Defense Industrial policy shop taking hands-on approach.

• Author: Erwin, Sandra I.
• Position: Defense Insider

* The chairman of the defense business panel, Rep. William Shuster, R-Pa.; seemed troubled by the idea that the Pentagon regards the defense sector as a capitalist Darwinian industry where the market decides who lives and who dies. During a House Armed Services Committee hearing, Brett Lambert, deputy assistant secretary of defense for manufacturing and industrial base policy, took issue with that.

"It is a mischaracterization that we have this laissez-faire" attitude, he said. "When possible we want to allow the market to work." But that is not always possible or appropriate, he added. Some industries, such as nuclear submarine makers, require "intervention and nurturing." But when it's commercial products, he said, "We prefer the market to work."

Decisions on what segments of the industry might need extra nurturing will come after Lambert's office completes a comprehensive survey of more than 25,000 companies that do business with the Defense Department. More than 5,500 have responded so far. Lambert said he believes the Pentagon has no reason to worry about its prime contractors, which have relatively easy access to capital and cash reserves. "The real fragility we're seeing is in the lower tiers," said Lambert. The...