Transformation is transforming. The Pentagon employs the term "transformation" to describe its efforts to shift the military away from its Cold War posture and toward a structure that is better prepared for future conflict and threats. This process has always had two aspects. The first is transformation for transformation's sake-applying emerging technolo­gies to overmatch any potential adversary. That has always been the Pentagon's priority. The second is transforming the military to address the diverse secu­rity challenges that the United States anticipates fac­ing in the 21st century.

While both are valuable, mastering the second remains the more crucial. To its credit, the Adminis­tration has been transforming transformation to reflect this precedence. Yet the three critical questions that are raised most frequently in the transformation debate have still not been addressed adequately:

• What needs to be transformed?
• Should the U.S. build its force based on existing threats or around broad capability requirements?
• Should the U.S. focus its transformation efforts on platforms or on systems?

Ultimately, each question requires a complex answer. Not everything needs to undergo transforma­tion, but some things certainly do. The United States must seek new capabilities within the context of potential threats, and neither platforms nor systems can be ignored. Understanding how to address each of these issues-as well as providing the robust defense budgets needed to transform today's mili­tary into the right armed forces for the decades ahead-must be a priority for Congress.

A Brief History of Transformation

The debate over radically restructuring modern militaries for future war predates the end of the Cold War.^[1] After the fall of the Berlin Wall, how­ever, calls for changes in the U.S. military became a clarion call. Some analysts argued that the collapse of the Soviet Union and the emergence of dramatic new military capabilities-such as stealth aircraft, precision-guided weapons, and information tech­nologies like computers-presaged an era of trans­formation, "innovation on a grand scale,"^[2] undertaken to exploit major changes in the charac­ter of conflict.

George W. Bush embraced the concept of trans­formation in his first major address on defense issues during his 1999 presidential campaign. At the Citadel, Bush declared that he wanted to "take advantage of a tremendous opportunity…created by a revolution in the technology of war.… [T]he real goal is to move beyond marginal improve­ments-to replace existing programs…to skip a generation of technology."^[3] These remarks created high expectations that the new Administration would endorse an approach to change that heavily emphasized transforming for transformation's sake.

The Pentagon's new leadership employed trans­formation rhetoric as well. The 2001 Quadrennial Defense Review (QDR)-a mandatory report to Congress assessing the military's strategy, force structure, missions, and resources-emphasized "capabilities-based planning," developing new mil­itary means not tied to specific threats but based on pushing the limits of what could be achieved with operational concepts, organizations, and technolo­gies.^[4] Secretary of Defense Donald Rumsfeld also created an Office of Force Transformation. Among its many activities, the office crafted planning guid­ance that defined transformation as "a process that shapes the changing nature of military competition and cooperation."^[5] These efforts portended a mili­tary transformation intent on achieving the over­matching and unprecedented conventional combat power promised in Bush's 1999 speech.

Uniformed military leaders embraced this image of transformation because it allowed admirals and generals to continue to focus on the mission with which they were most comfortable: the challenge of fighting and winning wars against conventional forces. Additionally, the open-ended nature of transformation left the services largely to define the process however they wished. For example, a Gov­ernment Accountability Office report concluded that the Office of Force Transformation had no charter, formal responsibilities, or authority to direct changes.^[6] There were no measures of perfor­mance or means to judge progress and value. Thus, the services could label acquisition programs that had begun long before the end of the Cold War as transformational or define their goals and rationale with little more than colorful PowerPoint slides and a plethora of adjectives like "faster, lighter, and more lethal."

However, the Citadel speech was also infused with a call for an alternative approach to transfor­mation that emphasizes changing to meet all the national security challenges of the 21st century. Bush spoke of preparing to deal with terrorism, ballistic and cruise missile threats, information warfare, protecting the homeland, and responding to disruption of finance, communication, transpor­tation, and public health networks, as well as other dangers that looked little like conventional warfare.

