheer amount of tonnage coming out of the yards is unparalleled. Its just bigger. Even then, the truly national moments, like where we went through our tonnage, is just very, very high. That is far enough down the line that it is something we need to get through and be there. That is why we are making the investments now, why we are dealing with the delays now to make sure those lines are running smooth, by the time we actually get to the moment that the australians take their boats and we want that columbiaclass coming out every year to get that new generational nuclear turn at sea. Mr. Harrison now it now i want to turn to something of a fun question. Fun for me. [laughter] mr. Rumbaugh if the rest of you will think a budget question is fun is an open question. [laughter] mr. Harrison there are just such fun names in this. There are a number of classified funding lanes lines in the budget. You used to track these as well, they have interesting names and its notable to me that the Largest Program elements in the Naval ResearchDevelopment Budget are called link tangerine and pirate fish. You look at the description of them, it just says classified. But they are not the only ones. Go down the list, there is rid track to maple, chalk coral, juniper chalk, eagle, i could go on. Lots of fun codenames in there. Two questions. One, whats up with the names . Two, what should we read into the fact that so much of the naval r d budget is going into these classified funding lines . Mr. Rumbaugh i think you already answered the question, didnt you . You said fun . Who doesnt want great codenames . Im not sure i would use this so much going in, do we act salute the exploit every advantage that we can to provide maritime dominance against potential adversaries . Some of those things achieve their best value if nobody knows about them, so we will not talk about them today. We will keep the advantage for real. There is a bunch of stuff we have a lot of stuff sitting in between where we are kind of talking about it, right . The Disruptive Capabilities Office is coming out of task force 59 to really try to leverage and get to the future. We are glad to be a part of the deputy secretarys replicator program. This is something where we can talk about autonomous, but am i going to tell you what the specific programs are . Now im telling you the things we are pursuing. But i assure you that the deputy herself has said that there are half 1 billion and 24, which the appropriations bill moved fast on. When you have a good story to tell, everyone can get into process at some point, but what people fail to recognize is the process moves slope and not everybody agrees with you. When everybody is like yes, thats a good idea, i can move through a process with no problems and lay the case out with the appropriate classification and make sure it comes out in a 24 beds it, even if it is six months late. That is taking advantage of something late. We are proud of those maritime programs and the navy would have backed them anyway, and they sit there with the edge of cannot talk about some of it but super excited to be pursuing some of it as well. Mr. Harrison are there things in the 25 budget request that are being funded because of the Replicator Initiative . You said that there is money in 24, but what is in the 25 request . Mr. Rumbaugh there is stuff in the 25 request. You asked the question in a great way, but we have to parse it a little bit. The department has been very cautious to not turn replicator into just a pool of money that they get to go and take. Makes it harder to answer questions like this, right . Its a very nice if there is a pot of money, we can tell you the Budget Hearing of here is your line and this is what you spend, but the problem is it gets filled with a bunch of programs where everyone is glad to take the money but its not clear that you have buyin in the except buyin. By accepting ambiguity, it shows we are serious, but what do you think . We want to emphasize that and i think there are a couple of cases where the navy is looking at something that they are curious about and that leadership retention ratchets it up. In the coming year you will see the navy internalizing that. They are not just responding to the deputy secretary. Its the new naval chief of operations. Secretarial guidance. You are seeing parallel efforts as we face the challenges that we need to face. Mr. Harrison i do want to see if there are questions in the audience. If you have got a question, you can raise your hand. I see one over here. Can we get a microphone . Anyone who has questions online, please email them in and we will be checking up here. Thank you for coming, its a great discussion. Specifically i want to know about not only the delays that came out last night, but the longrange shipbuilding plans that came out a week or two ago. Are those delays reflected in the longrange shipbuilding plans, or will they have to be reflected in the future based on last nights news . Thank you very much. Mr. Rumbaugh great question. Its a new development. Some of that will come out in the wash when the shipbuilding review takes marks on when we buy it. Some of that dying will continue on even as we try to compress the execution. On several of them, for example, the frigates, we rolled it out as up to six months. We were not willing to concede it. Certainly we were not willing to concede the delay on columbia. We need to look at ways to claw that back and get more efficient. We are trying to be honest and transparent with congress, with the american people, but we will fight to bring it back in, the steps that we take to materially improve outcomes and bring it back. You wont be surprised to hear that that is a bit of