Closing Bell - Manifest Space: Air Force Secretary on SpaceX, China and The Future of War with Air Force Secretary Frank Kendall 9/15/23

Episode Date: September 15, 2023

Walter Isaacson’s new biography on Elon Musk sparked controversy with the revelation that the SpaceX founder withheld Starlink internet services to Ukraine in a military operation on Russia last year. While the company was not under military contract at the time—and has since received funding from the Pentagon— the disclosure fueled the debate that U.S. government and allies are too reliant on SpaceX. U.S. Air Force Secretary Frank Kendall joins Morgan Brennan from the floor of the Air Force Association’s annual Air, Space, Cyber conference to discuss national security contracts, China, AI and more.

Walter Isaacson's new biography on Elon Musk has been making waves. The most recent? The disclosure that the SpaceX founder and CEO refused to allow the use of the Starlink Internet service by Ukraine in a surprise attack on Russian forces. The media frenzy was immediate and Senator Elizabeth Warren has called for a probe. But SpaceX wasn't under a military contract at the time. SpaceX had been providing terminals to Ukraine for free. Now, the U.S. been providing terminals to Ukraine for free.

Now the U.S. military is funded and contracted with the company for Starlink services in Ukraine. But the revelation has added to debate about whether the world is too reliant on SpaceX and Musk for matters of national security. Since the U.S. Air Force works closely with SpaceX, for example, on launches, I asked the service's secretary, the Honorable Frank Kendall. SpaceX is an important supplier to the government, launch services, and we do buy some communications capability from them and so on. But we do that through business arrangements that we can enforce. It was just one piece of our conversation with Secretary Kendall joining from the floor of the Air Force Association's annual Air, Space and Cyber Conference. On this

episode, which is a little different than the usual space-heavy conversations we have here, the secretary outlines what it will take to prevent a conflict with China, how the service is using artificial intelligence, and the risks associated with all of the congressional gridlock. I'm Morgan Brennan, and this is Manifest Space. Secretary Kendall, it's so great to speak with you today. You're joining me from the AFA conference, where you delivered a strong message regarding China. You said China is preparing for a war with the U.S., but that war is not inevitable. How do you see it? Well, for over a decade now, I've watched what China's

been doing to modernize its military. And it's been fairly clear to me that they're designing a force with the intention of having the ability to deter and, if necessary, defeat U.S. intervention in the Western Pacific. They're basically creating the assets that they need to come after what they perceive as our vulnerabilities. So what does this mean for the Air Force in terms of the strategy moving forward, the need to modernize the Air Force, the need to be able to counter China? That's right. And my focus initially on coming into office two years ago was on modernization. It was on modernization. It was on getting to the next generation of capability so that we could be more competitive.

And we spent a lot of time analyzing the operational problems we had to solve. And we put a lot of the work that resulted from that into our budget that's currently awaiting passage by the Congress. And I do want to get into the budget outlook with you just a little bit more. But first, in terms of China, if China were to, say, invade Taiwan or impose a blockade on Taiwan, is the Air Force and, more broadly, the U.S. military in a position to counter that right now? We are, but there's more operational risk than I would like to see. We have a very capable military. No one should underestimate the will or the capability of the U.S. military.

It would be a tragic mistake, I think, if China were to do the types of things you just described. But they are actively seeking the capability to be effective against us and to defeat us if possible. And we can't be idle while that's happening. We have to respond. Now, you did just mention the budget. There's certainly the uncertainty looming over Washington right now about the possibility of a partial government shutdown or more likely a continuing resolution. Even a lot of talk, at least among the analyst community, that there is a rising risk of an extended continuing resolution. Why would that be bad for the military? That would be devastating. All CRs have a very negative impact. They're very inefficient.

They delay modernization. It's very important. They delay increases in programs that are going into production, for example. And they make it very difficult for us to plan and to move forward. A long CR is particularly difficult. And we've gotten somewhat used to a short CR, a month or two or three even, over the last several years because it's been routine. So we tend to plan around that. But if it goes beyond that, then all the things that we put in our budget to respond to China, for example, would be deferred for as much as another year. That would really be tragic.

We lose a lot of time already in the budget process from the time we formulate our plans till we get them through the Congress. This will add another year to that already fairly long period of time. We're in a race for technological superiority, and we need to be moving as quickly as we can. And of course, that's the funding piece of this

and the technological piece of this. There's also the personnel piece with this hold by Senator Tuberville on hundreds of officer nominations right now. How much is that affecting the work you're doing? It's affecting our workforce dramatically. We have any number of organizations now that are under temporary leadership, pending confirmation for people. We've had a few people who were planning to retire stay on because of that, and we're grateful for that. It's a huge disruption to our military

families for our senior leaders. We have over 100 officers right now who are caught by this. They've earned those promotions. They've been waiting for them for a long time. Organizations can't move forward without permanent leadership. They'll continue to function, of course. We'll do our job. But the disruption is really significant, and it's accumulating over time. As I said, we've had about 100 officers now in the Air Force and Space Force, a little more than that. And we've had several months of this. So the cycle we have to move people into new jobs, promote people, is sort of built

into the system. And this is enormously destructive. Now, all of this speaks to the modernization process that we've already touched on for the Air Force. But you've laid out seven operational imperatives, among them nuclear modernization with a B-21 bomber, NGAD, which is the sixth generation fighter, and the loyal wingman, a number of other imperatives. I guess just starting with B-21, any updates you can share with us in terms of the beginning of production and where you're at with that program?