The Pentagon's generals and admirals were less comfortable with notions of transformation that did not center on high-tech equipment and fight­ing conventional forces. Despite their intransi­gence, the second path to transformation appears to have become more deeply rooted in the Penta­gon's thinking. The cancellation of the Army's Comanche helicopter seems to have been a case in point. The Army decided to forgo the new aircraft less because it intended to skip a generation in technology than because it realized that the money could be used to support a range of programs that would better enable the service to conduct all tasks requiring aviation support.^[7]

Indeed, transforming to support more effectively the variety of future missions that the military might be called upon to perform has emerged as a Pentagon priority. For example, establishing mis­sile defenses and creating U.S. Northern Command reflected an increasing emphasis on protecting the homeland, a mission that had been largely neglected before the September 11 terrorist attacks. The guidance issued for the impending 2005 Qua­drennial Review included a "changing security environment" or "threat" matrix defining four broad areas of capabilities that the U.S. military needed to provide in the future: responding to con­ventional military threats, "irregular" challenges such as terrorism and insurgent campaigns, cata­strophic dangers like weapons of mass destruction, and "disruptive" threats emanating from military competitors who develop new or unexpected capa­bilities, such as cyberattacks or biowarfare.^[8]

However, after four years, the full character of the Pentagon's transformation strategy is still far from clear. For example, while the leadership has called for a mix of capabilities to meet many missions, its acquisition plans still call for-much as they did during the Cold War-buying a fleet of next-gener­ation short-range, manned aircraft that will consume the lion's share of the Defense Department's procure­ment budget for years into the future.^[9]

Key Transformation Questions

The results of this year's QDR will help to define what the Pentagon does next. The challenge for the Department of Defense (DOD) is to expand its capacity to address irregular, catastrophic, and dis­ruptive dangers while retaining a robust capability to deal decisively with conventional military threats. One should not be sacrificed in pursuit of the other. Achieving this balance may require skip­ping a generation of technology in some cases. In other matters, modernizing or recapitalizing assets, changing strategies, or reorganizing current forces may be the right answer.

In the debate over setting the best course for the Pentagon's transformation efforts, three critical issues are routinely raised.

• What needs to be transformed? U.S. security is guaranteed by all of the elements of national power-the military, economic, diplomatic, informational, and political instruments that allow America to act in the world. Which instruments need the most radical reform?
• Should threats or capabilities drive future military developments? The 2001 QDR emphasized capabilities-based planning. The 2005 QDR argues that the "threat" matrix should define future needs. Which is right?
• Should the military focus on developing platforms or systems? Acquiring new plat­forms emphasizes fielding a new generation of ground vehicles, aircraft, and ships. Putting a priority on "system development" emphasizes overall systems performance, not individual platforms. Which approach is right?

Answering these questions is central to keeping the military on the right transformation path.

What to Transform?

The fundamental controversy regarding trans­formation is about what needs to be transformed. Much of the transformation debate centers on mil­itary capabilities.^[10] On the other hand, others argue that improving how the military is employed in concert with the other instruments of national power-a process often called interagency opera­tions-is more important.^[11]

Calls for interagency reform cut across the polit­ical spectrum. "Our real national security goals transcend the Defense Department," argued Newt Gingrich. "We do not today have an effective inter­agency process…. [I]t is the heart of our ability to operate around the planet and we frankly are not very well organized for it."^[12] A recent report by the Center for Strategic and International Studies also concluded that transforming the interagency pro­cess, particularly cooperation with the armed forces, should be the highest priority.^[13]

Improving the integration of defense activities with other agencies has always been problematic. Disparate organizational cultures, resources, and conflicting priorities make cooperation difficult. The DOD has made only a modicum of effort to improve the interagency process. For example, the Office of Force Transformation's planning guidance states only that the DOD should "share information with other agencies on its transformation programs and encourage other agencies to follow suit."^[14] Such direction offers little likelihood of dramatic change, despite some recent modest initiatives undertaken by the department.^[15]

Even if the Defense Department was fully committed to transforming interagency opera­tions, it lacks the authority to implement such a program without direction and support from the Administration. While the QDR identifies important issues requiring improved interagency processes and capabilities, as a DOD-authored document, it cannot really speak to how national security issues should be addressed across multi­ple agencies.