a tense conversation as we need to start pointing fingers and saying we need to do this, need your help doing that, talk at her at this point, it will be a powerful and important conversation. Mr. Harrison i want to ask you a related question what are the must fund things in the budget . The crown jewels . In the naval budget, you mentioned the columbiaclass program, having delays, but is that one of the crown jewels that you just cannot do without . Are there other things in the navy budget that no matter what, no matter how much the budget might be cut, you just cannot do without . Mr. Rumbaugh uh. Thats a great question, todd. Gets a bit into the philosophy of the budget. How much do you want me to live off of . We should talk about the u. S. Being the greatest nation on earth and continuing with the right investments in the department of the navy. But seriously, columbia would definitely be one of those. Columbia, whatever delay it is suffering doesnt come from a budget problem. That was true with our congressional overseers as well. The only anomaly, the anomaly being we will give you a continued resolution, we lived under four for six months and in the last 20 years we are under five years of continuing resolutions. It does not help us achieve good outcomes. Nevertheless, everybody, including congress, new how important columbia was. So, in 24, the tick mark for the second boat, wisconsin goes in and we had that anomaly starting that, a new start on the second boat. That level is the highest. The second is taking care of marines. We are clear on taking care of people and we just believed lived through this, if i. 2 pay raise for civilians and military. That starts in the new year, the new calendar year, january. Well, i am still living off a cr from fy 23 that did not have that they rise in their. We immediately start paying people to pay raise. We absolutely need to take care of our people. I was pretty nervous. Because if we get stuck at a cr level, we have to find that money somewhere else. Choices have to be made. Congress came through and acknowledged the payraise. Marines are the only ones meeting their recruiting targets. We will have to go back and ask for help to cover that, partly because we have been paying for the pay raises already. A whole series of that. The commandant, the chief of naval operations, her ali of service, they have a number of initiatives. We have increased Sexual Assault prevention funding five times in the last three years. We are putting money into Mental Health efforts. Taking care of people, we accelerated getting a birthing barge so that sailors under maintenance have better places to live. Some of those are absolutely must fund his. We are in a challenging recruiting environment, right . Incredibly low unemployment. For the budget year, that makes life easier. I have less people to pay. What makes those people sign up . We will not neglect the sailors serving our country. Mr. Harrison any other questions from the audience, here on this side of the room . Morning, sir. Nick wilson, inside defensive. On that 45 day review, i know it just came out, so maybe the navys plans are not fully fleshed out yet, but are there specific things you are looking for from the ship elders themselves to get after this problem more Going Forward . Thanks. Mr. Rumbaugh there is no answer to your question now on any of the particulars coming out of that 45 day review, we are still going through that. The second part of the question is it is a constant dialogue with the yards. The Program Managers are constantly trying to have that conversation. What we are trying to do is get the right incentives. We are having workforce challenges. Thats absolutely true. Every single report ports points to the problem. Its not hard to figure out why. American workers have a lot of options in what they can go do, unemployment is less than 4 . We are not seeing the commitment to bringing in the workers and retaining them. How much do we need to adjust what we are doing for our contractors and Industrial Partners to make sure that they take advantage of that . That is a separate conversation that we need to have with them. Do we need to change . How do we work on that together . These are examples of things we will have to explore. Mr. Harrison questions in the room i have one from online. The questioner says two thirds of u. S. Arms sales are through direct commercial sales. Does the absence of dcs info in the procurement books create a blind spot for congress and dod itself on how they impact procurement programs . Mr. Rumbaugh no. We are absolutely looking at our suppliers and their load. They want to have that conversation and that that that information is transparent in reporting done through the department of state and dmca, its just moving in a different channel than the budget books. So, you know, having been a Public Defense analyst for the budget, i acknowledge the difficulty in reconciling those, but when you get that information, at the end of the day while we want to be transparent and want todd to have a great deal of raw material to do his work, at the end of the day if you are a key staffer on the hill, we will show up and help you walk through that at every turn. We dont want you puzzling in deciphering. We want people in the room to help you with that. We have always been committed to that with congressional i overseers, as we are inside the building. Mr. Harrison lets see if there are any other questions here. I have one of my own. We talked a bit about classified program lines. I have been tracking for years a club that has become quite large. In last years budget request, it had an entry, a project within it called nextgeneration fa x x, next generation