Our program's still in development, but it's making good progress. I never make predictions about development programs. They all have risk, but we're still hopeful to have first flight this year and move to production relatively soon. Collaborative combat aircraft, which is part of what you're focused on right now, how does it speak to the increasing role of autonomy and artificial intelligence? There have been significant advances in these areas, and what we've committed to with the uncrewed collaborative combat aircraft is to program a record, which means we're serious about it. We're putting several billion dollars into our five-year plan

to move that program into development and into production by the end of the five-year plan. The technologies are mature enough to support that, and we've done a lot of work to decide what that initial incremental capability will be, and we'll add to it over time. So we're on the way to doing that. It's going to be very cost-effective for the force. All of our analysis supports it, and the technology is ready.

We're ready to move forward with that. When we talk about AI, some folks frame it as an AI arms race from a geopolitical standpoint. How crucial is that to the future of warfighting? I think we tend to have some confusion about what we talk about when we say AI. It's really a basket of technologies that offer a different range of capabilities. Military applications include autonomy, pattern recognition, data analytics and so on. And some of the functions that humans would normally perform can be automated and done much more accurately and more quickly through AI.

We are not talking about turning over control of lethality to machines. That is not what we have in mind. Humans will always be in the loop and responsible for any decisions that are made about lethality. But we cannot ignore this technology. It's going to provide a huge military advantage to whoever is able to make these advances in field capability more quickly than a potential adversary. So that's the road we're on. We're trying to get things into the field and into the hands of our operators, but within our ethics constraints as quickly as we can. And speaking of new technologies, hypersonics, something you and I have spoken about before.

I mean, we've seen a program with Lockheed canceled earlier this year. There was a high-profile test. I realize it was Army, not Air Force, for hypersonics that was recently scrapped as well. How are you thinking about hypersonic capabilities, and why is it taking so long for the U.S. to field them? Hypersonics are definitely a part of our future. We have more than one program ongoing. The Aero program, which I'm not sure if it will continue in the production or not, is teaching us a lot. And we just had a test there that we got a lot of data from that's going to be very helpful. So we're moving forward with autonomy.

We have a different operational problem than our adversaries do. I can understand why they want to do hypersonics quickly and proliferate it because of the target set that they're interested in. We have a different target set, and we're trying to get capabilities that are more matched to what we need to do. We're not trying to mirror image anybody else. I do want to shift gears a little bit here because a contractor that the Air Force has a lot of work with, SpaceX, has been in the headlines. There's this Musk biography that's been released chronicling Elon Musk's decision to not support an attack by Ukraine on Russia last fall. It's important to

note that SpaceX wasn't under contract with DOD at the time that that decision was made, but it's getting a lot of attention. You have Senator Warren calling for probes. Your thoughts on that topic, and especially given the fact that the Air Force does work so closely with SpaceX? The Air Force and the Department of Defense in general rely on contract arrangements with business, executable and enforceable contracts as you mentioned at the time spacex made some unilateral decisions about what to do for ukraine they were not on contract to the u.s or to ukraine i think they were at that point donating their

services essentially so they had discretion we run our contracts to basically ensure that we can get the services we need as expected from them, and those, again, are enforceable contracts. So whatever the business arrangement may be, whether it's individual ownership or a publicly held company, we write agreements with those businesses that get us what we need at a reasonable cost. So this notion that whether it's through Starlink with connectivity capabilities or whether it's through launch with SpaceX's rockets, this notion that the company has become a key player, or very important, this idea that Elon Musk is calling the shots on a lot of things

that could be tied back to government operations. You'd bat that down? SpaceX is an important supplier to the government, launch services, and we do buy some communications capability from them and so on. But we do that through business arrangements that we can enforce. Yeah. It does speak to, though, the role that so-called new space is playing with some of the new technologies, some of the new capabilities and operations that I think that are important to the government moving forward. So just how are you thinking about space as a warfighting domain and where you see that going in terms

of the relationship with commercial space? We recognized during the Obama administration that space was becoming a contested domain. We changed our strategy as a result of that. During the previous administration, the Space Force was formed and a lot of progress was made to react to that reality. We're continuing to move that forward. Basically, space will be contested. The military services that nations, great powers in particular, get from space are very important to their success. That's true for us. It's true for

potential adversaries. So we have got to have the capability to provide services reliably to our forces, to the entire joint force and our partners internationally, as well as the capability to provide services reliably to our forces, to the entire joint force and our partners internationally, as well as the capability to ensure that the other side does not have that kind of capability to support their forces. Now that's the reality that we're living in right now. And we're designing the Space Force around the mix of capabilities that are intended to have that,

those sets of capabilities. Final question for you, recruiting roles. You had signaled earlier this year that you might fall short of capabilities. Final question for you, recruiting roles. You had signaled earlier this year that you might fall short of them. You are going to fall short for the first time in more than two decades. Why? We're going to be short. We were a little short last year too. There's a lower propensity to serve. And for a long period of time under COVID, we couldn't get recruiters in the schools. So we're taking some corrective action on that. We're changing some of our policies a little bit to be more open to people. Our trends are in the

right direction right now. And as I look forward into the next year, I think things will improve substantially. But this year, we're going to be about 10% short for the active force and a little higher than that for the Guard and Reserves. Well, Secretary Kendall, appreciate the time and the insights. Thank you so much for joining me. The Honorable Frank Kendall, Secretary of the U.S. Air Force. Thank you. Thank you. Always good to be with you. That does it for this episode of Manifest Space. Make sure you never miss a launch by following us wherever you get your podcasts and by watching our coverage on Closing Bell Overtime. I'm Morgan Brennan.