Congress and the Administration must play an active role. They could clearly signal the impor­tance of transforming how government protects America by taking two steps:

• Establishing a National Security Review to provide an independent assessment of the QDR as part of an overall analysis of national security and to make recommendations on how to improve interagency cooperation. Without a government-wide assessment of America's national security apparatus, security functions could gravitate to the wrong agencies or departments.

The QDR tends to lead Congress and the Administration to focus excessively on mili­tary instruments as the best solutions to national security challenges at home and abroad. Indeed, "every problem looks like a nail, when all you have is a hammer." Con­gress should give equal attention to ensuring that all the U.S. national security instru­ments are adequate, complementary, and properly integrated.

• Scrapping the Pentagon's network of regional commands. The Unified Command Plan (UCP), the military's current global com­mand scheme, was set up to fight a worldwide war with the Soviet Union. It is a relic. Regional military commands such as the Euro­pean Command (EUCOM) should be abol­ished. They should be replaced with Joint Interagency Groups (InterGroups) designed for the challenges of the future, not the prob­lems of the past.

The United States should maintain major mili­tary commands for working with U.S. allies in Europe and Northeast Asia and to protect the homeland. In addition, it should establish three InterGroups composed of interagency staffs and assets that are organized to provide the instruments of national power needed to address U.S. security concerns in the world's most troubled regions.

1. A Latin America InterGroup would focus on drug, human, and arms trafficking; counterterrorism; civil-military relations; and trade liberalization.
   
2. An Africa-Middle East InterGroup would focus on counterterrorism, weapons prolif­eration, economic development, fighting AIDS and other infectious diseases, peace­keeping training and support, transna­tional crime, and civil-military relations.
   
3. The Central and South Asia InterGroup would concentrate on counterterrorism, weapons proliferation, training police forces, anti-piracy measures, civil-military relations, transnational crime, and fighting AIDS and other infectious diseases.^[16]

Changes in the military alone are not enough. Transforming all the instruments of national power to better address 21st century challenges must be a priority for Congress.

Threats or Capabilities?

Before the end of the Cold War, assessments of strategy, force structure, and modernization needs were based on evaluations of the Soviet threat. Even though the first QDR (1997) was conducted almost a decade after the collapse of the Soviet Union, the review was still based on "threat scenar­ios," such as a war with North Korea.

In contrast, the 2001 QDR formalized a shift in defense planning to a new capabilities-based model. This approach aimed to drive develop­ments based on "how an adversary might fight, rather than specifically whom the adversary might be, or where a war might occur."^[17] "It is clear," Secretary of Defense for Policy Douglas Feith told the Senate Armed Services Committee, "that the Defense Department needs to plan, but we must plan to be surprised." Feith argued that implementing the capabilities approach was an essential corrective to thinking that had long been based on the sure knowledge of the nature of the enemy that the United States would be likely to face in the future.

After four years of trying to implement a capabil­ities-based approach, and with America well into its second decade of post-Cold War operations, the issue of what should drive transformation is again up for debate. Should transformation continue to be driven by a capabilities-based approach, or is there reason to return to a traditional threat-based method of defining requirements?

The traditional threat-based model, centering on an easily identifiable threat, is certainly outmoded for today's security environment. Defense Secretary Donald Rumsfeld has rightly argued that "the old reliance on presence and mass reflects the last cen­tury's industrial age thinking."^[18]

However, the capabilities-based model, despite its current favor with planners, also has shortcom­ings. The most significant problem is trying to write a budget. The capabilities-based model is open-ended. It is impossible to imagine, build, resource, and deploy every possible desired capa­bility. It is also difficult to prioritize which new capabilities are the most important without a threat against which to measure requirements. The limit­ing factor in capabilities-based planning is budget­ary, not strategic, when it should be a combination of both.