fighter. This year i go in that has moved out. The next gen fighter for the navy is now its own program element. Again, all the details are classified. Is there anything you can tell us about when we might know some of the details about that program and does it have a name . Mr. Rumbaugh i wont comment on the connection between the programs, but we i can comment on the highlevel future fighter program. I told todd earlier that i would answer most of his questions by invoking the hard choices on fiscal responsibility act. Now hes come across one. All three of our major communities are delayed in the fy 25 budget. Thats a time slip for the two ships. For the aircraft there is a significant investment that you can see in the public to database. We think that gets us to the next data point. We are fully committed to those programs and have robust funding lines in them, but there is a Definite Development in the programs and the rush to get them to see is part of that act. In terms of a choice we have to look at soon, it was precipitated by the fiscal responsibility act, looking at that this year. That is a conscious choice to make sure that we balance the department of the navys portfolio across the globe and across time as well. The nextgeneration Development Programs dont even hit until later. The virginia class right now, its the block five. It is the ddg type three that will be in this decade in the next decade that are the mainstays of the navy. We recognize the decisive decade. The moment is coming, the moment this year. That was a conscious choice in this budget terms of the clearest representation of hard choices being made. Mr. Harrison can you talk more about unaccrued uncrewed services . Youve got things like emq 25 tanker, takeoff carriers, thats well underway. What are those relative priorities and what are the hard choices you had to make any uncrewed systems in the budget request . Mr. Rumbaugh we didnt have to make too many hard choices about that. A little bit. Its a very big word, uncrewed. Changes by domain. We are pretty confident the air domain. M q 25 is a very real program that has already entered proof of concept. That is much more about getting the production out. Its not uncrewed part thats hard, thats about building the airplane. To their credit, they are doing new approaches that should help us down the line, making every airplane less artisanal. One of the problems with everything we buy is they still have a lot of individualized rivets. We have an effort now to get past that and use more modern manufacturing techniques. You will not be surprised to hear that if we try something new, it may not go as smoothly as we had hoped. The Program Office will tell you again that they are optimistic, so i can reserve my judgment about that, but being uncrewed on the surface and undersea are different. Some lessons you can take, some you cant. If we had greater funds, you get to do more experimentation. You can be less sure and that would be great. We are absolutely still committed to it. I have already talked about the disruptive capabilities, replicator, and the number of named programs for uncrewed surface and undersea that we are pursuing. We have people playing with it, how do you actually use it . We are pursuing Technological Solutions across the board. Mr. Harrison all right. Question over here . Here it comes, right here. Morning, my name is daniel. I had a question going back to what you said around supporting industry side of things. Our using differences between small and Large Shipyards and how are the challenges being approached for me other than throwing money at the situation . Mr. Rumbaugh way to set me up great. Im a little partial to my boss, secretary of the navy. He had a couple of key budget jobs. He understands the lingo i use, so im always partial to briefing him. One of his other canonical things is that he himself was a successful Small Business owner. At the general, before he talked talk about yards, he is fully committed to the Industrial Base and a healthy way, right . Dont just go out there for an answer like its a makework program. We want to create a pipeline to the Industrial Base. Find Small Businesses, grow them into medium businesses. Grow medium businesses into large businesses. Let the wonders of market capitalism work. Yards, the secretary has been very outgoing on this. First of all, he doesnt just want to talk about navy shipbuilding. Under his maritime statecraft, hes explicit in talking about United States ship owning. He wants everybody. In the last two weeks i sat in a meeting that he convened where the leader of the Maritime Administration was in there, where the coast guard acquisition person was sitting in there. I have a standing call with my coast guard counterpart just because he says we are doing this collaboratively and cooperatively. You see him going to korea, looking at the state of the shipyards. We need people who can do small boats and get them to have ever greater expanse. China has 45 of the worlds shipbuilding. The pla navy doesnt cover the overhead, the pla navy takes advantage. Thats not too young the Industrial Base policy. Thats just scale, right . On the flipside, in the United States, our navy yards basically do only navy your work. Meaning that every bill or help they need comes directly from the navy. If we could strip that, the navy would get better at results and the entire United States would get better results. I absolutely think you are seeing some of these investments im not sure if i would call it throwing money at the problem, but significant investment. Investments we havent seen for decades. And we are getting that support across the range because of the fundamental effort to make