The primary thrust within our international programs continues to

be enhancement of the military capabilities of the NATO Alliance through closer, in-depth cooperative efforts. Major new and unprecedented initiatives for comprehensive NATO defense planning and cooperation were launched by the President during 1977. The initiatives provide the basic impetus and guidance to our international programs in 1978. Basic objectives of our international programs are:

o Promotion of fuller industrial collaboration in military equipment to achieve economies of scale and reduce unit costs.

The growing Warsaw Pact threat, coupled with inflation pressures, makes it even more important to make the best collective use of the considerable funds the Alliance, as a whole, spends on defense.

Standardization/interoperability of military equipment is at the heart of our NATO rationalization effort. Maintenance of NATO deterrent capabilities must be based upon healthy national economies and industries, greater financial commitment to the Alliance by the partners and increased military effectiveness through equipment standardization. These are possible only through more North-American-European industrial collaboration in armaments research, development and procurement.

Standardization calls for identical equipment for as many Allies as possible. It is a long term goal which will be achieved incrementally as older weapon systems are replaced. For many systems, Alliance-wide uniformity is impractical; there will normally be several generations of a particular type of weapon in the field at the same time--even in U.S. forces.

Interoperability, a major step toward standardization, does not require that NATO Allies standardize on one weapons system in order to meet a particular military need. However, interoperability does require that our systems have certain characteristics in common--such as compatible communications gear or common tank gun ammunition--in order to facilitate mutual Allied support.

The U.S. has always been looked to by the Allies to take the lead

in NATO, because we are the largest partner. I believe that we are again assuming leadership through a number of significant new initiatives, presented by the President and the Secretary this past year, that will guide our collective efforts in the coming years.

It is imperative that defense equipment design and procurement be more of a two-way street than it has in the past, to overcome European suspicions that standardization and interoperability really mean "Buy American" in our eyes. Therefore, we must "give" more in the sense of buying some European systems and loosening some restraints on technology sharing and licensing. We expect, however, to gain far more in terms of the total strength of the Alliance. Achieving all this must be a

joint endeavor of the Congress and the Administration--as well as our

Allies. Our policy remains the NATO strategy of deterrence and

collective defense, and if deterrence fails, forward defense and

flexible response. We are thus committed to effective participation

in Alliance defense, doing our part as our Allies do theirs. Our effort is both a catalyst and a companion piece to theirs; the net result is greater security at a lesser cost to all.

The continuing economic health and innovative vitality of our high technology industry is crucial to achieving NATO modernization at a minimum cost. We must recognize that these factors depend largely on the viability of those companies in commercial markets over which we in defense have no control, but from which we are beneficiaries. Thus, NATO's ability to compete with Warsaw Pact nations in force modernization is linked in part to the commercial vitality of our technology companies. Chapter IV provides a detailed review of our current and planned

international programs and activities.

E. MAJOR FY 1979 R&D AND PROCUREMENT THRUSTS

Our budget and programs focus on meeting critical deficiencies in

our deployed capabilities, strengthening the technology base, and applying our resources more effectively. The following programs are of particular importance.

1. Strategic Programs

We request $2.2 billion in RDT&E to continue development programs and $4.1 billion for procurement programs which will maintain the

effectiveness of each leg of the TRIAD of strategic retaliatory forces, demonstrate options for future force improvements, and strive for

leadership in the technology of defensive systems.

a. Strategic Offensive Systems

Of

In

The ability of our strategic offensive forces to retaliate with high levels of assurance is being threatened by the combination of Soviet quantitative advantages in offensive and defensive capabilities and rapidly evolving improvements in their systems performance. particular concern is the increasing vulnerability of our fixed-based ICBMs, which remain a vital element of our retaliatory capability. this regard, we will continue advanced development of the M-X missile, including a thorough examination of alternative basing modes which offer improved survivability through concealment and mobility. The $158 million requested will enable us to develop the system technologies necessary to reach an 100 in the mid-1980s.

We propose to upgrade the effectiveness of our SLBM force by continuing the development and procurement of the TRIDENT Weapon System ($2.8 billion, including the TRIDENT I and II missiles and the TRIDENT submarine) to replace our aging POSEIDON force. We will also be developing several options to improve the survivability and effectiveness of our SLBM force.

We propose to improve the air-breathing element of our TRIAD by continuing development and initiating procurement of the Air-Launched Cruise Missile ($413 million requested), and by improving the penetration

A

capability of our B-52 force. We intend to test our cruise missiles in an aggressive defensive environment to determine any vulnerabilities or Source selection for the Air-Launched Cruise Missile will

weaknesses.

be completed by January 1980. The B-1 development program will continue, as a hedge, with completion and testing of the fourth prototype aircraft ($106 million requested).

emerge.

Finally, we request $205 million to support development of

a number of technology base options for maintaining the effectiveness and survivability of our strategic offensive forces as future threats These efforts include Advanced Ballistic Re-entry Systems, the SSBN Security Technology Program, Advanced Strategic Air-Launched Missile and Strategic Bomber Enhancement, including consideration of a possible future advanced bomber.

b. Strategic Defensive Systems

The objectives of our program are to maintain leadership in the technologies of defensive systems and reduce the risk of technological surprise; to develop options for future defensive systems, including protection for satellite and command and control systems; and to develop an effective surveillance and warning network against aircraft, missiles and spacecraft.

We are requesting $228 million for research and development in ballistic missile defense technologies--a level equal to our FY 1978 program in real terms. I believe this is a minimum level of effort in view of the large and aggressive Soviet development and test program.