There is an alternative that incorporates the best aspects of each approach. It is not a new idea. In the early 1990s, then-Chairman of the Joints Chief of Staff Colin Powell developed such a model as part of the "Base Force" formulation. General Powell's thinking addressed both threats and capabilities in a combination approach to force sizing.^[19] A combi­nation capabilities-based and threat-based model can assist planners by:

• Providing a broad strategic framework;
• Determining what types of capabilities poten­tial adversaries might possess;
• Anticipating tactics;
• Developing capabilities to fill gaps, based on a meaningful risk assessment; and
• Directing resources to capabilities that are most likely to be needed.

Keeping DOD's transformation efforts on track will require ensuring that the QDR reflects a judi­cious combination of both threat-based and capa­bilities-based planning.

The 2005 QDR should revitalize and update the idea of a combined threat-based and capabilities-based approach to suit today's security challenges. The difference between General Powell's approach in the early 1990s and today's changed security environment is that the U.S. has a better apprecia­tion for the nature of post-Cold War threats. Armed with this knowledge, the Pentagon must implement flexible planning systems based on a combination of capabilities-based and threat-based planning methods.

Systems or Platforms?

Ever since the end of the Cold War, the con­troversy over whether the Pentagon should focus on buying new platforms or emphasize building new "systems" (networks of weapons, equip­ment, people, and organizations linked by infor­mation technologies) has continued unabated. The Pentagon's rhetoric overwhelmingly empha­sizes the importance of systems. "Networked forces and shared situational awareness," declares the Office of Transformation's planning guidance, "will transform warfare."^[20] On the other hand, service acquisition programs con­tinue to emphasize purchasing new platforms including light armored vehicles, manned fighter aircraft, and next-generation destroyers. DOD leadership is still struggling to determine the right balance between systems and platforms.

In practice, what matters most in joint warfare is overall systems performance, not individual plat­forms. In fact, given the right system, even old weap­ons can provide dramatic new capabilities. As Naval War College Professor Mackubin Owens points out, creating new ways of warfare is not an "all-or-noth­ing proposition"^[21] that requires scrapping all old weapons for new ones. The Joint Direct Attack Munition (JDAM), which turns a bomb built in the 1950s into a precision-guided 21st-century weapon by adding a $20,000 guidance kit, is a case in point.

That said, even in "systems-centric" warfare, platforms still matter. In war, systems do not always perform as expected. Sometimes they fail, leaving soldiers, sailors, and airmen dependent on their platforms. For example, it is unclear whether or not the military can yet achieve sufficient situational awareness of the battlefield to avoid all threats and completely give up the lethality and protection that some platforms provide in exchange for signifi­cantly lighter weight and greater speed. In close combat, robust platforms still matter. They are a hedge against the inevitable friction of battle that drags against any system in wartime.^[22]

While existing ships, planes, and tanks can be used in new and effective ways when plugged into these emerging information networks, the fact is that many of these platforms were developed for different times, different places, and different wars. Now is the time to develop a long-term investment strategy for replacing them. Underfunding and overuse during the 1990s, followed by three years of war since September 11, 2001, have left the United States with military equipment that is worn down and aging. Large portions of the force will need to be replaced in the next decade. While this certainly presents problems, it also presents an opportunity to make significant changes in the force by implementing a coherent and focused modernization strategy.

There are three alternative approaches to buying new platforms: modernizing the current generation of weapons, investing in next-generation technolo­gies, or developing totally new futuristic weapons.

Current-Generation Weapons. Current-gener­ation platforms, often referred to as the "legacy force," are the same as or marginally better than the military has had for the past 20 years. A modern­ization strategy that focuses on legacy weapons is the least expensive initially and the least time-con­suming to put into operation. For example, instead of developing an advanced multi-role fighter, the U.S. Air Force could quickly build a consignment of F-16s-the mainstay of today's Air Force that was developed during the 1970s. Or an aging weapons system could be upgraded to a new ver­sion, retaining most of the characteristics of the original system or program but employing some new technologies that yield only marginally improved capabilities.