america competitive at every level. Mr. Harrison question from online hear about the fiscal responsibility act, the budget gaps. Given the budget caps put in place, are you concerned about whether congress will have the flexibility to provide money beyond the cap budget . We are calling it a supplemental, but money is money , is a supplemental effectively a legal loophole . Mr. Rumbaugh well, its literally a legal loophole, right . You write it into the language to get it. Say it positively, this is section 241 of the eye partisan budget enforcement. That language is in every single purveyor for the supplemental. You can absolutely do that. Do i think that that is a intention to slip around the caps . No. You only do it if you have the agreement from both houses of congress and the president. Right . Thats the definition of a National Decision. It was a National Decision to go under the caps and that there are some things like operations in the red sea or some work for ukraine that should not be bound by the caps. That is why it was built in in 1986 and has been used every time we have been under caps. We are very conscious people love use love to use appropriators as bogeyman. I dont need to do that. Its about spending money on what you are supposed to. Im not looking for a slush fund. Im looking for the right resources and the demonstration that you need those resources. Expanding standard missiles makes it easy to do counting, but even then i told you about our Industrial Base emissions. So, just because we shot off a tomahawk doesnt mean that we can immediately put one on order. We are working through that right now. We talked about the early investments in the shipyards, with the munitions manufacturers. We got six out of our seven multiple year procurements, where we are consciously im a budget tiered locking that in, taking away the flexibility from my secretary, from congress, from the president. I want something in return and it had better be very significant costs savings. 10 to 12 is the rough guideline. We care so much about the outcome, the admirals looked at what happened in ukraine and said we cannot have empty magazines. We increased our munitions by 40 in 21. Congress took the mark, they saw that we had not successfully got the industrial lines up to speed. It is still very close to a 30 increase on what we had previously spent. We saw the same level in fy 25 we have to keep investing in munitions and the Industrial Base. I dont want to say no to the japanese. I want tomahawks. I want everyone who is a partner to have as many tomahawks as they can. We put direct investments into our Industrial Partners last year and down the potomac here to make sure we have the ability to build in more capabilities as well. Mr. Harrison so, you know, broad question, what are your priorities in the 25 budget in terms of getting it through, getting it on time, getting a 24 supplemental . What are your priorities . If you could Tell Congress that hey, this is what i need to work on for the sake of the navy, what would your question be . Mr. Rumbaugh the 24 supplemental. In some ways, that is a luxury. A few weeks ago i was anxious and nervous. You can track it, my secretary published an oped in december saying hey, if we have to live under this, this is what we are going to do. Prioritize readiness, prioritize people. My team and the programmers did an amazing job building that into the levers we would pull. Im glad not to pull those. Thank you much for the base, now we need to talk about the supplemental. 3. 3 billion submarine Industrial Base. Up to 20 billion for ukraine, israel, taiwan. Direct 6. 5 billion dollars in direct funding to the navy and marine corps that the senate has already passed. We are half of the chamber away already area half of congress has agreed to this. The present has already put it up. We also need help on the disaster supplementals. The biggest place that we see it is guam, which just suffered a typhoon at a time when this incredibly strategic important places running into execution problems where we lose ground to a big natural disaster. The big thing is declaring a Senior Defense official for guam. Thats one of my bosses with a specific task of hey, this is strategically important but we have to make executable programs. Its an island, theres a limit, there are constraints on getting people there to do the work. Hes got the tasks to make sure that they marry the people up and we can goose that if you get the supplementals requested through congress this year. 25, im not sure if you are aware of this, it is an election year. If you will forgive me, a budget joke, my standard for giving appropriations is never on time. My standard is did i get it before the next congress . That is a longstanding problem, just making sure that we engage in the geeky ness of the congressional act of 1974 when congress was having a hard time getting bills passed. We said maybe what they need is a little more time. Until 1976 through 75, july to july, congress appropriated it three months later. What if they just need more time and remove the fiscal year two october 1 from september 30 . Surprise, surprise, we started getting bills in december. Unfortunately, we have slipped into a new era where we get our bills in march. That is not the same thing. Its not great to lose a quarter, but hey, i understand. Tough decisions are tough decisions. Now we are in a whole other world. Do i have hope for 25 being the year we get back on track . Not really, but i hope we get to a more protectable and regular one. Im already conceding two months after the fiscal year. Mr. Harrison im telling people that my baseline expectation is march of next year. Mr. Rumbaugh very negative, very