War Will Change Industrial Priorities, Says Policy Chief.

• Author: Book, Elizabeth G.
• Position: War on Terrorism; Deputy Undersecretary of Defense for Industrial Policy Suzanne Patrick - Interview

Defense spending in the United States is likely to grow in the long term, officials said, regardless of the length or the outcome of the war in Afghanistan. The expected boost in Pentagon budgets is good news for the defense industry even though experts believe that companies will have to adapt to a new way of doing business.

The surge in requirements for new equipment and weapons that ensued from the terrorist attacks of September 11, on the one hand, will result in significant new business for many companies. On the other hand, the nature of the conflict in Afghanistan is driving Defense Department officials to rethink buying priorities. The so-called "transformation" of the U.S. military, officials said, means that increases in spending will nor necessarily be allocated to traditional military hardware, but rather to "transformational" technologies.

Deputy Undersecretary of Defense for Industrial Policy Suzanne Patrick recently told National Defense that she is confident that the defense industry will be able to adjust to the changing environment, which is "a natural by-product of the transformation we find ourselves in."

Recent developments in the world, she said, show that "we are veritably at the watershed between the more known, conventional forms of warfare and new ways of pursuing warfare that will undoubtedly be less platform and more network-centric.

"So it should not be surprising that as we advance this new kind of warfare, we will have a dwindling supplier base of the old-style platforms and systems." At the same time, Patrick said, "it is important to adequately fund the futuristic systems that will rake us to this new form of warfare without exposing ourselves to imprudent risks relative to current requirements."

Patrick said that specific programs would benefit as a result of the current conflict. The Pentagon, she said, will "accelerate into production a number of the transformational technologies so important to Secretary Rumsfeld as he took office."

Defense contractors, she said, should be flexible, "in order to pursue new opportunities as they continue to produce current platforms." A case in point is an initiative by Boeing to pursue future contracts for unmanned aircraft. "We were particularly pleased to see Boeing stand up its Unmanned Vehicles business unit in order to go after some of these new opportunities with many members of the fine team they assembled to compete for the Joint Strike Fighter program.

Operation Enduring Freedom and homeland defense efforts will result in the infusion of significant funding for "key programs in the defense industry," Patrick said. "And even after the current conflict ends, there should be considerable additional funding allocated for the replenishment of defense hardware and consumables...