Good morning.  It's good to see you all.

My goodness, it's a packed house.  Look at that.  I know that many of you, as others all across the country, are preparing for some vacation, and perhaps some have already gotten a little bit of vacation.   I see a few sun tans in the crowd.  You -- needless to say, I hope you get or have had a well-deserved rest with families and friends.

It's a good time to reflect on what you and your colleagues in this department have accomplished these past two-plus years.

It has been remarkable.

From the moment the Flight 77 hit the west wall of this building on September 11th, 2001, you -- and your comrades and colleagues around the world -- have performed magnificently and in so many ways, including the global war on terror.  Our folks have worked long hours, and under a great deal of pressure; often under difficult circumstances.  I guess the temperatures out there have been running 115, 120 pretty regularly.  And often working so hard to defend the American people against those who seek to harm this country.  And there are a number of folks that do seek to harm our country.

The brave men and women in uniform have risked their lives to help liberate two distant nations.  They have removed those regimes from power and they have ended the threats they pose to free people.

Despite these successes, however, the global war on terror is far from over.  It poses some difficult times ahead for us -- as we've seen just in recent weeks and months since the end of major combat operations in Iraq.

However, make no mistake -- we will win this global war on terror.  To do so, we're going to need to continue to transform our department -- making our forces lighter, more agile.  We're going to have to continue to try to create a culture that rewards unconventional thinking and thoughtful risk-taking.  We'll need to find ways to continue to attract the most talented people to the Department -- both military and civilian.  It is encouraging to see that at the present time our recruiting and retention goals for all the services are at or better than the targets.

So we're making good progress on each of these challenges.

In the last two years, we've worked with Congress to pass pay raises for the troops.  We're working to ensure that most troops will not have to pay out-of-pocket housing costs by the year 2005.

Today, with advanced technology and skills, our forces can do really even more than they were capable of previously.  The successful campaigns in Afghanistan and Iraq took far fewer troops and executed quicker buildups than earlier conflicts.

Every day, more coalition forces and Iraqis are taking over the police and civil defense duties carried out by American troops -- and that's a good thing.  In addition, we're continuing to draw down our forces in Bosnia and Kosovo and the Sinai.

We're working to develop a more efficient and predictable deployment and redeployment process.  Troops and their families need to have a better idea when they're leaving and when they're coming back.

We're looking for ways to improve the way we call up the Guard and the Reserves.  Unfortunately, our deployment process, as many of you who were involved in it know, is still rooted somewhat in the industrial age.  It's like there's a huge lever, that is either off or on: it's either peace or World War III -- and not much nuance in between.  Well, we're going to work on that.

Some regard -- Reserves and Guardsmen were called up three or four months before they were needed, to find out they were not needed, and many were given only five days notice, rather than the goal of 30 days, which really isn't fair to them.  And it's not fair to their families or their employers.  And that's not right.  We need to fix it, and we're in the process of getting it fixed.

We also plan to shift a portion of some skill sets from the Reserves to active duty forces and vice versa.  This way, we will not have to continue to reach into the Guard and Reserves for the same set of skills, resulting in a situation where you call up the same people too frequently.  That's not what they signed up for.

Today, I'm told, we have some 300,000 uniform personnel in positions that conceivably could be handled by civilians.  Now, we don't know if that's true precisely.  That's from some studies that dated back three or four years.  But we're in the process of analyzing those studies and determining what numbers of those positions conceivably could be filled by civilians.

The goal, obviously, would be to reduce the stress on the force by having some of those positions that are currently filled by military personnel filled by civil service or contractor personnel.

We need to be able to attract talented civilians to come to work for the Department.  And we're asking Congress to give us some flexibility to establish a promotion system for the civilian workforce that would reward excellence.  The men and women in uniform already have a performance-based system.  It's worked well for a number of civilians, in addition, in the demonstration projects that have existed now in one case for close to 2 1/2 decades, and the results from those demonstration projects have been good.

Also, we have proposed somewhat more flexible rules for the movement of funds in the Department, to give us the ability to respond to urgent needs as they emerge.

So, we have a good deal of work ahead, there's no question.  And we've got the war on terror to pursue and win.  And we have a Department that we need to continue to work to transform, so that the Armed Forces will be able to meet the challenges that we face and to deter future adversaries from posing new threats to the people of our country.

So I hope you'll get some time off; have a well-deserved rest -- you deserve it, there's no question about that.  Come back ready and rested, after August, so we can tackle the task of making our Department a still more dynamic place of innovation and opportunity and where we can work to make our country stronger and safer.

Please know that I thank each of you for all you do for our country.