negative. [laughter] mr. Harrison maybe im a pessimist, but it doesnt look good, going into the election year. Once you pass that its like well, which party stands to gannon gain more in the budget negotiation with incentives for pushing it into the new congress, who comes in and they dont do anything in january, they start thinking about it in february, before you know it, its march. Mr. Rumbaugh mike mccourt, one of his favorite ways to do it is the cumulative amount of time we have spent under cr. My way is that in the last 31 years, its only been 71 times we have had new appropriations from congress. Thats not too bad. The only problem is in the first 20 years it was once and in the last seven years it was seven. That was terrifying to me to realize that we could be in a new era. Hopefully that is over and we now have greater predictability, although yeah i dont think it will be for a potential election. Mr. Harrison lets see if there are other questions in the room from folks. I have got one that i always like to ask. If congress came to you and said hey, we have more money, we want to give it to the navy. If you had one more dollar, where would you put in the budget . Mr. Rumbaugh nobody ever asks me that question. They always say no, you cant have the marginal dollar, its going here. The secretary is very clear one of the great things about working for the secretary, one of the longestserving, since 2017, and he has had three enduring priorities and we have made it very clear. On the marine side they would put the money in to make sure that we are holding the account as they try to do recruiting and they try to make sure they have forced design with our aircraft programs. The clearest place is seeing where they took the tales on the aircraft programs. Almost certainly, that is the first dollar that you see. Though i have to emphasize the Service Chiefs at least provide their version of what they would do with another marginal dollar. What you see is what we have already talked about, right . Money for the submarine Industrial Base. Already not getting a supplemental and asking for it. Then saying if they dont get it, i needed, put it on the priority list. We have get theirs water treatment. That is something that developed after the budget. Thats an execution flexibility thing on the next marginal dollar. Do we absolutely know where we put it . Im going to cheat and be like todd, the main thing that is clear is we are not buying our way out of these programmatic difficulties. 255 billion dollars, as i like to point out come of the three best budget years we have just lived through. We are buying six ships in the 25 double digits. We think we can stay, we think we can get there, but six is not doubledigit. The amount of money taking six to double digit is manna from heaven level money. We are making dramatic investments but thats singledigit billions. Buying your way out of it is i dont know, tour 3 trillion . Im worried we might lose some of it. Not to indulge my inner budget tear, but im talking to you. The marginal dollar helps on specific things. Taking care of people, barracks, 20. A marginal dollar will not make the difference on the fundamental structure. What we need to do is make sure that we buy are things effectively. Mr. Harrison in the Business World there is always the option of change the business you are in. Do we need to rethink our approach to the Industrial Base, rethink our approach to weapons systems, right . Turn away from some of the Large Capital ships, really pivot into the uncrewed systems . Are there options like that that we should be weighing . Mr. Rumbaugh oh, todd. This is when todd might have a conversion moment. If you came, lets see if we can get him to write different reports. Answering the underlying question, there is no pivot here. We are purchasing uncrewed, doing all of the above. We know we have to have those submarines and we are seeing why we have to have destroyers in the red sea. There isnt a fundamental shift we have to do here. But you prefaced it with do things differently. As the comptroller, the other hat that i own is the auditing advocate. Todd and i have had a long relationship and been on mainly the strategic budgeting side, looking at money moving out of the pentagon and to congress and what the big choices are. I was conversant enough to get the job. I cannot believe how much of a believer in audit i have become. From the basic thing of doing a bunch of Business Practices that we just havent changed. One of our contract writing systems is called mocas. Its written in cobol. Produced in 1957. Thats not great. I have a modern enterprise Resource Planning system, we are currently migrating our last three commands. They are doing their data clearing right now. I have a bunch of people all of my commands are already in and yet i have a bunch of contracts being written with mocas despite the fact that the navy lp cannot handle them. Why are we using the cobol system . Use the modern one . I immediately get cyber protection. We have identity credentialing. As long as you are in the modern system, that one is easy and i get rigorous audits. I do a bunch of hand jamming to try to make it match. That is not the magic of audit. The audit wont find that. The audit will point out that we have a bunch of business processes we have been doing for a long time that are not really getting the outcomes we want. Isnt the obvious answer to change those business processes . I love the audit as a forcing function to start that conversation. I am super excited, we are just now coming into contact and are making enough progress to come in contact with the fleets. Both migrating to the new systems and talking to them about getting ordinance. You have to be careful of audit. Dod is very accountable. 