On the other hand, the disadvantages of main­taining legacy forces are not insignificant. Less advanced systems cost more to maintain over their lifetime, may lag behind the threat, and divert money away from the acquisition of new, more capable systems. Yet this path may be the best response when the quality of current equipment is suitable for anticipated future missions. For exam­ple, while it is possible to develop an entire new generation of land combat vehicles that can be deployed in C-130 aircraft, it is not clear that such a force is really necessary to meet the nation's stra­tegic deployment needs. In many cases, purchasing new weapons to replace aging ones of the same class is the right answer. This approach will ensure a well-functioning and modern force until the threat environment dictates a change.

Next-Generation Weapons. Next-generation weapons are the evolutionary extension of exist­ing weaponry. Instead of producing more of the same weapons or marginally improving existing platforms, investing in the next generation of weapons and applying new designs and technol­ogies to current models will yield much more advanced capabilities.

Such new weapons systems should not only replace the previous generation, but also be signif­icant upgrades to their predecessors. For example, while the F/A-18 E/F infuses new technology into an old design, the Joint Strike Fighter is the next generation of carrier-based tactical fighters, utiliz­ing advanced technologies in both design and pro­duction. Yet the Joint Strike Fighter is still a continuation of the carrier-based weapons system. Although it incorporates many technological advances that give it a distinct advantage over the F/A-18 E/F, it only begins to redefine how the Navy will conduct its operations.

Investing in the next generation of weapons will enable the United States to maintain military supe­riority over potential adversaries that pursue simi­lar capabilities. Furthermore, by building in cost-saving measures and employing efficient produc­tion practices, these next-generation weapon sys­tems could cost less over their lifetime.

However, a modernization strategy that relies too heavily on next-generation weaponry also has significant disadvantages. Next-generation weap­ons often require a greater initial investment to complete development and begin production. Fur­thermore, some evolutionary capabilities may not be sufficient to meet the next threat, making further investment useless. Buying next-generation sys­tems may also prematurely "lock in" technology, committing the Pentagon to an expensive research and acquisition program for platforms that emerg­ing new tactics or technologies may quickly render obsolete. Finally, investing too heavily in evolution­ary systems could interfere with the Pentagon's ability to fund other critical transformation efforts, such as repositioning and reorganizing forces.

Transformational Weapons. Transformational weapons (or skipping a generation of technology) are platforms that bring new capabilities to bear that change how operations are conducted. Much as gunpowder, aircraft carriers, and nuclear weap­ons changed how wars were fought in the past, information technology is doing the same today. These could include such weapons as unmanned combat aircraft, long-range bombers that trans­verse space, or directed-energy weapons such as lasers and microwaves.^[23] For example, the Chinese are developing passive air-defense systems that detect the slight turbulence of commercial radio and television waves caused by aircraft flight-a capability that could prove effective against Amer­ica's stealthy aircraft. A revolutionary response would be to develop space bombers or hypersonic cruise missiles.

Skip-generation platforms might take advan­tage of emerging technologies, such as robotics, biotechnology, nanotechnology, and microelec­tronic mechanical systems.^[24] By investing in them, the United States would be better prepared to defend its interests against future threats. Rev­olutionary systems also could be far less expensive to develop and deploy over the long term than much of today's force because they would be less manpower-intensive and would incorporate new, more efficient technologies.

A transformational modernization strategy also has certain disadvantages. Most of these systems exist only on paper or are early in their develop­ment. Developing them on a more rapid timetable would require a large up-front investment and involve a significant time lag before they could be deployed. Furthermore, funding for research, development, and acquisition of these systems would be diverted away from other systems that could be brought into the current force more rap­idly, and there is always the risk that the technolo­gies may never pan out. Most important, these systems do nothing to address current and near-term threats.

Ultimately, there is no one approach to defense modernization. Instead, Congress must look at programs and capabilities and individually assess which approach is best. In making those deci­sions, the following modernization principles offer a useful guide.

