Defense industrial base: active management needed.

• Author: Farrell, Lawrence P., Jr.
• Position: PRESIDENT'S PERSPECTIVE

In a time of constrained defense budgets, it is important to consider how the United States will preserve critical industrial and engineering capabilities. The concern obviously is to make sure the nation does not lose access to skills and supplies for future conflicts.

So what are some of the basics to sustain a healthy industrial base? First and foremost are programs that keep companies in business. Most defense contractors only supply the military and have few, if any, commercial customers. If the government doesn't buy, the design and engineering capabilities eventually disappear.

Another requisite is competition. So much has been written about competition that it hardly seems necessary to repeat this, but the evidence is that budget decisions routinely discount this critical element. When the U.S. industrial capability began to ramp up in World War II, the nation had the luxury of many suppliers that competed for contracts.

The reduced demand resulting from the collapse of the Soviet Union led to the fateful "last supper" with Defense Secretary William Perry, when the Pentagon directed the downsizing and consolidation of the U.S. industrial base.

That contraction has continued to this day to where we now have only one supplier for some major systems and numerous single sources (some overseas) for commodities. As competition is reduced, cost and quality suffer. This is almost axiomatic, but there is a real need, not only to maintain critical capabilities but to do so within the framework of a competitive environment. And that means keeping at least two suppliers in the game.

The two basic requirements for a healthy industrial base--ongoing programs and a competitive environment--can be achieved in a number of ways.

One way certainly is to have plans to implement follow-on programs to replace existing capability when it begins to wear out of technology mandates newer, more capable systems. What will the new fighter or submarine look like, and when do we begin the design process? Every system at some point goes away and needs replacement. An orderly planning and development process demands this planning always be ongoing.

Another track is to sustain programs in production until follow-on initiatives get under way. This keeps both design and manufacturing engineers in the game as systems are refined, modified and upgraded throughout their operational lifetime. It also allows feedback to flow back to the designers for incorporation into...