57 is an incredibly early time to field a modern Contract Value system. Its a huge accomplishment, dod should be proud of it, but its that we did that and everyone kept moving along and now we are lost. We dont lose it if they go boom. When i say ordinance, we dont lose that stuff. They are diligent about it. But we dont do it in a way that achieves auditability. We dont want things that go boom. A lot of people count that stuff a lot. Its not the same thing as being auditable. We will never give up readiness or mission to be auditable. I hope i have demonstrated that there is a huge amount of room to change how we are doing it without sacrificing Mission Readiness and still gain audit ability. So embarrassing, my longest answer was about the audit . The most important thing was the cultural change within the uniforms. The commandant can speak financial management. The assistant commandant coming out of the resource shop can speak accounting detail. The beautiful part about that is they are fourstar submarine generals. They are use to lance corporals going to do that, including putting a life in danger. Just because you can tell them to do that doesnt mean it is efficient or effective. With the audit they kept running into you are failing because you are not doing what you said you would do. As long as you are within certain general accepted standards, they are not telling you how to do it, just judging whether you are following your own policy. Why create your own owners policy that you fail at . Why not create internal controls . You have watched marine leadership go through that, learn that, and drive the change that brings them to a clean audit. I believe that all of dod can d thati believe that as a part ofe navy, we are doing that effort right now. I hijacked todds question, apologies. Pretty soon, todd is going to start with those classified programs that he wants to poke at that no one is supposed to talk about. I cant wait for your next audit report. [laughter] mr. Harrison something that comes up a lot for folks, even the folks not directly connected to the pentagon, they hear the folks talk about dod passing in audit and it being a Great Success and credit. What to you think the timeline is for the rest of the navy . Mr. Rumbaugh 2028. That number is what we say, now written into law, and now we have a plausible path to get there. The problem we have had for many years, which you saw since the kickoff of 2018 when we started doing annual audits is we keep turning over rocks and finding things we dont know about. We are still involved in that. I have a plausible plan that has cushions builtin for rocks that people did not know would be there. Like i said, we are now in contact with every part of the navy, including the sailors who are going to report back to fleet forces when they come back from sailing around the red sea. What we need is those department of defense wide things. We are focused on three things right now within the department of the navy. Sorry, the department of the navy is championing three things in the department of defense. The first is government furnished property. I have to have a good inventory around my stuff and the stuff held by contractors. Some of that is little stuff by the way, here is your sea whi p. Put it on a ship. Hey, keep track of this multibilliondollar thing. Again, they are not losing it. They are all audited, they have clean opinions. Those independent auditors are saying whats that major boxx over there . We the department of defense failed to say that it is important that you tell us where those things are so that we can audit it. Im confident that this is partnership. If we say that we care about this, my secretary signed letters where they signed a positively. They had a conversation last weekend another this week to get at that. Its a great way where its not the navy, i need Industrial Partners to help, and i think they will. The second one that the marines ran into is a huge amount of unmanned. If you buy something from a working capital fund or business like entity, they tell you the price. When it shows up, they charge you the price that it is now. Can you imagine amazon doing that to you . The price changes for amazon, too, and every once in a while it changes too much and they cancel on you, right . Within government, the money didnt leave. What it is hard on is my Financial Systems, which have one number here, one number there, and one way that you make sure the transactions are the same thing is on the price, except they are not the same, so we are advocating for changing that department wide. We just got permission, there are downsides, this is a classic audit problem where the Financial Systems have all upside but sustaining it within the community, they have to change, make investments. You can see when they are like wait, why am i doing that . The audit cannot just be financial management. I think if you change the Business Management practices, you will improve readiness, visibility, the time it takes to you. I still have plenty of operators who are like why are we doing this stupid audit thing . I do that within the department of defense and you are like well, if we stay if we say five minutes on every part, is that an operationally relevant timeframe question mark they say yes. Mr. Harrison all right. Well, we are out of time. We could go another hour on the audit. Unfortunately, we are out of time for today. Please thank me please join me in thanking houthi thinking Russell Rumbaugh for being here today. Thank you. [applause] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. Visit ncicap. Org] [captions Copyright National cable satellite corp. 2024]