• Long-term investments should not be made at the expense of near-term requirements. A prudent modernization strategy requires a deft understanding of current and future threats to U.S. interests and America's current ability to counter them. Identifying future threats is important, but ignoring current threats is irre­sponsible. Preparing for future tasks cannot be done at the expense of sustaining the ability to conduct current missions.
• Modernization efforts should not neglect warfighting. Building defense programs that enhance the ability of the U.S. military to fight and win wars must remain a priority. Other capabilities should not be developed at the expense of warfighting means. Additionally, the military should not develop capabilities for nonessential missions, such as peacekeeping operations. Modernization should focus on providing capabilities to secure U.S. vital national interests.
• Modernization should sustain a competitive advantage for the United States over its potential adversaries. Modernization should address the military's unmet needs.
• Modernization should balance capabilities with efficiency. Efforts to modernize the U.S. military should achieve efficiency and cost-effectiveness.
• Modernization should respond to a techno­logically and strategically changing security environment. The United States does not hold a monopoly on technological innovation. Much of the technology available to the United States is also available to potential future adversaries. Therefore, the United States must be prepared to face adversaries who may trans­form themselves.

In short, Congress needs to insist that the DOD place a premium on systems and platforms. Defense modernization strategy should look much like a sound financial portfolio, with a balance of investments that promote growth, hedge against risks, and preserve current assets.

Avoiding the Hollow Force

Even if the Pentagon correctly determines how to address the three key challenges of mapping a course for transformation, it will be wasted effort if the Congress does not provide adequate resources. The greatest challenge facing today's military is to avoid becoming a hollow force.

Reductions after World War II and the Vietnam War left the Army without sufficient soldiers, train­ing, and modern equipment to handle its world­wide commitments. As a result, U.S. troops were dangerously unprepared for the Korean War and lacked the conventional forces to deter the Soviets in Western Europe throughout the 1970s.^[25] To avoid a similar fate, today's military must have suf­ficient resources to balance overseas commitments, readiness needs, and transformation requirements.

One presidential term, particularly with the high demand for military forces in the war on terrorism, was not enough to provide the military with what the U.S. needs for the 21st century. Iraq is making transforming even tougher. Operations are strain­ing the force. Helicopters are wearing out at five times their anticipated rate. Trucks are going into overhaul five times faster than anticipated. Amer­ica's military is serving the nation well, but it is becoming a tired warhorse.

After Iraq, there will be pressure to balance the budget on the back of defense cuts. Before work on the 2005 QDR began in earnest, the Pentagon began to float proposals for trimming spending. Getting the military back in shape will require sustained invest­ments for the foreseeable future. Until the drawdown in Iraq begins, Congress must provide timely supple­mental funding. After Iraq, robust annual defense budgets should be axiomatic. Keeping spending at about 4 percent of GDP (only half of Cold War spend­ing levels, but about 25 percent higher than the Clin­ton years) is a reasonable goal for sustaining the resources needed to transform the military and pro­vide trained and ready forces.

Next Steps for Transformation

The coming year could be a critical one for chart­ing the course of transformation. The Pentagon must continue to emphasize transforming the force to meet the security challenges of the 21st century.

Congress and the Administration can support these efforts by insisting that the QDR address the critical unresolved issues of the transformation debate. In particular, Congress should:

• Insist that transformation address not just the military, but all the requirements for effective interagency operations.
• Demand that the Pentagon develop a require­ments process that balances the need to address threats and capabilities.
• Require a sophisticated platform moderniza­tion program to complement the armed forces' transformation efforts.

At the same time, Congress must provide ade­quate resources to support current operations, pre­serve combat readiness, and promote further transformation.

James Jay Carafano, Ph.D., is Senior Research Fellow for National Security and Homeland Security, Jack Spencer is Senior Policy Analyst for Defense and National Security, and Kathy Gudgel is a Research Assistant in the Kathryn and Shelby Cullom Davis Institute for International Studies at The Heritage Foundation.

This paper is part of The Heritage Foundation's Quadrennial Defense Review Project, a task force of representatives from research institutions, academia, and congressional offices studying the QDR process.